[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2004 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

   

                    7


          Parts 1200 to 1599

                         Revised as of January 1, 2004

Agriculture





          Containing a codification of documents of general 
          applicability and future effect
          As of January 1, 2004
          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 : 2004



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                            Table of Contents



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

  Title 7:
    Subtitle B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter XI--Agricultural Marketing Service 
          (Marketing Agreements and Orders; Miscellaneous 
          Commodities), Department of Agriculture                    5
          Chapter XIV--Commodity Credit Corporation, 
          Department of Agriculture                                289
          Chapter XV--Foreign Agricultural Service, Department 
          of Agriculture                                           821
  Finding Aids:
      Material Approved for Incorporation by Reference........     867
      Table of CFR Titles and Chapters........................     869
      Alphabetical List of Agencies Appearing in the CFR......     887
      List of CFR Sections Affected...........................     897

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

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

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

[[Page v]]



                               EXPLANATION

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

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

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

LEGAL STATUS

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

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2004), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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

OMB CONTROL NUMBERS

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

[[Page vi]]

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

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, 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) 741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


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 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

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Government Manual, the Federal Register, Public Laws, Public Papers, 
Weekly Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format at www.gpoaccess.gov/nara 
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    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

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

January 1, 2004.

[[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, 2004.

    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.

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[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1200 to 1599)

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

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

                                                                    Part

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

chapter xiv--Commodity Credit Corporation, Department of 
  Agriculture...............................................        1400

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

[[Page 3]]

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

[[Page 5]]



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




  --------------------------------------------------------------------
Part                                                                Page
1200            Rules of practice and procedure governing 
                    proceedings under research, promotion, 
                    and information programs................           7
1205            Cotton research and promotion...............          16
1206            Mango promotion, research, and information..          46
1207            Potato research and promotion plan..........          48
1209            Mushroom promotion, research, and consumer 
                    information order.......................          62
1210            Watermelon research and promotion plan......          82
1214            Kiwifruit research, promotion, and consumer 
                    information order.......................         105
1215            Popcorn promotion, research, and consumer 
                    information.............................         107
1216            Peanut promotion, research, and information 
                    order...................................         118
1218            Blueberry promotion, research, and 
                    information order.......................         132
1219            Hass avocado promotion, research, and 
                    information.............................         146
1220            Soybean promotion, research, and consumer 
                    information.............................         164
1230            Pork promotion, research, and consumer 
                    information.............................         188
1240            Honey research, promotion, and consumer 
                    information order.......................         213
1250            Egg research and promotion..................         234
1260            Beef promotion and research.................         250
1270

Wool and mohair advertising and promotion [Reserved]

1280            Lamb promotion, research, and information 
                    order...................................         272

[[Page 7]]



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




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

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

   Subpart B--Rules of Practice Governing Proceedings on Petitions to 
   Modify or to be Exempted from Research, Promotion, and Information 
                                Programs

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

    Authority: 7 U.S.C. 2111, 2620, 2713, 4509, 4609, 4814, 4909, 6106, 
6306, 6410, 7418, and 7486.



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

    Authority: 7 U.S.C. 2103, 2614, 2704, and 4804.

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



Sec.  1200.1  Words in the singular form.

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



Sec.  1200.2  Definitions.

    (a) The term Act means the Cotton Research and Promotion Act, as 
amended [7 U.S.C. 2101-2119]; the Egg Research and Consumer Information 
Act, as amended [7 U.S.C. 2701-2718]; the Pork Promotion, Research, and 
Consumer Information Act [7 U.S.C. 4801-4819]; and the Potato Research 
and Promotion Act, as amended [7 U.S.C. 2611-2627].
    (b) Administrator means the Administrator of the Agricultural 
Marketing Service or any officer or employee of the Department to whom 
authority has been delegated or may hereafter be delegated to act for 
the Administrator.
    (b) Board means the board or council established by the order to 
administer the program.
    (c) Department means the U.S. Department of Agriculture.
    (d) Federal Register means the publication provided for by the 
Federal Register Act, approved July 26, 1935 [44 U.S.C. 1501-1511], and 
acts supplementing and amending it.
    (e) Hearing means that part of the proceeding which involves the 
submission of evidence.
    (f) Judge means any administrative law judge appointed pursuant to 5 
U.S.C. 3105 and assigned to conduct the hearing.
    (g) Hearing means that part of the proceeding that involves the 
submission of evidence.
    (h) Hearing clerk means the Hearing Clerk, U.S. Department of 
Agriculture, Washington, D.C.
    (i) Order means any order or any amendment thereto which may be 
issued pursuant to the Act. The term order shall include plans issued 
under the Acts listed in paragraph (a) of this section.
    (j) Proceeding means a proceeding before the Secretary arising under 
the pertinent section of an Act.
    (k) 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 for the Secretary.

[67 FR 44350, July 2, 2002]

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Sec.  1200.3  Proposals.

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



Sec.  1200.4  Reimbursement of Secretary's expenses.

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



Sec.  1200.5  Institution of proceedings.

    (a) Filing and contents of the notice of hearing. The proceeding 
shall be instituted by filing the notice of hearing with the hearing 
clerk. The notice of hearing shall contain a reference to the authority 
under which the order is proposed; shall define the scope of the hearing 
as specifically as may be practicable; shall contain either the terms or 
substance of the proposed order or a description of the subjects and 
issues involved; and shall state the time and place of such hearing, and 
the place where copies of such proposed order may be obtained or 
examined. The time of the hearing shall not be less than 15 days after 
the date of publication of the notice in the Federal Register, as 
provided herein, unless the Administrator shall determine that an 
emergency exists which requires a shorter period of notice, in which 
case the period of notice shall be that which the Administrator may 
determine to be reasonable in the circumstances: Except that in the case 
of hearings on amendments to an order, the time of the hearing may be 
less than 15 days but shall not be less than three days after the date 
of publication in the Federal Register.
    (b) Giving notice of hearing and supplemental publicity. (1) The 
Administrator shall give or cause to be given notice of hearing in the 
following manner:
    (i) By publication of the notice of hearing in the Federal Register;
    (ii) By mailing a copy of the notice of hearing to each organization 
known by the Administrator to be interested therein;
    (iii) By issuing a press release containing the complete text or a 
summary of the contents of the notice of hearing and making the same 
available to such newspapers as, in the Administrator's discretion, are 
best calculated to bring the notice to the attention of the persons 
interested therein; and
    (iv) By forwarding copies of the notice of hearing addressed to 
those Governors of the States and executive heads of territories and 
possessions of the United States and the mayor of the District of 
Columbia that are directly affected by such order.
    (2) Legal notice of the hearing shall be deemed to be given if 
notice is given in the manner provided by paragraph (b)(1)(i) of this 
section; failure to give notice in the manner provided in paragraphs 
(b)(2) (ii), (iii), and (iv) of this section shall not affect the 
legality of the notice.
    (c) Record of notice and supplemental publicity. There shall be 
filed with the hearing clerk or submitted to the judge at the hearing an 
affidavit or certificate of the person giving the notice provided in 
paragraphs (b)(1) (iii) and (iv) of this section. In regard to the

[[Page 9]]

provisions relating to mailing in paragraph (b)(1)(ii) of this section, 
determination by the Administrator that such provisions have been 
complied with shall be filed with the hearing clerk or submitted to the 
judge at the hearing. In the alternative, if notice is not given in the 
manner provided in paragraphs (b)(1) (ii), (iii), and (iv) of this 
section there shall be filed with the hearing clerk or submitted to the 
judge at the hearing a determination by the Administrator that such 
notice is impracticable, unnecessary, or contrary to the public interest 
with a brief statement of the reasons for such determination. 
Determinations by the Administrator as herein provided shall be final.



Sec.  1200.6  Docket number.

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



Sec.  1200.7  Judge.

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



Sec.  1200.8  Motions and requests.

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



Sec.  1200.9  Conduct of the hearing.

    (a) Time and place. The hearing shall be held at the time and place 
fixed in the notice of hearing, unless the judge shall have changed the 
time or place, in which event the judge shall file with the hearing 
clerk a notice of such change, which notice shall be given in the same 
manner as provided in Sec.  1200.5 (relating to the giving of notice of 
the hearing): Except that if the change in time or place of hearing is 
made less than five days prior to the date previously fixed for the 
hearing, the judge either in addition to or in lieu of causing the 
notice of the change to be given, shall announce, or cause to be 
announced, the change at the time and place previously fixed for the 
hearing.
    (b) Appearances--(1) Right to appear. At the hearing, any interested 
person

[[Page 10]]

shall be given an opportunity to appear, either in person or through 
authorized counsel or representative, and to be heard with respect to 
matters relevant and material to the proceeding. Any interested person 
who desires to be heard in person at any hearing under these rules 
shall, before proceeding to testify, state his or her name, address, and 
occupation. If any such person is appearing through a counsel or 
representative, such person or such counsel or representative shall, 
before proceeding to testify or otherwise to participate in the hearing, 
state for the record the authority to act as such counsel or 
representative, and the names, addresses, and occupations of such person 
and such counsel or representative. Any such person or such counsel or 
representative shall give such other information respecting such 
appearance as the judge may request.
    (2) Debarment of counsel or representative. (i) Whenever, while a 
proceeding is pending before the judge, such judge finds that a person, 
acting as counsel or representative for any person participating in the 
proceeding, is guilty of unethical or unprofessional conduct, the judge 
may order that such person be precluded from further acting as counsel 
or representative in such proceeding. An appeal to the Secretary may be 
taken from any such order, but the proceeding shall not be delayed or 
suspended pending disposition of the appeal: Except that the judge may 
suspend the proceeding for a reasonable time for the purpose of enabling 
the client to obtain other counsel or representative.
    (ii) In case the judge has ordered that a person be precluded from 
further action as counsel or representative in the proceeding, the judge 
within a reasonable time thereafter shall submit to the Secretary a 
report of the facts and circumstances surrounding such order and shall 
recommend what action the Secretary should take respecting the 
appearance of such person as counsel or representative in other 
proceedings before the Secretary. Thereafter the Secretary may, after 
notice and an opportunity for hearing, issue such order respecting the 
appearance of such person as counsel or representative in proceedings 
before the Secretary as the Secretary finds to be appropriate.
    (3) Failure to appear. If any interested person fails to appear at 
the hearing, that person shall be deemed to have waived the right to be 
heard in the proceeding.
    (c) Order of procedure. (1) The judge shall, at the opening of the 
hearing prior to the taking of testimony, have noted as part of the 
record the notice of hearing as filed with the Office of the Federal 
Register and the affidavit or certificate of the giving of notice or the 
determination provided for in Sec.  1200.5(c).
    (2) Evidence shall then be received with respect to the matters 
specified in the notice of the hearing in such order as the judge shall 
announce.
    (d) Evidence--(1) General. The hearing shall be publicly conducted, 
and the testimony given at the hearing shall be reported verbatim.
    (i) Every witness shall, before proceeding to testify, be sworn or 
make affirmation. Cross-examination shall be permitted to the extent 
required for a full and true disclosure of the facts.
    (ii) When necessary, in order to prevent undue prolongation of the 
hearing, the judge may limit the number of times any witness may testify 
to the same matter or the amount of corroborative or cumulative 
evidence.
    (iii) The judge shall, insofar as practicable, exclude evidence 
which is immaterial, irrelevant, or unduly repetitious, or which is not 
of the sort upon which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to any other ruling of the judge during the hearing, 
such party shall state briefly the grounds of such objection, whereupon 
an automatic exception will follow if the objection is overruled by the 
judge. The transcript shall not include argument or debate thereon 
except as ordered by the judge. The ruling of the judge on any objection 
shall be a part of the transcript. Only objections made before the judge 
may subsequently be relied upon in the proceeding.
    (3) Proof and authentication of official records or documents. An 
official record or document, when admissible for any

[[Page 11]]

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



Sec.  1200.10  Oral and written arguments.

    (a) Oral argument before the judge. Oral argument before the judge 
shall be in the discretion of the judge. Such argument, when permitted, 
may be limited by the judge to any extent that the judge finds necessary 
for the expeditious disposition of the proceeding and shall be reduced 
to writing and made part of the transcript.
    (b) Briefs, proposed findings, and conclusions. The judge shall 
announce at the hearing a reasonable period of time within which 
interested persons may file with the hearing clerk proposed findings and 
conclusions, and written arguments or briefs, based upon the evidence 
received at the hearing, citing, where practicable, the page or pages of 
the transcript of the testimony where such evidence appears. Factual 
material other than that adduced at the hearing or subject to official 
notice shall not be alluded to therein, and, in any case, shall not be 
considered in the formulation of the order. If the person filing a brief 
desires the Secretary to consider any objection made by such person to a 
ruling of the judge, as provided in Sec.  1200.9(d), that person shall 
include in the brief a

[[Page 12]]

concise statement concerning each such objection, referring, where 
practicable, to the pertinent pages of the transcript.



Sec.  1200.11  Certification of the transcript.

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



Sec.  1200.12  Copies of the transcript.

    (a) During the period in which the proceeding has an active status 
in the Department, a copy of the transcript and exhibits shall be kept 
on file in the office of the hearing clerk where it shall be available 
for examination during official hours of business. Thereafter said 
transcript and exhibits shall be made available by the hearing clerk for 
examination during official hours of business after prior request and 
reasonable notice to the hearing clerk.
    (b) Transcripts of hearings shall be made available to any person at 
actual cost of duplication.

[47 FR 44684, Oct. 8, 1982, as amended at 67 FR 10830, Mar. 11, 2002]



Sec.  1200.13  Administrator's recommended decision.

    (a) Preparation. As soon as practicable following the termination of 
the period allowed for the filing of written arguments or briefs and 
proposed findings and conclusions the Administrator shall file with the 
hearing clerk a recommended decision.
    (b) Contents. The Administrator's recommended decision shall 
include: (1) a preliminary statement containing a description of the 
history of the proceedings, a brief explanation of the material issues 
of fact, law, or discretion presented on the record, and proposed 
findings and conclusions about such issues, including the reasons or 
basis for such proposed findings; (2) a ruling upon each proposed 
finding or conclusion submitted by interested persons; and (3) an 
appropriate proposed order effectuating the Administrator's 
recommendations.
    (c) Exceptions to recommended decision. Immediately following the 
filing of the recommended decision, the Administrator shall give notice 
thereof and opportunity to file exceptions thereto by publication in the 
Federal Register. Within a period of time specified in such notice any 
interested person may file with the hearing clerk exceptions to the 
Administrator's proposed order and a brief in support of such 
exceptions. Such exceptions shall be in writing, shall refer, where 
practicable, to the related pages of the transcript, and may suggest 
appropriate changes in the proposed order.
    (d) Omission of recommended decision. The procedure provided in this 
section may be omitted only if the Secretary finds on the basis of the 
record that due and timely execution of the Secretary's functions 
imperatively and unavoidably requires such omission.

[[Page 13]]



Sec.  1200.14  Submission to Secretary.

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



Sec.  1200.15  Decision by the Secretary.

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



Sec.  1200.16  Execution of the order.

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



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

    (a) Number of copies. Except as provided otherwise herein, all 
documents or papers required or authorized by the foregoing provisions 
hereof to be filed with the hearing clerk shall be filed in 
quadruplicate. Any documents or papers so required or authorized to be 
filed with the hearing clerk shall be filed with the judge during the 
course of an oral hearing.
    (b) Extension of time. The time for filing of any document or paper 
required or authorized by the foregoing provisions to be filed may be 
extended by the judge (before the record is so certified by the judge) 
or by the Administrator (after the record is so certified by the judge 
but before it is transmitted to the secretary), or by the Secretary 
(after the record is transmitted to the secretary) upon request filed, 
and if, in the judgment of the judge, Administrator, or the Secretary, 
as the case may be, there is good reason for the extension. All rulings 
made pursuant to this paragraph shall be filed with the hearing clerk.
    (c) Effective date of filing. Any document or paper required or 
authorized in this subpart to be filed shall be deemed to be filed at 
the time it is received by the Hearing Clerk.
    (d) Computation of time. Each day, including Saturdays, Sundays, and 
legal public holidays, shall be included in computing the time allowed 
for filing any document or paper: Provided, That when the time for 
filing a document or paper expires on a Saturday, Sunday, or legal 
public holiday, the time allowed for filing the document or paper shall 
be extended to include the following business day.

[47 FR 44684, Oct. 8, 1982, as amended at 67 FR 10830, Mar. 11, 2002]

[[Page 14]]



Sec.  1200.18  Ex parte communications.

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



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

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



Sec.  1200.20  Hearing before Secretary.

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



   Subpart B--Rules of Practice Governing Proceedings on Petitions to 
   Modify or to be Exempted from Research, Promotion and Information 
                                Programs

    Authority: 7 U.S.C. 2111, 2620, 2713, 4509, 4609, 4814, 4909, 6008, 
6106, 6306, 6410, 6807, 7106, 7418, 7486, and 7806.

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



Sec.  1200.50  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the

[[Page 15]]

plural, and vice versa, as the case may demand.



Sec.  1200.51  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means the Commodity Research, Promotion, and 
Information Act of 1996 [7 U.S.C. 7401-7425]; the Cotton Research and 
Promotion Act, as amended [7 U.S.C. 2101-2119]; the Dairy Production 
Stabilization Act of 1983 [7 U.S.C. 4501-4513]; the Egg Research and 
Consumer Information Act, as amended [7 U.S.C. 2701-2718]; the Fluid 
Milk Promotion Act of 1990 [7 U.S.C. 6401-6417]; the Hass Avocado 
Promotion, Research, and Information Act of 2000 [7 U.S.C. 7801-7813]; 
the Honey Research, Promotion, and Consumer Information Act, as amended 
[7 U.S.C. 4601-4612]; the Mushroom Promotion, Research, and Consumer 
Information Act of 1990 [7 U.S.C. 6101-6112]; the Pecan Promotion and 
Research Act of 1990 [7 U.S.C. 6001-6013]; the Popcorn Promotion, 
Research, and Consumer Information Act [7 U.S.C. 7481-7491]; the Pork 
Promotion, Research, and Consumer Information Act [7 U.S.C. 4801-4819]; 
the Potato Research and Promotion Act, as amended [7 U.S.C. 2611-2627]; 
the Sheep Promotion, Research, and Information Act of 1994 [7 U.S.C. 
7101-7111]; the Soybean Promotion, Research, and Consumer Information 
Act [7 U.S.C. 6301-6311]; and the Watermelon Research and Promotion Act, 
as amended, [7 U.S.C. 4901-4916].
    (b) Administrator means the Administrator of the Agricultural 
Marketing Service or any officer or employee of the Department to whom 
authority has been delegated or may hereafter be delegated to act for 
the Administrator.
    (c) Decision means the judge's initial decision and includes the 
judge's:
    (1) Findings of fact and conclusions with respect to all material 
issues of fact, law or discretion, as well as the reasons or basis 
thereof;
    (2) Order; and
    (3) Rulings on findings, conclusions and orders submitted by the 
parties.
    (d) Department means the U.S. Department of Agriculture.
    (e) Hearing means that part of the proceedings which involves the 
submission of evidence.
    (f) Hearing clerk means the Hearing Clerk, U.S. Department of 
Agriculture, Washington, D.C.
    (g) Judge means any administrative law judge, appointed pursuant to 
5 U.S.C. 3105, and assigned to the proceeding involved.
    (h) Order means any order or any amendment thereto which may be 
issued pursuant to the Act. The term order shall include plans issued 
under the Acts listed in paragraph (a) of this section.
    (i) Party includes the Department.
    (j) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity subject 
to an order or to whom an order is sought to be made applicable, or on 
whom an obligation has been imposed or is sought to be imposed under an 
order.
    (k) Petition includes an amended petition.
    (l) Proceeding means a proceeding before the Secretary arising under 
the pertinent section of an Act.
    (m) 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 for the Secretary.

[67 FR 44350, July 2, 2002]



Sec.  1200.52  Institution of proceeding.

    (a) Filing and service of petitions. Any person subject to an order 
desiring to complain that such order or any provision of such order or 
any obligation imposed in connection with an order is not in accordance 
with law, shall file with the hearing clerk, in quintuplicate, a 
petition in writing addressed to the Secretary. Promptly upon receipt of 
the petition in writing the hearing clerk shall transmit a true copy 
thereof to the Administrator and the General Counsel, respectively.
    (b) Contents of petitions. A petition shall contain:
    (1) The correct name, address, and principal place of business of 
the petitioner. If the petitioner is a corporation, such fact shall be 
stated, together

[[Page 16]]

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

[47 FR 44684, Oct. 8, 1982, as amended at 67 FR 10830, Mar. 11, 2002]



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




            Subpart--Procedures for Conduct of Sign-up Period

                               Definitions

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

                               Procedures

1205.24 General.
1205.25 Supervision of sign-up period.
1205.26 Eligibility.
1205.27 Participation in the sign-up period.
1205.28 Counting.

[[Page 17]]

1205.29 Reporting results.
1205.30 Instructions and forms.

              Subpart--Cotton Research and Promotion Order

                               Definitions

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

                              Cotton Board

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

                         Research and Promotion

1205.333 Research and promotion.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

              Certification of Cotton Producer Organization

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

                              Miscellaneous

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

                    Subpart--Members of Cotton Board

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

               Subpart--Cotton Board Rules and Regulations

                               Definitions

1205.500 Terms defined.

                                 General

1205.505 Communication.

                               Assessments

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

                             Reimbursements

1205.520 Procedure for obtaining reimbursement.

                           Warehouse Receipts

1205.525 Entry of gin code number.

                           Reports and Records

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

                        Confidential Information

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

Subpart--Fiscal Period [Reserved]

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

[[Page 18]]



            Subpart--Procedures for Conduct of Sign-up Period

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

                               Definitions



Sec.  1205.10  Act.

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



Sec.  1205.11  Administrator.

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



Sec.  1205.12  Cotton.

    The term cotton means all Upland cotton harvested in the United 
States and all imports of Upland cotton, including the Upland cotton 
content of products derived thereof. The term cotton does not include 
imported cotton for which the assessment is less than the value of $2.00 
per line item entry as established by regulations.

[62 FR 1660, Jan. 13, 1997, as amended at 67 FR 21169, Apr. 30, 2002]



Sec.  1205.13  Upland cotton.

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



Sec.  1205.14  Department.

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



Sec.  1205.15  Farm Service Agency.

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



Sec.  1205.16  Order.

    The term Order means the Cotton Research and Promotion Order.



Sec.  1205.17  Person.

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



Sec.  1205.18  Producer.

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

[67 FR 21169, Apr. 30, 2002]



Sec.  1205.19  Importer.

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



Sec.  1205.20  Representative period.

    The term representative period means the 2001 calendar year.

[67 FR 21169, Apr. 30, 2002]



Sec.  1205.21  Secretary.

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



Sec.  1205.22  State.

    The term State means each of the 50 states.



Sec.  1205.23  United States.

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

                               Procedures



Sec.  1205.24  General.

    A sign-up period will be conducted to determine whether eligible 
producers and importers favor the conduct of a referendum on the 
continuance of the 1991 amendments to the Order.
    (a) If the Secretary determines, based on the results of the sign-up 
period, that at least 10 percent (4,622) or more of the number of cotton 
producers and importers who voted in the 1991 referendum request the 
conduct of a continuance referendum on the 1991 Order amendments, a 
referendum will be held

[[Page 19]]

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



Sec.  1205.25  Supervision of sign-up period.

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



Sec.  1205.26  Eligibility.

    Only persons who meet the eligibility requirements in this subpart 
may participate in the sign-up period. No person is entitled to sign up 
more than once.
    (a) Except as set forth in paragraphs (b) and (c) of this section, 
the following persons are eligible to request the conduct of a 
continuance referendum:
    (1) Any person who was engaged in the production of Upland cotton 
during calendar year 2001; and
    (2) Any person who was an importer of Upland cotton and imported 
Upland cotton in excess of the value of $2.00 per line item entry during 
calendar year 2001.
    (b) A general partnership is not eligible to request a continuance 
referendum, however, the individual partners of an eligible general 
partnership are each entitled to submit a request.
    (c) Where a group of individuals is engaged in the production of 
Upland cotton under the same lease or cropping agreement, only the 
individual or individuals who signed or entered into the lease or 
cropping agreement are eligible to participate in the sign-up period. 
Individuals who are engaged in the production of Upland cotton as joint 
tenants, tenants in common, or owners of community property, are each 
entitled to submit a request if they share in the proceeds of the 
required crop as owners, cash tenants, share tenants, sharecroppers or 
landlords of a fixed rent, standing rent or share tenant.
    (d) An officer or authorized representative of a qualified 
corporation, association, or limited partnership may submit a request on 
behalf of that corporation, association, or limited partnership.
    (e) A guardian, administrator, executor, or trustee of any qualified 
estate or trust may submit a request on behalf of that estate or trust.
    (f) An individual may not submit a request on behalf of another 
individual.
    (g) Participation in the sign-up by proxy or power of attorney is 
not authorized.

[62 FR 1660, Jan. 13, 1997, as amended at 67 FR 21169, Apr. 30, 2002]



Sec.  1205.27  Participation in the sign-up period.

    The sign-up period will be from June 3, 2002, through August 30, 
2002. Those persons who favor the conduct of a continuance referendum 
and who wish to request that USDA conduct such a referendum may do so by 
submitting such request in accordance with this section. All requests 
must be received by the appropriate USDA office by August 30, 2002.
    (a) Before the sign-up period begins, FSA shall establish a list of 
known, eligible, Upland cotton producers in the county that it serves 
during the representative period, and shall also establish a list of 
known, eligible Upland cotton importers.
    (b) Before the start of the sign-up period, USDA shall mail a 
request form to each known, eligible, cotton importer. Importers who 
wish to request a referendum and who do not receive a request form in 
the mail by June 3, 2002, may participate in the sign-up period by 
submitting a signed, written request for a continuance referendum, along 
with a copy of a U.S. Customs form 7501 showing payment of a cotton 
assessment for calendar year 2001. Importers must submit their requests 
and supporting documents to USDA, FSA, ORAS, Attention: Phil Brockman, 
PO Box 23278, Washington, DC 20026-3278. All requests and supporting 
documents must be received by the appropriate FSA office by August 30, 
2002.
    (c) Each person on the county FSA office lists may participate in 
the sign-up period. Eligible producers must date

[[Page 20]]

and sign their name on the ``County FSA Office Sign-up Sheet.'' A person 
whose name does not appear on the county FSA office list may participate 
in the sign-up period. Such person must be identified on FSA-578 during 
the representative period or provide documentation that demonstrates 
that the person was a cotton producer during the representative period. 
Cotton producers not listed on the FSA-578 shall submit at least one 
sales receipt for cotton they planted during the representative period. 
Cotton producers must make requests to the county FSA office where the 
producer's farm is located. If the producer's land is in more than one 
county, the producer shall make request at the county office where FSA 
administratively maintains and processes the producer's farm records. It 
is the responsibility of the person to provide the information needed by 
the county FSA office to determine eligibility. It is not the 
responsibility of the county FSA office to obtain this information. If 
any person whose name does not appear on the county FSA office list 
fails to provide at least one sales receipt for the cotton they produced 
during the representative period, the county FSA office shall determine 
that such person is ineligible to participate in the sign-up period, and 
shall note ineligible in the remarks section next to the person's name 
on the county FSA office sign-up sheet. In lieu of personally appearing 
at a county FSA office, eligible producers may request a sign-up form 
from the county FSA office where the producer's farm is located. If the 
producer's land is in more than one county, the producer shall make the 
request for the sign-up form at the county office where FSA 
administratively maintains and processes the producer's farm records. 
Such request must be accompanied by a copy of at least one sales receipt 
for cotton they produced during the representative period. The 
appropriate FSA office must receive all completed forms and supporting 
documentation by August 30, 2002.

[67 FR 21169, Apr. 30, 2002]



Sec.  1205.28  Counting.

    County FSA offices and FSA, Director for Operations Review and 
Analysis Staff (ORAS), shall begin counting requests no later than 
September 3, 2002. FSA shall determine the number of eligible persons 
who favor the conduct of a continuance referendum.

[62 FR 1660, Jan. 13, 1997, as amended at 67 FR 21170, Apr. 30, 2002]



Sec.  1205.29  Reporting results.

    (a) Each county FSA office shall prepare and transmit to the state 
FSA office, by September 10, 2002, a written report of the number of 
eligible producers who requested the conduct of a referendum, and the 
number of ineligible persons who made requests.
    (b) ORAS shall prepare, by September 10, 2002, a written report of 
the number of eligible importers who requested the conduct of a 
referendum, and the number of ineligible persons who made requests.
    (c) Each state FSA office shall, by September 17, 2002, forward all 
county reports to ORAS. By September 24, 2002, ORAS shall forward its 
report of the total number of eligible producers and importers that 
requested a continuance referendum, through the sign-up period, to the 
Deputy Administrator, Cotton Program, AMS, Stop 0224, 1400 Independence 
Ave., SW, Washington, DC 20250-0224.
    (d) The Chief of the Research and Promotion Staff, Cotton Program, 
shall prepare a report of the requests received, including the number of 
eligible persons who requested the conduct of a referendum, and the 
number of ineligible persons who made requests, to the Deputy 
Administrator of the Cotton Program, and shall maintain one copy of the 
report where it will be available for public inspection for a period of 
5 years following the end of the sign-up period.
    (e) The Deputy Administrator of the Cotton Program shall prepare and 
submit to the Secretary a report of the results of the sign-up period. 
The Secretary will conduct a referendum if requested by 10 percent or 
more of the number of cotton producers and importers voting in the most 
recent (July 1991) referendum, but not more than 20 percent of the total 
requests counted toward the 10 percent figure may be from producers in 
any one state or

[[Page 21]]

from importers of cotton. The Secretary shall announce the results of 
the sign-up period in a separate notice in the Federal Register.

[67 FR 21170, Apr. 30, 2002]



Sec.  1205.30  Instructions and forms.

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



              Subpart--Cotton Research and Promotion Order

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

                               Definitions



Sec.  1205.301  Secretary.

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



Sec.  1205.302  Act.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.303  Person.

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



Sec.  1205.304  Cotton.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.305  Upland cotton.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.306  Bale.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.307  Fiscal period.

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

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



Sec.  1205.308  Cotton Board.

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

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



Sec.  1205.309  Producer.

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

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



Sec.  1205.310  Importer.

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

[56 FR 64472, Dec. 10, 1991]

[[Page 22]]



Sec.  1205.311  Handler.

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

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



Sec.  1205.312  Handle.

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

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



Sec.  1205.313  United States.

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

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



Sec.  1205.314  Cotton-producing State

    Cotton-producing State means each of the following States and 
combinations of States:

Alabama-Florida; Arizona; Arkansas; California-Nevada; Georgia; 
Louisiana; Mississippi; Missouri-Illinois; New Mexico; North Carolina-
Virginia; Oklahoma; South Carolina; Tennessee-Kentucky; Texas.

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



Sec.  1205.315  Marketing.

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

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



Sec.  1205.316  Cotton-Producer organization.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.317  Cotton-Importer organization.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.318  Contracting organization or association.

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

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



Sec.  1205.319  Cotton-producing region.

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

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



Sec.  1205.320  Marketing year.

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

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



Sec.  1205.321  Part and subpart.

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

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

                              Cotton Board



Sec.  1205.322  Establishment and membership.

    (a) There is hereby established a Cotton Board composed of:
    (1) Representatives of cotton producers, each of whom shall have an 
alternate, selected by the Secretary from nominations submitted by 
eligible producer organizations within a cotton-producing state, as 
certified pursuant to Sec.  1205.341, or, if the Secretary determines 
that a substantial number of producers are not members of or their

[[Page 23]]

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.323  Term of office.

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

[56 FR 64472, Dec. 10, 1991]



Sec.  1205.324  Nominations.

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

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



Sec.  1205.325  Selection.

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

[56 FR 64473, Dec. 10, 1991]



Sec.  1205.326  Acceptance.

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

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



Sec.  1205.327  Vacancies.

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

[56 FR 64473, Dec. 10, 1991]

[[Page 24]]



Sec.  1205.328  Alternate members.

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

[56 FR 64473, Dec. 10, 1991]



Sec.  1205.329  Procedure.

    A majority of the members of the Board, or alternates acting for 
members, shall constitute a quorum and any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. At assembled meetings all votes shall be cast in person. For 
routine and noncontroversial matters which do not require deliberation 
and the exchange of views, and in matters of an emergency nature when 
there is not enough time to call an assembled meeting of the Board, the 
Board may also take action upon the concurring votes of a majority of 
its members by mail, telegraph or telephone, but any such action by 
telephone shall be confirmed promptly in writing.

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



Sec.  1205.330  Compensation and reimbursement.

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

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



Sec.  1205.331  Powers.

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

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



Sec.  1205.332  Duties.

    The Board shall have the following duties:
    (a) To select from among its members a chairman and such other 
officers as may be necessary for the conduct of its business, and to 
define their duties;
    (b) To appoint or employ such persons as it may deem necessary and 
to determine the compensation and to define the duties of each;
    (c) With the approval of the Secretary, to enter into contracts or 
agreements for the development and submission to it of research and 
promotion plans or projects authorized by Sec.  1205.333, and for the 
carrying out of such plans or projects when approved by the Secretary, 
and for the payment of costs thereof with funds collected pursuant to 
Sec.  1205.335, with an organization or association whose governing body 
consists of cotton producers selected by the cotton-producer 
organizations certified by the Secretary under

[[Page 25]]

Sec.  1205.341, in such manner that the producers of each cotton-
producing state will, to the extent practicable, have representation on 
the governing body of such organization in the proportion that the 
cotton marketed by the producers of such state bears to the total 
marketed by the producers of all cotton-producing states. Any such 
contract or agreement shall provide that such contracting organization 
or association shall develop and submit annually to the Cotton Board, 
for the purpose of review and making recommendations to the Secretary, a 
program of research, advertising, and sales promotion projects, together 
with a budget, or budgets, which shall show the estimated cost to be 
incurred for such projects, and that any such projects shall become 
effective upon approval by the Secretary. Any such contract or agreement 
shall also provide that the contracting organization shall keep accurate 
records of all its transactions, which shall be available to the 
Secretary and Board on demand, and make an annual report to the Cotton 
Board of activities carried out and an accounting for funds received and 
expended, and such other reports as the Secretary may require;
    (d) To review and submit to the Secretary any research and promotion 
plans or projects which have been developed and submitted to it by the 
contracting organization or association, together with its 
recommendations with respect to the approval thereof by the Secretary;
    (e) To submit to the Secretary for his approval budgets on a fiscal 
period basis of its anticipated expenses and disbursements in the 
administration of this subpart, including probable costs of advertising 
and promotion and research and development projects as estimated in the 
budget or budgets submitted to it by the contracting organization or 
association, with the Board's recommendations with respect thereto;
    (f) To maintain such books and rec ords and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g) To cause its books to be audited by a competent public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and to submit a copy of each such audit to 
the Secretary;
    (h) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that his representative may attend such 
meetings;
    (i) To act as intermediary between the Secretary and any producer, 
importer, or handler.
    (j) To submit to the Secretary such information as he may request.

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

                         Research and Promotion



Sec.  1205.333  Research and promotion.

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

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

                        Expenses and Assessments



Sec.  1205.334  Expenses.

    (a) The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart.
    (b) The Board shall reimburse the Secretary for:

[[Page 26]]

    (1) Expenses up to $300,000 incurred by the Secretary in connection 
with any referendum conducted under the Act and
    (2) Expenses incurred by the Department of Agriculture for 
administrative and supervisory costs up to five employee years annually.
    (c) The Board shall reimburse any agency of the United States 
Government that assists in administering the import provisions of the 
order for a reasonable amount of the expenses incurred by that agency in 
connection therewith.
    (d) The funds to cover such expenses incurred under paragraphs (a), 
(b) and (c) of this section shall be paid from assessments received 
pursuant to Sec.  1205.335.

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



Sec.  1205.335  Assessments.

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

[56 FR 64473, Dec. 10, 1991]



Sec.  1205.336  ``Importer Reimbursements''.

    Any cotton importer against whose imports any assessment is made and 
collected under the authority of the Act who has reason to believe that 
such assessment or any portion of such assessment was made on U.S. 
produced

[[Page 27]]

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

[56 FR 64474, Dec. 10, 1991]



Sec.  1205.337  Influencing governmental action.

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

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

                       Reports, Books, and Records



Sec.  1205.338  Reports.

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

[56 FR 64474, Dec. 10, 1991]



Sec.  1205.339  Books and records.

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

[56 FR 64474, Dec. 10, 1991]



Sec.  1205.340  Confidential treatment.

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

[56 FR 64474, Dec. 10, 1991]

              Certification of Cotton Producer Organization



Sec.  1205.341  Certification of cotton producer organization.

    Any cotton producer organization within a cotton-producing State may 
request the Secretary for certification of eligibility to participate in 
nominating members and alternate members to represent such State on the 
Cotton Board. Such eligibility shall be

[[Page 28]]

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

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

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



Sec.  1205.342  Certification of cotton importer organizations.

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

[56 FR 64475, Dec. 10, 1991]

                              Miscellaneous



Sec.  1205.343  Suspension and termination.

    (a) The Secretary will, whenever the Secretary finds that this 
subpart or any provision thereof obstructs or does not tend to 
effectuate the declared policy of the Act, terminate or suspend the 
operation of this subpart or such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of 
cotton producers and importers (if subject to the Order) voting in the 
most recent referendum, to determine whether cotton

[[Page 29]]

producers and importers subject to the Order favor the suspension or 
termination of this subpart, except that in counting such request for a 
referendum, not more than 20 percent of such request may be from 
producers from any one state or importers of cotton (if subject to the 
Order). The Secretary shall suspend or terminate such subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of 
producers and importers subject to the Order voting in such referendum 
who, during a representative period determined by the Secretary, have 
been engaged in the production or importation of cotton, and who 
produced and imported more than 50 percent of the volume of cotton 
produced and imported by those voting in the referendum.

[56 FR 64474, Dec. 10, 1991]



Sec.  1205.345  Proceedings after termination.

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

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



Sec.  1205.346  Effect of termination or amendment.

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

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



Sec.  1205.347  Personal liability.

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

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



Sec.  1205.348  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances

[[Page 30]]

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

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



                    Subpart--Members of Cotton Board



Sec.  1205.401  Definitions.

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

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



Sec.  1205.402  Determination of Cotton Board membership.

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

[56 FR 65980, Dec. 20, 1991]



Sec.  1205.403  Nomination procedure.

    (a) The Director shall notify all certified producer organizations 
within each cotton-producing state and all certified importer 
organizations of the location, date, and time of the caucus for 
nominating producer and importer representatives for the Cotton Board as 
specified in Sec.  1205.324. The Director will designate a 
representative from the Cotton Division to attend the caucus meeting of 
cotton producer organizations in each state, and of cotton importer 
organizations. Each eligible cotton producer organization within each 
cotton-producing state and each importer organization will be entitled 
to only one representative at the caucus for the purpose of nominating 
two qualified persons for each member and for each alternate member to 
be selected. The representative of a cotton producer organization shall 
be a cotton

[[Page 31]]

producer and resident of such state, an officer or member of the Board 
of Directors of such organization, and duly and unqualifiedly authorized 
in writing by such organization to make nominations on its behalf. The 
representative of an importer organization shall be an importer of 
cotton and/or products containing cotton, an officer or member of the 
Board of Directors of such organization, and duly and unqualifiedly 
authorized in writing by such organization to make nominations on its 
behalf. The representative of the Director designated to attend the 
caucus meeting of cotton producer organizations in each state and of 
cotton importer organizations will ascertain the qualifications and 
eligibility of each representative of a cotton producer organization or 
cotton importer organization to participate in said meeting and to make 
nominations.
    (b) Each caucus will be conducted as follows:
    (1) The representative from the Cotton Division will act as 
temporary chairperson and will explain the procedure for nominations and 
the duties of the Cotton Board;
    (2) The representatives in attendance from the certified 
organizations will then select a chairperson and secretary;
    (3) At each caucus there will be presented for nomination and there 
will be nominated not less than the number of nominees required under 
the provisions of Sec. Sec.  1205.322, 1205.324, and 1205.402.

[56 FR 65981, Dec. 20, 1991]



               Subpart--Cotton Board Rules and Regulations

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

                               Definitions



Sec.  1205.500  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, the following terms shall mean:
    (a) ASCS means the Agricultural Stabilization and Conservation 
Service of the U.S. Department of Agriculture.
    (b) Cotton Board means the administrative body established pursuant 
to the Cotton Research and Promotion Order.
    (c) CCC means the Commodity Credit Corporation.
    (d) Current value of Cotton means the gross price per pound of lint 
cotton received by the producer for cotton as shown on the producers' 
settlement document before deductions are made for weight penalties, 
buyer's commission or brokerage fees, marketing fees, the $1 per bale 
cotton research and promotion assessment, picking charges, ginning 
charges, warehouse receiving charges, warehouse storage charges, 
transportation charges or any other charges, plus any amount received by 
a producer in the form of a loan deficiency payment with respect to such 
cotton.
    (e) Form A means Cotton Producer's Note, Form CCC Cotton A.
    (f) Gin code number means the identification number assigned to each 
cotton gin by the Cotton Division, Agricultural Marketing Service, U.S. 
Department of Agriculture.
    (g) Handle means to harvest, gin, warehouse, compress, purchase, 
market, transport, or otherwise acquire ownership or control of cotton.
    (h) Handler means any person who handles cotton, including CCC.
    (i) Marketing means any sale of cotton, or the pledging of cotton to 
CCC as collateral for a price support loan.
    (j) Marketing year means a consecutive 12-month period ending on 
July 31.
    (k) Person means any individual, partnership, corporation, 
association, or any other entity, whether governmental or private.
    (l) Producer means any person who owns or shares in a cotton crop 
(or in the proceeds thereof) as landowner, landlord, tenant, or 
sharecropper.
    (m) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the U.S. Department of Agriculture 
to whom authority has heretofore been delegated, or to whom authority 
may hereafter be delegated, to act in the Secretary's stead.
    (n) Loan deficiency payment means any payment on Upland cotton made 
by the Commodity Credit Corporation to a producer in accordance with 7 
CFR 713.55.

[[Page 32]]

    (o) Importer means any person who enters, or withdraws from 
warehouse, cotton for consumption in the customs territory of the United 
States and import means any such entry.
    (p) Customs Service means the United States Customs Service of the 
United States Department of Treasury.
    (q) Cotton means:
    (1) All Upland cotton harvested in the United States, and, except as 
used in section 7(e) of the Act, includes cottonseed of such cotton and 
the products derived from such cotton and its seed, and
    (2) Imports of Upland cotton, including the Upland cotton content of 
the products derived thereof. The term cotton shall not, however, 
include:
    (i) Any entry of imported cotton by an importer which has a value or 
weight less than a de minimis amount established in regulations issued 
by the Secretary and
    (ii) Industrial products as that term is defined by regulation.
    (r) Industrial products means cotton-containing products which are 
classified in the Harmonized Tariff Schedule of the United States under 
classifications other than textile classifications. Certain cotton-
containing textile products under textile classifications shall also be 
considered to be industrial products, and are therefore not included in 
the table appearing in these regulations as products subject to 
assessment. Such products include, but are not limited to textile 
fabrics coated, impregnated, covered, or laminated, with other 
materials, textile piping and tubing, and belting materials.

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

                                 General



Sec.  1205.505  Communication.

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

[57 FR 29186, July 1, 1992]

                               Assessments



Sec.  1205.510  Levy of assessments.

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

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

    (2) Each marketing year the collecting handler must select one of 
the two options for collecting the supplemental assessment as provided 
in paragraph (a)(1) of this section. The handler shall notify the Cotton 
Board as to the method selected at the time the handler files the first 
handler report each marketing year.

[[Page 33]]

    (b) Importer assessment. An assessment for cotton research and 
promotion of $1 per bale is hereby levied on each bale of cotton, or the 
bale equivalent thereof for cotton in cotton-containing products 
identified in the HTS conversion factor table in paragraph (b)(3) of 
this section and imported into the United States on or after July 31, 
1992. The $1 per bale assessment shall be converted to a fixed amount 
per kilogram to facilitate the U.S. Customs Service in collecting this 
assessment.
    (1) A supplemental assessment for cotton research and promotion in 
addition to the $1 per bale assessment provided for in paragraph (b) of 
this section is hereby levied on each bale of cotton or bale equivalent 
of cotton in cotton-containing products, identified in this subpart, 
imported into the United States on or after July 31, 1992. The 
supplemental assessment shall be levied at the rate of five-tenths of 
one percent of the historical value of cotton as determined by the 
Secretary and expressed in paragraph (b)(2) of this section. The rate of 
the supplemental assessment on imported cotton will be the same as that 
levied on cotton produced within the United States. The supplemental 
assessment will be calculated as a fixed amount per kilogram and added 
to the $1 per bale or bale equivalent assessment to facilitate the 
Customs Service in collecting assessments.
    (2) The 12-month average of monthly weighted average prices received 
by U.S. farmers will be calculated annually. Such weighted average will 
be used as the value of imported cotton for the purpose of levying the 
supplemental assessment on imported cotton and will be expressed in 
kilograms. The value of imported cotton for the purpose of levying this 
supplemental assessment is $0.8267 per kilogram.
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion factor 
for determining the raw fiber content for each kilogram of the HTS. HTS 
numbers for raw cotton have no conversion factor in the table. The right 
column indicates the total assessment per kilogram of the article 
assessed.
    (i) Any line item entry of cotton appearing on Customs entry 
documentation in which the value of the cotton contained therein results 
in the calculation of an assessment of two dollars ($2.00) or less will 
not be subject to assessments as described in this section.
    (ii) In the event that any HTS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the physical properties, description, or cotton content 
of the product involved, assessments will continue to be collected based 
on the new number.

                         Import Assessment Table
                           [Raw Cotton Fiber]
------------------------------------------------------------------------
        HTS No.                Conv. fact.               Cents/kg.
------------------------------------------------------------------------
        5201000500                        0                  0.8267
        5201001200                        0                  0.8267
        5201001400                        0                  0.8267
        5201001800                        0                  0.8267
        5201002200                        0                  0.8267
        5201002400                        0                  0.8267
        5201002800                        0                  0.8267
        5201003400                        0                  0.8267
        5201003800                        0                  0.8267
        5204110000                   1.1111                  0.9185
        5204200000                   1.1111                  0.9185
        5205111000                   1.1111                  0.9185
        5205112000                   1.1111                  0.9185
        5205121000                   1.1111                  0.9185
        5205122000                   1.1111                  0.9185
        5205131000                   1.1111                  0.9185
        5205132000                   1.1111                  0.9185
        5205141000                   1.1111                  0.9185
        5205210020                   1.1111                  0.9185
        5205210090                   1.1111                  0.9185
        5205220020                   1.1111                  0.9185
        5205220090                   1.1111                  0.9185
        5205230020                   1.1111                  0.9185
        5205230090                   1.1111                  0.9185
        5205240020                   1.1111                  0.9185
        5205240090                   1.1111                  0.9185
        5205310000                   1.1111                  0.9185
        5205320000                   1.1111                  0.9185
        5205330000                   1.1111                  0.9185
        5205340000                   1.1111                  0.9185
        5205410020                   1.1111                  0.9185
        5205410090                   1.1111                  0.9185
        5205420020                   1.1111                  0.9185
        5205420090                   1.1111                  0.9185
        5205440020                   1.1111                  0.9185
        5205440090                   1.1111                  0.9185
        5206120000                   0.5556                  0.4593
        5206130000                   0.5556                  0.4593
        5206140000                   0.5556                  0.4593
        5206220000                   0.5556                  0.4593

[[Page 34]]

 
        5206230000                   0.5556                  0.4593
        5206240000                   0.5556                  0.4593
        5206310000                   0.5556                  0.4593
        5207100000                   1.1111                  0.9185
        5207900000                   0.5556                  0.4593
        5208112020                   1.1455                  0.9470
        5208112040                   1.1455                  0.9470
        5208112090                   1.1455                  0.9470
        5208114020                   1.1455                  0.9470
        5208114060                   1.1455                  0.9470
        5208114090                   1.1455                  0.9470
        5208118090                   1.1455                  0.9470
        5208124020                   1.1455                  0.9470
        5208124040                   1.1455                  0.9470
        5208124090                   1.1455                  0.9470
        5208126020                   1.1455                  0.9470
        5208126040                   1.1455                  0.9470
        5208126060                   1.1455                  0.9470
        5208126090                   1.1455                  0.9470
        5208128020                   1.1455                  0.9470
        5208128090                   1.1455                  0.9470
        5208130000                   1.1455                  0.9470
        5208192020                   1.1455                  0.9470
        5208192090                   1.1455                  0.9470
        5208194020                   1.1455                  0.9470
        5208194090                   1.1455                  0.9470
        5208196020                   1.1455                  0.9470
        5208196090                   1.1455                  0.9470
        5208224040                   1.1455                  0.9470
        5208224090                   1.1455                  0.9470
        5208226020                   1.1455                  0.9470
        5208226060                   1.1455                  0.9470
        5208228020                   1.1455                  0.9470
        5208230000                   1.1455                  0.9470
        5208292020                   1.1455                  0.9470
        5208292090                   1.1455                  0.9470
        5208294090                   1.1455                  0.9470
        5208296090                   1.1455                  0.9470
        5208298020                   1.1455                  0.9470
        5208312000                   1.1455                  0.9470
        5208321000                   1.1455                  0.9470
        5208323020                   1.1455                  0.9470
        5208323040                   1.1455                  0.9470
        5208323090                   1.1455                  0.9470
        5208324020                   1.1455                  0.9470
        5208324040                   1.1455                  0.9470
        5208325020                   1.1455                  0.9470
        5208330000                   1.1455                  0.9470
        5208392020                   1.1455                  0.9470
        5208392090                   1.1455                  0.9470
        5208394090                   1.1455                  0.9470
        5208396090                   1.1455                  0.9470
        5208398020                   1.1455                  0.9470
        5208412000                   1.1455                  0.9470
        5208416000                   1.1455                  0.9470
        5208418000                   1.1455                  0.9470
        5208421000                   1.1455                  0.9470
        5208423000                   1.1455                  0.9470
        5208424000                   1.1455                  0.9470
        5208425000                   1.1455                  0.9470
        5208430000                   1.1455                  0.9470
        5208492000                   1.1455                  0.9470
        5208494020                   1.1455                  0.9470
        5208494090                   1.1455                  0.9470
        5208496010                   1.1455                  0.9470
        5208496090                   1.1455                  0.9470
        5208498090                   1.1455                  0.9470
        5208512000                   1.1455                  0.9470
        5208516060                   1.1455                  0.9470
        5208518090                   1.1455                  0.9470
        5208523020                   1.1455                  0.9470
        5208523045                   1.1455                  0.9470
        5208523090                   1.1455                  0.9470
        5208524020                   1.1455                  0.9470
        5208524045                   1.1455                  0.9470
        5208524065                   1.1455                  0.9470
        5208525020                   1.1455                  0.9470
        5208530000                   1.1455                  0.9470
        5208592025                   1.1455                  0.9470
        5208592095                   1.1455                  0.9470
        5208594090                   1.1455                  0.9470
        5208596090                   1.1455                  0.9470
        5209110020                   1.1455                  0.9470
        5209110035                   1.1455                  0.9470
        5209110090                   1.1455                  0.9470
        5209120020                   1.1455                  0.9470
        5209120040                   1.1455                  0.9470
        5209190020                   1.1455                  0.9470
        5209190040                   1.1455                  0.9470
        5209190060                   1.1455                  0.9470
        5209190090                   1.1455                  0.9470
        5209210090                   1.1455                  0.9470
        5209220020                   1.1455                  0.9470
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[[Page 35]]

 
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[[Page 36]]

 
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[[Page 37]]

 
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[[Page 38]]

 
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        6211320007                   0.8461                  0.6995
        6211320010                   1.0413                  0.8608
        6211320015                   1.0413                  0.8608
        6211320030                   0.9763                  0.8071
        6211320060                   0.9763                  0.8071
        6211320070                   0.9763                  0.8071
        6211330010                   0.3254                  0.2690
        6211330030                   0.3905                  0.3228
        6211330035                   0.3905                  0.3228
        6211330040                   0.3905                  0.3228
        6211420010                   1.0413                  0.8608
        6211420020                   1.0413                  0.8608
        6211420025                   1.1715                  0.9685
        6211420060                   1.0413                  0.8608
        6211420070                   1.1715                  0.9685
        6211430010                   0.2603                  0.2152
        6211430030                   0.2603                  0.2152
        6211430040                   0.2603                  0.2152
        6211430050                   0.2603                  0.2152
        6211430060                   0.2603                  0.2152
        6211430066                   0.2603                  0.2152
        6212105020                   0.2412                  0.1994
        6212109010                   0.9646                  0.7974
        6212109020                   0.2412                  0.1994
        6212200020                   0.3014                  0.2492
        6212900030                   0.1929                  0.1595
        6213201000                   1.1809                  0.9763
        6213202000                   1.0628                  0.8786
        6213901000                   0.4724                  0.3905
        6214900010                   0.9043                  0.7476
        6216000800                   0.2351                  0.1944
        6216001720                   0.6752                  0.5582
        6216003800                   1.2058                  0.9968
        6216004100                   1.2058                  0.9968
        6217109510                   1.0182                  0.8417
        6217109530                   0.2546                  0.2105
        6301300010                   0.8766                  0.7247
        6301300020                   0.8766                  0.7247
        6302100005                   1.1689                  0.9663
        6302100008                   1.1689                  0.9663
        6302100015                   1.1689                  0.9663
        6302215010                   0.8182                  0.6764
        6302215020                   0.8182                  0.6764
        6302217010                   1.1689                  0.9663
        6302217020                   1.1689                  0.9663
        6302217050                   1.1689                  0.9663
        6302219010                   0.8182                  0.6764
        6302219020                   0.8182                  0.6764
        6302219050                   0.8182                  0.6764
        6302222010                   0.4091                  0.3382
        6302222020                   0.4091                  0.3382
        6302313010                   0.8182                  0.6764
        6302313050                   1.1689                  0.9663
        6302315050                   0.8182                  0.6764
        6302317010                   1.1689                  0.9663
        6302317020                   1.1689                  0.9663
        6302317040                   1.1689                  0.9663
        6302317050                   1.1689                  0.9663
        6302319010                   0.8182                  0.6764
        6302319040                   0.8182                  0.6764
        6302319050                   0.8182                  0.6764
        6302322020                   0.4091                  0.3382
        6302322040                   0.4091                  0.3382
        6302402010                   0.9935                  0.8213
        6302511000                   0.5844                  0.4831
        6302512000                   0.8766                  0.7247
        6302513000                   0.5844                  0.4831
        6302514000                   0.8182                  0.6764
        6302600010                   1.1689                  0.9663
        6302600020                    1.052                  0.8697
        6302600030                    1.052                  0.8697
        6302910005                    1.052                  0.8697
        6302910015                   1.1689                  0.9663
        6302910025                    1.052                  0.8697
        6302910035                    1.052                  0.8697
        6302910045                    1.052                  0.8697
        6302910050                    1.052                  0.8697
        6302910060                    1.052                  0.8697
        6303110000                   0.9448                  0.7811
        6303910010                   0.6429                  0.5315
        6303910020                   0.6429                  0.5315
        6304111000                   1.0629                  0.8787
        6304190500                    1.052                  0.8697
        6304191000                   1.1689                  0.9663
        6304191500                   0.4091                  0.3382
        6304192000                   0.4091                  0.3382
        6304910020                   0.9351                  0.7730
        6304920000                   0.9351                  0.7730
        6505901540                    0.181                  0.1496
        6505902060                   0.9935                  0.8213
        6505902545                   0.5844                  0.4831
------------------------------------------------------------------------

    (4) Any entry of cotton that qualifies for informal entry according 
to regulations issued by the Customs Service will not be subject to the 
assessment.
    (5) Imported textile and apparel articles assembled of components 
formed from cotton produced in the Unites States and identified by HTS 
numbers 9819.11.03, 9819.11.06, 9820.11.03, 9820.11.06, 9820.11.09, 
9820.11.12, 9820.11.18, 9820.11.21, 9802.00.8015, 9802.00.9000, 
9802.00.8044, or 9802.00.8046 shall not subject to assessment.
    (6) Imported cotton and products may be exempted by the Cotton Board 
from assessment under this paragraph. Such imported cotton and products 
may include, but are not limited to cotton and the cotton content of 
products which is U.S. produced cotton, or cotton other than Upland 
cotton.
    (i) A request for such exemption must be submitted to the Cotton 
Board by the importer, prior to the importation of the cotton product. 
The Cotton Board will then issue, if deemed appropriate, a numbered 
exemption certificate valid for 1 year from the date of issue. The 
exemption number should be entered by the importer on the Customs entry 
documentation in the appropriate location as determined by the U.S. 
Customs Service.
    (ii) The request for exemption should include:
    (A) the name, address, and importer identification number for the 
importer;

[[Page 39]]

    (B) the HTS classification of the imported product;
    (C) weight of the product for which the exemption is sought;
    (D) estimated date of entry;
    (E) commercial invoices of other such documentation indicating the 
origin or production or type of the cotton fiber used to produce the 
imported product;
    (F) manufacture's description of the imported product.
    (7) The exemption number ``999999999'' shall be entered on the 
Customs entry summary document, in the appropriate location as 
determined by the U.S. Customs Service, by the importer when, based on 
the importer's own determination, the imported product is identified by 
a Harmonized Tariff Schedule classification number which is subject to 
assessment but the particular article contains no cotton.
    (8) Articles imported into the United States temporarily and under 
bond which are classified by the Harmonized Tariff Schedule heading 
which begins with ``9813'' shall not be subject to assessment.
    (9) Articles imported into the U.S. after being exported from the 
U.S. for alterations and which are classified by the Harmonized Tariff 
Schedule subheadings 9802.00.40 and 9802.00.50 shall not be subject to 
assessment.

[57 FR 29432, July 2, 1992, as amended at 58 FR 52216, Oct. 7, 1993; 59 
FR 59111, Nov. 16, 1994; 60 FR 36034, July 13, 1995; 61 FR 31819, 31822, 
June 21, 1996; 62 FR 22878, Apr. 28, 1997; 62 FR 46414, Sept. 2, 1997; 
62 FR 50244, Sept. 25, 1997; 63 FR 27819, May 21, 1998; 64 FR 30238, 
June 7, 1999; 65 FR 25237, May 1, 2000; 65 FR 70644, Nov. 27, 2000; 66 
FR 58052, Nov. 20, 2001; 67 FR 36795, May 28, 2002; 68 FR 27900, May 22, 
2003]



Sec.  1205.511  Payment and collection.

    (a) The $1 per bale assessment shall be paid by:
    (1) The producer of the cotton to the collecting handler designated 
in Sec.  1205.512, and
    (2) The importer of cotton to the Customs Service as provided in 
Sec.  1205.514.
    (b) The supplemental assessment shall be paid by:
    (1) The producer of the cotton to the collecting handler designated 
in Sec.  1205.513, and
    (2) The importer of cotton to the Customs Service as described in 
Sec.  1205.515.
    (c) If more than one person subject to assessment shares in the 
proceeds received from a bale or bale equivalent, each such person is 
obligated to pay that portion of the assessment that is equivalent to 
that person's proportionate share of the proceeds.
    (d) Failure of the handler to collect the assessments on each bale 
shall not relieve the handler of the handler's obligation to remit the 
assessments to the Cotton Board as required in Sec. Sec.  1205.512, 
1205.513 and 1205.516.

[57 FR 29190, July 1, 1992]



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

    Collecting handlers and the time of collecting the $1 per bale 
assessment shall be as follows:
    (a) Except as provided in paragraph (b) of this section, any person 
who purchases a bale of cotton from the producer of the cotton shall be 
the collecting handler for such cotton. The handler shall collect the 
assessment at the time the handler first makes any payment or any credit 
to the producer's account for the cotton. The handler shall give the 
producer a receipt indicating payment of the assessment.
    (b) Any cooperative marketing association or other person that 
accepts a bale of cotton from the producer of the cotton under an oral 
or written contract or agreement providing for the marketing of the 
cotton shall be the collecting handler for such cotton. Such association 
or person shall collect the assessment regardless of whether the cotton 
is marketed or tendered to CCC for price support loan. The handler shall 
collect the assessment at the time the handler first makes any cash 
advance, any payment, or any credit to the producer's account for the 
cotton. The handler shall give the producer a receipt indicating payment 
of the assessment.
    (c) For bales of cotton tendered to CCC for Form A loan, except 
bales tendered pursuant to paragraph (b) of this section:

[[Page 40]]

    (1) The ASCS County Office shall be the collecting handler except as 
provided in paragraph (c)(2) of this section. The ASCS County Office 
shall collect the assessment when it makes disbursement based on the 
Form A loan documents. The producer's copy of the Cotton Producer's Note 
(Form CCC Cotton A) shall show payment of the assessment and shall 
constitute the producer's receipt for payment of the assessment.
    (2) Any person (other than an ASCS County Office) who advances to 
the producer the loan value of the cotton as shown on a Cotton 
Producer's Note (Form CCC Cotton A) shall be the collecting handler for 
such cotton. The handler shall collect the $1 per bale assessment at the 
time the handler makes any advance to the producer on the loan value of 
the cotton. The handler shall give the producer a receipt indicating 
payment of the assessment.
    (d) Any person who purchases cotton in the cotton field where 
produced or who purchases seed cotton or unbaled lint cotton from the 
producer of the cotton shall be the collecting handler. The handler 
shall collect the assessment at the time such cotton is ginned and shall 
give the producer a receipt indicating payment of the assessment. When a 
bale is ginned that contains any such cotton purchased from more than 
one producer, the handler shall collect each producer's proportionate 
share of the assessment and shall give each producer a receipt 
indicating the producer's proportionate share of the assessment payment.
    (e) Any person who purchases cotton from a producer whereby the 
producer agrees to deliver a certain quantity of cotton but retains the 
right to establish the price at some future date shall be the collecting 
handler for such cotton. The handler shall collect the $1 per bale 
assessment at the time final settlement is made on the cotton. The 
handler shall give the producer a receipt indicating payment of the $1 
per bale assessment.
    (f) Any person who consumes domestically or exports cotton of that 
person's own production shall be the collecting handler for such cotton. 
Such handler shall pay the assessment to the Cotton Board at the time 
the cotton is consumed or exported.
    (g) Any person who obtains ownership of a bale of cotton from the 
producer of the cotton by transfer of any kind or by any means, under 
conditions other than those described in paragraph (a), (b), (c), (d) or 
(e) of this section shall be the collecting handler for such cotton. 
Such handler shall collect the assessment at the time such handler takes 
ownership of the cotton. The handler shall give the producer a receipt 
indicating payment of the assessment.
    (h) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer, or the 
producer's estate, or the person acting on behalf of creditors, shall be 
considered the producer for the purposes of this section.

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



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

    Collecting handlers and the time of collecting the supplemental 
assessment shall be as follows:
    (a) Except as provided in paragraph (b) of this section, any person 
who purchases a bale of cotton from the producer of the cotton shall be 
the collecting handler for such cotton. The handler shall collect the 
supplemental assessment at the time the handler first makes any payment 
or any credit to the producer's account for the cotton. The handler 
shall give the producer a receipt indicating payment of the supplemental 
assessment.
    (b) Any cooperative marketing association or other person that 
accepts a bale of cotton from the producer of the cotton under an oral 
or written contract or agreement providing for the marketing of the 
cotton shall be the collecting handler for such cotton. Such association 
or person shall collect the supplemental assessment regardless of 
whether the cotton is marketed or tendered to CCC for price support 
loan. The handler shall collect the supplemental assessment at the time 
the handler first makes any cash advance,

[[Page 41]]

any payment, or any credit to the producer's account for the cotton. 
Supplemental assessments due on any subsequent cash advances, payments, 
or credits to the producer's account shall be collected by the handler 
at the time final settlement is made on the cotton. The handler shall 
give the producer a receipt each time a supplemental assessment is 
collected.
    (c) For bales of cotton tendered to CCC for Form A loan, except 
bales tendered pursuant to paragraph (b) of this section:
    (1) The ASCS County Office shall be the collecting handler except as 
provided in paragraph (c)(2) of this section. The ASCS County Office 
shall collect the supplemental assessment when it makes disbursement 
based on the Form A loan value of cotton. The producer's copy of the 
Cotton Producer's Note (Form CCC Cotton A) shall show payment of the 
supplemental assessment and shall constitute the producer's receipt for 
payment of the supplemental assessment.
    (2) Any person (other than an ASCS County Office) who advances to 
the producer the loan value of the cotton as shown on a Cotton 
Producer's Note (Form CCC Cotton A) shall be the collecting handler for 
such cotton. The handler shall collect the supplemental assessment at 
the time the handler makes any advance to the producer on the loan value 
of the cotton. The handler shall give the producer a receipt indicating 
payment of the supplemental assessment.
    (d) With respect to any Upland cotton on which the producer or a 
cooperative marketing association acting on behalf of a producer 
receives a loan deficiency payment, the ASCS County Office or the 
cooperative marketing association shall be the collecting handler of the 
supplemental assessment on the value of the cotton represented by the 
loan deficiency payment at the time such payment is made to the producer 
or the cooperative marketing association. A copy of a document 
reflecting this transaction issued by the ASCS County Office or 
cooperative marketing association shall show the amount collected as the 
supplemental assessment and shall constitute the producer's receipt for 
payment of the supplemental assessment.
    (e) Any person who (1) purchases a producer's equity in cotton 
tendered to CCC for Form A loan or (2) purchases cotton that a producer 
has redeemed from the Form A loan, shall be the collecting handler for 
the portion of the total supplemental assessment not collected under 
paragraph (c) of this section. The handler shall give the producer a 
receipt indicating payment of that portion of the supplemental 
assessment.
    (f) Any person who purchases cotton in the cotton field where 
produced or who purchases seed cotton or unbaled lint cotton from the 
producer of the cotton shall be the collecting handler. The handler 
shall collect the supplemental assessment at the time such cotton is 
ginned and shall give the producer a receipt indicating payment of the 
supplemental assessment. When a bale is ginned and baled that contains 
any such cotton purchased from more than one producer, the handler shall 
collect each producer's proportionate share of the supplemental 
assessment and shall give each producer a receipt indicating the 
producer's proportionate share of the supplemental assessment payment.
    (g) Any person who purchases cotton from a producer whereby the 
producer agrees to deliver a certain quantity of cotton but retains the 
right to establish the price at some future date shall be the collecting 
handler for such cotton. The handler shall collect the supplemental 
assessment at the time final settlement is made on the cotton. The 
handler shall give the producer a receipt indicating payment of the 
supplemental assessment.
    (h) Any person who consumes domestically cotton of that person's own 
production shall be the collecting handler for such cotton. The handler 
shall pay the supplemental assessment at the time of consumption on the 
basis of a market value determined in consultation with the Cotton 
Board.
    (i) Any person who exports cotton of that person's own production 
shall be the collecting handler for such cotton. Such handler shall pay 
the supplemental assessment on the basis of the

[[Page 42]]

current value of cotton as reflected on the export settlement document.
    (j) Any person who obtains ownership of a bale of cotton from the 
producer of the cotton by transfer of any kind or by any means, under 
conditions other than those described in paragraph (a), (b), (c), (d), 
(e), or (f) of this section shall be the collecting handler for such 
cotton. Such handler shall collect the supplemental assessment at the 
time the handler takes ownership of the cotton. The handler shall give 
the producer a receipt indicating payment of the supplemental 
assessment.
    (k) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer or the producer's 
estate, or the person acting on behalf of creditors, shall be considered 
the producer for the purposes of this section.

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



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

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

[57 FR 29191, July 1, 1992]



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

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

[57 FR 29191, July 1, 1992]



Sec.  1205.516  Reports and remittance to the Cotton Board.

    (a) Handler reports and remittances. Each collecting handler shall 
transmit assessments to the Cotton Board as follows:
    (1) Reporting periods. Each calendar month shall be a reporting 
period and the period shall end on the close of business on the last day 
of the month.
    (2) Reports. Each collecting handler shall make reports on forms 
made available or approved by the Cotton Board. Each report shall be 
mailed to the Cotton Board and postmarked within ten days after the 
close of the reporting period.
    (i) Collecting handler report. Each collecting handler shall prepare 
a separate report form each reporting period for each gin from which 
such handler handles cotton on which the handler is required to collect 
the assessments during the reporting period. Each report shall be mailed 
in duplicate to the Cotton Board and shall contain the following 
information:
    (A) Date of report;

[[Page 43]]

    (B) Reporting period covered by report;
    (C) Gin code number;
    (D) Name and address of handler;
    (E) Listing of all producers from whom the handler was required to 
collect the assessments, their addresses, total number of bales, and 
total assessment collected and remitted for each producer;
    (F) Date of last report remitting assessments to the Cotton Board.
    (ii) No cotton purchased report. Each collecting handler shall 
submit a no cotton purchased report form for each reporting period in 
which no cotton was handled for which the handler is required to collect 
assessments during the reporting period. A collecting handler who 
handles cotton only during certain months shall file a final no cotton 
purchased report at the conclusion of such handlers marketing season. If 
a collecting handler handles cotton during any month following 
submission of the final report for the handlers marketing season, such 
handler shall send a collecting handler report and remittance to the 
Cotton Board by the 10th day of the month following the month in which 
cotton was handled. The no cotton purchased report shall be signed and 
dated by the handler of the handler's agent.
    (3) Remittances. The collecting handler shall remit all assessments 
to the Cotton Board with the report required in paragraph (a)(2) of this 
section. All remittances sent to the Cotton Board by collecting handlers 
shall be made by check, draft, or money order payable to the order of 
the ``Cotton Board''. All remittances shall be received subject to 
collection and payment at par.
    (4) Interest and late payment charges. (i) There shall be an 
interest charge, at rates prescribed by the Cotton Board with the 
approval of the Secretary, on any handler who is sent a second certified 
mail notice of past-due assessments from the Cotton Board in any one 
marketing year (August 1-July 31).
    (ii) In addition to the interest charge specified in paragraph 
(a)(4)(i) of this section, there shall be a late payment charge on any 
handler whose remittance is not received by the Cotton Board within 10 
days after the close of the reporting period in which interest charges 
were first accrued. The late payment charge shall be 5 percent of the 
unpaid balance before interest charges have accrued.
    (iii) The interest and late payment charges on the unremitted 
assessments for a particular reporting period will be applied from the 
first working day on or following the 20th day of the month in which the 
assessments were due.
    (b) Importer reports and remittance. The United States Customs 
Service will transmit reports and assessments collected on imported 
cotton to the Agricultural Marketing Service according to the agreement 
between the Customs Service and the Agricultural Marketing Service. Upon 
the request of the Cotton Board, an importer shall file with the Board a 
report, for a period of time specified in the request, that includes the 
following information:
    (1) The importer's name and address;
    (2) The quantity of cotton and cotton products imported;
    (3) The amount of the assessment paid on imported cotton and cotton 
products;
    (4) The amount of imported cotton and cotton products on which the 
assessment was not paid to the Customs Service.

[57 FR 29190, July 1, 1992]



Sec.  1205.517  Failure to report and remit.

    (a) Any collecting handler who fails to submit reports and 
remittances according to reporting periods and time schedules required 
in Sec.  1205.516 shall be subject to appropriate action by the Cotton 
Board which may include one or more of the following actions:
    (1) Audits of the collecting handler's books and records to 
determine the amount owed the Cotton Board;
    (2) Requirement that an escrow account for the deposit of 
assessments collected be established. Frequency and schedule of deposits 
and withdrawals from the escrow account shall be determined by the 
Cotton Board with the Approval of the Secretary;
    (3) Referral to the Secretary for appropriate enforcement action;
    (4) Publication of a collecting handler's name in accordance with 
the following provisions:

[[Page 44]]

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

[57 FR 29191, July 1, 1992]



Sec.  1205.518  Receipts for payment of assessments.

    Each collecting handler who is required by Sec.  1205.512 and Sec.  
1205.513 to give the producer a receipt showing payment of cotton 
research and promotion assessments shall provide the producer with an 
invoice or settlement sheet for the cotton. Such document shall serve as 
a receipt shall contain the following information:
    (a) Name and address of collecting handler.
    (b) Gin code number of gin at which cotton was ginned.
    (c) Name and address of producer who paid assessment.
    (d) Number of bales on which assessment was paid.
    (e) Gross price per pound received by the producer.
    (f) Total assessments paid by the producer.
    (g) Date on which assessment was paid by producer.

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

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

                             Reimbursements



Sec.  1205.520  Procedure for obtaining reimbursement.

    Each importer against whose imports of cotton or cotton-containing 
products any assessments are made and collected may obtain a 
reimbursement on that portion of the assessment that was collected on 
cotton produced in the United States or cotton other than Upland cotton 
by following the procedures prescribed in this section.
    (a) Application form. An importer shall obtain a reimbursement 
application form from the Cotton Board. Such form may be obtained by 
written request to the Cotton Board and the request shall bear the 
importer's signature or the importer's properly-witnessed mark.
    (b) Submission of reimbursement application to Cotton Board. Any 
importer requesting a reimbursement shall mail the application on the 
prescribed form to the Cotton Board. The application shall be postmarked 
within 180 days from the date the assessments were paid on the cotton by 
such importer. The reimbursement application shall show:
    (1) The importer's name, address, phone number and Customs Service 
identification number;

[[Page 45]]

    (2) Weight of the cotton in each HTS category for which the 
reimbursement is requested;
    (3) Subtotal amounts to be reimbursed for each HTS number and grand 
total to be reimbursed;
    (4) Date or inclusive dates on which the assessments were paid;
    (5) The name of the port of entry; and
    (6) Certification by the importer that the cotton was grown in the 
U.S. or is other than Upland cotton.
    (c) Where more than one importer shared in the assessment payment on 
cotton, joint or separate reimbursement application forms may be filed. 
In any such case, the reimbursement application shall show the names, 
addresses and proportionate shares of assessments paid by all importers. 
The reimbursement application shall bear the signature of each importer 
seeking reimbursement.
    (d) Proof of payment of the assessment on U.S. produced or other 
than Upland cotton. A copy of the Customs entry form and the commercial 
invoice filed with the Customs Service shall accompany the importer's 
reimbursement application. Within 60 days from the date the properly 
executed application for reimbursement is received by the Cotton Board, 
the Cotton Board shall make reimbursement to the importer. For joint 
applications, the reimbursement shall be made payable to all eligible 
importers signing the reimbursement application. Documentation submitted 
with reimbursement applications shall not be returned to the importer.

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

                           Warehouse Receipts



Sec.  1205.525  Entry of gin code number.

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

[57 FR 29192, July 1, 1992]

                           Reports and Records



Sec.  1205.530  Gin reports and reporting schedule.

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

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



Sec.  1205.531  Records.

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

[57 FR 29192, July 1, 1992]

[[Page 46]]



Sec.  1205.532  Retention period for reports and records.

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

[57 FR 29192, July 1, 1992]



Sec.  1205.533  Availability of reports and records.

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

[57 FR 29192, July 1, 1992]

                        Confidential Information



Sec.  1205.540  Confidential books, records, and reports.

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

[57 FR 29192, July 1, 1992]



Sec.  1205.541  OMB control numbers.

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

[57 FR 29192, July 1, 1992]

Subpart--Fiscal Period [Reserved]



PART 1206--MANGO PROMOTION, RESEARCH, AND INFORMATION--Table of Contents




Subpart A [Reserved]

                    Subpart B--Referendum Procedures.

Sec.
1206.100 General.
1206.101 Definitions.
1206.102 Voting.
1206.103 Instructions.
1206.104 Subagents.
1206.105 Ballots.
1206.106 Referendum report.
1206.107 Confidential information.
1206.108 OMB control number.

    Authority: 7 U.S.C. 7411-7425.

    Source: 68 FR 58554, Oct. 9, 2003, unless otherwise noted.

Subpart A [Reserved]



                    Subpart B--Referendum Procedures.



Sec.  1206.100  General.

    Referenda to determine whether eligible first handlers and importers 
of mangos favor the issuance, amendment, suspension, or termination of 
the Mango Promotion, Research, and Information Order shall be conducted 
in accordance with this subpart.



Sec.  1206.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Department means the U.S. Department of Agriculture or any 
officer or employee of the Department to whom authority has heretofore 
been delegated, or to whom authority may hereafter be delegated, to act 
in the Secretary's stead.
    (c) Eligible first handler means any person, (excluding a common or 
contract carrier), receiving 500,000 or more pounds of mangos from 
producers in a calendar year and who as owner, agent, or otherwise ships 
or causes mangos to be shipped as specified in this Order. This 
definition includes those engaged in the business of buying, selling 
and/or offering for sale; receiving; packing; grading; marketing; or 
distributing mangos in commercial quantities. The term first handler 
includes a producer who handles or markets mangos of the producer's own 
production.
    (d) Eligible importer means any person importing 500,000 or more 
pounds of

[[Page 47]]

mangos into the United States in a calendar year as a principal or as an 
agent, broker, or consignee of any person who produces or handles mangos 
outside of the United States for sale in the United States, and who is 
listed as the importer of record for such mangos that are identified in 
the Harmonized Tariff Schedule of the United States by the numbers 
0804.50.4040 and 0804.50.6040, during the representative period. 
Importation occurs when mangos originating outside of the United States 
are released from custody by the Customs and Border Protection and 
introduced into the stream of commerce in the United States. Included 
are persons who hold title to foreign-produced mangos immediately upon 
release by the Customs and Border Protection, as well as any persons who 
act on behalf of others, as agents or brokers, to secure the release of 
mangos from the Customs and Border Protection when such mangos are 
entered or withdrawn for consumption in the United States.
    (e) Mangos means all fresh fruit of Mangifera indica L. of the 
family Anacardiaceae.
    (f) Order means the Mango Promotion, Research, and Information 
Order.
    (g) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a mango farm as tenants in common, joint tenants, tenants by the 
entirety, or, under community property laws, as community property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (h) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (i) Representative period means the period designated by the 
Department.
    (j) United States or U.S. means collectively the 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec.  1206.102  Voting.

    (a) Each eligible first handler and eligible importer of mangos 
shall be entitled to cast only one ballot in the referendum.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate first handler or importer, or an administrator, 
executor, or trustee or an eligible entity may cast a ballot on behalf 
of such entity. Any individual so voting in a referendum shall certify 
that such individual is an officer or employee of the eligible entity, 
or an administrator, executive, or trustee of an eligible entity and 
that such individual has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (c) All ballots are to be cast by mail, as instructed by the 
Department.



Sec.  1206.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, not 
inconsistent with the provisions of this subpart, to govern the 
procedure to be followed by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (c) Give reasonable public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and

[[Page 48]]

    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible first handlers and importers whose names and 
addresses are known to the referendum agent, the instructions on voting, 
a ballot, and a summary of the terms and conditions of the proposed 
Order. No person who claims to be eligible to vote shall be refused a 
ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.



Sec.  1206.104  Subagents.

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



Sec.  1206.105  Ballots.

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



Sec.  1206.106  Referendum report.

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



Sec.  1206.107  Confidential information.

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



Sec.  1206.108  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 is 
OMB control number 0581-0209.



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




               Subpart--Potato Research and Promotion Plan

                               Definitions

Sec.
1207.301 Secretary.
1207.302 Act.
1207.303 Plan.
1207.304 Person.
1207.305 Producer.
1207.306 Potatoes.
1207.307 Handle.
1207.308 Handler.
1207.309 Board.
1207.310 Fiscal period and marketing year.
1207.311 Programs and projects.
1207.312 Importer.
1207.313 Customs Service.

                     National Potato Promotion Board

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

                         Research and Promotion

1207.335 Research and promotion.

                        Expenses and Assessments

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

                       Reports, Books, and Records

1207.350 Reports.
1207.351 Books and records.

[[Page 49]]

1207.352 Confidential treatment.

                              Miscellaneous

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

                     Subpart--Rules and Regulations

                               Definitions

1207.500 Definitions.

                                 General

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

                               Assessments

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

                                 Records

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

                        Confidential Information

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

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



               Subpart--Potato Research and Promotion Plan

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

                               Definitions



Sec.  1207.301  Secretary.

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



Sec.  1207.302  Act.

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

[56 FR 40229, Aug. 14, 1991]



Sec.  1207.303  Plan.

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



Sec.  1207.304  Person.

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



Sec.  1207.305  Producer.

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



Sec.  1207.306  Potatoes.

    Potatoes means any or all varieties of Irish potatoes grown by 
producers in the 50 states of the United States and grown in foreign 
countries and imported into the United States.

[56 FR 40229, Aug. 14, 1991]



Sec.  1207.307  Handle.

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



Sec.  1207.308  Handler.

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



Sec.  1207.309  Board.

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

[[Page 50]]



Sec.  1207.310  Fiscal period and marketing year.

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



Sec.  1207.311  Programs and projects.

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



Sec.  1207.312  Importer.

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

[56 FR 40229, Aug. 14, 1991]



Sec.  1207.313  Customs Service.

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

[56 FR 40229, Aug. 14, 1991]

                     National Potato Promotion Board



Sec.  1207.320  Establishment and membership.

    (a) There is hereby established a National Potato Promotion Board, 
hereinafter called the ``Board'', composed of producers, importers, and 
a public member appointed by the Secretary. Producer members shall be 
appointed from nominations submitted by producers in the various States 
or groups of States pursuant to Sec.  1207.322. Importer members shall 
be appointed from nominations submitted by importers pursuant to Sec.  
1207.322. The public member shall be nominated by Board members in such 
manner as recommended by the Board and approved by the Secretary, and 
shall be appointed by the Secretary.
    (b) Producer membership upon the Board shall be determined on the 
basis of the potato production reported in the latest Crop Production 
Annual Summary Report issued by the Crop Reporting Board, U.S. 
Department of Agriculture. Unless the Secretary, upon recommendation of 
the Board, determines an alternate basis, for each five million 
hundredweight of such production, or major fraction thereof, produced 
within each State, such State shall be entitled to one member. However, 
each State shall initially be entitled to at least one member.
    (c) The number of importer member positions on the Board shall be 
based on the hundredweights of potatoes, potato products equivalent to 
fresh potatoes, and seed potatoes imported into the United States but 
shall not exceed five importer members. Unless the Secretary, upon 
recommendation of the Board, determines an alternate basis, there shall 
be one importer member position for each 5 million hundredweight, or 
major fraction thereof, of potatoes, potato product equivalents, and 
seed potatoes imported into the United States.
    (d) Any State in which the potato producers fail to respond to an 
officially called nomination meeting may be combined with an adjacent 
State for the purpose of representation on the Board, in which case the 
Board's producer member selected by the Secretary will represent both 
States, but such member's voting power under Sec.  1207.325 shall not be 
increased.
    (e) The Secretary, upon recommendation of the Board, may establish, 
through rule making procedure, districts or groups of States in order to 
change the representation requirements for membership on the Board. In 
such event the voting power of members under Sec.  1207.325 would be 
based upon the total production within the new district or group of 
States.
    (f) Should the Board fail to nominate a public member, the Secretary 
may appoint such member.

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



Sec.  1207.321  Term of office.

    (a) The term of office of Board members shall be 3 years, beginning 
July 1, or such other beginning date as may be approved pursuant to 
regulations.
    (b) The terms of office of the Board's producer members shall be so 
determined that approximately one-third of the terms will expire each 
year. Importer and public member terms shall

[[Page 51]]

run concurrently. All members serving on the Board on the effective date 
of this amendment to the Plan shall continue serving the term to which 
they were appointed.
    (c) Board members shall serve during the term of office for which 
they are selected and have qualified, and until their successors are 
selected and have qualified.
    (d) No member shall serve for more than two full successive terms of 
office.

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



Sec.  1207.322  Nominations and appointment.

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

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

    Effective Date Note: At 62 FR 46179, Sept. 2, 1997, in Sec.  
1207.322, paragraphs (a) and (d)(1) through (d)(5); in paragraph (b), 
the words ``at meetings'' in the first sentence and the entire last 
sentence; in paragraph

[[Page 52]]

(c), the last sentence; and in paragraph (d), the last two sentences of 
the introductory text are suspended, effective Sept. 3, 1997.



Sec.  1207.323  Acceptance.

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



Sec.  1207.324  Vacancies.

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



Sec.  1207.325  Procedure.

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

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



Sec.  1207.326  Compensation and reimbursement.

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



Sec.  1207.327  Powers.

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



Sec.  1207.328  Duties.

    The Board shall, among other things, have the following duties:
    (a) To meet and organize and to select from among its members a 
president and such other officers as may be necessary; to select 
committees and subcommittees of Board members to nominate the public 
member; to adopt such rules for the conduct of its business as it may 
deem advisable; and it may establish advisory committees of persons 
other than Board members;
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) At the beginning of each fiscal period, to prepare and submit to 
the Secretary for his approval a budget on a fiscal period basis of the 
anticipated expenses in the administration of this plan including the 
probable costs of all programs or projects and to recommend a rate of 
assessment with respect thereto;
    (d) To develop programs and proj ects and to enter into contracts or 
agreements for the development and carrying out of programs or projects 
of research, development, advertising or promotion, and the payment of 
the costs thereof with funds collected pursuant to this plan;

[[Page 53]]

    (e) To keep minutes, books, and rec ords which clearly reflect all 
of the acts and transactions of the Board. Minutes of each Board meeting 
shall be promptly reported to the Secretary;
    (f) To cause the books of the Board to be audited by a certified 
public accountant at least once each fiscal period, and at such other 
time as the Board may deem necessary. The report of such audit shall 
show the receipt and expenditure of funds collected pursuant to this 
part. Two copies of each such report shall be furnished to the Secretary 
and a copy of each such report shall be made available at the principal 
office of the Board for inspection by producers, handlers, and 
importers;
    (g) To give the Secretary the same notice of meetings of the Board 
and its subcommittees as is given to its members;
    (h) To act as intermediary between the Secretary and any producer, 
handler, or importer;
    (i) To furnish the Secretary such information as he may request.
    (j) To prepare and submit to the Secretary such reports from time to 
time as may be prescribed by the Secretary for appropriate accounting 
with respect to the receipt and disbursement of funds entrusted to the 
Board; and

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

                         Research and Promotion



Sec.  1207.335  Research and promotion.

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

                        Expenses and Assessments



Sec.  1207.341  Budget and expenses.

    (a) At the beginning of each fiscal period, or as may be necessary 
thereafter, the Board shall prepare and recommend a budget on a fiscal 
period basis of its anticipated expenses and disbursements in the 
administration of this plan, including probable costs of research, 
development, advertising, and promotion. The Board shall also recommend 
a rate of assessment calculated to provide adequate funds to defray its 
proposed expenditures and to provide for a reserve as set forth in Sec.  
1207.344.
    (b) The Board is authorized to incur such expenses for research, 
development, advertising, or promotion of potatoes and potato products, 
such other expenses for the administration, maintenance, and functioning 
of the Board, and any referendum and administrative costs incurred by 
the Department of Agriculture as are approved pursuant to Sec.  
1207.361.

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



Sec.  1207.342  Assessments.

    (a) The funds to cover the Board's expenses shall be acquired by the 
levying of assessments upon handlers and importers as designated in 
regulations recommended by the Board and issued by the Secretary. Such 
assessments shall be levied at a rate fixed by the Secretary which shall 
not exceed one-half of one per centum of the immediate past ten calendar 
years United

[[Page 54]]

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

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



Sec.  1207.343  [Reserved]



Sec.  1207.344  Operating reserve.

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

                       Reports, Books, and Records



Sec.  1207.350  Reports.

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

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



Sec.  1207.351  Books and records.

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

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



Sec.  1207.352  Confidential treatment.

    All information obtained from books, records, or reports required 
pursuant to this part shall be kept confidential by all employees of the 
Department of Agriculture and of the Board, and by

[[Page 55]]

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

[56 FR 40230, Aug. 14, 1991]

                              Miscellaneous



Sec.  1207.360  Influencing governmental action.

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



Sec.  1207.361  Right of the Secretary.

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



Sec.  1207.362  Suspension or termination.

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

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



Sec.  1207.363  Proceedings after termination.

    (a) Upon the termination of this plan, the Board shall recommend not 
more than five of its members to the Secretary to serve as trustees for 
the purpose of liquidating the affairs of the Board. Such persons, upon 
designation by the Secretary, shall become trustees of all funds and 
property then in the possession or under control of the Board including 
claims for any funds unpaid or property not delivered or any other claim 
existing at the time of such termination.
    (b) The said trustees shall (1) continue in such capacity until 
discharged by the Secretary; (2) carry out the obligations of the Board 
under any contracts or agreements entered into by it pursuant to this 
plan; (3) account for all receipts and disbursements and deliver all 
property on hand, together with all books and records of the Board and 
of the trustees, to such person or persons as the Secretary may direct; 
and (4) upon the request of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person or 
persons full title and right to all of the funds, property, and claims 
vested in the Board of the trustees pursuant to this section.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this section shall be subject to 
the same obligation imposed upon the Board and upon the trustee.

[[Page 56]]

    (d) A reasonable effort shall be made by the Board or its trustees 
to return to producers and importers any residual funds not required to 
defray the necessary expenses of liquidation. If it is found impractical 
to return such remaining funds to producers and importers, such funds 
shall be disposed of in such manner as the Secretary may determine to be 
appropriate.

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



Sec.  1207.364  Effect of termination or amendment.

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



Sec.  1207.365  Personal liability.

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



Sec.  1207.366  Separability.

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



                     Subpart--Rules and Regulations

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

                               Definitions



Sec.  1207.500  Definitions.

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

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

                                 General



Sec.  1207.501  Communications.

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

[59 FR 44036, Aug. 26, 1994]



Sec.  1207.502  Determination of membership.

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

[[Page 57]]

years as determined by the Board's records.

[56 FR 40231, Aug. 14, 1991]



Sec.  1207.503  Nominations.

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

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



Sec.  1207.504  Term of office.

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

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



Sec.  1207.505  Procedure.

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

[62 FR 46179, Sept. 2, 1997]



Sec.  1207.506  Policy.

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



Sec.  1207.507  Administrative Committee.

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

[[Page 58]]

    (1) The Administrative Committee also shall act for the Board in 
contracting with cooperating agencies for the collection of assessments 
pursuant to Sec.  1207.513(d).
    (2) [Reserved]
    (c) The Board may assign such other administrative powers and duties 
to the Administrative Committee as it shall determine, and the 
Administrative Committee shall act on behalf of and in the name of the 
Board in all administrative matters.

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



Sec.  1207.508  USDA costs.

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

[49 FR 26202, June 27, 1984]

                               Assessments



Sec.  1207.510  Levy of assessments.

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

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

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

------------------------------------------------------------------------
                                                         Assessment
  Tablestock potatoes, processed potato products,  ---------------------
                 and seed potatoes                  Cents/cwt   Cents/kg
------------------------------------------------------------------------
0701.10.0020......................................       2.00     0.0441
0701.10.0040......................................       2.00     0.0441
0701.90.1000......................................       2.00     0.0441
0701.90.5010......................................       2.00     0.0441
0701.90.5020......................................       2.00     0.0441
0701.90.5030......................................       2.00     0.0441
0701.90.5040......................................       2.00     0.0441
0710.10.0000......................................       4.00     0.0882
2004.10.4000......................................       4.00     0.0882
2004.10.8020......................................       4.00     0.0882
2004.10.8040......................................       4.00     0.0882
2005.20.6060......................................     3.1446     0.0693
0712.10.0000......................................    14.2857     0.3149
1105.10.0000......................................    14.2857     0.3149
1105.20.0000......................................    14.2857     0.3149
2005.20.6040......................................    14.2857     0.3149
2005.20.2000......................................     8.1633     0.1800
1108.13.0010......................................    18.0018     0.3969
------------------------------------------------------------------------

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

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



Sec.  1207.511  Determination of assessable quantity.

    The assessable quantity of potatoes in any lot shall be determined 
on the basis of utilization. Assessments shall be due on the entire lot 
handled for

[[Page 59]]

human consumption, seed, or unspecified purposes if there is no 
accounting made on the basis of the utilization of such lot. However, if 
the accounting identifies all or portions of such lot on the basis of 
utilization, assessments shall be due only on that portion utilized for 
human consumption and seed.



Sec.  1207.512  Designated handler.

    The assessment on each lot of potatoes produced in the 50 States of 
the United States and handled shall be paid by the designated handler as 
hereafter set forth.
    (a) Unless otherwise provided in paragraphs (a)(8), (b), and (c) of 
this section, the designated handler shall be the first handler of such 
potatoes. The first handler is the person who initially performs a 
handler function as heretofore defined. Such person may be a fresh 
shipper, processor, or other person who first places the potatoes in the 
channels of commerce. A producer who grades, packs, or otherwise 
performs handler functions thereby becomes a handler and as such assumes 
first handler responsibilities under this part. The following examples 
are provided to aid in identification of first handlers who are 
designated handlers:
    (1) Producer delivers field-run potatoes of his own production to a 
handler for preparation for market. The handler in this instance is the 
designated handler, regardless of whether he subsequently handles such 
potatoes for his own account or for the account of the producer.
    (2) Producer delivers field-run potatoes of his own production to a 
handler who takes title to such potatoes and places them in storage for 
subsequent handling. The handler who purchases such potatoes from the 
producer is the designated handler.
    (3) Producer delivers field-run potatoes to a commercial storage 
facility for the purpose of holding such potatoes under his own account 
for later sale. There is no designated handler in this instance since 
such potatoes have not been handled as heretofore defined and no 
assessment is due. The designated handler of such potatoes would be 
identified on the basis of subsequent handling of such potatoes.
    (4) Fresh shipper purchases a lot of potatoes from a producer, packs 
a portion of such potatoes for fresh market, and delivers the balance to 
a processor. The fresh shipper is the designated handler for all 
potatoes in the lot.
    (5) Handler purchases potatoes from a producer's field or storage 
for the purpose of preparing such potatoes for market or for 
transporting such potatoes to storage for subsequent handling. The 
handler who purchases such potatoes from the producer is the designated 
handler.
    (6) Producer packs and sells potatoes of his own production from the 
field, roadside stand, or storage to a consumer, itinerant trucker, or 
other buyer. In performing such handler functions the producer assumes 
the responsibility of designated handler.
    (7) Processor utilizes potatoes of his own production in the 
manufacture of potato chips, frozen, dehydrated, or canned products for 
human consumption. In so handling potatoes, the proc essor assumes the 
responsibility of designated handler.
    (8) Producer utilizes potatoes of his own production for seed in 
planting his subsequent crop. Such seed potatoes do not enter the 
current of commerce; there is no designated handler in this instance 
since the potatoes have not been handled as heretofore defined and no 
assessment is due. However, seed potatoes sold or shipped to other 
producers for planting or to other persons for subsequent disposition 
enter the current of commerce and are subject to assessment. The 
producer of seed potatoes shall be the designated handler of such 
potatoes shipped to other producers for planting and the assessment is 
due when he first sells or otherwise handles such potatoes. The first 
person who acquires seed potatoes from the producer thereof for 
subsequent disposition other than planting by said person shall be the 
designated handler of such potatoes. However, the seed producer will be 
the designated handler responsible for filing reports and making 
payments, unless he can show that the first person who obtained the 
potatoes from him disposed of them other than by planting. To show this 
the seed producer must submit to the Potato Board the name and address 
of the first

[[Page 60]]

person who obtained the potatoes from him and an invoice of sale or 
settlement sheet on which it is indicated that such person will be the 
designated handler and therefore will be responsible for the payment of 
the assessments. Only by showing this is the seed producer no longer 
considered the designated handler and therefore not liable for the 
assessments.
    (b) Any person who handles potatoes for a producer thereof under 
oral or written contract or agreement providing for the sale thereof 
shall be the designated handler for such potatoes, notwithstanding the 
fact that the producer may have graded, packed, or otherwise handled 
such potatoes and thereby became the first handler of such potatoes.
    Examples. A cooperative marketing association, or other person, who 
makes an accounting to the producer, or pay the proceeds of the sale to 
the producer would be the designated handler responsible for the 
assessment.
    (c) Any processor who purchases potatoes from the producer thereof 
shall be the designated handler even though the producer may have 
graded, packed, or otherwise handled such potatoes and thereby became 
the first handler of such potatoes.

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



Sec.  1207.513  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
potatoes shall become due at the time a determination of assessable 
potatoes is made in the normal handling process, pursuant to Sec.  
1207.511. If no determination is made of the utilization of a lot, 
assessments shall be due on the entire lot when it enters the current of 
commerce. The assessment on imported potatoes, potato products, and seed 
potatoes shall become due at the time of entry, or withdrawal, for 
consumption into the United States.
    (b) Responsibility for payment. (1) The designated handler is 
responsible for payment of the assessment on domestically produced 
potatoes. He may pay with no reimbursement from the producer. In the 
alternative, he may collect the assessment from the producer, or deduct 
such assessment from the proceeds paid to the producer on whose potatoes 
the assessment is made, provided he furnishes the producer with evidence 
of such payment. Any such collection or deduction of assessment shall be 
made not later than the time when the assessment becomes payable by the 
handler to the Board. Failure of the handler to collect or deduct such 
assessment does not relieve the handler of his obligation to remit the 
assessment to the Board.
    (2) The Customs Service shall collect payment of assessment on 
imported potatoes, potato products, and seed potatoes from importers and 
forward such assessment per agreement between the Customs Service and 
the U.S. Department of Agriculture. Importers shall be responsible for 
payment of assessment directly to the Board of any assessment due but 
not collected by the Customs Service at the time of entry, or 
withdrawal, for consumption into the United States. An importer may 
apply to the Board for reimbursement of assessments paid on exempted 
products.
    (c) Payment directly to the Board. (1) Except as provided in 
paragraphs (b) and (d) of this section, each designated handler or 
importer shall remit assessments directly to the Board by check, draft, 
or money order payable to the National Potato Promotion Board, or NPPB, 
not later than 10 days after the end of the month such assessment is due 
together with a report (preferably on Board forms) thereon.
    (2) All designated handlers, including a designated handler whose 
own production is handled and assessments to the Board paid by another 
designated handler, shall report to the Board:
    (i) Date of report (which is also date of payment to the Board).
    (ii) The name and address of the designated handler;
    (iii) The period potatoes were handled;
    (iv) The total quantity of potatoes determined to be assessable 
during the period potatoes were handled, pursuant to Sec.  1207.511.
    (3) Designated handlers who collect assessments from producers or 
withhold assessments from their accounts or pay the assessment 
themselves shall also include a list of all such producers

[[Page 61]]

whose potatoes were handled during the period, their addresses and the 
total assessable quantities handled for each such producer.
    (i) In lieu of such a list, the designated handler may substitute 
authentic copies of settlement sheets given to each producer provided 
such settlement sheets contain all the information listed above.
    (ii) The words ``final report'' shall be shown on the last report at 
the close of his marketing season or at the end of each fiscal period if 
such handler markets potatoes on a year-round basis.
    (4) Prepayment of assessment: (i) In lieu of the monthly assessment 
and reporting requirements of paragraph (b) of this section, the Board 
may permit designated handlers to make advance payments of their total 
estimated assessments for the season to the Board prior to their actual 
determination of assessable potatoes. Such procedure may be permitted 
when it is considered by the designated handler to be the more practical 
method of payment.
    (ii) Persons using such procedure shall provide a final annual 
accounting of actual handling and assessments.
    (iii) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board upon request.
    (d) Payment through cooperating agency. The Board may authorize 
other organizations to collect assessments in its behalf. In any State 
or area in which the Board has negotiated an agreement to collect 
assessments with an agency such as a State Potato Commission or a Potato 
Association approved by the Secretary, the designated handler shall pay 
the assessment to such agency in the time and manner, and with such 
identifying information as specified in such agreement. Such an 
agreement shall not provide any cooperating agency with authority to 
collect confidential information from handlers; to qualify, the 
cooperating agency must on its own accord have access to all information 
required by the Board for collection purposes. If the Board requires 
further evidence of payment than provided, it may acquire such evidence 
from individual designated handlers.
    (1) All such agreements are subject to the requirement of Sec.  
1207.352 Confidential treatment, of the plan, the provisions of section 
310(c) of the Act, and all applicable rules and regulations and 
financial safeguards in effect under the Act and the plan; and all 
affected persons shall agree to, and conduct their operations and 
activities in accordance with, such requirements.
    (2) [Reserved]

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



Sec.  1207.514  [Reserved]



Sec.  1207.515  Safeguards.

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

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

                                 Records



Sec.  1207.532  Retention period for records.

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

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



Sec.  1207.533  Availability of records.

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

[[Page 62]]

quantities of potato products imported, and a record of each importation 
of potatoes, potato products, and seed potatoes including quantity, 
date, and port of entry, and shall make such records available for 
inspection by authorized employees of the Board or the Secretary during 
regular business hours.

[56 FR 40232, Aug. 14, 1991]



Sec.  1207.534  OMB control number assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) under the 
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB Control 
number 0581-0093.

[49 FR 23826, June 8, 1984]

                        Confidential Information



Sec.  1207.540  Confidential books, records, and reports.

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

[56 FR 40232, Aug. 14, 1991]



Sec.  1207.545  Right of the Secretary.

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



Sec.  1207.546  Personal liability.

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



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




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

                               Definitions

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

                            Mushroom Council

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

   Promotion, Research, Consumer Information, and Industry Information

1209.40 Programs, plans, and projects.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

1209.70 Right of the Secretary.
1209.71 Suspension or termination.
1209.72 Proceedings after termination.
1209.73 Effect of termination or amendment.

[[Page 63]]

1209.74 Personal liability.
1209.75 Patents, copyrights, inventions, publications, and product 
          formulations.
1209.76 Amendments.
1209.77 Separability.

                    Subpart B--Rules and Regulations

                               Definitions

1209.200 Terms defined.

                          Nomination Procedures

1209.230 Reallocation of council members.
1209.231 Nominations.
1209.233 Regional caucus chairpersons.
1209.235 Mail balloting.
1209.237 Appointment.

                                 General

1209.239 Financial statements.

                               Assessments

1209.251 Payment of assessments.
1209.252 Exemption procedures.

                                 Reports

1209.260 Reports.

                              Miscellaneous

1209.280 OMB control numbers.

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

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

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

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



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

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

                               Definitions



Sec.  1209.1  Act.

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



Sec.  1209.2  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec.  1209.3  Consumer information.

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



Sec.  1209.4  Council.

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



Sec.  1209.5  Department.

    Department means the United States Department of Agriculture.



Sec.  1209.6  First handler.

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



Sec.  1209.7  Fiscal year.

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



Sec.  1209.8  Importer.

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



Sec.  1209.9  Industry information.

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

[[Page 64]]



Sec.  1209.10  Marketing.

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



Sec.  1209.11  Mushrooms.

    Mushrooms means all varieties of cultivated mushrooms grown within 
the United States and marketed for the fresh market, or imported into 
the United States and marketed for the fresh market, except such term 
shall not include mushrooms that are commercially marinated, canned, 
frozen, cooked, blanched, dried, packaged in brine, or otherwise 
processed in such manner as the Council, with the approval of the 
Secretary, may determine.



Sec.  1209.12  On average.

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



Sec.  1209.13  Part and subpart.

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



Sec.  1209.14  Person.

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



Sec.  1209.15  Producer.

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



Sec.  1209.16  Programs, plans, and projects.

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



Sec.  1209.17  Promotion.

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



Sec.  1209.18  Region.

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



Sec.  1209.19  Research.

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



Sec.  1209.20  Secretary.

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



Sec.  1209.21  State and United States.

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

                            Mushroom Council



Sec.  1209.30  Establishment and membership.

    (a) There is hereby established a Mushroom Council of not less than 
four or more than nine members. The Council shall be composed of 
producers appointed by the Secretary under Sec.  1209.33, except that, 
as provided in paragraph (c), importers shall be appointed by the 
Secretary to the Council under Sec.  1209.33 once imports, on average, 
reach at least 35,000,000 pounds of mushrooms annually.
    (b) For purposes of nominating and appointing producers to the 
Council,

[[Page 65]]

the United States shall be divided into four geographic regions and the 
number of Council members from each region shall be as follows:
    (1) Region 1: including Maine, Vermont, New Hampshire, 
Massachusetts, Rhode Island, Connecticut, New York, Ohio, Kentucky, 
Indiana, Michigan, Wisconsin, Illinois, Missouri, Iowa, Nebraska, 
Kansas, Minnesota, North Dakota, South Dakota, Montana, Colorado, and 
Wyoming--2 Members.
    (2) Region 2: including Pennsylvania, Delaware, New Jersey, the 
District of Columbia, West Virginia, Virginia, and Maryland--3 Members.
    (3) Region 3: including Washington, Oregon, Idaho, Utah, Arizona, 
California, Nevada, Alaska, and Hawaii--3 Members.
    (4) Region 4: including New Mexico, Texas, Oklahoma, Arkansas, 
Louisiana, Alabama, Mississippi, Georgia, Tennessee, North Carolina, 
South Carolina, Florida, and the Commonwealth of Puerto Rico--1 Member.
    (c) Importers shall be represented by a single, separate region, 
referred to as Region 5, consisting of the United States as defined in 
Sec.  1209.21(b) when imports, on average, equal or exceed 35,000,000 
pounds of mushrooms annually.
    (d) At least every five years, and not more than every three years, 
the Council shall review changes in the geographic distribution of 
mushroom production volume throughout the United States and import 
volume, using the average annual mushroom production and imports over 
the preceding four years, and, based on such review, shall recommend to 
the Secretary reapportionment of the regions established in paragraph 
(b), or modification of the number of members from such regions, as 
determined under the rules established in paragraph (e), or both, as 
necessary to best reflect the geographic distribution of mushroom 
production volume in the United States and representation of imports, if 
applicable.
    (e) Subject to the nine-member maximum limitation, the following 
procedure will be used to determine the number of members for each 
region to serve on the Council under paragraph (d):
    (1) Each region that produces, on average, at least 35,000,000 
pounds of mushrooms annually shall be entitled to one representative on 
the Council.
    (2) As provided in paragraph (c), importers shall be represented by 
a single, separate region, which shall be entitled to one 
representative, if such region imports, on average, at least 35,000,000 
pounds of mushrooms annually.
    (3) Each region shall be entitled to representation by an additional 
Council member for each 50,000,000 pounds of annual production or 
imports, on average, in excess of the initial 35,000,000 pounds required 
to qualify the region for representation.
    (4) Should, in the aggregate, regions be entitled to levels of 
representation under paragraphs (e) (1), (2) and (3) that would exceed 
the nine-member limit on the Council under the Act, the regions shall be 
entitled to representation on the Council as follows:
    (i) Each region first shall be assigned one representative on the 
Council pursuant to paragraphs (e) (1) and (2).
    (ii) Then, each region with 50,000,000 pounds of annual production 
or imports, on average, in excess of the initial 35,000,000 pounds 
required to qualify the region for representation shall be assigned one 
additional representative on the Council, except that if under such 
assignments all five regions, counting importers as a region, if 
applicable, would be entitled to additional representatives, that region 
with the smallest on-average volume, in terms of production or imports, 
will not be assigned an additional representative.
    (iii) After members are assigned to regions under paragraphs (e)(4) 
(i) and (ii), if less than the entire nine seats on the Council have 
been assigned to regions, the remaining seats on the Council shall be 
assigned to each region for each 50,000,000 pound increment of annual 
production or import volume, on average, in excess of 85,000,000 pounds 
until all the seats are filled. It for any such 50,000,000 pound 
increment, more regions are eligible for seats than there are seats 
available, the seat or seats assigned for such increment shall be 
assigned to that region or those regions with greater on-

[[Page 66]]

average production or import volume than the other regions otherwise 
eligible at that increment level.
    (f) In determining the volume of mushrooms produced in the United 
States or imported into the United States for purposes of this section, 
the Council and the Secretary shall:
    (1) Only consider mushrooms produced or imported by producers and 
importers, respectively, as those terms are defined in Sec. Sec.  1209.8 
and 1209.15; and
    (2) Use the information received by the Council under Sec.  1209.60, 
and data published by the Department.
    (g) For purposes of the provisions of this section relating to the 
appointment of producers and importers to serve on the Council, the term 
producer or importer refers to any individual who is a producer or 
importer, respectively, or if the producer or importer is an entity 
other than an individual, an individual who is an officer or employee of 
such producer or importer.



Sec.  1209.31  Nominations.

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

[[Page 67]]

more than one region or is also an importer, such individual shall 
participate within the region that such individual so elects in writing 
to the Council and such election shall remain controlling until revoked 
in writing to the Council.
    (e) After the regional caucuses for the initial Council, the Council 
may conduct the selection of nominees by mail ballot in lieu of a 
regional caucus.
    (f) When producers or importers are voting for nominees to the 
Council, whether through a regional caucus or a mail ballot, the 
following conditions shall apply:
    (1) Voting for any open position shall be on the basis of:
    (i) One vote per eligible voter; and
    (ii) Volume of on-average production or imports of the eligible 
voter within that region.
    (2) Whenever the producers or importers in a region are choosing 
nominees for one open position on the Council, the proposed nominee with 
the highest number of votes cast and the proposed nominee with the 
highest volume of production or importers voted shall be the nominees 
submitted to the Secretary. If a proposed nominee receives both the 
highest number of votes cast and the highest volume of production or 
imports voted, then the proposed nominee with the second highest number 
of votes cast shall be a nominee submitted to the Secretary along with 
such proposed nominee receiving both the highest number of votes cast 
and the highest volume of production or imports voted.
    (3) Whenever the producers or importers in a region are choosing 
nominees for more than one open position on the Council at the same 
time, the number of the nominations submitted to the Secretary shall 
equal twice the number of such open positions, and for each open 
position shall consist of the proposed nominee with the highest number 
of votes cast and the proposed nominee with the highest volume of 
production or imports voted with respect to that position, subject to 
the rule set out in paragraph (f)(2). An individual shall only be 
nominated for one such open position.
    (4) Voters shall certify on their ballots as to their on-average 
production or import volume within the region involved. Such 
certification may be subject to verification.
    (g)(1) The Secretary may reject any nominee submitted. If there are 
insufficient nominees from which to appoint members to the Council as a 
result of the Secretary's rejecting such nominees, additional nominees 
shall be submitted to the Secretary under the procedures set out in this 
section.
    (2) Whenever producers or importers in a region cannot agree on 
nominees for an open position on the Council under the preceding 
provisions of this section, or whenever they fail to nominate 
individuals for appointment to the Council, the Secretary may appoint 
members in such manner as the Secretary, by regulation, determines 
appropriate.



Sec.  1209.32  Acceptance.

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



Sec.  1209.33  Appointment.

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



Sec.  1209.34  Term of office.

    (a) The members of the Council shall serve for terms of three years, 
except that the members appointed to the initial Council shall serve, 
proportionately, for terms of one, two, and three years.
    (b) Members of the initial Council shall be designated for, and 
shall serve, terms as follows: One producer member each from regions 1, 
2 and 3 shall be appointed for an initial term of one year; one producer 
member each from regions 1, 2, and 3 shall be appointed for an initial 
term of two years; and one producer member each from regions 2, 3, and 4 
shall be appointed for an initial term of three years. Because current 
imports of fresh mushrooms are less than 35,000,000 pounds, the minimum 
established for representation on the

[[Page 68]]

Council, importers will not initially have a member appointed to the 
Council.
    (c)(1) Except with respect to terms of office of the initial 
Council, the term of office for each member of the Council shall begin 
on January 1 or such other date that may be approved by the Secretary.
    (2) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary, except that time in 
the interim period from appointment until the following January 1, or 
such other date that is the generally applicable beginning date for 
terms under paragraph (c)(1) approved by the Secretary, shall not count 
toward the initial term of office.
    (d) Council members shall serve during the term of office for which 
they are appointed and have qualified, and until their successors are 
appointed and have qualified.
    (e)(1) No member shall serve more than two successive three-year 
terms, except as provided in paragraph (e)(2)(ii).
    (2)(i) Those members serving initial terms of two or three years may 
serve one successive three-year term.
    (ii) Those members serving initial terms of one year may serve two 
successive three-year terms.



Sec.  1209.35  Vacancies.

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



Sec.  1209.36  Procedure.

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

[[Page 69]]

given prior notice of the meeting and has an opportunity to be present 
either physically or by electronic connection.
    (e) The organization of the Council and the procedures for 
conducting meetings of the Council shall be in accordance with its 
bylaws,which shall be established by the Council and approved by the 
Secretary.



Sec.  1209.37  Compensation and reimbursement.

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



Sec.  1209.38  Powers.

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

[[Page 70]]

    (k) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a program, plan, or project, funds collected 
through assessments provided for in Sec.  1209.51, and any other funds 
received by the Council in, and only in, obligations of the United 
States or any agency thereof, in general obligations of any State or any 
political subdivision thereof, in any interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or in obligations fully guaranteed as to principal and interest 
by the United States;
    (l) Such other powers as may be approved by the Secretary; and
    (m) To develop and propose to the Secretary voluntary quality and 
grade standards for mushrooms, if the Council determines that such 
quality and grade standards would benefit the promotion of mushrooms.



Sec.  1209.39  Duties.

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

   Promotion, Research, Consumer Information, and Industry Information



Sec.  1209.40  Programs, plans, and projects.

    (a) The Council shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, consumer information, and 
industry information with respect to mushrooms; and

[[Page 71]]

    (2) The establishment and conduct of research with respect to the 
sale, distribution, marketing, and use of mushrooms and mushroom 
products, and the creation of new products thereof, to the end that 
marketing and use of mushrooms may be encouraged, expanded, improved or 
made more acceptable. However, as prescribed by the Act, nothing in this 
subpart may be construed to authorize mandatory requirements for quality 
control, grade standards, supply management programs, or other programs 
that would control production or otherwise limit the right of individual 
producers to produce mushrooms.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Council shall take appropriate steps to implement it.
    (c) Each programs, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Council to ensure 
that it contributes to an effective program of promotion, research, 
consumer information, or industry information. If it is found by the 
Council that any such program, plan, or project does not contribute to 
an effective program of promotion, research, consumer information, or 
industry information, then the Council shall terminate such program, 
plan, or project.
    (d) In carrying out any program, plan, or project, no reference to a 
brand name, trade name, or State or regional identification of any 
mushrooms or mushroom product shall be made. In addition, no program, 
plan, or project shall make use of unfair or deceptive acts or practices 
with respect to the quality, value, or use of any competing product.

                        Expenses and Assessments



Sec.  1209.50  Budget and expenses.

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

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

[[Page 72]]

donor and the Council shall retain complete control of their use. The 
donor may recommend that the whole or a portion of the contribution be 
applied to an ongoing program, plan, or project.
    (e) The Council shall reimburse the Secretary, from funds received 
by the Council, for administrative costs incurred by the Secretary in 
implementing and administering this subpart, except for the salaries of 
Department employees incurred in conducting referenda.
    (f) The Council may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established, except that the funds in the reserve shall not exceed 
approximately one fiscal year's expenses. Such reserve funds may be used 
to defray any expenses authorized under this subpart.
    (g) With the approval of the Secretary, the Council may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Council.



Sec.  1209.51  Assessments.

    (a) Any first handler initially purchasing, or otherwise placing 
into the current of commerce, mushrooms produced in the United States 
shall, in the manner as prescribed by the Council and approved by the 
Secretary, collect an assessment based upon the number of pounds of 
mushrooms marketed in the United States for the account of the producer, 
and remit the assessment to the Council.
    (b) The rate of assessment effective during any fiscal year shall be 
the rate specified in the budget for such fiscal year approved by the 
Secretary, except that:
    (1) The rate of assessment during the first year this subpart is in 
effect shall be one-quarter of one cent per pound of mushrooms marketed, 
or the equivalent thereof.
    (2) The rate of assessment during the second year this subpart is in 
effect shall not exceed one-third of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (3) The rate of assessment during the third year this subpart is in 
effect shall not exceed one-half of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (4) The rate of assessment during each of the fourth and following 
years this subpart is in effect shall not exceed one cent per pound of 
mushrooms marketed, or the equivalent thereof.
    (5) The Council may change the rate of assessment for a fiscal year 
at any time with the approval of the Secretary as necessary to reflect 
changed circumstances, except that any such changed rate may not exceed 
the level of assessment specified in paragraphs (b)(1), (2), (3), or 
(4), whichever is applicable.
    (c) Any person marketing mushrooms of that person's own production 
to consumers in the United States, either directly or through retail or 
wholesale outlets, shall be considered a first handler and shall remit 
to the Council an assessment on such mushrooms at the rate per-pound 
then in effect, and in such form and manner prescribed by the Council.
    (d) Only one assessment shall be paid on each unit of mushrooms 
marketed.
    (e)(1) Each importer of mushrooms shall pay an assessment to the 
Council on mushrooms imported for marketing in the United States, 
through the U.S. Customs Service or in such other manner as may be 
established by rules and regulations approved by the Secretary.
    (2) The per-pound assessment rate for imported mushrooms shall be 
the same as the rate provided for mushrooms produced in the United 
States.
    (3) The import assessment shall be uniformly applied to imported 
mushrooms that are identified by the number, 0709.51.0000, in the 
Harmonized Tariff Schedule of the United States or any other number used 
to identify fresh mushrooms.
    (4) The assessments due on imported mushrooms shall be paid when the 
mushrooms are entered or withdrawn for consumption in the United States, 
or at such other time as may be established by rules and regulations 
prescribed by the Council and approved by the Secretary and under such 
procedures as are provided in such rules and regulations.
    (5) Only one assessment shall be paid on each unit of mushrooms 
imported.

[[Page 73]]

    (f) The collection of assessments under this section shall commence 
on all mushrooms marketed in or imported into the United States on or 
after the date established by the Secretary, and shall continue until 
terminated by the Secretary. If the Council is not constituted on the 
date the first assessments are to be collected, the Secretary shall have 
the authority to receive assessments on behalf of the Council and may 
hold such assessments until the Council is constituted, then remit such 
assessments to the Council.
    (g)(1) Each person responsible for remitting assessments under 
paragraphs (a), (c), or (e) shall remit the amounts due from assessments 
to the Council on a monthly basis no later than the fifteenth day of the 
month following the month in which the mushrooms were marketed, in such 
manner as prescribed by the Council.
    (2)(i) A late payment charge shall be imposed on any person that 
fails to remit to the Council the total amount for which the person is 
liable on or before the payment due date established under this section. 
The amount of the late payment charge shall be prescribed in rules and 
regulations as approved by the Secretary.
    (ii) An additional charge shall be imposed on any person subject to 
a late payment charge, in the form of interest on the outstanding 
portion of any amount for which the person is liable. The rate of 
interest shall be prescribed in rules and regulations as approved by the 
Secretary.
    (3) Any assessment that is determined to be owing at a date later 
than the payment due established under this section, due to a person's 
failure to submit a report to the Council by the payment due date, shall 
be considered to have been payable on the payment due date. Under such a 
situation, paragraphs (g)(2)(i) and (g)(2)(ii) of this section shall be 
applicable.
    (h) The Council, with the approval of the Secretary, may enter into 
agreements authorizing other organizations to collect assessments in its 
behalf. Any such organization shall be required to maintain the 
confidentiality of such information as is required by the Council for 
collection purposes. Any reimbursement by the Council for such services 
shall be based on reasonable charges for services rendered.
    (i) The Council is hereby authorized to accept advance payment of 
assessments for the fiscal year by any person, that shall be credited 
toward any amount for which such person may become liable. The Council 
shall not be obligated to pay interest on any advance payment.



Sec.  1209.52  Exemption from assessment.

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



Sec.  1209.53  Influencing governmental action.

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

                       Reports, Books and Records



Sec.  1209.60  Reports.

    (a) Each producer marketing mushrooms of that person's own 
production directly to consumers, and each first handler responsible for 
the collection of assessments under Sec.  1209.51(a) shall be required 
to report monthly to the Council, on a form provided by the Council, 
such information as may be required under this subpart or any

[[Page 74]]

rules and regulations issued thereunder. Such information shall include, 
but not be limited to, the following:
    (1) The first handler's name, address, and telephone number;
    (2) Date of report, which is also the date of payment to the 
Council;
    (3) Period covered by the report;
    (4) The number of pounds of mushrooms purchased, initially 
transferred, or that in any other manner are subject to the collection 
of assessments, and a copy of a certificate of exemption, claiming 
exemption under Sec.  1209.52 from those who claim such exemptions;
    (5) The amount of assessments remitted; and
    (6) The basis, if necessary, to show why the remittance is less than 
the number of pounds of mushrooms determined under paragraph (a)(4) 
multiplied by the applicable assessment rate.
    (b) If determined necessary by the Council and approved by the 
Secretary, each importer shall file with the Council periodic reports, 
on a form provided by the Council, containing at least the following 
information:
    (1) The importer's name, address, and telephone number;
    (2) The quantity of mushrooms entered or withdrawn for consumption 
in the United States during the period covered by the report; and
    (3) The amount of assessments paid to the U.S. Customs Service at 
the time of such entry or withdrawal.
    (c) The words final report shall be shown on the last report at the 
end of each fiscal year.



Sec.  1209.61  Books and records.

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



Sec.  1209.62  Confidential treatment.

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

                              Miscellaneous



Sec.  1209.70  Right of the Secretary.

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



Sec.  1209.71  Suspension or termination.

    (a) Whenever the Secretary finds that this subpart or any provision 
thereof obstructs or does not tend to effectuate

[[Page 75]]

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



Sec.  1209.72  Proceedings after termination.

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



Sec.  1209.73  Effect of termination or amendment.

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

[[Page 76]]

    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.



Sec.  1209.74  Personal liability.

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



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

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



Sec.  1209.76  Amendments.

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



Sec.  1209.77  Separability.

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



                    Subpart B--Rules and Regulations

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

                               Definitions



Sec.  1209.200  Terms defined.

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

                          Nomination Procedures



Sec.  1209.230  Reallocation of council members.

    Pursuant to Sec.  1209.30 of the Order, the regions and their number 
of members on the Council shall be as follows:
    Region 1: Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, 
Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, 
Nebraska, New York, New Hampshire, North Dakota, Ohio, Rhode Island, 
South Dakota, Vermont, Wisconsin, and Wyoming--1 Producer Member.
    Region 2: Delaware, Maryland, New Jersey, Pennsylvania, the District 
of Columbia, West Virginia, and Virginia--3 Producer Members.
    Region 3: Alaska, Arizona, California, Hawaii, Idaho, Nevada, 
Oregon, Utah, and Washington--2 Producer Members.
    Region 4: Alabama, Arkansas, Florida, Georgia, Louisiana, 
Mississippi, New Mexico, North Carolina, Oklahoma, the Commonwealth of 
Puerto Rico, South Carolina, Tennessee, and Texas--2 Producer Members.
    Region 5:--1 Importer Member.

[67 FR 46579, July 16, 2002]



Sec.  1209.231  Nominations.

    Nominations shall be made at regional caucuses of producers or 
importers, or by mail ballot in accordance with the procedures 
prescribed in Sec.  1209.31 of this part. Proxy voting by producers and 
importers shall not be permitted at a regional caucus or in a mail 
ballot. Each regional caucus and mail ballot shall be scheduled so as to

[[Page 77]]

ensure that the nominations for each position that will be open at the 
beginning of the following year are received by the Secretary by August 
1, or such other date approved by the Secretary.



Sec.  1209.233  Regional caucus chairpersons.

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



Sec.  1209.235  Mail balloting.

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

[[Page 78]]

will be contacted by the Council and asked to forward such completed 
documentation to the Council within 14 days of such notification.



Sec.  1209.237  Appointment.

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

                                 General



Sec.  1209.239  Financial statements.

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

                               Assessments



Sec.  1209.251  Payment of assessments.

    (a) Each first handler responsible for collecting assessments on 
domestic mushrooms shall collect the amounts assessed and remit such 
amounts to the Council on a monthly basis not later than the fifteenth 
day of the month following the month in which the mushrooms were 
marketed to or through the first handler.
    (b) Each producer responsible for paying any assessment amount on 
the producer's own mushrooms shall remit such amount to the Council on a 
monthly basis not later than the fifteenth day of the month following 
the month in which the mushrooms were marketed by the producer.
    (c) Each importer shall be responsible for remittance to the Council 
of any assessment amount not collected by the U.S. Customs Service at 
the time of entry or withdrawal for consumption into the United States. 
Any such assessment amount shall be remitted to the Council on a monthly 
basis not later than the fifteenth day of the month following the month 
of entry or withdrawal for consumption into the United States. Any 
person who imports mushrooms, as principal or as an agent, broker, or 
consignee for any person who produces mushrooms outside the United 
States for marketing in the United States shall be considered an 
importer.
    (d) Remittance shall be by check, draft, or money order payable to 
the Mushroom Council, and shall be accompanied by a report, on a form 
provided by the Council.
    (e) A late payment charge shall be imposed on any first handler or 
importer who fails to make timely remittance to the Council of the total 
assessment amount for which the person is liable. Such late payment 
charge shall be imposed on any assessments not received by the last day 
of the month following the month in which the mushrooms involved were 
marketed or, in the case of imports, not collected by the U.S. Customs 
Service at the time of entry or withdrawal for consumption into the 
United States. This one-time late payment charge shall be 10 percent of 
the assessments due before interest charges have accrued. The late 
payment charge will not be applied to any late payments postmarked 
within 15 days after the end of the month such assessments are due.
    (f) In addition to the late payment charge, interest shall be 
charged at a rate of one and one-half percent per month on the 
outstanding balance, including the late payment charge and any accrued 
interest, of any account that remains delinquent beyond the last day of 
the second month following the month the mushrooms involved were 
marketed. However, first handlers

[[Page 79]]

paying their assessments, in accordance with paragraph (h)(2) of this 
section, will not be subject to the one and one-half percent per month 
interest under this paragraph until the last day of the second month 
after such assessments are due under paragraph (h)(2) of this section. 
In the case of imports, such a rate of interest will be charged to any 
account that remains delinquent on any assessments not collected by the 
U.S. Customs Service at the time of entry or withdrawal for consumption 
into the United States. Such a rate of interest will continue to be 
charged monthly until the outstanding balance is paid to the Council.
    (g) Any assessment determined by the Council at a date later than 
prescribed by this section, because of a person's failure to submit a 
report to the Council when due, shall be considered to have been payable 
by the date it would have been due if the report had been filed on time. 
A late payment charge and monthly interest charges on the outstanding 
balance shall be applicable to such unpaid assessment in accordance with 
paragraphs (e) and (f) of this section.
    (h) In lieu of the monthly assessment payment and reporting 
requirements of Sec.  1209.260 of this subpart and Sec.  1209.60 of this 
part, the Council may permit a first handler to make advance payment of 
the total estimated assessment amount due to the Council for the ensuing 
fiscal year, or portion thereof, prior to the actual determination of 
assessable mushrooms.
    (1) Each person shall provide an initial report estimating 
assessable mushrooms. The Council may request additional information on 
such estimate.
    (2) Each person shall provide a final report of actual marketings 
during the period involved and remit any unpaid assessments not later 
than the fifteenth day of the month following the end of the period 
covered.
    (3) Any person whose prepayment exceeds the amount paid shall be 
reimbursed for the amount of overpayment. The Council shall not, in any 
case, be obligated to pay interest on any advance payment.



Sec.  1209.252  Exemption procedures.

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

                                 Reports



Sec.  1209.260  Reports.

    Each first handler shall be required to report monthly to the 
Council such

[[Page 80]]

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

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

                              Miscellaneous



Sec.  1209.280  OMB control numbers.

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



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

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



Sec.  1209.300  General.

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



Sec.  1209.301  Definitions.

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

[[Page 81]]

    (g) Eligible importer means any person or entity defined as an 
importer who imports, on average, over 500,000 pounds annually of fresh 
mushrooms during the representative period. Importation occurs when 
commodities originating outside the United States are entered or 
withdrawn from the U.S. Customs Service for consumption in the United 
States. Included are persons who hold title to foreign-produced 
mushrooms immediately upon release by the U.S. Customs Service, as well 
as any persons who act on behalf of others, as agents or brokers, to 
secure the release of mushrooms from the U.S. Customs Service when such 
mushrooms are entered or withdrawn for consumption in the United States.



Sec.  1209.302  Voting.

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



Sec.  1209.303  Instructions.

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

[[Page 82]]



Sec.  1209.304  Subagents.

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



Sec.  1209.305  Ballots.

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



Sec.  1209.306  Referendum report.

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



Sec.  1209.307  Confidential information.

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



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




            Subpart A--Watermelon Research and Promotion Plan

                               Definitions

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

                   National Watermelon Promotion Board

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

                         Research and Promotion

1210.330 Policy and objective.
1210.331 Programs and projects.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                    Subpart B--Nominating Procedures

                      Producer and Handler Members

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

                            Importer Members

1210.404 Importer member nomination and selection.

                              Public Member

1210.405 Public member nominations and selection.

[[Page 83]]

                    Subpart C--Rules and Regulations

                               Definitions

1210.500 Terms defined.

                                 General

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

                               Assessments

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

                                 Records

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

                              Miscellaneous

1210.540 OMB assigned numbers.

                    Subpart D--Referendum Procedures

1210.600 General.
1210.601 Definitions.
1210.602 Voting.
1210.603 Instructions.
1210.604 Subagents.
1210.605 Ballots.
1210.606 Referendum report.
1210.607 Confidential information.

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

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



            Subpart A--Watermelon Research and Promotion Plan

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

                               Definitions



Sec.  1210.301  Secretary.

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



Sec.  1210.302  Act.

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

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



Sec.  1210.303  Plan.

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



Sec.  1210.304  Board.

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



Sec.  1210.305  Watermelon.

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

[60 FR 10797, Feb. 28, 1995]



Sec.  1210.306  Producer.

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

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



Sec.  1210.307  Handle.

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



Sec.  1210.308  Handler.

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

[[Page 84]]

``handler'' means the ``first'' person who performs the handling 
functions.



Sec.  1210.309  Person.

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



Sec.  1210.310  Fiscal period and marketing year.

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



Sec.  1210.311  Programs and projects.

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



Sec.  1210.312  Promotion.

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



Sec.  1210.313  Research.

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



Sec.  1210.314  Importer.

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

[60 FR 10797, Feb. 28, 1995]



Sec.  1210.315  United States.

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

[60 FR 10797, Feb. 28, 1995]

                   National Watermelon Promotion Board



Sec.  1210.320  Establishment and membership.

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

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

[[Page 85]]

District #7--The States of Arizona, California, Nevada, Utah, Oregon, 
Idaho, Wyoming, Washington, and Montana.

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

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

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



Sec.  1210.321  Nominations and selection.

    The Secretary shall appoint the members of the Board from 
nominations to be made in the following manner:
    (a) There shall be two individuals nominated for each vacant 
position.
    (b) The Board shall issue a call for nominations by February first 
of each year in which an election is to be held. The call shall include 
at a minimum, the following information:
    (1) A list of the vacancies and qualifications as to producers and 
handlers by district and to importers nationally for which nominees may 
be submitted.
    (2) The date by which the nominees shall be submitted to the 
Secretary for consideration to be in compliance with Sec.  1210.323 of 
this subpart.
    (3) A list of those States, by district, entitled to participate in 
the nomination process.
    (4) The date, time, and location of any next scheduled meeting of 
the Board, national and State producer or handler associations, 
importers, and district conventions, if any.
    (c) Nominations for producer and handler positions that will become 
vacant shall be made by district convention in the district entitled to 
nominate. Notice of such convention shall be publicized to all producers 
and handlers within such district, and the Secretary at least ten days 
prior to said event. The notice shall have attached to it the call for 
nominations from the Board. The responsibility for convening and 
publicizing the district convention shall be that of the then members of 
the Board from that district.
    (d) Nominations for importers positions that become vacant may be 
made by mail ballot, nomination conventions, or by other means 
prescribed by the Secretary. The Board shall provide notice of such 
vacancies and the nomination process to all importers through press 
releases and any other available means as well as direct mailing to 
known importers. All importers may participate in the nomination 
process: Provided, That a person who both imports and handles 
watermelons may vote for importer members and serve as an importer 
member if that person imports 50 percent or more of the combined total 
volume of watermelons handled and imported by that person.
    (e) All producers and handlers within the district may participate 
in the convention: Provided, That a person that produces and handles 
watermelons may vote for handler members only if the producer purchased 
watermelons from other producers, in a combined total volume that is 
equal to 25 percent or more of the producer's own production;

[[Page 86]]

or the combined total volume of watermelon handled by the producer from 
the producer's own production and purchases from other producer's 
production is more than 50 percent of the producer's own production; and 
provided further, That if a producer or handler is engaged in the 
production or handling of watermelons in more than one State or 
district, the producer or handler shall participate within the State or 
district in which the producer or handler so elects in writing to the 
Board and such election shall remain controlling until revoked in 
writing to the Board.
    (f) The district convention chairperson shall conduct the selection 
process for the nominees in accordance with procedures to be adopted at 
each such convention, subject to requirements set in Sec.  1210.321(e).
    (1) No State in Districts 3, 4, 5, and 7 as currently constituted 
shall have more than three producers and handlers representatives 
concurrently on the Board.
    (2) Each State represented at the district convention shall have one 
vote for each producer position and one vote for each handler position 
from the District on the Board, which vote shall be determined by the 
producers and handlers from that State by majority vote. Each State 
shall further have an additional vote for each five hundred thousand 
hundredweight volume as determined by the three year average annual crop 
production summary reports of the USDA, or if such reports are not 
published, then the three year average of the Board assessment reports; 
Provided, That for the first two calls for nominees, the USDA Crop 
Production Annual Summary Reports for 1979, 1980, and 1981 will be 
controlling as to any additional production volume votes.

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



Sec.  1210.322  Term of office.

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

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



Sec.  1210.323  Acceptance.

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



Sec.  1210.324  Vacancies.

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

[[Page 87]]



Sec.  1210.325  Procedure.

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

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



Sec.  1210.326  Compensation and reimbursement.

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



Sec.  1210.327  Powers.

    The Board shall have the following powers subject to Sec.  1210.363:
    (a) To administer the provisions of this Plan in accordance with its 
terms and conditions;
    (b) To make rules and regulations to effectuate the terms and 
conditions of this Plan;
    (c) To require its employees to receive, investigate, and report to 
the Secretary complaints of violations of this Plan; and
    (d) To recommend to the Secretary amendments to this Plan.



Sec.  1210.328  Duties.

    The Board shall, among other things, have the following duties:
    (a) To meet, organize, and select from among its members a president 
and such other officers as may be necessary; to select committees and 
subcommittees of board members; to adopt such rules for the conduct of 
its business as it may deem advisable; and it may establish working 
committees of persons other than Board members.
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) To prepare and submit for the Secretary's approval, prior to the 
beginning of each fiscal period, a recommended rate of assessment and a 
fiscal period budget of the anticipated expenses in the administration 
of this Plan, including the probable costs of all programs and projects;
    (d) To develop programs and projects, which must be approved by the 
Secretary before becoming effective, and enter into contracts or 
agreements, with the approval of the Secretary, for the development and 
carrying out of programs or projects of research, development, 
advertising or promotion, and the payment of the costs thereof with 
funds received pursuant to this Plan;
    (e) To keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Board. Minutes of each Board meeting 
shall be promptly reported to the Secretary;
    (f) To prepare and submit to the Secretary such reports from time to 
time as may be prescribed for appropriate accounting with respect to the 
receipt and disbursement of funds entrusted to the Board;
    (g) To cause the books of the Board to be audited by a certified 
public accountant at least once each fiscal period, and at such other 
time as the Board may deem necessary. The report of such audit shall 
show the receipt and expenditure of funds received pursuant to this 
part. Two copies of each such report shall be furnished to the Secretary 
and a copy of each such report shall be made available at the principal 
office of the Board for inspection by producers, handlers, and 
importers;
    (h) To investigate violations of the Plan and report the results of 
such investigations to the Secretary for appropriate action to enforce 
the provisions of the Plan;

[[Page 88]]

    (i) To periodically prepare, make public, and make available to 
producers, handlers, and importers reports of its activities carried 
out.
    (j) To give the Secretary the same notice of meetings of the Board 
and its subcommittees as is given to its members;
    (k) To act as intermediary between the Secretary and any producer, 
handler, or importer;
    (l) To furnish the Secretary such information as the Secretary may 
request;
    (m) To notify watermelon producers, handlers, and importers of all 
Board meetings through press releases or other means;
    (n) To appoint and convene, from time to time, working committees 
drawn from producers, handlers, importers, and the public to assist in 
the development of research and promotion programs for watermelons; and
    (o) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of programs or projects to effectuate the declared purpose of 
the Act.

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

                         Research and Promotion



Sec.  1210.330  Policy and objective.

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

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



Sec.  1210.331  Programs and projects.

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

                        Expenses and Assessments



Sec.  1210.340  Budget and expenses.

    (a) Prior to the beginning of each fiscal period, or as may be 
necessary

[[Page 89]]

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

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



Sec.  1210.341  Assessments.

    (a) During the effective period of this subpart, assessments shall 
be levied on all watermelons produced and first handled in the United 
States and all watermelons imported into the United States for 
consumption as human food. No more than one assessment on a producer, 
handler, or importer shall be made on any lot of watermelons. The 
handler shall be assessed an equal amount on a per unit basis as the 
producer. If a person performs both producing and handling functions on 
any same lot of watermelons, both assessments shall be paid by such 
person. In the case of an importer, the assessment shall be equal to the 
combined rate for domestic producers and handlers and shall be paid by 
the importer at the time of entry of the watermelons into the United 
States.
    (b) Assessment rates shall be fixed by the Secretary in accordance 
with section 1647(f) of the Act. No assessments shall be levied on 
watermelons grown by producers of less than 10 acres of watermelons.
    (c) Each handler, as defined, is responsible for payment to the 
Board of both the producer's and the handler's assessment pursuant to 
regulations issued hereunder. The handler may collect producer 
assessments from the producer or deduct such assessments from the 
proceeds paid to the producer on whose watermelons the assessments are 
made. The handler shall maintain separate records for each producer's 
watermelons handled, including watermelons produced by said handler. In 
addition, the handler shall indicate the total quantity of watermelons 
handled by the handler, including those that are exempt under this Plan, 
and such other information as may be prescribed by the Board.
    (d) Each importer shall be responsible for payment of the assessment 
to the Board on watermelons imported into the United States through the 
U.S. Customs Service or in such other manner as may be established by 
rules and regulations approved by the Secretary.
    (e) Producer-handlers and handlers shall pay assessments to the 
Board at such time and in such manner as the Board, with the Secretary's 
approval, directs, pursuant to regulations issued under this part. Such 
regulations may provide for different handlers or classes of handlers 
and different handler payment and reporting schedules to recognize 
differences in marketing practices or procedures used in any State or 
production area.
    (f) There shall be a late payment charge imposed on any handler or 
importer who fails to remit to the Board the total amount for which any 
such handler or importer is liable on or before the payment due date 
established by the Board under paragraph (e) of this section. The amount 
of the late payment charge shall be set by the Board subject to approval 
by the Secretary.
    (g) There shall also be imposed on any handler or importer subject 
to a late payment charge, an additional charge in the form of interest 
on the outstanding portion of any amount for which the handler or 
importer is liable. The rate of such interest shall be prescribed by the 
Board subject to approval by the Secretary.
    (h) The Board is hereby authorized to accept advance payment of 
assessments by handlers and importers that shall be credited toward any 
amount

[[Page 90]]

for which the handlers and importers may become liable. The Board shall 
not be obligated to pay interest on any advance payment.
    (i) The Board is hereby authorized to borrow money for the payment 
of administrative expenses subject to the same fiscal, budget, and audit 
controls as other funds of the Board.
    (j) The Board may authorize other organizations to collect 
assessments in its behalf with the approval of the Secretary. Any 
reimbursement by the Board for such services shall be based on 
reasonable charges for services rendered.

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



Sec.  1210.342  Exemption from assessment.

    (a) The Board may exempt watermelons used for nonfood purposes from 
the provisions of this Plan and shall establish adequate safeguards 
against improper use of such exemptions.
    (b) Importers of less than 150,000 pounds of watermelons per year 
shall be entitled to apply for a refund that is equal to the rate of 
assessment paid by domestic producers.
    (c) The Secretary may adjust the quantity of the weight exemption 
specified in paragraph (b) of this section on the recommendation of the 
Board after an opportunity for public notice and comment to reflect 
significant changes in the 5-year average yield per acre of watermelons 
produced in the United States.
    (d) The Board shall have the authority to establish rules, with the 
approval of the Secretary, for certifying whether a person meets the 
definition of a producer under section 1210.306.

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



Sec.  1210.343  [Reserved]



Sec.  1210.344  Operating reserve.

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

                       Reports, Books, and Records



Sec.  1210.350  Reports.

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

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



Sec.  1210.351  Books and records.

    Each handler and importer subject to this Plan shall maintain, and 
during normal business hours make available for inspection by employees 
of the Board or Secretary, such books and records as are necessary to 
carry out

[[Page 91]]

the provisions of this Plan and the regulations issued thereunder, 
including such records as are necessary to verify any required reports. 
Such records shall be maintained for 2 years beyond the fiscal period of 
their applicability.

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



Sec.  1210.352  Confidential treatment.

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

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

                              Miscellaneous



Sec.  1210.360  Right of the Secretary.

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



Sec.  1210.361  Personal liability.

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



Sec.  1210.362  Influencing government action.

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

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



Sec.  1210.363  Suspension or termination.

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

[[Page 92]]

handled by the producer from the producer's own production and purchases 
from other producer's production is more than 50 percent of the 
producer's own production. Provided, That the vote of a person who both 
imports and handles watermelons will be counted as an importer vote if 
that person imports 50 percent or more of the combined total volume of 
watermelons handled and imported by that person. Any such referendum 
shall be conducted by mail ballot.

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



Sec.  1210.364  Proceedings after termination.

    (a) Upon the termination of this Plan, the Board shall recommend not 
more than five of its members to the Secretary to serve as trustees for 
the purpose of liquidating the affairs of the Board. Such persons, upon 
designation by the Secretary, shall become trustees of all funds and 
property then in possession or under control of the Board, including 
claims for any funds unpaid or property not delivered or any other claim 
existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by it pursuant to Sec.  1210.328(d);
    (3) From time-to-time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to person or persons as the Secretary may 
direct; and
    (4) Upon the request of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person or 
persons full title and right to all the funds, property, and claims 
vested in the Board or the trustees pursuant to this section.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this section shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) A reasonable effort shall be made by the Board or its trustees 
to return to producers, handlers and importers any residual funds not 
required to defray the necessary expenses of liquidation. If it is found 
impractical to return such remaining funds to producers, handlers and 
importers such funds shall be disposed of in such manner as the 
Secretary may determine to be appropriate.

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



Sec.  1210.365  Effect of termination or amendment.

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



Sec.  1210.366  Separability.

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



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

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

[[Page 93]]

apply to determine the disposition of all such property.



                    Subpart B--Nominating Procedures

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

                      Producer and Handler Members



Sec.  1210.400  Terms defined.

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



Sec.  1210.401  District conventions.

    (a) Except for the initial district convention in each district, 
which will be called and opened by a representative of the Secretary, 
the Board shall call and open all district conventions.
    (b) District conventions are to be held to nominate producers and 
handlers as candidates for membership on the National Watermelon 
Promotion Board. Each district, as defined in Sec.  1210.501, is 
entitled to two producer and two handler members on the Board.
    (c) There shall be two individuals nominated for each vacant 
position. In multi-State districts, no one State shall have nominees for 
more than three of the four district positions on the Board.
    (d) All producers and handlers within each district may participate 
in that district's convention: Provided, That they meet the eligibility 
provisions set forth in Sec.  1210.402 of this subpart.
    (e) The convention chairperson shall be elected as provided in Sec.  
1210.403(b) of this subpart.
    (f) The Board member nomination process shall be conducted by the 
chairperson in conformance with the provisions of Sec.  1210.321 of the 
Plan and Sec.  1210.403 of this subpart. At the conclusion of the 
district convention for the initial term of office, the chairperson will 
provide the Secretary with:
    (1) The identification of that district's two nominees for each 
producer and handler position on the Board, and
    (2) A typed copy of the district convention's minutes.

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

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



Sec.  1210.402  Voter and board member nominee eligibility.

    (a) All producers and handlers within a district may participate in 
their district convention for the purpose of nominating candidates for 
appointment to the Board: Provided, That a producer who both produces 
and handles watermelons may vote for handler member nominees and serve 
as a handler member nominee only if the producer purchased watermelons 
from other producers, in a combined total volume that is equal to 25 
percent or more of the producer's own production or the combined total 
volume of watermelons handled by the producer from

[[Page 94]]

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

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



Sec.  1210.403  Voting procedures.

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

All proxy documentation must be received by the Board at its 
headquarters address at least two weeks before the district convention 
is scheduled to convene. For the purpose of the initial district 
convention, all proxy documentation must be forwarded to the Department 
representative identified in the call for the district convention in a 
manner that will ensure receipt, at the address specified in the call, 
at least 72 hours before the district convention is scheduled to 
convene. The Board, or in the case of the initial conventions the 
Department representative identified in the call or other representative 
of the Department, may challenge any proxy vote and disqualify any 
challenged vote for cause. In the case of duplicate proxy authorizations 
by any person, only the first authorization, determined by date will be 
allowed. In the case of duplicate dates, the proxy which is received 
first will be allowed.
    (b) In non-multi-State districts, convention chairpersons shall be 
elected by a majority vote of the eligible voters in attendance. In 
multi-State districts, the election shall be by majority vote of all 
States present with each State's vote(s) determined by a majority vote 
of the eligible voters of that State in attendance. Each such State is 
entitled to one vote, plus one additional vote for each 500,000 
hundredweight volume of production in the State as determined by the 
three-year average annual crop production summary reports of the 
Department or, if such reports are not published, then the three-year 
average of the Board's assessment reports: Provided, That for the first 
two conventions, the Department's Crop Production Annual Summary Reports 
for 1979, 1980, and 1981 will be controlling as to any additional 
production volume votes.

[[Page 95]]

    (c) In multi-State districts 3, 4, 5 and 7, the convention 
chairperson will direct the eligible producer voters and handler voters 
from each State to caucus separately for the purpose of electing a State 
spokesperson for each group. Election of each State spokesperson shall 
be by simple majority of all individual voters in attendance. In lieu of 
written ballots, a State spokesperson may be elected by voice vote or a 
show of hands. The role of the State spokesperson is to coordinate State 
voting and to cast all State votes.
    (d) Convention chairpersons will coordinate the entire producer and 
handler nomination process. In conducting the nomination process, each 
convention chairperson will ensure that:
    (1) Voting for producer nominees is limited to producers, and voting 
for handler nominees is limited to handlers; and
    (2) Producer candidates for nomination are producers, and handler 
candidates for nomination are handlers.
    (e) Voting, for producer and handler nominees, in non-multi-State 
districts shall be on the basis of one vote per person, except that 
persons authorized to cast proxy votes shall be allowed to cast all 
proxy votes not disallowed by the Board or the Department. Election of 
nominees shall be on the basis of a simple majority of all eligible 
votes cast.
    (f) Voting for producer and handler nominees in multi-State 
districts shall be on a State by State basis. Producers and handlers 
from each State shall caucus separately, at the district convention, for 
the purpose of determining which nominees shall receive their State's 
vote(s) for membership on the Board. Each State's vote(s) shall be based 
on a simple majority of all votes (including proxy votes) cast by 
producers or handlers voting in their State's caucus. Each State 
represented at a multi-State district convention shall have one vote for 
each producer position and one vote for each handler position from the 
district on the Board. Each State shall further have an additional vote 
toward each position for each 500,000 hundredweight volume of production 
in the State as determined by the three-year average annual crop 
production summary reports of the Department or, if such reports are not 
published, then the three-year average of the Board's assessment 
reports: Provided, That for the first two calls for nominees, the 
Department's Crop Production Annual Summary Reports for 1979, 1980, and 
1981 will be controlling as to any additional production volume votes. 
Each State spokesperson will cast the State's vote(s) for each nominee 
position. Election of nominees shall be on the basis of a simple 
majority of all State votes cast.
    (g) During the voting for convention chairperson, State 
spokesperson, and Board member nominee, should no candidate receive the 
required simple majority on the first ballot, the number of candidates 
may be reduced by dropping one or more of the lowest vote recipients 
from the list of candidates. The balloting will be repeated until the 
position is filled.
    (h) Two nominees shall be elected for each of the producer and 
handler positions from each district on the Board. The two nominees for 
each position shall be elected simultaneously. The convention 
chairperson will open the floor to the nomination of candidates for 
possible election as a Board member nominee for each available position. 
Each position will be dealt with separately (i.e., candidates for one 
position will be nominated and then elected before the convention moves 
on to the next available position). Each eligible voter may vote for two 
of the nominees on one ballot. The two nominees receiving the greatest 
number of votes and at least a simple majority of the votes cast will be 
elected as the district's Board member nominees for the position. No 
individual elected as a nominee for Board membership may be a candidate 
on subsequent Board member nominee ballots (i.e., two different producer 
names and two different handler names must be submitted as nominees for 
each producer and handler position from each district to the Secretary 
of Agriculture). There shall be no designation of first and second 
choice nominees.

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

[[Page 96]]

                            Importer Members



Sec.  1210.404  Importer member nomination and selection.

    (a) The Board shall include one or more representatives of 
importers, who shall be appointed by the Secretary from nominations 
submitted by watermelon importers. Importers' representation on the 
Board shall be proportionate to the percentage of assessments paid by 
importers to the Board, except that at least one representative of 
importers shall serve on the Board if importers are subject to the Plan. 
Nominations for importer positions that become vacant shall be made by 
importers at nomination conventions or by mail ballot.
    (b) The initial nomination of importer members shall be made not 
later than 90 days after the Plan is amended.
    (c) There shall be two individuals nominated for each vacant 
position. The importer receiving the highest number of votes for a 
vacancy shall be the first choice nominee, and the importer receiving 
the second highest number of votes shall be the second choice nominee 
submitted to the Secretary.
    (d) Any individual, group of individuals, partnership, corporation, 
association, cooperative or any other entity which is engaged in the 
production, first handling or importing of watermelons is considered a 
person and as such is entitled to only one vote, except that such person 
may cast proxy votes as provided in paragraph (e)(1) of this section.
    (e) Nomination Conventions. If nominations are made by nomination 
conventions, the Board shall widely publicize such conventions and 
provide importers and the Secretary at least 10 days notice prior to 
each convention.
    (1) Proxy voting by importers shall be permitted at all conventions. 
Any person wanting to cast proxy votes must demonstrate authorization to 
do so. Authority to cast a proxy vote on behalf of another person shall 
be demonstrated through documentation containing:
    (i) The proxy voter's name, address, and telephone number;
    (ii) Signature and date signed;
    (iii) A certification identifying the proxy voter as an importer; 
and
    (iv) A statement identifying the person being given authority by the 
proxy voter to cast the proxy vote.
    (2) The Board shall provide to the Secretary a typed copy of each 
convention's minutes and shall arrange for completion of qualification 
statements and other specified information by each nominee and forward 
such to the Secretary within 14 calendar days of completion of a 
convention.
    (f) Mail balloting. If nominations are conducted by mail ballot, the 
Board shall request importers to submit nominations of eligible 
importers. It is the importer's responsibility to prove the individual's 
eligibility. After the names of nominees are received, the Board shall 
print ballots and ask eligible importers to vote to nominate their 
candidates. After the vote is received, the Board shall tabulate the 
results and shall send to the Department the nominees in order of 
preference. The Board shall provide the Secretary with a report on the 
results, number of importers participating in the vote, and the volume 
of imports, and shall arrange for completion of qualification statements 
and other specified information by each nominee and forward such to the 
Secretary within 14 calendar days of receiving the ballots.
    (g) Any individual who both imports and handles watermelons will be 
considered an importer if that person imports 50 percent or more of the 
combined total volume of watermelons handled and imported by that 
person.

[60 FR 10800, Feb. 28, 1995]

                              Public Member



Sec.  1210.405  Public member nominations and selection.

    (a) The public member shall be nominated by the other members of the 
Board. The public member shall have no direct financial interest in the 
commercial production or marketing of watermelons except as a consumer 
and shall not be a director, stockholder, officer or employee of any 
firm so engaged. The Board shall nominate two individuals for the public 
member position. Voting for public member nominees shall require a 
quorum of the

[[Page 97]]

Board and shall be on the basis of one vote per Board member. Election 
of nominees shall be on the basis of a simple majority of those present 
and voting. Such election shall be held prior to August 1, 1990, and 
every third August first thereafter. The Board may prescribe such 
additional qualifications, administrative rules and procedures for 
selection and voting for public member nominees as it deems necessary 
and the Secretary approves.
    (b) Each person nominated for the position of public member on the 
Board shall qualify by filing a written acceptance with the Secretary 
within 14 calendar days of completion of the Board meeting at which 
public member nominees were selected.

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



                    Subpart C--Rules and Regulations

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

                               Definitions



Sec.  1210.500  Terms defined.

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

                                 General



Sec.  1210.501  Realignment of districts.

    Pursuant to Sec.  1210.320(c) of the Plan, the districts shall be as 
follows:
    District 1--The Florida counties of Brevard, Broward, Collier, Dade, 
Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin, Monroe, 
Okeechobee, Osceola, Palm Beach, Polk, and St. Lucie.
    District 2--The Florida counties of Alachula, Baker, Bay, Bradford, 
Calhoun, Charlotte, Citrus, Clay, Columbia, Desoto, Dixie, Duval, 
Escambia, Flagler, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, 
Hernando, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Lake, 
Leon, Levy, Liberty, Madison, Manatee, Marion, Nassau, Okaloosa, Orange, 
Pasco, Pinnellas, Putnam, Santa Rosa, Sarasota, Seminole, St. Johns, 
Sumter, Suwannee, Taylor, Union, Volusia, Wakulla, Walton, and 
Washington.
    District 3--Alabama, Arkansas, Georgia, Louisiana, Mississippi, 
South Carolina, and Tennessee.
    District 4--Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, 
Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, 
Nebraska, New Hampshire, New Jersey, New York, North Carolina, North 
Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, 
Vermont, Virginia, Washington, D.C., West Virginia, and Wisconsin.
    District 5--Alaska, Colorado, Hawaii, Idaho, Montana, Nevada, 
Oregon, Utah, Washington, Wyoming, and the California counties of 
Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del 
Norte, El Dorado, Fresno, Glenn, Humboldt, Inyo, Kern, Kings, Lake, 
Lassen, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, 
Monterey, Napa, Nevada, Placer, Plumas, Sacramento, San Benito, San 
Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa 
Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, 
Sutter, Tehama, Trinity, Tulare, Toulumne, Venture, Yolo, and Yuba.
    District 6--Texas.
    District 7--Arizona, New Mexico, and the California counties of 
Imperial, Los Angeles, Orange, Riverside, San Bernardino and San Diego.

[66 FR 13402, Mar. 6, 2001]



Sec. 1210.502  [Reserved]



Sec.  1210.504  Contracts.

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

[[Page 98]]

and subcontractors applicable to contracts entered into by the Board are 
subject to audit by the Secretary.



Sec.  1210.505  Department of Agriculture costs.

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

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

                               Assessments



Sec.  1210.515  Levy of assessments.

    (a) An assessment of two cents per hundredweight shall be levied on 
all watermelons produced for ultimate consumption as human food, and an 
assessment of two cents per hundredweight shall be levied on all 
watermelons first handled for ultimate consumption as human food. An 
assessment of four cents per hundredweight shall be levied on all 
watermelons imported into the United States for ultimate consumption as 
human food at the time of entry in the United States.
    (b) The import assessment shall be uniformly applied to imported 
watermelons that are identified by the numbers 0807.10.30007 and 
0807.10.40005 in the Harmonized Tariff Schedule of the United States or 
any other number used to identify fresh watermelons for consumption as 
human food. The U.S. Customs Service (USCS) will collect assessments on 
such watermelons at the time of entry and will forward such assessment 
as per the agreement between USCS and USDA. Any importer or agent who is 
exempt from payment of assessments may submit the Board adequate proof 
of the volume handled by such importer for the exemption to be granted.
    (c) Watermelons used for non-human food purposes are exempt from 
assessment requirements but are subject to the safeguard provisions of 
Sec.  1210.521.

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



Sec.  1210.516  [Reserved]



Sec.  1210.517  Determination of handler.

    The producer and handler assessments on each lot of watermelons 
handled shall be paid by the handler. Unless otherwise provided in this 
section, the handler responsible for payment of assessments shall be the 
first handler of such watermelons. The first handler is the person who 
initially performs a handling function as heretofore defined. Such 
person may be a fresh shipper, processor, or other person who first 
places the watermelons in the current of commerce.
    (a) The following examples are provided to aid in the identification 
of first handlers:
    (1) Producer grades, packs, and sells watermelons of own production 
to a handler. In this instance, it is the handler, not the producer, who 
places the watermelons in the current of commerce. The handler is 
responsible for payment of the assessments.
    (2) Producer packs and sells watermelons of that producer's own 
production from the field, roadside stand, or storage to a consumer, 
trucker, retail or wholesales outlet, or other buyer who is not a 
handler of watermelons. The producer places the watermelons in the 
current of commerce and is the first handler.
    (3) Producer purchases watermelons from another producer. The 
producer purchasing the watermelons is the first handler.
    (4) Producer delivers field-run watermelons of own production to a 
handler for preparation for market and entry into the current of 
commerce. The handler, in this instance, is the first handler, 
regardless of whether the handler subsequently handles such watermelons 
for the account of the handler or for the account of the producer.
    (5) Producer delivers field-run watermelons of own production to a 
handler for preparation for market and return to the producer for sale. 
The producer

[[Page 99]]

in this instance, is the first handler, except when the producer 
subsequently sells such watermelons to a handler.
    (6) Producer delivers watermelons of own production to a handler who 
takes title to such watermelons. The handler who purchases such 
watermelons from the producer is the first handler.
    (7) Producer supplies watermelons to a cooperative marketing 
association which sells or markets the watermelons and makes an 
accounting to the producer, or pays the proceeds of the sale to the 
producer. In this instance, the cooperative marketing association 
becomes the first handler upon physical delivery to such cooperative.
    (8) Handler purchases watermelons from a producer's field for the 
purpose of preparing such watermelons for market or for transporting 
such watermelons to storage for subsequent handling. The handler who 
purchases such watermelons from the producer is the first handler.
    (9) Broker/Commission House receives watermelons from a producer and 
sells such watermelons in the Broker's/Commission House's name. In this 
instance, the Broker/Commission House is the first handler, regardless 
of whether the Broker/ Commission House took title to such watermelons.
    (10) Broker/Commission House, without taking title or possession of 
watermelons, sells such watermelons in the name of the producer. In this 
instance, the producer is the first handler.
    (11) Processor utilizes watermelons of own production in the 
manufacture of rind pickles, frozen, dehydrated, extracted, or canned 
products for human consumption. In so handling watermelons the processor 
is the first handler.
    (12) Processor purchases watermelons from the producer thereof. In 
this instance, the processor is the first handler even though the 
producer may have graded, packed, or otherwise handled such watermelons.
    (b) In the event of a handler's death, bankruptcy, receivership, or 
incapacity to act, the representative of the handler or the handler's 
estate shall be considered the handler of the watermelons for the 
purpose of this subpart.

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



Sec.  1210.518  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
watermelons shall become due at the time the first handler handles the 
watermelons for non-exempt purposes. The assessment on imported 
watermelons shall become due at the time of entry, or withdrawal, into 
the United States.
    (b) Responsibility for payment. (1) The first handler is responsible 
for payment of both the producer's and the handler's assessment. The 
handler may collect the producer's assessment from the producer or 
deduct such producer's assessment from the proceeds paid to the producer 
on whose watermelons the producer assessment is made. Any such 
collection or deduction of producer assessment shall be made not later 
than the time when the first handler handles the watermelons.
    (2) The U.S. Customs Service shall collect assessments on imported 
watermelons from importers and forward such assessments under an 
agreement between the U.S. Customs Service and the U.S. Department of 
Agriculture. Importers shall be responsible for payment of assessments 
directly to the Board of any assessments due but not collected by the 
U.S. Customs Service at the time of entry, or withdrawal, on watermelons 
imported into the United States for human consumption.
    (c) Payment direct to the Board. (1) Except as provided in paragraph 
(b) and (e) of this section, each handler and importer shall remit the 
required producer and handler assessments, pursuant to Sec.  1210.341 of 
the Plan, directly to the Board not later than 30 days after the end of 
the month such assessments are due. Remittance shall be by check, draft, 
or money order payable to the National Watermelon Promotion Board, or 
NWPB, and shall be accompanied by a report, preferably on Board forms, 
pursuant to Sec.  1210.350. To avoid late payment charges, the 
assessments must be mailed to the Board and postmarked within 30 days 
after the end of the month such assessments are due.

[[Page 100]]

    (2) Pursuant to Sec.  1210.350 of the Plan, each handler shall file 
with the Board a report for each month that assessable watermelons were 
handled. All handler reports shall contain at least the following 
information:
    (i) The handler's name, address, and telephone number;
    (ii) Date of report (which is also the date of payment to the 
Board);
    (iii) Period covered by the report;
    (iv) Total quantity of watermelons handled during the reporting 
period;
    (v) Date of last report remitting assessments to the Board; and
    (vi) Listing of all persons for whom the handler handled 
watermelons, their addresses, hundredweight handled, and total 
assessments remitted for each producer. In lieu of such a list, the 
handler may substitute copies of settlement sheets given to each person 
or computer generated reports, provided such settlement sheets or 
computer reports contain all the information listed above.
    (vii) Name, address, and hundredweight handled for each person 
claiming exemption for assessment.
    (viii) If the handler handled watermelons for persons engaged in the 
growing of less than 10 acres of watermelons, the report shall indicate 
the name and address of such person and the quantity of watermelons 
handled for such person.
    (3) The words ``final report'' shall be shown on the last report at 
the close of the handler's marketing season or at the end of each fiscal 
period if such handler markets assessable watermelons on a year-round 
basis.
    (4) Prepayment of assessments. (i) In lieu of the monthly assessment 
and reporting requirements of paragraph (b) of this section, the Board 
may permit handlers to make an advance payment of their total estimated 
assessments for the crop year to the Board prior to their actual 
determination of assessable watermelons. The Board shall not be 
obligated to pay interest on any advance payment.
    (ii) Handlers using such procedures shall provide a final annual 
report of actual handling and remit any unpaid assessments not later 
than 30 days after the end of the last month of the designated handler's 
marketing season or at the end of each fiscal period if such handler 
markets assessable watermelons on a year-round basis.
    (iii) Handlers using such procedures shall, after filing a final 
annual report, receive a reimbursement of any overpayment of 
assessments.
    (iv) Handlers using such procedures shall, at the request of the 
Board to verify a producer's refund claim, provide the Board with a 
handling report on any and all producers for whom the handler has 
provided handling services but has not yet filed a handling report with 
the Board.
    (v) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board on request.
    (d) Late payment charges and interest. (1) A late payment charge 
shall be imposed on any handler and importer who fails to make timely 
remittance to the Board of the total producer and handler and importer 
assessments for which any such handler and importer is liable. Such late 
payment shall be imposed on any assessments not received before the 
fortieth day after the end of the month such assessments are due. This 
one-time late payment charge shall be 10 percent of the assessments due 
before interest charges have accrued. The late payment charge will not 
be applied to any late payments postmarked within 30 days after the end 
of the month such assessments are due.
    (2) In addition to the late payment charge, one and one-half percent 
per month interest on the outstanding balance, including the late 
payment charge and any accrued interest, will be added to any accounts 
for which payment has not been received by the last day of the second 
month following the month of handling; Provided, that, handlers paying 
their assessments in accordance with paragraph (c)(4)(ii), will not be 
subject to the one and one-half percent per month interest under this 
paragraph until the last day of the second month after such assessments 
are due under paragraph (c)(4)(ii). Such interest will continue monthly 
until the outstanding balance is paid to the Board.

[[Page 101]]

    (e) Payment through cooperating agency. The Board may enter into 
agreements, subject to approval of the Secretary, authorizing other 
organizations, such as a regional watermelon association or State 
watermelon board, to collect assessments in its behalf. In any State or 
area in which the Board has entered into such an agreement, the 
designated handler shall pay the assessment to such agency in the time 
and manner, and with such identifying information as specified in such 
agreement. Such an agreement shall not provide any cooperating agency 
with authority to collect confidential information from handlers or 
producers. To qualify, the cooperating agency must on its own accord 
have access to all information required by the Board for collection 
purposes. If the Board requires further evidence of payment than 
provided by the cooperating agency, it may acquire such evidence from 
individual handlers. All such agreements are subject to the requirements 
of the Act, Plan, and all applicable rules and regulations under the Act 
and the Plan.

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



Sec.  1210.519  Failure to report and remit.

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

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



Sec.  1210.520  Refunds.

    Each importer of less than 150,000 pounds of watermelons during any 
calendar year shall be entitled to apply for a refund of the assessments 
paid in an amount equal to the amount paid by domestic producers.
    (a) Application form. The Board shall make available to all 
importers a refund application form.
    (b) Submission of refund application to the Board. The refund 
application form shall be submitted to the Board within 90 days of the 
last day of the year the watermelons were actually imported. The refund 
application form shall contain the following information:
    (1) Importer's name and address;
    (2) Number of hundredweight of watermelon on which refund is 
requested;
    (3) Total amount to be refunded;
    (4) Proof of payment as described below; and
    (5) Importer's signature.
    (c) Proof of payment of assessment. Evidence of payment of 
assessments satisfactory to the Board shall accompany the importer's 
refund application. An importer must submit a copy of the importer's 
report or a cancelled check. Evidence submitted with a refund 
application shall not be returned to the applicant.
    (d) Payment of refund. Immediately after receiving the properly 
executed application for refund, the Board shall make remittance to the 
applicant.

[60 FR 10801, Feb. 28, 1995]



Sec.  1210.521  Reports of disposition of exempted watermelons.

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

[60 FR 10801, Feb. 28, 1995]

[[Page 102]]

                                 Records



Sec.  1210.530  Retention period for records.

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

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



Sec.  1210.531  Availability of records.

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

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



Sec.  1210.532  Confidential books, records, and reports.

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

[60 FR 10801, Feb. 28, 1995]

                              Miscellaneous



Sec.  1210.540  OMB assigned numbers.

    The information collection and recordkeeping requirements contained 
in this part have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. chapter 35 and have been 
assigned OMB Control Number 0581-0093, except that Board member nominee 
background information sheets are assigned OMB Control Number 0505-0001.

[58 FR 3356, Jan. 8, 1993]



                    Subpart D--Referendum Procedures

    Source: 66 FR 56388, Nov. 7, 2001; 67 FR 17907, Apr. 12, 2002, 
unless otherwise noted.



Sec.  1210.600  General.

    Referenda to determine whether eligible producers, handlers, and 
importers favor the continuation, suspension, termination, or amendment 
of the Watermelon Research and Promotion Plan shall be conducted in 
accordance with this subpart.



Sec.  1210.601  Definitions.

    Unless otherwise defined in this section, the definition of terms 
used in these procedures shall have the same meaning as the definitions 
in the Plan.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Department means the United States Department of Agriculture.
    (c) Eligible handler means any person (except a common contract 
carrier of watermelons owned by another person) who handles watermelons, 
including a producer who handles watermelons of the producer's own 
production, subject to the provisions of Sec.  1210.602(a) of this 
chapter, who handles watermelons as a person performing a handling 
function and either:
    (1) Takes title or possession of watermelons from a producer and 
directs the grading, packing, transporting, and selling of the 
watermelons in the current of commerce;
    (2) Purchases watermelons from producers;
    (3) Purchases watermelons from handlers;
    (4) Purchases watermelons from importers; or
    (5) Arranges the sale or transfer of watermelons from one party to 
another and takes title or possesssion of the watermelons: Provided, 
That harvest crews and common carriers who collect and transport 
watermelons from the field to a handler are not handlers and that 
retailers, wholesale retailers,

[[Page 103]]

foodservice distributors, and foodservice operators are not handlers.
    (d) Eligible importer means any person who imports 150,000 pounds or 
more watermelons annually into the United States as principal or as an 
agent, broker, or consignee for any person who produces watermelons 
outside the United States for sale in the United States. An importer who 
imports less than 150,000 pounds of watermelons annually and did not 
apply for and receive reimbursement of assessments is also an eligible 
importer.
    (e) Eligible producer means any person who is engaged in the growing 
of 10 or more acres of watermelons, including any person who owns or 
shares the ownership and risk of loss of such watermelon crop. A person 
who shares the ownership and risk of loss includes a person who:
    (1) Owns and farms land, resulting in ownership, by said producer, 
of the watermelons produced thereon;
    (2) Rents and farms land, resulting in ownership, by said producer, 
of all or a portion of the watermelons produced thereon; or
    (3) Owns land which said producer does not farm and, as rental for 
such land, obtains the ownership of a portion of the watermelons 
produced thereon. Ownership of, or leasehold interest in land, and the 
acquisition, in any manner other than set forth in this subpart, of 
legal title to the watermelons grown on said land, shall not be deemed 
to result in such owners or lessees becoming producers. Persons who 
produce watermelons for non-food uses are not producers for the purposes 
of this subpart.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity. For the 
purpose of this definition, the term partnership includes, but is not 
limited to:
    (1) A husband and wife who have title to, or leasehold interest in, 
land as tenants in common, joint tenants, tenants by the entirety, or, 
under community property laws, as community property, and
    (2) So-called joint ventures wherein one or more parties to the 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, equipment, or other services, or 
any variation of such contributions by two or more parties, so that it 
results in the production, handling, or importation of watermelons for 
market and the authority to transfer title to the watermelons so 
produced, handled, or imported.
    (g) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (h) Representative period means the period designated by the 
Secretary pursuant to the Act.



Sec.  1210.602  Voting.

    (a) Each person who is an eligible producer, handler, or importer as 
defined in this subpart, at the time of the referendum and who also was 
a producer, handler, or importer during the representative period, shall 
be entitled to one vote in the referendum: Provided, That each producer 
in a landlord-tenant relationship or a divided ownership arrangement 
involving totally independent entities cooperating only to produce 
watermelons in which more than one of the parties is a producer, shall 
be entitled to one vote in the referendum covering only that producer's 
share of the ownership: Provided further, That the vote of a person who 
both produces and handles watermelons will be counted as a handler vote 
if the producer purchased watermelons from other producers, in a 
combined total volume that is equal to 25 percent or more of the 
producer's own production; or the combined total volume of watermelon 
handled by the producer from the producer's own production and purchased 
from other producer's production is more than 50 percent of the 
producer's own production: Provided further, That the vote of a person 
who both imports and handles watermelons will be counted as an importer 
vote if that person imports 50 percent or more of the combined total 
volume of watermelons handled and imported by that person.
    (b) Proxy voting is not authorized, but an officer or employee of a 
corporate producer, handler, or importer, or an administrator, executor, 
or trustee of a producing, handling, or importing entity may cast a 
ballot on behalf

[[Page 104]]

of such entity. Any individual so voting in a referendum shall certify 
that the individual is an officer, employee of the producer, handler, or 
importer, or an administrator, executor, or trustee of a producing, 
handling, or importing entity and that the individual has the authority 
to take such action. Upon request of the referendum agent, the 
individual shall submit adequate evidence of such authority.
    (c) Casting of ballots. All ballots are to be cast as instructed by 
the Secretary.



Sec.  1210.603  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this section, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, not 
inconsistent with the provisions in this section, to govern the 
procedure to be followed by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (c) Give reasonable public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the voting period, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as said agent may deem advisable.
    (d) Mail to eligible producers; importers; and in the case of an 
order assessing handlers, handlers whose names and addresses are known 
to the referendum agent; the instructions on voting; a ballot; and a 
summary of the terms and conditions to be voted upon. No person who 
claims to be eligible to vote shall be refused a ballot. However, such 
persons may be required to submit evidence of their eligibility.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.



Sec.  1210.604  Subagents.

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



Sec.  1210.605  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
questioned for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was questioned, by whom questioned, why the ballot was 
questioned, the results of any investigation made with respect to the 
questionable ballot, and the disposition of the questionable ballot. 
Ballots invalid under this subpart shall not be counted.



Sec.  1210.606  Referendum report.

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



Sec.  1210.607  Confidential information.

    All ballots cast and their contents and all other information or 
reports furnished to, compiled by, or in possession of, the referendum 
agent or subagents that reveal, or tend to reveal, the identity or vote 
of any producer, handler, or importer of watermelons shall be held 
strictly confidential and shall not be disclosed.

[[Page 105]]



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




Subparts A-B [Reserved]

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

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

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

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

Subparts A-B [Reserved]



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



Sec.  1214.200  General.

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



Sec.  1214.201  Definitions.

    Unless otherwise defined in this section, the definition of terms 
used in this subpart shall have the same meaning as the definitions in 
the Order.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Order means the Kiwifruit Research, Promotion, and Consumer 
Information Order.
    (c) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (d) Representative period means the period designated by the 
Secretary.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and wife who has title to, or leasehold interest in, 
kiwifruit production facilities and equipment as tenants in common, 
joint tenants, tenants by the entirety, or, under community property 
laws, as community property, and
    (2) So-called ``joint ventures,'' wherein one or more parties to the 
agreement, informal or otherwise, contributed capital and others 
contributed labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties so that it 
results in the production or importation of kiwifruit and the authority 
to transfer title to the kiwifruit so produced or imported.
    (f) Eligible producer means any person or entity defined as a 
producer who produced 500 pounds or more of kiwifruit during the 
representative period and who:
    (1) Owns or shares in the ownership of kiwifruit production 
facilities and equipment resulting in the ownership of the kiwifruit 
produced;
    (2) Rents kiwifruit production facilities and equipment resulting in 
the ownership of all or a portion of the kiwifruit produced;
    (3) Owns kiwifruit production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the kiwifruit produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce kiwifruit who share the risk of loss and receive a share 
of the kiwifruit produced. No other acquisition of legal title to 
kiwifruit shall be deemed to result in persons becoming eligible 
producers.
    (g) Eligible importer means any person or entity defined as an 
importer who imported 10,000 pounds or more during the representative 
period. Importation occurs when commodities originating

[[Page 106]]

outside the United States are entered or withdrawn from the U.S. Customs 
Service for consumption in the United States. Included are persons who 
hold title to foreign-produced kiwifruit immediately upon release by the 
U.S. Customs Service, as well as any persons who act on behalf of 
others, as agents or broker, to secure the release of kiwifruit from the 
U.S. Customs Service when such kiwifruit are entered or withdrawn for 
consumption in the United States.
    (h) Kiwifruit means all varieties of fresh kiwifruit classified 
under the species Actinidia deliciosa or the genus Actinidia, whose 
fruit is a large berry, oval in shape, with a brown skin covered in 
hairs, which are grown in or imported into the United States.



Sec.  1214.202  Voting.

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



Sec.  1214.203  Instructions.

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

[[Page 107]]



Sec.  1214.204  Subagents.

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



Sec.  1214.205  Ballots.

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



Sec.  1214.206  Referendum report.

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



Sec.  1214.207  Confidential information.

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



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




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

                               Definitions

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

                              Popcorn Board

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

   Promotion, Research, Consumer Information, and Industry Information

1215.40 Programs, plans, and projects.
1215.41 Contracts.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                    Subpart B--Rules and Regulations

                               Definitions

1215.100 Terms defined.

                          Exemption Procedures

1215.300 Exemption procedures.

                              Miscellaneous

1215.400 OMB control numbers.


[[Page 108]]


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

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



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

                               Definitions



Sec.  1215.1  Act.

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



Sec.  1215.2  Board.

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



Sec.  1215.3  Board member.

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



Sec.  1215.4  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec.  1215.5  Consumer information.

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



Sec.  1215.6  Department.

    Department means the United States Department of Agriculture.



Sec.  1215.7  Fiscal year.

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



Sec.  1215.8  Industry information.

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



Sec.  1215.9  Marketing.

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



Sec.  1215.10  Part and subpart.

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



Sec.  1215.11  Person.

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



Sec.  1215.12  Popcorn.

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



Sec.  1215.13  Process.

    Process means to shell, clean, dry, and prepare popcorn for the 
market, but does not include packaging popcorn for the market without 
also engaging in another activity described in this paragraph.



Sec.  1215.14  Processor.

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



Sec.  1215.15  Programs, plans, and projects.

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

[[Page 109]]



Sec.  1215.16  Promotion.

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



Sec.  1215.17  Research.

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



Sec.  1215.18  Secretary.

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



Sec.  1215.19  State.

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



Sec.  1215.20  United States.

    United States means all of the States.

                              Popcorn Board



Sec.  1215.21  Establishment and membership.

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



Sec.  1215.22  Nominations and appointment.

    (a) All nominations for appointments to the Board established under 
Sec.  1215.21 shall be made as follows:
    (1) As soon as practicable after the effective date of this subpart, 
nominations for appointment to the initial Board shall be obtained from 
processors by the Secretary. In any subsequent year in which an 
appointment to the Board is to be made, nominations for positions for 
which the term will expire at the end of that year shall be obtained 
from processors at least six months prior to the expiration of terms.
    (2) Except for initial Board members, whose nomination process will 
be initiated by the Secretary, the Board shall issue a call for 
nominations in each year for which an appointment to the Board is to be 
made. The call shall include, at a minimum, the following information:
    (i) A list of the vacancies for which nominees may be submitted and 
qualifications for nomination; and
    (ii) The date by which the names of nominees shall be submitted to 
the Secretary for consideration to be in compliance with paragraph (a) 
of this section.
    (3)(i) Nominations for each position shall be made by processors. 
Notice shall be publicized to all processors.
    (ii) All processors may participate in submitting nominations.
    (4) Two nominees must be submitted for each vacancy. If processors 
fail to nominate a sufficient number of nominees, additional nominees 
shall be obtained in a manner prescribed by the Secretary.
    (b) The Secretary shall appoint the members of the Board from 
nominations made in accordance with paragraph (a).
    (1) The Secretary may reject any nominee submitted. If there is an 
insufficient number of nominees from whom to appoint members to the 
Board as a result of the Secretary's rejecting such nominees, additional 
nominees shall be submitted to the Secretary in a manner prescribed by 
the Secretary.
    (2) Whenever processors cannot agree on nominees for a position on 
the Board under the preceding provisions of this section, or whenever 
they fail to nominate individuals for appointment to the Board, the 
Secretary may appoint members in such a manner as the Secretary 
determines appropriate.
    (3) If a processor nominates more than one officer or employee, only 
one

[[Page 110]]

may be appointed to the Board by the Secretary.



Sec.  1215.23  Acceptance.

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



Sec.  1215.24  Term of office.

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



Sec.  1215.25  Vacancies.

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



Sec.  1215.26  Removal.

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



Sec.  1215.27  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum.
    (b) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by a 
simple majority of those voting. At assembled meetings of the Board, all 
votes will be cast in person.
    (c) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action upon the concurring votes by a 
majority of its members by mail, telephone, facsimile, or any other 
means of communication. If appropriate, any such action shall be 
confirmed promptly in writing. In that event, all members must be given 
prior notice and provided the opportunity to vote. Any action so taken 
shall have the same force and effect as though such action had been 
taken at a properly convened meeting of the Board. All votes shall be 
recorded in Board minutes.
    (d) Meetings of the Board may be conducted by electronic 
communications, provided that each member is given prior notice of the 
meeting and

[[Page 111]]

has the opportunity to be present either physically or by electronic 
connection.
    (e) The organization of the Board and the procedures for conducting 
meetings of the Board shall be in accordance with its bylaws, which 
shall be established by the Board and approved by the Secretary.



Sec.  1215.28  Compensation and reimbursement.

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



Sec.  1215.29  Powers.

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



Sec.  1215.30  Duties.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson and such other officers as may be 
necessary;
    (b) To evaluate or develop, and submit to the Secretary for 
approval, promotion, research, consumer information, and industry 
information programs, plans or projects;
    (c) To prepare for each fiscal year, and submit to the Secretary for 
approval at least 60 days prior to the beginning of each fiscal year, a 
budget of its anticipated expenses and disbursements in the 
administration of this subpart, as provided in Sec.  1215.50;
    (d) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (e) To prepare and make public, at least annually, a report of its 
activities carried out, and an accounting for funds received and 
expended;

[[Page 112]]

    (f) To cause its financial statements to be prepared in conformity 
with generally accepted accounting principles and to be audited by an 
independent certified public accountant in accordance with generally 
accepted auditing standards at least once each fiscal year and at such 
other times as the Secretary may request, and submit a copy of each such 
audit to the Secretary;
    (g) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or a representative 
of the Secretary, may attend such meetings;
    (h) To submit to the Secretary such information as may be requested 
pursuant to this subpart;
    (i) To keep minutes, books and records that clearly reflect all the 
acts and transactions of the Board. Minutes of each Board meeting shall 
be promptly reported to the Secretary;
    (j) To act as intermediary between the Secretary and any processor;
    (k) To investigate violations of the Act, order, and regulations 
issued under the order, conduct audits, and report the results of such 
investigations and audits to the Secretary for appropriate action to 
enforce the provisions of the Act, order, and regulations; and
    (l) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the popcorn industry's position in 
the marketplace, maintain and expand existing markets and uses for 
popcorn, develop new markets and uses for popcorn, and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the popcorn industry.

   Promotion, Research, Consumer Information, and Industry Information



Sec.  1215.40  Programs, plans, and projects.

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



Sec.  1215.41  Contracts.

    The Board shall not contract with any processor for the purpose of 
promotion or research. The Board may lease physical facilities from a 
processor for such promotion or research, if such an arrangement is 
determined to be cost effective by the Board and approved by the 
Secretary. Any contract or agreement shall provide that:
    (a) The contractor or agreeing party shall develop and submit to the 
Board a program, plan or project together with a budget or budgets that 
shall

[[Page 113]]

show the estimated cost to be incurred for such program, plan, or 
project;
    (b) Any such program, plan, or project shall become effective upon 
approval by the Secretary;
    (c) The contracting or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Board of 
activities conducted, submit accountings for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require; and the Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (d) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.

                        Expenses and Assessments



Sec.  1215.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, and 
as may be necessary thereafter, the Board shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart.
    (b) Each budget shall include:
    (1) A rate of assessment for such fiscal year calculated, subject to 
Sec.  1215.51(b), to provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in paragraph (g) 
of this section;
    (2) A statement of the objectives and strategy for each program, 
plan, or project;
    (3) A summary of anticipated revenue, with comparative data for at 
least one preceding year;
    (4) A summary of proposed expenditures for each program, plan, or 
project; and
    (5) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year.
    (c) In budgeting plans and projects of promotion, research, consumer 
information, and industry information, the Board shall expend assessment 
and contribution funds on:
    (1) Plans and projects for popcorn marketed in the United States or 
Canada in proportion to the amount of assessments projected to be 
collected on domestically marketed popcorn (including Canada); and
    (2) Plans and projects for exported popcorn in proportion to the 
amount of assessments projected to be collected on exported popcorn 
(excluding Canada).
    (d) The Board is authorized to incur such reasonable expenses, 
including provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects approved by the Secretary. Such contributions shall be free 
from any encumbrances by the donor and the Board shall retain complete 
control of their use. The Board may also receive funds provided through 
the Foreign Agricultural Service of the United States Department of 
Agriculture for foreign marketing activities.
    (f) As stated in section 75(f)(4)(A)(ii) of the Act, the Board shall 
reimburse the Secretary, from funds received by the Board, for costs 
incurred by the Secretary in implementing and administering this 
subpart: Provided, That the costs incurred by the Secretary to be 
reimbursed by the Board, excluding legal costs to defend and enforce the 
order, shall not exceed 15 percent of the projected annual revenues of 
the Board.
    (g) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established, except that the funds in this reserve shall not exceed 
approximately one fiscal year's expenses. Such reserve funds may be used 
to defray any expenses authorized under this subpart.
    (h) With the approval of the Secretary, the Board may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other

[[Page 114]]

funds of the Board during its first year of operation only.



Sec.  1215.51  Assessments.

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



Sec.  1215.52  Exemption from assessment.

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

[[Page 115]]



Sec.  1215.53  Influencing governmental action.

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

                       Reports, Books, and Records



Sec.  1215.60  Reports.

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



Sec.  1215.61  Books and records.

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



Sec.  1215.62  Confidential treatment.

    (a) All information obtained from books, records, or reports under 
the Act, this subpart, and the rule and regulations issued thereunder 
shall be kept confidential by all persons, including all employees, 
agents, and former employees and agents of the Board; all officers, 
employees, agents, and former officers, employees, and agents of the 
Department; and all officers, employees, agents, and former officers, 
employees, and agents of contracting and subcontracting agencies or 
agreeing parties having access to such information. Such information 
shall not be available to Board members or processors. Only those 
persons having a specific need for such information to administer 
effectively the provisions of this part shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed by them, and then only in a suit or 
administrative hearing brought at the direction, or on the request, of 
the Secretary, or to which the Secretary or any officer of the United 
States is a party, and involving this part.
    (b) No information obtained under the authority of this part may be 
made available to any agency or officer of the Federal Government for 
any purpose other than the implementation of the Act and any 
investigatory or enforcement action necessary for the implementation of 
the Act.
    (c) Nothing in paragraph (a) of this section may be deemed to 
prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of persons subject to this part or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person;
    (2) The publication, by direction of the Secretary, of the name of 
any person who has violated this part, together with a statement of the 
particular provisions of this part violated by such person.

[[Page 116]]

    (d) Any person who knowingly violated the provisions of this 
section, on conviction, shall be subject to a fine of not more than 
$1,000 or to imprisonment for not more than 1 year, or both, or if the 
person is an officer, employee, or agent of the Board or the Department, 
that person shall be removed from office or terminated from employment 
as applicable.

                              Miscellaneous



Sec.  1215.70  Right of the Secretary.

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



Sec.  1215.71  Suspension or termination.

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



Sec.  1215.72  Proceedings after termination.

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



Sec.  1215.73  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any rule and regulation issued under 
this subpart, or the

[[Page 117]]

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



Sec.  1215.74  Personal liability.

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



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

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



Sec.  1215.76  Amendments.

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



Sec.  1215.77  Separability.

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



                    Subpart B--Rules and Regulations

                               Definitions



Sec.  1215.100  Terms defined.

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

                          Exemption Procedures



Sec.  1215.300  Exemption procedures.

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

                              Miscellaneous



Sec.  1215.400  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0581-0093, except

[[Page 118]]

for the Promotion Board nominee background statement form which is 
assigned OMB control number 0505-0001.



PART 1216--PEANUT PROMOTION, RESEARCH, AND INFORMATION ORDER--Table 
of Contents




      Subpart A--Peanut Promotion, Research, and Information Order

                               Definitions

Sec.
1216.1 Act.
1216.2 Additional peanuts.
1216.3 Area marketing association.
1216.4 Board.
1216.5 Conflict of interest.
1216.6 Contract export additional peanuts.
1216.7 Department.
1216.8 Farm Service Agency.
1216.9 Farmers stock peanuts.
1216.10 First handler.
1216.11 Fiscal year.
1216.12 Handle.
1216.13 Information.
1216.14 Market.
1216.15 Minor peanut-producing states.
1216.16 Order.
1216.17 Part and subpart.
1216.18 Peanuts.
1216.19 Peanut producer organization.
1216.20 Person.
1216.21 Primary peanut-producing states.
1216.22 Producer.
1216.23 Promotion.
1216.24 Quota peanuts.
1216.25 Research.
1216.26 Secretary.
1216.27 Suspend.
1216.28 State.
1216.29 Terminate.
1216.30 United States.

                          National Peanut Board

1216.40 Establishment and membership.
1216.41 Nominations.
1216.42 Selection.
1216.43 Term of office.
1216.44 Vacancies.
1216.45 Alternate members.
1216.46 Procedure.
1216.47 Compensation and reimbursement.
1216.48 Powers and duties.
1216.49 Prohibited activities.

                        Expenses and Assessments

1216.50 Budget and expenses.
1216.51 Assessments.
1216.52 Programs, plans, and projects.
1216.53 Independent evaluation.
1216.54 Operating reserve.
1216.55 Investment of funds.

                       Reports, Books, and Records

1216.60 Reports.
1216.61 Books and records.
1216.62 Confidential treatment.

             Certification of Peanut Producer Organizations

1216.70 Certification.

                              Miscellaneous

1216.80 Right of the Secretary.
1216.81 Implementation of the Order.
1216.82 Suspension and termination.
1216.83 Proceedings after termination.
1216.84 Effect of termination or amendment.
1216.85 Personal liability.
1216.86 Separability.
1216.87 Amendments.
1216.88 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

Subpart B--Procedure for the Conduct of Referenda in Connection With the 
            Peanut Promotion, Research, and Information Order

1216.100 General.
1216.101 Definitions.
1216.102 Voting.
1216.103 Instructions.
1216.104 Subagents.
1216.105 Ballots.
1216.106 Referendum report.
1216.107 Confidential information.

    Authority: 7 U.S.C. 7401-7425.

    Source: 64 FR 20105, Apr. 23, 1999, unless otherwise noted.



      Subpart A--Peanut Promotion, Research, and Information Order

    Source: 64 FR 41256, July 29, 1999, unless otherwise noted.

                               Definitions



Sec.  1216.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Public Law 104-127, 110 Stat. 1029), or any 
amendments thereto.



Sec.  1216.2  Additional peanuts.

    Additional peanuts means peanuts which are marketed from a farm 
other than peanuts marketed or considered marketed as quota peanuts.

[[Page 119]]



Sec.  1216.3  Area marketing association.

    Area marketing association means an association selected and 
approved by the Secretary to conduct activities under regulations of the 
Department's Farm Service Agency. Under an interagency agreement, area 
marketing associations may assist in the collection of assessments under 
this subpart. The approved area marketing associations and the areas 
served by such associations are as follows:
    (a) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves the 
southeastern area consisting of Puerto Rico, the U.S. Virgin Islands, 
and the states of Alabama, Florida, Georgia, Mississippi, and that part 
of South Carolina south and west of the Santee-Congaree-Broad Rivers;
    (b) Peanut Growers Cooperative Marketing Association of Franklin, 
Virginia (PGCMA). PGCMA serves the Virginia-Carolina area consisting of 
the District of Columbia, and the states of Connecticut, Delaware, 
Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, 
Virginia, West Virginia, Wisconsin, and that part of South Carolina 
north and east of the Santee-Congaree-Broad Rivers; and
    (c) Southwestern Peanut Growers Association of Gorman, Texas 
(SWPGA). SWPGA serves the southwestern area consisting of the states of 
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, 
Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming, 
and all other territories of the United States not listed in paragraph 
(a) or (b) of this section.



Sec.  1216.4  Board.

    Board means the administrative body referred to as the National 
Peanut Board established pursuant to Sec.  1216.40.



Sec.  1216.5  Conflict of interest.

    Conflict of interest means a situation in which a member or employee 
of the Board has a direct or indirect financial interest in a person who 
performs a service for, or enters into a contract with, the Board for 
anything of economic value.



Sec.  1216.6  Contract export additional peanuts.

    Contract export additional peanuts are additional peanuts for 
exportation, including peanuts for crushing for exportation, for which a 
contract has been entered into between a first handler and a producer.



Sec.  1216.7  Department.

    Department means the U.S. Department of Agriculture.



Sec.  1216.8  Farm Service Agency.

    Farm Service Agency or FSA means the U.S. Department of 
Agriculture's Farm Service Agency.



Sec.  1216.9  Farmers stock peanuts.

    Farmers stock peanuts means 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.



Sec.  1216.10  First handler.

    First handler means any person who handles peanuts in a capacity 
other than that of a custom cleaner or dryer, an assembler, a 
warehouseman, or other intermediary between the producer and the person 
handling.



Sec.  1216.11  Fiscal year.

    Fiscal year is synonymous with crop year and means the 12-month 
period beginning with August 1 of any year and ending with July 31 of 
the following year, or such other period as determined by the Board and 
approved by the Secretary.



Sec.  1216.12  Handle.

    Handle means to engage in the receiving or acquiring, cleaning and 
shelling, cleaning in-shell, or crushing of peanuts and in the shipment 
(except

[[Page 120]]

as a common or contract carrier of peanuts owned by another) or sale of 
cleaned in-shell or shelled peanuts, or other activity causing peanuts 
to enter the current of commerce: Provided, that this term does not 
include sales or deliveries of peanuts by a producer to a handler or to 
an intermediary person engaged in delivering peanuts to handler(s) and: 
Provided further, that this term does not include sales or deliveries of 
peanuts by such intermediary person(s) to a handler.



Sec.  1216.13  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increased market efficiency, and activities that are 
designed to enhance the image of peanuts on a national or international 
basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
peanuts; and
    (b) Producer information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the peanut industry, and activities to 
enhance the image of the peanut industry.



Sec.  1216.14  Market.

    Market means to sell or otherwise dispose of peanuts into 
interstate, foreign, or intrastate commerce by buying, marketing, 
distributing, or otherwise placing peanuts into commerce.



Sec.  1216.15  Minor peanut-producing states.

    Minor peanut-producing states means all peanut-producing states with 
the exception of Alabama, Florida, Georgia, New Mexico, North Carolina, 
Oklahoma, South Carolina, Texas, and Virginia.



Sec.  1216.16  Order.

    Order means an Order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.  1216.17  Part and subpart.

    Part means the Peanut Promotion, Research, and Information Order and 
all rules, regulations, and supplemental Orders issued pursuant to the 
Act and the Order. The Order shall be a ``subpart'' of such part.



Sec.  1216.18  Peanuts.

    Peanuts means the seeds of the legume arachis hypogaea and includes 
both in-shell and shelled peanuts other than those marketed by the 
producer in green form for consumption as boiled peanuts.



Sec.  1216.19  Peanut producer organization.

    Peanut producer organization means a state-legislated peanut 
promotion, research, and education commission or organization. For 
states without a state-legislated peanut promotion, research, and 
education commission or organization, ``peanut producer organization'' 
means any organization which has the primary purpose of representing 
peanut producers and has peanut producers as members.



Sec.  1216.20  Person.

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



Sec.  1216.21  Primary peanut-producing states.

    Primary peanut-producing states means Alabama, Florida, Georgia, New 
Mexico, North Carolina, Oklahoma, South Carolina, Texas, and Virginia, 
Provided, these states maintain three-year average production of at 
least 10,000 tons of peanuts.



Sec.  1216.22  Producer.

    Producer means any person engaged in the production and sale of 
peanuts and who owns, or shares the ownership and risk of loss of the 
crop. This does not include quota holders who do not share in the risk 
of loss of the crop.

[[Page 121]]



Sec.  1216.23  Promotion.

    Promotion means any action taken by the Board under this Order, 
including paid advertising, to present a favorable image of peanuts to 
the public to improve the competitive position of peanuts in the 
marketplace, including domestic and international markets, and to 
stimulate sales of peanuts.



Sec.  1216.24  Quota peanuts.

    Quota peanuts means peanuts which are:
    (a) Eligible for domestic edible uses; and
    (b) Marketed or considered marketed from a farm as quota peanuts 
pursuant to the provisions of 7 CFR Part 729 and are not in excess of 
the effective farm poundage quota established for the farm on which such 
peanuts were produced.



Sec.  1216.25  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of peanuts, including research relating to 
nutritional value and cost of production.



Sec.  1216.26  Secretary.

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



Sec.  1216.27  Suspend.

    Suspend means to issue a rule under section 553 of title 5, United 
States Code, to temporarily prevent the operation of an Order, or part 
thereof, during a particular period of time specified in the rule.



Sec.  1216.28  State.

    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, or any territory or possession of the 
United States.



Sec.  1216.29  Terminate.

    Terminate means to issue a rule under section 553 of title 5, United 
States Code, to cancel permanently the operation of an Order, or part 
thereof, beginning on a date certain specified in the rule.



Sec.  1216.30  United States.

    United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.

                          National Peanut Board



Sec.  1216.40  Establishment and membership.

    (a) Establishment of a National Peanut Board. There is hereby 
established a National Peanut Board, hereinafter called the Board, 
composed of no more than 10 peanut producers and alternates, appointed 
by the Secretary from nominations as follows:
    (1) Nine members and alternates. One member and one alternate shall 
be appointed from each primary peanut-producing state, who are producers 
and whose nominations have been submitted by certified peanut producer 
organizations within a primary peanut-producing state.
    (2) The minor peanut-producing states shall collectively have one 
at-large member and one alternate, who are producers, to be appointed by 
the Secretary from nominations submitted by certified peanut producer 
organizations within minor peanut-producing states or from other 
certified farm organizations that include peanut producers as part of 
their membership.
    (b) Adjustment of membership. At least once in each five-year 
period, but not more frequently than once in each three-year period, the 
Board, or a person or agency designated by the Board, shall review the 
geographical distribution of peanuts in the United States and make 
recommendation(s) to the Secretary to continue without change, or 
whether changes should be made in the number of representatives on the 
Board to reflect changes in the geographical distribution of the 
production of peanuts.

[[Page 122]]



Sec.  1216.41  Nominations.

    (a) All nominations authorized under Sec.  1216.40 shall be made 
within such a period of time as the Secretary shall prescribe. Eligible 
peanut producer organizations within each state as certified pursuant to 
Sec.  1216.70 shall nominate two qualified persons for each member and 
each alternate member. The nominees shall be elected at an open meeting 
among peanut producers eligible to serve on the Board. Any certified 
peanut producer organization representing a minor peanut-producing state 
may nominate two eligible persons for each member and two eligible 
persons for each alternate member.
    (b) As soon as practicable after this subpart becomes effective, the 
Secretary shall obtain nominations for appointment to the initial 
promotion Board from certified nominating organizations. In any 
subsequent year in which an appointment to the Board is to be made, 
nominations for positions whose terms will expire shall be obtained from 
certified nominating organizations by the Board's staff and submitted to 
the Secretary by May 1 of such year, or other such date as approved by 
the Secretary.
    (c) Except for initial Board members, whose nomination process will 
be initiated by the Secretary, the Board shall issue the call for 
nominations by March 1 of each year.
    (d) The nomination meeting shall be announced 30 days in advance:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as deemed advisable.
    (e) At nominations meetings, Department personnel will be present to 
oversee and to verify eligibility and count ballots.



Sec.  1216.42  Selection.

    From the nominations, the Secretary shall select the members of the 
Board and alternates for each primary peanut-producing state. The 
Secretary shall select one member and one alternate from all nominations 
submitted by certified peanut producer organizations representing minor 
peanut-producing states.



Sec.  1216.43  Term of office.

    All members and alternates of the Board shall each serve for terms 
of three years, except that the members and alternates appointed to the 
initial Board shall serve proportionately for two-, three-, and four-
year terms, with the length of the terms determined at random. No member 
or alternate may serve more than two consecutive three-year terms. An 
alternate, after serving two consecutive three-year terms, may serve as 
a member for an additional two consecutive three-year terms. A member, 
after serving two consecutive three-year terms, may serve as an 
alternate for an additional two consecutive three-year terms. Each 
member and alternate shall continue to serve until a successor is 
selected and has qualified.
    (a) Those members serving initial terms of two or four years may 
serve one successive three-year term.
    (b) Any successor serving one year or less may serve two consecutive 
three-year terms.



Sec.  1216.44  Vacancies.

    To fill any vacancy resulting from the failure to qualify of any 
person selected as a member or as an alternate member of the Board, or 
in the event of death, removal, resignation, or disqualification of any 
member or alternate member of the Board, a successor for the unexpired 
term of such member or alternate member of the Board shall be nominated 
and selected in the manner specified in Sec.  1216.40.



Sec.  1216.45  Alternate members.

    An alternate member of the Board, during the absence of the member 
for the primary peanut-producing state or at-large member for whom the 
person is the alternate, shall act in the place and stead of such member 
and perform such duties as assigned. In the event of death, removal, 
resignation, or disqualification of any member, the alternate for that 
state or at-large member shall act for the member until a successor for 
such member is selected and

[[Page 123]]

qualified. In the event that both a producer member of the Board and the 
alternate are unable to attend a meeting, the Board may not designate 
any other alternate to serve in such member's or alternate's place and 
stead for such a meeting.



Sec.  1216.46  Procedure.

    (a) A majority of the members of the Board, including alternate 
members acting for members, shall constitute a quorum.
    (b) At assembled meetings, all votes shall be cast in person. Board 
actions shall be weighted by value of production as determined by a 
primary peanut-producing state's three-year running average of total 
gross farm income derived from all peanut sales. The at-large Board 
member's vote shall be weighted by the collective value of production 
from all minor peanut-producing states' three-year running average of 
total gross farm income derived from all peanut sales. Any Board action 
shall require the concurring votes of members or alternates from states 
representing more than 50 percent of total U.S. gross farm income 
derived from all peanut sales, plus an additional two votes from any 
other Board members, provided a minimum of five votes concur.
    (c) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and in matters of an emergency 
nature when there is not time to call an assembled meeting of the Board, 
the Board may also take action as prescribed in this section by mail, 
facsimile, telephone, or any telecommunication method appropriate for 
the conduct of business, but any such action shall be confirmed in 
writing within 30 days.
    (d) There shall be no voting by proxy.
    (e) The chairperson shall be a voting member.



Sec.  1216.47  Compensation and reimbursement.

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



Sec.  1216.48  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines to be appropriate;
    (d) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs and projects, and enter into contracts or 
agreements, which must be approved by the Secretary before becoming 
effective, for the development and carrying out of programs or projects 
of research, information, or promotion, and the payment of costs thereof 
with funds collected pursuant to this subpart. Each contract or 
agreement shall provide that any person who enters into a contract or 
agreement with the Board shall develop and submit to the Board a 
proposed activity; keep accurate records of all of its transactions 
relating to the contract or agreement; account for funds received and 
expended in connection with the contract or agreement; make periodic 
reports to the Board of activities conducted under the contract or 
agreement; and make such other reports available as the Board or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted,

[[Page 124]]

submit accounting for funds received and expended, and make such other 
reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor;
    (f) To prepare and submit for approval of the Secretary fiscal year 
budgets in accordance with Sec.  1216.50;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (h) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (i) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each meeting 
of the Board to the Secretary;
    (j) To act as intermediary between the Secretary and any producer or 
first handler;
    (k) To furnish to the Secretary any information or records that the 
Secretary may request;
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate; and
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the peanut industry's 
position in the marketplace; maintain and expand existing markets and 
uses for peanuts; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the peanut industry.



Sec.  1216.49  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, including local, state, national, and international, 
other than recommending to the Secretary amendments to the Order; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the Order, that is false 
or misleading or disparaging to another agricultural commodity.

                        Expenses and Assessments



Sec.  1216.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, and 
as may be necessary thereafter, the Board shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart. Each such 
budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from

[[Page 125]]

one program, plan, or project to another. Shifts of funds which do not 
cause an increase in the Board's approved budget and which are 
consistent with governing bylaws need not have prior approval by the 
Secretary.
    (d) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Board.
    (e) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Board shall retain complete control of their use.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (h) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal year an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (g) of this section are excluded from this limitation on 
spending.
    (i) The Board shall allocate, to the extent practicable, no less 
than 80 percent of the assessments collected on all peanuts available 
for any fiscal year on national and regional promotion, research, and 
information activities. The Board shall allocate, to the extent 
practicable, no more than 20 percent of assessments collected on all 
peanuts available for any fiscal year for use in state or regional 
research programs. Specific percentages and amounts shall be determined 
annually by the Board, with the approval of the Secretary.
    (j) Certified peanut producer organizations may submit requests for 
funding for research and/or generic promotion projects. Amounts approved 
for each state shall not exceed the pro rata Share of funds available 
for that State as determined by the Board and approved by the Secretary. 
Amounts allocated by the Board for state research or promotion 
activities will be based on requests submitted to the Board when it is 
determined that they meet the goals and objectives stated in the Order.
    (k) Assessments collected, less pro rata administrative expenses, 
from the gross sales of contract export additional peanuts shall be 
allocated by the Board for the promotion and related research of export 
peanuts.
    (l) The Board shall determine annually how total funds shall be 
allocated pursuant to paragraphs (i), (j), and (k) of this section, with 
the approval of the Secretary.



Sec.  1216.51  Assessments.

    (a) The funds to cover the Board's expenses shall be acquired by the 
levying of assessments upon producers in a manner prescribed by the 
Secretary.
    (b) Each first handler, at such times and in such manner as 
prescribed by the Secretary, shall collect from each producer and pay 
assessments to the Board on all peanuts handled, including peanuts 
produced by the first handler, no later than 60 days after the last day 
of the month in which the peanuts were marketed.
    (c) Such assessments shall be levied at a rate of 1 percent of the 
price paid for all farmers stock peanuts sold. Price paid is the value 
of segment entry on the FSA 1007 form.
    (d) For peanuts placed under loan with the Department's Commodity 
Credit Corporation, each area marketing association shall remit to the 
Board the following:
    (1) One (1) percent of the initial price paid for either quota or 
additional peanuts no more than 60 days after the

[[Page 126]]

last day of the month in which the peanuts were placed under loan; and
    (2) One (1) percent of the profit from the sale of the peanuts 
within 60 days after the final day of the area association's fiscal 
year.
    (e) All assessments collected under this section are to be used for 
expenses and expenditures pursuant to this Order and for the 
establishment of an operating reserve as prescribed in the Order.
    (f) The Board shall impose a late payment charge on any person who 
fails to remit to the Board the total amount for which the person is 
liable on or before the payment due date established under this section. 
The late payment charge will be in the form of interest on the 
outstanding portion of any amount for which the person is liable. The 
rate of interest shall be prescribed in regulations issued by the 
Secretary.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (i) The assessment rate may not be increased unless the new rate is 
approved by a referendum among eligible producers.



Sec.  1216.52  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
producer and consumer information, with respect to peanuts; and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, sale, distribution, and marketing of peanuts and 
peanut products, and the creation of new products thereof, to the end 
that marketing and use of peanuts may be encouraged, expanded, improved, 
or made more acceptable and to advance the image, desirability, or 
quality of peanuts.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, or 
consumer information. If it is found by the Board that any such program, 
plan, or project does not contribute to an effective program of 
promotion, research, or consumer information, then the Board shall 
terminate such program, plan, or project.
    (d) No program, plan, or project shall make any false claims on 
behalf of peanuts or use unfair or deceptive acts or practices with 
respect to the quality, value, or use of any competing product. Peanuts 
of all domestic origins shall be treated equally.



Sec.  1216.53  Independent evaluation.

    The Board shall, not less often than every five years, authorize and 
fund, from funds otherwise available to the Board, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the Board pursuant to the Act. The Board shall submit to 
the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this section.



Sec.  1216.54  Operating reserve.

    The Board shall establish an operating monetary reserve and may 
carry over to subsequent fiscal years excess funds in a reserve so 
established; Provided, that funds in the reserve shall not exceed any 
fiscal year's anticipated expenses.



Sec.  1216.55  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency of 
the United States; general obligations of any state or any political 
subdivision of a state; interest bearing accounts or

[[Page 127]]

certificates of deposit of financial institutions that are members of 
the Federal Reserve system; or obligations that are fully guaranteed as 
to principal and interest by the United States.

                       Reports, Books, and Records



Sec.  1216.60  Reports.

    (a) Each producer and first handler subject to this part shall be 
required to report to the employees of the Board, at such times and in 
such manner as it may prescribe, such information as may be necessary 
for the Board to perform its duties. Such reports shall include, but 
shall not be limited to the following:
    (1) Number of pounds of peanuts produced or handled;
    (2) Price paid to producers (entry in value of segment section on 
the FSA 1007 form); and
    (3) Total assessments collected.
    (b) First Handlers shall submit monthly reports to the Board. These 
reports shall accompany the payment of the collected assessments and 
shall be due 60 days after the last day of the month in which the 
peanuts were marketed.



Sec.  1216.61  Books and records.

    Each first handler and producer subject to this subpart shall 
maintain and make available for inspection by the Secretary and 
employees and agents of the Board such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued thereunder, including such records as are necessary 
to verify any reports required. Such records shall include but are not 
limited to the following: copies of FSA 1007 forms, the names and 
address of producers, and the date the assessments were collected. Such 
records shall be retained for at least two years beyond the marketing 
year of their applicability.



Sec.  1216.62  Confidential treatment.

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

             Certification of Peanut Producer Organizations



Sec.  1216.70  Certification.

    (a) Organizations receiving certification from the Secretary will be 
entitled to submit nominations for Board membership to the Secretary for 
appointment and to submit requests for funding to the Board.
    (b) For major peanut-producing states, state-legislated peanut 
promotion, research, and information organizations may request 
certification, provided the state-legislated promotion program submits a 
factual report that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination pursuant 
to paragraph (e) of this section.
    (c) If a state-legislated peanut promotion, research and information 
organization in a major peanut-producing

[[Page 128]]

state does not elect to seek certification from the Secretary within a 
specified time period as determined by the Secretary, or does not meet 
eligibility requirements as specified by the Secretary, then any peanut 
producer organization whose primary purpose is to represent peanut 
producers within a primary peanut-producing state, or any other 
organization which has peanut producers as part of its membership, may 
request certification. Certification shall be based, in addition to 
other available information, upon a factual report submitted by the 
organization that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination pursuant 
to paragraph (e) of this section.
    (d) For minor peanut-producing states, any organization that has 
peanut producers as part of its membership may request certification.
    (e) The information required for certification by the Secretary may 
include, but is not limited to, the following:
    (1) The geographic distribution within the state covered by the 
organization's active membership;
    (2) The nature and size of the organization's active membership in 
the state, proportion of the organization's active membership accounted 
for by producers, a map showing the peanut-producing counties in the 
state in which the organization has members, the volume of peanuts 
produced in each county, the number of peanut producers in each county, 
and the size of the organization's active peanut producer membership in 
each county;
    (3) The extent to which the peanut producer membership of such 
organization is represented in setting the organization's policies;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organization's operating funds are 
derived;
    (6) Functions of the organization;
    (7) The organization's ability and willingness to further the aims 
and objectives of the Act and Order; and,
    (8) Demonstrated experience administering generic state promotion 
and research programs.
    (f) The Secretary's determination as to eligibility or certification 
of an organization shall be final.

                              Miscellaneous



Sec.  1216.80  Right of the Secretary.

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



Sec.  1216.81  Implementation of the Order.

    The Order shall not become effective unless:
    (a) The Secretary determines that the Order is consistent with and 
will effectuate the purposes of the Act; and
    (b) The Order is approved by a simple majority of the peanut 
producers as defined in Sec.  1216.21 voting in a referendum who, during 
a representative period determined by the Secretary, have been engaged 
in the production of peanuts.



Sec.  1216.82  Suspension and termination.

    (a) The Secretary shall suspend or terminate this subpart or a 
provision thereof if the Secretary finds that this subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) Every five years, the Secretary shall hold a referendum to 
determine whether peanut producers favor the continuation of the Order. 
The Secretary will also conduct a referendum if 10 percent or more of 
all eligible peanut producers request the Secretary to hold a 
referendum. In addition, the Secretary may hold a referendum at any 
time.
    (c) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a simple majority of 
the producers voting in a referendum who, during a representative period 
determined by the Secretary, have been engaged in the production of 
peanuts.

[[Page 129]]

    (d) If, as a result of the referendum conducted under paragraph (b) 
of this section, the Secretary determines that this subpart is not 
approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an Orderly manner.



Sec.  1216.83  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than three of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property then in the possession or under control of the Board, 
including claims for any funds unpaid or property not delivered, or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time, account for all receipts and disbursements 
and deliver all property on hand, together with all books and records of 
the Board and the trustees, to such person or persons as the Secretary 
may direct; and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary and appropriate to vest in such persons title and 
right to all funds, property and claims vested in the Board or the 
trustees pursuant to the Order.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practical, to the peanut producer organizations, certified 
pursuant to Sec.  1216.70, in the interest of continuing peanut 
promotion, research, and information programs.



Sec.  1216.84  Effect of termination or amendment.

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



Sec.  1216.85  Personal liability.

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



Sec.  1216.86  Separability.

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



Sec.  1216.87  Amendments.

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

[[Page 130]]



Sec.  1216.88  Patents, copyrights, trademarks, information, publications, 
and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government as 
represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the benefit 
of the Board; shall be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the Board; and may be 
licensed subject to approval by the Secretary. Upon termination of this 
subpart, Sec.  1216.82 shall apply to determine disposition of all such 
property.



Subpart B--Procedure for the Conduct of Referenda in Connection With the 
            Peanut Promotion, Research, and Information Order



Sec.  1216.100  General.

    Referenda to determine whether eligible peanut producers favor the 
issuance, amendment, suspension, or termination of a Peanut Promotion, 
Research, and Information Order shall be conducted in accordance with 
this subpart.



Sec.  1216.101  Definitions.

    The following definitions apply to this subpart:
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Order means the Peanut Promotion, Research, and Information 
Order.
    (c) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (d) Representative period means the period designated by the 
Secretary.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a peanut farm as tenants in common, joint tenants, tenants by the 
entirety, or, under community property laws, as community property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (f) Eligible producer means any person who is engaged in the 
production and sale of peanuts in the United States and who:
    (1) Owns, or shares the ownership and risk of loss of, the crop. 
This does not include quota holders who do not share in the risk of loss 
of the crop;
    (2) Rents peanut production facilities and equipment resulting in 
the ownership of all or a portion of the peanuts produced;
    (3) Owns peanut production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the peanuts produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce peanuts who share the risk of loss and receive a share 
of the peanuts produced. No other acquisition of legal title to peanuts 
shall be deemed to result in persons becoming eligible producers.



Sec.  1216.102  Voting.

    (a) Each person who is an eligible producer, as defined in this 
subpart, at the time of the referendum and during the representative 
period, shall be entitled to cast only one ballot in the referendum. 
However, each producer in a landlord-tenant relationship or a divided 
ownership arrangement involving

[[Page 131]]

totally independent entities cooperating only to produce peanuts, in 
which more than one of the parties is a producer, shall be entitled to 
cast one ballot in the referendum covering only such producer's share of 
the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate producer, or an administrator, executor, or trustee 
or an eligible producing entity may cast a ballot on behalf of such 
producer. Any individual so voting in a referendum shall certify that 
such individual is an officer or employee of the eligible producer, or 
an administrator, executive, or trustee of an eligible producing entity 
and that such individual has the authority to take such action. Upon 
request of the referendum agent, the individual shall submit adequate 
evidence of such authority.
    (c) All ballots are to be cast by mail or by facsimile, as 
instructed by the Secretary.



Sec.  1216.103  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, not 
inconsistent with the provisions hereof, to govern the procedure to be 
followed by the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (c) Give reasonable public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible producers whose names and addresses are known 
to the referendum agent, the instructions on voting, a ballot, and a 
summary of the terms and conditions of the Peanut Promotion, Research, 
and Information Order. No person who claims to be eligible to vote shall 
be refused a ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.



Sec.  1216.104  Subagents.

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



Sec.  1216.105  Ballots.

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



Sec.  1216.106  Referendum report.

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



Sec.  1216.107  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the vote of any person covered under the Act and the voting list 
shall be

[[Page 132]]

held confidential and shall not be disclosed.



PART 1218--BLUEBERRY PROMOTION, RESEARCH, AND INFORMATION ORDER--Table 
of Contents




     Subpart A--Blueberry Promotion, Research, and Information Order

                               Definitions

Sec.
1218.1 Act.
1218.2 Blueberries.
1218.3 Conflict of interest.
1218.4 Crop year.
1218.5 Department.
1218.6 Exporter.
1218.7 First handler.
1218.8 Fiscal period.
1218.9 Importer.
1218.10 Information.
1218.11 Market or marketing.
1218.12 Order.
1218.13 Part and subpart.
1218.14 Person.
1218.15 Processed blueberries.
1218.16 Producer.
1218.17 Promotion.
1218.18 Research.
1218.19 Secretary.
1218.20 Suspend.
1218.21 Terminate.
1218.22 United States.
1218.23 USACBC.

                   U.S.A. Cultivated Blueberry Council

1218.40 Establishment and membership.
1218.41 Nominations and appointments.
1218.42 Term of office.
1218.43 Vacancies.
1218.44 Alternate members.
1218.45 Procedure.
1218.46 Compensation and reimbursement.
1218.47 Powers and duties.
1218.48 Prohibited activities.

                        Expenses and Assessments

1218.50 Budget and expenses.
1218.51 Financial statements.
1218.52 Assessments.
1218.53 Exemption procedures.
1218.54 Programs, plans, and projects.
1218.55 Independent evaluation.
1218.56 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

                       Reports, Books, and Records

1218.60 Reports.
1218.61 Books and records.
1218.62 Confidential treatment.

                              Miscellaneous

1218.70 Right of the Secretary.
1218.71 Referenda.
1218.72 Suspension and termination.
1218.73 Proceedings after termination.
1218.74 Effect of termination or amendment.
1218.75 Personal liability.
1218.76 Separability.
1218.77 Amendments.
1218.78 OMB control numbers.

Subpart B--Procedure for the Conduct of Referenda in Connection with the 
          Blueberry Promotion, Research, and Information Order

1218.100 General.
1218.101 Definitions.
1218.102 Voting.
1218.103 Instructions.
1218.104 Subagents.
1218.105 Ballots.
1218.106 Referendum report.
1218.107 Confidential information.

    Authority: U.S.C. 7401--7425.

    Source: 65 FR 7654, Feb. 15, 2000, unless otherwise noted.



     Subpart A--Blueberry Promotion, Research, and Information Order

    Source: 65 FR 43963, July 17, 2000, unless otherwise noted.

    Editorial Note: Nomenclature changes appear at 66 FR 37118, 37119, 
July 17, 2001.

                               Definitions



Sec.  1218.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Pub. L. 104-127; 110 Stat. 1029), or any 
amendments thereto.



Sec.  1218.2  Blueberries.

    Blueberries means cultivated blueberries grown in or imported into 
the United States of the genus Vaccinium Corymbosum and Ashei, including 
the northern highbush, southern highbush, rabbit eye varieties, and any 
hybrid, and excluding the lowbush (native) blueberry Vaccinium 
Angustifolium.



Sec.  1218.3  Conflict of interest.

    Conflict of interest means a situation in which a member or employee 
of the U.S.A. Cultivated Blueberry Council

[[Page 133]]

has a direct or indirect financial interest in a person who performs a 
service for, or enters into a contract with, the USACBC for anything of 
economic value.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37118, July 17, 2001]



Sec.  1218.4  Crop year.

    Crop year means the 12-month period from November 1 through October 
31 of the following year or such other period approved by the Secretary.



Sec.  1218.5  Department.

    Department means the U.S. Department of Agriculture.



Sec.  1218.6  Exporter.

    Exporter means a person involved in exporting blueberries from 
another country to the United States.



Sec.  1218.7  First handler.

    First handler means any person, (excluding a common or contract 
carrier), receiving blueberries from producers and who as owner, agent, 
or otherwise ships or causes blueberries to be shipped as specified in 
the Order. This definition includes those engaged in the business of 
buying, selling and/or offering for sale; receiving; packing; grading; 
marketing; or distributing blueberries in commercial quantities. This 
definition includes a retailer, except a retailer who purchases or 
acquires from, or handles on behalf of any producer, blueberries. The 
term first handler includes a producer who handles or markets 
blueberries of the producer's own production.



Sec.  1218.8  Fiscal period.

    Fiscal period means a calendar year from January 1 through December 
31, or such other period as approved by the Secretary.



Sec.  1218.9  Importer.

    Importer means any person who imports fresh or processed blueberries 
into the United States as a principal or as an agent, broker, or 
consignee of any person who produces or handles fresh or processed 
blueberries outside of the United States for sale in the United States, 
and who is listed in the import records as the importer of record for 
such blueberries.



Sec.  1218.10  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increase market efficiency, and activities that are designed 
to enhance the image of blueberries on a national or international 
basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
blueberries; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the blueberry industry, and activities to 
enhance the image of the blueberry industry.



Sec.  1218.11  Market or marketing.

    (a) Marketing means the sale or other disposition of blueberries in 
any channel of commerce.
    (b) To market means to sell or otherwise dispose of blueberries in 
interstate, foreign, or intrastate commerce.



Sec.  1218.12  Order.

    Order means an order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.  1218.13  Part and subpart.

    Part means the Blueberry Promotion, Research, and Information Order 
and all rules, regulations, and supplemental orders issued pursuant to 
the Act and the Order. The Order shall be a subpart of such part.



Sec.  1218.14  Person.

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

[[Page 134]]



Sec.  1218.15  Processed blueberries.

    Processed blueberries means blueberries which have been frozen, 
dried, pureed, or made into juice.



Sec.  1218.16  Producer.

    Producer means any person who grows blueberries in the United States 
for sale in commerce, or a person who is engaged in the business of 
producing, or causing to be produced for any market, blueberries beyond 
the person's own family use and having value at first point of sale.



Sec.  1218.17  Promotion.

    Promotion means any action taken to present a favorable image of 
blueberries to the general public and the food industry for the purpose 
of improving the competitive position of blueberries both in the United 
States and abroad and stimulating the sale of blueberries. This includes 
paid advertising and public relations.



Sec.  1218.18  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of blueberries, including research relating to 
nutritional value, cost of production, new product development, varietal 
development, nutritional value, health research, and marketing of 
blueberries.



Sec.  1218.19  Secretary.

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



Sec.  1218.20  Suspend.

    Suspend means to issue a rule under section 553 of title 5, U.S.C., 
to temporarily prevent the operation of an order or part thereof during 
a particular period of time specified in the rule.



Sec.  1218.21  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
U.S.C., to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.



Sec.  1218.22  United States.

    United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.



Sec.  1218.23  USACBC.

    USACBC, or U.S.A. Cultivated Blueberry Council, means the 
administrative body established pursuant to Sec.  1218.40.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37118, July 17, 2001]

                   U.S.A. Cultivated Blueberry Council



Sec.  1218.40  Establishment and membership.

    (a) Establishment of the U.S.A. Cultivated Blueberry Council. There 
is hereby established a U.S.A. Cultivated Blueberry Council, hereinafter 
called the USACBC, composed of no more than 13 members and alternates, 
appointed by the Secretary from the nominations as follows:
    (1) One producer member and alternate from each of the following 
regions:
    (i) Region 1 Western Region (all states from the Pacific 
east to the Rockies): Alaska, Arizona, California, Colorado, Hawaii, 
Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and 
Wyoming.
    (ii) Region 2 Midwest Region (all states east of the 
Rockies to the Great Lakes and south to the Kansas/Missouri/Kentucky 
state line): Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, 
Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and 
Wisconsin.
    (iii) Region 3 Northeast Region (all states east of the 
Great Lakes and North of the North Carolina/Tennessee state line): 
Connecticut, Delaware, New York, Maine, Maryland, Massachusetts, New 
Hampshire, New Jersey, Pennsylvania, Rhode Island, Virginia, Vermont, 
Washington, D.C., and West Virginia.
    (iv) Region 4 Southern Region (all states south of the 
Virginia/Kentucky/Missouri/Kansas state line and east of

[[Page 135]]

the Rockies): Alabama, Arkansas, Florida, Georgia, Louisiana, 
Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, 
Tennessee, and Texas.
    (2) One producer member and alternate from each of the top five 
blueberry producing states, based upon the average of the total tons 
produced over the previous three years. Average tonnage will be based 
upon North American Blueberry Council production figures for the initial 
election and production and assessment figures generated by the USACBC 
thereafter.
    (3) One importer and alternate.
    (4) One exporter and alternate shall be filled by foreign blueberry 
producers currently shipping blueberries into the United States from the 
largest foreign blueberry production area, based on a three-year 
average.
    (5) One first handler member and alternate shall be filled by a 
United States based independent or cooperative organization which is a 
producer/shipper of domestic blueberries.
    (6) One public member and alternate.
    (b) Adjustment of membership. At least once every five years, the 
USACBC will review the geographical distribution of United States 
production of blueberries and the quantity of imports. The review will 
be conducted through an audit of state crop production figures and 
USACBC assessment receipts. If warranted, the USACBC will recommend to 
the Secretary that membership on the USACBC be altered to reflect any 
changes in geographical distribution of domestic blueberry production 
and the quantity of imports. If the level of imports increases, importer 
members and alternates may be added to the USACBC.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.41  Nominations and appointments.

    (a) Voting for regional and state representatives will be made by 
mail ballot.
    (b) In a case where a state has a state blueberry commission or 
marketing order in place, the state commission or committee will 
nominate members and alternates to serve on the USACBC. At least two 
nominees shall be submitted to the Secretary for each member and for 
each alternate.
    (c) Nomination and election of regional, and state representatives 
where no commission or order is in place will be handled by the USACBC, 
provided that the initial nominations will be handled by the North 
American Blueberry Council. The USACBC will seek nominations for members 
and alternates from the specific states and/or regions. Nominations will 
be returned to the USACBC and placed on a ballot which will then be sent 
to producers in the state and/or region for vote. The final nominee for 
member will have received the highest number of votes cast. The person 
with the second highest number of votes cast will be the final nominee 
for alternate. The persons with the third and fourth place highest 
number of votes cast will be designated as additional nominees for 
consideration by the Secretary.
    (d) Nominations for the importer, exporter, first handler, and 
public member positions will be made by the USACBC. Two nominees for 
each member and each alternate position will be submitted to the 
Secretary for consideration.
    (e) From the nominations, the Secretary shall select the members of 
the USACBC and alternates for each position on the USACBC.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.42  Term of office.

    USACBC members and alternates will serve for a term of three years 
and be able to serve a maximum of two consecutive terms. A USACBC member 
may serve as an alternate during the years the member is ineligible for 
a member position. When the USACBC is first established, the state 
representatives, first handler member, and their respected alternates 
will be assigned initial terms of three years. Regional representatives, 
the importer member, the exporter member, public member, and their 
alternates will serve an initial term of two years. Thereafter, each of 
these positions will carry a full three-year term. USACBC nominations 
and appointments will take place in two out of every three years. Each 
term of office will end on December 31,

[[Page 136]]

with new terms of office beginning on January 1.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.43  Vacancies.

    (a) In the event that any member of the USACBC ceases to be a member 
of the category of members from which the member was appointed to the 
USACBC, such position shall automatically become vacant.
    (b) If a member of the USACBC consistently refuses to perform the 
duties of a member of the USACBC, or if a member of the USACBC engages 
in acts of dishonesty or willful misconduct, the USACBC may recommend to 
the Secretary that the member be removed from office. If the Secretary 
finds the recommendation of the USACBC shows adequate cause, the 
Secretary shall remove such member from office.
    (c) Should any member position become vacant, the alternate of that 
member shall automatically assume the position of said member. Should 
the positions of both a member and such member's alternate become 
vacant, successors for the unexpired terms of such member and alternate 
shall be appointed in the manner specified in Sec.  1218.40 and Sec.  
1218.41, except that said nomination and replacement shall not be 
required if said unexpired terms are less than six months.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.44  Alternate members.

    An alternate member of the USACBC, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such member and perform such duties as assigned. In the event of 
death, removal, resignation, or disqualification of any member, the 
alternate for that member shall automatically assume the position of 
said member. In the event that both a producer member of the USACBC and 
the alternate are unable to attend a meeting, the USACBC may not 
designate any other alternate to serve in such member's or alternate's 
place and stead for such a meeting.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.45  Procedure.

    (a) At a USACBC meeting, it will be considered a quorum when a 
minimum of seven members, or their alternates serving in the absence, 
are present.
    (b) At the start of each fiscal period, the USACBC will select a 
chairperson and vice chairperson who will conduct meetings throughout 
that period.
    (c) All USACBC members and alternates will receive a minimum of 10 
days advance notice of all USACBC and committee meetings.
    (d) Each member of the USACBC will be entitled to one vote on any 
matter put to the USACBC, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the USACBC 
members present.
    (e) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are present. 
Alternates may also be assigned to committees as necessary. Committees 
may also consist of individuals other than USACBC members and such 
individuals may vote in committee meetings. These committee members 
shall serve without compensation but shall be reimbursed for reasonable 
travel expenses, as approved by the USACBC.
    (f) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the USACBC such action is considered 
necessary, the USACBC may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or any other means of communication, and all telephone votes 
shall be confirmed promptly in writing. In that event, all members must 
be notified and provided the opportunity to vote. Any action so taken 
shall have the same force and effect as though such action had been 
taken at a properly convened meeting of the USACBC. All votes shall be 
recorded in USACBC minutes.
    (g) There shall be no voting by proxy.

[[Page 137]]

    (h) The chairperson shall be a voting member.
    (i) The organization of the USACBC and the procedures for the 
conducting of meetings of the USACBC shall be in accordance with its 
bylaws, which shall be established by the USACBC and approved by the 
Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.46  Compensation and reimbursement.

    The members of the USACBC, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for reasonable 
travel expenses, as approved by the USACBC, incurred by them in the 
performance of their duties as USACBC members.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.47  Powers and duties.

    The USACBC shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the USACBC, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
USACBC a chairperson, other officers, committees, and subcommittees, as 
the USACBC determines to be appropriate;
    (d) To employ persons, other than the members, as the USACBC 
considers necessary to assist the USACBC in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs and projects, and enter into contracts or 
agreements, which must be approved by the Secretary before becoming 
effective, for the development and carrying out of programs or projects 
of research, information, or promotion, and the payment of costs thereof 
with funds collected pursuant to this subpart. Each contract or 
agreement shall provide that any person who enters into a contract or 
agreement with the USACBC shall develop and submit to the USACBC a 
proposed activity; keep accurate records of all of its transactions 
relating to the contract or agreement; account for funds received and 
expended in connection with the contract or agreement; make periodic 
reports to the USACBC of activities conducted under the contract or 
agreement; and make such other reports available as the USACBC or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
USACBC a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the USACBC of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the USACBC may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a USACBC 
contractor and who receives or otherwise uses funds allocated by the 
USACBC shall be subject to the same provisions as the contractor.
    (f) To prepare and submit for approval of the Secretary fiscal year 
budgets in accordance with Sec.  1218.50;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
USACBC;
    (h) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (i) To give the Secretary the same notice of meetings of the USACBC 
as is

[[Page 138]]

given to members in order that the Secretary's representative(s) may 
attend such meetings, and to keep and report minutes of each meeting of 
the USACBC to the Secretary;
    (j) To act as intermediary between the Secretary and any producer, 
first handler, importer, or exporter;
    (k) To furnish to the Secretary any information or records that the 
Secretary may request;
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary such amendments to the Order as 
the USACBC considers appropriate; and
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the blueberry industry's 
position in the marketplace; maintain and expand existing markets and 
uses for blueberries; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the blueberry industry.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.48  Prohibited activities.

    The USACBC may not engage in, and shall prohibit the employees and 
agents of the USACBC from engaging in:
    (a) Any action that would be a conflict of interest; and
    (b) Using funds collected by the USACBC under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, by local, state, national, and foreign governments, 
other than recommending to the Secretary amendments to the Order.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                        Expenses and Assessments



Sec.  1218.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, and 
as may be necessary thereafter, the USACBC shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart. Each such 
budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data or at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least on preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the USACBC's approved budget and which 
are consistent with governing bylaws need not have prior approval by the 
Secretary.
    (d) The USACBC is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the USACBC for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the USACBC.
    (e) With approval of the Secretary, the USACBC may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the USACBC. Any funds 
borrowed by the USACBC shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
USACBC.
    (f) The USACBC may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the USACBC shall retain complete control of their use.

[[Page 139]]

    (g) The USACBC may also receive funds provided through the 
Department's Foreign Agricultural Service or from other sources, with 
the approval of the Secretary, for authorized activities.
    (h) The USACBC shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (i) The USACBC may not expend for administration, maintenance, and 
functioning of the USACBC in any fiscal year an amount that exceeds 15 
percent of the assessments and other income received by the USACBC for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (h) are excluded from this limitation on spending.
    (j) The USACBC may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established: Provided that the funds in the reserve do not exceed one 
fiscal period's budget. Subject to approval by the Secretary, such 
reserve funds may be used to defray any expenses authorized under this 
part.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.51  Financial statements.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.52  Assessments.

    (a) The funds to cover the Council's expenses shall be paid from 
assessments on producers and importers, donations from any person not 
subject to assessments under this Order, and other funds available to 
the Board including those collected pursuant to Sec.  1218.56 and 
subject to the limitations contained therein.
    (b) The collection of assessments on domestic blueberries will be 
the responsibility of the first handler receiving the blueberries. In 
the case of the producer acting as its own first handler, the producer 
will be required to collect and remit its individual assessments.
    (c) Such assessments shall be levied at a rate of $12 per ton on all 
blueberries. The assessment rate will be reviewed, and may be modified 
with the approval of the Secretary, after the first referendum is 
conducted as stated in Sec.  1218.71(b).
    (d) Each importer of fresh and processed blueberries shall pay an 
assessment to the USACBC on blueberries imported for marketing in the 
United States, through the U.S. Customs Service.
    (1) The assessment rate for imported fresh and processed blueberries 
shall be the same or equivalent to the rate for fresh blueberries 
produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
fresh and frozen blueberries that are identified by the numbers 
0810.40.0028 and 0811.90.2028, respectively, in the Harmonized Tariff 
Schedule of the United States or any other numbers used to identify 
fresh and frozen blueberries. Assessments on other types of imported 
processed blueberries, such as dried blueberries, puree, and juice, may 
be added at the recommendation of the USACBC with the approval of the 
Secretary.
    (3) The assessments due on imported fresh and processed blueberries 
shall be paid when they enter or are withdrawn for consumption in the 
United States.
    (e) All assessment payments and reports will be submitted to the 
office of the USACBC. All final payments for a crop year are to be 
received no later than November 30 of that year. A late

[[Page 140]]

payment charge shall be imposed on any handler who fails to remit to the 
USACBC, the total amount for which any such handler is liable on or 
before the due date established by the USACBC. In addition to the late 
payment charge, an interest charge shall be imposed on the outstanding 
amount for which the handler is liable. The rate of interest shall be 
prescribed in regulations issued by the Secretary.
    (f) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (g) The USACBC may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.53  Exemption procedures.

    (a) Any producer who produces less than 2,000 pounds of blueberries 
annually who desires to claim an exemption from assessments during a 
fiscal year as provided in Sec.  1218.42 shall apply to the USACBC, on a 
form provided by the USACBC, for a certificate of exemption. Such 
producer shall certify that the producer's production of blueberries 
shall be less than 2,000 pounds for the fiscal year for which the 
exemption is claimed. Any importer who imports less than 2,000 pounds of 
fresh and processed blueberries annually who desires to claim an 
exemption from assessments during a fiscal year as provided in Sec.  
1218.52 shall apply to the USACBC, on a form provided by the USACBC, for 
a certificate of exemption. Such importer shall certify that the 
importer's importation of fresh and processed blueberries shall not 
exceed 2,000 pounds, for the fiscal year for which the exemption is 
claimed.
    (b) On receipt of an application, the USACBC shall determine whether 
an exemption may be granted. The USACBC then will issue, if deemed 
appropriate, a certificate of exemption to each person who is eligible 
to receive one. Each producer who is exempt from assessment must provide 
an exemption number to the first handler in order to be exempt from the 
collection of an assessment on blueberries. First handlers and 
importers, except as otherwise authorized by the USACBC, shall maintain 
records showing the exemptee's name and address along with the exemption 
number assigned by the USACBC.
    (c) Importers who are exempt from assessment shall be eligible for 
reimbursement of assessments collected by the U.S. Customs Service and 
shall apply to the USACBC for reimbursement of such assessments paid. No 
interest will be paid on assessments collected by the U.S. Customs 
Service. Requests for reimbursement shall be submitted to the USACBC 
within 90 days of the last day of the year the blueberries were actually 
imported.
    (d) Any person who desires an exemption from assessments for a 
subsequent fiscal year shall reapply to the USACBC, on a form provided 
by the USACBC, for a certificate of exemption.
    (e) The USACBC may require persons receiving an exemption from 
assessments to provide to the USACBC reports on the disposition of 
exempt blueberries and, in the case of importers, proof of payment of 
assessments.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.54  Programs, plans, and projects.

    (a) The USACBC shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
producer and consumer information, with respect to fresh and processed 
blueberries; and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, sale, distribution, and marketing of fresh and 
processed blueberries, and the creation of new products thereof, to the 
end that the marketing and use of blueberries may be encouraged, 
expanded, improved, or made more acceptable and to advance the image, 
desirability, or quality of fresh and processed blueberries.

[[Page 141]]

    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the USACBC shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the USACBC to ensure that 
it contributes to an effective program of promotion, research, or 
information. If it is found by the USACBC that any such program, plan, 
or project does not contribute to an effective program of promotion, 
research, or information, then the USACBC shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging another agricultural commodity. 
Blueberries of all origins shall be treated equally.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.55  Independent evaluation.

    The USACBC shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the USACBC, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the USACBC pursuant to the Act. The USACBC shall submit to 
the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.56  Patents, copyrights, trademarks, information, publications, 
and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
USACBC under this subpart shall be the property of the U.S. Government 
as represented by the USACBC and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the benefit 
of the USACBC; shall be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the USACBC; and may be 
licensed subject to approval by the Secretary. Upon termination of this 
subpart, Sec.  1218.73 shall apply to determine disposition of all such 
property.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                       Reports, Books, and Records



Sec.  1218.60  Reports.

    (a) Each first handler subject to this subpart may be required to 
provide to the USACBC periodically such information as may be required 
by the USACBC, with the approval of the Secretary, which may include but 
not be limited to the following:
    (1) Number of pounds handled;
    (2) Number of pounds on which an assessment was collected;
    (3) Name and address of person from whom the first handler has 
collected the assessments on each pound handled; and
    (4) Date collection was made on each pound handled. All reports are 
due to the USACBC 30 days after the end of the crop year.
    (b) Each producer and importer subject to this subpart may be 
required to provide to the USACBC periodically such information as may 
be required by the USACBC, with the approval of the Secretary, which may 
include but not be limited to the following:
    (1) Number of pounds produced;
    (2) Number of pounds on which an assessment was paid;
    (3) Name and address of the producer;
    (4) Date collection was made on each pound produced. All reports are 
due to the USACBC 30 days after the end of the crop year.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.61  Books and records.

    Each first handler, producer, and importer subject to this subpart 
shall maintain and make available for inspection by the Secretary such 
books and records as are necessary to carry out the provisions of this 
subpart and the regulations issued thereunder, including such records as 
are necessary to verify any reports required. Such

[[Page 142]]

records shall be retained for at least 2 years beyond the fiscal period 
of their applicability.



Sec.  1218.62  Confidential treatment.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]

                              Miscellaneous



Sec.  1218.70  Right of the Secretary.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.71  Referenda.

    (a) Initial referendum. The Order shall not become effective unless:
    (1) The Secretary determines that the Order is consistent with and 
will effectuate the purposes of the Act; and
    (2) The Order is approved by a majority of producers and importers 
voting for approval who also represent a majority of the volume of 
blueberries represented in the referendum who, during a representative 
period determined by the Secretary, have been engaged in the production 
or importation of blueberries.
    (b) Subsequent referenda. Every five years, the Secretary shall hold 
a referendum to determine whether blueberry producers and importers 
favor the continuation of the Order. The Order shall continue if it is 
favored by a majority of producers and importers voting for approval who 
also represent a majority of the volume of blueberries represented in 
the referendum who, during a representative period determined by the 
Secretary, have been engaged in the production or importation of 
blueberries. The Secretary will also conduct a referendum if 10 percent 
or more of all eligible blueberry producers and importers request the 
Secretary to hold a referendum. In addition, the Secretary may hold a 
referendum at any time.



Sec.  1218.72  Suspension and termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that the subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored

[[Page 143]]

by a majority of producers and importers voting for approval who also 
represent a majority of the volume of blueberries represented in the 
referendum who, during a representative period determined by the 
Secretary, have been engaged in the production or importation of 
blueberries.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.  1218.73  Proceedings after termination.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.74  Effect of termination or amendment.

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



Sec.  1218.75  Personal liability.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.76  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances

[[Page 144]]

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



Sec.  1218.77  Amendments.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec.  1218.78  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0581-0093, except for the USABC nominee background statement form 
which is assigned OMB control number 0505-001.



Subpart B--Procedure for the Conduct of Referenda in Connection with the 
          Blueberry Promotion, Research, and Information Order



Sec.  1218.100  General.

    Referenda to determine whether eligible blueberry producers and 
importers favor the issuance, amendment, suspension, or termination of 
the Blueberry Promotion, Research, and Information Order shall be 
conducted in accordance with this subpart.



Sec.  1218.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Blueberries means cultivated blueberries grown in or imported 
into the United States of the genus Vaccinium Corymbosum and Ashei, 
including the northern highbush, southern highbush, rabbit eye 
varieties, and any hybrid, and excluding the lowbush (native) blueberry 
Vaccinium Angustifolium.
    (c) Eligible importer means any person who imported 2,000 pounds or 
more of fresh or processed blueberries, that are identified by the 
numbers 0810.40.0028 and 0811.90.2028, respectively, in the Harmonized 
Tariff Schedule of the United States or any other numbers used to 
identify fresh and frozen blueberries. Importation occurs when 
commodities originating outside the United States are entered or 
withdrawn from the U.S. Customs Service for consumption in the United 
States. Included are persons who hold title to foreign-produced 
blueberries immediately upon release by the U.S. Customs Service, as 
well as any persons who act on behalf of others, as agents or brokers, 
to secure the release of blueberries from the U.S. Customs Service when 
such blueberries are entered or withdrawn for consumption in the United 
States.
    (d) Eligible producer means any person who produced 2,000 pounds or 
more of blueberries in the United States during the representative 
period who:
    (1) Owns, or shares the ownership and risk of loss of, the crop;
    (2) Rents blueberry production facilities and equipment resulting in 
the ownership of all or a portion of the blueberries produced;
    (3) Owns blueberry production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the blueberries produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce blueberries who share the risk of loss and receive a 
share of the blueberries produced. No other acquisition of legal title 
to blueberries shall be deemed to result in persons becoming eligible 
producers.
    (e) Order means the Blueberry Promotion, Research, and Information 
Order.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:

[[Page 145]]

    (1) A husband and a wife who have title to, or leasehold interest 
in, a blueberry farm as tenants in common, joint tenants, tenants by the 
entirety, or, under community property laws, as community property; and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (g) Processed blueberries means blueberries which have been frozen, 
dried, pureed, or made into juice.
    (h) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (i) Representative period means the period designated by the 
Secretary.
    (j) United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.



Sec.  1218.102  Voting.

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



Sec.  1218.103  Instructions.

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



Sec.  1218.104  Subagents.

    The referendum agent may appoint any individual or individuals 
necessary

[[Page 146]]

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



Sec.  1218.105  Ballots.

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



Sec.  1218.106  Referendum report.

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



Sec.  1218.107  Confidential information.

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



 PART 1219--HASS AVOCADO PROMOTION, RESEARCH, AND INFORMATION--Table of 
 Contents




   Subpart A--Hass Avocado Promotion, Research, and Information Order

                               Definitions

Sec.
1219.1 Act.
1219.2 Association.
1219.3 Conflict of interest.
1219.4 Consumer information.
1219.5 Crop year.
1219.6 Customs.
1219.7 Department.
1219.8 Exempt handler.
1219.9 First handler.
1219.10 Fiscal period or marketing year.
1219.11 Handle.
1219.12 Hass avocado.
1219.13 Hass Avocado Board.
1219.14 Importer.
1219.15 Industry information.
1219.16 Marketing.
1219.17 Order.
1219.18 Part and subpart.
1219.19 Person.
1219.20 Producer.
1219.21 Programs, plans, and projects.
1219.22 Promotion.
1219.23 Research.
1219.24 Secretary.
1219.25 State.
1219.26 United States.

                         The Hass Avocado Board

1219.30 Establishment and membership.
1219.31 Initial nomination and appointment of producer members and 
          alternates.
1219.32 Initial nomination and appointment of importer members and 
          alternates.
1219.33 Subsequent nomination and appointment of Board members and 
          alternates.
1219.34 Failure to nominate.
1219.35 Term of office.
1219.36 Vacancies.
1219.37 Alternate members.
1219.38 Powers and duties.
1219.39 Board procedure.
1219.40 Committee procedure.
1219.41 Compensation and expenses.
1219.42 Prohibited activities.

                   Budgets, Expenses, and Assessments

1219.50 Budgets, programs, plans, and projects.
1219.51 Contracts and agreements.
1219.52 Control of administrative costs.
1219.53 Budget and expenses.
1219.54 Assessments.
1219.55 Exemption from assessment.
1219.56 Adjustment of accounts.
1219.57 Patents, copyrights, trademarks, publications, and product 
          formulations.
1219.58 Importer associations.

                       Books, Records, and Reports

1219.60 Reports.
1219.61 Books and records.
1219.62 Books and records of the Board.
1219.63 Confidential treatment.
1219.64 List of importers.
1219.65 List of producers.

                              Miscellaneous

1219.70 Right of the Secretary.
1219.71 Suspension or termination.
1210.72 Proceedings after termination.
1219.73 Effect of termination or amendment.
1219.74 Personal liability.
1219.75 Separability.
1219.76 Amendments.
1219.77 OMB control numbers.

[[Page 147]]

                    Subpart B--Referendum Procedures

1219.100 General.
1219.101 Definitions.
1219.102 Registration.
1219.103 Voting.
1219.104 Instructions.
1219.105 Subagents.
1219.106 Ballots.
1219.107 Referendum report.
1219.108 Confidential information.
1219.109 OMB control number.

    Authority: 7 U.S.C. 7801-7813.

    Source: 67 FR 7264, Feb. 19, 2002, unless otherwise noted.



   Subpart A--Hass Avocado Promotion, Research, and Information Order

    Source: 67 FR 56897, Sept. 6, 2002, unless otherwise noted.

                               Definitions



Sec.  1219.1  Act.

    Act means the Hass Avocado Promotion, Research, and Information Act 
of 2000, Public Law 106-387, 7 U.S.C. 7801-7813, and any amendments 
thereto.



Sec.  1219.2  Association.

    Association means an avocado organization established by State 
statute in a State with the majority of Hass avocado production in the 
United States.



Sec.  1219.3  Conflict of interest.

    Conflict of interest means a situation in which a Board member or 
employee has a direct or indirect financial interest in a person who 
performs a service for, or enters into a contract with, the Board for 
anything of economic value.



Sec.  1219.4  Consumer information.

    Consumer information means any action or program that disseminates 
or otherwise provides information to consumers and other persons, on the 
use, nutritional attributes, and other information that will assist 
consumers and other persons in the United States in making evaluations 
and decisions regarding the purchase, preparation, and use of Hass 
avocados.



Sec.  1219.5  Crop year.

    Crop year means the period from November 1 of one year through 
October 31 of the following year, or such other one-year period 
recommended by the Board and approved by the Secretary.



Sec.  1219.6  Customs.

    Customs means the United States Customs Service.



Sec.  1219.7  Department.

    Department means the United States Department of Agriculture.



Sec.  1219.8  Exempt handler.

    Exempt handler means a person who would otherwise be considered a 
first handler, except that all Hass avocados purchased by the person 
have already been subject to assessments under the Order. A person who 
handles both Hass avocados that have already been subject to assessments 
under the Order and Hass avocados that have not been subject to 
assessments under the Order is a first handler.



Sec.  1219.9  First handler.

    First handler means a person operating in the Hass avocado marketing 
system that sells domestic or imported Hass avocados for consumption in 
the United States and who is responsible for remitting assessments to 
the Board. For the purposes of the Order, the term means the first 
person who handles Hass avocados for sale (except a common or contract 
carrier of Hass avocados owned by another person), including a producer 
who handles Hass avocados for sale of the producer's own production.



Sec.  1219.10  Fiscal period or marketing year.

    Fiscal period or marketing year means the period beginning on 
November 1 of any year and extending through the last day of October of 
the following year, or such other consecutive 12-month period as shall 
be recommended by the Board and approved by the Secretary.



Sec.  1219.11  Handle.

    Handle means to pack, process, transport, purchase, or in any other 
way to

[[Page 148]]

place or cause Hass avocados to which one has title or possession to be 
placed in the current of commerce. Such term shall not include the 
transportation or delivery of Hass avocados by the producer thereof to a 
handler.



Sec.  1219.12  Hass avocado.

    Hass avocado means the fruit grown in or imported into the United 
States of the species Persea americana Mill., or other type of avocados 
that, in the determination of the Board, with approval of the Secretary, 
is so similar to the Hass variety avocado as to be indistinguishable to 
consumers in fresh form. The term shall include all fruit in fresh, 
frozen, or any other processed form.



Sec.  1219.13  Hass Avocado Board.

    Hass Avocado Board or the Board means the administrative body 
established pursuant to Sec.  1219.40.



Sec.  1219.14  Importer.

    Importer means any person who imports Hass avocados into the United 
States. The term includes a person who holds title to Hass avocados 
produced outside of the United States immediately upon release by 
Customs, as well as any person who acts on behalf of others, as an 
agent, broker, or consignee, to secure the release of Hass avocados from 
Customs and the introduction of the released Hass avocados into the 
current of commerce and who is listed in the import records of Customs 
as the importer of record for such Hass avocados.



Sec.  1219.15  Industry information.

    Industry information means information, programs, and activities 
that are designed to increase efficiency in processing, enhance the 
development of new markets and marketing strategies, increase marketing 
efficiency, and enhance the image of Hass avocados and the Hass avocado 
industry in the United States.



Sec.  1219.16  Marketing.

    Marketing means any activity related to the sale or other 
disposition of Hass avocados in any channel of commerce.



Sec.  1219.17  Order.

    Order means this subpart.



Sec.  1219.18  Part and subpart.

    Part means the Order and all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order. The Order itself shall 
be a subpart of such part.



Sec.  1219.19  Person.

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



Sec.  1219.20  Producer.

    Producer means any person who is engaged in the business of 
producing Hass avocados in the United States for commercial use, who 
owns, or shares the ownership and risk of loss, of such Hass avocados.



Sec.  1219.21  Programs, plans, and projects.

    Programs, plans, and projects means those research, promotion, and 
information programs, plans, studies, or projects established pursuant 
to Sec.  1219.50.



Sec.  1219.22  Promotion.

    Promotion means any action to advance the image, desirability, or 
marketability of Hass avocados in the United States, including paid 
advertising, sales promotion, and publicity. Promotion activities are 
designed to improve the competitive position and stimulate sales of Hass 
avocados in the domestic marketplace.



Sec.  1219.23  Research.

    Research means any type of test, study, or analysis relating to 
market research, market development, and market efforts, or relating to 
the use, quality, or nutritional value of Hass avocados, other related 
food science research, or research designed to advance the knowledge, 
image, desirability, usage, or marketability of Hass avocados in the 
United States.

[[Page 149]]



Sec.  1219.24  Secretary.

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



Sec.  1219.25  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, the United States Virgin Islands, Guam, 
American Samoa, the Republic of the Marshall Islands, and the Federated 
States of Micronesia.



Sec.  1219.26  United States.

    United States means collectively the several 50 States of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
Commonwealth of the Northern Mariana Islands, the United States Virgin 
Islands, Guam, American Samoa, the Republic of the Marshall Islands, and 
the Federated States of Micronesia.

                         The Hass Avocado Board



Sec.  1219.30  Establishment and membership.

    (a) A Hass Avocado Board, called the Board elsewhere in this part, 
is hereby established to administer the terms and provisions of this 
subpart. The Board shall consist of 12 members nominated by the Hass 
avocado industry and appointed by the Secretary as provided in this 
subpart, each of whom shall have an alternate nominated and appointed in 
the same manner as members of the Board are nominated and appointed. 
Board members and alternates shall be domiciled in the United States.
    (b) The membership of the Board shall be divided as follows:
    (1) Seven members and their alternates shall be producers of Hass 
avocados that are subject to assessments under this subpart;
    (2) Two members and their alternates shall be importers of Hass 
avocados that are subject to assessments under this subpart; and
    (3) Three members shall be producers of Hass avocados that are 
subject to assessments under this subpart or importers of Hass avocados 
that are subject to assessments under this subpart. Producers and 
importers shall be allocated to these positions so as to assure as 
nearly as possible that the composition of the 12-member Board reflects 
the proportion of domestic production and imports supplying the United 
States market. Such proportion shall be based on the Secretary's 
determination of the average volume of domestic production and the 
average volume of imports into the United States market over the 
previous three years, based on all information available to the 
Secretary.
    (c) Three years after the assessment of funds commences pursuant to 
this subpart, and at the end of each three-year period thereafter, the 
Board shall review the production of domestic Hass avocados in the 
United States and the volume of imported Hass avocados on the basis of 
the amount of assessments collected from producers and importers over 
the immediately preceding three-year period and, if warranted, recommend 
to the Secretary the reapportionment of the positions authorized in 
paragraph (b)(3) of this section to reflect changes in the proportion of 
domestic Hass avocado production to the volume of imported Hass 
avocados, to the extent possible in the Act. Any adjustment under this 
paragraph shall be subject to the review and approval of the Secretary.
    (d) For purposes of this section, importer means a person who is 
involved in, as a substantial activity, the importation of Hass avocados 
for sale or marketing in the United States (either directly or as an 
agent, broker, or consignee of any person that produces Hass avocados 
outside of the United States for sale in the United States), who is 
subject to assessments under the Order, and who is listed by Customs as 
the importer of record for such Hass avocados. A substantial activity 
means that the volume of a person's Hass avocado imports must exceed the 
volume of the person's production or handling of domestic Hass avocados.

[[Page 150]]



Sec.  1219.31  Initial nomination and appointment of producer members 
and alternates.

    (a) The Association will nominate producer members and alternates to 
serve on the Board in accordance with the following procedures.
    (1) The Association shall establish a list of producers in the 
United States who are eligible to serve on the Board and notify all 
producers that they may nominate persons to serve as members and 
alternates on the Board.
    (2) After names are received from the producers, the Association 
shall prepare a ballot with the names of all persons nominated and mail 
it to all producers to allow them the opportunity to vote for the 
persons who will represent their interests on the Board.
    (3) After tabulating the vote, the Association shall announce the 
results and submit two names for each producer member and two names for 
each alternate producer member to the Secretary from the persons 
receiving the highest number of votes.
    (b) The Secretary shall select the producer members and alternates 
of the Board from the names submitted by the Association. Following the 
selection of the producer members, the Secretary shall select the 
alternate producer members. In selecting the alternate members, the 
Secretary shall consider the names submitted by the Association for each 
alternate member position along with the individuals whose names were 
submitted by the Association for each Board member position but were not 
selected for that position.



Sec.  1219.32  Initial nomination and appointment of importer members 
and alternates.

    (a) The Department will conduct the nomination process for the 
initial importer members and alternates on the Board in accordance with 
the following procedures.
    (1) The Department shall notify all known importers and importer 
organizations that they may nominate persons to serve as importer 
members and alternates on the Board.
    (2) After names are received from the importers and importer 
organizations, the Department shall prepare a ballot with the names of 
all persons nominated and mail it to all known importers to allow them 
the opportunity to vote for the persons who will represent their 
interests on the Board.
    (3) After tabulating the vote, the Department shall announce the 
results and submit two names for each importer member and two names for 
each alternate importer member to the Secretary from the persons 
receiving the highest number of votes.
    (b) The Secretary shall select the importer members and alternates 
of the Board from the nominees elected by importers. Following the 
selection of the importer members, the Secretary shall select the 
alternate importer members. In selecting the alternate members, the 
Secretary shall consider the names for each alternate member position 
along with the individuals who were elected by importers for each Board 
member position but were not selected for that position.



Sec.  1219.33  Subsequent nomination and appointment of Board members 
and alternates.

    The Board's staff shall announce at least 150 days in advance of the 
expiration of members' and alternates' terms that such terms are 
expiring and shall solicit nominations in accordance with procedures 
recommended by the Board and approved by the Secretary. Nominations for 
such positions should be submitted to the Secretary no less than 90 days 
prior to the expiration of the terms.



Sec.  1219.34  Failure to nominate.

    In any case in which producers or importers fail to nominate 
individuals for appointment to the Board, the Secretary may appoint 
individuals to fill vacancies from the appropriate segments of the 
industry.



Sec.  1219.35  Term of office.

    The members and alternate members of the Board shall serve for terms 
of three years, except the members of the initial Board shall serve 
terms as follows: Four members and four alternates shall serve for two-
year terms; four members and four alternates shall serve for three-year 
terms; and four members and four alternates shall

[[Page 151]]

serve for four-year terms. No member shall serve more than two 
consecutive three-year terms. Members and alternates serving initial 
two-year or four-year terms may serve for one additional three-year 
term. A Board member may serve as an alternate during the years the 
member is ineligible for a member position. Each term of office will end 
on October 31, with new terms of office beginning on November 1.



Sec.  1219.36  Vacancies.

    (a) In the event any member or alternate of the Board ceases to be a 
member of the category of members from which the member was appointed to 
the Board, such member or alternate shall be disqualified from serving 
on the Board and the position shall automatically become vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that the member be removed from office. If the Secretary finds 
that the recommendation of the Board shows adequate cause, the member 
shall be removed from office.
    (c) Should any Board member position become vacant in the event of 
the death, removal, resignation, or disqualification, the alternate of 
that member shall automatically assume the position of said member. The 
alternate shall serve until the end of the member's normal term. If 
there is no alternate member to assume the position of member, the 
successor member and alternate shall be nominated and selected in the 
manner specified in Sec. Sec.  1219.31, 1219.32, or 1219.33.
    (d) Should any alternate member become vacant in the event of death, 
removal, resignation, or disqualification, the Board may nominate 
persons to serve for the unexpired term of such alternate member. The 
nomination shall be conducted at a regularly scheduled Board meeting as 
soon as practicable after the vacancy occurs. The Board may solicit the 
names of nominees from producers and importers prior to the meeting and 
from the floor of the meeting. All nominees must meet the qualifications 
for nomination. The Board shall submit two nominees for each vacancy to 
the Secretary. A vacancy will not be required to be filled if the 
unexpired term is less than six months.



Sec.  1219.37  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such member and perform such duties as assigned. In the event of the 
death, removal, resignation, or disqualification of any member, the 
alternate for that member shall automatically assume the position of 
said member. In the event that both a member of the Board and the 
alternate are unable to attend a meeting, the Board may not designate 
any other alternate to serve in such member's or alternate's place and 
stead for the meeting.



Sec.  1219.38  Powers and duties.

    The Board shall have the following powers and duties in addition to 
the responsibilities and authorities specified in other sections of this 
subpart:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, at 
the start of each fiscal period, and at such other times as the Board 
determines to be appropriate;
    (d) To recommend to the Secretary rules and regulations to 
effectuate the terms and conditions of this subpart;
    (e) To employ such persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (f) To appoint from its members an executive committee and to 
delegate to the committee authority to administer

[[Page 152]]

the terms and provisions of this subpart under the direction of the 
Board and within the policies determined by the Board and approved by 
the Secretary;
    (g) To develop budgets for the implementation of this subpart and 
submit the budgets to the Secretary for approval and to propose and 
develop (or receive and evaluate), approve, and submit to the Secretary 
for approval programs, plans, and projects for Hass avocado promotion, 
industry information, consumer information, or related research;
    (h) To develop and implement after the approval by the Secretary 
programs, plans, and projects for Hass avocado promotion, industry 
information, consumer information, or related research, to contract or 
enter into agreements with appropriate persons to implement the 
programs, plans, and projects, and to pay the costs of the 
implementation of contracts and agreements with funds collected under 
this subpart.
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the Hass avocado industry's position 
in the domestic marketplace; to maintain and expand existing domestic 
markets and uses for Hass avocados; to create new domestic markets; and 
to carry out programs, plans, and projects designed to provide maximum 
benefits to the Hass avocado industry;
    (k) To evaluate on-going and completed programs, plans, and projects 
for Hass avocado promotion, industry information, consumer information, 
or related research and to comply with the independent evaluation 
provisions of the Federal Agricultural Improvement and Reform Act of 
1996 [7 U.S.C. 7401 et seq.];
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary amendments to this Order;
    (n) To invest, pending disbursement under a program, plan, or 
project, funds collected through assessments authorized under this Act 
only in:
    (1) Obligations of the United States or any agency of the United 
States;
    (2) General obligations of any State or any political subdivision of 
a State;
    (3) Any interest-bearing account or certificate of deposit of a bank 
that is a member of the Federal Reserve System; or
    (4) Obligations fully guaranteed as to principal and interest by the 
United States, except that income from any such invested funds may be 
used only for a purpose for which the invested funds may be used;
    (o) To borrow funds necessary for the startup expenses of the Order;
    (p) To cause the books of the Board to be audited by a qualified 
independent auditor at the end of each fiscal period and to submit a 
report of the audit directly to the Secretary;
    (q) To give the Secretary the same notice of meetings and 
teleconferences of the Board and its committees as is given to members 
in order that the Secretary's representative(s) may attend or 
participate in the meetings;
    (r) To act as intermediary between the Secretary and any producer, 
first handler, or importer;
    (s) To periodically prepare and make public reports of its 
activities carried out, and at least once each fiscal period, to make 
public an accounting of funds received and expended; and
    (t) To notify Hass avocado producers, first handlers, and importers 
of all Board meetings through news releases or other means.



Sec.  1219.39  Board procedure.

    (a) At a properly convened meeting of the Board, seven (7) members, 
including alternates acting in place of members of the Board, shall 
constitute a quorum: Provided, that such alternates shall serve only 
when the member is absent from a meeting. Any action of the Board shall 
require the concurring votes of a majority of those present

[[Page 153]]

and voting. At assembled meetings, all votes shall be cast in person.
    (b) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action if supported by one vote more than 
50 percent of the members by mail, telephone, electronic mail, 
facsimile, or other means of communication. Such alternative means for 
the Board taking action may be undertaken for various reasons. These 
reasons include the need to address matters of an emergency nature when 
there is not enough time to call an assembled meeting of the Board. All 
telephone votes shall be confirmed promptly in writing. In that event, 
all members must be notified and provided an opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a properly convened meeting of the Board. All 
votes shall be recorded in the Board minutes.
    (c) All Board members and alternates and the Secretary will be 
notified at least 10 days in advance of all Board meetings, except the 
chairperson of the Board can waive the 10-day requirement in matters of 
an emergency nature.
    (d) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by one 
vote more than 50 percent of the total votes represented by the Board 
members present.
    (e) There shall be no voting by proxy.
    (f) The chairperson shall be a voting member of the Board.



Sec.  1219.40  Committee procedure.

    (a) The Board may establish committees as deemed necessary to carry 
out the purposes and objectives of the Order.
    (b) The chairperson of the Board shall appoint all committee 
chairpersons and shall appoint all members of each committee after 
consultation with the committee chairperson affected. Appointments are 
subject to approval by the Board and may be changed from time to time as 
determined by the chairperson of the Board with the concurrence of the 
Board.
    (c) The chairperson of the Board may appoint committee members from 
among the Board members and alternates and from the industry in general.
    (d) The rules and procedures under which committees conduct their 
activities shall be prescribed in the Board's bylaws.
    (e) Committee members and the Secretary will be notified at least 10 
days in advance of all committee meetings.
    (f) It will be considered a quorum at a committee meeting when at 
least one more than half of those assigned to the committee are present.
    (g) There shall be no voting by proxy on committees.
    (h) The chairperson of the Board shall be an ex-officio member of 
all committees.



Sec.  1219.41  Compensation and expenses.

    (a) The members and alternates of the Board and committee members 
shall serve without compensation but shall be reimbursed for reasonable 
out-of-pocket expenses, as approved by the Board, incurred by them in 
the performance of their duties.
    (b) The Board shall have in place sufficient internal controls to 
prevent reimbursements or expenditures for unreasonable or otherwise 
controversial travel and meeting expenses.



Sec.  1219.42  Prohibited activities.

    The Board may not engage in and shall prohibit its employees and 
agents from engaging in:
    (a) Any action that would be a conflict of interest. For the 
purposes of this subpart, Board members and employees thereof must 
disclose any relationship with any organization or company that has a 
contract with the Board or operates a State promotion program. No member 
may vote on any matter in which the member or member's business entity 
has a financial interest.
    (b) Using funds collected under this subpart for the purpose of 
influencing legislation or governmental action or policy, by local, 
national, and foreign governments, except to develop and make 
recommendations to the Secretary as provided for in this subpart.
    (c) In a program, plan, or project conducted under this subpart:

[[Page 154]]

    (1) Making any reference to private brand names or making false, 
misleading, disparaging, or unwarranted claims on behalf of Hass 
avocados or
    (2) Making any false, misleading, or disparaging statements with 
respect to the attributes or use of any agricultural product. This 
section shall not preclude the Board from offering its programs, plans, 
and projects for use by commercial parties under such terms and 
conditions as the Board may prescribe as approved by the Secretary.
    (d) For the purposes of this section, a reference to State of origin 
or country of origin does not constitute a reference to a private brand 
name with regard to any funds credited to or disbursed by the Board to 
the Association or to any importer association established in accordance 
with Sec.  1219.54.

                   Budgets, Expenses, and Assessments



Sec.  1219.50  Budgets, programs, plans, and projects.

    (a) The Board shall submit to the Secretary, on a fiscal period 
basis, annual budgets of its anticipated expenses and disbursements of 
the Board in the administration of this subpart, including the projected 
costs of Hass avocado promotion, industry information, consumer 
information, and related research programs, plans, and projects. The 
first budget shall cover such period as may remain before the beginning 
of the next fiscal period. If such fiscal period is 90 days or less, the 
first budget shall cover such period, as well as the next fiscal period. 
Thereafter, the Board shall submit budgets for each succeeding fiscal 
period not less than 60 days before the beginning of such fiscal period.
    (b) The Board shall receive and evaluate, or on its own initiative 
develop programs, plans and projects for Hass avocado promotion, 
industry information, consumer information as well as related research. 
The Board shall submit to the Secretary for approval any program, plan, 
or project authorized in this subpart. Such programs, plans or projects 
shall provide for:
    (1) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, or 
projects for advertising, sales promotion, other promotion, and consumer 
information with respect to Hass avocados directed toward increasing the 
general demand for Hass avocados in the United States. Funds shall be 
available as necessary to carry out this section;
    (2) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of appropriate programs, plans, and 
projects designed to strengthen the position of the Hass avocado 
industry in the domestic marketplace; to maintain, develop, and expand 
markets for Hass avocados in the United States; to lead to the 
development of new marketing strategies; to advance the image and 
desirability of, increase the efficiency of, and encourage further 
development of the Hass avocado industry; and to provide for the 
disbursement of necessary funds for the purposes described in this 
section;
    (3) The establishment, implementation, issuance, effectuation, 
administration, and evaluation of programs, plans, and projects for 
marketing development research; research on the sale, distribution, 
marketing, use, quality, and nutritional value of Hass avocados; and 
other research with respect to Hass avocado marketing, promotion, 
industry information, or consumer information, including the creation of 
new products thereof. Information acquired from such plans and projects 
shall be disseminated as appropriate. Funds shall be available as 
necessary to carry out this section; and
    (4) The Board to enter into contracts or make agreements for the 
development and carrying out of research, promotion, and information, 
and pay for the costs of such contracts or agreements with funds 
collected pursuant to Sec.  1219.54.
    (c) A budget, program, plan, or project for Hass avocados promotion, 
industry information, consumer information, or related research may not 
be implemented prior to approval of the budget, program, plan, or 
project by the Secretary. If the Secretary fails to provide notice to 
the Board or approval or disapproval of a budget, program, plan, or 
project within 45 days after receipt, such budget, program, plan, or 
project shall be deemed approved by

[[Page 155]]

the Secretary and may be implemented by the Board.
    (d) The Board, from time to time, may seek advice and consult with 
experts from the production, import, wholesale, and retail segments of 
the Hass avocado industry to assist in the development of promotion, 
industry information, consumer information, and related research 
programs, plans, and projects. For these purposes, the Board may appoint 
special committees composed of persons other than Board members. A 
committee so appointed shall consult directly with the Board.
    (e) Programs must be conducted throughout the year to reflect the 
periods when imported and domestic Hass avocados are in the U.S. 
marketplace.
    (f) The Board shall consult with both the Association and importer 
associations on programs, plans, and projects for generic promotions.



Sec.  1219.51  Contracts and agreements.

    (a) The Board shall enter into a contract or an agreement with the 
Association for the implementation of programs, plans, or projects for 
promotion, industry information, consumer information, or related 
research with respect to Hass avocados and for the payment of the cost 
of the contract or agreement with funds received by the Board under this 
subpart. The Board may disburse such funds as necessary for these 
purposes after such programs, plans, or projects have been submitted to 
and approved by the Secretary.
    (b) Any contract or agreement entered into shall provide that the 
contracting or agreeing party shall develop and submit to the Board a 
program, plan or project, together with a budget that includes the 
estimated costs to be incurred for the program, plan or project, and 
such program, plan or project shall become effective on the approval of 
the Secretary. For such contract or agreement, the contracting or 
agreeing party shall:
    (1) Keep accurate records of all transactions of the party;
    (2) Account for funds received and expended;
    (3) Make periodic reports to the Board of activities conducted; and
    (4) Make such other reports as the Board or the Secretary shall 
require.
    (c) The Secretary may audit the records of the contracting or 
agreeing party periodically.
    (d) Contractors and subcontractors are subject to the provisions of 
Sec.  1219.42.
    (e) The Board may enter into contracts or agreements for 
administrative services, including contracts for employment, as may be 
required to conduct its business. To the extent appropriate to the 
contract involved, contracts or agreements entered into by the Board 
under the authority of this section shall conform to the provisions 
described in paragraph (b) of this section.



Sec.  1219.52  Control of administrative costs.

    (a) As soon as practicable after September 9, 2002, and after 
consultation with the Secretary and other appropriate persons, the Board 
shall implement a system of cost controls based on normally accepted 
business practices to:
    (1) Ensure that the costs incurred by the Board in administering 
this part in any fiscal period shall not exceed 10 percent of the 
projected level of assessments and other income received by the Board 
for generic promotion and research programs for that fiscal period; and
    (2) Cover the minimum administrative activities and personnel needed 
to properly administer and enforce this subpart, and conduct, supervise, 
and evaluate programs, plans, and projects under this subpart.
    (b) Reimbursements to the Secretary required under Sec.  1219.53(b) 
are excluded from the limitation on spending.
    (c) To the extent possible, the Board shall use the resources, 
staffs, and facilities of existing avocado organizations as provided in 
Sec.  1219.54(a).



Sec.  1219.53  Budget and expenses.

    (a) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve for operating contingencies, as the 
Secretary finds are reasonable and likely to be incurred by the Board 
for its maintenance and functioning and to enable it to exercise

[[Page 156]]

its powers and perform its duties in accordance with the provisions of 
this subpart. Such expenses shall be paid from funds received by the 
Board, including assessments, contributions from any person not subject 
to assessments under this subpart, and other funds available to the 
Board.
    (b) The Board shall reimburse the Department:
    (1) For expenses not to exceed $25,000 incurred by the Secretary in 
connection with any referendum conducted under the Act;
    (2) For administrative costs incurred by the Secretary for 
supervisory work of up to two employee years annually after the Order or 
amendment to the Order has been issued and made effective; and
    (3) For costs incurred by the Secretary in implementation of the 
Order, for enforcement of the Act and the order, for subsequent 
referenda conducted under the Act, and in defending the Board in 
litigation arising out of action taken by the Board or otherwise in 
defense of the Order.
    (c) The Board shall establish and maintain the minimum level of 
annual administrative expenses necessary to efficiently and effectively 
carry out the programs authorized by the Act. The Board shall include 
its annual administrative expenses as a separate item in its annual 
report. The Board shall adhere to its fiduciary responsibilities and 
ensure that all monies are spent in accordance with the Act and the 
Order.
    (d) With the approval of the Secretary, the Board may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first period of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. The contributions shall be free from any encumbrance by 
the donor, and the Board shall retain complete control of their use.



Sec.  1219.54  Assessments.

    (a) Except as provided in Sec.  1219.55, the initial rate of 
assessment shall be 2.5 cents per pound on fresh Hass avocados produced 
and handled in the United States and on fresh Hass avocados imported 
into the United States. An equivalent rate shall be assessed on 
processed and frozen Hass avocados on which an assessment has not been 
paid. Such equivalent rate will be assessed on processed or frozen Hass 
avocados upon the recommendation of the Board with the approval of the 
Secretary. The rate of assessment may be increased or decreased as 
recommended by the Board and approved by the Secretary. Such an increase 
or decrease may occur not more than once annually. Any change in the 
assessment rate shall be announced by the Board at least 30 days prior 
to going into effect and shall not be subject to a vote in a referendum. 
The maximum assessment rate authorized is 5 cents per pound. No more 
than one assessment shall be made on any Hass avocados.
    (b) Domestic assessments. The collection of assessments on domestic 
Hass avocados will be the responsibility of the first handler.
    (1) In the case of a producer acting as the producer's own first 
handler, the producer will be required to collect and remit the 
assessments due to the Board.
    (2) Each first handler shall collect from the producer and pay to 
the Board an assessment of 2.5 cents per pound in accordance with this 
subpart. Assessments shall be remitted by each first handler to the 
Board or its agent within 30 days after the end of the month in which 
the sale or non-sale transfer subject to assessment under this subpart 
took place.
    (3) The first handler shall maintain a separate record of the 
domestic Hass avocados of each producer whose domestic Hass avocados are 
handled, including the domestic Hass avocados owned by the handler and 
domestic Hass avocados that are exported.
    (4) Assessment of other types of fresh avocados may be added at the 
recommendation of the Board with the approval of the Secretary.

[[Page 157]]

    (c) Import assessments. Each importer of fresh Hass avocados shall 
pay an assessment to the Board through Customs on fresh Hass avocados 
imported for marketing in the United States.
    (1) The assessment rate for imported fresh Hass avocados shall be 
the same or equivalent to the rate for fresh Hass avocados produced and 
handled in the United States.
    (2) The import assessment shall be uniformly applied to imported 
fresh Hass avocados that are identified by the number 0804.40.00.10 in 
the Harmonized Tariff Schedule of the United States or any other numbers 
to identify fresh Hass avocados. Assessments on other types of imported 
fresh avocados or on processed Hass avocados, such as prepared, 
preserved, or frozen Hass avocados or Hass avocado paste, puree, and oil 
will be added at the recommendation of the Board with the approval of 
the Secretary.
    (3) The assessments due on imported Hass avocados shall be paid when 
they are released from custody by Customs and introduced into the stream 
of commerce in the United States.
    (d) All assessment payments and reports will be submitted to the 
Board's office. All final payments for a crop year are to be received no 
later than November 30 of that year, unless the Board determines that 
assessments due from the first handler shall be paid to the Board at a 
different time and manner, with approval of the Secretary.
    (e) A late payment charge prescribed by the Secretary shall be 
imposed on any first handler who fails to remit to the Board the total 
amount for which any such handler is liable on or before the due date. 
In addition to the late payment charge, an interest charge shall be 
imposed on the outstanding amount for which the handler is liable. The 
rate of interest shall be prescribed by the Secretary. The timeliness of 
a payment to the Board shall be based on the date the payment is 
actually received by the Board.
    (f) Regulations issued by the Secretary may provide for different 
first handler payment schedules of assessments on domestic Hass 
avocados, so as to recognize differences in marketing or purchasing 
practices and procedures.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with approval of the Secretary.
    (i) The collection of assessments shall commence on or after a date 
established by the Secretary and shall continue until terminated by the 
Secretary. If the Board is not constituted on the date the first 
assessments are to be remitted, the Secretary shall have the authority 
to receive assessments on behalf of the Board and may hold such 
assessments in an interest-bearing account until the Board is 
constituted and the funds are transferred to the Board.
    (j) To facilitate the payment of assessments under this section, the 
Board shall publish lists of first handlers required to remit 
assessments under this subpart and exempt handlers.
    (k) The Association shall receive an amount of assessment funds 
equal to 85 percent of the assessments paid on Hass avocados produced in 
such State. Such funds shall be remitted to such State organization no 
later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the Association to finance promotion, research, 
consumer information, and industry information programs, plans, and 
projects in the United States. However, no such funds shall be used for 
any administrative expenses incurred by the Association.
    (l) An association of Hass avocado importers established pursuant to 
Sec.  1219.58 shall receive an amount of assessment funds equal to 85 
percent of the assessments paid on Hass avocados imported by its 
members. Such funds shall be remitted to such importer association no 
later than 30 days after such funds are received by the Board. In 
addition, such funds and any proceeds from the investment of such funds 
shall be used by the importer association to finance promotion, 
research, consumer information, and industry information programs, 
plans,

[[Page 158]]

and projects in the United States. However, no such funds shall be used 
for any administrative expenses incurred by the importer association.
    (m) In general, assessment funds received by the Board shall be 
used:
    (1) For payment of costs incurred in implementing and administering 
this subpart;
    (2) To provide for a reasonable reserve to be maintained from 
assessments to be available for contingencies; and
    (3) To cover the administrative costs incurred by the Secretary in 
implementing and administering this Act, as set forth in Sec.  
1219.53(b).
    (n) The Board may establish an operating monetary reserve which may 
carry over to subsequent fiscal periods: Provided that, the funds in the 
reserve do not exceed one fiscal period's budget. Subject to approval by 
the Secretary, reserve funds may be used to defray any expenses 
authorized under this part.



Sec.  1219.55  Exemption from assessment.

    (a) Any sale of Hass avocados for export from the United States is 
exempt from assessment.
    (b) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
Hass avocados.



Sec.  1219.56  Adjustment of accounts.

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



Sec.  1219.57  Patents, copyrights, trademarks, publications, and product 
formulations.

    (a) Any patents, copyrights, trademarks, inventions, information, 
publications, and product formulations developed through the use of 
funds received by the Board under this subpart shall be the property of 
the U.S. Government as represented by the Board, and shall, along with 
any rents, royalties, residual payments, or other income from the 
rental, sale, leasing, franchising, or other uses of such patents, 
copyrights, trademarks, inventions, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered income subject to the same fiscal, budget, and audit controls 
as other funds of the Board; and may be licensed subject to approval of 
the Secretary. Section 1219.72 describes the procedures for termination.
    (b) Should patents, copyrights, trademarks, inventions, 
publications, or product formulations be developed through the use of 
funds collected by the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, trademarks, inventions, publications, or product 
formulations shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, trademark, invention, publication, or product formulation in 
a manner consistent with paragraph (a) of this section.



Sec.  1219.58  Importer associations.

    (a) An association of avocado importers is eligible to receive 
assessment funds and any proceeds from the investment of such funds only 
if such importer association is:
    (1) Established pursuant to State law that requires detailed State 
regulation comparable to that applicable to the State organization of 
domestic avocado producers, as determined by the Secretary; or
    (2) Certified by the Secretary as meeting the requirements 
applicable to the Board as to its operations and obligations, including 
budgets, programs, plans, projects, audits, conflicts of interest, and 
reimbursements for administrative costs incurred by the Secretary.
    (b) An importer association may represent any importers of Hass 
avocados

[[Page 159]]

including importers of Hass avocados from a particular foreign country. 
An importer association may be composed of importers as well as 
representatives of foreign avocado exporting industries. An importer 
association should establish it own bylaws and may use existing 
organizations for the establishment of the association and coordination 
of the association's promotion and research efforts.
    (c) For the purposes of the Order, the information required for 
certification of the importer associations by the Secretary may include, 
but is not limited to, the following:
    (1) Evidence of incorporation under any state law with all 
appropriate legal requirements;
    (2) Evidence that the association is composed of importers that are 
located in any state and subject to assessments under the Order, no 
matter where the association has been incorporated or in which state the 
importers reside;
    (3) Certification of the association's ability and willingness to 
further the aims and objectives of the Order;
    (4) Evidence of stability and permanency; and
    (5) A description of the functions of the association.

                       Books, Records, and Reports



Sec.  1219.60  Reports.

    (a) Each first handler of domestic Hass avocados, producer, and 
importer subject to this subpart shall report to the administrative 
staff of the Board, at such times and in such manner as the Board may 
prescribe, such information as may be necessary for the Board to perform 
its duties.
    (b) First handler reports shall include, but shall not be limited 
to, the following:
    (1) Number of pounds of domestic Hass avocados received during the 
reporting period;
    (2) Number of pounds on which assessments were collected;
    (3) Assessments collected during the reporting period;
    (4) Name and address of person(s) from whom the first handler 
collected the assessments on each pound handled;
    (5) Date collection was made on each pound handled;
    (6) Record of assessments paid, including a statement from the 
handler that assessments have been paid on all domestic Hass avocados 
handled during the reporting period; and
    (7) Number of pounds exported.
    (c) Each importer subject to this subpart may be required to report 
the following:
    (1) Number of pounds of Hass avocados imported during the reporting 
period;
    (2) Number of pounds on which an assessment was paid;
    (3) Name and address of the importer;
    (4) Date collection was made on each pound imported and to whom 
payment was made; and
    (5) Record of each importation of Hass avocados during such period, 
giving quantity, variety, date, and port of entry.



Sec.  1219.61  Books and records.

    Each producer, first handler, and importer subject to this subpart 
shall maintain and make available for inspection by the employees and 
agents of the Board and the Secretary, such books and records as are 
necessary to carry out the provisions of this subpart, and the 
regulations issued thereunder, including such records as are necessary 
to verify any reports required. Books and records shall be retained for 
at least two years beyond the fiscal period of their applicability.



Sec.  1219.62  Books and records of the Board.

    (a) The Board shall maintain such books and records as the Secretary 
may require. Such books and records shall be made available upon request 
by the Secretary for inspection and audit.
    (b) The Board shall prepare and submit to the Secretary, from time 
to time, such reports as the Secretary may require.
    (c) The Board shall account for the receipt and disbursement of all 
the funds entrusted to the Board.
    (d) The Board shall cause the books and records of the Board to be 
audited by an independent auditor at the end of each fiscal period. A 
report of each

[[Page 160]]

audit shall be submitted to the Secretary.



Sec.  1219.63  Confidential treatment.

    (a) All information obtained from the books, records, or reports 
under the Act, this subpart, and the regulations issued thereunder shall 
be kept confidential and shall not be disclosed to the public by any 
person, including all current and former officers, employees, staff and 
agents of the Department, the Board, and contracting and subcontracting 
agencies or agreeing parties having access to such information. Only 
those persons having a specific need for such information to effectively 
administer the provisions of this subpart shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed, and then only in a judicial proceeding or 
administrative hearing brought at the direction, or upon the request, of 
the Secretary, or to which the Secretary or any officer of the United 
States is a party, and involving this subpart. Nothing in this subpart 
shall be deemed to prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
from such reports, if such statements do not identify the information 
furnished by any person; or
    (2) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.
    (b) Any disclosure of any confidential information by any employee 
or agent of the Board shall be considered willful misconduct.
    (c) No information on how a person voted in a referendum conducted 
under the Act shall be made public.



Sec.  1219.64  List of importers.

    The administrative staff of the Board shall periodically review the 
list of importers of Hass avocados to determine whether persons on the 
list are subject to this subpart.



Sec.  1219.65  List of producers.

    The administrative staff of the Board shall periodically review the 
list of producers of Hass avocados to determine whether the persons on 
the list of subject to this subpart. On the request of the Secretary or 
the Board, the Association shall provide to the Secretary or the 
administrative staff of the Board the list of producers of Hass 
avocados.

                              Miscellaneous



Sec.  1219.70  Right of the Secretary.

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



Sec.  1219.71  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that the part or subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this part or subpart or 
a provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Order or the Act.
    (b) The Secretary shall suspend or terminate this subpart at the end 
of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a majority of the 
producers and importers voting who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of Hass avocados.
    (c) If, as a result of a referendum, the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Suspend or terminate, as appropriate, the collection of 
assessments not later than 180 days after making such determination; and
    (2) Suspend or terminate, as appropriate, all activities under this 
subpart in an orderly manner as soon as practicable.

[[Page 161]]



Sec.  1219.72  Proceedings after termination.

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



Sec.  1219.73  Effect of termination or amendment.

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



Sec.  1219.74  Personal liability.

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



Sec.  1219.75  Separability.

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



Sec.  1219.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested persons affected by the provisions of the 
Act, including the Secretary. Except for changes in the assessment rate, 
the provisions of the Act applicable to the Order are applicable to any 
amendment of the Order.



Sec.  1219.77  OMB control numbers.

    The control numbers assigned to the information collection 
requirements in this part by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, 
are OMB control numbers 0581-0197 and 0505-0001.

[[Page 162]]



                    Subpart B--Referendum Procedures



Sec.  1219.100  General.

    Referenda to determine whether eligible producers and importers of 
Hass avocados favor the issuance, amendment, suspension, or termination 
of the Hass Avocado Promotion, Research, and Information Order shall be 
conducted in accordance with this subpart.



Sec.  1219.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the U.S. Department of Agriculture to whom authority has been 
delegated or may hereafter be delegated to act in the Administrator's 
stead.
    (b) Eligible importer means any person who imported Hass avocados 
that are identified by the number 0804.40.00.10 in the Harmonized Tariff 
Schedule of the United States for at least one year prior to the 
referendum. Importation occurs when Hass avocados originating outside of 
the United States are released from custody by the U.S. Customs Service 
and introduced into the stream of commerce in the United States. 
Included are persons who hold title to foreign-produced Hass avocados 
immediately upon release by the U.S. Customs Service, as well as any 
persons who act on behalf of others, as agents or brokers, to secure the 
release of Hass avocados from the U.S. Customs Service when such Hass 
avocados are entered or withdrawn for consumption in the United States.
    (c) Eligible producer means any person who produced Hass avocados in 
the United States for at least one year prior to the referendum who:
    (1) Owns, or shares the ownership and risk of loss of, the crop;
    (2) Rents Hass avocado production facilities and equipment resulting 
in the ownership of all or a portion of the Hass avocados produced;
    (3) Owns Hass avocado production facilities and equipment but does 
not manage them and, as compensation, obtains the ownership of a portion 
of the Hass avocados produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce Hass avocados who share the risk of loss and receive a 
share of the Hass avocados produced. No other acquisition of legal title 
to Hass avocados shall be deemed to result in persons becoming eligible 
producers.
    (d) Hass avocados means the fruit grown in or imported into the 
United States of the species Persea americana Mill. For the purposes of 
the initial referendum, the term shall include fresh fruit only.
    (e) Order means the Hass Avocado Promotion, Research, and 
Information Order.
    (f) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and a wife who have title to, or leasehold interest 
in, a Hass avocado farm as tenants in common, joint tenants, tenants by 
the entirety, or, under community property laws, as community property; 
and
    (2) So-called ``joint ventures'' wherein one or more parties to an 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, or other services, or any 
variation of such contributions by two or more parties.
    (g) Referendum agent or agent means the individual or individuals 
designated by the Administrator to conduct the referendum.
    (h) Representative period means the period designated by the 
Administrator.
    (i) United States. The term ``United States'' means collectively of 
the several 50 States of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Commonwealth of the Northern 
Mariana Islands, the United States Virgin Islands, Guam, American Samoa, 
the Republic of the Marshall Islands, and the Federated States of 
Micronesia.

[67 FR 7264, Feb. 19, 2002; 67 FR 13563, Mar. 25, 2002]

[[Page 163]]



Sec.  1219.102  Registration.

    An eligible producer or importer of Hass avocados, as defined in 
this subpart, at the time of the referendum and during a representative 
period, who chooses to vote in any referendum conducted under this 
subpart, shall register with the referendum agent prior to the voting 
period, after receiving notice from the referendum agent concerning the 
referendum under Sec.  1219.104(b). Registration information shall be 
confidential under Sec.  1219.108.



Sec.  1219.103  Voting.

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



Sec.  1219.104  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast (voting 
period).
    (b) Notify producers and importers of the voting period for the 
referendum and the requirement to register to vote in the referendum at 
least 30 days in advance by utilizing available media or public 
information sources, without incurring advertising expense, to publicize 
the dates, places, method of voting, eligibility requirements, and other 
pertinent information. Such sources of publicity may include, but are 
not limited to, print and radio.
    (c) Develop the ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining whether the person 
voting, or on whose behalf the vote is cast, is an eligible voter.
    (d) Develop a list of producers and importers who register to vote.
    (e) Mail to registered voters the instructions on voting, a ballot, 
and a summary of the terms and conditions of the proposed Order.
    (f) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party authorized to monitor the referendum process.
    (g) Prepare a report on the referendum.
    (h) Announce the results to the public.



Sec.  1219.105  Subagents.

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



Sec.  1219.106  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such

[[Page 164]]

ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec.  1219.107  Referendum report.

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



Sec.  1219.108  Confidential information.

    The list of registered voters, ballots, and all other information or 
reports that reveal, or tend to reveal, the identity or vote of voters 
in the referendum shall be strictly confidential and shall not be 
disclosed.



Sec.  1219.109  OMB control number.

    The control number assigned to the information collection 
requirement in this subpart by the Office of Management and Budget 
pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35 is 
OMB control number 0581-0197.



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




             Subpart A--Soybean Promotion and Research Order

                               Definitions

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

                          United Soybean Board

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

                 Soybean Program Coordinating Committee

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

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

1220.251 Proceedings after termination.
1220.252 Effect of termination or amendment.
1220.253 Personal liability.
1220.254 Patents, copyrights, inventions, and publications.
1220.255 Amendments.
1220.256 Separability.
1220.257 OMB control numbers.

[[Page 165]]

                    Subpart B--Rules and Regulations

                               Definitions

1220.301 Terms defined.

                               Assessments

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

Subparts C-E [Reserved]

              Subpart F--Procedures To Request a Referendum

                               Definitions

1220.600 Act.
1220.601 Administrator, AMS.
1220.602 Administrator, FSA.
1220.603 Department.
1220.604 Farm Service Agency.
1220.605 Farm Service Agency County Committee.
1220.606 Farm Service Agency County Executive Director.
1220.607 Order.
1220.608 Person.
1220.609 Producer.
1220.610 Public notice.
1220.611 Representative period.
1220.612 Secretary.
1220.613 Soybeans.
1220.614 State and United States.

                               Procedures

1220.615 General.
1220.616 Supervision of the process for requesting a referendum.
1220.617 Eligibility.
1220.618 Time and place for requesting a referendum.
1220.619 Facilities.
1220.620 Certification and request form.
1220.621 Certification and request procedure.
1220.622 List of producers requesting a referendum.
1220.623 Challenge of eligibility.
1220.624 Canvassing.
1220.625 Counting requests.
1220.626 Public review.
1220.627 FSA county office report.
1220.628 FSA State office report.
1220.629 Reporting results.
1220.630 Disposition of records.
1220.631 Instructions and forms.

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



             Subpart A--Soybean Promotion and Research Order

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

                               Definitions



Sec.  1220.101  Act.

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



Sec.  1220.102  Board.

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



Sec.  1220.103  Commerce.

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



Sec.  1220.104  Committee.

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



Sec.  1220.105  Consumer information.

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



Sec.  1220.106  [Reserved]



Sec.  1220.107  Cooperator organization.

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



Sec.  1220.108  Department.

    Department means the United States Department of Agriculture.

[[Page 166]]



Sec.  1220.109  Eligible organization.

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



Sec.  1220.110  First purchaser.

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

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



Sec.  1220.111  Fiscal period.

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



Sec.  1220.112  Industry information.

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



Sec.  1220.113  Marketing.

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



Sec.  1220.114  National nonprofit producer-governed organization.

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



Sec.  1220.115  Net market price.

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

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



Sec.  1220.116  Part and subpart.

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



Sec.  1220.117  Plans and projects.

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



Sec.  1220.118  Person.

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



Sec.  1220.119  Producer.

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



Sec.  1220.120  [Reserved]



Sec.  1220.121  Promotion.

    The term promotion means any action, including paid advertising, 
technical assistance, and trade servicing activities, to enhance the 
image or desirability of soybeans or soybean products in domestic and 
foreign markets,

[[Page 167]]

and any activity designed to communicate to consumers, importers, 
processors, wholesalers, retailers, government officials, or other 
information relating to the positive attributes of soybeans or soybean 
products or the benefits of importation, use, or distribution of 
soybeans and soybean products.



Sec.  1220.122  Qualified State Soybean Board.

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



Sec.  1220.123  Referendum.

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



Sec.  1220.124  [Reserved]



Sec.  1220.125  Research.

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



Sec.  1220.126  Secretary.

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



Sec.  1220.127  Soybean products.

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



Sec.  1220.128  Soybeans.

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



Sec.  1220.129  State and United States.

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



Sec.  1220.130  Unit.

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

                          United Soybean Board



Sec.  1220.201  Membership of board.

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

------------------------------------------------------------------------
                                                                  No. of
                              Unit                               members
------------------------------------------------------------------------
Illinois.......................................................       4
Iowa...........................................................       4
Minnesota......................................................       4
Indiana........................................................       4
Missouri.......................................................       3
Ohio...........................................................       3
Arkansas.......................................................       3
Nebraska.......................................................       3
South Dakota...................................................       3
Kansas.........................................................       3
Michigan.......................................................       3
Mississippi....................................................       2
Louisiana......................................................       2
Tennessee......................................................       2
North Carolina.................................................       2
Kentucky.......................................................       2
North Dakota...................................................       2
Wisconsin......................................................       2
Maryland.......................................................       2
Virginia.......................................................       1
Georgia........................................................       1

[[Page 168]]

 
South Carolina.................................................       1
Alabama........................................................       1
Delaware.......................................................       1
Texas..........................................................       1
Pennsylvania...................................................       1
Oklahoma.......................................................       1
New York.......................................................       1
Eastern Region (New Jersey, Massachusetts, Connecticut,               1
 Florida, Rhode Island, Vermont, New Hampshire, Maine, West
 Virginia,District of Columbia, and Puerto Rico)...............
Western Region (Montana, Wyoming, Colorado, New Mexico, Idaho,        1
 Utah, Arizona, Washington, Oregon, Nevada, California, Hawaii,
 and Alaska)...................................................
------------------------------------------------------------------------

    (b) The Board shall be composed of soybean producers appointed by 
the Secretary from nominations submitted pursuant to Sec.  1220.203. A 
soybean producer may only be nominated by the unit in which that soybean 
producer is a resident or producer.
    (c) At the end of each three (3) year period, the Board shall review 
the geographic distribution of soybean production volume throughout the 
United States and may recommend to the Secretary a modification of 
paragraph (e) of this section, to best reflect the geographic 
distribution of soybean production volume in the United States. The 
Secretary may amend this subpart to make the changes recommended by the 
Board in levels of productions used to determine per unit 
representation. A unit may not, as a result of any modifications under 
this subsection, lose Board seats to which it is entitled at the time 
this subpart is initially issued unless its average annual production, 
as determined under paragraph (e)(6) of this section, declines below the 
levels required for representation, as specified in paragraphs (e) (1) 
through (5) of this section.
    (d) At the end of each three (3) year period, the Secretary shall 
review the volume of production (minus the volume of production for 
which refunds have been paid) of each unit provided representation under 
paragraph (a) of this section, and shall adjust the boundaries of any 
unit and the number of Board members from each such unit to conform with 
the criteria set out in paragraphs (e) (1) through (5) of this section.
    (e) The following formula will be used to determine the number of 
directors for each unit who shall serve on the Board:
    (1)(i) Except as provided in paragraph (e)(1)(ii) of this section, 
each State will be considered as a separate unit.
    (ii) States which do not have annual average soybean production 
equal to or greater than three million (3,000,000) bushels shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which, to the extent practicable, have a combined annual soybean 
production level which is equal to or greater than three million 
(3,000,000) bushels and each such unit shall be entitled to at least one 
representative on the Board.
    (2) Each unit that has an annual average soybean production of less 
than fifteen million (15,000,000) bushels shall be entitled to one 
representative on the Board.
    (3) Each unit which has an annual average soybean production of 
fifteen million (15,000,000) or more bushels but less than seventy 
million (70,000,000) bushels shall be entitled to two (2) 
representatives on the Board.
    (4) Each unit which has an annual average soybean production of 
seventy million (70,000,000) or more bushels but less than two hundred 
million (200,000,000) bushels shall be entitled to three (3) 
representatives on the Board.
    (5) Each unit which has an annual average soybean production of two 
hundred million (200,000,000) bushels or more shall be entitled to four 
(4) representatives on the Board.
    (6) For the purposes of this section, average annual soybean 
production shall be determined by using the average of the production 
for the State or unit over the five previous years, excluding the year 
in which production was the highest and the year in which production was 
the lowest.
    (f) [Reserved]

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995; 62 FR 37489, July 14, 1997; 62 FR 41485, Aug. 
1, 1997; 65 FR 63768, Oct. 25, 2000; 68 FR 57327, Oct. 3, 2003]



Sec.  1220.202  Term of office.

    (a) The members of the Board shall serve for terms of 3 years, 
except that the members appointed to the initial

[[Page 169]]

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



Sec.  1220.203  Nominations.

    All nominations for appointments to the Board under Sec.  1220.204 
shall be made in the following manner:
    (a) After the issuance of this subpart by the Secretary, nominations 
shall be obtained by the Secretary as specified in paragraphs (a), (b), 
and (c) of this section from Qualified State Soybean Boards or for 
initial Board nominations, eligible organizations deemed qualified to 
nominate pursuant to paragraph (f) of the section. A Qualified State 
Soybean Board, or for initial Board nominations, an eligible 
organization shall only submit nominations for positions on the Board 
representing the unit, as established under Sec.  1220.201, in which 
such Qualified State Soybean Board operates.
    (b) If the Secretary determines that a unit is not represented by a 
Qualified State Soybean Board or for initial Board nominations, an 
eligible organization, then the Secretary may solicit nominations from 
organizations which represent producers in that unit and from producers 
residing in that unit. A caucus may be held in such units for the 
purpose of collectively submitting nominations to the Secretary.
    (c) Where there is more than one State comprising a unit, the 
Secretary shall take into consideration the nominations submitted by 
Qualified State Soybean Boards or for initial Board nominations, 
eligible organizations, within the unit. A caucus may be held in such 
units for the purpose of collectively submitting nominations to the 
Secretary. The Secretary shall consider the proportional levels of 
production in each State comprising the unit when appointing members to 
the Board representing that unit.
    (d) At least two nominations shall be submitted for each position to 
be filled.
    (e) Nominations may be submitted in order of preference and for the 
initial Board, in order of preference for staggered terms. Should the 
Secretary reject any nomination submitted and there are insufficient 
nominations submitted from which appointments can be made, the Secretary 
may request additional nominations under paragraph (a) or (b) of this 
section, whichever provision is applicable for such unit.
    (f) Any organization authorized pursuant to State law to collect 
assessments from producers may notify the Secretary of the 
organization's intent to nominate members to the initial Board for the 
State or unit, as established under Sec.  1220.201, in which such 
organization operates and is authorized by State law. Such eligibility 
shall be based only upon the criteria established pursuant to Sec.  
1220.228(a)(1). There shall only be one organization authorized per 
State pursuant to this section to submit nominations to the initial 
Board. If no such entity exists in a State, any organization meeting 
those requirements of Sec.  1220.228(a)(2) may request eligibility to 
submit nominations.



Sec.  1220.204  Appointment.

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



Sec.  1220.205  Nominee's agreement to serve.

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



Sec.  1220.206  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request nominations for a successor pursuant to Sec.  1220.203, and such 
successor shall be appointed pursuant to Sec.  1220.204.

[[Page 170]]



Sec.  1220.207  Alternate members.

    (a) The Secretary shall solicit, pursuant to the procedures of Sec.  
1220.203, nominations for alternate members of the Board.
    (b) The Secretary shall appoint one alternate member of the Board 
for each unit which has only one member pursuant to Sec.  1220.204 and 
Sec.  1220.205.
    (c) Alternate members of the Board may attend meetings of the Board 
as a voting member upon the following circumstances:
    (1) A member of the Board for the unit which the alternate member 
represents is absent; and
    (2) Such member, or in the case of incapacitation or death of the 
member, a relative, has contacted the appropriate officer of the Board 
to inform such officer of such absence;
    (d) An alternate member of the Board, when attending Board meetings 
in an official capacity, shall have the rights, duties and obligations 
of a Board member.



Sec.  1220.208  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the Board or Committee may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.  1220.209  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum.
    (b)(1) Except for roll call votes, each member of the Board will be 
entitled to one vote on any matter put to the Board and the motion will 
carry if supported by a simple majority of those voting.
    (2)(i) If a member requests a roll call vote, except as provided in 
paragraph (b)(2)(ii) of this section, each unit as established under 
Sec.  1220.201, shall cast one vote for each percent, or portion of a 
percent, of the average total amount of assessments remitted to the 
Board that was remitted from the unit (minus refunds) during each of the 
three previous fiscal years of the Board under Sec.  1220.223.
    (ii)(A) During the first fiscal year of the Board, the percentage 
used to determine the votes given to a unit will be based on annual 
average soybean production of the three previous years. If a unit is 
represented by more than one member, each member representing the unit 
shall receive an equal percentage of the votes allocated to the unit.
    (B) During the second and third year this subpart is in effect, the 
percentage used to determine the votes given to a unit will be based 
upon averaging the unit's percentage of annual assessments remitted to 
the Board (minus refunds).
    (iii) Should a member representing a unit not be present, then the 
other members representing such unit shall vote, on an equal basis if 
there is more than one member representing the unit present, the number 
of votes which the absent member would have been entitled to vote.
    (iv) A motion will carry on a roll call vote if approved by both a 
simple majority of all votes cast and a simple majority of all units 
voting (with the vote of each unit determined by a simple majority of 
all votes cast by members in that unit).
    (3) A member may not cast votes by proxy.
    (c) In lieu of a properly convened meeting and, when in the opinion 
of the chairperson of the Board such action is considered necessary, the 
Board may take action upon the concurring votes of a majority of its 
members, or if a roll call vote is requested, a simple majority of all 
votes cast and a simple majority of all units voting by mail, telephone, 
facsimile, or telegraph, but any such action by telephone shall be 
confirmed promptly in writing. In the event that such action is taken, 
all members must be notified and provided the opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a regular or special meeting of the Board.
    (d) On or after the end of the three-year period beginning on the 
effective

[[Page 171]]

date of this subpart, the Board may recommend to the Secretary changes 
in the voting procedures of the Board described in paragraph (b) of this 
section.



Sec.  1220.210  Compensation and reimbursement.

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



Sec.  1220.211  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Secretary regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules to effectuate the terms and provisions of this 
subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To disseminate information to producers or producer 
organizations through programs or by direct contact utilizing the public 
postage system or other systems;
    (f) To assign responsibilities relating to budget and program 
development to the Committee as provided in Sec.  1220.219.
    (g) To select committees and subcommittees of Board members, and to 
adopt such rules for the conduct of its business as it may deem 
advisable;
    (h) To contract with Qualified State Soybean Boards to implement 
plans or projects;
    (i) To recommend to the Secretary amendments to this subpart; and
    (j) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec.  1220.223 in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank which is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec.  1220.212  Duties.

    The Board shall have the following duties:
    (a) To meet not less than three times annually, or more often if 
required for the Board to carry out its responsibilities pursuant to 
this subpart.
    (b) To organize and select from among its members a chairperson, 
vice chairperson, a treasurer and such other officers as may be 
necessary.
    (c) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Board and within 
the policies determined by the Board.
    (d) To employ or contract for such persons to perform administrative 
functions as it may deem necessary and define the duties and determine 
the compensation of each.
    (e) To develop and submit to the Secretary for approval, promotion, 
research, consumer information, and industry information plans or 
projects.
    (f) To prepare, and submit to the Secretary for approval, budgets on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this subpart, including probable costs of 
promotion, research, consumer information, and industry information 
plans or projects, and also including a description of the proposed 
promotion, research, consumer information, and industry information 
programs contemplated therein.
    (g) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it.
    (h) With the approval of the Secretary, to enter into contracts or 
agreements with appropriate parties, including national nonprofit 
producer-

[[Page 172]]

governed organizations, for the development and conduct of activities 
authorized under Sec.  1220.230 of this subpart and for the payment of 
the cost thereof with funds collected through assessments pursuant to 
Sec.  1220.223. Provided, that the Board shall contract with only one 
national nonprofit producer-governed organization to administer all 
projects within a program area.
    Any such contract or agreement shall provide that:
    (1) The contractor shall develop and submit to the Board a plan or 
project together with a budget or budgets which shall show the estimated 
cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective only upon 
approval of the Secretary; and
    (3) The contracting party shall keep complete and accurate records 
of all of its transactions and make periodic reports to the Board of 
activities conducted pursuant to a contract and an accounting for funds 
received and expended, and such other reports as the Secretary or the 
Board may require. The Board and Secretary may audit the records of the 
contracting party periodically.
    (i) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended.
    (j) [Reserved]
    (k) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may require and to submit a copy of each such audit to the 
Secretary.
    (l) To give the Secretary the same notice of meetings of the Board 
and committees as is given to members in order that the Secretary, or a 
representative of the Secretary, may attend such meetings.
    (m) To submit to the Secretary such information pursuant to this 
subpart as may be requested.
    (n) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybean 
and soybean products produced in the United States.

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995]

                 Soybean Program Coordinating Committee



Sec.  1220.213  Establishment and membership.

    (a) The Board may establish, with the approval of the Secretary, a 
Soybean Program Coordinating Committee to assist in the administration 
of this subpart. The Committee shall consist of 15 members. The 
Committee shall be composed of 10 Board members elected by the Board and 
5 producers elected by the Cooperator Organization.
    (b) Board representation on the Committee shall consist of the 
Chairperson and Treasurer of the Board, and eight additional members 
duly elected by the Board to serve on the Committee. The eight 
representatives to the Committee elected by the Board shall, to the 
extent practicable, reflect the geographic and unit distribution of 
soybean production.
    (c) Cooperator Organization representation on the Committee shall 
consist of five members elected by the Cooperator Organization Board of 
Directors. The Cooperator Organization shall submit to the Secretary the 
names of the representatives elected by the Cooperator Organization to 
serve on the Committee, the manner in which such election was held, and 
verify that such representatives are producers. The prospective 
Cooperator Organization representatives shall file with the Secretary a 
written agreement to serve on the Committee and to disclose any 
relationship with any soybean entity or with any organization that has 
or is being considered for a contractual relationship with the Board. 
When the Secretary is satisfied that the above conditions are met, the 
Secretary shall certify such representatives as eligible to serve on the 
Committee.



Sec.  1220.214  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.

[[Page 173]]



Sec.  1220.215  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Cooperator Organization, depending upon which organization is 
represented by the vacancy, shall submit the name of a successor for the 
position in the manner utilized to appoint representatives pursuant to 
Sec.  1220.213 above.



Sec.  1220.216  Procedure.

    (a) Attendance of at least 12 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds (\2/3\) of the members present. The Committee shall establish 
rules concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than 
twelve of its members by mail, telephone, facsimile, or telegraph. 
Action taken by this emergency procedure is valid only if all members 
are notified and provided the opportunity to vote and any telephone vote 
is confirmed promptly in writing. Any action so taken shall have the 
same force and effect as though such action had been taken at a properly 
convened meeting of the Committee.
    (c) A member may not cast votes by proxy.



Sec.  1220.217  Compensation and reimbursement.

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



Sec.  1220.218  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The Chairperson of the Board shall be Chairperson of the 
Committee.
    (b) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec.  1220.219  Powers of the Committee.

    If established by the Board, the Committee may have the following 
powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of soybeans and soybean 
products as well as plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Board regarding such proposals; and
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable.



Sec.  1220.220  Duties of the Committee.

    If established by the Board, the Committee may have the following 
duties:
    (a) To meet and to organize;
    (b) To prepare and submit to the Board for approval, budgets on a 
fiscal period basis of proposed costs of promotion, research, consumer 
information, and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information, and industry information programs contemplated 
therein;
    (c) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees as is given to members in order that the 
Secretary, or the Secretary's representative, may attend such meetings;
    (d) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (e) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybeans 
and soybean products.

                        Expenses and Assessments



Sec.  1220.222  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary

[[Page 174]]

finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart. 
However, during any fiscal year, expenses incurred by the Board for 
administrative staff costs and their benefits shall not exceed l percent 
of the projected level of assessments, net of projected refunds, of the 
Board for that fiscal year. Such expenses shall be paid from assessments 
received pursuant to Sec.  1220.223. The administrative expenses of the 
Board, including the cost of administrative staff, shall not exceed 5 
percent of the projected level of assessments, net of projected refunds, 
of the Board for that fiscal year.
    (b) The Board shall reimburse the Secretary, from assessments 
received pursuant to Sec.  1220.223, for administrative costs incurred 
after an Order has been submitted to the Department pursuant to section 
1968(b) of the Act; Provided, that the Board shall only be required to 
reimburse the Secretary for one-half (50%) of the costs incurred by the 
Secretary to conduct the refund referendum relating to continuation of 
authority to pay refunds.
    (c)(1) The Board may, with the approval of the Secretary, authorize 
a credit to Qualified State Soybean Boards of up to 5 percent of the 
amount to be remitted to the Board pursuant to Sec.  1220.223 and Sec.  
1220.228 of this subpart to offset collection and compliance costs 
relating to such assessments and for fees paid to State governmental 
agencies or first purchasers for collection of the assessments where the 
payment of such fees by the Qualified State Soybean Board is required by 
State law enacted prior to November 28, 1990.
    (2) The portion of the credit authorized in paragraph (c)(1) of this 
section which compensates Qualified State Soybean Boards for fees paid 
to State governmental agencies or first purchasers for collection of the 
assessments where the payment of such fees by the Qualified State 
Soybean Board is required by State law enacted prior to November 28, 
1990:
    (i) Shall not exceed one-half of such fees paid to State 
governmental agencies or first purchasers, and;
    (ii) Shall not exceed 2.5 percent of the amount of assessments 
collected and remitted to the Board.
    (3) Except for that portion of the credit issued pursuant to 
paragraph (c)(2) of this section, credits authorized by paragraph (c)(1) 
of this section will be included as part of the Board's administrative 
expenses.



Sec.  1220.223  Assessments.

    (a)(1) Except as prescribed by regulations approved by the Secretary 
or as otherwise provided in this section, each first purchaser of 
soybeans shall collect an assessment from the producer, and each 
producer shall pay such assessment to the first purchaser, at the rate 
of one-half of one percent (0.5%) of the net market price of the 
soybeans purchased. Each first purchaser shall remit such assessment to 
the Board or to a Qualified State Soybean Board, as provided in 
paragraph (a)(5) of this section.
    (2) Any producer marketing processed soybeans or soybean products of 
that producer's own production, shall remit to a Qualified State Soybean 
Board or to the Board, as provided in paragraph (a)(5) of this section, 
an assessment on such soybeans or soybean products at a rate of one-half 
of one percent (0.5%) of the net market price of the soybeans involved 
or the equivalent thereof.
    (3) In determining the assessment due from each producer under 
paragraph (a)(1) or (a)(2) of this section, a producer who is 
contributing to a Qualified State Soybean Board shall receive a credit 
from the Board for contributions to such Qualified State Soybean Board 
on any soybeans assessed under this section in an amount not to exceed 
one-quarter of one percent of the net market price of the soybeans 
assessed.
    (4) In order for a producer to receive the credit provided for in 
paragraph (a)(3) of this section, the Qualified State Soybean Board or 
the first purchaser must establish to the satisfaction of the Board that 
the producer has contributed to a Qualified State Soybean Board.

[[Page 175]]

    (5)(i) If the soybeans, for which an assessment is paid, were grown 
in a State other than the State which is the situs of the first 
purchaser, the first purchaser that collects the assessment shall remit 
the assessment and information as to the State of origin of the soybeans 
to the Qualified State Soybean Board operating in the State in which the 
first purchaser is located. The Qualified State Soybean Board operating 
in the State in which the first purchaser is located shall remit such 
assessments to the Qualified State Soybean Board operating in the State 
in which the soybeans were grown. If no such Qualified State Soybean 
Board exists in such State, then the assessments shall be remitted to 
the Board. The Board, with the approval of the Secretary, may authorize 
Qualified State Soybean Boards to propose modifications to the foregoing 
``State of Origin'' rule to ensure effective coordination of assessment 
collections between Qualified State Soybean Boards.
    (ii)(A) If a producer pledges soybeans grown by that producer as 
collateral for a loan issued by the Commodity Credit Corporation and if 
that producer forfeits said soybeans in lieu of loan repayment, the 
Commodity Credit Corporation shall at the time of the loan settlement, 
collect from the producer the assessments due based on 0.5 percent of 
the principal loan amount received by the producer and remit the 
assessment to the Qualified State Soybean Board in the State in which 
the soybeans were pledged, or if no Qualified State Soybean Board exists 
in such State, the Board.
    (B) If a producer redeems and subsequently markets soybeans which 
have been pledged as collateral for a loan issued by the Commodity 
Credit Corporation, the first purchaser shall collect and remit the 
assessments due pursuant to paragraph (a)(1) of this section; or if a 
producer markets such soybeans as processed soybeans or as soybean 
products, the producer shall remit the assessment pursuant to paragraph 
(a)(2) of this section.
    (iii) Qualified State Soybean Boards and the Board shall coordinate 
assessment collection procedures to ensure that producers marketing 
soybeans are required to pay only one assessment per bushel of soybeans 
and collections are adjusted among States on a mutually agreeable basis.
    (b) The collection of assessments pursuant to paragraph (a) of this 
section, shall commence on and after the date assessments are required 
to be paid and shall continue until terminated by the Secretary. If the 
Board is not constituted on the date the first assessments are to be 
collected, the Secretary shall have the authority to receive the 
assessments on behalf of the Board, and to hold such assessments until 
the Board is constituted, then remit such assessments to the Board.
    (c)(1) Each person responsible for the collection of assessments 
under paragraph (a) of this section, shall collect and remit the 
assessments to the Board or a Qualified State Soybean Board on a monthly 
basis or as required by State law, but no less than quarterly, unless 
the Board, with the approval of the Secretary, has specifically 
authorized otherwise.
    (2) Any unpaid assessments due the Board or a Qualified State 
Soybean Board from a person responsible for remitting assessments to the 
Board or a Qualified State Soybean Board pursuant to paragraph (a) of 
this section, shall be increased two percent (2%) each month beginning 
with the day following the date such assessments were due under this 
subpart. Any remaining amount due shall be increased at the same rate on 
the corresponding day of each month thereafter until paid.
    (3) The amounts payable pursuant to this section shall be computed 
monthly on unpaid assessments and shall include any unpaid late charges 
previously applied pursuant to this section.
    (4) For the purpose of this section, any assessment that was 
determined at a date later than prescribed by this subpart because of a 
person's failure to submit a report to the Board or a Qualified State 
Soybean Board when due, shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.
    (d) Prior to the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall

[[Page 176]]

ensure that each Qualified State Soybean Board is provided credit in 
accordance with the provisions of section 1969(n)(1) and subject to 
section 1969(n)(3) of the Act.
    (e) Following the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure annually that each 
Qualified State Soybean Board is provided credit in accordance with the 
provisions of section 1969(n)(2) and subject to section 1969(n)(3) of 
the Act.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31096, July 14, 1992]



Sec. Sec.  1220.224-1220.227  [Reserved]



Sec.  1220.228  Qualified State Soybean Boards.

    (a)(1) Any soybean promotion entity that is authorized by State 
statute to collect assessments required by State law from soybean 
producers may notify the Board of its election to be the Qualified State 
Soybean Board for the State in which it operates so that producers may 
receive credit pursuant to Sec.  1220.223(a)(3) for contributions to 
such organization. Only one such entity may make such election or be 
qualified pursuant to paragraph (a)(2) of this section. Such entity, 
upon making such election, agrees to the following:
    (i) To conduct activities as defined in Sec.  1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (ii) Provide a report describing the manner in which assessments are 
collected and the procedure utilized to ensure that assessments due are 
paid;
    (iii) Collect assessments paid on soybeans marketed within the State 
and establish procedures for ensuring compliance with this subpart with 
regard to the payment of such assessments;
    (iv) Remit to the Board each assessment paid and remitted to it, 
minus authorized credits issued pursuant to Sec.  1220.222(c) and 
credits issued to producers pursuant to Sec.  1220.223(a)(3), and other 
required deductions by the last day of the month following the month in 
which the assessment was remitted to it unless the Board determines a 
different date for remittance of assessments;
    (v)-(vi) [Reserved]
    (vii) Furnish the Board with an annual report by a certified public 
accountant or an authorized State agency of all funds remitted to such 
Board pursuant to this subpart; and
    (viii) Not use funds it collects pursuant to this subpart to fund 
plans or projects which make use of any unfair or deceptive acts or 
practices with respect to the quality, value or use of any product that 
competes with soybeans or soybean products; and
    (ix)(A) Except as otherwise provided in paragraph (a)(1)(ix)(B) of 
this section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (B) The prohibition in paragraph (a)(1)(ix)(A) of this section, 
shall not apply to--
    (1) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under the Order;
    (2) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (3) The development and recommendation of amendments to this 
subpart.
    (2) If no entity elects to serve as a Qualified State Soybean Board 
within a State pursuant to paragraph (a)(1) of this section, any State 
soybean promotion entity that is organized and operating within a State, 
and receives assessments or contributions from producers and conducts 
soybean or soybean product promotion, research, consumer information, or 
industry information programs, may apply for certification as the 
Qualified State Soybean Board for such State so that producers may 
receive credit pursuant to Sec.  1220.223(a)(3) for contributions to 
such organizations. All provisions of this subpart applicable to 
Qualified State Soybean Boards will be applicable to such entity. The 
Board shall review such applications for certification and

[[Page 177]]

shall make a determination as to the certification of each applicant.
    (b) In order for the State soybean entity to be certified by the 
Board pursuant to paragraph (a)(2) of this section, as a Qualified State 
Soybean Board, the entity must:
    (1) Conduct activities as defined in Sec.  1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such State entity will collect 
assessments paid on soybeans marketed within the State and establish 
procedures for ensuring compliance with this subpart with regard to the 
payment of such assessments;
    (4) Certify to the Board that such organization will remit to the 
Board each assessment paid and remitted to it, minus credits issued 
pursuant to Sec.  1220.222(c) and authorized credits issued to producers 
pursuant to Sec.  1220.223(a)(3), and other required deductions by the 
last day of the month following the month in which the assessment was 
remitted to it unless the Board determines a different date for 
remittance of assessments;
    (5)-(6) [Reserved]
    (7) Certify to the Board that it will furnish the Board with an 
annual report by a certified public accountant or an authorized State 
agency of all funds remitted to such Board pursuant to this subpart; and
    (8) Not use funds it collects pursuant to this subpart to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
with respect to the quality, value or use of any product that competes 
with soybeans or soybean products; and
    (9)(i) Except as otherwise provided in paragraph (b)(9)(ii) of this 
section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (ii) The prohibition in paragraph (b)(9)(i) of this section, shall 
not apply to--
    (A) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart;
    (B) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (C) The development and recommendation of amendments to this 
subpart.
    (c) Notwithstanding any other provisions of this subpart, and 
provided that activities of a Qualified State Soybean Board are 
authorized under the Act and this subpart, the Board shall not have the 
authority to:
    (1) Establish guidelines, regulations, or rules which would restrict 
or infringe upon a Qualified State Soybean Board's authority to 
determine administrative or program expenditure allocations or 
administrative or program implementation; and
    (2) Direct Qualified State Soybean Boards to participate or not 
participate in program activities or implementation.
    (d) The Board shall establish procedures, after an opportunity for 
public comment and subject to approval of the Secretary, which provide 
Qualified State Soybean Boards with a right to present information to 
the Board prior to any determinations relating to nonparticipation as a 
Qualified State Soybean Board following initial election or 
determination as a Qualified State Soybean Board.

[56 FR 31049, July 9, 1991, as amended at 60 FR 58500, Nov. 28, 1995; 61 
FR 50694, Sept. 27, 1996]



Sec.  1220.229  Influencing governmental action.

    (a) Except as otherwise provided in paragraph (b) of this section, 
funds collected or received by the Board under this subpart shall not be 
used in any manner for the purpose of influencing any action or policy 
of the United States Government, any foreign or State government, or any 
political subdivision thereof.

[[Page 178]]

    (b) The prohibition in paragraph (a) of this section shall not apply 
to--
    (1) The development and recommendation of amendments to this 
subpart;
    (2) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart; or
    (3) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof.



Sec.  1220.230  Promotion, research, consumer information, and industry 
information.

    (a) The Board shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans or projects 
authorized in this subpart. Such plans or projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate promotion, research, consumer information, and industry 
information activities with respect to soybean and soybean products;
    (2) The establishment and conduct of research, and studies with 
respect to the sale, distribution, marketing and utilization of soybean 
and soybean products and the creation of new products thereof, to the 
end that marketing and utilization of soybean and soybean products may 
be encouraged, expanded, improved or made more acceptable; and
    (3) Such other activities as are authorized by the Act and this 
subpart.
    (b) Each plan or project described in paragraph (a) of this section, 
shall be periodically reviewed or evaluated by the Board to ensure that 
each such plan or project contributes to an effective program of 
promotion, research, consumer information, and industry information. If 
it is found by the Board that any such plan or project does not further 
the purposes of the Act, then the Board shall terminate such plan or 
project.
    (c) No such plans or projects shall make use of unfair or deceptive 
acts or practices with respect to the quality, value or use of any 
competing product. In carrying out any plan or project funded by the 
Board described in paragraph (a) of this section, no preference shall be 
given to a brand or trade name of any soybean product without the 
approval of the Board and the Secretary.

                       Reports, Books, and Records



Sec.  1220.241  Reports.

    Each producer marketing processed soybeans or soybean products of 
that producer's own production and each first purchaser responsible for 
the collection of assessments under Sec.  1220.223 shall be required to 
report to the Board periodically such information as may be required by 
the regulations recommended by the Board and approved by the Secretary. 
Such information may include but not be limited to the following:
    (a) The number of bushels of soybeans purchased, initially 
transferred, or which, in any other manner, is subject to the collection 
of assessment;
    (b) The amount of assessments remitted;
    (c) The basis, if necessary, to show why the remittance is less than 
one-half percent (0.5%) of the net market price per bushel of soybeans 
purchased multiplied by the number of bushels purchased; and
    (d) The date any assessment was paid.



Sec.  1220.242  Books and records.

    (a) Except as provided in paragraph (b) of this section, each person 
who is subject to this subpart shall maintain and make available for 
inspection by the Board or Secretary such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued under this part, including such records as are 
necessary to verify any reports required. Such records shall be retained 
for at least two years beyond the fiscal period of their applicability.
    (b) Any producer who plants less than 25 acres of soybeans annually 
and does not market such soybeans shall not be required to maintain 
books or records pursuant to this subpart.

[[Page 179]]



Sec.  1220.243  Confidential treatment.

    Except as otherwise provided in the Act, financial or commercial 
information that is obtained under the Act and this subpart and that is 
privileged and confidential shall be kept confidential by all persons, 
including employees and former employees of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and employees and all former officers and employees of 
contracting agencies having access to such information, and shall not be 
available to Board members or any other producers. Only those persons 
having a specific need for such information in order to effectively 
administer the provisions of this part shall have access to such 
information.

                              Miscellaneous



Sec.  1220.251  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property, owned, in the possession of or under the control of 
the Board, including any unpaid claims or property not delivered or any 
other claims existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec.  1220.212(h);
    (3) From time to time account for all receipts and disbursements; 
and
    (4) Deliver all property on hand, together with all books and 
records of the Board and of the trustees, to such persons as the 
Secretary may direct, and upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such persons full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information plans 
or projects authorized pursuant to this subpart.



Sec.  1220.252  Effect of termination or amendment.

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



Sec.  1220.253  Personal liability.

    No member, employee or agent of the Board, including employees, 
agents or board members of Qualified State Soybean Boards, acting 
pursuant to authority provided in this subpart, shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission, of such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec.  1220.254  Patents, copyrights, inventions, and publications.

    (a) Any patents, copyrights, inventions, or publications developed 
through the use of funds remitted to the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the

[[Page 180]]

Board, and shall, along with any rents, royalties, residual payments, or 
other income from the rental, sale, leasing, franchising, or other uses 
of such patents, copyrights, inventions, or publications, inure to the 
benefit of the Board. Upon termination of this subpart, Sec.  1220.251 
shall apply to determine disposition of all such property.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
if patents, copyrights, inventions, or publications are developed by the 
use of funds remitted to the Board under this subpart. Should patents, 
copyrights, inventions or publications be developed through the use of 
funds remitted to the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, inventions, or publications shall be determined by 
agreement between the Board and the party contributing funds towards the 
development of such patent, copyright, invention or publication.



Sec.  1220.255  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any Qualified State Soybean Board recognized, or by any 
interested person affected by the provisions of the Act, including the 
Secretary.



Sec.  1220.256  Separability.

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



Sec.  1220.257  OMB control numbers.

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

[56 FR 31049, July 9, 1991, as amended at 61 FR 50694, Sept. 27, 1996]



                    Subpart B--Rules and Regulations

    Source: 57 FR 29439, July 2, 1992, unless otherwise noted.

                               Definitions



Sec.  1220.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in subpart A of this part.

                               Assessments



Sec.  1220.310  Assessments.

    (a) A 0.5 percent of the net market price per bushel assessment on 
soybeans marketed shall be paid by the producer of the soybeans in the 
manner designated in Sec.  1220.311.
    (b) If more than one producer shares the proceeds received for the 
soybeans marketed, each such producer is obligated to pay that portion 
of the assessments which is equivalent to each producer's proportionate 
share of the proceeds.
    (c) Failure of the first purchaser to collect the assessment on each 
bushel of soybeans marketed as designated in Sec.  1220.311 shall not 
relieve the producer of the producer's obligation to pay the assessment 
to the appropriate Qualified State Soybean Board or the United Soybean 
Board as required in Sec.  1220.312.



Sec.  1220.311  Collection and remittance of assessments.

    (a) Except as otherwise provided in this section, each first 
purchaser making payment to a producer for soybeans marketed by a 
producer shall collect from that producer at the time of settlement of 
that producer's account an assessment at the rate of 0.5 percent of the 
net market price per bushel of soybeans marketed and shall be 
responsible for remitting the assessment to the Qualified State Soybean 
Board or the United Soybean Board as provided in Sec.  1220.312. The 
first purchaser shall give to the producer a receipt indicating payment 
of the assessment. The receipt shall be any document issued by the first 
purchaser that contains the information requested in Sec.  1220.314(a).

[[Page 181]]

    (b) A first purchaser who purchases soybeans pursuant to a contract 
with a producer, either on a volume basis or on a per acre basis, shall 
be responsible for remitting the assessment due on soybeans purchased as 
required in Sec.  1220.312. Such assessment shall be based upon 0.5 
percent of the net market price specified or established in the contract 
and shall be collected at the time of payment to the producer. If the 
net market price is not specified or established in the contract the 
assessment shall be based on fair market value as specified in paragraph 
(c) of this section below.
    (c) Any producer marketing processed soybeans or soybean products of 
that producer's own production either directly or through retail or 
wholesale outlets shall be responsible for remitting to the Qualified 
State Soybean Board or the United Soybean Board pursuant to Sec.  
1220.312, an assessment on the number of bushels of soybeans processed 
or manufactured into soybean products at the rate 0.5 percent of the net 
market price of the soybeans involved or the equivalent thereof. The 
assessment shall attach upon date of sale of the processed soybeans or 
soybean products and shall be based upon the posted county price for 
soybeans on the date of the sale as posted at the local ASCS office for 
the county in which the soybeans are grown. The producer shall remit the 
assessment in the manner provided in Sec.  1220.312.
    (d) Any producer marketing processed soybeans or soybean products of 
that producer's own production shall be responsible for remitting to the 
Qualified State Soybean Board or the United Soybean Board pursuant to 
Sec.  1220.312, an assessment on the number of bushels of soybeans 
processed or manufactured into soybean products at the rate of 0.5 
percent of the net market price of the soybeans involved or the 
equivalent thereof. The assessment shall attach upon the date of final 
settlement for such processed soybeans or soybean products and shall be 
based upon the posted county price for soybeans on the date of final 
settlement as posted at the local ASCS office for the county in which 
the soybeans are grown. The producer shall remit the assessment in the 
manner provided in Sec.  1220.312.
    (e) A producer delivering soybeans of the producer's own production 
against a soybean futures contract shall be responsible for remitting an 
assessment at the rate of 0.5 percent of net market price as specified 
in settlement documents. The assessment shall attach at the time of 
delivery and the producer shall remit the assessment due in accordance 
with Sec.  1220.312.
    (f) A producer who forfeits soybeans of that producer's own 
production which were pledged as collateral on a loan issued by 
Commodity Credit Corporation shall pay an assessment. The assessment 
shall attach upon the date the settlement statement is prepared and 
issued to the producer by the Commodity Credit Corporation and shall be 
0.5 percent of the principal amount of the loan for the soybeans as 
specified by Commodity Credit Corporation in the settlement statement. 
The Commodity Credit Corporation shall collect the assessment and then 
remit the assessment due in accordance with Sec.  1220.312.



Sec.  1220.312  Remittance of assessments and submission of reports to 
United Soybean Board or Qualified State Soybean Board.

    (a) Each first purchaser and each producer responsible for the 
remittance of assessments shall remit assessments and submit a report of 
assessments to the Qualified State Soybean Board in the State in which 
each first purchaser or each producer responsible for the remittance of 
assessments is located or if there is no Qualified State Soybean Board 
in such State, then to the United Soybean Board as provided in this 
section.
    (b) First purchasers and producers responsible for remitting 
assessments shall remit assessments and reports on a monthly or 
quarterly basis depending on the State or region in which the first 
purchasers or producers are located. The reporting period for each State 
and region shall be as follows:

 
              Monthly                             Quarterly
 
Arkansas                             Alabama
Delaware                             Florida
Iowa                                 Georgia
Kansas                               Illinois

[[Page 182]]

 
Kentucky                             Indiana
Louisiana                            Maryland
Michigan                             North Dakota
Minnesota                            Nebraska
Missouri                             New Jersey
Mississippi                          Ohio
North Carolina                       Oklahoma
South Carolina                       Pennsylvania
Tennessee                            South Dakota
Texas                                Virginia
Wisconsin
Eastern Region
Western Region
 

    (c) Reports. Each first purchaser or producer responsible for 
remitting assessments shall make reports on forms made available by the 
United Soybean Board or on Qualified State Soybean Board forms which 
contain the information required in Sec.  1220.241 and are approved by 
the Board. A first purchaser with multiple facilities or purchasing 
locations within a State shall have the option to submit a single, 
consolidated report specifying the combined volume of soybeans purchased 
or the net market value of all soybeans purchased from the producers in 
the State. Reports shall be submitted with assessments due in accordance 
with the provisions of paragraph (d) of this section.
    (d) Remittances. Each first purchaser or producer responsible for 
remitting assessments shall remit all assessments to the Qualified State 
Soybean Board, its designee, or the United Soybean Board. All 
assessments shall be remitted in the form of a check or money order 
payable to the order of the applicable Qualified State Soybean Board or 
the United Soybean Board and shall be sent to the designated address not 
later than the last day of the month following the month or quarter in 
which the soybeans, processed soybeans, or soybean products were 
marketed and shall be accompanied by the reports required by paragraph 
(c) of this section. All remittances shall be received subject to 
collection and payment at par.
    (e) Receipt of Reports and Remittances. The timeliness of receipt of 
reports and assessments by the Board or Qualified State Soybean Board 
shall be based on the applicable postmark date or the date actually 
received by the Board or the Qualified State Soybean Board whichever is 
earlier.

[57 FR 29439, July 2, 1992, as amended at 58 FR 40732, July 30, 1993; 60 
FR 58500, Nov. 28, 1995]

    Effective Date Note: At 68 FR 69954, December 16, 2003, Sec.  
1220.312 was amended by revising the table in paragraph (b), effective 
April 1, 2004. For the convenience of the user, the revised text is set 
forth as follows:

Sec.  1220.312  Remittance of assessments and submission of reports to 
          United Soybean Board or Qualified State Soybean Board.

                                * * * * *

    (b) * * *

 
      Monthly                             Quarterly
 
Arkansas            Alabama
Iowa                Delaware
Kansas              Florida
Kentucky            Georgia
Michigan            Illinois
Minnesota           Indiana
Missouri            Louisiana
Mississippi         Maryland
North Carolina      North Dakota
Tennessee           Nebraska
Wisconsin           New Jersey
                    Ohio
                    Oklahoma
                    Pennsylvania
                    South Carolina
                    South Dakota
                    Texas
                    Virginia
                    Eastern Region
                    Western Region
 

                                * * * * *



Sec.  1220.313  Qualified State Soybean Boards.

    The following State soybean promotion organizations shall be 
Qualified State Soybean Boards. First purchasers and producers 
responsible for remitting assessments located in States which have a 
Qualified State Soybean Board shall remit assessments accompanied by the 
required reports to the Qualified State Soybean Board in the State in 
which the first purchaser or producer responsible for remitting 
assessments is located.

(1) Alabama Soybean Producers Board
(2) Arkansas Soybean Promotion Board
(3) Delaware Soybean Board
(4) Florida Soybean Advisory Council
(5) Georgia Agricultural Commodity Commission for Soybeans
(6) Illinois Soybean Program Operating Board

[[Page 183]]

(7) Iowa Soybean Promotion Board
(8) Indiana Soybean Development Council, Inc.
(9) Kansas Soybean Commission
(10) Kentucky Soybean Promotion Board
(11) Louisiana Soybean Promotion Board
(12) Maryland Soybean Board
(13) Soybean promotion Committee of Michigan
(14) Minnesota Soybean Research and Promotion Council
(15) Mississippi Soybean Promotion Board
(16) Missouri Soybean Merchandising Council
(17) Nebraska Soybean Development, Utilization, and Marketing Board
(18) New Jersey Soybean Board
(19) North Carolina Soybean Producers Association
(20) North Dakota Soybean Council
(21) Ohio Soybean Council Board of Trustees
(22) Oklahoma Soybean Commission
(23) Pennsylvania Soybean Board
(24) South Carolina Soybean BoardI25(25) South Dakota Soybean Research 
and Promotion Council
(26) Tennessee Soybean Promotion Board
(27) Texas Soybean Producers Board
(28) Virginia Soybean Board
(29) Wisconsin Soybean Marketing Board, Inc.



Sec.  1220.314  Document evidencing payment of assessments.

    (a) Each first purchaser responsible for remitting an assessment to 
a Qualified State Soybean Board or the United Soybean Board is required 
to give to the producer from whom the first purchaser collected an 
assessment written evidence of payment of the assessment containing the 
following information:
    (1) Name and address of the first purchaser.
    (2) Name of producer who paid assessment.
    (3) Number of bushels sold.
    (4) Net market price.
    (5) Total assessments paid by the producer.
    (6) Date.
    (7) State in which soybeans were grown.
    (b) [Reserved]



Sec. Sec.  1220.330-1220.332  [Reserved]

Subparts C-E [Reserved]



              Subpart F--Procedures To Request a Referendum

    Source: 64 FR 45416, Aug. 20, 1999; 65 FR 1, Jan. 3, 2000, unless 
otherwise noted.

                               Definitions



Sec.  1220.600  Act.

    The term Act means the Soybean, Promotion, Research, and Consumer 
Information Act set forth in title XIX, subtitle E, of the Food, 
Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 101-624), and 
any amendments thereto.



Sec.  1220.601  Administrator, AMS.

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



Sec.  1220.602  Administrator, FSA.

    The term Administrator, FSA, means the Administrator, of the Farm 
Service Agency, or any officer or employee of the Department to whom 
there has been delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec.  1220.603  Department.

    The term Department means the United States Department of 
Agriculture.



Sec.  1220.604  Farm Service Agency.

    The term Farm Service Agency, also referred to as ``FSA,'' means the 
Farm Service Agency of the Department.



Sec.  1220.605  Farm Service Agency County Committee.

    The term Farm Service Agency County Committee, also referred to as 
``FSA County Committee or COC,'' means the group of persons within a 
county who are elected to act as the Farm Service Agency County 
Committee.



Sec.  1220.606  Farm Service Agency County Executive Director.

    The term Farm Service Agency County Executive Director, also 
referred to as

[[Page 184]]

``CED,'' means the person employed by the FSA County Committee to 
execute the policies of the FSA County Committee and to be responsible 
for the day-to-day operation of the FSA county office, or the person 
acting in such capacity.



Sec.  1220.607  Order.

    The term Order means the Soybean Promotion and Research Order.



Sec.  1220.608  Person.

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



Sec.  1220.609  Producer.

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



Sec.  1220.610  Public notice.

    The term Public Notice means a notice published in the Federal 
Register, not later than 60 days prior to the last day of the Request 
for Referendum period that provides information regarding the Request 
for Referendum period. Such notification shall include, but not be 
limited to, explanation of producers' rights; procedures to request a 
referendum, the purpose, dates of the Request for Referendum period, 
location for conducting the Request for Referendum, and eligibility 
requirements. Additionally, the Board is required to provide producers, 
in writing, this same information during that same time period. Other 
pertinent information shall also be provided, without advertising 
expense, through press releases by State and county FSA offices and 
other appropriate Government offices, by means of newspapers, electronic 
media, county newsletter, and the like.



Sec.  1220.611  Representative period.

    The term Representative period means the period designated by the 
Secretary pursuant to Section 1970 of the Act.



Sec.  1220.612  Secretary.

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



Sec.  1220.613  Soybeans.

    The term Soybeans means all varieties of glycine max or glycine 
soja.



Sec.  1220.614  State and United States.

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

                               Procedures



Sec.  1220.615  General.

    An opportunity to request a referendum shall be provided to U.S. 
soybean producers to determine whether eligible producers favor the 
conduct of a referendum and the Request for Referendum shall be carried 
out in accordance with this subpart.
    (a) The opportunity to request a referendum shall be provided at the 
county FSA offices.
    (b) If the Secretary determines, based on results of the Request for 
Referendum, that no less than 10 percent (not in excess of one-fifth of 
which may be producers in any one State) of all producers have requested 
a referendum on the Order, a referendum would be held within 1 year of 
that determination.
    (c) If the Secretary determines, based on the results of the Request 
for Referendum, that the requirements in paragraph (b) of this section 
were not met, a referendum would not be conducted.
    (d) For purposes of paragraphs (b) and (c) of this section, the 
number of soybean producers in the United States is determined to be 
600,813.



Sec.  1220.616  Supervision of the process for requesting a referendum.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting producers to request a referendum in accordance 
with this subpart.

[[Page 185]]



Sec.  1220.617  Eligibility.

    (a) Eligible producers. Each person who was a producer during the 
representative period is provided the opportunity to request a 
referendum. Each producer entity is entitled to only one request.
    (b) Proxy registration. Proxy registration is not authorized except 
that an officer or employee of a corporate producer, or any guardian, 
administrator, executor, or trustee of a producer's estate, or an 
authorized representative of any eligible producer entity (other than an 
individual producer), such as a corporation or partnership, may request 
a referendum on behalf of that entity. Any individual who requests a 
referendum on behalf of any producer entity, shall certify that he/she 
is authorized by such entity to take such action.
    (c) Joint and group interest. A group of individuals, such as 
members of a family, joint tenants, tenants in common, a partnership, 
owners of community property, or a corporation engaged in the production 
of soybeans as a producer entity shall be entitled to make only one 
request for a referendum; provided, however, that any individual member 
of a group who is an eligible producer separate from the group may 
request a referendum separately.



Sec.  1220.618  Time and place for requesting a referendum.

    The opportunity to request a referendum shall be provided during a 
4-week period beginning and ending on a date determined by the 
Secretary. Eligible persons shall have the opportunity to request a 
referendum by following the procedures in Sec.  1220.621 during the 
normal business hours of each county FSA office.



Sec.  1220.619  Facilities

    Each county FSA office shall provide adequate facilities and space 
to permit producers to complete Form LS-51-1.



Sec.  1220.620  Certification and request form.

    Form LS-51-1 shall be used to request a referendum and certify 
producer eligibility. The form does not require a ``yes'' or ``no.'' 
Individual producers and representatives of other producer entities 
should read the form carefully. By completing and signing the form, the 
individual simultaneously registers, certifies eligibility and requests 
that a referendum be conducted.



Sec.  1220.621  Certification and request procedure.

    (a) To request that a referendum be conducted, each eligible 
producer shall, during the Request for Referendum period, be provided 
the opportunity to request a referendum during a specified period 
announced by the Secretary, at the county FSA office where FSA maintains 
and processes the producer's administrative farm records. For the 
producer not participating in FSA programs, the opportunity to request a 
referendum would be provided at the county FSA office serving the county 
where the producer owns or rents land. Each eligible producer shall be 
required to complete Form LS-51-1 in its entirety and sign it. The 
producer must legibly print his/her name and, if applicable, the 
producer entity represented, address, county, and telephone number. The 
producer must read the certification statement on Form LS-51-1 and sign 
it certifying that he/she or the producer entity represented was a 
producer of soybeans during the representative period and is requesting 
a referendum. Only a completed and signed Form LS-51-1 shall be 
considered a valid request for a referendum.
    (b) To request a referendum eligible producers may obtain Form LS-
51-1 in person, by mail, or by facsimile during the Request for 
Referendum period from the county FSA office where FSA maintains and 
processes the producer's administrative farm records. For the producer 
not participating in FSA programs, the opportunity to request a 
referendum would be provided at the county FSA office serving the county 
where the producer owns or rents land. Producers or producer entities 
may return Form LS-51-1 in person, by mail, or facsimile. Form's LS-51-1 
returned in person or by facsimile, must be received in the appropriate 
county FSA office no later than the last business day of the Request for 
Referendum period to be considered a valid request. However, Form's LS-
51-1 mailed to the

[[Page 186]]

county FSA office must be postmarked no later than the last business day 
of the Request for Referendum period and be received in the county FSA 
office no later than 10 business days after the last business day of the 
Request for Referendum period to be considered a valid request for a 
referendum.
    (c) Eligible participants who obtain form LS-51-1 in person at the 
appropriate county office may complete, and return by hand the form the 
same day.



Sec.  1220.622  List of producers requesting a referendum.

    (a) The county FSA personnel shall enter on the ``List of Soybean 
Producers Requesting a Referendum'' form (Form LS-51-2), the following 
information for each returned Form LS-51-1: name of individual soybean 
producer or other producer entity, name of producer entity 
representative, if applicable, postmarked date of a mailed Form LS-51-1 
and the date it was received in the county FSA office where FSA 
maintains and processes the producer's administrative farm records or at 
the county FSA office serving the county where the producer owns or 
rents land, the date Form LS-51-1 was received by facsimile or in person 
in the county FSA office where FSA maintains and processes the 
producer's administrative farm records or at the county FSA office 
serving the county where the producer owns or rents land. For any 
challenges of a producer's or producer entities' eligibility, the county 
FSA personnel would make a ``check mark'' in the space provided on Form 
LS-51-2 indicating a producer's or producer entities' eligibility has 
been challenged. After the challenge is resolved ``eligible'' or 
``ineligible'' would be entered in the space provided on Form LS-51-2.
    (b) County FSA offices shall, at all times, maintain control of the 
master (original) copy of Forms LS-51-1 and LS-51-2. A copy of each Form 
LS-51-2 shall be posted and made available for public inspection each 
day beginning on the first business day of the Request for Referendum 
period through the 11th business day following the last business day of 
the Request for Referendum period. An updated copy of Form LS-51-2 shall 
be posted in the county FSA office during normal business office hours 
in a conspicuous location.



Sec.  1220.623  Challenge of eligibility.

    (a) Who may challenge. Any person may challenge a producer's or 
producer entity's eligibility to request a referendum. Each challenge 
must be in writing include the full name of the individual or other 
producer entity being challenged; be made on a separate piece of paper; 
and be signed by the challenger. The Secretary may issue other 
guidelines as the Secretary deems necessary.
    (b) Challenge period. A challenge of a person's eligibility to 
request a referendum may be made on any business day during the 4-week 
Request for Referendum period through the 11th business day after the 
Request for Referendum period.
    (c) Challenged names. Producers whose eligibility is challenged 
shall be so noted with a ``checkmark'' in the space provided on Form LS-
51-2.
    (d) Determination of challenges. The FSA County Committee (COC) or 
designee, acting on behalf of the Administrator, AMS, shall make a 
determination concerning the challenge and shall notify challenged 
producers as soon as practicable, but no later than the 14th business 
day after the end of the request for referendum period. If the COC or 
designee is unable to determine whether a person was a producer during 
the representative period, the COC or designee may require the person 
challenged to submit records such as sales documents or similar 
documents to verify producer status during the representative period.
    (e) Appeal. A person declared to be ineligible by the COC or 
designee, acting on behalf of the Administrator, AMS, may file an appeal 
at the county FSA office within 3 business days after notification by 
the county FSA office of its decision. Such person may be required to 
provide documentation such as sales documents or similar documents in 
order to demonstrate eligibility. An appeal shall be determined by the 
COC or designee as soon as practicable, but in

[[Page 187]]

all cases not later than the 18th business day after the last day of the 
Request for Referendum period. The determination of the COC or designee 
on an appeal shall be final.
    (f) Resolved challenges. A challenge shall be determined to have 
been resolved if the determination of the COC or designee, acting on 
behalf of the Administrator, AMS, is not appealed within the time 
allowed for appeal or there has been a determination by the COC or 
designee after an appeal. After the challenge has been resolved, the 
county FSA office shall write either ``eligible'' or ``ineligible'' in 
the space provided on Form LS-51-2.



Sec.  1220.624  Canvassing

    Canvassing of Forms LS-51-1 and LS-51-2 shall take place as soon as 
possible after the opening of county FSA offices on the 19th business 
day following the Request for Referendum period. Such canvassing shall 
be under the supervision of the CED or designee, acting on behalf of the 
Administrator, AMS, who shall make a determination as to the number of 
valid or invalid requests for a referendum.
    (a) Invalid requests for a referendum. An invalid request for a 
referendum may include the following:
    (1) Form LS-51-1 is not signed and/or all required information has 
not been provided;
    (2) Form LS-51-1 returned in person or by facsimile was not received 
by the last business day of the Request for Referendum period;
    (3) Form LS-51-1 returned by mail was not postmarked by the last 
business day of the Request for Referendum period;
    (4) Form LS-51-1 returned by mail was not received in the county FSA 
office by the 10th business day after the Request for Referendum period;
    (5) Form LS-51-1 is mutilated or marked in such a way that any 
required information on the form is illegible; and/or
    (6) Form LS-51-1 not returned to the appropriate county FSA office.
    (b) Any Form LS-51-1 determined invalid shall not be considered as a 
request for a referendum.



Sec.  1220.625  Counting requests.

    The requests for a referendum shall be counted by the COC or 
designee on the 19th business day after the last business day of the 
Request for Referendum period. Requests for a referendum shall be 
counted as follows:
    (a) Total number of producers registering to request a referendum;
    (b) Number of eligible producers requesting a referendum;
    (c) Number of challenged producers deemed ineligible;
    (d) Number of challenged producers; and
    (e) Number of invalid requests for a referendum.



Sec.  1220.626  Public review.

    The public may witness the counting from an area designated by the 
FSA County Executive Director (CED) or designee, acting on behalf of the 
Administrator, AMS, but may not interfere with the process.



Sec.  1220.627  FSA county office report.

    The county FSA office report shall be certified as accurate and 
complete by the CED or designee, acting on behalf of the Administrator, 
AMS. Such report shall include, the information listed in Sec. Sec.  
1220.624 and 1220.625. The county FSA office shall notify the FSA State 
office of the results of the Request for Referendum on a form provided 
by the Administrator, FSA. Each county FSA office shall transmit the 
results in its county to the FSA State office. The results in each 
county may be made available to the public upon notification by the 
Administrator, FSA, that the final results have been released by the 
Secretary. A copy of the report shall be posted for 30 days following 
the date of notification by the Administrator, FSA, in the county FSA 
office in a conspicuous place accessible to the public. One copy shall 
be kept on file in the county FSA office for a period of at least 12 
months after notification by FSA that the final results have been 
released by the Secretary.



Sec.  1220.628  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, a 
report summarizing the data contained in

[[Page 188]]

each of the reports from the county FSA office on a State report form 
provided by the Administrator, FSA. The State FSA office shall maintain 
one copy of the summary where it shall be available for public 
inspection upon request for a period of not less that 12 months after 
the results have been released.



Sec.  1220.629  Reporting results.

    (a) The Administrator, FSA, shall submit to the Administrator, AMS, 
the reports from all State FSA offices. The Administrator, AMS, shall 
tabulate the results of the Request for Referendum. The Department will 
issue an official press release announcing the results of the Request 
for Referendum and publish the same results in the Federal Register. 
Subsequently, State reports and related papers shall be available for 
public inspection upon request during normal business hours in the 
Marketing Programs Branch office, Livestock and Seed Program, AMS, USDA, 
Room 2627 South Agriculture Building, 14th and Independence Avenue, SW., 
Washington, DC.
    (b) If the Secretary deems necessary, a State report or county 
report shall be reexamined and checked by such persons who may be 
designated by the Secretary.



Sec.  1220.630  Disposition of records.

    Forms LS-51-1 and LS-51-2 and county reports shall be placed in 
sealed containers under the supervision of the CED or designee, acting 
on behalf of the Administrator, AMS, and such container shall be marked 
with ``Request for Soybean Referendum.'' Such records shall remain in 
the secured custody of the CED or designee for a period of not less than 
12 months after the date of notification by the Administrator, FSA, that 
the final results have been announced by the Secretary. If the county 
FSA office receives no notice to the contrary from the Administrator, 
FSA, by the end of the 12 month period, the CED or designee shall 
destroy the records.



Sec.  1220.631  Instructions and forms.

    The Administrator, AMS, is hereby authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



PART 1230--PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION--Table of Contents




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

                               Definitions

Sec.
1230.1 Act.
1230.2 Department.
1230.3 Secretary.
1230.4 Board.
1230.5 Consumer information.
1230.6 Council.
1230.7 Customs Service.
1230.8 Delegate Body.
1230.9 Fiscal period.
1230.10 Imported.
1230.11 Imported pork and pork products.
1230.12 Importer.
1230.13 Market.
1230.14 Market value.
1230.15 Part and subpart.
1230.16 Person.
1230.17 Plans and projects.
1230.18 Porcine animal.
1230.19 Pork.
1230.20 Pork product.
1230.21 Producer.
1230.22 Promotion.
1230.23 Research.
1230.24 State.
1230.25 State association.
1230.26 State where produced.

                  National Pork Producers Delegate Body

1230.30 Establishment and membership.
1230.31 Nomination and appointment of producer members.
1230.32 Conduct of election.
1230.33 Appointment of importer members.
1230.34 Term of office.
1230.35 Vacancies.
1230.36 Procedure.
1230.37 Officers.
1230.38 Compensation and reimbursement.
1230.39 Powers and duties of the Delegate Body.

                           National Pork Board

1230.50 Establishment and membership.
1230.51 Term of office.
1230.52 Nominations.
1230.53 Nominee's agreement to serve.
1230.54 Appointment.
1230.55 Vacancies.
1230.56 Procedure.
1230.57 Compensation and reimbursement.
1230.58 Powers and duties of the Board.

[[Page 189]]

              Promotion, Research, and Consumer Information

1230.60 Promotion, research, and consumer information.

                        Expenses and Assessments

1230.70 Expenses.
1230.71 Assessments.
1230.72 Distribution of assessments.
1230.73 Uses of distributed assessments.
1230.74 Prohibited use of distributed assessments.
1230.75 Adjustment of accounts.
1230.76 Charges.
1230.77 [Reserved]

                       Reports, Books, and Records

1230.80 Reports.
1230.81 Books and records.
1230.82 Confidential treatment.

                              Miscellaneous

1230.85 Proceedings after termination.
1230.86 Effect of termination or amendment.
1230.87 Personal liability.
1230.88 Patents, copyrights, inventions, and publications.
1230.89 Amendments.
1230.90 Separability.
1230.91 Paperwork Reduction Act assigned number.

                    Subpart B--Rules and Regulations

                               Definitions

1230.100 Terms defined.

                               Assessments

1230.110 Assessments on imported pork and pork products.
1230.111 Remittance of assessments on domestic porcine animals.
1230.112 Rate of assessment.
1230.113 Collection and remittance of assessments for the sale of feeder 
          pigs and market hogs.
1230.115 Submission of annual financial statements.

                              Miscellaneous

1230.120 OBM control number assigned pursuant to the Paperwork Reduction 
          Act.

Subpart C [Reserved]

 Subpart D--Procedures for Nominations and Elections of Pork Producers 
  and Nominations of Importers for Appointment to the Initial National 
                      Pork Producers Delegate Body

1230.501-1230.512 [Reserved]

           Subpart E--Procedures for the Conduct of Referendum

                               Definitions

1230.601 Act.
1230.602 Administrator, AMS.
1230.603 Administrator, FSA.
1230.604 Department.
1230.605 Farm Service Agency.
1230.606 Farm Service Agency County Committee.
1230.607 Farm Service Agency County Executive Director.
1230.608 Imported porcine animals, pork, and pork products.
1230.609 Importer.
1230.610 Order.
1230.611 Porcine animal.
1230.612 Person.
1230.613 Pork.
1230.614 Pork product.
1230.615 Producer.
1230.616 Public notice.
1230.617 Referendum.
1230.618 Representative period.
1230.619 Secretary.
1230.620 State.
1230.621 Voting period.

                               Referendum

1230.622 General.
1230.623 Supervision of referendum.
1230.624 Eligibility.
1230.625 Time and place of registration and voting.
1230.626 Facilities for registering and voting.
1230.627 Registration form and ballot.
1230.628 Registration and voting procedures for producers.
1230.629 Registration and voting procedures for importers.
1230.630 List of registered voters.
1230.631 Challenge of votes.
1230.632 Receiving ballots.
1230.633 Canvassing ballots.
1230.634 FSA county office report.
1230.635 FSA State office report.
1230.636 Results of the referendum.
1230.637 Disposition of ballots and records.
1230.638 Instructions and forms.
1230.639 Additional absentee voter challenge period.

    Authority: 7 U.S.C. 4801-4819.



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

    Source: 51 FR 31903, Sept. 5, 1986, unless otherwise noted.

[[Page 190]]

                               Definitions



Sec.  1230.1  Act.

    Act means the Pork Promotion, Research, and Consumer Information Act 
of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec.  1230.2  Department.

    Department means the United States Department of Agriculture.



Sec.  1230.3  Secretary.

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



Sec.  1230.4  Board.

    Board means the National Pork Board established pursuant to Sec.  
1230.50.



Sec.  1230.5  Consumer information.

    Consumer information means an activity intended to broaden the 
understanding of the sound nutritional attributes of pork and pork 
products, including the role of pork and pork products in a balanced, 
healthy diet.



Sec.  1230.6  Council.

    Council means the National Pork Producers Council, a nonprofit 
corporation of the type described in section 501(c)(5) of the Internal 
Revenue Code of 1954 and incorporated in the State of Iowa.



Sec.  1230.7  Customs Service.

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



Sec.  1230.8  Delegate Body.

    Delegate Body means the National Pork Producers Delegate Body 
established pursuant to Sec.  1230.30.



Sec.  1230.9  Fiscal period.

    Fiscal period means the 12-month period ending on December 31 or 
such other consecutive 12-month period as the Secretary or Board may 
determine.



Sec.  1230.10  Imported.

    Imported means entered, or withdrawn from a warehouse for 
consumption, in the customs territory of the United States.



Sec.  1230.11  Imported pork and pork products.

    Imported pork and pork products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of pork, including those products which have been 
assigned one or more of the following numbers in Schedule 1 of the 
Tariff Schedules of the United States Annotated (1985): 106.4020; 
106.4040; 106.8000; 106.8500; 107.1000; 107.1500; 107.3020; 107.3040; 
107.3060; 107.3515; 107.3525; 107.3540; and 107.3560.



Sec.  1230.12  Importer.

    Importer means a person who imports porcine animals, pork, or pork 
products into the United States.



Sec.  1230.13  Market.

    Market means to sell, slaughter for sale, or otherwise dispose of a 
porcine animal in commerce.



Sec.  1230.14  Market value.

    Market value means, with respect to porcine animals which are sold, 
the price at which they are sold. With respect to porcine animals 
slaughtered for the sale by the producer, the term means the most recent 
annual seven-market average for barrows and gilts, as published by the 
Department. With respect to imported porcine animals, the term means the 
declared value. With respect to imported pork and pork products, the 
term means an amount which represents the value of the live porcine 
animals from which the pork or pork products were derived, based upon 
the most recent annual seven-market average for barrows and gilts, as 
published by the Department.



Sec.  1230.15  Part and subpart.

    Part means the Pork Promotion, Research, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder,

[[Page 191]]

and the aforesaid order shall be a ``subpart of such part.



Sec.  1230.16  Person.

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



Sec.  1230.17  Plans and projects.

    Plans and projects means promotion, research, and consumer 
information plans, studies, or projects.



Sec.  1230.18  Porcine animal.

    Porcine animal means a swine, that is raised as (a) a feeder pig, 
that is, a young pig sold to another person to be finished for 
slaughtering over a period of more than 1 month; (b) for breeding 
purposes as seed stock and included in the breeding herd; and (c) a 
market hog, slaughtered by the producer or sold to be slaughtered, 
usually within 1 month of such transfer.



Sec.  1230.19  Pork.

    Pork means the flesh of a porcine animal.



Sec.  1230.20  Pork product.

    Pork product means an edible product produced or processed in whole 
or in part from pork.



Sec.  1230.21  Producer.

    Producer means a person who produces porcine animals in the United 
States for sale in commerce.



Sec.  1230.22  Promotion.

    Promotion means any action, including but not limited to paid 
advertising and retail or food service merchandising, taken to present a 
favorable image for porcine animals, pork, or pork products to the 
public, or to educate producers with the intent of improving the 
competitive position and stimulating sales of porcine animals, pork, or 
pork products.



Sec.  1230.23  Research.

    Research means any action designed to advance, expand, or improve 
the image, desirability, nutritional value, usage, marketability, 
production, or quality of porcine animals, pork, or pork products, 
including the dissemination of the results of such research.



Sec.  1230.24  State.

    State means each of the 50 States.



Sec.  1230.25  State association.

    State association means the single organization of producers in a 
State that is organized under the laws of that State and is recognized 
by the chief executive officer of such State as representing such 
State's producers. If no such organization exists in a State as of 
January 1, 1986, the Secretary may recognize an organization that 
represents not fewer than 50 producers who market annually an aggregate 
of not less than 10 percent of the pounds of porcine animals marketed in 
such State. The Secretary may cease to recognize a State association and 
instead recognize another organization of producers in a State as that 
State's association if the Secretary determines either that a majority 
of the members of the existing State association are not producers or 
that a majority of the members of the other organization seeking 
recognition are producers and that such organization better represents 
the economic interests of producers.



Sec.  1230.26  State where produced.

    State where produced means with respect to a porcine animal marketed 
as a feeder pig or as breeding stock, the State in which that porcine 
animal was born, and with respect to a porcine animal that is marketed 
as a market hog, the State in which that porcine animal was fed for 
market.

                  National Pork Producers Delegate Body



Sec.  1230.30  Establishment and membership.

    (a) There is hereby established a National Pork Producers Delegate 
Body which shall consist of producers and importers appointed by the 
Secretary.
    (b)(1) At least two producer members shall be allocated to each 
State, but any State that has more than 300 but less than 601 shares 
shall receive three producer members; each State with more than 600 but 
less than 1,001 shares

[[Page 192]]

shall receive four producer members and each State with more than 1,000 
shares shall receive an additional member in excess of four for each 300 
additional shares in excess of 1,000 shares, rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to each State on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to such State.
    (c)(1) The number of importer members to be appointed shall be 
determined by allocating three such members for the first 1,000 shares. 
Importers shall receive an additional member in excess of three for each 
300 shares in excess of 1,000 shares, rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to importers on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to importers.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.  1230.31  Nomination and appointment of producer members.

    (a) [Reserved]
    (b) Delegate Body nominations for appointment as producer members 
shall be submitted to the Secretary in the number requested by the 
Secretary by each State association either after an election conducted 
in accordance with Sec.  1230.32 and by nominating the producers who 
receive the highest number of votes in such State; or pursuant to a 
selection process that is approved by the Secretary, is given public-
notice at least one week in advance by publication in a newspaper or 
newspapers of general circulation in such State and in pork production 
and agriculture trade publications, and provides complete and equal 
access to every producer who has paid all assessments due under this 
subpart and who has not demanded any refund of an assessment paid 
pursuant to this subpart in the period since the selection of the 
previous Delegate Body;
    (c) The Secretary shall appoint the producer members of each 
Delegate Body from the nominations submitted in accordance with this 
section, except that if a State association does not submit nominations 
in the required manner or number, or if a State has no State 
association, the Secretary shall select producer members from that State 
after consultation with representatives of the pork industry in that 
State.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.  1230.32  Conduct of election.

    If a State association selects nominees for appointment to the 
Delegate Body through an election, it shall be conducted in the 
following manner:
    (a) Elections shall be administered by the Board and the Board shall 
determine the timing of any elections.
    (b) Producers who are residents of that State may be named as 
candidates for election to be nominees for appointment to the Delegate 
Body:
    (1) By a nominating committee of producers in that State appointed 
by the Board; or
    (2) The number of pork producers in a State shall be determined by 
the Department based on the latest available Department information, 
which tabulates by State the number of farming operations with porcine 
animals.
    (c) To be eligible to vote in an election to nominate producer 
members from a State, a person must:
    (1) Be a producer who is a resident of that State;
    (2) Have paid all assessments due pursuant to this subpart; and
    (3) Not have demanded any refund of an assessment paid pursuant to 
this subpart in the period since the selection of the previous Delegate 
Body.
    (d) The Board shall cause notices of any election to be published at 
least one week prior to the election in a newspaper or newspapers of 
general circulation in that State, and in pork production and 
agricultural trade publications. The notices shall set forth the period 
of time and places for voting and such other information as the Board 
considers necessary.
    (e) The identity of any person who voted and the manner in which any 
person voted shall be kept confidential.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]

[[Page 193]]



Sec.  1230.33  Appointment of importer members.

    The Secretary shall appoint the importer members of each Delegate 
Body after consultation with importers.



Sec.  1230.34  Term of office.

    (a) The members of the Delegate Body shall serve for terms of one 
year, except that the members of the initial Delegate Body shall serve 
only until the completion of the nomination and appointment process of 
the succeeding Delegate Body.
    (b) Each member of the Delegate Body shall serve until that member's 
term expires, or a successor is appointed, whichever occurs later.



Sec.  1230.35  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Delegate Body, the Secretary 
shall appoint a successor for the unexpired term of such member from 
nominations made either by the appropriate State association or by 
importers, depending upon whether the vacancy is a producer or importer 
vacancy.



Sec.  1230.36  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Delegate Body, but only if that 
majority is also entitled to cast a majority of the shares (including 
fractions thereof). Any action of the Delegate Body, including any 
motion or nomination presented to it for a vote, shall require a 
majority vote, that is, the concurring votes of a majority of the shares 
cast on that action. The Delegate Body shall give timely notice of its 
meetings. The Delegate Body shall give the Secretary the same notice of 
its meetings as it gives to its members in order that the Secretary or a 
representative of the Secretary may attend meetings.
    (b) The number of votes that may be cast by a producer member if 
present at a meeting shall be equal to the number of shares attributable 
to the State of such member divided by the number of producer members 
from such State. The number of votes that may be cast by an importer 
member if present at a meeting shall be equal to the number of shares 
allocated to importers divided by the number of importer members.



Sec.  1230.37  Officers.

    The Delegate Body shall elect its Chairperson by a majority vote at 
the first annual meeting, but at each annual meeting after the first, 
the President of the Board shall serve as the Delegate Body's 
Chairperson.



Sec.  1230.38  Compensation and reimbursement.

    The members of the Delegate Body shall serve without compensation 
but may be reimbursed by the Board for actual transportation expenses 
incurred by them in exercising their powers and duties under this 
subpart. Such expenses shall be paid from funds received by the Board 
pursuant to Sec.  1230.72.



Sec.  1230.39  Powers and duties of the Delegate Body.

    The Delegate Body shall have the following powers and duties:
    (a) To meet annually;
    (b) To recommend the rate of assessment prescribed by the initial 
order and any increase in such rate;
    (c) To determine the percentage of the net assessments attributable 
to porcine animals produced in a State that each State association shall 
receive; and
    (d) To nominate not less than 23 persons, including producers from a 
minimum of 12 States or importers, for appointment to the initial Board 
and not less than one and one-half persons (rounded up to the nearest 
person) for each vacancy on the Board that requires nominations 
thereafter. Each nomination shall be by a majority vote of the Delegate 
Body voting in person in accordance with Sec.  1230.36.

                           National Pork Board



Sec.  1230.50  Establishment and membership.

    There is hereby established a National Pork Board of 15 members 
consisting of producers representing at least 12 States or importers 
appointed by the Secretary from nominations submitted pursuant to Sec.  
1230.39(d). The

[[Page 194]]

Board shall be deemed to be constituted once the Secretary makes the 
appointments to the Board.



Sec.  1230.51  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall be 
designated for, and shall serve terms as follows: One-third of such 
members shall serve for one year terms; One-third shall serve for two 
year terms; and the remaining One-third shall serve for three year 
terms.
    (b) Each member of the Board shall serve until the member's term 
expires, or until a successor is appointed, unless the member is removed 
pursuant to Sec.  1230.55(b).
    (c) No member shall serve more than two consecutive terms provided 
that those members serving an initial term of one year are eligible to 
serve two additional consecutive terms, but in no event, more than seven 
years in total.
    (d) The first year of the terms of the initial Board shall begin 
immediately on appointment by the Secretary and continue until July 1, 
1988. In subsequent years, the term of office shall begin on July 1.



Sec.  1230.52  Nominations.

    Nominations for members of the Board shall be made by the Delegate 
Body in accordance with Sec.  1230.39(d).



Sec.  1230.53  Nominee's agreement to serve.

    Any person nominated to serve on the Board shall file with the 
Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with the Council or a State 
association or any organization that has a contract with the Board and 
thereafter disclose, at any time while serving on the Board, any 
relationship with any organization that applies to the Board for a 
contract; and
    (c) Withdraw from participation in deliberations, decisionmaking, or 
voting on matters concerning any entity referred to in paragraph (b) of 
this section, if an officer or member of the executive committee of such 
entity.



Sec.  1230.54  Appointment.

    From the nominations submitted pursuant to Sec.  1230.39(d), the 
Secretary shall appoint 15 producers or importers as members of the 
Board, but in no event shall the Secretary appoint producer members 
representing fewer than 12 States.



Sec.  1230.55  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Board, the 
Secretary shall appoint a successor for the unexpired term of such 
member from the most recent list of nominations made by the Delegate 
Body.
    (b) If a member of the Board fails or refuses to perform the duties 
of a member of the Board, or if a member of the Board engages in acts of 
dishonesty or willful misconduct, the Board may recommend to the 
Secretary that that member be removed from office. If the Secretary 
finds that the recommendation of the Board demonstrates adequate cause, 
the Secretary shall remove such member from office. A person appointed 
under this part or any employee of the Board may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.  1230.56  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall give timely notice of its meetings. The Board 
shall give the Secretary the same notice of its meetings, including the 
meetings of its committees, as it gives to its members in order that the 
Secretary, or a representative of the Secretary, may attend the 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, telegraph or by other means 
of communication when, in the opinion of the President of the Board, 
such action must be taken before a meeting can be called. Action taken 
by this emergency

[[Page 195]]

procedure is valid only if all members are notified and provided the 
opportunity to vote and any telephone vote is confirmed promptly in 
writing and recorded in the Board minutes. Any action so taken shall 
have the same force and effect as though such action had been taken at a 
properly convened meeting of the Board.



Sec.  1230.57  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for reasonable expenses incurred by them in the exercise 
of their powers and the performance of their duties under this subpart. 
Such expenses shall be paid from funds received by the Board pursuant to 
Sec.  1230.72.



Sec.  1230.58  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To meet not less than annually, and to organize and elect from 
among its members, by majority vote, a President and such other officers 
as may be necessary;
    (b) To receive and evaluate, or, on its own initiative, develop, and 
budget for proposals for plans and projects and to submit such plans and 
projects to the Secretary for approval;
    (c) To administer directly or through contract the provisions of 
this subpart in accordance with its terms and provisions;
    (d) To develop and submit to the Secretary for the Secretary's 
approval, plans and projects conducted either by the Board or others;
    (e) To prepare and submit to the Secretary for the Secretary's 
approval, which is required for the following to be implemented:
    (1) Budgets on a fiscal period basis of its anticipated expenses and 
disbursements in the administration of this subpart, including the 
projected cost of plans and projects to be conducted by the Board 
directly or by way of contract or agreement; and
    (2) The budget, plans, or projects for which State associations are 
to receive funds under Sec.  1230.72, including a general description of 
the proposed plan and project contemplated therein;
    (f) With the approval of the Secretary, to enter into contracts or 
agreements with any person for the development and conduct of activities 
authorized under this subpart and for the payment of the cost thereof 
with funds collected through assessments pursuant to Sec.  1230.71. Any 
such contract or agreement shall provide that:
    (1) The contracting party shall develop and submit to the Board a 
plan or project together with a budget or budgets which shall show the 
estimated cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
relevant transactions and make periodic reports to the Board of relevant 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary or the Board may require. The 
Secretary or employees of the Board may audit periodically the records 
of the contracting party;
    (g) To appoint or employ staff persons as it may deem necessary, to 
define the duties and determine the compensation of each, to protect the 
handling of Board funds through fidelity bonds, and to conduct routine 
business.
    (h) To disseminate information to or communicate with producers or 
State associations through programs or by direct contact utilizing the 
public postage system or other systems;
    (i) To select committees and subcommittees of Board members and to 
adopt such rules and by laws for the conduct of its business as it may 
deem advisable;
    (j) To utilize advisory committees of persons other than Board 
members to assist in the development of plans or projects and pay the 
reasonable expenses and fees of the members of such committees;
    (k) To prescribe rules and regulations necessary to effectuate the 
terms and provisions of this subpart;
    (l) To recommend to the Secretary amendments to this subpart;
    (m) With the approval of the Secretary, to invest, pending 
disbursement

[[Page 196]]

pursuant to a plan or project, funds collected through assessments 
authorized under Sec.  1230.71 in, and only in, an obligation of the 
United States, a general obligation of any State or any political 
subdivision thereof, an interest-bearing account or certificate of 
deposit of a bank that is a member of the Federal Reserve System, or an 
obligation fully guaranteed as to principal and interest by the United 
States.
    (n) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and prepare and submit such 
reports as the Secretary may prescribe from time to time, and to make 
appropriate accounting with respect to the receipt and disbursement of 
all funds entrusted to it;
    (o) To prepare and make public and available to producers and 
importers at least annually, a report of its activities carried out and 
an accounting of funds received and expended;
    (p) To have an audit of its financial statements conducted by a 
certified public accountant in accordance with generally accepted 
auditing standards at the end of each fiscal period and at such other 
times as the Secretary may request, and to submit a copy of each such 
audit report to the Secretary;
    (q) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (r) To submit to the Secretary such information pursuant to this 
subpart as the Secretary may request; and
    (s) To carry out an effective and coordinated program of promotion, 
research, and consumer information designed to strengthen the position 
of the pork industry in the marketplace and maintain, develop, and 
expand markets for pork and pork products.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]

              Promotion, Research, and Consumer Information



Sec.  1230.60  Promotion, research, and consumer information.

    (a) The Board shall receive and evaluate, or, on its own initiative, 
develop, and submit to the Secretary for approval, any plans and 
projects. Such plans and projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate plans and projects for promotion, research, and consumer 
information with respect to pork and pork products designed to 
strengthen the position of the pork industry in the marketplace and to 
maintain, develop, and expand domestic and foreign markets for pork and 
pork products;
    (2) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of pork 
and pork products and the creation of new products thereof, to the end 
that marketing and utilization of pork and pork products may be 
encouraged, expanded, improved, or made more acceptable.
    (b) Each plan and project shall be periodically reviewed or 
evaluated by the Board to ensure that the plan and project contributes 
to an effective and coordinated program of promotion, research, and 
consumer information. If it is found by the Board that any such plan and 
project does not further the purposes of the Act, the Board shall 
terminate such plan and project.
    (c) No plan or project shall make a false or misleading claim on 
behalf of pork or a pork product or a false or misleading statement with 
respect to an attribute or use of a competing product.
    (d) No plan or project shall undertake to advertise or promote pork 
or pork products by private brand or trade name unless such 
advertisement or promotion is specifically approved by the Board, with 
the concurrence of the Secretary.

                        Expenses and Assessments



Sec.  1230.70  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve that would permit an effective 
promotion, research, and consumer information program to continue in 
years when the amount of assessments may be reduced) as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
administration, maintenance, and functioning and to enable it to 
exercise its powers and perform its duties in accordance with the 
provisions of this

[[Page 197]]

subpart, including financing plans and projects. Such expenses shall be 
paid from assessments collected pursuant to Sec.  1230.71 and other 
funds available to the Board, including donations.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec.  1230.71, for reasonable administrative 
expenses incurred by the Department with respect to this subpart after 
January 1, 1986, including any expenses reasonably incurred for the 
conduct of elections of nominees for appointment to the initial Delegate 
Body and for the conduct of referenda.



Sec.  1230.71  Assessments.

    (a)(1) Each producer producing in the United States a porcine animal 
raised as a feeder pig that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
feeder pig.
    (2) Each producer producing in the United States a porcine animal 
raised for slaughter that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
market hog.
    (3) Each producer producing in the United States a porcine animal 
raised for slaughter that such producer slaughters for sale shall pay an 
assessment on that animal unless such producer demonstrates to the Board 
by appropriate documentation that an assessment was previously paid on 
that animal as a market hog.
    (4) Each producer producing in the United States a porcine animal 
raised for breeding stock that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid by a person on that 
animal as breeding stock.
    (5) Each importer importing a porcine animal, pork, or pork product 
into the United States shall pay an assessment on that porcine animal, 
pork, or pork product, unless such importer demonstrates to the Board by 
appropriate documentation that an assessment was previously paid for 
that porcine animal, pork, or pork product.
    (b)(1) Each purchaser of a porcine animal raised by a producer as a 
feeder pig or market hog shall collect an assessment on such porcine 
animal if an assessment is due pursuant to paragraph (a) of this 
section, and shall remit that assessment to the Board. For the purposes 
of collection and remittance of assessments, any person engaged as a 
commission merchant, auction market, or livestock market in the business 
of receiving such porcine animals for sale on commission for or on 
behalf of a producer shall be deemed to be a purchaser.
    (2) Assessments on porcine animals raised as breeding stock which 
are sold by a commission merchant, auction, market, or livestock market 
in the business of receiving such porcine animals for sale on commission 
for or on behalf of a producer shall be collected and remitted by the 
commission merchant, auction market, or livestock market selling such 
porcine animals.
    (3) Each producer of porcine animals slaughtered for sale by the 
producer or sold directly to a consumer in connection with a custom 
slaughter operation shall remit an assessment to the Board if an 
assessment is due pursuant to paragraph (a) of this section.
    (4) Assessments on domestic porcine animals shall be remitted in the 
form of a negotiable instrument made payable to the ``National Pork 
Board,'' which, together with the reports required by Sec.  1230.80, 
shall be sent to the address designated by the Board.
    (5) Each importer of a porcine animal, pork, or pork product shall 
remit an assessment to the Customs Service at the time such porcine 
animal, pork, or pork product is imported or in such manner as may be 
established by regulations prescribed by the Board and approved by the 
Secretary, if an assessment is due pursuant to paragraph (a) of this 
section.
    (c) The initial rate of assessment shall be 0.25 percent of market 
value.
    (d) The rate of assessment may, upon the recommendation of the 
Delegate Body, be increased by regulations prescribed by the Board and 
approved by

[[Page 198]]

the Secretary by no more than 0.1 percent of such market value per 
fiscal period to a total of not more than 0.5 percent of market value.
    (e) Assessments on imported pork and pork products shall be 
expressed in an amount per pound for each type of pork or pork product 
subject to assessment, which shall be established by regulations 
prescribed by the Board and approved by the Secretary.

[51 FR 31903, Sept. 5, 1986; 51 FR 36383, Oct. 10, 1986; 53 FR 1910, 
Jan. 25, 1988; 53 FR 30245, Aug. 11, 1988; 56 FR 6, Jan. 2, 1991]



Sec.  1230.72  Distribution of assessments.

    Assessments remitted to the Board shall be distributed as follows:
    (a) Each State association shall receive on a monthly basis, a 
percentage determined by the Delegate Body or 16.5 percent, whichever is 
higher, of the net assessments attributable to that State. The net 
assessments attributable to a State is the total amount of assessments 
received from producers in a State.
    (b) A State association which was conducting a pork promotion 
program in the period from July 1, 1984 to June 30, 1985, shall receive 
additional amounts at such times as the Board may determine, so that the 
total amount received on an annual basis would be equal to the amount 
that would have been collected in such State pursuant to the pork 
promotion program in existence in such State from July 1, 1984, to June 
30, 1985, had the porcine animals subject to assessment, been produced 
from July 1, 1984, to June 30, 1985, and been subject to the rates of 
assessment then in effect from such State to the Council and other 
national entities involved in pork promotion, research, and consumer 
information. This paragraph shall apply to a State association only if 
the annual amount determined under this paragraph would be greater than 
the annual amount determined under paragraph (a) of this section.
    (c) The Council shall receive on a monthly basis 35 percent of the 
net assessments until after the referendum is conducted, and 25 percent 
thereafter and until 12 months after the referendum.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec.  1230.73  Uses of distributed assessments.

    (a) Each State association shall use its distribution of assessments 
pursuant to Sec.  1230.72, as well as any proceeds from the investment 
of such funds pending their use, for financing plans and projects and 
the administrative expenses incurred in connection therewith, including 
the cost of administering nominations and elections of producer members 
of the Delegate Body.
    (b) The Council shall use its distribution of assessments pursuant 
to Sec.  1230.72, as well as any proceeds from the investment of such 
funds pending their use, for financing plans and projects and the 
Council's administrative expenses.
    (c) The Board shall use its distribution of assessments pursuant to 
Sec.  1230.72, as well as any proceeds from the investment of such funds 
pending their use, for:
    (1) Financing plans and projects;
    (2) The Board's expenses for the Board's administration, 
maintenance, and functioning as authorized by the Secretary;
    (3) Accumulation of a reserve not to exceed one fiscal period's 
budget to permit continuation of an effective promotion, research, and 
consumer information program in years when assessment amounts may be 
reduced; and
    (4) The Secretary's administrative costs in carrying out this part.



Sec.  1230.74  Prohibited use of distributed assessments.

    (a) No funds collected under this subpart shall in any manner be 
used for the purpose of influencing legislation as that term is defined 
in section 4911 (d) and (e)(2) of the Internal Revenue Code of 1954, or 
for the purpose of influencing governmental policy or action except in 
recommending to the Secretary amendments to this part.
    (b) Organizations receiving distributions of assessments from the 
Board

[[Page 199]]

shall furnish the Board with annual financial statements audited by a 
certified public accountant of all funds distributed to such 
organizations pursuant to this subpart and any other reports as may be 
required by the Secretary or the Board in order to verify the use of 
such funds.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988; 
60 FR 33683, June 29, 1995]



Sec.  1230.75  Adjustment of accounts.

    Whenever the Board or the Department determines, through an audit of 
a person's reports, records, books or accounts or through some other 
means that additional money is due the Board or that money is due such 
person from the Board, such person shall be notified of the amount due. 
Any amount due the Board shall be remitted to the Board by the next date 
for remitting assessments as provided in Sec.  1230.71(b)(3). Any 
overpayment to the Board shall be credited to the account of the person 
remitting the overpayment and shall be applied against amounts due in 
succeeding months except that the Board shall make prompt payment when 
an overpayment cannot be adjusted by a credit.



Sec.  1230.76  Charges.

    Any assessment not paid when due shall be increased 1.5 percent each 
month beginning with the day following the date such assessment was due. 
Any remaining amount due, which shall include any unpaid charges 
previously made pursuant to this section, shall be increased at the same 
rate on the corresponding day of each month thereafter until paid. For 
the purpose of this section, any assessment that was determined at a 
date later than prescribed by this subpart because of a person's failure 
to submit a report to the Board when due shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due. The timeliness of a payment to the Board shall be based 
on the applicable postmark date or the date actually received by the 
Board, whichever is earlier.



Sec.  1230.77  [Reserved]

                       Reports, Books, and Records



Sec.  1230.80  Reports.

    Each person responsible for collecting or remitting any assessment 
under Sec.  1230.71(b) shall report at the time for remitting 
assessments to the Board the following information:
    (a) The quantity and market value of the porcine animals subject to 
assessment;
    (b) The amount of assessment collected;
    (c) The month the assessment was collected;
    (d) The State where the porcine animals were produced; and
    (e) Such other information as may be required by regulations 
prescribed by the Board and approved by the Secretary.



Sec.  1230.81  Books and records.

    Each person who is subject to this subpart shall maintain and, 
during normal business hours, make available for inspection by employees 
of the Board and the Secretary such books and records as are necessary 
to carry out the provision of this subpart, including such records as 
are necessary to verify any required reports. Such records shall be 
retained for at least two years beyond the fiscal period of their 
applicability.



Sec.  1230.82  Confidential treatment.

    All information obtained from the books, records or reports required 
to be maintained under Sec. Sec.  1230.80 and 1230.81 of this subpart 
shall be kept confidential by all persons, including employees and 
agents and former employees and agents of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and all employees and all former officers and employees 
of contracting parties having access to such information, and shall not 
be available to Board members. Only those persons having a specific need 
for such information in order to effectively implement, administer, or 
enforce the provisions of this subpart shall have access to such 
information. In addition, only such information so

[[Page 200]]

furnished or acquired shall be disclosed as the Secretary deems relevant 
and then only in a suit or administrative hearing brought at the 
direction, or upon the request, of the Secretary or to which the 
Secretary or any officer of the United States is a party, and involving 
this subpart. Nothing in this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of persons subject to this subpart or of statistical data 
collected therefrom, which statements or data do not identify the 
information furnished by any person; or
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

                              Miscellaneous



Sec.  1230.85  Proceedings after termination.

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



Sec.  1230.86  Effect of termination or amendment.

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



Sec.  1230.87  Personal liability.

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



Sec.  1230.88  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, trademarks, inventions, or publications 
developed through the use of funds collected under the provisions of 
this subpart shall be the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications inure to the benefit of the Board as income and be subject 
to the same fiscal, budget, and audit controls as other funds of the 
Board. Upon termination of this subpart, Sec.  1230.85

[[Page 201]]

shall apply to determine disposition of all such property.



Sec.  1230.89  Amendments.

    The Secretary may from time to time amend provisions of this part. 
Any interested person or organization affected by the provisions of the 
Act may propose amendments to the Secretary.



Sec.  1230.90  Separability.

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



Sec.  1230.91  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in this subpart have been approved by the Office of Management and 
Budget (OMB) under the provisions of 44 U.S.C. Chapter and have been 
assigned OMB Control Number 0851-0151.



                    Subpart B--Rules and Regulations

    Source: 53 FR 1911, Jan. 25, 1988, unless otherwise noted.

                               Definitions



Sec.  1230.100  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in Subpart A of this part.

                               Assessments



Sec.  1230.110  Assessments on imported pork and pork products.

    (a) The following Harmonized Tariff Schedule (HTS) categories of 
imported live porcine animals are subject to assessment at the rate 
specified.

------------------------------------------------------------------------
                  Live porcine animals                      Assessment
------------------------------------------------------------------------
0103.10.0000............................................        \1\ 0.40
0103.91.0000............................................        \1\ 0.40
0103.92.0000............................................        \1\ 0.40
------------------------------------------------------------------------
\1\ percent Customs Entered Value.

    (b) The following HTS categories of imported pork and pork products 
are subject to assessment at the rates specified.

------------------------------------------------------------------------
                                                         Assessment
              Pork and pork products               ---------------------
                                                     Cents/lb   Cents/kg
------------------------------------------------------------------------
0203.11.0000......................................        .25    .551150
0203.12.1010......................................        .25    .551150
0203.12.1020......................................        .25    .551150
0203.12.9010......................................        .25    .551150
0203.12.9020......................................        .25    .551150
0203.19.2010......................................        .29    .639334
0203.19.2090......................................        .29    .639334
0203.19.4010......................................        .25    .551150
0203.19.4090......................................        .25    .551150
0203.21.0000......................................        .25    .551150
0203.22.1000......................................        .25    .551150
0203.22.9000......................................        .25    .551150
0203.29.2000......................................        .29    .639334
0203.29.4000......................................        .25    .551150
0206.30.0000......................................        .25    .551150
0206.41.0000......................................        .25    .551150
0206.49.0000......................................        .25    .551150
0210.11.0010......................................        .25    .551150
0210.11.0020......................................        .25    .551150
0210.12.0020......................................        .25    .551150
0210.12.0040......................................        .25    .551150
0210.19.0010......................................        .29    .639334
0210.19.0090......................................        .29    .639334
1601.00.2010......................................        .34    .749564
1601.00.2090......................................        .34    .749564
1602.41.2020......................................        .37    .815702
1602.41.2040......................................        .37    .815702
1602.41.9000......................................        .25    .551150
1602.42.2020......................................        .37    .815702
1602.42.2040......................................        .37    .815702
1602.42.4000......................................        .25    .551150
1602.49.2000......................................        .34    .749564
1602.49.4000......................................        .29    .639334
1602.49.9000......................................        .29    .639334
------------------------------------------------------------------------


[67 FR 58322, Sept. 16, 2002]



Sec.  1230.111  Remittance of assessments on domestic porcine animals.

    Assessments on domestic porcine animals shall be remitted to the 
National Pork Board pursuant to Sec.  1230.71(b) in accordance with the 
following remittance schedule.
    (a) Monthly assessments totaling $25 or more shall be remitted to 
the Board by the 15th day of the month following the month in which the 
porcine animals were marketed or by the 15th day following the end of a 
Board-approved, consecutive 4-week period in which the porcine animals 
were marketed.
    (b) Assessments totaling less than $25 during each month of a 
quarter in which the porcine animals were marketed may be accumulated 
and remitted by the 15th day of the month following the end of a 
quarter. The quarters shall be: January through March;

[[Page 202]]

April through June; July through September; October through December.
    (c) Assessments totaling $25 or more during any month of a quarter 
must be remitted by the 15th day of the month following the month of the 
quarter in which the assessments totaled $25 or more, together with any 
unremitted assessments from the previous month(s) of the quarter, if 
applicable.
    (d) Assessments collected during any calendar quarter and not 
previously remitted as described in paragraphs (b) or (c) of this 
section must be remitted by the 15th day of the month following the end 
of the quarter regardless of the amount.

[56 FR 6, Jan. 2, 1991]



Sec.  1230.112  Rate of assessment.

    In accordance with Sec.  1230.71(d) the rate of assessment shall be 
0.40 percent of market value.

[67 FR 58323, Sept. 16, 2002]



Sec.  1230.113  Collection and remittance of assessments for the sale 
of feeder pigs and market hogs.

    Pursuant to the provisions of Sec.  1230.71, purchasers of feeder 
pigs or market hogs shall collect assessments from producers if an 
assessment is due and shall remit those assessments to the Board. 
Failure of the purchaser to collect such assessment from a producer 
shall not relieve the producer of the obligation to pay the assessment. 
If the purchaser fails to collect the assessment when an assessment is 
due pursuant to Sec.  1230.71, the producer (seller) shall remit the 
total amount of assessments due to the Board as set forth in Sec.  
1230.111.

[65 FR 7283, Feb. 14, 2000]



Sec.  1230.115  Submission of annual financial statements.

    State Pork Producer Associations, as defined in Sec.  1230.25, that 
receive distributions of assessments pursuant to Sec.  1230.72 and that 
receive less than $30,000 in assessments annually, may satisfy the 
requirements of Sec.  1230.74(b) by providing to the Board unaudited 
annual financial statements prepared by State association staff members 
or individuals who prepare annual financial statements, provided that 
two members of the State association attest to and certify such 
financial statements. Notwithstanding any provisions of the Order to the 
contrary, State associations that receive less than $30,000 in 
distributed assessments annually and submit unaudited annual financial 
statements to the Board shall be required to submit an annual financial 
statement audited by a certified public accountant at least once every 5 
years, or more frequently if deemed necessary by the Board or the 
Secretary. The Board may elect to conduct its own audit of the annual 
financial statements of State Pork Producer Associations that receive 
less than $2,000 in distributed assessments annually, every 5 years in 
lieu of the required financial statements.

[60 FR 33683, June 29, 1995]

                              Miscellaneous



Sec.  1230.120  OMB control number assigned pursuant to the Paperwork 
Reduction Act.

    The information collection and recordkeeping requirements contained 
in this part have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0851-0151.

Subpart C [Reserved]



 Subpart D--Procedures for Nominations and Elections of Pork Producers 
  and Nominations of Importers for Appointment to the Initial National 
                      Pork Producers Delegate Body



Sec.  1230.501-1230.512  [Reserved]



           Subpart E--Procedures for the Conduct of Referendum

    Source: 65 FR 43508, July 13, 2000, unless otherwise noted.

[[Page 203]]

                               Definitions



Sec.  1230.601  Act.

    The term Act means the Pork Promotion, Research, and Consumer 
Information Act of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec.  1230.602  Administrator, AMS.

    The term Administrator, AMS, means the Administrator of the 
Agricultural Marketing Service, or any officer or employee of the 
Department to whom there has heretofore been delegated or may hereafter 
be delegated the authority to act in the Administrator's stead.



Sec.  1230.603  Administrator, FSA.

    The term Administrator, FSA, means the Administrator, of the Farm 
Service Agency, or any officer or employee of the Department to whom 
there has heretofore been delegated or may hereafter be delegated the 
authority to act in the Administrator's stead.



Sec.  1230.604  Department.

    The term Department means the United States Department of 
Agriculture.



Sec.  1230.605  Farm Service Agency.

    The term Farm Service Agency also referred to as ``FSA'' means the 
Farm Service Agency of the Department.



Sec.  1230.606  Farm Service Agency County Committee.

    The term Farm Service Agency County Committee, also referred to as 
the FSA County Committee or COC, means the group of persons within a 
county elected to act as the Farm Service Agency County Committee.



Sec.  1230.607  Farm Service Agency County Executive Director.

    The term Farm Service Agency County Executive Director also referred 
to as the CED, means the person employed by the FSA County Committee to 
execute the policies of the FSA County Committee and be responsible for 
the day-to-day operations of the FSA county office or the person acting 
in such capacity.



Sec.  1230.608  Imported porcine animals, pork, and pork products.

    The term Imported porcine animals, pork, and pork products means 
those animals, pork, or pork products that are imported into the United 
States and subject to assessment under the harmonized tariff schedule 
numbers identified in Sec.  1230.110 of the regulations.



Sec.  1230.609  Importer.

    The term Importer means a person who imports porcine animals, pork, 
or pork products into the United States.



Sec.  1230.610  Order.

    The term Order means the Pork Promotion, Research, and Consumer 
Information Order.



Sec.  1230.611  Porcine animal.

    The term Porcine animal means a swine, that is raised:
    (a) As a feeder pig, that is, a young pig sold to another person to 
be finished over a period of more than 1 month for slaughtering;
    (b) For breeding purposes as seedstock and included in the breeding 
herd; and
    (c) As a market hog, slaughtered by the producer or sold to be 
slaughtered, usually within 1 month of such transfer.



Sec.  1230.612  Person.

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



Sec.  1230.613  Pork.

    The term Pork means the flesh of a porcine animal.



Sec.  1230.614  Pork product.

    The term Pork product means an edible product processed in whole or 
in part from pork.



Sec.  1230.615  Producer.

    The term Producer means a person who produces porcine animals in the 
United States for sale in commerce.

[[Page 204]]



Sec.  1230.616  Public notice.

    The term Public notice means information regarding a referendum that 
would be provided by the Secretary, such as press releases, newspapers, 
electronic media, FSA county newsletters, and the like. Such notice 
would contain the referendum date and location, registration and voting 
requirements, rules regarding absentee voting, and other pertinent 
information.



Sec.  1230.617  Referendum.

    The term Referendum means any referendum to be conducted by the 
Secretary pursuant to the Act whereby persons who have been producers 
and importers during a representative period would be given the 
opportunity to vote to determine whether producers and importers favor 
continuation of the Order.



Sec.  1230.618  Representative period.

    The term Representative period means the 12-consecutive months prior 
to the first day of absentee and importer voting in the referendum. The 
representative period for this referendum is August 18, 1999, through 
August 17, 2000.



Sec.  1230.619  Secretary.

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



Sec.  1230.620  State.

    The term State means each of the 50 States.



Sec.  1230.621  Voting period.

    The term Voting period means the 3-consecutive business day period 
for in-person voting.

                               Referendum



Sec.  1230.622  General.

    (a) A referendum to determine whether eligible pork producers and 
importers favor continuation of the Pork Checkoff Program will be 
conducted in accordance with this subpart.
    (b) The Pork Checkoff Program will be terminated only if a majority 
of producers and importers voting in the referendum favor such 
termination.
    (c) The referendum will be conducted at the county FSA offices for 
producers and at FSA headquarters office in Washington, DC, for 
importers.



Sec.  1230.623  Supervision of referendum.

    The Administrator, AMS, will be responsible for conducting the 
referendum in accordance with this subpart.



Sec.  1230.624  Eligibility.

    (a) Eligible producers and importers. Persons eligible to register 
and vote in the referendum include:
    (1) Individual Producers. Each individual that owns and sells at 
least one hog or pig during the representative period and does so in his 
or her own name is entitled to cast one ballot.
    (2) Producers who are a corporation or other entity. Each 
corporation or other entity that owns and sells at least one hog or pig 
during the representative period is entitled to cast one ballot. A group 
of individuals, such as members of a family, a partnership, owners of 
community property, or a corporation engaged in the production of hogs 
and pigs will be entitled to only one vote; provided, however, that any 
member of a group may register to vote as a producer if he or she sells 
at least one hog or pig in his or her own name.
    (3) Importers. Each importer who imports hogs, pigs, pork, or pork 
products during the representative period is entitled to cast one 
ballot. A group of individuals, such as members of a family, a 
partnership, or a corporation engaged in the importation of hogs, pigs, 
pork, or pork products will be entitled to only one vote; provided, 
however, that any member of a group may register to vote as a importer 
if he or she imports hogs, pigs, pork, or pork products in his or her 
own name.
    (b) Proxy registration and voting. Proxy registration and voting is 
not authorized, except that an officer or employee of a corporate 
producer or

[[Page 205]]

importer, or any guardian, administrator, executor, or trustee of a 
producer's or importer's estate, or an authorized representative of any 
eligible producer or importer (other than an individual producer or 
importer), such as a corporation or partnership, may register and cast a 
ballot on behalf of that entity. Any individual who registers to vote in 
the referendum on behalf of any eligible producer or importer 
corporation or other entity must certify that he or she is authorized to 
take such action.



Sec.  1230.625  Time and place of registration and voting.

    (a) Producers. The referendum shall be held for 3-consecutive days 
on September 19, 20, 21, 2000. Eligible producers shall register and 
vote on-site following the procedures in 1230.628. Producers shall 
register and vote during the normal business hours of each county FSA 
office or request absentee ballots from the county FSA offices by mail, 
telephone, or facsimile, or pick up an absentee ballot in-person. The 
absentee voting period shall be from August 18, 2000, through September 
21, 2000.
    (b) Importers. Importer voting shall take place during the same time 
period provided producers for in-person and absentee voting in the 
referendum. The referendum shall be conducted by mail ballot by the FSA 
headquarters office in Washington, DC, between August 18, 2000, through 
September 21, 2000.



Sec.  1230.626  Facilities for registering and voting.

    (a) Producers. Each county FSA office shall provide:
    (1) Adequate facilities and space to permit producers of hogs and 
pigs to register and to mark their ballots in secret;
    (2) A sealed box or other designated receptacle for registration 
forms and ballots that is kept under observation during office hours and 
secured at all times; and
    (3) Copies of the Order for review.
    (b) Absentee ballots. Each FSA county office shall provide each 
producer an absentee ballot package upon request. Producers can pick up 
an absentee ballot in-person or request it by telephone, mail, or 
facsimile. The FSA county office will provide absentee ballots by mail 
for all requests received by telephone, mail, or facsimile. The FSA 
county office shall record date of receipt of the ``Pork Referendum'' 
envelope containing the completed absentee ballot on the Absentee Voter 
Request List and place it unopened in a secure ballot box.
    (c) Importers. The FSA headquarters office in Washington, DC, will:
    (1) Mail ballot packages to eligible importers upon request;
    (2) Have a sealed box or other designated receptacle for 
registration forms and ballots that is kept under observation during 
office hours and secured at all times; and
    (3) Mail copies of the Order to importers if requested by mail, 
telephone, or facsimile. Importers can also pickup a ballot in-person.



Sec.  1230.627  Registration form and ballot.

    (a) Producers. (1) A ballot (Form LS-72) and combined registration 
and certification form (Form LS-72-2) will be used for voting in-person. 
The information required on the registration form includes name, 
address, and telephone number. Form LS-72-2 also contains the 
certification statement referenced in Sec.  1230.628. The ballot will 
require producers to check a ``yes'' or ``no.''
    (2) A combined registration and voting form (Form LS-73) will be 
used for absentee voting. The information required on this combined 
registration and voting form includes name, address, and telephone 
number. Form LS-73 also contains the certification statement referenced 
in Sec.  1230.628. The ballot will require producers to check ``yes'' or 
``no.''
    (b) Importers. A combined registration and ballot form (FormLS-76) 
will be used for importer voting. The information required on this 
combined registration and ballot form includes name, address, and 
telephone number. Form LS-76 also contains the certification statement 
referenced in Sec.  1230.629. The ballot will require importers to check 
``yes'' or ``no.''

[[Page 206]]



Sec.  1230.628  Registration and voting procedures for producers.

    (a) Registering and voting in-person. (1) Each eligible producer who 
wants to vote whether as an individual or as a representative of a 
corporation or other entity shall register during the 3-day in-person 
voting period at the county FSA office where FSA maintains and processes 
the individual producer's or corporation's or other entities' 
administrative farm records. A producer voting as an individual or as a 
representative of a corporation or other entity not participating in FSA 
programs, shall register and vote in the county FSA office serving the 
county where the individual producer or corporation or other entity owns 
hogs or pigs. An individual or an authorized representative of a 
corporation or other entity who owns hogs or pigs in more than one 
county shall register and vote in the FSA county office where the 
individual or corporation or other entity does most of their business. 
Producers shall be required to record on the In-Person Voter 
Registration List (Form LS-75) their name and address, and if 
applicable, the name and address of the corporation or other entity they 
represent before they can receive a registration form and ballot. To 
register, producers shall complete the in-person registration and 
certification form (Form LS-72-2) and certify that:
    (i) They or the corporation or other entity they represent were 
producers during the specified representative period; and
    (ii) The person voting on behalf of a corporation or other entity 
referred to in Sec.  1230.612 is authorized to do so.
    (2) Each eligible producer who has not voted by means of an absentee 
ballot may cast a ballot in-person at the location and time set forth in 
Sec.  1230.625 and on September 19, 20, 21, 2000. Eligible producers who 
record their names and addresses and, if applicable, the name and 
address of the corporation or other entity they are authorized to 
represent on the In-Person Voter Registration List (Form LS-75) will 
receive a combined registration and certification form printed on an 
envelope (Form LS-72-2) and a ballot (Form LS-72). Producers will enter 
the information requested on the combined registration and certification 
form/envelope (Form LS-72-2) as indicated above. Producers will then 
mark their ballots to indicate ``yes'' or ``no.'' Producers will place 
their completed ballots in an envelope marked ``Pork Ballot'' (Form LS-
72-1), seal and place it in the completed and signed registration form/
envelope marked ``Pork Referendum'' (Form LS-72-2), seal that envelope 
and personally place it in a box marked ``Ballot Box'' or other 
designated receptacle. Voting will be conducted on-site under the 
supervision of the county FSA County Executive Director (CED).
    (b) Absentee voting. (1) Eligible producers who are unable to vote 
in-person may request an absentee voting package consisting of a 
combined registration and absentee ballot form (Form LS-73) and two 
envelopes--one marked ``Pork Ballot'' (Form LS-72-1) and the other 
marked ``Pork Referendum'' (Form LS-73-1) by mail, telephone, facsimile, 
or by picking up one in-person from the county FSA office where FSA 
maintains and processes the producer's administrative farm records.
    (2) If a producer, whether requesting an absentee ballot as an 
individual or as an authorized representative of a corporation or other 
entity that does not participate in FSA programs, and therefore does not 
have administrative records at a county FSA office, he or she may 
request an absentee voting package by telephone, mail, facsimile, or 
pick it up in-person from the county FSA office serving the county where 
the individual or corporation or other entity owns hogs or pigs. An 
individual or authorized representative of a corporation or other 
entity, who owns hogs or pigs in more than one county can request an 
absentee ballot from the county FSA office where the producer or 
corporation or other entity does most of their business.
    (3) An absentee voting package will be mailed to producers by the 
FSA CED to the address provided by the prospective voter. Only one 
absentee registration form and absentee ballot

[[Page 207]]

will be provided to each eligible producer. The absentee ballots and 
registration forms may be requested during August 1, 2000, through 
September 18, 2000.
    (4) The county FSA office will enter on the Absentee Voter Request 
List (Form LS-74) the name and address of the individual or corporation 
or other entity requesting an absentee ballot and the date the forms 
were requested.
    (5) To register, eligible producers shall complete and sign the 
combined registration and certification form and absentee ballot (Form 
LS-73) and certify that:
    (i) They or the corporation or other entity they represent were 
producers during the specified representative period;
    (ii) If voting on behalf of a corporation or other entity referred 
to in Sec.  1230.612, they are authorized to do so.
    (6) A producer, after completing the absentee voter registration 
form and marking the ballot, shall remove the ballot portion of the 
combined registration and absentee ballot form (Form LS-73) and seal the 
completed ballot in a separate envelope marked ``Pork Ballot'' (Form LS-
72-1) and place the sealed ``Pork Ballot'' envelope in the mailing 
envelope marked ``Pork Referendum'' (Form LS-73-1) along with the signed 
registration form. Producers are required to print their name and 
address on the mailing envelope marked ``Pork Referendum'' (Form LS-73-
1), and mail or hand deliver it to the county FSA office from which the 
producer or corporation or other entity obtained the absentee voting 
package. Absentee ballots returned in-person must be received by close 
of business on the last day of the in-person voting period, which is 
September 21, 2000. Ballots received after that date will be counted as 
invalid ballots.
    (7) Absentee ballots returned by mail have to be postmarked with a 
date not later than the last day of the in-person voting period, which 
is September 21, 2000, and be received in the county FSA office by the 
close of business on the 5th business day after the last day of the in-
person voting period, which is September 28, 2000. Absentee ballots 
received after that date will be counted as invalid ballots. Upon 
receiving the ``Pork Referendum'' envelope (Form LS-73-1) containing the 
registration form and ballot, the county FSA CED will record the date 
the ``Pork Referendum'' envelope (Form LS-73-1) containing the absentee 
ballot was received in the FSA county office on the Absentee Voter 
Request List (Form LS-74) opposite the name of the producer voting 
absentee. The county FSA CED will place it, unopened, in a secure ballot 
box.



Sec.  1230.629  Registration and voting procedures for importers.

    (a) Individual importers, corporations, or other entities can obtain 
the registration and certification forms, ballots, and envelopes by mail 
from the following address: USDA, FSA, Operations Review and Analysis 
Staff, Attention: William A. Brown, P.O. Box 44366, Washington, DC 
20026-4366. Importers may pick up the voting materials in-person at 
USDA, FSA, Operations Review and Analysis Staff, Room 2741, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC. 
Importers may also request voting materials by facsimile or telephone. 
The facsimile number is 202/690-3354. The telephone number is 202/720-
6833.
    (b) When requesting a ballot, eligible importers will be required to 
submit a U.S. Customs Service Form 7501 showing that they paid the pork 
assessment during the representative period.
    (c) Upon receipt of a request and U.S. Customs Service Form 7501, 
the voting materials will be mailed to importers by the FSA headquarters 
office in Washington, DC, to the address provided by the importer or 
importer corporation or other entity. Only one mail ballot and 
registration form will be provided to each eligible importer. The forms 
must be requested during August 1, 2000, through September 21, 2000.
    (d) The FSA headquarters office in Washington, DC, will enter on the 
Importer Ballot Request List (Form LS-77) the name and address of the 
importer requesting a ballot and the date of the request.
    (e) To register, eligible importers will complete and sign the 
combined registration form and ballot (Form LS-76) and certify that:

[[Page 208]]

    (1) To the best of their knowledge and belief the information 
provided on the form is true and accurate;
    (2) If voting on behalf of an importer corporation or other entity 
referred to in Sec.  1230.612, they are authorized to do so.
    (f) Eligible importers, after completing the combined ballot and 
registration form, will remove the ballot portion of the combined 
registration and ballot form (Form LS-76) and seal the completed ballot 
in a separate envelope marked ``Pork Ballot'' (Form LS-72-1) and place 
the sealed ``Pork Ballot'' envelope in the mailing envelope marked 
``Pork Referendum'' (Form LS-73-1) along with the signed registration 
form. Importers, corporations, or other entities must legibly print 
their name and address on the mailing envelope marked ``Pork 
Referendum'' (Form LS-73-1), and mail the envelope to the FSA 
headquarters office at the following address: USDA, FSA, Operations 
Review and Analysis Staff, Attention: William A. Brown, Post Office Box 
44366, Washington, DC 20026-4366. Importers may hand deliver the ``Pork 
Referendum'' envelope to USDA, FSA, Operations Review and Analysis 
Staff, Room 2741, South Agriculture Building, 1400 Independence Avenue, 
SW., Washington, DC.
    (g) The ``Pork Referendum'' envelope (Form LS-73-1) containing the 
registration form and ballot has to be postmarked with a date not later 
than the last day of the in-person voting period, which is September 21, 
2000, and be received in the FSA headquarters office by the close of 
business on the 5th business day after the date of the last day of the 
in-person voting period, which is September 28, 2000. If delivered in-
person, it has to reach headquarters office not later than the last day 
of the in-person voting period. Ballots received after that date will be 
counted as invalid ballots. Upon receiving the ``Pork Referendum'' 
envelope (Form LS-73-1) containing the registration form and ballot, an 
FSA employee will record the date the ``Pork Referendum'' envelope 
containing the completed ballot was received in the FSA headquarters 
office in Washington, DC, on the Importer Ballot Request List (Form LS-
77) directly opposite the voting importer's name. The FSA employee will 
place the ``Pork Referendum'' envelope, unopened, in a secure ballot 
box.



Sec.  1230.630  List of registered voters.

    (a) Producers. The In-Person Voter Registration List (Form LS-75) 
and the Absentee Voter Request List (Form LS-74) will be available for 
inspection during the 3 days of the voting period and during the 7 
business days following the date of the last day of the voting period at 
the county FSA office. The lists will be posted during regular office 
hours in a conspicuous public location at the FSA county office. The 
Absentee and In-Person Voter Registration Lists will be updated and 
posted daily. The complete In-Person Voter Request List (Form LS-75) 
will be posted in the FSA county office on the 1st business day after 
the date of the last day of the voting period. The complete Absentee 
Voter Request List (Form LS-74) will be posted in the FSA county office 
on the 6th business day after the date of the last day of the voting 
period.
    (b) Importers. The Importer Ballot Request List (Form LS-77) will be 
maintained by the FSA headquarters office in Washington, DC, and not 
posted.



Sec.  1230.631  Challenge of votes.

    (a) Challenge period. During the dates of the 3-consecutive day 
voting period and the 7 business days following the voting period, the 
ballots of producers may be challenged at the FSA county office.
    (b) Who can challenge. Any person can challenge a producer's vote. 
Any person who wants to challenge shall do so in writing and shall 
include the full name of the individual or corporation or other entity 
being challenged. Each challenge of a producer vote must be made on a 
separate sheet of paper and each challenge must be signed by the 
challenger. The identity of the challenger will be kept confidential 
except as the Secretary may direct or as otherwise required by law.
    (c) Who can be challenged. Any producer having cast an in-person 
ballot or an absentee ballot whose name is

[[Page 209]]

posted on the In-Person Voter Registration List (Form LS-75) or the 
Absentee Voter Request List (Form LS-74) can be challenged. There is no 
challenge process for importers.
    (d) Notification of challenges. The FSA County Committee or its 
representative, acting on behalf the Administrator, AMS, will notify 
challenged producers as soon as practicable, but no later than 12 
business days after the date of the last day of the in-person voting 
period. FSA will notify all challenged persons that documentation such 
as sales documents, tax records, or other similar documents proving that 
the person owned and sold hogs or pigs during the representative period 
must be submitted or his or her vote will not be counted. The 
documentation must be provided to the FSA county offices within 5 
business days of notification and not later than 17 business days after 
the date of the last day of the voting period.
    (e) Determination of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will make a 
determination concerning the challenge based on documentation provided 
by the producer and will notify challenged producers as soon as 
practicable, but no later than 22 business days after the date of the 
last day of the in-person voting period of its decision.
    (f) Challenged ballot. A challenge to a ballot shall be deemed to 
have been resolved if the determination of the FSA County Committee or 
its representative, acting on behalf of the Administrator, AMS, is not 
appealed within the time allowed for appeal or there has been a 
determination by the Administrator, AMS, after an appeal.
    (g) Appeal. A person declared to be ineligible to register and vote 
by the FSA County Committee or its representative, acting on behalf of 
the Administrator, AMS, can file an appeal at the FSA county office 
within 5 business days after the date of receipt of the letter of 
notification of ineligibility, but not later than November 2, 2000. The 
FSA county office shall send a producer's appeal by facsimile to the 
Administrator, AMS, on the date it is filed at the FSA county office or 
as soon as practical thereafter.
    (h) An appeal will be determined by the Administrator, AMS, as soon 
as practical, but in all cases not later than the 45th business day 
after the date of the last day of the voting period. The Administrator, 
AMS, shall send her decision on a producer's appeal to the FSA county 
office where the producer was initially challenged. The FSA county 
office shall notify the challenged producer of the Administrator's, AMS, 
determination on his or her appeal. The Administrator's, AMS, 
determination on an appeal shall be final.

[65 FR 43508, July 13, 2000, as amended at 65 FR 62579, Oct. 19, 2000]



Sec.  1230.632  Receiving ballots.

    (a) Producers. A ballot shall be considered to be received on time 
if:
    (1) It was cast in-person in the county FSA office prior to the 
close of business on the date of the last day of the in-person voting 
period; or
    (2) It was cast as an absentee ballot, having a postmarked date not 
later than the last day of the in-person voting period and was received 
in the county FSA office not later than the close of business, 5 
business days after the last day of the in-person voting period.
    (b) Importers. A ballot shall be considered to be received on time 
if it had a postmarked date not later than the date of the last day of 
the in-person voting period and was received in the FSA headquarters 
office in Washington, DC, not later than the close of business, 5 
business days after the last day of the in-person voting period.



Sec.  1230.633  Canvassing ballots.

    (a) Producers. (1) Counting the ballots. Under the supervision of 
FSA CED, acting on behalf of the Administrator, AMS, the in-person 
registration and certification form envelopes (Form LS-72-2) and the 
absentee ``Pork Referendum'' envelopes (Form LS-73-1) containing the 
``Pork Ballot'' envelopes for producer voters will be checked against 
the In-Person Voter Registration List (Form LS-75) and the Absentee 
Voter Request List (FormLS-74), respectively, to determine properly 
registered voters. The ballots of producers voting in-person whose names 
are not on the In-Person Voter

[[Page 210]]

Registration List (Form LS-75), will be declared invalid. Likewise, the 
ballots of producers voting absentee whose names are not on the Absentee 
Voter Request List (Form LS-74) will be declared invalid. All ballots of 
challenged producer voters declared ineligible and invalid ballots will 
be kept separate from the other ballots and the envelopes containing 
these ballots will not be opened. The valid ballots will be counted on 
November 29, 2000, during regular business hours on the 46th business 
day after the last day of the in-person voting period. FSA county office 
employees will remove the sealed ``Pork Ballot'' envelopes (Form LS-72-
1) from the registration form envelopes and ``Pork Referendum'' 
envelopes (absentee voting) envelopes of all eligible producer voters 
and all challenged producer voters determined to be eligible. After 
removing all ``Pork Ballot'' envelopes, FSA county employees will 
shuffle the sealed ``Pork Ballot'' envelopes or otherwise mix them up so 
that ballots cannot be matched with producers' names. After shuffling 
the ``Pork Ballot'' envelopes, FSA county employees will open them and 
count the ballots. The ballots will be counted as follows:
    (i) Number of eligible producers casting valid ballots;
    (ii) Number of producers favoring continuation of the Pork Checkoff 
Program;
    (iii) Number of producers favoring termination of the Pork Checkoff 
Program;
    (iv) Number of challenged producer ballots deemed ineligible;
    (v) Number of invalid ballots; and
    (vi) Number of spoiled ballots.
    (2) Invalid ballots. Ballots will be declared invalid if a producer 
voting in-person has failed to print his or her name and address on the 
In-Person Voter Registration List (Form LS-75) or if an absentee voter's 
name and address is not recorded on the Absentee Voter Request List 
(Form LS-74), or the registration form or ballot was incomplete or 
incorrectly completed.
    (3) Spoiled ballots. Ballots will be considered spoiled if they are 
mutilated or marked in such a way that it cannot be determined whether 
the voter is voting ``yes'' or ``no.'' Spoiled ballots shall not be 
considered as approving or disapproving the Pork Checkoff Program, or as 
a ballot cast in the referendum.
    (4) Confidentiality. All ballots shall be confidential and the 
contents of the ballots not divulged except as the Secretary may direct. 
The public may witness the opening of the ballot box and the counting of 
the votes but may not interfere with the process.
    (b) Importers. (1) Counting the ballots. FSA headquarters personnel, 
acting on behalf of the Administrator, AMS, will check the registration 
forms and ballots for all importer voters against the Importer Ballot 
Request List (Form LS-77) to determine properly registered voters. The 
ballots of importers voting whose names are not recorded on the Importer 
Ballot Request List (Form LS-77), will be declared invalid. All ballots 
of importer voters declared invalid will be kept separate from the other 
ballots and the envelopes containing these ballots will not be opened. 
The valid ballots will be counted on November 29, 2000, during regular 
office hours on the 46th business day after the date of the last day of 
the in-person voting period. FSA headquarter office employees will 
remove the sealed ``Pork Ballot'' envelope (Form LS-72-1) from the 
``Pork Referendum'' envelopes (Form LS-73-1) of all eligible importer 
voters. After removing all ``Pork Ballot'' envelopes, FSA headquarter 
employees will shuffle the sealed ``Pork Ballot'' envelopes or otherwise 
mix them up so that ballots cannot be matched with importers' names. 
After shuffling the ``Pork Ballot'' envelopes, FSA headquarters 
employees will open the envelopes and count the ballots. The ballots 
will be counted as follows:
    (i) Number of eligible importers casting valid ballots;
    (ii) Number of importers favoring continuation of the Pork Checkoff 
Program;
    (iii) Number of importers favoring termination of the Pork Checkoff 
Program;
    (iv) Number of importer ballots deemed invalid; and
    (v) Number of spoiled ballots.
    (2) Invalid ballots. Ballots will be declared invalid if an importer 
voter's name was not recorded on the Importer Ballot Request List (Form 
LS-77), or

[[Page 211]]

the registration form or ballot was incomplete or incorrectly completed.
    (3) Spoiled ballots. Ballots will be considered spoiled if they were 
mutilated or marked in such a way that it cannot be determined whether 
the voter is voting ``yes'' or ``no.'' Spoiled ballots shall not be 
considered as a ballot cast in the referendum.
    (4) Confidentiality. All ballots shall be confidential and the 
contents of the ballots not divulged except as the Secretary may direct. 
The public can witness the opening of the ballot box and the counting of 
the votes but can not interfere with the process.



Sec.  1230.634  FSA county office report.

    The FSA county office will notify the FSA State office of the 
results of the referendum. Each FSA county office will transmit the 
results of the referendum in its county to the FSA State office. Such 
report will include the information listed in Sec.  1230.633. The 
results of the referendum in each county will be made available to the 
public, after the results of the referendum are announced by the 
Secretary. A copy of the report of results will be posted for 30 days in 
the FSA county office in a conspicuous place accessible to the public 
and a copy will be kept on file in the FSA county office for a period of 
at least 12 months after the referendum.



Sec.  1230.635  FSA State office report.

    Each FSA State office will transmit to the Administrator, FSA, a 
written summary of the results of the referendum received from all FSA 
county offices within the State. The summary shall include the 
information on the referendum results contained in the reports from all 
county offices within each State and be certified by the FSA State 
Executive Director. The FSA State office will maintain a copy of the 
summary where it will be available for public inspection for a period of 
not less than 12 months.



Sec.  1230.636  Results of the referendum.

    (a) The Administrator, FSA, will submit the combined results of the 
FSA State offices' results of the producers' vote and the FSA 
headquarters office results of the importers' vote to the Administrator, 
AMS. The Administrator, AMS, will prepare and submit to the Secretary a 
report of the results of the referendum. The results of the referendum 
will be announced by the Department in an official press release and 
published in the Federal Register. State reports on producer balloting, 
FSA headquarters office report on importer balloting, and related papers 
will be available for public inspection in the office of the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2627, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC.
    (b) If the Secretary deems it necessary, the report of producer 
voting results in any State or county or the report of importer voting 
results shall be reexamined and checked by such persons as may be 
designated by the Secretary.



Sec.  1230.637  Disposition of ballots and records.

    (a) Producer ballots and records. Each FSA CED will place in sealed 
containers marked with the identification of the referendum, the voter 
registration list, absentee voter request list, voted ballots, 
challenged registration forms/envelopes, challenged absentee voter 
registration forms, challenged ballots found to be ineligible, invalid 
ballots, spoiled ballots, and county summaries. Such records will be 
placed under lock in a safe place under the custody of the FSA CED for a 
period of not less than 12 months after the referendum. If no notice to 
the contrary is received from the Administrator, FSA, by the end of such 
time, the records shall be destroyed.
    (b) Importer ballots and records. The FSA headquarters office in 
Washington, DC, will deliver the importers' U.S. Customs Service Form 
7501s, the voter registration list, voted ballots, invalid ballots, 
spoiled ballots, and national summaries and records to the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2627, South 
Agriculture Building, 1400 Independence Avenue, SW., Washington, DC. A 
Marketing Programs Branch employee will place the ballots and records in 
sealed containers marked with the identification of the referendum. Such 
ballots and records

[[Page 212]]

will be placed under lock in a safe place under the custody of the 
Marketing Programs Branch for a period of not less than 12 months after 
the referendum. If no notice to the contrary is received from the 
Administrator, AMS, by the end of such time, the records shall be 
destroyed.



Sec.  1230.638  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart to govern the conduct of the referendum.



Sec.  1230.639  Additional absentee voter challenge period.

    (a) Absentee Voter Request List. The Absentee Voter Request List 
(Form LS-74) will be available for inspection during an additional 
challenge period of five business days (October 23, 2000-October 27, 
2000) at county FSA offices. The Absentee Voter Request List will be 
posted daily during regular office hours in a conspicuous public 
location at FSA county offices during the additional challenge period.
    (b) Who can challenge. Any person can challenge a producer's vote 
during the period provided in paragraph (a) of this section. Any person 
who wants to challenge shall do so in writing and shall include the full 
name of the individual or corporation or other entity being challenged. 
Each challenge of a producer vote must be made on a separate sheet of 
paper and each challenge must be signed by the challenger. The identity 
of the challenger will be kept confidential except as the Secretary may 
direct or as otherwise required by law.
    (c) Who can be challenged. Any person whose name is on the Absentee 
Voter Request List who was not subject to challenge during the September 
19, 2000, through October 2, 2000, challenge period may be challenged. 
Those producers whose names were listed on the Absentee Voter Request 
List and who were subject to challenge because the Absentee Voter 
Request List indicated they had returned their ballot are not subject to 
challenge during this additional 5-day period.
    (d) Notification of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will notify 
challenged producers as soon as practicable, but no later than the 2nd 
business day (October 31, 2000) after the last day of the additional 
challenge period. FSA county offices will notify all challenged persons 
that documentation such as sales documents, tax records, or other 
similar documents proving that the person owned and sold hogs or pigs 
during the representative period must be submitted or his or her vote 
will not be counted. The documentation must be provided to FSA county 
offices not later than November 7, 2000.
    (e) Determination of challenges. The FSA County Committee or its 
representative, acting on behalf of the Administrator, AMS, will make a 
determination concerning the challenge based on documentation provided 
by the producer and will notify challenged producers as soon as 
practicable but no later than November 9, 2000.
    (f) Challenged ballot. A challenge to a ballot shall be deemed to 
have been resolved if the determination of the FSA County Committee or 
its representative, acting on behalf of the Administrator, AMS, is not 
appealed within the time allowed for appeal or there has been a 
determination by the Administrator, AMS, after an appeal.
    (g) Appeal. A person declared to be ineligible to register and vote 
by the FSA County Committee or its representative, acting on behalf of 
the Administrator, AMS, can file an appeal at the FSA county office not 
later than November 17, 2000. The FSA county office shall send a 
producer's appeal by facsimile to the Administrator, AMS, on the date it 
is filed at the FSA office or as soon as practical thereafter.
    (h) Determination of appeals. An appeal will be determined by the 
Administrator, AMS, as soon as practical, but in all cases not later 
than the 45th business day (November 28, 2000) after the date of the 
last day of the voting period. The Administrator, AMS, shall send her 
decision on a producer's appeal to the FSA county office where the 
producer was initially challenged. The FSA county office shall notify 
the challenged producer of the Administrator's, AMS, determination on 
his or her

[[Page 213]]

appeal. The Administrator's, AMS, determination on an appeal shall be 
final.

[65 FR 62579, Oct. 19, 2000]



PART 1240--HONEY RESEARCH, PROMOTION, AND CONSUMER INFORMATION--Table 
of Contents




                               Definitions

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

Sec.
1240.1 Act.
1240.2 Board.
1240.3 Committee.
1240.4 Consumer education.
1240.5 Department or USDA.
1240.6 Exporter.
1240.7 Fiscal period and marketing year.
1240.8 Handle.
1240.9 Handler.
1240.10 Honey.
1240.11 Honey production.
1240.12 Honey products.
1240.13 Importer.
1240.14 Industry information.
1240.15 Marketing.
1240.16 National honey marketing cooperative.
1240.17 Part and subpart.
1240.18 Person.
1240.19 Plans and projects.
1240.20 Producer.
1240.21 Producer-packer.
1240.22 Promotion.
1240.23 Qualified national organization representing handler interests.
1240.24 Qualified national organization representing importer interests.
1240.25 Research.
1240.26 Secretary.
1240.27 State.
1240.28 State association.

                               Honey Board

1240.30 Establishment and membership.
1240.31 Term of office.
1240.32 Nominations.
1240.33 Board reconstitution.
1240.34 Vacancies.
1240.35 Procedure.
1240.36 Attendance.
1240.37 Powers.
1240.38 Duties.

    Research, Promotion, Consumer Education, and Industry Information

1240.39 Research, promotion, consumer education, and industry 
          information.

                        Expenses and Assessments

1240.40 Budget and expenses.
1240.41 Assessments.
1240.42 Exemption from assessment.
1240.43 Operating reserve.
1240.44 Voluntary quality assurance program.

                       Reports, Books, and Records

1240.50 Reports.
1240.51 Books and records.
1240.52 Confidential treatment.

                              Miscellaneous

1240.60 Influencing governmental action.
1240.61 Right of the Secretary.
1240.62 Suspension or termination.
1240.63 Proceedings after termination.
1240.64 Effect of termination or amendment.
1240.65 Personal liability.
1240.66 Separability.
1240.67 Patents, copyrights, inventions, product formulations, and 
          publications.

                Subpart B--General Rules and Regulations

1240.100 Terms defined.
1240.105 Definitions.
1240.106 Communications.
1240.107 Policy and objective.
1240.108 Contracts.
1240.109 Procedure.
1240.110 U.S. Department of Agriculture costs.
1240.111 First handler and producer-packer.
1240.113 Importer.
1240.114 Exemption procedures.
1240.115 Levy of assessments.
1240.116 Payment of assessments.
1240.118 Reports of disposition of exempted honey.
1240.119 Reporting period and reports.
1240.120 Retention period for records.
1240.121 Availability of records.
1240.122 Confidential books, records, and reports.
1240.123 Right of the Secretary.
1240.124 Personal liability.
1240.125 OMB control numbers.

                    Subpart C--Referendum Procedures

1240.200 General.
1240.201 Definitions.
1240.202 Voting.
1240.203 Instructions.
1240.204 Subagents.
1240.205 Ballots.
1240.206 Referendum report.
1240.207 Confidential information.

    Authority: 7 U.S.C. 4601-4613; 7 U.S.C. 7401.

    Source: 51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, 
unless otherwise noted.

[[Page 214]]

                               Definitions



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



Sec.  1240.1  Act.

    Act means the Honey Research, Promotion, and Consumer Information 
Act (Pub. L. 98-590) and any amendments thereto.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]
Sec.  1240.2 Board.
    Board or National Honey Board means Honey Board, the administrative 
body established pursuant to Sec.  1240.30.

[66 FR 21829, May 1, 2001]



Sec.  1240.3  Committee.

    Committee means the National Honey Nominations Committee established 
pursuant to Sec.  1240.32.

[66 FR 21829, May 1, 2001]



Sec.  1240.4  Consumer education.

    Consumer education means the act of providing information to the 
public on the usage and care of honey and honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.5  Department or USDA.

    Department or USDA means the United States Department of 
Agriculture.

[66 FR 21829, May 1, 2001]



Sec.  1240.6  Exporter.

    Exporter means any person who exports honey or honey products from 
the United States.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.7  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending on 
December 31 or such other consecutive 12-month period as shall be 
recommended by the Board and approved by the Secretary.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991, and further redesignated at 66 FR 21829, May 
1, 2001]



Sec.  1240.8  Handle.

    Handle means to process, package, sell, transport, purchase or in 
any other way place honey or honey products, or cause them to be placed, 
in the current of commerce. This term shall include selling unprocessed 
honey that will be consumed without further processing or packaging. 
This term shall not include the transportation of unprocessed honey by a 
producer to a handler or transportation by a commercial carrier of 
honey, whether processed or unprocessed, for the account of the handler 
or producer. This term shall not include the purchase of honey or a 
honey product by a consumer or other end-user of the honey or honey 
product.

[66 FR 21829, May 1, 2001]



Sec.  1240.9  Handler.

    Handler means any person who handles honey or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.10  Honey.

    Honey means the nectar and saccharine exudations of plants which are 
gathered, modified, and stored in the comb by honey bees, including comb 
honey.

[66 FR 21829, May 1, 2001]



Sec.  1240.11  Honey production.

    Honey production means all beekeeping operations related to managing 
honey bee colonies to produce honey, harvesting honey from the colonies, 
extracting honey from the honeycombs, and preparing honey for sale and 
further processing.

[66 FR 21829, May 1, 2001]

[[Page 215]]



Sec.  1240.12  Honey products.

    Honey products means products wherein honey is a principal 
ingredient.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.13  Importer.

    Importer means any person who imports honey or honey products into 
the United States as principal or as an agent, broker, or consignee for 
any person who produces honey or honey products outside of the United 
States for sale in the United States, and who is listed in the import 
records as the importer of record for such honey or honey products.

[66 FR 21829, May 1, 2001]



Sec.  1240.14  Industry information.

    Industry information means information or a program that will lead 
to the development of new domestic and foreign markets, new marketing 
strategies, or increased efficiency for the honey industry, or an 
activity to enhance the image of honey and honey products and of the 
honey industry.

[66 FR 21830, May 1, 2001]



Sec.  1240.15  Marketing.

    Marketing means the sale or other disposition in commerce of honey 
or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec.  1240.16  National honey marketing cooperative.

    National honey marketing cooperative means a cooperative that 
markets its products in at least two of the following four regions of 
the United States, as determined by the Secretary:
    (a) The Atlantic Coast, including the District of Columbia and the 
Commonwealth of Puerto Rico;
    (b) The Mideast;
    (c) The Midwest; and
    (d) The Pacific, including the states of Alaska and Hawaii.

[66 FR 21830, May 1, 2001]



Sec.  1240.17  Part and subpart.

    Part means the Honey Research, Promotion, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder, and the order shall be a ``subpart'' of such part.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991, and further redesignated at 66 FR 21829, May 
1, 2001]



Sec.  1240.18  Person.

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

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.19  Plans and projects.

    Plans and projects means those research, promotion, industry 
information, and consumer education plans, studies, or projects 
established pursuant to Sec. Sec.  1240.38 and 1240.39.

[66 FR 21830, May 1, 2001]



Sec.  1240.20  Producer.

    Producer means any person who produces honey in any State for sale 
in commerce.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.21  Producer-packer.

    Producer-packer means any person who is both a producer and handler 
of honey or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.22  Promotion.

    Promotion means any action, including paid advertising and public 
relations, to present a favorable image for honey or honey products to 
the public with the express intent of improving

[[Page 216]]

the competitive position and stimulating sales of honey or honey 
products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991, and further redesignated at 66 FR 21829, May 
1, 2001]



Sec.  1240.23  Qualified national organization representing handler interests.

    Qualified national organization representing handler interests means 
an organization that the Secretary certifies as being eligible to 
recommend nominations to the Committee for handler and alternate handler 
members of the Board under Sec.  1240.32.

[66 FR 21830, May 1, 2001]



Sec.  1240.24  Qualified national organization representing importer interests.

    Qualified national organization representing importer interests 
means an organization that the Secretary certifies as being eligible to 
recommend nominations to the Committee for importer and alternate 
importer members of the Board under Sec.  1240.32.

[66 FR 21830, May 1, 2001]



Sec.  1240.25  Research.

    Research means any type of systematic study or investigation, 
including studies testing the effectiveness of market development and 
promotion efforts, and/or the evaluation of any study or investigation 
designed to advance the image, desirability, usage, marketability, 
production, or quality of honey or honey products. Such term shall also 
include studies on bees to advance the cost effectiveness, 
competitiveness, efficiency, pest and disease control, and other 
management aspects of beekeeping, honey production, and honey bees.

[66 FR 21830, May 1, 2001]



Sec.  1240.26  Secretary.

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

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.27  State.

    State means any of the fifty States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991, and further redesignated at 66 FR 21829, May 
1, 2001]



Sec.  1240.28  State association.

    State association or association means that organization of 
beekeepers in a State which is generally recognized as representing the 
beekeepers of that State.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]

                               Honey Board



Sec.  1240.30  Establishment and membership.

    A Honey Board is established to administer the terms and provisions 
of this part. The Board shall consist of twelve (12) members, each of 
whom shall have an alternate. Seven members and seven alternates shall 
be honey producers; two members and two alternates shall be honey 
handlers; two members and two alternates shall be honey importers; and 
one member and one alternate shall be an officer, director, or employee 
of a national honey marketing cooperative. The Board shall be appointed 
by the Secretary from nominations submitted by the Committee, pursuant 
to Sec.  1240.32. Notwithstanding any other provision of this part, at 
least 50 percent of the members of the Board shall be honey producers.

[66 FR 21830, May 1, 2001]



Sec.  1240.31  Term of office.

    The members of the Board and their alternates shall serve for terms 
of three years, except that terms may be staggered periodically as 
recommended by the Board and as determined by the

[[Page 217]]

Secretary or as determined by the Secretary alone. No member or 
alternate shall serve more than two consecutive three-year terms. The 
term of office shall begin on April 1. Each Board member and alternate 
member shall continue to serve until the member's or alternate's 
successor meets all qualifications and is appointed by the Secretary.

[66 FR 21830, May 1, 2001]



Sec.  1240.32  Nominations.

    All nominations to the Board authorized under Sec.  1240.30 herein 
shall be made in the following manner.
    (a) Establishment of National Honey Nominations Committee.
    (1) There is established a National Honey Nominations Committee, 
which shall consist of not more than one member from each State, 
appointed by the Secretary from nominations submitted by each State 
beekeeper association. Wherever there is more than one eligible 
association within a State, the Secretary shall designate the 
association most representative of the honey producers, handlers, and 
importers not exempt under Sec.  1240.42 (a) and (b) to make nominations 
for that State.
    (2) If a State Association does not submit a nomination for the 
Committee, the Secretary may select a member of the honey industry from 
that State to represent that State on the Committee. However, if a State 
which is not one of the top twenty honey producing States (as determined 
by the Secretary) does not submit a nomination, such State shall not be 
represented on the Committee.
    (3) Members of the Committee shall serve for three-year terms, 
except that the term of appointments to the Committee may be staggered 
periodically, as determined by the Secretary. No member shall serve more 
than two consecutive three-year terms. The term of office shall begin on 
July 1.
    (4) The Committee shall select its Chairperson by a majority vote.
    (5) The members of the Committee shall serve without compensation, 
but shall be reimbursed for necessary and reasonable expenses incurred 
in performing their duties as members of the Committee and approved by 
the Board. Such expenses shall be paid from funds collected by the Board 
pursuant to Sec.  1240.41.
    (b) Nominations to the Board.
    (1) The Committee shall nominate the members and alternate members 
of the Board and submit such nominations promptly to the Secretary for 
approval.
    (2) The Committee shall meet annually to make such nominations, or, 
at the determination of the Chairperson, the Committee may conduct its 
business by mail ballot in lieu of an annual meeting.
    (3) A majority of the Committee shall constitute a quorum for voting 
at an annual meeting. In the event of a mail ballot, votes must be 
received from a majority of the Committee to constitute a quorum.
    (4) At least 50 percent of the members from the twenty leading 
honey-producing states must vote in any nomination of members to the 
Board.
    (5) For the purpose of nominating producer members to the Board, the 
Secretary shall establish seven regions on the basis of the production 
of honey. For the purpose of facilitating initial nominations to the 
Honey Board, the following regions shall be the initial regions:

Region 1: Washington, Oregon, Idaho, California, Nevada, Utah, Alaska, 
and Hawaii.
Region 2: Montana, Wyoming, Nebraska, Kansas, Colorado, Arizona, and New 
Mexico.
Region 3: North Dakota and South Dakota.
Region 4: Minnesota, Iowa, Wisconsin, and Michigan.
Region 5: Texas, Oklahoma, Missouri, Arkansas, Tennessee, Louisiana, 
Mississippi, and Alabama.
Region 6: Florida, Georgia, and Puerto Rico.
Region 7: Illinois, Indiana, Ohio, Kentucky, Virginia, North Carolina, 
South Carolina, West Virginia, Maryland, District of Columbia, Delaware, 
New Jersey, New York, Pennsylvania, Connecticut, Rhode Island, 
Massachusetts, New Hampshire, Vermont, and Maine.

    (6) In nominating producer members to the Board, no producer-packer 
who, during any three of the preceding five years, purchased for resale 
more honey than the producer-packer produced shall be eligible for 
nomination or appointment to the Board as a producer or as an alternate 
to a producer.

[[Page 218]]

    (7) In nominating importer members to the Board, no importer who, 
during any three of the preceding five years, did not receive at least 
75 percent of the gross income generated by the sale of honey and honey 
products from the sale of imported honey and honey products shall be 
eligible for nomination or appointment to the Board as an importer or as 
an alternate to an importer.
    (8) Six months before the new Board term begins, the Committee shall 
submit to the Secretary nominations for positions on the Board. The 
number of nominations will directly correspond to the number of 
producer, handler, importer, and cooperative member positions due to 
become vacant. Selection of nominees by the Committee will be pursuant 
to the following:
    (i) Nominations for producer members and alternate producer members 
will be from the regions in which one or more vacancies will occur;
    (ii) Nominations for handler members and alternate handler members 
will be based on recommendations made by qualified national 
organizations representing handler interests, or, if the Secretary 
determines that there is not a qualified national organization 
representing handler interests, by individual handlers who have paid 
assessments to the Board on honey or honey products handled;
    (iii) Nominations for importer members and alternate importer 
members will be based on recommendations made by qualified national 
organizations representing importer interests, or, if the Secretary 
determines that there is not a qualified national organization 
representing importer interests, by individual importers who have paid 
assessments to the Board on imported honey or honey products; and
    (iv) Nominations for a member and alternate member who are officers, 
directors, or employees of national honey marketing cooperatives will be 
based on recommendations made by qualified national honey marketing 
cooperatives.
    (9) Qualified national organization representing handler interests. 
To be certified by the Secretary as a qualified national organization 
representing handler interests, an association or organization must meet 
the following criteria, as evidenced in a factual report submitted by 
the association or organization to the Secretary:
    (i) The organization's membership is comprised primarily of honey 
handlers;
    (ii) The organization represents a substantial number of handlers 
who handle a substantial volume of honey in at least 20 states;
    (iii) The organization has a history of stability and permanency;
    (iv) A primary or overriding purpose of the organization is to 
promote the economic welfare of honey handlers;
    (v) A portion of the operating funds of the organization are derived 
from handlers; and
    (vi) The organization demonstrates the ability and willingness to 
further the purposes of the Act.
    (10) Qualified national organization representing importer 
interests. To be certified as a qualified national organization 
representing importer interests, an association or organization must 
meet the following criteria, as evidenced in a factual report submitted 
by the association or organization to the Secretary:
    (i) The organization's total paid membership is comprised of a 
significant number of importers or the organization's total paid 
membership represents at least a majority of the volume of honey 
imported into the United States;
    (ii) The organization has a history of stability and permanency;
    (iii) A primary or overriding purpose of the organization is to 
promote the economic welfare of honey importers;
    (iv) Substantial geographic territory is covered by the active 
membership of the organization;
    (v) A portion of the operating funds of the organization are derived 
from importers; and
    (vi) The organization demonstrates the ability and willingness to 
further the purposes of the Act.
    (11) As a condition of certification by the Secretary as a qualified 
national organization representing handler or importer interests, an 
organization shall agree to:
    (i) Notify handlers and importers who are not members of the 
organization of Board nomination opportunities for

[[Page 219]]

which the organization is certified to make recommendations to the 
Committee; and
    (ii) Consider the nomination of handlers and importers who are not 
members when making the nominations of the organization to the 
Committee, if nonmembers indicate an interest in serving on the Board.
    (12) A certification determination by the Secretary of a qualified 
organization representing handler or importer interests shall be final.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991; 66 FR 21830, May 1, 2001]



Sec.  1240.33  Board reconstitution.

    (a) Every five years, the Board shall review the geographic 
distribution of the quantities of domestically produced honey assessed 
under this subpart and the changes in the annual average percentage of 
assessments owed by importers under this subpart relative to assessments 
owed by producers of domestic honey. The Board shall conduct the initial 
review required by this paragraph prior to the first continuance 
referendum conducted after May 31, 2001.
    (b)(1) If warranted as a result of this review, the Board shall 
recommend for the Secretary's approval:
    (i) Changes in the regional representation of honey producers; and/
or
    (ii) The addition of Board members.
    (2) If such allocations are necessary to reflect changes in the 
proportion of domestic and imported honey assessed under this subpart or 
the source of assessments on imported honey or honey products, the Board 
may not recommend the addition of members pursuant to paragraph 
(b)(1)(ii) of this section unless the proportion of assessments owed by 
importers compared with the proportion of assessments owed on domestic 
honey by producers changed by more than 6 percent from the base period 
proportion determined in accordance with paragraph (d) of this section.
    (c) Except as provided in paragraph (d) of this section, 
recommendations made under paragraph (b) of this section shall be based 
on the 5-year average annual assessments, excluding the 2 years 
containing the highest and lowest disparity between the proportion of 
assessments owed from imported and domestic honey or honey products, 
determined pursuant to the review that is conducted under paragraph (a) 
of this section.
    (d) The base period proportions for determining the magnitude of 
change under paragraph (c) of this section shall be the proportions 
determined during the prior review conducted under this section. In the 
case of the initial review, the base period proportions shall be the 
proportions determined by the Board for fiscal period 1996.
    (e) Notwithstanding any other provision of this section, at least 50 
percent of the members of the Board shall be honey producers.
    (f) Any such reallocation or addition of members shall be made at 
least six months prior to the date on which terms of office of the Board 
begin each year and shall become effective at least 30 days prior to 
such date.

[66 FR 21831, May 1, 2001]



Sec.  1240.34  Vacancies.

    (a) In the event any member of the Board ceases to be a member of 
the category of members from which the member was appointed to the 
Board, such position shall automatically become vacant: Provided, That 
if, as a result of Board reconstitution pursuant to Sec.  1240.33, a 
producer member or alternate is no longer from the region from which 
such person was appointed, the affected member and/or alternate may 
serve out the term for which such person was appointed, or if a member, 
whose position is based on the member's status as an importer is subject 
to reallocation by the Board, the affected member and/or alternate may 
serve out the term for which such person was appointed.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that the member be removed from office. If the Secretary finds 
the recommendation of the Board shows adequate cause, the Secretary 
shall remove such member from office.

[[Page 220]]

    (c) Should any member position become vacant, the alternate of that 
member shall automatically assume the position of said member. At its 
next meeting, the Committee shall nominate a replacement for said 
alternate. Should the positions of both a member and such member's 
alternate become vacant, successors for the unexpired terms of such 
member and alternate shall be nominated and appointed in the manner 
specified in Sec. Sec.  1240.30 and 1240.32, except that said nomination 
and replacement shall not be required if said unexpired terms are less 
than six months.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991; 66 FR 21831, May 1, 2001]



Sec.  1240.35  Procedure.

    (a) A majority of members, of which at least 50 percent are 
producers, including alternates acting in place of members of the Board, 
shall constitute a quorum: Provided, That such alternates shall serve 
only whenever the member is absent from a meeting or is disqualified. 
Any action of the Board shall require the concurring votes of a majority 
of those present and voting. At assembled meetings, all votes shall be 
cast in person.
    (b) In matters of an emergency nature when there is not enough time 
to call an assembled meeting of the Board, the Board may act upon the 
concurring votes of a majority of its members by mail, telephone, 
telegraph, or by other means of communication: Provided, That each 
proposition is explained accurately, fully, and substantially 
identically to each member. All telephone votes shall be promptly 
confirmed in writing and recorded in the Board minutes.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
66 FR 21832, May 1, 2001]



Sec.  1240.36  Attendance.

    Members of the Board and the members of any special panels shall be 
reimbursed for reasonable out-of-pocket expenses incurred when 
performing Board business. The Board shall have the authority to request 
the attendance of alternates of any or all meetings, notwithstanding the 
expected or actual presence of the respective members.



Sec.  1240.37  Powers.

    The Board shall have the following powers subject to Sec.  1240.61:
    (a) To administer this subpart in accordance with its terms and 
provisions of the Act;
    (b) To make rules and regulations to effectuate the terms and 
conditions of this subpart;
    (c) To require its employees to receive, investigate, and report to 
the Secretary complaints of violations of this part; and
    (d) To recommend to the Secretary amendments to this part.



Sec.  1240.38  Duties.

    The Board shall have, among other things, the following duties:
    (a) To meet and organize and to select from among its members a 
chairperson and such other officers as may be necessary; to select 
committees and subcommittees from its membership and consultants; to 
adopt such rules, regulations, and by-laws for the conduct of its 
business as it may deem advisable.
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) To prepare and submit to the Secretary for approval 60 days in 
advance of the beginning of a fiscal period, a budget of its anticipated 
expenses in the administration of this part including the probable costs 
of all programs and plans and to recommend a rate of assessment with 
respect thereto;
    (d) To investigate violations of this part and report the results of 
such investigations to the Secretary for appropriate action to enforce 
the provisions of this part;
    (e) To develop programs and plans and to enter into contracts or 
agreements with the approval of the Secretary for the development and 
carrying out of programs and plans of research, promotion, advertising, 
consumer education, or industry information and the payment of the costs 
thereof with funds collected pursuant to this part;

[[Page 221]]

    (f) To maintain minutes, books, and records and prepare and submit 
to the Secretary such reports from time to time as may be required for 
appropriate accounting with respect to the receipt and disbursement of 
funds entrusted to it;
    (g) To periodically prepare and make public and to make available to 
producers, handlers, producer-packers, and importers, reports of its 
activities carried out and, at least once each fiscal period, to make 
public an accounting of funds received and expended;
    (h) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and to submit a copy of each 
audit to the Secretary;
    (i) To give to the Secretary the same notice of meetings of the 
Board and subcommittees as is given to members in order that 
representatives of the Secretary may attend such meetings;
    (j) To submit to the Secretary such information pertaining to this 
subpart as the Secretary may request;
    (k) To notify honey producers, producer-packers, handlers, and 
importers of all Board meetings through press releases or other means;
    (l) To appoint and convene, from time to time, working committees 
which may include producers, handlers, producer-packers, importers, 
exporters, members of wholesale or retail outlets for honey, or other 
members of the public to assist in the development of research, 
promotion, advertising, consumer education, and industry information 
programs for honey; and
    (m) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of plans or activities to effectuate the declared purpose of 
the Act.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991; 66 FR 21832, May 1, 2001]

    Research, Promotion, Consumer Education, and Industry Information



Sec.  1240.39  Research, promotion, consumer education, and industry information.

    (a) Scope of activities. The Board shall develop and submit to the 
Secretary for approval any plans, programs, or projects authorized in 
this section. Such plans, programs, and projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate plans, programs, or projects for consumer education, 
industry information, advertising, and promotion of honey and honey 
products designed to strengthen the position of the honey industry in 
the marketplace and to maintain, develop, and expand markets for honey 
and honey products;
    (2) The establishment and conduct of marketing research and 
development plans to the end that the acquisition of knowledge 
pertaining to honey and honey products or their consumption and use may 
be encouraged or expanded, or to the end that the marketing and 
utilization of honey and honey products may be encouraged, expanded, 
improved, or made more efficient: Provided, That supply management 
programs or other programs that would otherwise limit the right of the 
individual honey producer to produce honey shall not be conducted under, 
or as a part of, this subpart;
    (3) The development and expansion of honey and honey product sales 
in foreign markets;
    (4) A prohibition on advertising or other promotion programs that 
make any false or unwarranted claims on behalf of honey or its products 
or false or unwarranted statements with respect to the attributes or use 
of any competing product;
    (5) The sponsorship of research designed to advance the cost-
effectiveness, competitiveness, efficiency, pest and disease control, 
and other management aspects of beekeeping, honey production, and honey 
bees;
    (6) The conduct of activities which may lead to the development of 
new markets or marketing strategies for honey or honey products. In 
addition, the Board may conduct activities designed to increase the 
efficiency of the honey industry or activities to enhance the image of 
honey and honey products and the honey industry;
    (7) Periodic evaluation by the Board of each plan, program, or 
project authorized under this part to insure that each plan, program, or 
project contributes to an effective and coordinated

[[Page 222]]

program of research, promotion, consumer education, and industry 
information and submit such evaluation to the Secretary. If the Board or 
the Secretary finds that a plan, program, or project does not further 
the purposes of the Act, then the Board shall terminate such plan, 
program, or project; and
    (8) The Board to enter into contracts or make agreements for the 
development and carrying out of research, promotion, consumer education, 
and industry information programs, and pay for the costs of such 
contracts or agreements with funds received by the Board.
    (b) Independent evaluation. In addition to any evaluation that may 
be carried out pursuant to paragraph (a)(7) of this section, the Board 
shall, not less often than every five years, authorize and fund, from 
funds otherwise available to the Board, an independent evaluation of the 
effectiveness of this subpart and other plans, programs, and projects 
conducted by the Board pursuant to the Act. The Board shall submit to 
the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.

[66 FR 21832, May 1, 2001]

                        Expenses and Assessments



Sec.  1240.40  Budget and expenses.

    (a) Sixty days in advance of the beginning of each fiscal period, or 
as may be necessary thereafter, the Board shall prepare and recommend a 
budget on a fiscal period basis of its anticipated expenses and 
disbursements in the administration of this subpart, including expenses 
of the Committee and probable costs of research, promotion, consumer 
education, and industry information.
    (b) The Board is authorized to incur expenses for: research, 
promotion, consumer education, and industry information; such other 
expenses for the administration, maintenance, and functioning of the 
Board and the Committee as may be authorized by the Secretary; any 
operating reserve established pursuant to Sec.  1240.43; and those 
administrative costs incurred by the Department specified in paragraph 
(d) of this section. The funds to cover such expenses shall be paid from 
assessments collected pursuant to Sec.  1240.41, donations from any 
person not subject to assessments under this subpart, and other funds 
available to the Board including those collected pursuant to Sec.  
1240.67 and subject to the limitationscontained in that section.
    (c) The Board shall reimburse the Department from assessments for 
administrative costs incurred by the Department with respect to this 
order after its promulgation. The Department shall also be reimbursed 
for administrative expenses incurred by it for the conduct of referenda.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
66 FR 21832, May 1, 2001]



Sec.  1240.41  Assessments.

    (a) Domestic honey and honey products. The assessment rate on honey 
produced in the United States and handled shall be 1 cent per pound of 
honey produced.
    (b) Imported honey and honey products. The assessment rate on honey 
or honey products imported into the United States shall be 1 cent per 
pound of honey or honey products imported. The importer of imported 
honey and honey products shall pay the assessment to the Board through 
the U.S. Customs Service at the time of entry of such honey and honey 
products into the United States. Should the U.S. Customs Service fail to 
collect an assessment from an importer, the importer shall be 
responsible for the payment of the assessment to the Board.
    (c) General. (1) Except as provided in Sec.  1240.42 and in 
paragraphs (c)(2) and (e) of this section, the first handler shall be 
responsible for the collection of such assessment from the producer and 
payment thereof to the Board. The first handler shall maintain separate 
records for each producer's honey handled, including honey produced by 
said handler.
    (2) Producer-packers shall pay to the Board the assessment on all 
honey or honey products for which they act as first handler, in addition 
to the assessment owed on honey they produce.
    (3) Should a first handler fail to collect an assessment from a 
producer, the producer shall be responsible for

[[Page 223]]

the payment of the assessment to the Board.
    (4) Assessments shall be paid to the Board at such time and in such 
manner as the Board, with the Secretary's approval, directs pursuant to 
this part. Such regulations may provide for different handler, importer, 
producer, or producer-packer payment schedules so as to recognize 
differences in marketing or purchasing practices and procedures.
    (d) Late payment. (1) There shall be a late-payment charge imposed 
on any importer, handler, or producer-packer who fails to remit to the 
Board the total amount for which any such importer, producer, or 
producer-packer is liable on or before the payment due date established 
by the Board. The amount of the late-payment charge shall be set by the 
Board subject to approval by the Secretary.
    (2) There shall also be imposed on any importer, handler, or 
producer-packer subject to a late-payment charge, an additional charge 
in the form of interest on the outstanding portion of any amount for 
which the importer, handler, or producer-packer is liable. The rate of 
interest shall be prescribed in regulations issued by the Secretary.
    (3) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (e) Honey under loan. Whenever a loan is made on honey under an USDA 
loan program, the Secretary shall provide that the assessment be 
deducted from the proceeds of the loan or the loan deficiency payment, 
if applicable, and that the amount of such assessment shall be forwarded 
to the Board, except that the assessment shall not be deducted by the 
Secretary in the case of a honey marketing cooperative approved by the 
Department's Commodity Credit Corporation that deducts the assessment 
from its member producers. As soon as practicable after the assessment 
is deducted from the loan funds or loan deficiency payment, the 
Secretary shall provide the producer with proof of payment of the 
assessment.
    (f) Advance payment. The Board is authorized to accept advance 
payment of assessments by handlers, importers, or producer-packers that 
shall be credited toward any amount for which the handlers, importers, 
or producer-packers may become liable. The Board is not obligated to pay 
interest on any advance payment.

[66 FR 21833, May 1, 2001]



Sec.  1240.42  Exemption from assessment.

    (a) A producer who produces less than 6,000 pounds of honey per 
year, a producer-packer who produces and handles less than 6,000 pounds 
of honey or honey products per year, or an importer who imports less 
than 6,000 pounds of honey or honey products per year shall be exempt 
from assessment: Provided, such honey or honey products are distributed 
directly through local retail outlets such as roadside stands, farmers 
markets, groceries, or other outlets as otherwise determined by the 
Secretary during such year.
    (b) A producer or importer who consumes honey at home or donates 
honey to a nonprofit, government, or other entity, as determined 
appropriate by the Secretary, rather then sell such honey, shall be 
exempt from the assessment on that honey so consumed or donated, except 
for honey donated that is later sold in a commercial outlet by a donee 
or donee's assignee.
    (c) If, after a person has been exempt from paying assessments for 
any year under this section, and such person no longer meets the 
requirements of this section for an exemption, such person shall file a 
report with the Board in the form and manner prescribed by the Board and 
pay an assessment on or before March 15 of the subsequent year on all 
honey or honey products produced or imported by such person during the 
year for which the person claimed the exemption.
    (d) The Board may recommend to the Secretary that honey exported 
from the United States be exempted from the provisions of this subpart 
and include procedures for the refund of assessments on such honey and 
such safeguards as may be necessary to prevent improper use of this 
exemption.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37457, Aug. 7, 1991; 66 FR 21833, May 1, 2001]

[[Page 224]]



Sec.  1240.43  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal periods excess funds in any reserve so 
established: Provided, That the funds in the reserve shall not exceed 
one fiscal period's budget. Subject to approval by the Secretary, such 
reserve funds may be used to defray any expenses authorized under this 
part.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
66 FR 21829, May 1, 2001]



Sec.  1240.44  Voluntary quality assurance program.

    (a) The Board is authorized to develop and carry out a voluntary 
quality assurance program concerning purity standards for honey and 
honey products. The Secretary shall have the authority to approve or 
disapprove such program.
    (b) The program may include the following components:
    (1) The establishment of an official Board seal of approval to be 
displayed on honey and honey products which meet such standards of 
purity as are established under the program;
    (2) Actions to encourage producers, handlers, and importers to 
participate in the program;
    (3) Actions to encourage consumers to purchase honey and honey 
products bearing the official seal of approval; and
    (4) Periodic inspections by the Secretary, or other parties approved 
by the Secretary, of honey and honey products of persons who participate 
in the program.
    (c) To be eligible to display the official seal of approval under 
paragraph (b)(1) of this section on a honey or honey product, a 
producer, handler, or importer shall participate in the voluntary 
program described in paragraph (a) of this section.

[66 FR 21833, May 1, 2001]

                       Reports, Books, and Records



Sec.  1240.50  Reports.

    Each handler, importer, producer, or producer-packer subject to this 
part shall be required to report to the employees of the Board, at such 
time and in such manner as it may prescribe, such information as may be 
necessary for the Board to perform its duties. Such reports shall 
include, but shall not be limited to the following:
    (a) For producers or producer-packers: the quantity of honey 
produced and the total number of bee colonies maintained.
    (b) For handlers and producer-packers: the total quantity of honey 
acquired during the reporting period; the total quantity of honey and 
honey products handled during such period; the amount of honey acquired 
from each producer, giving the name and address of each producer; the 
assessments collected during the reporting period; the quantity of honey 
processed for sale from a producer-packer's own production; and a record 
of each transaction for honey on which assessments had already been 
paid, including a statement from the seller that the assessment had been 
paid.
    (c) For importers: the total quantity of honey and honey products 
imported during the reporting period and a record of each importation of 
honey or honey products during such period, giving the quantity, date, 
country of origin, and port of entry.
    (d) For persons who have an exemption from assessments under Sec.  
1240.42(a) and (b), such information as deemed necessary by the Board, 
and approved by the Secretary, concerning the exemption including 
disposition of exempted honey.

[66 FR 21834, May 1, 2001]



Sec.  1240.51  Books and records.

    Each handler, importer, producer, producer-packer, or any person who 
is exempt from assessments under this subpart shall maintain and during 
normal business hours make available for inspection by employees or 
agents of the Board or the Secretary, such books and records as are 
necessary to carry out the provisions of this part, including such 
records as are necessary to verify any required reports. A member or 
alternate member of the Board is prohibited from conducting such 
inspections. Such books and records shall

[[Page 225]]

be maintained for two years beyond the fiscal period of their 
applicability.

[66 FR 21834, May 1, 2001]



Sec.  1240.52  Confidential treatment.

    All information obtained from the books, records, or reports 
required to be maintained under Sec. Sec.  1240.50 and 1240.51 shall be 
kept confidential by all employees and agents of the Board and all 
officers and employees of the Department and shall not be disclosed to 
the public. Only such information as the Secretary deems relevant shall 
be disclosed to the public and then only in a suit or administrative 
hearing brought at the direction, or upon the request, of the Secretary, 
or to which the Secretary or any officer of the United States is a 
party, and involving this subpart: Except that nothing in this subpart 
shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of handlers or importers subject to this subpart, if such 
statements do not identify the information furnished by any person;
    (b) The publication by direction of the Secretary of the name of any 
person convicted of violating this subpart, together with a statement of 
the particular provisions of this subpart violated by such person.

[66 FR 21834, May 1, 2001]

                              Miscellaneous



Sec.  1240.60  Influencing governmental action.

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



Sec.  1240.61  Right of the Secretary.

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

[66 FR 21834, May 1, 2001]



Sec.  1240.62  Suspension or termination.

    (a) The Secretary shall, whenever the Secretary finds that this 
subpart or any provision thereof obstructs or does not tend to 
effectuate the declared policy of the Act, terminate or suspend the 
operation of this subpart or such provisions thereof.
    (b) Except as otherwise provided in paragraph (c) of this section, 
five years from the date the Secretary issues an order authorizing the 
collection of assessments on honey under provisions of this subpart, and 
every five years thereafter, the Secretary shall conduct a referendum to 
determine if honey producers and importers favor the termination or 
suspension of this subpart.
    (c) The Secretary shall hold a referendum on the request of the 
Board, or when petitioned by 10 percent or more of the honey producers 
and importers subject to assessment under this subpart to determine if 
the honey producers and importers favor termination or suspension of 
this subpart. A referendum under this paragraph may not be held more 
than once every two (2) years. If the Secretary determines, through a 
referendum conducted pursuant to this paragraph, that continuation of 
this subpart is approved, any referendum otherwise required to be 
conducted under paragraph (b) of this section shall not be held less 
than five (5) years after the date the referendum was conducted under 
this paragraph.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37457, Aug. 7, 1991; 66 FR 21834, May 1, 2001]



Sec.  1240.63  Proceedings after termination.

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

[[Page 226]]

    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by it pursuant to Sec.  1240.38;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such person as the Secretary may direct; 
and
    (4) Upon the direction of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations as imposed upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be returned to the persons who contributed such 
funds, or paid assessments, or if not practicable, shall be turned over 
to the Department to be utilized, to the extent practicable, in the 
interest of continuing one or more of the honey research or education 
programs hitherto authorized.



Sec.  1240.64  Effect of termination or amendment.

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



Sec.  1240.65  Personal liability.

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



Sec.  1240.66  Separability.

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



Sec.  1240.67  Patents, copyrights, inventions, product formulations, and publications.

    Except for a reasonable royalty paid by the Board to the inventor of 
a patented invention, any patents, copyrights, inventions, product 
formulations, or publications developed through the use of funds 
collected under the provisions of this subpart shall be the property of 
the Honey Board. Funds generated by such patents, copyrights, 
inventions, product formulations, or publications shall inure to the 
benefit of the Board and shall be considered income subject to the same 
fiscal, budget, and audit controls as other funds of the Board.

[56 FR 37457, Aug. 7, 1991]



                Subpart B--General Rules and Regulations

    Source: 52 FR 3103, Feb. 2, 1987, unless otherwise noted.



Sec.  1240.100  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall have the same meaning as the definitions of such 
terms which appear in Subpart--Honey Research, Promotion, and Consumer 
Information Order. Additional terms are defined in Sec.  1240.105.



Sec.  1240.105  Definitions.

    (a) Principal ingredient means fifty-one percent or more by weight 
of the

[[Page 227]]

total ingredients contained in honey products.
    (b) First handler means the person who first handles honey.
    (c) Order means the Honey Research, Promotion, and Consumer 
Information Order which appears in this part.
    (d) United States means the fifty States, the District of Columbia, 
and the Commonwealth of Puerto Rico.



Sec.  1240.106  Communications.

    Communications in connection with the Order and all rules, 
regulations, and supplemental Orders issued thereunder shall be 
addressed to the National Honey Board, 421 21st Street, Longmont, 
Colorado 80501-1421.

[56 FR 37458, Aug. 7, 1991]



Sec.  1240.107  Policy and objective.

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



Sec.  1240.108  Contracts.

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



Sec.  1240.109  Procedure.

    The Organization of the Board and the procedure for conducting 
meetings of the Board shall be in accordance with the By-Laws of the 
Board.



Sec.  1240.110  U.S. Department of Agriculture costs.

    The Board shall reimburse the U.S. Department of Agriculture (USDA) 
from assessments for administrative costs incurred by USDA with respect 
to the Order after its promulgation and for any administrative expenses 
incurred by USDA for the conduct of referenda. The Board shall pay those 
administrative costs incurred by USDA for the conduct of its duties 
under the Order as determined periodically by the Secretary. USDA will 
bill the Board quarterly and payment shall be due promptly after the 
billing of such costs.



Sec.  1240.111  First handler and producer-packer.

    Persons who are first handlers or producer-packers include but are 
not limited to the following:
    (a) When a producer delivers honey from his or her own production to 
a packer or processor for processing in preparation for marketing and 
consumption, the packer or processor is the first handler, regardless of 
whether he or she handles the honey for his or her own account or for 
the account of the producer or the account of other persons.
    (b) When a producer delivers honey to a handler who takes title to 
such honey, and places it in storage, such handler is the first handler.
    (c) When a producer delivers honey to a commercial storage facility 
for the purpose of holding such honey under his or her own account for 
later sale, the first handler of such honey would be identified on the 
basis of later handling of such honey.
    (d) When a producer packages and sells honey of his or her own 
production at a roadside stand or other facility to consumers or sells 
to wholesale or retail outlets or other buyers, the producer is a 
producer-packer.
    (e) When a producer sells unprocessed or processed honey from his or 
her own production directly to a commercial user or food processor who 
utilizes such

[[Page 228]]

honey as an ingredient in the manufacture of formulated products, the 
producer is a producer-packer.
    (f) When a producer uses honey from his or her own production in the 
manufacture of formulated products for his or her own account and for 
the account of others, the producer is the producer-packer.
    (g) When a producer delivers a lot of honey to a processor who 
processes and packages a portion of such lot of honey for his or her own 
account and sells the balance of the lot, with or without further 
processing, to another processor or commercial user, the first processor 
is the first handler for all the honey.
    (h) When a producer supplies honey to a cooperative marketing 
organization which sells or markets the honey, with or without further 
processing and packaging, the cooperative marketing organization becomes 
the first handler upon physical delivery to such cooperative.
    (i) When a producer uses honey from his or her own production for 
feeding his or her own bees, such honey is not handled at that time. 
Honey in any form sold and shipped to any persons for the purpose of 
feeding bees is handled and is subject to assessment. The buyer of the 
honey for feeding bees is the first handler.



Sec.  1240.113  Importer.

    Each lot of honey and honey products imported into the United States 
is subject to assessment under this part. Such assessment shall be paid 
by the importer of such honey and honey products at the time of entry or 
withdrawal for consumption into the United States. Any person who 
imports honey or honey products into the United States as principal, 
agent, broker, or consignee for honey produced outside the United States 
and imported into the United States shall be the importer.



Sec.  1240.114  Exemption procedures.

    (a) Producers who produce, producer-packers who produce and handle, 
and importers who import honey and who wish to claim an exemption from 
assessments pursuant to Sec.  Sec.  1240.42 (a) and (b) should submit an 
application to the Board for a certificate of exemption.
    (b) Upon receipt of the claim for exemption, the Board shall 
investigate, to the extent practicable, the request for exemption. The 
Board will then issue, if deemed appropriate, an exemption certificate 
to each person who is eligible to receive one.
    (c) The Secretary, upon recommendation by the Board, may exempt that 
portion of assessments collected under a qualified State plan; Provided, 
That the State plan meets all of the requirements in Sec.  1240.42(d) of 
the Order.
    (1) First handlers collecting assessments from producers for the 
State plan and the Board shall forward that portion of assessments 
collected under the order in excess of the State assessment to the 
Board.
    (2) Upon request of the Board, producers having an exemption from a 
portion of the assessments under this Order due to payment of 
assessments under a State plan, shall be required to furnish evidence to 
the Board that the assessments to the State have been paid.

[52 FR 3103, Feb. 2, 1987, as amended at 56 FR 37458, Aug. 7, 1991; 59 
FR 22493, May 2, 1994]



Sec.  1240.115  Levy of assessments.

    (a) Time of payment. The assessment shall become due at the time 
assessable honey is first handled or entered or withdrawn for 
consumption into the United States pursuant to this part.
    (b) An assessment of one cent per pound is levied on honey produced 
in the United States, on imported honey entered or withdrawn for 
consumption into the United States, and on honey used in imported honey 
products entered or withdrawn for consumption into the United States 
except that assessments shall not be levied on the following:
    (1) Any persons other than importers holding a valid exemption 
certificate during the twelve month period ending on December 31;
    (2) That portion of honey which does not enter the current of 
commerce which is utilized solely to sustain a producers or producer-
packer's own colonies of bees;
    (3) That portion of otherwise assessable honey which is contained in 
imported products wherein honey is not a

[[Page 229]]

principal ingredient. Honey subject to assessment shall be assessed only 
once.
    (c) The assessment on each lot of honey handled in the United States 
shall be paid by the first handler who handles, or by the producer-
packer who produces and handles such honey.
    (1) The first handler shall collect and pay assessments to the Board 
unless such handler has received documentation acceptable to the Board 
that the assessment has been previously paid.
    (2) A producer-packer shall pay, or collect and pay, assessments to 
the Board unless--
    (i) Such producer-packer has obtained an exemption from the Board 
applicable to the honey which that producer-packer produced or produced 
and handled; or
    (ii) Has received documentation acceptable to the Board that the 
assessment has been previously paid.
    (d) Assessments shall be levied with respect to honey pledged as 
collateral for a loan or loan deficiency payment under the Commodity 
Credit Corporation (CCC) Honey Price Support Program in accordance with 
an agreement entered into between the Honey Board and the CCC. The 
assessment will be deducted from the proceeds of the loan or loan 
deficiency payment by the CCC and forwarded to the Board, except that 
the assessment shall not be deducted in the case of a honey marketing 
cooperative that has already deducted the assessment or that portion of 
the assessment paid to a qualified State plan exempted by the Board. The 
Secretary, through the CCC, shall provide for the producer to receive a 
statement of the amount of the assessment deducted from the loan funds 
or loan deficiency payment promptly after each occasion when an 
assessment is deducted from any such loan funds or payment under this 
subsection.
    (e) The U.S. Customs Service (USCS) will collect assessments on all 
honey or honey products where honey is the principal ingredient imported 
under its tariff schedule (HTS heading numbers 0409.00.00 and 
2106.90.9988) at the time of entry or withdrawal for consumption and 
forward such assessment as per the agreement between the USCS and USDA. 
Any importer or agent who is exempt from payment of assessments pursuant 
to Sec.  1240.42 (a) and (b) of the Order may apply to the Board for 
reimbursement of such assessment paid.
    (f) A late payment charge shall be imposed on any handler, producer-
packer, or importer except as otherwise authorized by the Board, who 
fails to pay to the Board within the time prescribed in this subpart the 
total amount of assessment due for which any such handler, importer, or 
producer-packer is liable. Fifteen days after the assessment becomes due 
a one-time late payment charge of 10 percent will be added to any 
outstanding funds due the Board.
    (g) In addition to the late payment charge, one and one-half percent 
per month interest on the outstanding balance except as otherwise 
authorized by the Board, will be added to any accounts delinquent over 
30 days and will continue monthly until the outstanding balance is paid 
to the Board.

[52 FR 3103, Feb. 2, 1987, as amended at 53 FR 37731, Sept. 28, 1988; 56 
FR 37458, Aug. 7, 1991; 61 FR 29462, June 11, 1996; 61 FR 38356, July 
24, 1996]



Sec.  1240.116  Payment of assessments.

    (a) Responsibility for payment. Unless otherwise authorized by the 
Board under the Act and Order, the first handler or producer-packer 
shall collect the assessment from the producer, or deduct such 
assessment from the proceeds paid to the producer on whose honey the 
assessment is made, and remit the assessments to the Board. The first 
handler or producer-packer shall furnish the producer with evidence of 
such payment. Any such collection or deduction of assessment shall be 
made not later than the time when the assessment becomes payable to the 
Board. Failure of the handler or producer-packer to collect or deduct 
such assessment does not relieve the handler or producer-packer of his 
or her obligation to remit the assessment to the Board. However, should 
a first handler or the Secretary fail to collect an assessment from a 
producer, the producer shall be responsible for the payment of the 
assessment to the Board. Assessments on imported honey and honey 
products shall be collected as specified in Sec.  1240.115(e); Provided, 
That importers shall be responsible for

[[Page 230]]

payment of any assessment amount not collected by the U.S. Customs 
Service at the time of entry or withdrawal for consumption into the 
United States.
    (b) Payment directly to the Board. Except as provided in paragraph 
(c) of this section, each first handler and producer-packer shall pay 
the required assessment pursuant to Sec.  1240.41 of the Order directly 
to the Board at the address referenced in Sec.  1240.106, for each 
reporting period specified in Sec.  1240.119, on or before the 15th day 
following the end of such period. Payment shall be in the form of a 
check, draft, or money order payable to the Board and shall be 
accompanied by a report on Board forms pursuant to Sec.  1240.50.
    (c) Prepayment of assessment. (1) In lieu of the monthly assessment 
payment specified in Sec.  1240.119 of this subpart, the Board may 
permit first handlers or producer-packers to make advance payments of 
their total estimated assessments for the season to the Board prior to 
their actual determination of assessable honey.
    (2) Persons using such procedure shall provide a monthly accounting 
of actual handling and assessments.
    (3) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board upon request.
    (d) Payment through cooperating agency. The Board may enter into 
agreements subject to approval of the Secretary authorizing other 
organizations to collect assessments in its behalf. All such agreements 
are subject to the requirements of the Act, Order, and all applicable 
rules and regulations under the Act and the Order.

[52 FR 3103, Feb. 2, 1987, as amended at 56 FR 37458, Aug. 7, 1991]



Sec.  1240.118  Reports of disposition of exempted honey.

    The Board may require reports by first handlers, producer-packers, 
importers, or any persons who receive an exemption from assessments 
under Sec.  1240.42 (a) and (b) on the handling and disposition of 
exempted honey. Also, authorized employees of the Board or the Secretary 
may inspect such books and records as are appropriate and necessary to 
verify the reports on such disposition.

[56 FR 37458, Aug. 7, 1991]



Sec.  1240.119  Reporting period and reports.

    (a) For the purpose of the payment of assessments, a calendar month 
shall be considered the reporting period; however, other accounting 
periods may be used when registered with and approved by the Board in 
writing.
    (b) Pursuant to Sec.  1240.50 of the Order, handlers and producer-
packers shall file with the Board a report for each reporting period.
    (1) All reports shall contain at least the following information:
    (i) The handler's or producer-packer's name and address;
    (ii) Date of report (which is also date of payment to the Board);
    (iii) Period covered by report; and
    (iv) Total quantity of honey determined as assessable during the 
reporting period.
    (2) Handlers or producer-packers who collect assessments from 
producers or withhold assessments for their accounts or pay the 
assessments themselves shall also include with each report a list of all 
such producers whose honey was handled during the period, their 
addresses, and to total assessable quantities handled for each such 
producer.
    (c) Each importer shall file with the Board a monthly report 
containing at least the following information:
    (1) The importer's name and address.
    (2) The quantity of honey and honey products entered or withdrawn 
for consumption into the United States.
    (3) The amount of assessment paid on honey and honey products 
entered or withdrawn for consumption into the United States to the U.S. 
Customs Service at the time of entry or withdrawal for consumption.
    (4) The amount of any honey and honey products on which the 
assessment was not paid to the U.S. Customs Service at the time of entry 
or withdrawal for consumption into the United States.
    (d) In the event of a first handler's, producer-packer's, or 
importer's death, bankruptcy, receivership, or incapacity

[[Page 231]]

to act, the representative of the handler, producer-packer, or importer 
or his or her estate, shall be considered the first handler, producer-
packer, or importer for the purposes of this part.



Sec.  1240.120  Retention period for records.

    Each first handler, producer-packer, importer, or any person who 
receives an exemption from assessments under Sec.  Sec.  1240.42 (a) and 
(b) required to make reports pursuant to this subpart shall maintain and 
retain for at least two years beyond the marketing year of their 
applicability: One copy of each report made to the Board, records of all 
exempt producers, producer-packers, and importers including 
certification of exemption as necessary to verify the address of such 
exempt person and such records as are necessary to verify such reports.

[56 FR 37458, Aug. 7, 1991]



Sec.  1240.121  Availability of records.

    Each first handler, producer-packer, importer, or any person who 
receives an exemption from assessments under Sec. Sec.  1240.42 (a) and 
(b) and is required to make reports pursuant to this subpart shall make 
available for inspection by authorized employees of the Board or the 
Secretary during regular business hours, such records as are appropriate 
and necessary to verify reports required under this subpart.

[56 FR 37458, Aug. 7, 1991]



Sec.  1240.122  Confidential books, records, and reports.

    All information obtained from the books, records, and reports of 
handlers, producer-packers, importers or any persons who receive an 
exemption from assessments under Sec.  1240.42 (a) and (b) and all 
information with respect to refunds of assessments made to individual 
producers and importers shall be kept confidential in the manner and to 
the extent provided for in Sec.  1240.52 of the Order.

[56 FR 37458, Aug. 7, 1991]



Sec.  1240.123  Right of the Secretary.

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



Sec.  1240.124  Personal liability.

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



Sec.  1240.125  OMB control numbers.

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

[56 FR 37458, Aug. 7, 1991]



                    Subpart C--Referendum Procedures

    Source: 65 FR 48321, Aug. 7, 2000, unless othewise noted.



Sec.  1240.200  General.

    Referenda to determine whether eligible producers, importers, and, 
in the case of an order assessing handlers, handlers favor the 
continuation, suspension, termination, or amendment of the Honey 
Research, Promotion, and Consumer Information Order shall be conducted 
in accordance with this subpart.



Sec.  1240.201  Definitions.

    (a) Act means the Honey Research, Promotion, and Consumer 
Information Act (Pub. L. 98-590; 98 Stat. 3115; enacted October 30, 
1984; 7 U.S.C. 4601-4613, as amended) and any amendments thereto.
    (b) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.

[[Page 232]]

    (c) Board or National Honey Board means the Honey Board, the 
administrative body provided for under section 7(c) of the Act and 
established under Sec.  1240.30.
    (d) Department means the United States Department of Agriculture.
    (e) Eligible handler means any person defined as a handler or 
producer-packer in the Order, or importer in this subpart, who handles 
domestic honey or honey products, and is covered by an order and subject 
to assessment on domestic honey handled during the representative 
period.
    (f) Eligible importer means any person defined as an importer in 
this subpart, who is engaged in the importation of honey or honey 
products, and is subject to pay assessments to the Board on honey or 
honey products imported during the representative period.
    (g) Eligible producer means any person defined as a producer or 
producer-packer in the Order who produces honey and is subject to pay 
assessments to the Board on such honey produced during the 
representative period and who:
    (1) Owns or shares in the ownership of honey bee colonies or 
beekeeping equipment resulting in the ownership of the honey produced;
    (2) Rents honey bee colonies or beekeeping equipment resulting in 
the ownership of all or a portion of the honey produced;
    (3) Owns honey bee colonies or beekeeping equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the honey produced; or
    (4) Is a party in a lessor-lessee relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce honey who share the risk of loss and receive a share of 
the honey produced. No other acquisition of legal title to honey shall 
be deemed to result in persons becoming eligible producers.
    (h) Importer means any person who imports honey or honey products 
into the United States as principal or as an agent, broker, or consignee 
for any person who produces honey or honey products outside of the 
United States for sale in the United States, and who is listed as the 
importer of record for such honey or honey products.
    (i) Order means the Honey Research, Promotion, and Consumer 
Information Order.
    (j) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity. For the 
purpose of this definition, the term partnership includes, but is not 
limited to:
    (1) A husband and wife who have title to, or leasehold interest in, 
honey bee colonies or beekeeping equipment as tenants in common, joint 
tenants, tenants by the entirety, or, under community property laws, as 
community property, and
    (2) So-called joint ventures wherein one or more parties to the 
agreement, informal or otherwise, contributed land and others 
contributed capital, labor, management, equipment, or other services, or 
any variation of such contributions by two or more parties, so that it 
results in the production, handling, or importation of honey or honey 
products for market and the authority to transfer title to the honey or 
honey products so produced, handled or imported.
    (k) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (l) Representative period means the period designated by the 
Secretary pursuant to the Act.
    (m) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec.  1240.202  Voting.

    (a) Eligibility. (1) Each person who is, as defined in this subpart, 
an eligible producer; an eligible importer; or, in the case of an order 
assessing handlers, an eligible handler shall be entitled to vote in the 
referendum.
    (2) In conducting a referendum for the sole purpose of determining 
whether persons favor the implementation of amendments to the Order in 
accordance with changes to the Act made by the Agricultural Research, 
Extension, and Education Reform Act of 1998 (Pub.

[[Page 233]]

L. 105-185, enacted June 23, 1998), producer-packers, importers, and 
handlers shall be allowed to vote as if:
    (i) The proposed amendments to the Order were in place during the 
representative period; and
    (ii) They were subject to assessment based on the quantity of honey 
or honey products handled during the representative period.
    (b) Number of ballots cast. (1) Each person who is an eligible 
producer, as defined in this subpart, at the time of the referendum and 
during the representative period, shall be entitled to cast one ballot 
in the referendum: Provided, That each producer in a landlord-tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to produce honey and/or honey 
products, in which more than one of the parties is a producer, shall be 
entitled to cast one ballot covering only such producer's share of the 
ownership.
    (2) In the case of an order assessing handlers, each person who is 
an eligible handler, as defined in this subpart, at the time of the 
referendum and during the representative period, shall be entitled to 
cast one ballot in the referendum.
    (3) Each person who is a producer-packer, as defined in the Order, 
at the time of the referendum and during the representative period, 
shall be entitled to cast one ballot as an eligible producer and, in the 
case of an order assessing handlers, one ballot as an eligible handler.
    (4) Each importer, as defined in the Order, at the time of the 
referendum and during the representative period, shall be entitled to 
cast in the referendum one ballot as an importer and, in the case of an 
order assessing handlers, one ballot as an eligible handler.
    (c) Proxy voting. Proxy voting is not authorized, but an officer or 
employee of an eligible corporate producer; importer; and, in the case 
of an order assessing handlers, handler; or an administrator, executor, 
or trustee of an eligible entity may cast a ballot on behalf of such 
entity. Any individual so voting in a referendum shall certify that they 
are an officer or employee of the eligible entity, or an administrator, 
executor, or trustee of an eligible entity and that such individual has 
the authority to take such action. Upon request of the referendum agent, 
the individual shall submit adequate evidence of such authority.
    (d) Casting of ballots. All ballots are to be cast by mail as 
instructed by the Secretary.



Sec.  1240.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the period during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. The ballot shall provide for recording essential 
information, including that needed for ascertaining:
    (1) Whether the person voting, or on whose behalf the vote is cast, 
is an eligible voter; and
    (2) The quantity of honey or honey products produced, imported, and, 
in the case of an order assessing handlers, handled.
    (c) Give reasonable public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the voting period, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as said agent may deem advisable.
    (d) Mail to eligible producers, importers, and in the case of an 
order assessing handlers, handlers whose names and addresses are known 
to the referendum agent the instructions on voting; a ballot; and a 
summary of the terms and conditions to be voted upon. No person who 
claims to be eligible to vote shall be refused a ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in the presence of an agent 
of a third party

[[Page 234]]

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



Sec.  1240.204  Subagents.

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



Sec.  1240.205  Ballots.

    The referendum agent and subagents shall accept all ballots cast. 
However, if an agent or subagent deems that a ballot should be 
questioned for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was questioned, by whom questioned, why the ballot was 
questioned, the results of any investigation made with respect to the 
questionable ballot, and the disposition of the questionable ballot. 
Ballots invalid under this subpart shall not be counted.



Sec.  1240.206  Referendum report.

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



Sec.  1240.207  Confidential information.

    All ballots cast and their contents and all other information or 
reports furnished to, compiled by, or in possession of, the referendum 
agent or subagents that reveal, or tend to reveal, the identity or vote 
of any producer, handler, or importer of honey or honey products shall 
be held strictly confidential and shall not be disclosed.



PART 1250--EGG RESEARCH AND PROMOTION--Table of Contents




                Subpart--Egg Research and Promotion Order

                               Definitions

Sec.
1250.301 Secretary.
1250.302 Act.
1250.303 Fiscal period.
1250.304 Egg Board or Board.
1250.305 Egg producer or producer.
1250.306 Commercial eggs or eggs.
1250.307 Person.
1250.308 United States.
1250.309 Handler.
1250.310 Promotion.
1250.311 Research.
1250.312 Marketing.
1250.313 Eligible organization.
1250.314 Plans and projects.
1250.315 Part and subpart.
1250.316 Representative of a producer.

                                Egg Board

1250.326 Establishment and membership.
1250.327 Term of office.
1250.328 Nominations.
1250.329 Selection.
1250.330 Acceptance.
1250.331 Vacancies.
1250.332 Alternate members.
1250.333 Procedure.
1250.334 Compensation and reimbursement.
1250.335 Powers of the Board.
1250.336 Duties.

                   Research, Education, and Promotion

1250.341 Research, education, and promotion.

                        Expenses and Assessments

1250.346 Expenses.
1250.347 Assessments.
1250.348 Exemptions.
1250.349 Collecting handlers and collection.
1250.350 [Reserved]
1250.351 Influencing governmental action.

                       Reports, Books, and Records

1250.352 Reports.
1250.353 Books and records.
1250.354 Confidential treatment.

                     Certification of Organizations

1250.356 Certification of organizations.

                              Miscellaneous

1250.357 Suspension and termination.
1250.358 Proceedings after termination.
1250.359 Effect of termination or amendment.
1250.360 [Reserved]

[[Page 235]]

1250.361 Right of the Secretary.
1250.362 Amendments.
1250.363 Separability.

                     Subpart--Rules and Regulations

                               Definitions

1250.500 Terms defined.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act

1250.501 OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

                                 General

1250.505 Communications.
1250.506 Policy and objective.
1250.507 Contracts.
1250.508 Procedure.
1250.509 USDA costs.
1250.510 Determination of Board membership.

                Assessments, Collections, and Remittances

1250.514 Levy of assessments.
1250.515 Reporting period and payment.
1250.516 Collecting handlers and collection.
1250.517 Remittance to Egg Board.
1250.518 Receipts for payment of assessments.
1250.519 Late-payment charge.

                Registration, Certification, and Reports

1250.528 Registration of collecting handlers.
1250.529 Reports.
1250.530 Certification of exempt producers.

                                 Records

1250.535 Retention of records.
1250.536 Availability of records.
1250.537 Confidentiality.

            Patents, Copyrights, Trademarks, and Information

1250.542 Patents, copyrights, trademarks, and information.

                           Personal Liability

1250.547 Personal liability.

    Authority: 7 U.S.C. 2701-2718.



                Subpart--Egg Research and Promotion Order

    Source: 40 FR 59190, Dec. 22, 1975, unless otherwise noted.

                               Definitions



Sec.  1250.301  Secretary.

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



Sec.  1250.302  Act.

    Act means the Egg Research and Consumer Information Act and as it 
may be amended (Pub. L. 93-428).



Sec.  1250.303  Fiscal period.

    Fiscal period means the calendar year unless the Egg Board, with the 
approval of the Secretary, selects some other budgetary period.



Sec.  1250.304  Egg Board or Board.

    Egg Board or Board or other designatory term adopted by such Board, 
with the approval of the Secretary, means the administrative body 
established pursuant to Sec.  1250.326.



Sec.  1250.305  Egg producer or producer.

    Egg producer or producer means any person who either:
    (a) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (b) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual argeement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party

[[Page 236]]

(or parties) under said contract who is the owner of the hens.



Sec.  1250.306  Commercial eggs or eggs.

    Commercial eggs or eggs means eggs from domesticated chickens which 
are sold for human consumption either in shell egg form or for further 
processing into egg products.



Sec.  1250.307  Person.

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



Sec.  1250.308  United States.

    United States means the 48 contiguous States of the United States of 
America and the District of Columbia.



Sec.  1250.309  Handler.

    Handler means any person who receives or otherwise acquires eggs 
from an egg producer, and processes, prepares for marketing, or markets, 
such eggs, including eggs of his own production.



Sec.  1250.310  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image or desirability of eggs, egg products, spent fowl, or products 
of spent fowl.



Sec.  1250.311  Research.

    Research means any type of research to advance the image, 
desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.



Sec.  1250.312  Marketing.

    Marketing means the sale or other disposition of commercial eggs, 
egg products, spent fowl, or products of spent fowl in any channel of 
commerce.



Sec.  1250.313  Eligible organization.

    Eligible organization means any organization, association, or 
cooperative which represents egg producers of any egg producing area of 
the United States certified by the Secretary pursuant to Sec.  1250.356.



Sec.  1250.314  Plans and projects.

    Plans and projects means those research, consumer and producer 
education, advertising, marketing, product development, and promotion 
plans, studies, or projects pursuant to Sec.  1250.341.



Sec.  1250.315  Part and subpart.

    Part means the Egg Research and Promotion Order and all rules, 
regulations, and supplemental order issued pursuant to the act and the 
order. ``Subpart'' refers to the aforesaid order or any other portion or 
segment of this part.



Sec.  1250.316  Representative of a producer.

    Representative of a producer means the owner, officer, or an 
employee of a producer who has been duly authorized to act in the place 
and stead of the producer.

                                Egg Board



Sec.  1250.326  Establishment and membership.

    There is hereby established an Egg Board, hereinafter called the 
``Board,'' composed of 18 egg producers or representatives of egg 
producers, and 18 specific alternates, all appointed by the Secretary 
from nominations submitted by eligible organizations, associations, or 
cooperatives, or by other producers pursuant to Sec.  1250.328.



Sec.  1250.327  Term of office.

    The members of the Board, and their alternates, shall serve for 
terms of 2 years, except initial appointments shall be, proportionately, 
for terms of 2 and 3 years. Each member and alternate member shall 
continue to serve until his successor is appointed by the Secretary and 
has qualified. No member shall serve for more than three consecutive 
terms.



Sec.  1250.328  Nominations.

    All nominations authorized under Sec.  1250.326 shall be made in the 
following manner:
    (a) Within 30 days of the approval of this order by referendum, 
nominations shall be submitted to the Secretary for each geographic area 
as specified in

[[Page 237]]

paragraph (d) of this section by eligible organizations, associations, 
or cooperatives certified pursuant to Sec.  1250.356, or, if the 
Secretary determines that a substantial number of egg producers are not 
members of, or their interests are not represented by, any such eligible 
organization, association, or cooperative, then from nominations made by 
such egg producers in the manner authorized by the Secretary;
    (b) After the establishment of the initial Board, the nominations 
for subsequent Board members and alternates shall be submitted to the 
Secretary not less than 60 days prior to the expiration of the terms of 
the members and alternates previously appointed to the Board;
    (c) Where there is more than one eligible organization, association, 
or cooperative within each geographic area, as defined by the Secretary, 
they may caucus for the purpose of jointly nominating two qualified 
persons for each member and for each alternate member to be appointed. 
If joint agreement is not reached with respect to any such nominations, 
or if no caucus is held within a defined geographic area, each eligible 
organization, association, or cooperative may submit to the Secretary 
two nominations for each appointment to be made;
    (d) The number of members of the initial Board, and their 
alternates, who shall be appointed from each area are: Area 1-3, Area 2-
4, Area 3-2, Area 4-2, Area 5-4, and Area 6-3, for a total of 18 members 
from all areas. Changes to the Board as provided in paragraph (e) of 
this section shall be accomplished by determining the percentage of 
United States egg production in each area times 18 (total Board 
membership) and rounding to the nearest whole number; and
    (e) After the establishment of the initial Board, the area grouping 
of the 48 contiguous States of the United States, including the area 
distribution of the 18 members of the Board and their alternates, shall 
be reviewed at any time not to exceed 5 years by the Board, or by a 
person or agency designated by the Board to perform such review, and the 
results shall be reported to the Secretary along with any 
recommendations by the Board regarding whether the delineation of the 
areas and the area distribution of the Board should continue without any 
change, or whether changes should be made in either the areas or the 
number of Board members to be appointed from each area, providing that 
each area shall be represented by not less than one Board member and any 
action recommended shall be subject to the approval of the Secretary.

[40 FR 59190, Dec. 22, 1975, as amended at 60 FR 66861, Dec. 27, 1995]



Sec.  1250.329  Selection.

    From the nominations made pursuant to Sec.  1250.328, the Secretary 
shall appoint the members of the Board, and an alternate for each such 
member, on the basis of representations provided for in Sec.  1250.326, 
Sec.  1250.327, and Sec.  1250.328.



Sec.  1250.330  Acceptance.

    Any person appointed by the Secretary as a member, or as an 
alternate member, of the Board shall qualify by filing a written 
acceptance with the Secretary within a period of time prescribed by the 
Secretary.



Sec.  1250.331  Vacancies.

    To fill any vacancy occasioned by the failure to qualify of any 
person appointed as a member, or as an alternate member, of the Board, 
or in the event of the death, removal, resignation, or disqualification 
of any member or alternate member of the Board, a successor for the 
unexpired term of such member or alternate member of the Board shall be 
nominated, qualified, and appointed in the manner specified in Sec.  
1250.326, Sec.  1250.328(b), Sec.  1250.329, and Sec.  1250.330, except 
that replacement of a Board member, or alternate, with an unexpired term 
of less than 6 months is not necessary.



Sec.  1250.332  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom he is the alternate, shall act in the place and stead of such 
member and perform such other duties as assigned. In the event of the 
death, removal, resignation, or disqualification of a member, his 
alternate shall act for

[[Page 238]]

him until a successor for such member is appointed and qualified.



Sec.  1250.333  Procedure.

    (a) A majority of the members, including alternates acting for 
members of the Board, shall constitute a quorum, and any action of the 
Board shall require the concurring votes of at least a majority of those 
present and voting. At assembled meetings, all votes shall be cast in 
person.
    (b) For routine and noncontroversial matters which do not require 
deliberation and exchange of views, and in matters of an emergency 
nature when there is not enough time to call an assembled meeting of the 
Board, the Board may also take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing.



Sec.  1250.334  Compensation and reimbursement.

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



Sec.  1250.335  Powers of the Board.

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



Sec.  1250.336  Duties.

    The Board shall have the following duties:
    (a) To meet and organize and to select from among its members a 
chairman and such other officers as may be necessary, to select 
committees and subcommittees of Board members, to adopt such rules for 
the conduct of its business as it may deem advisable, and it may 
establish advisory committees of persons other than Board members;
    (b) To appoint or employ such persons as it may deem necessary and 
to define the duties and determine the compensation of each;
    (c) To prepare and submit to the Secretary for his approval budgets 
on a fiscal-period basis of its anticipated expenses and disbursements 
in the administration of this subpart, including probable cost of plans 
and projects as estimated in the budget or budgets submitted to it by 
prospective contractors, with the Board's recommendations with respect 
thereto. In preparing a budget for each of the 1994 and subsequent 
fiscal years, the Board shall, to the maximum extent practicable, 
allocate a proportion of funds for research projects comparable to the 
proportion of funds allocated for research projects in the Board's 
fiscal year 1993 budget.
    (d) With the approval of the Secretary, to enter into contracts or 
agreements with persons, including, but not limited to, State, regional, 
or national agencies or State, regional, or national egg organizations 
which administer research, education, or promotion programs, advertising 
agencies, public relations firms, public or private research 
organizations, advertising and promotion media, and egg producer 
organizations, for the development and submission to it of plans and 
projects authorized by Sec.  1250.341 and for the carrying out of such 
plans or projects when approved by the Secretary, and for the payment of 
the cost thereof with funds collected pursuant to Sec.  1250.347. Any 
such contracts or agreements shall provide that such contractors shall 
develop and submit to the Board a plan or project together with a budget 
or budgets which shall show estimated costs to be incurred for such plan 
or project, and that any such plan or project shall become effective 
upon approval by the Secretary. Any such contract or agreement shall 
also provide that the contractor shall keep accurate records of all of 
its transactions and make periodic reports to the Board

[[Page 239]]

of activities carried out and an accounting for funds received and 
expended, and such other reports as the Secretary may require;
    (e) To review and submit to the Secretary any plans or projects 
which have been developed and submitted to it by the prospective 
contractor, together with its recommendations with respect to the 
approval thereof by the Secretary;
    (f) To maintain such books and records and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g)-(h) [Reserved]
    (i) To prepare and make public, at least annually, a report of 
activities carried out and an accounting for funds received and 
expended;
    (j) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that he or his representative may attend 
such meetings;
    (l) To act as an intermediary between the Secretary and any producer 
or handler; and
    (m) To submit to the Secretary such information pursuant to this 
subpart as he may request.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 99, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989; 54 FR 12310, Mar. 24, 1989; 59 FR 38876, 
Aug. 1, 1994; 60 FR 66861, Dec. 27, 1995]

                   Research, Education, and Promotion



Sec.  1250.341  Research, education, and promotion.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate programs or projects for advertising, sales promotion, and 
consumer education with respect to the use of eggs, egg products, spent 
fowl, and products of spent fowl: Provided, however, That any such 
program or project shall be directed towards increasing the general 
demand for eggs, egg products, spent fowl, or products of spent fowl;
    (b) The establishment and carrying on of research, marketing, and 
development projects and studies with respect to sale, distribution, 
marketing, utilization, or production of eggs, egg products, spent fowl, 
and products of spent fowl, and the creation of new products thereof in 
accordance with section 7(b) of the act, to the end that the marketing 
and utilization of eggs, egg products, spent fowl, and products of spent 
fowl may be encouraged, expanded, improved, or made more acceptable, and 
the data collected by such activities may be disseminated;
    (c) The development and expansion of foreign markets and uses for 
eggs, egg products, spent fowl, and products of spent fowl;
    (d) Each program or project authorized under paragraphs (a), (b), 
and (c) of this section shall be periodically reviewed or evaluated by 
the Board to insure that each such program or proj ect contributes to a 
coordinated national program of research, education, and promotion 
contributing to the maintenance of markets and for the development of 
new markets for and of new products from eggs, egg products, spent fowl, 
and products of spent fowl. If it is found by the Board that any such 
program or project does not further the national purpose of the act, 
then the Board shall terminate such program or project; and
    (e) No advertising or promotion programs shall use false or 
unwarranted claims or make any reference to private brand names of eggs, 
egg products, spent fowl, and products of spent fowl or use unfair or 
deceptive acts or practices with respect to quality, value, or use of 
any competing product.

                        Expenses and Assessments



Sec.  1250.346  Expenses.

    The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and

[[Page 240]]

functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. The total 
costs incurred by the Board for a fiscal period in collecting producer 
assessments and having an administrative staff shall not exceed an 
amount of the projected total assessments to be collected by the Board 
for such fiscal period that the Secretary determines to be reasonable. 
The funds to cover such expenses shall be paid from assessments received 
pursuant to Sec.  1250.347.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 100, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989]



Sec.  1250.347  Assessments.

    Each handler designated in Sec.  1250.349 and pursuant to 
regulations issued by the Board shall collect from each producer, except 
for those producers specifically exempted in Sec.  1250.348, and shall 
pay to the Board at such times and in such manner as prescribed by 
regulations issued by the Board an assessment at a rate not to exceed 10 
cents per 30-dozen case of eggs, or the equivalent thereof, for such 
expenses and expenditures, including provisions for a reasonable reserve 
and those administrative costs incurred by the Department of Agriculture 
after this subpart is effective, as the Secretary finds are reasonable 
and likely to be incurred by the Board and the Secretary under this 
subpart, except that no more than one such assessment shall be made on 
any case of eggs.

[59 FR 64560, Dec. 15, 1994]



Sec.  1250.348  Exemptions.

    The following shall be exempt from the specific provisions of the 
Act:
    (a) Any egg producer whose aggregate number of laying hens at any 
time during a 3-consecutive-month period immediately prior to the date 
assessments are due and payable has not exceeded 75,000 laying hens. The 
aggregate number of laying hens owned by a trust or similar entity shall 
be considered ownership by the beneficiaries of the trust or other 
entity. Ownership of laying hens by an egg producer also shall include 
the following:
    (1) In cases in which the producer is an individual, laying hens 
owned by such producer or members of such producer's family that are 
effectively under the control of such producer, as determined by the 
Secretary;
    (2) In cases in which the producer is a general partnership or 
similar entity, laying hens owned by the entity and all partners or 
equity participants in the entity; and
    (3) In cases in which the producer holds 50 percent or more of the 
stock or other beneficial interest in a corporation, joint stock 
company, association, cooperative, limited partnership, or other similar 
entity, laying hens owned by the entity. Stock or other beneficial 
interest in an entity that is held by the following shall be considered 
as held by the producer:
    (i) Members of the producer's family described in paragraph (a)(1);
    (ii) A general partnership or similar entity in which the producer 
is a partner or equity participant;
    (iii) The partners or equity participants in an entity of the type 
described in (a)(3)(ii); or
    (iv) A corporation, joint stock company, association, cooperative, 
limited partnership, or other similar entity in which the producer holds 
50 percent or more of the stock or other beneficial interests.
    (b) Any egg producer owning a flock of breeding hens whose 
production of eggs is primarily utilized for the hatching of baby 
chicks.
    (c) In order to qualify for exemption from the provisions of the Act 
under this section, producers claiming such exemption must comply with 
Sec.  1250.530 regarding certification of exempt producers and other 
such regulations as may be prescribed by the Secretary as a condition to 
exemption from the provisions of the Act under this section.

[55 FR 6973, Feb. 28, 1990, as amended at 59 FR 38876, Aug. 1, 1994]



Sec.  1250.349  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessment specified in 
Sec.  1250.347 shall be any one of the following:

[[Page 241]]

    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec.  1250.309,
    (2) A producer who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec.  1250.309 for eggs of his own 
production, or
    (3) Such other persons as designated by the Board under rules and 
regulations issued pursuant to this subpart.
    (b) Handlers shall collect and remit to the Egg Board all 
assessments collected in the manner and in the time specified by the 
Board pursuant to rules and regulations issued by the Board.
    (c) Handlers shall maintain such rec ords as the Egg Board may 
prescribe pursuant to rules and regulations issued by the Board.
    (d) The Board with the approval of the Secretary may authorize other 
organizations or agencies to collect assessments in its behalf.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.  1250.350  [Reserved]



Sec.  1250.351  Influencing governmental action.

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

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

                       Reports, Books, and Records



Sec.  1250.352  Reports.

    Each handler subject to this subpart and other persons subject to 
section 7(c) of the act may be required to report to the Board 
periodically such information as is required by regulations and will 
effectuate the purposes of the act, which information may include but 
not be limited to the following:
    (a) Number of cases of eggs handled;
    (b) Number of cases of eggs on which an assessment was collected;
    (c) Name and address of person from whom any assessment was 
collected; and
    (d) Date collection of assessment was made on each case of eggs 
handled.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.  1250.353  Books and records.

    Each handler subject to this subpart and persons subject to section 
7(c) of the act shall maintain and make available for inspection by the 
Board or the Secretary such books and records as are necessary to carry 
out the provisions of the subpart and the regulations issued hereunder, 
including such records as are necessary to verify any reports required. 
Such records shall be retained for at least 2 years beyond the fiscal 
period of their applicability.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec.  1250.354  Confidential treatment.

    (a) All information obtained from such books, records, or reports 
shall be kept confidential by all officers and employees of the 
Department of Agriculture and the Board, and only such information so 
furnished or acquired as the Secretary deems relevant shall be disclosed 
by them, and then only in a suit or administrative hearing brought at 
the direction, or upon the request of the Secretary, or to which the 
Secretary or any officer of the United States is a party and involving 
this subpart. Nothing in this paragraph shall be deemed to prohibit (1) 
the issuance of general statements based upon the reports of the number 
of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person, (2) the publication, by direction of the Secretary, of 
general statements relating to refunds made by the Egg Board during any 
specific period of time, or (3) the publication, by direction of the 
Secretary, of the name of any person violating this subpart together 
with a statement of the particular provisions of this subpart violated 
by such person.
    (b) All information with respect to refunds, except as provided in 
paragraph (a)(2) of this section, made to individual producers shall be 
kept confidential by all officers and employees

[[Page 242]]

of the Department of Agriculture and the Board.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

                     Certification of Organizations



Sec.  1250.356  Certification of organizations.

    Any organization may request the Secretary for certification of 
eligibility to participate in nominating members and alternate members 
on the Board to represent the geographic area in which the organization 
represents egg producers. Such eligibility shall be based in addition to 
other available information upon a factual report submitted by the 
organization which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including, but not limited to, the following:
    (a) Geographic territory covered by the organization's active 
membership;
    (b) Nature and size of the organization's active membership, 
proportion of total of such active membership accounted for by producers 
of commercial eggs, a chart showing the egg production by State in which 
the organization has members, and the volume of commercial eggs produced 
by the organization's active membership in such State(s);
    (c) The extent to which the commercial egg producer membership of 
such organization is represented in setting the organization's policies;
    (d) Evidence of stability and permanency of the organization;
    (e) Sources from which the organization's operating funds are 
derived;
    (f) Functions of the organization; and
    (g) The organization's ability and willingness to further the aims 
and objectives of the act.

The primary consideration in determining the eligibility of an 
organization shall be whether its egg producer membership consists of a 
substantial number of egg producers who produce a substantial volume of 
the applicable geographic area's commercial eggs to reasonably warrant 
its participation in the nomination of members for the Board or to 
request the issuance of an order. The Secretary shall certify any 
organization which he finds to be eligible under this section and his 
determination as to eligibility shall be final.

                              Miscellaneous



Sec.  1250.357  Suspension and termination.

    (a) The Secretary shall, whenever he finds that this subpart or any 
provision thereof obstructs or does not tend to effectuate the declared 
policy of the act, terminate or suspend the operation of this subpart or 
such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of egg 
producers voting in the referendum approving this subpart, to determine 
whether egg producers favor the termination or suspension of this 
subpart, and the Secretary shall suspend or terminate such subpart at 
the end of 6 months after he determines that suspension or termination 
of the subpart is approved or favored by a majority of the egg producers 
voting in such referendum who, during a representative period determined 
by the Secretary, have been engaged in the production of commercial 
eggs, and who produced more than 50 percent of the volume of eggs 
produced by the egg producers voting in the referendum.



Sec.  1250.358  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than six of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property then in the possession or under control of the Board, 
including claims for any funds unpaid or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall: (1) Continue in such capacity until 
discharged by the Secretary, (2) carry out the obligations of the Board 
under any contracts or agreements entered into by it pursuant to Sec.  
1250.336, (3) from time to time account for all receipts and 
disbursements and deliver all property on hand, together with all books 
and

[[Page 243]]

records of the Board and of the trustees, to such person as the 
Secretary may direct, and (4) upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such person full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practicable, in the interest of continuing one or more of 
the research or promotion programs hitherto authorized.



Sec.  1250.359  Effect of termination or amendment.

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



Sec.  1250.360  [Reserved]



Sec.  1250.361  Right of the Secretary.

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



Sec.  1250.362  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by an organization certified pursuant to section 16 of the 
act, or by any interested person affected by the provisions of the act, 
including the Secretary.



Sec.  1250.363  Separability.

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



                     Subpart--Rules and Regulations

    Source: 41 FR 22925, June 8, 1976, unless otherwise noted.

                               Definitions



Sec.  1250.500  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall be those definitions of terms defined in the Egg 
Research and Consumer Information Act, hereinafter called the Act, and 
the Egg Research and Promotion Order, hereinafter called the Order.
    (a) Act. ``Act'' means the Egg Research and Consumer Information Act 
as it may be amended (Pub. L. 93-428).
    (b) Secretary. ``Secretary'' means the Secretary of Agriculture or 
any other officer or employee of the Department of Agriculture to whom 
there has heretofore been delegated, or to whom there may hereafter be 
delegated, the authority to act in his stead.
    (c) Egg Board or Board. ``Egg Board'' or ``Board'' or other 
designatory term adopted by such Board, with the approval of the 
Secretary, means the administrative body established pursuant to Sec.  
1250.326.
    (d) Fiscal period. ``Fiscal period'' means the calendar year unless 
the Egg Board, with the approval of the Secretary, selects some other 
budgetary period.
    (e) Egg producer or producer. ``Egg producer'' or ``producer'' means 
any person who either:

[[Page 244]]

    (1) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (2) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual agreement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.
    (f) Commercial eggs or eggs. ``Commercial eggs'' or ``eggs'' means 
eggs from domesticated chickens which are sold for human consumption 
either in shell egg form or for further processing into egg products.
    (g) Person. ``Person'' means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other entity.
    (h) Handle. ``Handle'' means to grade, carton, process, transport, 
purchase, or in any way place eggs or cause eggs to be placed in the 
current of commerce. Such term shall not include the washing, the 
packing in cases, or the delivery by the producer of his own nest run 
eggs.
    (i) Handler. ``Handler'' means any person who receives or otherwise 
acquires eggs from an egg producer, and processes, prepares for 
marketing, or markets such eggs, including eggs of his own production.
    (j) Egg products. ``Egg products'' means products produced, in whole 
or in part, from eggs.
    (k) Cooperating agency. ``Cooperating agency'' means any person with 
which the Egg Board has entered into an agreement pursuant to Sec.  
1250.517(c).
    (l) Case. ``Case'' means the standard shipping package containing 
30-dozen eggs or the equivalent thereof.
    (m) Plans and projects. ``Plans'' and ``projects'' mean those 
research, consumer and producer education, advertising, marketing, 
product development, and promotion plans, studies, or projects pursuant 
to Sec.  1250.341.
    (n) Representative of a producer. ``Representative of a producer'' 
means the owner, officer, or an employee of a producer who has been duly 
authorized to act in the place and stead of the producer.
    (o) Hen or laying hen. ``Hen'' or ``laying hen'' means a 
domesticated female chicken 20 weeks of age or over, raised primarily 
for the production of commercial eggs.
    (p) Hatching eggs. ``Hatching eggs'' means eggs intended for use by 
hatcheries for the production of baby chicks.
    (q) United States. ``United States'' means the 48 contiguous States 
of the United States of America and the District of Columbia.
    (r) Promotion. ``Promotion'' means any action, including paid 
advertising, to advance the image or desirability of eggs, egg products, 
spent fowl, or products of spent fowl.
    (s) Research. ``Research'' means any type of research to advance the 
image, desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.
    (t) Consumer education. ``Consumer education'' means any action to 
advance the image or desirability of eggs, egg products, spent fowl, or 
products of spent fowl.
    (u) Marketing. ``Marketing'' means the sale or other disposition of 
commercial eggs, egg products, spent fowl, or products of spent fowl, in 
any channel of commerce.
    (v) Commerce. ``Commerce'' means interstate, foreign, or intrastate 
commerce.

[[Page 245]]

    (w) Spent fowl. ``Spent fowl'' means hens which have been in 
production of commercial eggs and have been removed from such production 
for slaughter.
    (x) Products of spent fowl. ``Products of spent fowl'' means 
commercial products produced from spent fowl.
    (y) Started pullet. ``Started pullet'' means a hen less than 20 
weeks of age.
    (z) Shell egg packer. ``Shell egg packer'' means any person grading 
eggs into their various qualities.
    (aa) Egg breaker. ``Egg breaker'' means any person subject to the 
Egg Products Inspection Act (21 U.S.C. 1031 et seq.) engaged in the 
breaking of shell eggs or otherwise involved in preparing shell eggs for 
use as egg products.
    (bb) Nest run eggs. ``Nest run eggs'' means eggs which are packed as 
they come from the production facilities without having been sized and/
or candled with the exception that some checks, dirties, or obvious 
undergrades may have been removed and provided further that the eggs may 
have been washed.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act



Sec.  1250.501  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements by the Office of 
Management and Budget contained in 7 CFR part 1250 pursuant to the 
Paperwork Reduction Act of 1980, Pub. L. 96-511.
    (b) Display.

------------------------------------------------------------------------
                                                             Current OMB
        7 CFR section where identified and described           control
                                                                number
------------------------------------------------------------------------
Sec.:
  1250.523.................................................    0581-0098
  1250.528.................................................    0581-0098
  1250.529.................................................    0581-0098
  1250.530.................................................    0581-0098
  1250.535.................................................    0581-0098
------------------------------------------------------------------------


(Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621-1627) and 
Egg Research and Consumer Information Act, as amended (7 U.S.C. 2701-
2718))

[48 FR 56566, Dec. 22, 1983]

                                 General



Sec.  1250.505  Communications.

    Communications in connection with the Order shall be addressed to 
the Egg Board at its business address.



Sec.  1250.506  Policy and objective.

    (a) It shall be the policy of the Egg Board to carry out an 
effective and continuous coordinated program of research, consumer and 
producer education, advertising, and promotion designed to strengthen 
the egg industry's position in the marketplace, and maintain and expand 
domestic and foreign markets and uses for eggs, egg products, spent 
fowl, and products of spent fowl of the United States.
    (b) It shall be the objective of the Egg Board to carry out programs 
and projects which will provide maximum benefit to the egg industry and 
no undue preference shall be given to any of the various industry 
segments.



Sec.  1250.507  Contracts.

    The Egg Board, with the approval of the Secretary, may enter into 
contracts with persons for the development and submission to it of plans 
or proj ects authorized by the Order and for carrying out of such plans 
or projects. Contractors shall agree to comply with the provisions of 
the Order, this subpart, and applicable provisions of the U.S. Code 
relative to contracting with the U.S. Department of Agriculture. 
Subcontractors who enter into contracts or agreements with a primary 
contractor and who receive or otherwise utilize funds allocated by the 
Egg Board shall be subject to the provisions of this subpart.



Sec.  1250.508  Procedure.

    The organization of the Egg Board and the procedure for conducting 
meetings of the Board shall be in accordance with the By-Laws of the 
Board.



Sec.  1250.509  USDA costs.

    Pursuant to Sec.  1250.347 of the Order, the Board shall pay those 
administrative costs incurred by the U.S. Department of Agriculture for 
the conduct of its duties under the Order as determined periodically by 
the Secretary.

[[Page 246]]

Payment shall be due promptly after the billing for such costs.



Sec.  1250.510  Determination of Board membership.

    (a) Pursuant to Sec.  1250.328 (d) and (e) of the Order, the 48 
contiguous States of the United States shall be grouped into 6 
geographic areas, as follows:

Area 1 (North Atlantic States)--Connecticut, Delaware, Maine, Maryland, 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, Vermont, Virginia, West Virginia, and the District of Columbia;
Area 2 (South Atlantic States)--Alabama, Florida, Georgia, Kentucky, 
North Carolina, South Carolina, and Tennessee;
Area 3 (East North Central States)--Indiana, Michigan, and Ohio;
Area 4 (West North Central States)--Illinois, Iowa, Minnesota, Nebraska, 
North Dakota, South Dakota, and Wisconsin;
Area 5 (South Central States)--Arkansas, Colorado, Kansas, Louisiana, 
Mississippi, Missouri, New Mexico, Oklahoma, and Texas;
Area 6 (Western States)--Arizona, California, Idaho, Montana, Nevada, 
Oregon, Utah, Washington, and Wyoming.

    (b) Board representation among the 6 geographic areas is apportioned 
to reflect the percentage of United States egg production in each area 
times 18 (total Board membership). The number of members of the Board, 
beginning with the 1995-96 term, are: Area 1--3, Area 2--3, Area 3--3, 
Area 4--3, Area 5--3, Area 6--3. Each member will have an alternate 
appointed from the same area.

[59 FR 12155, Mar. 16, 1994]

                Assessments, Collections, and Remittances



Sec.  1250.514  Levy of assessments.

    An assessment rate of 10 cents per case of commercial eggs is levied 
on each case of commercial eggs handled for the account of each 
producer. Each case of commercial eggs shall be subject to assessment 
only once. Producers meeting the requirements of Sec.  1250.348 are 
exempt from the provisions of the Act including this section.

[55 FR 6974, Feb. 28, 1990, as amended at 59 FR 64560, Dec. 15, 1994]



Sec.  1250.515  Reporting period and payment.

    (a) For the purpose of the payment of assessments, either a calendar 
month or a 4-week accounting period shall be considered the reporting 
period; however, other accounting periods may be used when approved by 
the Board on an individual basis. Each collecting handler shall register 
his reporting period with the Board. All changes in reporting periods 
shall be requested in writing and subject to approval by the Board.
    (b) Each producer shall pay the required assessment on his 
commercial eggs pursuant to Sec.  1250.514 to the collecting handler 
designated in Sec.  1250.516 on or before the date of final settlement 
between the producer and the collecting handler for the eggs received by 
the collecting handler during each reporting period.



Sec.  1250.516  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessments shall be any 
of the following:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, or breaks such eggs. Such shell 
egg breaker or egg packer must collect and remit to the Board the 
assessments on all eggs handled except eggs for which there is a 
certification of exemption or eggs for which there is a statement 
indicating that an assessment has already been paid;
    (2) A person who buys or receives nest run eggs from a producer and 
who does not grade, carton, or break such eggs. Such person shall 
collect the assessment from the producer and remit to the Egg Board on 
all such eggs, except for which there is a certification of exemption or 
eggs for which there is a statement indicating that an assessment has 
already been paid;
    (3) Except as otherwise provided in paragraph (a)(4) of this 
section, a producer who grades, cartons, or breaks eggs of his own 
production shall be responsible for remitting the assessment to the 
Board on all eggs produced. This would include the eggs which he grades, 
cartons, or breaks as well as the nest run eggs which are graded,

[[Page 247]]

cartoned, or broken by another handler. Such a producer who remits the 
assessment on nest run eggs to the Board shall provide the handler 
specified in paragraph (a) (1) or (2) of this section with a written 
statement that the assessment has already been paid on the nest run 
eggs; or
    (4) Upon approval of the Board, any person who handles eggs for a 
producer under a written contract that includes express provisions that 
said handler will remit the assessment on such eggs to the Board shall 
be the collecting handler notwithstanding the fact that the producer may 
have graded, cartoned, or otherwise processed the eggs.
    Following are some examples to aid in identification of collecting 
handlers:
    (i) Producer sells, assigns, consigns, or otherwise delivers nest 
run eggs of his own production to a shell egg packer or breaker for 
preparation for market--the shell egg packer or breaker is the 
collecting handler and is responsible for remitting to the Egg Board;
    (ii) Producer grades, cartons, breaks, or otherwise prepares for 
marketing a portion of the eggs of his own production and delivers the 
remaining portion of his nest run eggs to a shell egg packer or breaker-
-the producer is the collecting handler and shall remit the assessment 
on his total production to the Board;
    (iii) Producer sells all or a portion of his eggs in nest run form 
to a handler who is not a shell egg packer or breaker--the handler is 
responsible for collecting the assessment and remitting it to the Egg 
Board except for eggs covered by a statement indicating that an 
assessment has already been paid;
    (iv) A shell egg packer or breaker who buys or receives nest run 
eggs from a handler who is not a shell egg packer or breaker--the 
handler is the collecting handler and shall remit such assessment to the 
Board;
    (v) A shell egg packer or egg breaker buys nest run or graded eggs 
including undergrade eggs from another shell egg packer or egg breaker--
the first shell egg packer or breaker is the collecting handler and 
shall remit such assessments to the Board.
    (b) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of the producer or his estate, or 
the person acting on behalf of creditors, shall be considered the 
producer of the eggs for the purpose of this subpart.
    (c) The collecting handler may collect the assessment directly from 
the producer or deduct the assessment from the proceeds due or paid to 
the producer on whose eggs the assessment is made.

[41 FR 22925, June 8, 1976, as amended at 42 FR 60724, Nov. 29, 1977]



Sec.  1250.517  Remittance to Egg Board.

    (a) The collecting handler responsible for remittance of assessments 
to the Board is not relieved of this obligation as a result of his 
failure to collect payment of the assessment from the egg producer(s).
    (b) Each collecting handler required to remit the assessments on the 
eggs handled during each reporting period, specified in Sec.  
1250.515(a), shall remit the assessments directly to the Egg Board by 
check, draft, or money order payable to the Egg Board on or before the 
15th day after the end of said reporting period together with a report 
pursuant to Sec.  1250.529. The assessment for each reporting period 
shall be calculated on the basis of the gross volume of eggs subject to 
assessment received by the collecting handler during each reporting 
period.
    (c) Remittance through cooperating agency.
    (1) In any State or specified geographic area the Egg Board, with 
the approval of the Secretary, may designate by agreement a cooperating 
agency to collect the assessments in its behalf. Every collecting 
handler within such a State or geographic area shall remit the 
assessments for each reporting period, specified in Sec.  1250.515(a), 
to the designated cooperating agency by check, draft, or money order 
payable to said cooperating agency on or before the 15th day after the 
end of said reporting period together with a report pursuant to Sec.  
1250.529.
    (2) On or before the 20th day after the end of each reporting 
period, each designated cooperating agency shall remit to the Egg Board 
the total amount of

[[Page 248]]

all assessments received from collecting handlers for said reporting 
period together with all collecting handler reports. In addition, each 
designated cooperating agency shall submit to the Egg Board such 
information as is required by the designation agreement with the Egg 
Board.



Sec.  1250.518  Receipts for payment of assessments.

    (a) Each collecting handler shall give each producer whose eggs are 
subject to assessment a receipt for the commercial eggs handled by said 
collecting handler showing payment of the assessment. This receipt may 
be on a separate receipt form or included as part of the invoice or 
settlement sheet for the eggs, but in either event shall contain the 
following information:
    (1) Name, address, and identification number of the collecting 
handler;
    (2) Name and address of the producer who paid the assessment;
    (3) Number of cases of eggs on which assessment was paid and the 
total amount of the assessment; and
    (4) Date on which assessment was paid by producer.
    (b) All eggs sold, consigned, or delivered from a collecting handler 
to another handler, excluding cartoned eggs and loose graded eggs sold 
to the bakeries, restaurants, and institutions, shall be accompanied 
with the collecting handler's written statement that the assessment on 
the lot of eggs covered by the invoice has been paid or that lot of eggs 
or portion thereof is exempt from assessment under provisions of Sec.  
1250.514.



Sec.  1250.519  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec.  1250.347 
shall be increased by a late-payment charge of 1.5 percent each month 
beginning with the day following the date such assessments are 30 days 
past due. Any remaining amount due, which shall include any unpaid 
charges previously made pursuant to this section, shall be increased at 
the same rate on the corresponding day of each month thereafter until 
paid. Assessments that are not paid when due because of a person's 
failure to submit a handler report to the Board as required shall accrue 
late-payment charges from the time such assessments should have been 
remitted. The timeliness of a payment to the Board shall be based on the 
applicable postmark date or the date payment is actually received by the 
Board, whichever is earlier.

[58 FR 34697, June 29, 1993]

                 Registration, Certification and Reports



Sec.  1250.528  Registration of collecting handlers.

    All collecting handlers shall, prior to August 1, 1976, register 
with the Egg Board by filing a registration statement. Registered 
collecting handlers will receive an identification number which must 
appear on all required reports and official communications with the Egg 
Board. New businesses subject to this subpart beginning after August 1, 
1976, shall register with the Egg Board within 30 days following the 
beginning of operations. The statement of registration shall include:
    (a) Name and complete address of the collecting handler;
    (b) Name of individual(s) responsible for filing reports with the 
Egg Board; and
    (c) Type of reporting period desired.



Sec.  1250.529  Reports.

    (a) Collecting handler reports. (1) Each collecting handler shall 
make reports on forms made available or approved by the Egg Board. Each 
collecting handler shall prepare a separate report form each reporting 
period. Each report shall be mailed to the Egg Board within 15 days 
after the close of the reporting period and shall contain the following 
information:
    (i) Date of report;
    (ii) Reporting period covered by the report;
    (iii) Name and address of collecting handler and identification 
number;
    (iv) Total number of cases of eggs handled, total number of cases of 
eggs subject to collection of assessment, total number of cases of eggs 
exempt under Sec.  1250.514 from collection of assessment, total number 
of cases of imported eggs handled, and total number of cases of eggs 
received from another

[[Page 249]]

handler and on which an assessment was already collected;
    (v) The names and addresses of producers subject to assessment 
supplying eggs to the handlers and number of cases of eggs received from 
each producer;
    (vi) Total amount of assessment due for eggs handled during the 
reporting period and remitted with the report; and
    (vii) Such other information as may be required by the Board.
    (2) Collecting handler reports shall be filed each reporting period 
following registration until such time as the Egg Board is notified in 
writing that the collecting handler has ceased to do business. During 
reporting periods in which the collecting handler does not handle any 
eggs, his report form shall state ``No Eggs Handled.''
    (b) The Egg Board may require all persons subject to section 7(c) of 
the Act to make reports as needed for the enforcement and administration 
of the Order and as approved by the Secretary.



Sec.  1250.530  Certification of exempt producers.

    Egg producers not subject to the provisions of the Act pursuant to 
Sec.  1250.348 shall file with all handlers to whom they sell eggs a 
statement certifying their exemption from the provisions of the Act in 
accordance with the criterion of Sec.  1250.348. Certification shall be 
made on forms approved and provided by the Egg Board to collecting 
handlers for use by exempt producers. The certification form shall be 
filed with each handler within 10 days after the first sale of eggs to 
such handler after March 1, 1990, and annually thereafter on or before 
January 1 as long as the producer continues to do business with the 
handler. A copy of the certificate of exemption shall be forwarded to 
the Egg Board by the handler within 30 days of receipt. The 
certification shall list the following:
    (a) The name and address of the producer;
    (b) Basis for producer exemption according to the requirements of 
Sec.  1250.348; and
    (c) The signature of the producer.

If the exempt producer becomes subject to the provisions of the Act 
pursuant to the requirements of Sec.  1250.348, that producer shall 
notify, within 10 days, all handlers with whom he has filed a 
certificate of exemption.

[55 FR 6974, Feb. 28, 1990]

                                 Records



Sec.  1250.535  Retention of records.

    (a) Each person required to make reports pursuant to this subpart 
shall maintain and retain for at least 2 years beyond the fiscal period 
of their applicability:
    (1) One copy of each report submitted to the Egg Board;
    (2) Records of all exempt producers including certification of 
exemption as necessary to verify the address of each exempt producer; 
and
    (3) Such other records as are necessary to verify reports submitted 
to the Egg Board.
    (b) Egg producers subject to Sec.  1250.514 shall maintain and 
retain for at least 2 years beyond the period of their applicability:
    (1) Receipts, or copies thereof, for payment of assessments; and
    (2) Such records as are necessary to verify monthly levels of egg 
production.



Sec.  1250.536  Availability of records.

    Each handler and egg producer subject to this subpart and all 
persons subject to section 7(c) of the Act shall make available for 
inspection and copying by authorized employees of the Egg Board and/or 
the Secretary during regular business hours, such information as is 
appropriate and necessary to verify compliance with this subpart.



Sec.  1250.537  Confidentiality.

    All information obtained by officers and employees of the Department 
of Agriculture, the Egg Board, or any person under contract by the Egg 
Board or otherwise acting on behalf of the Egg Board from the books, rec 
ords, and reports of persons subject to this subpart, and all 
information with respect to refunds of assessments made to individual 
producers, shall be kept confidential in the manner and to the extent 
provided in Sec.  1250.353 of the Order.

[[Page 250]]

            Patents, Copyrights, Trademarks, and Information



Sec.  1250.542  Patents, copyrights, trademarks, and information.

    Patents, copyrights, trademarks, and information accruing from work 
pursuant to any plan or project undertaken by any person on behalf of 
the Egg Board, financed by assessment funds or other revenues of the Egg 
Board; shall become property of the U.S Government as represented by the 
Egg Board; and such patents, copyrights, trademarks, and information may 
be licensed subject to approval by the Secretary of Agriculture. Upon 
termination of the Order, the Egg Board shall transfer custody of all 
such patents, copyrights, trademarks, and information to the Secretary 
of Agriculture pursuant to the procedure provided for in Sec.  1250.358 
who shall utilize them in a manner that he determines to be in the best 
interest of egg producers. Funds generated from the use of patents, 
copyrights, trademarks, and information by the Egg Board will be 
considered income subject to the same fiscal, budget, and audit control 
as the other funds of the Egg Board. Ownership of inventions made by 
employees of the Board shall be determined in accordance with Executive 
Order 10096.

[41 FR 22925, June 8, 1976; 41 FR 23930, June 14, 1976]

                           Personal Liability



Sec.  1250.547  Personal liability.

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



PART 1260--BEEF PROMOTION AND RESEARCH--Table of Contents




              Subpart A--Beef Promotion and Research Order

                               Definitions

Sec.
1260.101 Department.
1260.102 Secretary.
1260.103 Board.
1260.104 Committee.
1260.105 Person.
1260.106 Collecting person.
1260.107 State.
1260.108 United States.
1260.109 Unit.
1260.110 [Reserved]
1260.111 Fiscal year.
1260.112 Federation.
1260.113 Established national nonprofit industry-governed organizations.
1260.114 Eligible organization.
1260.115 Qualified State beef council.
1260.116 Producer.
1260.117 Importer.
1260.118 Cattle.
1260.119 Beef.
1260.120 Beef products.
1260.121 Imported beef or beef products.
1260.122 Promotion.
1260.123 Research.
1260.124 Consumer information.
1260.125 Industry information.
1260.126 Plans and projects.
1260.127 Marketing.
1260.128 Act.
1260.129 Customs Service.
1260.130 Part and subpart.

              Cattlemen's Beef Promotion and Research Board

1260.141 Membership of Board.
1260.142 Term of office.
1260.143 Nominations.
1260.144 Nominee's agreement to serve.
1260.145 Appointment.
1260.146 Vacancies.
1260.147 Procedure.
1260.148 Compensation and reimbursement.
1260.149 Powers of the Board.
1260.150 Duties of the Board.
1260.151 Expenses.

                   Beef Promotion Operating Committee

1260.161 Establishment and membership.
1260.162 Term of office.
1260.163 Vacancies.
1260.164 Procedure.
1260.165 Compensation and reimbursement.

[[Page 251]]

1260.166 Officers of the Committee.
1260.167 Powers of the Committee.
1260.168 Duties of the Committee.
1260.169 Promotion, research, consumer information and industry 
          information.

                               Assessments

1260.172 Assessments.
1260.173-1260.174 [Reserved]
1260.175 Late-payment charge.
1260.176 Adjustment of accounts.
1260.181 Qualified State beef councils.

                       Reports, Books and Records

1260.201 Reports.
1260.202 Books and records.
1260.203 Confidential treatment.

                              Miscellaneous

1260.211 Proceedings after termination.
1260.212 Effect of termination or amendment.
1260.213 Removal.
1260.214 Personal liability.
1260.215 Patents, copyrights, inventions and publications.
1260.216 Amendments.
1260.217 Separability.

                    Subpart B--Rules and Regulations

1260.301 Terms defined.
1260.310 Domestic assessments.
1260.311 Collecting persons for purposes of collection of assessments.
1260.312 Remittance to the Cattlemen's Board or Qualified State Beef 
          Council.
1260.313 Document evidencing payment of assessments.
1260.314 Certification of non-producer status for certain transactions.
1260.315 Qualified State Beef Councils.
1260.316 Paperwork Reduction Act assigned number.

Subpart C [Reserved]

  Subpart D--Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

1260.500 General.
1260.510 Definitions.
1260.520 Responsibility for administration of regulations.
1260.530 Certification of eligibility.
1260.540 Application for certification.
1260.550 Verification of information.
1260.560 Review of certification.
1260.570 Notification of certification and the listing of certified 
          organizations.
1260.580-1260.600 [Reserved]
1260.610 Acceptance of appointment.
1260.620 Confidential treatment of information.
1260.630 Paperwork Reduction Act assigned number.
1260.640 Application for Certification Form.

    Authority: 7 U.S.C. 2901-2911.



              Subpart A--Beef Promotion and Research Order

    Source: 51 FR 26138, July 18, 1986, unless otherwise noted.

                               Definitions



Sec.  1260.101  Department.

    Department means the United States Department of Agriculture.



Sec.  1260.102  Secretary.

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



Sec.  1260.103  Board.

    Board means the Cattlemen's Beef Promotion and Research Board 
established pursuant to the Act and this subpart.



Sec.  1260.104  Committee.

    Committee means the Beef Promotion Operating Committee established 
pursuant to the Act and this subpart.



Sec.  1260.105  Person.

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



Sec.  1260.106  Collecting person.

    Collecting person means the person making payment to a producer for 
cattle, or any other person who is responsible for collecting and 
remitting an assessment pursuant to the Act, the order and regulations 
prescribed by the Board and approved by the Secretary.



Sec.  1260.107  State.

    State means each of the 50 States.



Sec.  1260.108  United States.

    United States means the 50 States and the District of Columbia.

[[Page 252]]



Sec.  1260.109  Unit.

    Unit means each State, group of States or class designation which is 
represented on the Board.



Sec.  1260.110  [Reserved]



Sec.  1260.111  Fiscal year.

    Fiscal year means the calendar year or such other annual period as 
the Board may determine.



Sec.  1260.112  Federation.

    Federation means the Beef Industry Council of the National Live 
Stock and Meat Board, or any successor organization to the Beef Industry 
Council, which includes as its State affiliates the qualified State beef 
councils.



Sec.  1260.113  Established national nonprofit industry-governed organizations.

    Established national nonprofit industry-governed organizations means 
organizations which:
    (a) Are nonprofit organizations pursuant to sections 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6));
    (b) Are governed by a board of directors representing the cattle or 
beef industry on a national basis; and
    (c) Were active and ongoing before the enactment of the Act.



Sec.  1260.114  Eligible organization.

    Eligible organization means any organization which has been 
certified by the Secretary pursuant to the Act and this part as being 
eligible to submit nominations for membership on the Board.



Sec.  1260.115  Qualified State beef council.

    Qualified State beef council means a beef promotion entity that is 
authorized by State statute or a beef promotion entity organized and 
operating within a State that receives voluntary assessments or 
contributions; conducts beef promotion, research, and consumer and 
industry information programs; and that is certified by the Board 
pursuant to this subpart as the beef promotion entity in such State.



Sec.  1260.116  Producer.

    Producer means any person who owns or acquires ownership of cattle; 
provided, however, that a person shall not be considered a producer 
within the meaning of this subpart if (a) the person's only share in the 
proceeds of a sale of cattle or beef is a sales commission, handling 
fee, or other service fee; or (b) the person (1) acquired ownership of 
cattle to facilitate the transfer of ownership of such cattle from the 
seller to a third party, (2) resold such cattle no later than ten (10) 
days from the date on which the person acquired ownership, and (3) 
certified, as required by regulations prescribed by the Board and 
approved by the Secretary, that the requirements of this provision have 
been satisfied.



Sec.  1260.117  Importer.

    Importer means any person who imports cattle, beef, or beef products 
from outside the United States.



Sec.  1260.118  Cattle.

    Cattle means live domesticated bovine animals regardless of age.



Sec.  1260.119  Beef.

    Beef means flesh of cattle.



Sec.  1260.120  Beef products.

    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and products made therefrom.



Sec.  1260.121  Imported beef or beef products.

    Imported beef or beef products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of beef including those products which have been 
assigned one or more of the following numbers in the Tariff Schedule of 
the United States: 106.1020, 106.1040, 106.1060, 106.1080, 107.2000, 
107.2520, 107.4000, 107.4500, 107.4820, 107.4840, 107.5220, 107.5240, 
107.5500, 107.6100, 107.6200, 107.6300.



Sec.  1260.122  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image and desirability of beef and beef

[[Page 253]]

products with the express intent of improving the competitive position 
and stimulating sales of beef and beef products in the marketplace.



Sec.  1260.123  Research.

    Research means studies relative to the effectiveness of market 
development and promotion efforts, studies relating to the nutritional 
value of beef and beef products, other related food science research, 
and new product development.



Sec.  1260.124  Consumer information.

    Consumer information means nutritional data and other information 
that will assist consumers and other persons in making evaluations and 
decisions regarding the purchasing, preparing, and use of beef and beef 
products.



Sec.  1260.125  Industry information.

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



Sec.  1260.126  Plans and projects.

    Plans and projects means promotion, research, consumer information 
and industry information plans, studies or projects conducted pursuant 
to this subpart.



Sec.  1260.127  Marketing.

    Marketing means the sale or other disposition in commerce of cattle, 
beef or beef products.



Sec.  1260.128  Act.

    Act means the Beef Promotion and Research Act of 1985, Title XVI, 
Subtitle A of the Food Security Act of 1985, Pub. L. 99-198 and any 
amendments thereto.



Sec.  1260.129  Customs Service.

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



Sec.  1260.130  Part and subpart.

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

              Cattlemen's Beef Promotion and Research Board



Sec.  1260.141  Membership of Board.

    (a) Beginning with the 2002 Board nominations and the associated 
appointments effective early in the year 2003, the United States shall 
be divided into 39 geographical units and 1 unit representing importers, 
and the number of Board members from each unit shall be as follows:

                          Cattle and Calves \1\
------------------------------------------------------------------------
                                                    (1,000
                   State/unit                        head)     Directors
------------------------------------------------------------------------
1. Alabama......................................       1,440           1
2. Arizona......................................         833           1
3. Arkansas.....................................       1,823           2
4. California...................................       5,117           5
5. Colorado.....................................       3,167           3
6. Florida......................................       1,820           2
7. Idaho........................................       1,940           2
8. Illinois.....................................       1,497           1
9. Indiana......................................         953           1
10. Iowa........................................       3,683           4
11. Kansas......................................       6,617           7
12. Kentucky....................................       2,303           2
13. Louisiana...................................         887           1
14. Michigan....................................       1,013           1
15. Minnesota...................................       2,533           3
16. Mississippi.................................       1,100           1
17. Missouri....................................       4,333           4
18. Montana.....................................       2,583           3
19. Nebraska....................................       6,650           7
20. Nevada......................................         517           1
21. New Mexico..................................       1,617           2
22. New York....................................       1,433           1
23. North Carolina..............................         957           1
24. North Dakota................................       1,927           2
25. Ohio........................................       1,237           1
26. Oklahoma....................................       5,183           5
27. Oregon......................................       1,447           1
28. Pennsylvania................................       1,653           2
29. South Dakota................................       3,950           4
30. Tennessee...................................       2,167           2
31. Texas.......................................      13,900          14
32. Utah........................................         903           1
33. Virginia....................................       1,650           2
34. Wisconsin...................................       3,383           3
35. Wyoming.....................................       1,563           2
36. Northwest...................................  ..........           1
  Alaska........................................          11  ..........
  Hawaii........................................         162  ..........
  Washington....................................       1,187  ..........
                                                 ------------
      Total.....................................       1,408  ..........
37. Northeast...................................  ..........           1
  Connecticut...................................          65  ..........
  Delaware......................................          28  ..........
  Maine.........................................          99  ..........
  Massachusetts.................................          55  ..........
  New Hampshire.................................          45  ..........
  New Jersey....................................          50  ..........
  Rhode Island..................................           6  ..........
  Vermont.......................................         300  ..........
                                                 ------------

[[Page 254]]

 
      Total.....................................         647  ..........
38. Mid-Atlantic................................  ..........           1
  District of Columbia..........................           0  ..........
  Maryland......................................         243  ..........
  West Virginia.................................         420  ..........
                                                 ------------
      Total.....................................         663  ..........
39. Southeast...................................  ..........           2
  Georgia.......................................       1,293  ..........
  South Carolina................................         463  ..........
                                                 ------------
      Total.....................................       1,756  ..........
40. Importer \2\................................       7,654           8
------------------------------------------------------------------------
\1\ 1999, 2000, and 2001 average of January 1 cattle inventory data.
\2\ 1998, 1999, and 2000 average of annual import data.

    (b) The Board shall be composed of cattle producers and importers 
appointed by the Secretary from nominations submitted pursuant to the 
Act and regulations of this Part. A producer may only be nominated to 
represent the unit in which that producer is a resident.
    (c) At least every three (3) years, and not more than every two (2) 
years, the Board shall review the geographic distribution of cattle 
inventories throughout the United States and the volume of imported 
cattle, beef, and beef products and, if warranted, shall reapportion 
units and/or modify the number of Board members from units in order to 
best reflect the geographic distribution of cattle production volume in 
the United States and the volume of imported cattle, beef, or beef 
products into the United States.
    (d) The Board may recommend to the Secretary a modification in the 
number of cattle per unit necessary for representation on the Board.
    (e) The following formula will be used to determine the number of 
Board members who shall serve on the Board for each unit:
    (1) Each geographic unit or State that includes a total cattle 
inventory equal to or greater than five hundred thousand (500,000) head 
of cattle shall be entitled to one representative on the Board;
    (2) States which do not have total cattle inventories equal to or 
greater than five hundred thousand (500,000) head of cattle shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which have a combined total inventory of not less than 500,000 
head of cattle and such unit(s) shall be entitled to at least one 
representative on the Board;
    (3) Importers shall be represented by a single unit, with the number 
of Board members representing such unit based upon a conversion of the 
total volume of imported cattle, beef or beef products into live animal 
equivalencies;
    (4) Each unit shall be entitled to representation by an additional 
Board member for each one million (1,000,000) head of cattle within the 
unit which exceeds the initial five hundred thousand (500,000) head of 
cattle within the unit qualifying such unit for representation.
    (f) In determining the volume of cattle within the units, the Board 
and the Secretary shall utilize the information received by the Board 
pursuant to Sec. Sec.  1260.201 and 1260.202 industry data and data 
published by the Department.

[51 FR 26138, July 18, 1986, as amended at 55 FR 20445, May 17, 1990; 58 
FR 12999, Mar. 9, 1993; 60 FR 62020, Dec. 4, 1995; 64 FR 3815, Jan. 26, 
1999; 67 FR 11412, Mar. 14, 2002]



Sec.  1260.142  Term of office.

    (a) The members of the Board shall serve for terms of three (3) 
years, except that the members appointed to the initial Board shall 
serve, proportionately, for terms of 1, 2, and 3 years. To the extent 
practicable, the terms of Board members from the same unit shall be 
staggered for the initial Board.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary.
    (c) No member shall serve more than two consecutive 3-year terms in 
such capacity.



Sec.  1260.143  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations. An eligible organization shall only submit nominations 
for positions on the Board representing units in which such eligible 
organization can establish that it is certified as an eligible 
organization to submit nominations for that unit. If the Secretary 
determines that a unit is not represented

[[Page 255]]

by an eligible organization, then the Secretary may solicit nominations 
from organizations, and producers residing in that unit.
    (b) Nominations for representation of the importer unit may be 
submitted by--
    (1) Organizations which represent importers of cattle, beef or beef 
products, as determined by the Secretary, or
    (2) Individual importers of cattle, beef or beef products. 
Individual importers submitting nominations for representation of the 
importer unit must establish to the satisfaction of the Secretary that 
the persons submitting the nominations are importers of cattle, beef or 
beef products.
    (c) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board members shall be submitted to the Secretary not less 
than sixty (60) days prior to the expiration of the terms of the members 
whose terms are expiring, in the manner as described in this section. In 
the case of vacancies due to reasons other than the expiration of a term 
of office, successor Board members shall be appointed pursuant to Sec.  
1260.146.
    (d) Where there is more than one eligible organization representing 
producers in a unit, they may caucus and jointly nominate two qualified 
persons for each position representing that unit on the Board for which 
a member is to be appointed. If joint agreement is not reached with 
respect to any such nominations, or if no caucus is held, each eligible 
organization may submit to the Secretary two nominees for each 
appointment to be made to represent that unit.



Sec.  1260.144  Nominee's agreement to serve.

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



Sec.  1260.145  Appointment.

    (a) From the nominations made pursuant to Sec.  1260.143, the 
Secretary shall appoint the members of the Board on the basis of 
representation provided for in Sec.  1260.141.
    (b) Producers or importers serving on the Federation Board of 
Directors shall not be eligible for appointment to serve on the Board 
for a concurrent term.



Sec.  1260.146  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request that nominations for a successor for the vacancy be submitted by 
the eligible organization(s) representing producers or importers of the 
unit represented by the vacancy. If no eligible organization(s) 
represents producers or importers in such unit, then the Secretary shall 
determine the manner in which nominations for the vacancy are submitted.



Sec.  1260.147  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum, and any action of the Board at such a 
meeting shall require the concurring votes of at least a majority of 
those present at such meeting. The Board shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Board emergency 
action is considered necessary, and in lieu of a properly convened 
meeting, the Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing. In the event 
that such action is taken, all members must be notified and provided the 
opportunity to vote. Any action so taken shall have the same force as 
though such action had been taken at a regular or special meeting of the 
Board.

[[Page 256]]



Sec.  1260.148  Compensation and reimbursement.

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



Sec.  1260.149  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive or initiate, investigate, and report to the Secretary 
complaints of violations of the provisions of this subpart;
    (d) To adopt such rules for the conduct of its business as it may 
deem advisable;
    (e) To recommend to the Secretary amendments to this subpart; and
    (f) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec.  1260.172, in, and only in, 
obligations of the United States or any agency thereof, in general 
obligations of any State or any political subdivision thereof, in any 
interest-bearing account or certificate of deposit of a bank that is a 
member of the Federal Reserve System, or in obligations fully guaranteed 
as to principal and interest by the United States.



Sec.  1260.150  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson, a vice-chairperson and a treasurer and 
such other officers as may be necessary;
    (b) To elect from its members an Executive Committee of no more than 
11 and no less than 9 members, whose membership shall, to the extent 
practicable, reflect the geographic distribution of cattle numbers or 
their equivalent. The vice-chairperson of the Board shall serve as 
chairperson of the Executive Committee and the chairperson and the 
treasurer of the Board shall serve as members of the Executive 
Committee;
    (c) To delegate to the Executive Committee the authority to 
administer the terms and provisions of this subpart under the direction 
of the Board and within the policies determined by the Board;
    (d) To elect from its members 10 representatives to the Beef 
Promotion Operating Committee which shall be composed of 10 members from 
the Board and 10 members elected by the Federation;
    (e) To utilize the resources, personnel, and facilities of 
established national nonprofit industry-governed organizations;
    (f) To review and, if approved, submit to the Secretary for 
approval, budgets prepared by the Beef Promotion Operating Committee on 
a fiscal period basis of the Committee's anticipated expenses and 
disbursements in the administration of the Committee's responsibilities, 
including probable costs of promotion, research, and consumer 
information and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information and industry information programs contemplated 
therein;
    (g) To prepare and submit to the Secretary for approval budgets on a 
fiscal period basis of the Board's overall anticipated expenses and 
disbursements, including the Committee's anticipated expenses and 
disbursements, in the administration of this subpart;
    (h) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (i)-(j) [Reserved]
    (k) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (l) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may

[[Page 257]]

request, and submit a copy of each such audit to the Secretary;
    (m) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or his 
representative may attend such meetings;
    (n) To review applications submitted by State beef promotion 
organizations pursuant to Sec.  1260.181 and to make determinations with 
regard to such applications;
    (o) To submit to the Secretary such information pursuant to this 
subpart as may be requested; and
    (p) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the beef industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]



Sec.  1260.151  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve), as the Secretary finds are 
reasonable and likely to be incurred by the board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with this subpart. Administrative expenses incurred 
by the board shall not exceed 5 percent of the projected revenue of that 
fiscal period. Expenses authorized in this paragraph shall be paid from 
assessments collected pursuant to Sec.  1260.172.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec.  1260.172, for administrative costs incurred 
by the Department to carry out its responsibilities pursuant to this 
subpart after the effective date of this subpart.
    (c) [Reserved]
    (d) Expenditures for the maintenance and expansion of foreign 
markets for beef and beef products shall be limited to an amount equal 
to or less than the total amount of assessments paid pursuant to Sec.  
1260.172(a).

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 60 FR 58502, Nov. 28, 1995]

                   Beef Promotion Operating Committee



Sec.  1260.161  Establishment and membership.

    (a) There is hereby established a Beef Promotion Operating Committee 
of 20 members. The Committee shall be composed of 10 Board members 
elected by the Board and 10 producers elected by the Federation.
    (b) Board representation on the Committee shall consist of the 
chairperson, vice-chairperson and treasurer of the Board, and seven 
representatives of the Board who will be duly elected by the Board to 
serve on the Committee. The seven representatives to the Committee 
elected by the Board shall, to the extent practical, reflect the 
geographic and unit distribution of cattle numbers, or the equivalent 
thereof.
    (c) Federation representation on the Committee shall consist of the 
Federation chairperson, vice-chairperson, and eight duly elected 
producer representatives of the Federation Board of Directors who are 
members or ex officio members of the Board of Directors of a qualified 
State beef council. The eight representatives of the Federation elected 
to serve on the Committee shall, to the extent practical, reflect the 
geographic distribution of cattle numbers. The Federation shall submit 
to the Secretary the names of the representatives elected by the 
Federation to serve on the Committee and the manner in which such 
election was held and that such representatives are producers and are 
members or ex officio members of the Board of Directors of a qualified 
State beef council on the Federation Board of Directors. The prospective 
Federation representatives shall file with the Secretary a written 
agreement to serve on the Committee and to disclose any relationship 
with any beef promotion entity or with any organization that has or is 
being considered for a contractual relationship with the Board or the 
Committee. When the Secretary is satisfied that the above conditions are 
met, the Secretary shall certify such representatives as eligible to 
serve on the Committee.

[[Page 258]]



Sec.  1260.162  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec.  1260.163  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Federation, depending upon which organization is represented by the 
vacancy, shall submit the name of a successor for the position in the 
manner utilized to elect representatives pursuant to Sec.  1260.161 (b) 
and (c) of this section.



Sec.  1260.164  Procedure.

    (a) Attendance of at least 15 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds of the members present. The Committee shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than two-
thirds of its members by mail, telephone, or telegraph. Action taken by 
this emergency procedure is valid only if all members are notified and 
provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Committee.



Sec.  1260.165  Compensation and reimbursement.

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



Sec.  1260.166  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The chairperson of the Board shall be chairperson of the 
Committee.
    (b) The chairperson of the Federation shall be vice-chairperson of 
the Committee.
    (c) The treasurer of the Board shall be treasurer of the Committee.
    (d) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec.  1260.167  Powers of the Committee.

    The Committee shall have the following powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of beef and beef 
products as well as projects for research, consumer information and 
industry information and to make recommendations to the Secretary 
regarding such proposals;
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable;
    (c) To establish committees of persons other than Committee members 
to advise the Committee and pay the necessary and reasonable expenses 
and fees of the members of such committees.



Sec.  1260.168  Duties of the Committee.

    The Committee shall have the following duties:
    (a) To meet and to organize;
    (b) To contract with established national nonprofit industry-
governed organizations to implement programs of promotion, research, 
consumer information and industry information;
    (c) To disseminate information to Board members;
    (d) To prepare and submit to the Board for approval budgets on a 
fiscal-period basis of its anticipated expenses and disbursements in the 
administration of its responsibilities, including probable costs of 
promotion, research, consumer information and industry information plans 
or projects, and also including a general description of the proposed 
promotion, research, consumer information and industry information 
programs contemplated therein;

[[Page 259]]

    (e) To develop and submit to the Secretary for approval promotion, 
research, consumer information and industry information plans or 
projects;
    (f) With the approval of the Secretary to enter into contracts or 
agreements with established national nonprofit industry-governed 
organizations for the implementation and conduct of activities 
authorized under Sec. Sec.  1260.167 and 1260.169 and for the payment of 
the cost of such activities with funds collected through assessments 
pursuant to Sec.  1260.172. Any such contract or agreement shall provide 
that:
    (1) The contractors shall develop and submit to the Committee a 
budget or budgets which shall show the estimated cost to be incurred for 
such activity or project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
transactions and make periodic reports to the Committee or Board of 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary, the Committee or the Board may 
require. The Secretary or agents of the Committee or the Board may audit 
periodically the records of the contracting party;
    (g) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (h) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees and advisory committees in order that 
the Secretary, or his representative, may attend such meetings;
    (i) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (j) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the cattle industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.



Sec.  1260.169  Promotion, research, consumer information and industry 
information.

    The Committee shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans and projects 
for promotion, research, consumer information and industry information 
authorized by this subpart. Such plans and projects shall provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate plans or projects for promotion, research, consumer 
information and industry information, with respect to beef and beef 
products designed to strengthen the beef industry's position in the 
marketplace and to maintain and expand domestic and foreign markets and 
uses for beef and beef products;
    (b) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of beef 
and beef products and the creation of new products thereof, to the end 
that marketing and utilization of beef and beef products may be 
encouraged, expanded, improved or made more acceptable in the United 
States and foreign markets;
    (c) Each plan or project authorized under paragraph (a) and (b) of 
this section shall be periodically reviewed or evaluated by the 
Committee to ensure that each such plan or project contributes to an 
effective program of promotion, research, consumer information and 
industry information. If it is found by the Committee that any such plan 
or project does not further the purposes of the Act, then the Committee 
shall terminate such plan or project;
    (d) In carrying out any plan or project of promotion or advertising 
implemented by the Committee, no reference to a brand or trade name of 
any beef product shall be made without the approval of the Board and the 
Secretary. No such plans or projects shall make use of any unfair or 
deceptive acts or practices, including unfair or deceptive acts or 
practices with respect to the quality, value or use of any competing 
product; and
    (e) No funds collected by the Board under this subpart shall in any 
manner

[[Page 260]]

be used for the purpose of influencing governmental policy or action, 
except to recommend to the Secretary amendments to this part.

                               Assessments



Sec.  1260.172  Assessments.

    (a) Domestic assessments. (1) Except as prescribed by regulations 
approved by the Secretary, each person making payment to a producer for 
cattle purchased from such producer shall be a collecting person and 
shall collect an assessment from the producer, and each producer shall 
pay such assessment to the collecting person, at the rate of one dollar 
($1) per head of cattle purchased and such collecting person shall remit 
the assessment to the Board or to a qualified State beef council 
pursuant to Sec.  1260.172(a)(5).
    (2) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, or for export purposes, shall remit 
to a qualified State beef council or to the Board an assessment on such 
cattle at the rate of one dollar ($1) per head of cattle or the 
equivalent thereof.
    (3) In determining the assessment due from each producer pursuant to 
Sec.  1260.172(a), a producer who is contributing to a qualified State 
beef council(s) shall receive a credit from the Board for contributions 
to such Council, but not to exceed 50 cents per head of cattle assessed.
    (4) In order for a producer described in Sec.  1260.172(a) to 
receive the credit authorized in Sec.  1260.172(a)(3), the qualified 
State beef council or the collecting person must establish to the 
satisfaction of the Board that the producer has contributed to a 
qualified State beef council.
    (5) Each person responsible for the remittance of the assessment 
pursuant to Sec.  1260.172 (a) (1) and (2) shall remit the assessment to 
the qualified State beef council in the State from which the cattle 
originated prior to sale, or if there is no qualified State beef council 
within such State, the assessment shall be remitted directly to the 
Board. However, the Board, with the approval of the Secretary, may 
authorize qualified State beef councils to propose modifications to the 
foregoing ``State of origin'' rule to ensure effective coordination of 
assessment collections between qualified State beef councils. Qualified 
State beef councils and the Board shall coordinate assessment collection 
procedures to ensure that producers selling or marketing cattle in 
interstate commerce are required to pay only one assessment per 
individual sale of cattle. For the purpose of this subpart, ``State of 
origin'' rule means the State where the cattle were located at time of 
sale, or the State in which the cattle were located prior to sale if 
such cattle were transported interstate for the sole purpose of sale. 
Assessments shall be remitted not later than the 15th day of the month 
following the month in which the cattle were purchased or marketed.
    (6) If a State law or regulation promulgated pursuant to State law 
requires the payment and collection of a mandatory, nonrefundable 
assessment of more fifty (50) cents per head on the sale and purchase of 
cattle, or the equivalent thereof for beef and beef products as 
described in Sec.  1260.172 (a)(1) and (2) for use by a qualified State 
beef council to fund activities similar to those described in Sec.  
1260.169, and such State law or regulation authorizes the issuance of a 
credit of that amount of the assessment which exceeds fifty (50) cents 
to producers who waive any right to the refund of the assessment 
credited by the State due pursuant to this subpart, then any producer 
subject to such State law or regulation who pays only the amount due 
pursuant to such State law or regulation and this subpart, including any 
credits issued, shall thereby waive that producer's right to receipt 
from the Board of a refund of such assessment for that portion of such 
refund for which the producer received credit pursuant to such State law 
or regulation.
    (b) Importer assessments. (1) Importers of cattle, beef, and beef 
products into the United States shall pay an assessment to the Board 
through the U.S. Customs Service, or in such other manner as may be 
established by regulations approved by the Secretary.

[[Page 261]]

    (2) The assessment rates for imported cattle, beef, and beef 
products are as follows:

------------------------------------------------------------------------
                 Live Cattle                          Assessment
------------------------------------------------------------------------
0102.10.00103...............................  $1.00/hd
0102.10.00201...............................  $1.00/hd
0102.10.00309...............................  $1.00/hd
0102.10.00504...............................  $1.00/hd
0102.90.20004...............................  $1.00/hd
0102.90.40206...............................  $1.00/hd
0102.90.40402...............................  $1.00/hd
0102.90.40607...............................  $1.00/hd
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                        Assessment
             Beef and Beef Products              -----------------------
                                                   cents/lb    cents/kg
------------------------------------------------------------------------
0201.10.00103...................................         .77    1.697542
0201.10.00906...................................         .20    0.440920
0201.20.20009...................................         .28    0.617288
0201.20.40005...................................         .27    0.595242
0201.20.60000...................................         .20    0.440920
0201.30.20007...................................         .28    0.617288
0201.30.40003...................................         .27    0.595242
0201.30.60008...................................         .27    0.595242
0202.10.00102...................................         .77    1.697542
0202.10.00905...................................         .20    0.440920
0202.20.20008...................................         .28    0.617288
0202.20.40004...................................         .27    0.595242
0202.20.60009...................................         .20    0.440920
0202.30.20006...................................         .28    0.617288
0202.30.40002...................................         .27    0.595242
0202.30.60007...................................         .27    0.595242
0206.10.00000...................................         .20    0.440920
0206.21.00007...................................         .20    0.440920
0206.22.00006...................................         .20    0.440920
0206.29.00009...................................         .20    0.440920
0210.20.00002...................................         .35    0.771610
1601.00.40003...................................         .25    0.551150
1601.00.60204...................................         .25    0.551150
1602.50.05004...................................         .35    0.771610
1602.50.09000...................................         .35    0.771610
1602.50.10203...................................         .35    0.771610
1602.50.10409...................................         .35    0.771610
1602.50.20201...................................         .37    0.815702
1602.50.20407...................................         .37    0.815702
1602.50.60006...................................         .38    0.837748
------------------------------------------------------------------------

    (3) The Board may prescribe by regulation, with the approval of the 
Secretary, an increase or decrease in the level of assessments for 
imported beef and beef products based upon revised determinations of 
live animal equivalencies.
    (4) The assessments due upon imported cattle, beef and beef products 
shall be remitted to the Customs Service upon importation of the cattle, 
beef or beef products into the United States, or in such other manner as 
may be provided by regulations prescribed by the Board and approved by 
the Secretary.
    (c) The collection of assessments pursuant to Sec.  1260.172 (a) and 
(b) shall begin with respect to cattle purchased or cattle, beef, and 
beef products imported on and after the effective date of this section 
and shall continue until terminated by the Secretary.
    (d) Money remitted pursuant to this subpart shall be in the form of 
a negotiable instrument made payable as appropriate to the qualified 
State beef council or the ``Cattlemen's Beef Promotion and Research 
Board.'' Such remittances and the reports specified in Sec.  1260.201 
shall be mailed to the location designated by the Board.

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 54 FR 28019, July 5, 1989]



Sec.  1260.173-1260.174  [Reserved]



Sec.  1260.175  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec.  1260.172 
shall be increased 2.0 percent each month beginning with the day 
following the date such assessments were due. Any remaining amount due, 
which shall include any unpaid charges previously made pursuant to this 
section, shall be increased at the same rate on the corresponding day of 
each month thereafter until paid. For the purposes of this section, any 
assessment that was determined at a date later than prescribed by this 
subpart because of a person's failure to submit a report to the Board 
when due shall be considered to have been payable by the date it would 
have been due if the report had been filed when due. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the qualified State beef council or Board, 
whichever is earlier.



Sec.  1260.176  Adjustment of accounts.

    Whenever the Board or the Department determines that money is due 
the Board or that money is due any person from the Board, such person 
shall be notified of the amount due. The person shall then remit any 
amount due the Board by the next date for remitting assessments as 
provided in Sec.  1260.172. Overpayments shall be credited to the 
account of the person remitting the overpayment and shall be applied 
against amounts due in succeeding months except that the Board shall

[[Page 262]]

make prompt payment when an overpayment cannot be adjusted by a credit.



Sec.  1260.181  Qualified State beef councils.

    (a) Any beef promotion entity that is authorized by State statute or 
is organized and operating within a State, that receives assessments or 
contributions from producers and conducts beef promotion, research, 
consumer information and/or industry information programs may apply for 
certification of qualification so that producers may receive credit 
pursuant to Sec.  1260.172(a)(3) for contributions to such organization. 
The Board shall review such applications for certification and shall 
make a determination as to certification of such applicant.
    (b) In order for the State beef council to be certified by the Board 
as a qualified State beef council, the council must:
    (1) Conduct activities as defined in Sec.  1260.169 that are 
intended to strengthen the beef industry's position in the marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such council will collect assessments 
paid on cattle originating from the State or unit within which the 
council operates and shall establish procedures for ensuring compliance 
with this subpart with regard to the payment of such assessments;
    (4) Certify to the Board that such organization shall remit to the 
Board assessments paid and remitted to the council, minus authorized 
credits issued to producers pursuant to Sec.  1260.172(a)(3), by the 
last day of the month in which the assessment was remitted to the 
qualified State beef council unless the Board determines a different 
date for remittance of assessments.
    (5) [Reserved]
    (6) Certify to the Board that the council will furnish the Board 
with an annual report by a certified public accountant of all funds 
remitted to such council pursuant to this subpart and any other reports 
and information the Board or Secretary may request; and
    (7) Not use council funds collected pursuant to this subpart for the 
purpose of influencing governmental policy or action, or to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
including unfair or deceptive acts or practices with respect to the 
quality, value or use of any competing product.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]

                       Reports, Books and Records



Sec.  1260.201  Reports.

    Each importer, person marketing cattle, beef or beef products of 
that person's own production directly to consumers, and each collecting 
person making payment to producers and responsible for the collection of 
the assessment under Sec.  1260.172 shall report to the Board 
periodically information required by regulations prescribed by the Board 
and approved by the Secretary. Such information may include but is not 
limited to the following:
    (a) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transaction;
    (b) The number of cattle imported; or the equivalent thereof of beef 
or beef products;
    (c) The amount of assessment remitted;
    (d) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and,
    (e) The date any assessment was paid.

    Effective Date Note: The regulations implementing the reporting and 
recordkeeping provisions contained in Sec.  1260.201 will be submitted 
for approval to the Office of Management and Budget and will not become 
effective prior to (OMB) approval.



Sec.  1260.202  Books and records.

    Each person subject to this subpart shall maintain and make 
available for inspection by the Secretary the records required by 
regulations prescribed by the Board and approved by the Secretary that 
are necessary to carry out

[[Page 263]]

the provisions of this subpart, including records necessary to verify 
any required reports. Such records shall be maintained for the period of 
time prescribed by the regulations issued hereunder.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

    Effective Date Note: The regulations implementing the reporting and 
recordkeeping provisions contained in Sec.  1260.202 will be submitted 
for approval to the Office of Management and Budget and will not become 
effective prior to (OMB) approval.



Sec.  1260.203  Confidential treatment.

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

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

                              Miscellaneous



Sec.  1260.211  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than 11 of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of or under the control of 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec. Sec.  1260.150 and 
1260.168.
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information or industry information plans 
or projects authorized pursuant to this subpart.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

[[Page 264]]



Sec.  1260.212  Effect of termination or amendment.

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



Sec.  1260.213  Removal.

    If any person appointed under this part fails or refuses to perform 
his or her duties properly or engages in acts of dishonesty or willful 
misconduct, the Board or Committee may recommend to the Secretary that 
that person be removed from office. If the Secretary finds that the 
recommendation demonstrates adequate cause, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the Board or Committee may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec.  1260.214  Personal liability.

    No member, employee or agent of the Board or the Committee, 
including employees or agents of a qualified State beef council acting 
on behalf of the Board, shall be held personally responsible, either 
individually or jointly, in any way whatsoever, to any person for errors 
in judgment, mistakes or other acts of either commission or omission, or 
such member or employee, except for acts of dishonesty or willful 
misconduct.



Sec.  1260.215  Patents, copyrights, inventions and publications.

    (a) Any patents, copyrights, inventions or publications developed 
through the use of funds collected by the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
ensure to the benefit of the Board. Upon termination of this subpart, 
Sec.  1260.211 shall apply to determine disposition of all such 
property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec.  1260.216  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any organization or association certified pursuant to 
the Act and this part, or by any interested person affected by the 
provisions of the Act, including the Secretary.



Sec.  1260.217  Separability.

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



                    Subpart B--Rules and Regulations

    Source: 53 FR 5754, Feb. 26, 1988, unless otherwise noted.



Sec.  1260.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in Subpart A of this part.

[[Page 265]]



Sec.  1260.310  Domestic assessments.

    (a) A $1.00 per head assessment on cattle sold shall be paid by the 
producer of the cattle in the manner designated in Sec.  1260.311.
    (b) If more than one producer shares the proceeds received for the 
cattle sold, each such producer is obligated to pay that portion of the 
assessments which are equivalent to the producer's proportionate share 
of the proceeds.
    (c) Failure of the collecting person to collect the assessment on 
each head of cattle sold as designated in Sec.  1260.311 shall not 
relieve the producer of his obligation to pay the assessment to the 
appropriate qualified State beef council or the Cattlemen's Board as 
required in Sec.  1260.312.



Sec.  1260.311  Collecting persons for purposes of collection of assessments.

    Collecting persons for purposes of collecting and remitting the 
$1.00 per head assessment shall be:
    (a) Except as provided in paragraphs (b), (c), and (f) of this 
section, each person making payment to a producer for cattle purchased 
in the United States shall collect from the producer an assessment at 
the rate of $1-per-head of cattle purchased and shall be responsible for 
remitting assessments to the QSBC or the Board as provided in Sec.  
1260.312. The collecting person shall collect the assessment at the time 
the collecting person makes payment or any credit to the producer's 
account for the cattle purchased. The person paying the producer shall 
give the producer a receipt indicating payment of the assessment.
    (b) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, shall be responsible for remitting 
to the qualified State beef council or the Cattlemen's Board pursuant to 
Sec.  1260.312, an assessment on such cattle at the rate of $1.00 per 
head of cattle or the equivalent thereof. The obligation to remit the 
assessment shall attach upon slaughter of the cattle, and the producer 
responsible for remitting the assessment shall remit the assessment in 
the manner provided in Sec.  1260.312. For the purposes of this subpart, 
a producer marketing cattle of the producer's own production in the form 
of beef or beef products shall be considered a collecting person.
    (c) In the States listed in the following chart there exists a 
requirement that cattle be brand inspected by State authorized 
inspectors prior to sale. In addition, when cattle are sold in the sales 
transactions listed below in those States, these State authorized 
inspectors are authorized to, and shall, except as provided for in 
paragraph (f) of this section, collect assessments due as a result of 
the sale of cattle. In those transactions in which inspectors are 
responsible for collecting assessments, the person paying the producer 
shall not be responsible for the collection and remittance of such 
assessments. The following chart identifies the party responsible for 
collecting and remitting assessments in these States:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Sales  through      Sales to a  slaughter/                           Sales to  an order
               State                     auction  market              packer          Sales to a  feedlot        buyer/dealer        Country  sales \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona............................  CP....................  CP....................  CP...................  B....................  B
California.........................  CP....................  CP....................  B....................  B-CP.................  B
Colorado...........................  CP....................  B.....................  B....................  B....................  B
Idaho..............................  B.....................  B.....................  B....................  B....................  B
Montana............................  CP....................  B.....................  B....................  B....................  B
Nebraska...........................  CP....................  CP....................  B-CP.................  B-CP.................  B-CP
Nevada.............................  B.....................  B.....................  B....................  B....................  B
Oregon.............................  CP....................  B-CP..................  B....................  B....................  B
New Mexico.........................  CP....................  B-CP..................  B-CP.................  B-CP.................  B-CP
Utah...............................  CP....................  B-CP..................  B....................  B....................  B
Washington.........................  CP....................  CP....................  B....................  B-CP.................  B
Wyoming............................  CP....................  B.....................  B....................  B....................  B
--------------------------------------------------------------------------------------------------------------------------------------------------------
Key:
B--Brand inspector has responsibility to collect and remit assessments due.
CP--The person paying the producer shall be the collecting person and has responsibility to collect and remit the assessments due.
B-CP--Brand inspector has responsibility to collect; however, when there has not been a physical brand inspection the person paying the producer shall
  be the collecting person and has the responsibility to collect and remit assessments due.

[[Page 266]]

 
\1\ For the purpose of this subpart, the term ``country sales'' shall include any sales not conducted at an auction or livestock market and which is not
  a sale to a slaughter/packer, feedlot, or order buyer or dealer.

    (d) For cattle delivered on futures contracts, the commission firm 
or the market agency representing the seller in the delivery of cattle 
shall be the collecting person.
    (e) In a case where a producer sells cattle as part of a custom 
slaughter operation, the producer shall be the collecting person in the 
same manner as if the cattle were slaughtered for sale.
    (f)(1) In lieu of each person making a payment to a producer for 
cattle purchased in the United States, producers are provided the option 
in accordance with this paragraph (f) to remit the assessment to the 
QSBC in the State in which the producer resides. A producer who 
transports, prior to sale, cattle of that producer's own production to 
another State, may elect to make a directed payment of the $1-per-head 
assessment in advance to the QSBC in the State in which the producer 
resides, provided that the producer fulfills the following requirements:
    (i) Transports the cattle under retained ownership to a feedlot or 
similar location, and the cattle remain at such location, prior to sale, 
for a period not less than 30 days; and
    (ii) The producer, either before or at the time of transport, signs 
a Certification of Producer Directed Payment of Cattle Assessments form 
indicating that the assessment has been paid in advance, and remits the 
assessment to the appropriate QSBC. A copy of the certification form 
indicating the payment of the assessment shall be sent by the producer 
with the assessment when remitted to the QSBC. The producer also shall 
send a copy of the certification form to the feedlot operator at the 
time the cattle are delivered. A copy of the certification form also 
shall be given to the purchaser of the cattle by the feedlot operator at 
the time of sale.
    (2) The certification form will include the following information:
    (i) Producer's Name.
    (ii) Producer's social security number or Tax I.D. number.
    (iii) Producer's address (street address or P.O. Box, city, State, 
and zip code).
    (iv) Signature of Producer.
    (v) Producer's State of residence.
    (vi) Number of cattle shipped to out of State feedyard under 
retained ownership.
    (vii) Date cattle shipped.
    (viii) State where cattle will be on feed.
    (ix) Name of feedyard.
    (x) Address of feedyard.
    (3) Cattle of a producer's own production shall be those cattle 
which meet all of the following requirements:
    (i) The cattle shall be offspring of a producer's own cow herd;
    (ii) The cattle shall have been continuously and exclusively under 
the producer's ownership; and
    (iii) The cattle are transported to a feedlot with such producer 
continuously owning the cattle through the entire feeding phase.
    (4) For those cattle for which the assessment has been producer 
directed and paid in advance pursuant to paragraph (f)(1) of this 
section, the purchaser of the cattle shall not be required to collect 
and remit the assessment, but shall maintain on file a copy of the 
Certification of Producer Directed Payment of Cattle Assessments form 
completed and signed by the producer who originally transported the 
cattle under retained ownership.
    (5) For those cattle for which the assessment has been producer 
directed and paid in advance pursuant to paragraph (f)(1) of this 
section, copies of the completed Certification of Producer Directed 
Payment of Cattle Assessments form shall be maintained on file by the 
producer, the QSBC or the Board, the feedlot operator, and the purchaser 
of the cattle for 3 years.
    (6) Producers shall not receive credit of the assessment required to 
be paid pursuant to paragraph (f)(1) of this section for those cattle 
lost because of death.

[53 FR 5754, Feb. 26, 1988, as amended at 67 FR 61766, Oct. 2, 2002]

[[Page 267]]



Sec.  1260.312  Remittance to the Cattlemen's Board or Qualified State Beef Council.

    Each person responsible for the collection and remittance of 
assessments shall transmit assessments and a report of assessments to 
the qualified State beef council of the State in which such person 
resides or if there is no qualified State beef council in such State, 
then to the Cattlemen's Board as follows:
    (a) Reports. Each collecting person shall make reports on forms made 
available or approved by the Cattlemen's Board. Each collecting person 
shall prepare a separate report for each reporting period. Each report 
shall be mailed to the qualified State beef council of the State in 
which the collecting person resides, or its designee, or if there exists 
no qualified State beef council in such State, to the Cattlemen's Board. 
Each report shall contain the following information:
    (1) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transactions;
    (2) The amount of assessment remitted;
    (3) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and
    (4) The date any assessment was paid.
    (b) Reporting periods. Each calendar month shall be a reporting 
period and the period shall end at the close of business on the last 
business day of the month.
    (c) Remittances. The remitting person shall remit all assessments to 
the qualified State beef council or its designee, or, if there is no 
qualified State beef council, to the Cattlemen's Board at P.O. Box 27-
275; Kansas City, Missouri 64180-0001, with the report required in 
paragraph (a) of this section not later than the 15th day of the 
following month. All remittances sent to a qualified State beef council 
or the Cattlemen's Board by the remitting persons shall be by check or 
money order payable to the order of the qualified State beef council or 
the Cattlemen's Board. All remittances shall be received subject to 
collection and payment at par.



Sec.  1260.313  Document evidencing payment of assessments.

    Each collecting person responsible for remitting an assessment to a 
qualified State beef council or the Board, other than a producer 
slaughtering cattle of the producer's own production for sale, is 
required to give the producer from whom the collecting person collected 
an assessment written evidence of payment of the Beef Promotion and 
Research Assessments. Such written evidence serving as a receipt shall 
contain the following information:
    (a) Name and address of the collecting person.
    (b) Name of producer who paid assessment.
    (c) Number of head of cattle sold.
    (d) Total assessments paid by the producer.
    (e) Date.



Sec.  1260.314  Certification of non-producer status for certain transactions.

    (a) The assessment levied on each head of cattle sold shall not 
apply to cattle owned by a person:
    (1) If the person certifies that the person's only share in the 
proceeds of a sale of cattle, beef, or beef products is a sales 
commission, handling fee or other service fee; or
    (2) If the person:
    (i) Certifies that the person acquired ownership of cattle to 
facilitate the transfer of ownership of such cattle from the seller to a 
third party,
    (ii) Establishes that such cattle were resold not later than 10 days 
from the date on which the person acquired ownership; and
    (iii) Certifies that the assessment levied upon the person from whom 
the person purchased the cattle, if an assessment was due, has been 
collected and has been remitted, or will be remitted in a timely 
fashion.
    (b) Each person seeking non-producer status pursuant to Sec.  
1260.116 shall provide the collecting person, on a form approved by the 
Board and the Secretary, with a Statement of Certification of Non-
Producer Status at the

[[Page 268]]

time the collecting person makes payment to the seller of cattle, in 
lieu of the assessment that would otherwise be due, except as provided 
for in paragraphs (c) and (d) of this section.
    (c) When the seller of cattle is not physically present during a 
sales transaction in which the seller claims non-producer status, such 
seller shall deliver to the collecting person an original Statement of 
Certification of Non-Producer Status within 10 business days of the date 
the collecting person makes payment to the seller of the cattle.
    (d) If the collecting person is a brand inspector, as provided for 
in Sec.  1260.311, the seller of cattle claiming non-producer status 
shall provide to the brand inspector at the time the physical brand 
inspection is completed, in lieu of the assessment that would otherwise 
be due, either: a Statement of Certification of Non-Producer Status or a 
valid brand inspection certificate which shows collection of the 
assessment by a brand inspector in a transaction which took place not 
more than 10 days prior to the sale of the cattle.
    (e) A copy of the Statement of Certification of Non-Producer Status 
shall be forwarded, upon request, by the collecting person to the 
qualified State beef council or the Cattlemen's Board.

[53 FR 5754, Feb. 26, 1988, as amended at 66 FR 26784, May 15, 2001]



Sec.  1260.315  Qualified State Beef Councils.

    The following State beef promotion entities have been certified by 
the Board as qualified State beef councils:

Alabama Cattlemen's Association
Arizona Beef Council
Arkansas Beef Council
California Beef Council
Colorado Beef Council
Florida Beef Council, Inc.
Georgia Beef Board, Inc.
Idaho Beef Council
Illinois Beef Council
Indiana Beef Council
Iowa Beef Cattle Producers Association
Kansas Beef Council
Kentucky Beef Cattle Association
Louisiana Beef Industry Council
Maryland Beef Council
Michigan Beef Industry Commission
Minnesota Beef Council
Mississippi Cattle Industry Board
Missouri Beef Industry Council
Montana Beef Council
Nebraska Beef Industry Development Board
Nevada Beef Council
New Mexico Beef Council
New York Beef Industry Council
North Carolina Cattlemen's Association
North Dakota Beef Commission
Ohio Beef Council
Oklahoma Beef Commission
Oregon Beef Council
Pennsylvania Beef Council, Inc.
South Carolina Cattle and Beef Board
South Dakota Beef Industry Council
Tennessee Beef Industry Council
Texas Beef Industry Council
Utah Beef Council
Vermont Beef Council
Virginia Cattle Industry Board
Washington State Beef Commission
West Virginia Beef Industry
Wisconsin Beef Council
Wyoming Beef Council



Sec.  1260.316  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in this part have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0851-0152.

Subpart C [Reserved]



  Subpart D--Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

    Source: 51 FR 11559, Apr. 4, 1986, unless otherwise noted. 
Redesignated at 51 FR 26138, July 18, 1986, and further redesignated at 
51 FR 35197, Oct. 1, 1986. Redesignated also at 53 FR 9858, Mar. 28, 
1988.



Sec.  1260.500  General.

    State organizations or associations shall be certified by the 
Secretary as provided for in the Beef Promotion and Research Act of 1985 
to be eligible to make nominations of cattle producers to the Board. 
Additionally, where there is no eligible organization or association in 
a State, the Secretary may provide for nominations in the manner 
prescribed in this subpart. Organizations or associations determined by 
the Secretary to represent importers of

[[Page 269]]

cattle, beef, and beef products may submit nominations for membership on 
the Board in a manner prescribed by the Secretary in this subpart. The 
number of nominees required for each allotted position will be 
determined by the Secretary.



Sec.  1260.510  Definitions.

    As used in this subpart:
    Act means the Beef Promotion and Research Act of 1985 (7 U.S.C. 
2901-2918).
    Beef means the flesh of cattle.
    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and milk products produced therefrom.
    Board means the Cattlemen's Beef Promotion and Research Board 
established under section 5(1) of the Act.
    Cattle means live, domesticated bovine animals regardless of age.
    Department means the United States Department of Agriculture.
    Importer means a person who imports cattle, beef, or beef products 
from outside the United States.
    Livestock and Seed Division means the Livestock and Seed Division of 
the Department's Agricultural Marketing Service.
    Producer means a person who owns or acquires ownership of cattle, 
except that a person shall not be considered to be a producer if the 
person's only share in the proceeds of a sale of cattle or beef is a 
sales commission, handling fee, or other service fee.
    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    State means each of the 50 States.
    Unit means a State or combination of States which has a total 
inventory of not less than 500,000 head of cattle; or importers.



Sec.  1260.520  Responsibility for administration of regulations.

    The Livestock and Seed Division shall have the responsibility for 
administering the provisions of this subpart.



Sec.  1260.530  Certification of eligibility.

    (a) State organizations or associations: Requirements for 
certification. (1) To be eligible for certification to nominate producer 
members to the Board, State organizations or associations must meet all 
of the following criteria:
    (i) Total paid membership must be comprised of at least a majority 
of cattle producers or represent at least a majority of cattle producers 
in a State or unit.
    (ii) Membership must represent a substantial number of producers who 
produce a substantial number of cattle in such State or unit.
    (iii) There must be a history of stability and permanency.
    (iv) There must be a primary or overriding purpose of promoting the 
economic welfare of cattle producers.
    (2) Written evidence of compliance with the certification criteria 
shall be contained in a factual report submitted to the Secretary by all 
applicant State organizations or associations.
    (3) The primary consideration in determining the eligibility of a 
State organization or association shall be based on the criteria set 
forth in this section. However, the Secretary may consider any 
additional information that the Secretary deems relevant and 
appropriate.
    (4) The Secretary shall certify any State organization or 
association which he determines complies with the criteria in this 
section, and his eligibility determination shall be final.
    (b) Organizations or associations representing importers. The 
determination by the Secretary as to the eligibility of importer 
organizations or associations to nominate members to the Board shall be 
based on applications containing the following information:
    (1) The number and type of members represented (i.e., beef, or 
cattle importers, etc.).
    (2) Annual import volume in pounds of beef and beef products and/or 
the number of head of cattle.
    (3) The stability and permanency of the importer organization or 
association.
    (4) The number of years in existence.
    (5) The names of the countries of origin for cattle, beef, or beef 
products imported.

[[Page 270]]


The Secretary may also consider additional information that the 
Secretary deems relevant and appropriate. The Secretary's determination 
as to eligibility shall be final.



Sec.  1260.540  Application for certification.

    (a) State organizations or associations. Any State organization or 
association which meets the eligibility criteria specified in Sec.  
1260.530(a) for certification is entitled to apply to the Secretary for 
such certification of eligibility to nominate producers for appointment 
to the Board. To apply, such organization or association must submit a 
completed ``Application for Certification of Organization or 
Association,'' Form LS-25, contained in Sec.  1260.640. It may be 
reproduced or additional copies may be obtained from the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250. (Telephone: 
202/447-2650.)
    (b) Importer organizations or associations. Any organization or 
association whose members import cattle, beef, or beef products into the 
United States may apply to the Secretary for determination of 
eligibility to nominate importers under the Act. Applications shall be 
in writing and shall contain the information required by Sec.  1260.530. 
Interested organizations or associations may contact the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250; (Telephone: 
202/447-2650) for information concerning application procedures.



Sec.  1260.550  Verification of information.

    The Secretary may require verification of the information to 
determine eligibility for certification to make nominations under the 
Act.



Sec.  1260.560  Review of certification.

    The Secretary may terminate or suspend certification or eligibility 
of any organization or association if it ceases to comply with the 
certification or eligibility criteria set forth in this subpart. The 
Secretary may require any information deemed necessary to ascertain 
whether the organization or association may remain certified or eligible 
to make nominations.



Sec.  1260.570  Notification of certification and the listing of certified 
organizations.

    Organizations and associations shall be notified in writing as to 
whether they are eligible to nominate producer members to the Board. A 
copy of the certification or eligibility determination shall be 
furnished to certified or eligible organizations and associations. 
Copies shall also be maintained on file in the Livestock and Seed 
Division office, where they will be available for inspection.



Sec. Sec.  1260.580-1260.600  [Reserved]



Sec.  1260.610  Acceptance of appointment.

    Producers and importers nominated to the Board must signify in 
writing their intent to serve if appointed.



Sec.  1260.620  Confidential treatment of information.

    All documents and information submitted to or obtained by the 
Department shall be kept confidential by all employees of the 
Department, except that the Secretary may issue general statements based 
upon the information collected from a number of different sources. These 
general statements will not identify any information as having been 
furnished by any one source.



Sec.  1260.630  Paperwork Reduction Act assigned number.

    The OMB has approved the information collection request contained in 
this subpart under the provisions of 44 U.S.C. Chapter 35, and OMB 
Control Number 0581-152 has been assigned.



Sec.  1260.640  Application for Certification Form.

    The following official form, ``Application for Certification of 
Association or Organization,'' must be completed and submitted to the 
Department by eligible State organizations or associations seeking 
certification by the Secretary. This form may be reproduced.

[[Page 271]]

[GRAPHIC] [TIFF OMITTED] TC04SE91.000


[[Page 272]]





PART 1270--WOOL AND MOHAIR ADVERTISING AND PROMOTION [RESERVED]--Table 
of Contents




    Authority: 7 U.S.C. 1781-1787.



  



PART 1280--Lamb Promotion, Research, and Information Order--Table 
of Contents




       Subpart A--Lamb Promotion, Research, and Information Order

                               Definitions

Sec.
1280.101 Act.
1280.102 Board.
1280.103 Certified organization.
1280.104 Conflict of interest.
1280.105 Department.
1280.106 Exporter.
1280.107 Feeder.
1280.108 First handler.
1280.109 Fiscal period and marketing year.
1280.110 Information.
1280.111 Lamb.
1280.112 Lamb products.
1280.113 Order.
1280.114 Part and subpart.
1280.115 Person.
1280.116 Producer.
1280.117 Producer information.
1280.118 Promotion.
1280.119 Referendum.
1280.120 Research.
1280.121 Secretary.
1280.122 Seedstock producer.
1280.123 State.
1280.124 Suspend.
1280.125 Terminate.
1280.126 Unit.
1280.127 United States.
1280.128 Wool.
1280.129 Wool products.

             Lamb Promotion, Research, and Information Board

1280.201 Establishment and membership.
1280.202 Nominations.
1280.203 Nominee's agreement to serve.
1280.204 Appointment.
1280.205 Vacancies.
1280.206 Certification of organizations.
1280.207 Term of office.
1280.208 Compensation.
1280.209 Removal.
1280.210 Powers and duties of the board.
1280.211 Prohibited activities.

                                Expenses

1280.212 Budget and expenses.
1280.213 Investment of funds.
1280.214 Refund escrow accounts.
1280.215 Refunds.
1280.216 Procedures for obtaining a refund.

                               Assessments

1280.217 Lamb purchases.
1280.218 Exporter.
1280.219 First handlers.
1280.220 Collections.
1280.221 Prohibition on use of funds.

                       Reports, Books, and Records

1280.222 Books and records of board.
1280.223 Reports.
1280.224 Periodic evaluation.
1280.225 Books and records of persons.
1280.226 Use of information.
1280.227 Confidentiality.

                              Miscellaneous

1280.228 Right of the Secretary.
1280.229 Personal liability.
1280.230 Separability.
1280.231 Patents, copyrights, inventions, product formulations, and 
          publications.
1280.232 Amendments.
1280.233 Referenda.
1280.234 Suspension or termination.
1280.235 Proceedings after termination.
1280.236 Effect of termination or amendment.
1280.237 Rules and regulations.
1280.238 OMB Control numbers.

Subpart B [Reserved]

                    Subpart C--Rules and Regulations

1280.401 Terms defined.
1280.402 Assessments.
1280.403 Refunds.
1280.404 Reporting.
1280.405 Books and records.

Subparts D-E [Reserved]

    Authority: 7 U.S.C. 7411-7425.

    Source: 67 FR 17857, Apr. 11, 2002, unless otherwise noted.



       Subpart A--Lamb Promotion, Research, and Information Order

                               Definitions



Sec.  1280.101  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425; Pub. L. 104-127; 110 Stat. 1029, as amended), 
or any amendments thereto.

[[Page 273]]



Sec.  1280.102  Board.

    Board means the Lamb Promotion, Research, and Information Board 
established pursuant to Sec.  1280.201.



Sec.  1280.103  Certified organization.

    Certified organization means any organization which has been 
certified by the Secretary pursuant to this part as being eligible to 
submit nominations for membership on the Board.



Sec.  1280.104  Conflict of Interest.

    Conflict of interest means a situation in which a member or employee 
of a board has a direct or indirect financial interest in a person that 
performs a service for, or enters into a contract with, a board for 
anything of economic value.



Sec.  1280.105  Department.

    Department means the United States Department of Agriculture.



Sec.  1280.106  Exporter.

    Exporter means any person who exports domestic live lambs from the 
United States.



Sec.  1280.107  Feeder.

    Feeder means any person who acquires ownership of lambs and feeds 
such lambs in the U.S. until they reach slaughter weight.



Sec.  1280.108  First handler.

    First handler means the packer or other person who buys or takes 
possession of lambs from a producer or feeder for slaughter, including 
custom slaughter. If a producer or feeder markets lamb products directly 
to consumers, the producer or feeder shall be considered to be a first 
handler with respect to such lambs produced by the producer or feeder.



Sec.  1280.109  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending on 
December 31 or such other consecutive 12-month period as shall be 
recommended by the Board and approved by the Secretary.



Sec.  1280.110  Information.

    Information means information and programs that are designed to 
increase efficiency in producing lambs, to maintain and expand existing 
markets, and to develop new markets, marketing strategies, increased 
market efficiency, and activities that are designed to enhance the image 
of lamb and lamb products on a national or international basis. These 
include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, and nutritional attributes of lamb and 
lamb products; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the lamb industry, and activities to enhance 
the image of lamb.



Sec.  1280.111  Lamb.

    Lamb means ovine animals of any age, including ewes and rams.



Sec.  1280.112  Lamb products.

    Lamb products means products produced in whole or in part from lamb, 
including pelts, and excluding wool and wool products.



Sec.  1280.113  Order.

    Order means an order issued by the Secretary under Sec.  514 of the 
Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the Act.



Sec.  1280.114  Part and subpart.

    Part means the Lamb Promotion, Research, and Information Order and 
all rules and regulations issued pursuant to the Act and the Order. The 
Order shall be a subpart of the Part.



Sec.  1280.115  Person.

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

[[Page 274]]



Sec.  1280.116  Producer.

    Producer means any person who owns and produces lambs in the United 
States for sale.



Sec.  1280.117  Producer information.

    Producer information means activities designed to provide producers, 
feeders, and first handlers with information relating to production or 
marketing efficiencies, development of new markets, program activities, 
or other information that would facilitate an increase in the demand for 
lambs or lamb products.



Sec.  1280.118  Promotion.

    Promotion means any action, including paid advertising and the 
dissemination of culinary and nutritional information and public 
relations with emphasis on new marketing strategies, to present a 
favorable image of U.S. lamb products to the public for the purpose of 
improving the competitive position of U.S. lamb and lamb products in the 
marketplace and to stimulate sales.



Sec.  1280.119  Referendum.

    Referendum means a referendum to be conducted by the Secretary 
pursuant to the Act whereby producers, feeders, first handlers, and 
exporters shall be given the opportunity to vote to determine whether 
the continuance of this subpart is favored by a majority of eligible 
persons voting and a majority of volume voting.



Sec.  1280.120  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of lamb or lamb products.



Sec.  1280.121  Secretary.

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



Sec.  1280.122  Seedstock producer.

    Seedstock producer means any lamb producer in the U.S. who engages 
in the production and sale of breeding replacement lambs or semen or 
embryos.



Sec.  1280.123  State.

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



Sec.  1280.124  Suspend.

    Suspend means to issue a rule under Sec.  553 of title 5, U.S.C., to 
temporarily prevent the operation of an order or part thereof during a 
particular period of time specified in the rule.



Sec.  1280.125  Terminate.

    Terminate means to issue a rule under Sec.  553 of title 5, U.S.C., 
to cancel permanently the operation of an order or part thereof 
beginning on a date certain specified in the rule.



Sec.  1280.126  Unit.

    Unit means each State, group of States, or class designation 
(producers, feeders, first handlers, or seedstock producers) that is 
represented on the Board.



Sec.  1280.127  United States.

    United States means collectively the 50 States and the District of 
Columbia.



Sec.  1280.128  Wool.

    Wool means fiber from the fleece of a lamb.



Sec.  1280.129  Wool products.

    Wool products means products produced, in whole or in part, from 
wool and products containing wool fiber, excluding pelts.

             Lamb Promotion, Research, and Information Board



Sec.  1280.201  Establishment and membership.

    (a) There is hereby established a Lamb Promotion, Research and 
Information Board of 13 members. Members of the Board shall be appointed 
by the Secretary from nominations submitted in accordance with this 
subpart. The seats shall be apportioned as follows:

[[Page 275]]

    (1) Producers. There shall be six producer representatives on the 
Board appointed by the Secretary from nominations submitted pursuant to 
this subpart. For purposes of nominating and appointing producers to the 
Board, the United States as defined within this subpart shall be divided 
into two regions. Each region must be represented by at least two 
producers. The Secretary will appoint the remaining two producers to 
ensure that the criteria specified in paragraphs (a)(1)(i), (ii), and 
(iii) of this section are met. Region 1 shall include the geographic 
area east of the Mississippi River, which includes the following States: 
Maine, New Hampshire, Vermont, New York, Massachusetts, Connecticut, 
Pennsylvania, Rhode Island, New Jersey, Delaware, Maryland, District of 
Columbia, Virginia, West Virginia, North Carolina, South Carolina, 
Georgia, Florida, Alabama, Mississippi, Tennessee, Kentucky, Ohio, 
Indiana, Michigan, Illinois and Wisconsin. Region 2 shall consist of all 
States west of the Mississippi River, which includes the following 
states: Minnesota, Iowa, Missouri, Arkansas, Louisiana, Texas, Oklahoma, 
Kansas, Nebraska, North Dakota, South Dakota, Montana, Wyoming, 
Colorado, New Mexico, Arizona, Utah, Idaho, Washington, Oregon, Nevada, 
California, Hawaii and Alaska. With regard to appointments to the Board, 
the Secretary shall ensure that the representation for producers on the 
Board shall meet the following criteria:
    (i) Two producers appointed to the Board shall own annually 100 or 
less head of lambs;
    (ii) One producer shall own annually between 101 and 500 head of 
lambs; and
    (iii) Three producers shall own more than 500 head of lambs 
annually.
    (2) Feeders. There shall be three feeder representatives on the 
Board appointed by the Secretary from nominations submitted pursuant to 
this subpart. The Secretary will appoint two feeder representatives to 
ensure that the criteria in paragraphs (a)(2)(i), (ii) and (iii) of this 
section are met. The third feeder representative will be appointed by 
the Secretary and will not be chosen or bound by size requirements.
    (i) At least one of the feeders appointed to the Board shall feed 
less than 5,000 head of lambs annually.
    (ii) At least one of the feeders appointed to the Board shall feed 
5,000 or more head of lambs annually.
    (iii) The Secretary shall ensure that the feeders appointed to the 
Board are not all located in one geographic region as established for 
producers pursuant to paragraph (a)(1) of this section.
    (3) First handlers. There shall be three first handler 
representatives appointed to the Board by the Secretary from nominations 
submitted pursuant to this subpart.
    (4) Seedstock producers. There shall be one seedstock producer 
appointed to the Board by the Secretary from nominations submitted 
pursuant to this subpart.
    (b) In soliciting nominations for the Board, the Secretary will 
request those nominating to identify specific categories in which 
nominees will qualify.
    (c) Adjustment of membership. At least once every 5 years, the Board 
will review the geographical distribution of the United States 
production of lambs. The review will be conducted using the National 
Agricultural Statistics Service inventory figures and the Board's annual 
assessment receipts. If warranted, the Board will recommend to the 
Secretary that the membership on the Board be adjusted to reflect 
changes in geographical distribution of domestic lamb production.



Sec.  1280.202  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations certified under Sec.  1280.206. Certified eligible 
organizations representing producers, feeders, first handlers, or 
seedstock producers shall submit to the Secretary at least two nominees 
for each seat on the Board. If the Secretary determines that a unit is 
not represented by a certified eligible organization, then the Secretary 
may solicit nominations from other organizations or other persons 
residing in the unit.

[[Page 276]]

    (b) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nomination for 
subsequent Board members shall be submitted to the Secretary not less 
than 60 days prior to the expiration of the terms of the members whose 
terms are expiring, in the manner as described in this section. In the 
case of vacancies due to reasons other than the expiration of a term of 
office, successor Board members shall be appointed pursuant to Sec.  
1280.205.
    (c) When there is more than one certified eligible organization 
representing the unit or when the Secretary solicits nominations from 
organizations and persons residing in that unit, they may caucus and 
jointly nominate, two qualified persons for each position representing 
that unit on the Board for which a member is to be appointed. If joint 
agreement is not reached with respect to any such nominations, or if no 
caucus is held, each eligible organization may submit to the Secretary 
two nominees for each appointment to be made to represent that unit.



Sec.  1280.203  Nominee's agreement to serve.

    Any producer, feeder, first handler, or seedstock producer nominated 
to serve on the Board shall file with the Secretary at the time of the 
nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with any lamb promotion entity or with 
any organization that has or is being considered for a contractual 
relationship with the Board; and
    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters that concern the relationship disclosed under 
paragraph (b) of this section.



Sec.  1280.204  Appointment.

    From the nominations made pursuant to Sec.  1280.202, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided in Sec.  1280.201.



Sec.  1280.205  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
appoint a successor from the most recent list of nominations for the 
position or the Secretary shall request nominations for a successor 
pursuant to Sec.  1280.202 and such successor shall be appointed 
pursuant to Sec.  1280.204.



Sec.  1280.206  Certification of organizations.

    (a) In General. The eligibility of State, regional, or national 
organizations to represent producers, seedstock producers, feeders, and 
first handlers and to participate in the making of nominations under 
this subpart shall be certified by the Secretary. The Secretary shall 
certify any organization that the Secretary determines meets the 
eligibility criteria established under paragraphs (b) and (c) of this 
section. An eligibility determination by the Secretary shall be final.
    (b) Basis for Certification. Certification shall be based upon, in 
addition to other available information, a factual report submitted by 
the organization that shall contain information considered relevant and 
specified by the Secretary, including:
    (1) The geographic territory covered by the active membership of the 
organization;
    (2) The nature and size of the active membership of the 
organization, including the number of active producers, seedstock 
producers, feeders, or first handlers represented by the organization;
    (3) Evidence of stability and permanency of the organization;
    (4) Sources from which the operating funds of the organization are 
derived;
    (5) The functions of the organization; and
    (6) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (c) Primary Considerations. The primary considerations in 
determining the eligibility of an organization under this paragraph 
shall be whether:
    (1) The membership of the organization consists primarily of 
producers, seedstock producers, feeders, or first

[[Page 277]]

handlers who market or handle a substantial quantity of lamb or lamb 
products; and
    (2) A primary purpose of the organization is in the production or 
marketing of lamb or lamb products.



Sec.  1280.207  Term of office.

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



Sec.  1280.208  Compensation.

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



Sec.  1280.209  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed under this part or any 
employee of the Board may be removed by the Secretary if the Secretary 
determines that the person's continued service would be detrimental to 
the purposes of the Act.



Sec.  1280.210  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To administer this subpart in accordance with its terms and 
provisions;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet not less than annually, organize, and select from among 
the members of the Board a Chairperson, Vice Chairperson, Secretary/
Treasurer, other officers, and committees and subcommittees, as the 
Board determines to be appropriate;
    (d) To prepare and submit for the approval of the Secretary, fiscal 
year budgets in accordance with Sec.  1280.212.
    (e) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties, and 
to determine the compensation and specify the duties of the persons;
    (f) To develop and submit plans and projects to the Secretary for 
the Secretary's approval, and to enter into contracts or agreements, 
which must be approved by the Secretary before becoming effective, for 
the development and carrying out of programs or projects of research, 
information (including producer information), or promotion, and the 
payment of costs thereof with funds collected pursuant to this subpart. 
Each contract or agreement shall provide that any person who enters into 
a contract or agreement with the Board shall develop and submit to the 
Board a proposed activity; keep accurate records of all of its 
transactions relating to the contract or agreement; account for funds 
received and expended in connection with the contract or agreement; make 
periodic reports to the Board of activities conducted under the contract 
or agreement; and make such other reports available as the Board or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to the 
Board a program, plan, or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Board may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and,
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.

[[Page 278]]

    (g) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (h) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (i) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (j) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each meeting 
of the Board to the Secretary;
    (l) To furnish to the Secretary any information or records that the 
Secretary may request;
    (m) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, and information (including producer 
information), designed to strengthen the lamb industry's position in the 
marketplace; maintain and expand existing markets and uses for lamb and 
lamb products; and to carry out programs, plans, and projects designed 
to provide maximum benefits to the lamb industry;
    (n) To provide not less than annually a report to producers, feeders 
and first handlers, accounting for the funds expended by the Board, and 
describing programs implemented under the Act; and to make such report 
available to the public upon request;
    (o) To invest funds in accordance with Sec.  1280.213.



Sec.  1280.211  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the lamb industry from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected under the Order to undertake any action 
for the purpose of influencing legislation or governmental action or 
policy, other than recommending to the Secretary amendments to the 
Order; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the order, that may be 
false or disparaging to another agricultural commodity.

                                Expenses



Sec.  1280.212  Budget and expenses.

    (a) The Board shall prepare and submit to the Secretary a budget for 
the fiscal year covering its anticipated expenses and disbursements in 
administering, this subpart. The budget shall be submitted before the 
beginning of each fiscal year, and as frequently as may be necessary 
thereafter.
    (b) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another.
    (c) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Board.
    (d) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the

[[Page 279]]

donor and the Board shall retain complete control of their use.
    (f) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (g) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal year an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal year, except for the initial fiscal year. Reimbursements to 
the Secretary required under paragraph (f) of this section are excluded 
from this limitation on spending.



Sec.  1280.213  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency 
thereof, in general obligations of any State or any political 
subdivision thereof, in any interest-bearing account or certificate of 
deposit of a financial institution that is a member of the Federal 
Reserve System, or in obligations fully guaranteed as to principal and 
interest by the United States. Income from any such investment may be 
used for any purpose for which the invested funds may be used.



Sec.  1280.214  Refund escrow accounts.

    (a) The Board shall establish an interest bearing escrow account 
with a financial institution which is a member of the Federal Reserve 
System and will deposit into such account an amount equal to the product 
obtained by multiplying:
    (1) The total amount of assessments collected by the Board during 
the period beginning on the effective date of the Order and ending on 
the date the Secretary announces the results of the required referendum; 
by
    (2) Ten percent (10 percent)
    (b) The Board shall pay refunds of assessments to eligible persons 
requesting refunds during the period beginning on the effective date of 
the Order and ending on the date the Secretary announces the results of 
the required referendum in the manner specified in paragraph (c) of this 
section.
    (c) If the amount deposited in the escrow account is less than the 
amount of refunds requested, the Board shall prorate the amount 
deposited in such account among all eligible persons who request a 
refund of assessments paid no later than the date the required 
referendum results are announced by the Secretary.



Sec.  1280.215  Refunds.

    Any producer, seedstock producer, feeder, first handler, or exporter 
from whom an assessment is collected and remitted to the Board, or who 
pays an assessment directly to the Board, under authority of the Act and 
this subpart through the announcement of the results of the required 
referendum, and who is not in favor of supporting the promotion and 
research program as provided for in this subpart, shall have the right 
to receive from the Board a refund of such assessment, or a pro rata 
share thereof, upon submission of proof satisfactory to the Board that 
the producer, seedstock producer, feeder, first handler, or exporter 
paid the assessment for which refund is sought. Any such demand shall be 
made by such producer, seedstock producer, feeder, first handler, or 
exporter in accordance with the provisions of this subpart and in a 
manner consistent with regulations recommended by the Board and 
prescribed by the Secretary.



Sec.  1280.216  Procedure for obtaining a refund.

    Each producer, seedstock producer, feeder, first handler, or 
exporter who pays an assessment pursuant to the Act and this subpart 
during the period beginning on the effective date of the Order and 
ending on the date the required referendum results are announced may 
obtain a refund of such assessment only by following the procedures 
prescribed in this section and any regulations recommended by the Board 
and prescribed by the Secretary.
    (a) Application form. A producer, seedstock producer feeder, first 
handler, or exporter shall obtain a Board-approved refund application 
form from the Board. Such form may be obtained by written request to the 
Board and

[[Page 280]]

the request shall bear the producer's, seedstock producer's, feeder's, 
first handler's, or exporter's signature or properly witnessed mark.
    (b) Submission of refund application to Board. Any producer, 
seedstock producer, feeder, first handler, or exporter requesting a 
refund shall submit an application on the prescribed form to the Board 
within 60 days from the date the assessments were paid by such producer, 
seedstock producer, feeder, first handler, or exporter but no later than 
the date the results of the required referendum are announced by the 
Secretary. The refund application shall show:
    (1) The producer's, seedstock producer's, feeder's, first handler's, 
or exporter's name and address;
    (2) Name and address of the person who collected applicant's 
assessment;
    (3) Number of head of lambs, weight of lambs, or its equivalent, on 
which a refund is requested;
    (4) Total amount of refund requested;
    (5) Date or inclusive dates on which assessments were paid;
    (6) Certification that the producer, seedstock producer, feeder, 
first handler, or exporter did not collect the assessment from another 
producer, seedstock producer, feeder, first handler; or exporter or 
documentation of assessments collected from others; and
    (7) The producer's, seedstock producer's, feeder's, first handler's, 
or exporter's signature or properly witnessed mark.
    (c) Proof of payment of assessments. The documentation provided 
pursuant to Sec.  1280.225(b) to the producer, seedstock producer, 
feeder, first handler, or exporter by the person responsible for 
collecting an assessment pursuant to this subpart, or a copy thereof, or 
such other evidence deemed satisfactory to the Board, shall accompany 
the producer's, seedstock producer's, feeder's, first handler's, or 
exporter's refund application.
    (d) Payment of refunds. The Board shall initiate payment of refund 
requests, or pay a pro rata share thereof, within 90 days of the date 
the results of the required referendum are released by the Secretary. 
Refunds shall be paid in a manner consistent with Sec.  1280.214.

                               Assessments



Sec.  1280.217  Lamb purchases.

    (a) Except as prescribed by regulations approved by the Secretary, 
each first handler, or exporter making payment to a producer, seedstock 
producer, or feeder for lambs purchased from such producer, seedstock 
producer, or feeder shall collect an assessment from the producer, 
seedstock producer, or feeder. Each producer, seedstock producer, or 
feeder shall pay such assessment to the first handler or exporter, at 
the rate of one-half cent ($.005) per pound of live lambs sold.
    (b) Except as otherwise specified in this subpart, a person shall 
not be considered a producer, seedstock producer, or feeder within the 
meaning of this subpart if;
    (1) The person's only share in the proceeds of a sale of lambs is a 
sales commission, handling fee, or other service fee; or
    (2) The person:
    (i) Acquired ownership of the lambs to facilitate the transfer of 
ownership of such lambs from the seller to a third party,
    (ii) Resold such lambs no later than 10 days from the date on which 
the person acquired ownership, and
    (iii) Certified, as required by regulations recommended by the Board 
and prescribed by the Secretary, that the requirements of this provision 
have been satisfied.
    (c) Each person processing or causing to be processed lambs or lamb 
products of that person's own production and marketing such lambs or 
lamb products, shall pay an assessment on such lambs or lamb products on 
the live weight of the lamb at the time of slaughter at the rate 
established in paragraph (e) of this section. In addition, pursuant to 
Sec.  1280.108, such individual would be considered a first handler and 
would be required by Sec.  1280.219 to pay an additional assessment of 
$.30 per head. As the first handler, the individual must remit the total 
amount of assessment to the Board.
    (d) A person who is a market agency; i.e. commission merchant, 
auction market, or livestock market in the business of receiving lambs 
for sale or

[[Page 281]]

commission for or on behalf of a producer, seedstock producer, or feeder 
shall collect an assessment from the producer, seedstock producer, or 
feeder and shall pass the collected assessments on to the subsequent 
purchaser pursuant to this subpart and regulations recommended by the 
Board and prescribed by the Secretary.
    (e) Rate. Except as otherwise provided, the rate of assessment shall 
be one-half of a cent ($.005 per pound) per pound on all live lambs 
sold. The rate of assessment may be raised or lowered no more than 
twenty-hundredths of a cent ($.002) in any one year. The Board may 
recommend any change to the Department. Prior to a change in the 
assessment rate, the Department will provide notice by publishing in the 
Federal Register any proposed changes with interested parties allowed to 
provide comment.
    (f) The collection of assessments pursuant to Sec.  1280.217, Sec.  
1280.218, and Sec.  1280.219 shall begin with respect to lambs 
purchased, or lambs or lamb products marketed on or after the effective 
date established by the Secretary and shall continue until terminated or 
suspended by the Secretary.
    (g) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall have the authority to receive 
assessments and invest them on behalf of the Board, and shall pay such 
assessments and any interest earned to the Board when it is formed. The 
Secretary shall have the authority to promulgate rules and regulations 
concerning assessments and the collection of assessments, if the Board 
is not in place or is otherwise unable to develop such rules and 
regulations.
    (h) Payment remitted pursuant to this subpart shall be in the form 
of a negotiable instrument made payable to the Board. Such remittances 
and the reports specified in Sec.  1280.223 and Sec.  1280.225 shall be 
mailed to the location designated by the Board.



Sec.  1280.218  Exporter.

    Each person exporting live lambs shall remit to the Board an 
assessment on such lambs at the time of export at the rate established 
in Sec.  1280.217(e). An exporter directly exporting his or her own 
lambs shall remit an assessment to the Board at the rate established in 
Sec.  1280.217(e).



Sec.  1280.219  First handlers.

    Each first handler, in addition to remitting the assessment 
collected pursuant to Sec.  1280.217, shall pay an assessment equal to 
thirty cents ($.30) per head of lambs purchased by the first handler for 
slaughter or slaughtered by such first handler pursuant to a custom 
slaughter arrangement. The rates of assessment for first handlers shall 
be increased or decreased proportionately if the assessment paid by 
producers, seedstock producers, and feeders is increased or decreased. 
Such assessment shall be remitted with the assessments collected 
pursuant to Sec.  1280.217.



Sec.  1280.220  Collections.

    (a) Each first handler and each exporter responsible for the 
collection of assessments under this subpart shall remit assessments to 
the Board by the 15th day of the month following the month in which the 
lambs were purchased for slaughter or export, as required by regulations 
recommended by the Board and prescribed by the Secretary, has provided 
otherwise; or
    (b) If a first handler marketed lambs or lamb products directly to 
consumers, assessments shall be remitted to the Board by the 15th day of 
the month following the month in which the lambs or lamb products were 
marketed, as required by regulations recommended by the Board and 
prescribed by the Secretary, has provided otherwise.
    (c) Late payment charges. Any unpaid assessments due to the Board 
pursuant to Sec.  1280.217 shall be increased 2 percent each month 
beginning with the day following the date such assessments were due. Any 
remaining amount due, which shall include any unpaid charges previously 
made pursuant to this paragraph, shall be increased at the same rate on 
the corresponding day of each month thereafter until paid. For the 
purposes of this paragraph, any assessment determined at a date later 
than the date prescribed by this subpart, because of a person's failure 
to timely submit a report to the Board, shall be considered to have been 
payable by the

[[Page 282]]

date it would have been due if the report had been timely filed. The 
timeliness of a payment to the Board shall be based on the applicable 
postmark date or the date actually received by the Board, whichever is 
earlier.
    (d) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.



Sec.  1280.221  Prohibition on use of funds.

    No funds collected by the Board under this subpart shall be used to 
undertake any action for the purpose of influencing legislation or 
governmental action or policy, other than recommending to the Secretary 
amendments to this subpart. A plan or project conducted pursuant to this 
title shall not make false or misleading claims on behalf of lamb or 
lamb products or disparage a competing product.

                       Reports, Books, and Records



Sec.  1280.222  Books and Records of Board.

    The Board shall:
    (a) Maintain such books and records, which shall be made available 
to the Secretary for inspection and audit, as the Secretary may 
prescribe,
    (b) Prepare and submit to the Secretary, from time to time, such 
reports as the Secretary may prescribe, and
    (c) Account for the receipt and disbursement of all funds entrusted 
to it. The Board shall cause its books and records to be audited by an 
independent auditor at the end of each fiscal year, and a report of such 
audit to be submitted to the Secretary.



Sec.  1280.223  Reports.

    Each first handler required to remit assessments to the Board for 
live lambs pursuant to Sec.  1280.217, each first handler marketing lamb 
products of that person's own production, and each exporter of lambs, 
shall report to the Board information pursuant to regulations 
recommended by the Board and prescribed by the Secretary. Such 
information may include but is not limited to the following:
    (a) The number of lambs purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, the 
total weight in pounds, and the dates of such transactions;
    (b) The number of lambs exported; the total weight in pounds of 
lambs exported;
    (c) The amount of assessment remitted;
    (d) The basis; if necessary, to show why the remittance is less than 
the total weight in pounds of lamb multiplied by the assessment rate;
    (e) The date any assessment was paid.



Sec.  1280.224  Periodic evaluation.

    Pursuant to the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7401), the Board shall, not less often than every 5 
years, authorize and fund, from funds otherwise available to the Board, 
an independent evaluation of the effectiveness of the Order and other 
programs conducted by the Board. The Board shall submit to the 
Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this paragraph.



Sec.  1280.225  Books and records of persons.

    (a) Each first handler, exporter of lambs, and market agency shall 
maintain and make available for inspection such books and records as may 
be required by regulations recommended by the Board and prescribed by 
the Secretary, including records necessary to verify any required 
reports. Such records shall be maintained for at least 2 years beyond 
the fiscal period of their applicability.
    (b) Document evidencing payment of assessments. Each person, 
including first handlers, exporters and market agencies, responsible for 
collecting an assessment paid pursuant to this subpart is required to 
give the person from whom the assessment was collected, written evidence 
of payment of the assessments paid pursuant to this subpart. Such 
written evidence serving as a receipt shall include, but not be limited 
to, the following information:
    (1) Name and address of the person collecting the assessment.
    (2) Name of person who paid assessment.

[[Page 283]]

    (3) Number of head of lamb sold.
    (4) Total weight in pounds of lamb sold.
    (5) Total assessments paid by the producer, seedstock producer, or 
feeder.
    (6) Date of sale.
    (7) Such other information as the Board, with the approval of the 
Secretary, may require.



Sec.  1280.226  Use of information.

    Information from records or reports required pursuant to this 
subpart shall be made available to the Secretary as is appropriate to 
the administration or enforcement of the Act, subpart or any regulation 
issued under the Act. In addition, the Secretary may authorize the use, 
under this part, of information regarding person paying producers, 
seedstock producers, feeders, first handlers, or exporters that is 
accumulated under laws or regulations other than the Act or regulations 
issued under the Act.



Sec.  1280.227  Confidentiality.

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

                              Miscellaneous



Sec.  1280.228  Right of the Secretary.

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



Sec.  1280.229  Personal liability.

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



Sec.  1280.230  Separability.

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



Sec.  1280.231  Patents, copyrights, inventions, product formulations, 
and publications.

    (a) Any patents, copyrights, inventions or publications developed 
through the use of funds collected by the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale leasing, franchising, or 
other uses of such patents, copyrights, inventions, or publication, 
inure to the benefit of the Board. Upon termination of this subpart, 
Sec.  1280.235 shall apply to determine the disposition of all such 
property.

[[Page 284]]

    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec.  1280.232  Amendments.

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



Sec.  1280.233  Referenda.

    (a) Required referendum. For the purpose of ascertaining whether the 
persons subject to this part favor the continuation, suspension, or 
termination of this part, the Secretary shall conduct a referendum among 
persons subject to assessments under Sec.  1280.217, Sec.  1280.218, and 
Sec.  1280.219 who, during a representative period determined by the 
Secretary, have engaged in the production, feeding, handling, or 
slaughter of lamb; or the exportation of lamb.
    (1) Time for referendum. The referendum shall be conducted not later 
than 3 years after assessments first begin under this part.
    (2) Approval of part. This part may be approved in a referendum by a 
majority of those persons voting for approval who also represent a 
majority of the volume of lamb produced, fed, slaughtered, handled, and 
exported.
    (b) Subsequent referenda. The Secretary shall conduct a subsequent 
referendum:
    (1) Not later than 7 years after assessments first begin under this 
part;
    (2) At the request of the Board established pursuant to Sec.  
1280.201; or
    (3) At the request of 10 percent or more of the lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote to determine if the persons favor the continuation, suspension, or 
termination of this part.
    (c) Other referenda. The Secretary may conduct a referendum at any 
time to determine whether the continuation, suspension or termination of 
this part or a provision of this part is favored by lamb producers, 
seedstock producers, feeders, first handlers, and exporters eligible to 
vote.
    (d) Costs of referenda. The Board shall reimburse the Secretary for 
any expenses incurred by the Secretary to conduct referenda.
    (e) Manner of conducting referenda. A referendum conducted under 
this section with respect to this part shall be conducted in the manner 
determined by the Secretary to be appropriate.
    (1) Voting. Eligible voters may vote by mail ballot in the 
referendum or in person if so prescribed by the Secretary.
    (2) Notice. Not later than 30 days before a referendum is conducted 
under this section with respect to this part, the Secretary shall notify 
the eligible voters, in such manner as determined by the Secretary, of 
the period during which voting in the referendum will occur. The notice 
shall explain any registration and voting procedures established under 
this part.



Sec.  1280.234  Suspension or termination.

    (a) The Secretary shall suspend or terminate this part or subpart or 
a provision thereof if the Secretary finds that this part, subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act,
    (b) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec.  1280.235  Proceedings after termination.

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

[[Page 285]]

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



Sec.  1280.236  Effect of termination or amendment.

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



Sec.  1280.237  Rules and Regulations.

    The Secretary may prescribe such rules and regulations as may be 
necessary to effectively carry out the provisions of this subpart.



Sec.  1280.238  OMB Control Numbers.

    The control number for the information requirements assigned by the 
Office of Management and Budget pursuant to the Paperwork Reduction Act 
of 1995, 44 U.S.C. Chapter 35 is 0581-0198, except that the OMB control 
number for the nominee background form is 0505-0001.

Subparts B [Reserved]



                    Subpart C--Rules and Regulations

    Source: 67 FR 39253, June 7, 2002, unless otherwise noted.



Sec.  1280.401  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in subpart A of this part.



Sec.  1280.402  Assessments.

    (a) Sharing proceeds of sale. If more than one producer, feeder, or 
seedstock producer shares the proceeds received for the lamb or lamb 
products sold, each such producer, feeder, or seedstock producer is 
obligated to pay that portion of the assessments that is equivalent to 
that producer's, feeder's, or seedstock producer's proportionate share 
of the proceeds.
    (b) Market agencies. A person who is a market agency; i.e., 
commission merchant, auction market, or livestock market in the business 
of receiving lambs or lamb products for sale on commission for or on 
behalf of a producer, feeder, or seedstock producer,

[[Page 286]]

will be required to collect an assessment from the producer, feeder, or 
seedstock producer and pass the collected assessment on to the 
subsequent purchaser(s) until remitted by a first handler or exporter 
responsible for submitting assessments under this part.
    (c) Failure to collect. Failure of a person to collect the 
assessment on lambs purchased from a producer, feeder, or seedstock 
producer shall not relieve the producer, feeder, or seedstock producer 
of their obligation to pay the assessment and to remit the assessment to 
the Secretary.
    (d) Death, bankruptcy, receivership or incapacity to act. In the 
event of a producer's, feeder's, seedstock producer's, or exporter's 
death, bankruptcy, receivership or incapacity to act, the representative 
of such producer's, feeder's, seedstock producer's, or exporter's 
estate, the person acting on behalf of creditors or other person acting 
in such person's stead, shall be considered the producer, feeder, or 
seedstock producer and shall be required to pay an assessment or collect 
an assessment.
    (e) Remittance of assessments. (1) Assessments shall be remitted to 
the Lamb Promotion, Research, and Information Program, c/o the Secretary 
at USDA, 23029 Network Place, Chicago, Illinois 60673-1230, with a 
``Monthly Remittance Report'' form LS-81 not later than the 15th day of 
the following month in which lambs or lamb products were purchased for 
slaughter or export, or marketed, if a first handler markets lambs or 
lamb products directly to consumers, in order to avoid late payment 
charges.
    (2) In cases where a producer or feeder sells lambs as part of a 
custom slaughter operation, the producer or feeder shall be responsible 
for remitting the assessments pursuant to Sec.  1280.219.
    (3) Each person processing or causing to be processed lamb or lamb 
products of that person's own production and marketing such lamb or lamb 
products shall be responsible for remitting the assessments pursuant to 
Sec.  1280.217(c).
    (4) Late payment charges. Any unpaid assessments due to the Board 
pursuant to Sec.  1280.217 shall be increased 2 percent each month 
beginning with the day following the date such assessments were due. Any 
remaining amount due, which shall include any unpaid charges previously 
made pursuant to this paragraph, shall be increased at the same rate on 
the corresponding day of each month thereafter until paid. Any 
assessment received at a date later than the date prescribed by this 
part, because of a persons failure to submit a timely report to the 
Secretary, shall be considered to have been payable by the date it would 
have been due if the report had been filed in a timely manner. The 
timeliness of a payment to the Secretary shall be based on the 
applicable postmark date or the date actually received by the Secretary, 
whichever is earlier.
    (5) Weekends and holidays. If the 15th day of the month falls on a 
Saturday, Sunday, or a federally recognized holiday then the required 
reports and assessment will be due the next business day in order to 
avoid late payment charges.
    (f) Non-producer status for certain transactions. (1) Each person 
seeking non-producer status pursuant to Sec.  1280.217 shall provide the 
person remitting the assessment a Statement of Certification of Non-
Producer Status form (LS-78).
    (2) A copy of the Statement of Certification of Non-Producer Status 
shall be forwarded by the person collecting the assessment to the 
Secretary.



Sec.  1280.403  Refunds.

    (a) Procedure for obtaining a refund. Any producer, seedstock 
producer, feeder, first handler, or exporter from whom an assessment is 
collected and remitted to the Secretary, or who pays an assessment 
directly to the Secretary, under the authority of the Act and the Order 
through the announcement of the results of the required referendum, 
shall have a right to receive a refund of such assessment, or pro rata 
share thereof, upon submission of proof satisfactory that such person 
paid the assessment for which the refund is sought. Any such demand 
shall be made in accordance with the provision of the Order and this 
subpart.
    (b) Refund application form. A producer shall obtain an approved 
application from the Secretary. Such form

[[Page 287]]

may be obtained by written request to the Lamb Promotion, Research, and 
Information Program, c/o the Secretary at USDA, P.O. Box 23198, 
Washington, DC 20026-3198.
    (c) Submission of refund application to the Secretary. Any producer, 
seedstock producer, feeder, first handler, or exporter requesting a 
refund shall submit an application on the prescribed form to the 
Secretary within 60 days from the date the assessments were paid by such 
producer, seedstock producer, feeder, first handler, or exporter but no 
later than the date the results of the required referendum are announced 
by the Secretary.
    (d) Proof of payment of assessments. The documentation provided 
pursuant to Sec.  1280.225(b) to the producer, seedstock producer, 
feeder, first handler, or exporter by the person responsible for 
collecting an assessment pursuant to the Order and this subpart or such 
other evidence deemed satisfactory to the Secretary, shall accompany the 
producer's, seedstock producer's, feeder's, first handler's, or 
exporter's refund application.
    (e) Payment of refunds. Refunds will be paid pursuant to Sec.  
1280.216(d).



Sec.  1280.404  Reporting.

    (a) Each first handler required to submit assessments for live lambs 
pursuant to Sec.  1280.217, each first handler marketing lamb products 
of that person's own production, and each exporter of lambs, shall 
report to the Secretary the following information on form LS-81.
    (1) The number of lambs purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, the 
total weight in pounds, and the dates of such transactions;
    (2) The number of lambs exported and the total weight in pounds of 
lambs exported;
    (3) The amount of assessment remitted;
    (4) The basis; if necessary, to show why the remittance is less than 
the total weight in pounds of lamb multiplied by the assessment rate; 
and
    (5) The date any assessment was paid.
    (b) Reporting periods. For reports required pursuant to Sec.  
1280.223, each calendar month shall be a reporting period.



Sec.  1280.405  Books and records.

    (a) Each first handler, exporter of lambs, and market agency shall 
maintain and, during normal business hours, make available for 
inspection by representatives of the Secretary, such books and records 
as are necessary to carry out the provisions of this part, including 
such books and records as are necessary to verify any required reports.
    (b) Documents evidencing payments of assessments. Each person, 
including first handlers, exporters, and market agencies, responsible 
for collecting an assessment paid pursuant to this part is required to 
give the person from whom the assessment was collected, written evidence 
of payment of the assessments paid. Such written evidence serving as a 
receipt shall include the following information:
    (1) Name and address of the person collecting the assessment.
    (2) Name of person who paid assessment.
    (3) Number of head of lambs sold.
    (4) Total weight in pounds of lamb sold.
    (5) Total assessments paid by the producer, seedstock producer, or 
feeder.
    (6) Date of sale.
    (7) Such other information as the Secretary may require.

Subparts D-E [Reserved]

[[Page 289]]



  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE




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


  Editorial Note: Nomenclature changes for Chapter XIV appear at 60 FR 
1710, Jan. 5, 1995, and at 60 FR 64297, Dec. 15, 1995.

             SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES
Part                                                                Page
1400            Payment limitation and payment eligibility..         291
1401            Commodity certificates, in kind payments, 
                    and other forms of payment..............         309
1402            Policy for certain commodities available for 
                    sale....................................         314
1403            Debt settlement policies and procedures.....         314
1404            Assignment of payments......................         326
1405            Loans, purchases and other operations.......         328
1407            Debarment and suspension....................         329
1409            Meetings of the Board of Directors of 
                    Commodity Credit Corporation............         330
          SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS
1410            Conservation Reserve Program................         335
1412            Direct and counter-cyclical program and 
                    peanut quota buyout program.............         353
1413            Hard white wheat incentive program..........         378
1421            Grains and similarly handled commodities--
                    marketing assistance loans and loan 
                    deficiency payment for the 2002 through 
                    2007 crop years.........................         381
1423            Processed agricultural commodities..........         412
1424            Bioenergy program...........................         416
1425            Cooperative marketing associations..........         422
1427            Cotton......................................         427
1430            Dairy products..............................         466
1434            Nonrecourse marketing assistance loan and 
                    LDP regulations for honey...............         477
1435            Sugar program...............................         487
1436            Farm Storage Facility Loan Program 
                    regulations.............................         505
1437            Noninsured Crop Disaster Assistance Program.         515

[[Page 290]]

1439            Emergency livestock assistance..............         534
1446            Peanuts.....................................         551
1464            Tobacco.....................................         589
1465            Agricultural Management Assistance..........         610
1466            Environmental Quality Incentives Program....         616
1467            Wetlands Reserve Program....................         628
1468            Conservation Farm Option....................         638
1470            Apple Market Loss Assistance Payment Program         648
1480            2001 and 2002-Crop disaster program.........         660
1481            Sugar Beet Disaster Program.................         676
1482            Value-added wheat gluten and wheat starch 
                    product market development program......         679
                      SUBCHAPTER C--EXPORT PROGRAMS
1484            Programs to help develop foreign markets for 
                    agricultural commodities................         683
1485            Cooperative agreements for the development 
                    of foreign markets for agricultural 
                    commodities.............................         697
1487            Technical assistance for specialty crops....         714
1488            Financing of sales of agricultural 
                    commodities.............................         717
1491            Farm and Ranch Lands Protection Program.....         727
1492            [Reserved]
1493            CCC Export Credit Guarantee Programs........         735
1494            Export Bonus Programs.......................         781
1495            [Reserved]
1496            Procurement of processed agricultural 
                    commodities for donation under Title II, 
                    Pub. L. 480.............................         799
1499            Foreign Donation Programs...................         802

Cross Reference: For regulations relative to standards, inspections, and 
  marketing practices, see Chapter I of this title.

[[Page 291]]



             SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES





PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY--Table of Contents




                      Subpart A--General Provisions

Sec.
1400.1 Applicability.
1400.2 Administration.
1400.3 Definitions.
1400.4 Indian tribal ventures.
1400.5 Scheme or device.
1400.6 Commensurate contributions.
1400.7 Joint and several liability.
1400.8 Equitable adjustments.
1400.9 Appeals.
1400.10 Paperwork Reduction Act assigned number.

                    Subpart B--Person Determinations

1400.100 Timing for determining status of persons.
1400.101 Limited partnerships, limited liability partnerships, limited 
          liability companies, corporations and other similar entities.
1400.102 Joint operations.
1400.103 Trusts.
1400.104 Estates.
1400.105 Husband and wife.
1400.106 Minor children.
1400.107 States, political subdivisions, and agencies thereof.
1400.108 Charitable organizations.
1400.109 Changes in farming operations.

          Subpart C--Actively Engaged in Farming Determinations

1400.201 General provisions for determining whether an individual or 
          entity is actively engaged in farming.
1400.202 Individuals.
1400.203 Joint operations.
1400.204 Limited partnerships, limited liability partnerships, limited 
          liability companies, corporations and other similar entities.
1400.205 Trusts.
1400.206 Estates.
1400.207 Landowners.
1400.208 Family members.
1400.209 Sharecroppers.
1400.210 Deceased and incapacitated individuals.
1400.211 Persons not considered to be actively engaged in farming.
1400.212 Hybrid seed producers.
1400.213 Military personnel.

                      Subpart D--Permitted Entities

1400.301 Limitation on the number of entities through which an 
          individual or entity may receive a payment and required 
          notification.

                      Subpart E--Cash Rent Tenants

1400.401 Eligibility.

                       Subpart F--Foreign Persons

1400.501 Eligibility.
1400.502 Notification.

           Subpart G--Average Adjusted Gross Income Limitation

1400.600 Applicability.
1400.601 Determination of average adjusted gross income.
1400.602 Compliance.
1400.603 Commensurate reduction.

    Authority: 7 U.S.C. 1308 et seq.

    Source: 61 FR 37566, July 18, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1400.1  Applicability.

    (a) Together with any additional coverage as may apply with respect 
to Subpart G of this part or other subpart of this part as provided in 
such subpart, this part is applicable to the following programs 
(together with any other programs which adopt this part by reference):
    (1) The program governed by part 1413 of this chapter;
    (2) All programs governed by parts 1421 and 1427 of this chapter 
under which a producer realizes a gain from repaying a marketing 
assistance loan at a lower rate than the commodity's original loan rate, 
and any program that authorizes a loan deficiency payment for a 
commodity;
    (3) The Conservation Reserve Program (CRP) as governed by part 1410 
of this chapter.
    (b) This part does not apply to:
    (1) CRP rental payments if they are made to a State, including a 
political subdivision or agency thereof, under a special conservation 
reserve enhancement program the Secretary approves.

[[Page 292]]

    (2) CRP rental payments made to an individual heir who succeeded to 
a contract on inherited land, if the land was subject to the CRP 
contract at the time it was inherited.
    (c) This part applies to the programs specified in paragraph (a)(1) 
and (2) of this section on a crop year basis, and those in paragraph 
(a)(3) of this section based on each fiscal year.
    (d) This part is used to determine whether individuals and entities 
are to be treated as one person or as separate persons regarding the 
application of statutory provisions that limit the amount of payments a 
specific person may receive.
    (e) Where more than one provision of this part may apply, the 
provision most restrictive on the program participant shall apply.
    (f) Payments made to the following are not subject to payment 
limitations under this part:
    (1) Public schools for land a public school district owns; and
    (2) A State for land a State owns that is used to maintain a public 
school.
    (g) Unless otherwise noted, the following amounts are the payment 
limitations per person per applicable period for each payment or 
benefit:

------------------------------------------------------------------------
                                                              Limitation
                                                             per person,
                                                              per crop,
                     Payment or benefit                        program
                                                               year or
                                                             fiscal year
------------------------------------------------------------------------
1. Direct Payments for covered commodities.................      $40,000
2. Direct Payment for peanuts..............................       40,000
3. Counter-Cyclical Payments for covered commodities.......       65,000
4. Counter-Cyclical Payment for peanuts....................       65,000
5. Loan Deficiency Payments and Marketing Loan Gains for          75,000
 loan commodities..........................................
6. Total Loan Deficiency Payments and Marketing Loan Gains        75,000
 for peanuts, wool, mohair and honey.......................
7. Conservation Reserve Program............................       50,000
8. Non-Insured Crop Disaster Assistance Program (NAP)            100,000
 payments..................................................
9. Environmental Quality Incentives Program (EQIP) payments  \1\ 450,000
10. Agricultural Management Assistance Program.............       50,000
11. Conservation Security Program (CSP):
  Tier 1...................................................   \2\ 20,000
  Tier 2...................................................   \2\ 35,000
  Tier 3...................................................   \2\ 45,000
------------------------------------------------------------------------
\1\ This statutory limit is applied on a ``direct attribution'' method
  with respect to the individual or entity.
\2\ This limitation is attributed to an individual or entity covered by
  a Conservation Security Program contract.

    (h) As provided in Subpart G of this part, additional requirements 
are applicable to certain of the payments specified in paragraph (g) of 
this section.

[67 FR 61469, Oct. 1, 2002, as amended at 68 FR 33346, June 4, 2003]



Sec.  1400.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), and the Administrator, Farm Service 
Agency (FSA). In the field, the regulations in this part will be 
administered by the FSA State and county committees (herein referred to 
as ``State and county committees,'' respectively).
    (b) State executive directors, county executive directors and State 
and county committees do not have authority to modify or waive any of 
the provisions of this part.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee which has not been 
taken by such committee. The State committee may also:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Executive Vice President, CCC, and the Administrator, FSA, 
or a designee, from determining any question arising under this part or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) Benefits from programs subject to this part may not be issued 
until all required forms and necessary payment eligibility and payment 
limitation determinations are made.
    (f) The initial ``actively engaged in farming'' and ``person'' 
determinations shall be made within 60 days after the producer files the 
required forms and any other supporting documentation needed in making 
such determinations. If the determination is not made within 60 days, 
the producer will receive a determination for that program year that 
reflects the determination sought

[[Page 293]]

by the producer unless the Deputy Administrator determines that the 
producer did not follow the farm operating plan that was presented to 
the county or State committee for such year.
    (g) Initial determinations concerning the provisions of this part 
shall not be made by a county FSA office with respect to any farm 
operating plan that is for a joint operation with more than five 
members.
    (h) Reviews of farming operations and corresponding documentation 
submitted by program participants may be conducted to determine 
compliance with applicable statutes and regulations.

[61 FR 37566, July 18, 1996, as amended at 65 FR 36561, June 8, 2000]



Sec.  1400.3  Definitions.

    (a) The terms defined in part 718 of this chapter shall be 
applicable to this part and all documents issued in accordance with this 
part, except as otherwise provided in this section.
    (b) The following definitions shall also be applicable to this part:
    Active personal labor. Active personal labor is personally providing 
physical activities necessary in a farming operation, including 
activities involved in land preparation, planting, cultivating, 
harvesting, and marketing of agricultural commodities in the farming 
operation. Other physical activities include those physical activities 
required to establish and maintain conserving cover crops on conserving 
use and CRP acreages and those physical activities necessary in 
livestock operations.
    Active personal management. Active personal management is personally 
providing:
    (1) The general supervision and direction of activities and labor 
involved in the farming operation; or
    (2) Services (whether performed on-site or off-site) reasonably 
related and necessary to the farming operation, including:
    (i) Supervision of activities necessary in the farming operation, 
including activities involved in land preparation, planting, 
cultivating, harvesting, and marketing of agricultural commodities, as 
well as activities required to establish and maintain conserving cover 
crops on conserving use and CRP acreage and activities required in 
livestock operations;
    (ii) Business-related actions, which include discretionary decision 
making;
    (iii) Evaluation of the financial condition and needs of the farming 
operation;
    (iv) Assistance in the structuring or preparation of financial 
reports or analyses for the farming operation;
    (v) Consultations in or structuring of business-related financing 
arrangements for the farming operation;
    (vi) Marketing and promotion of agricultural commodities produced by 
the farming operation;
    (vii) Acquiring technical information used in the farming operation; 
and
    (viii) Any other management function reasonably necessary to conduct 
the farming operation and for which service the farming operation would 
ordinarily be charged a fee.
    Alien. Any person not a citizen or national of the United States.
    Lawful Alien. Any person who is not a citizen or national of the 
United States but who is admitted into the United States for permanent 
residence under the Immigration and Nationality Act and possesses a 
valid Alien Registration Receipt Card (Form I-551 or I-151).
    (2) [Reserved]
    Capital. Capital consists of the funding provided by an individual 
or entity to the farming operation in order for such operation to 
conduct farming activities. In determining whether an individual or 
entity has contributed capital, in the form of funding, to the farming 
operation, such capital must have been derived from a fund or account 
separate and distinct from that of any other individual or entity 
involved in such operation. Capital does not include the value of any 
labor or management that is contributed to the farming operation or any 
outlays for land or equipment. A capital contribution may be a direct 
out-of-pocket input of a specified sum or an amount borrowed by the 
individual or entity.
    (1) With respect to a farming operation conducted by an individual, 
a joint operation in which the capital is contributed by a member of the 
joint operation or an entity, such capital contributed to meet the 
requirements of:

[[Page 294]]

    (i) Section 1400.201(b) must be contributed directly by the 
individual or entity and must not be acquired as a result of a loan made 
to, guaranteed, or secured by:
    (A) Any other individual, joint operation, or entity that has an 
interest in such farming operation;
    (B) Such individual, joint operation, or entity by any other 
individual, joint operation, or entity that has an interest in such 
farming operation; or
    (C) Any other individual, joint operation, or entity in whose 
farming operation such individual, joint operation, or entity has an 
interest; and
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the individual or entity and if acquired as a result of a loan made to, 
guaranteed, or secured by the individuals, joint operations, or entities 
listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the 
loan must bear the prevailing interest rate; and
    (2) With respect to a farming operation conducted by a joint 
operation in which the capital is contributed by such joint operation, 
such capital contributed to meet the requirements of:
    (i) Section 1400.201(b) must be contributed directly by the joint 
operation and must not be acquired as a result of a loan made to, 
guaranteed, or secured by:
    (A) Any individual, entity, or other joint operation that has an 
interest in such farming operation, including either joint operation's 
members;
    (B) Such joint operation by any individual, entity, or other joint 
operation that has an interest in such farming operation; or
    (C) Any individual, entity, or other joint operation in whose 
farming operation such joint operation has an interest.
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the joint operation and if acquired as a result of a loan made to, 
guaranteed, or secured by the individuals, entities, or joint operations 
listed in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, the 
loan must bear the prevailing interest rate.
    Entity. An entity is a corporation, joint stock company, 
association, limited partnership, limited liability partnership, limited 
liability company, irrevocable trust, revocable trust, estate, 
charitable organization, or other similar organization, including any 
such organization participating in the farming operation as a partner in 
a general partnership, a participant in a joint venture, a grantor of a 
revocable trust, or as a participant in a similar organization.
    Equipment. Equipment is the machinery and implements needed by the 
farming operation to conduct activities of the farming operation, 
including machinery and implements involved in land preparation, 
planting, cultivating, harvesting, or marketing of the crops involved. 
Equipment also includes machinery and implements needed to establish and 
maintain conserving cover crops on conserving use and CRP acreages and 
those needed to conduct livestock operations.
    (1) With respect to a farming operation conducted by an individual, 
entity or joint operation in which the equipment is contributed by a 
member of the joint operation, such equipment contributed to meet the 
requirements of:
    (i) Section 1400.201(b) must be contributed directly by the 
individual or entity and must not be acquired as a result of a loan made 
to, guaranteed, or secured by:
    (A) Any other individual, joint operation, or entity that has an 
interest in such farming operation.
    (B) Such individual, joint operation, or entity by any other 
individual, joint operation, or entity that has an interest in such 
farming operation; or
    (C) Any other individual, joint operation, or entity in whose 
farming operation such individual, joint operation, or entity has an 
interest.
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the individual or entity and if acquired as a result of a loan made to, 
guaranteed, or secured by the individuals, joint operations, or entities 
listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the 
loan must bear the prevailing interest rate.
    (2) With respect to a farming operation conducted by a joint 
operation in which the equipment is contributed by such joint operation, 
such equipment

[[Page 295]]

contributed to meet the requirements of:
    (i) Section 1400.201(b) must be contributed directly by the joint 
operation and must not be acquired as a result of a loan made to, 
guaranteed, or secured by:
    (A) Any individual, entity, or other joint operation that has an 
interest in such farming operation, including either joint operation's 
members.
    (B) Such joint operation by any individual, entity, or other joint 
operation that has an interest in such farming operation; or
    (C) Any individual, entity, or other joint operation in whose 
farming operation such joint operation has an interest; and
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the joint operation and if listed as a result of a loan made to, 
guaranteed, or secured by the individuals, entities, or joint operations 
provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, 
the loan must bear the prevailing interest rate.
    (3) Such equipment may be leased from any source. If such equipment 
is leased from another individual or entity with an interest in the 
farming operation, such equipment must be leased at a fair market value.
    Family member. The term family member means an individual to whom 
another member in the farming operation is related as lineal ancestor, 
lineal descendant, or sibling, including spouses of those individuals 
who do not make a significant contribution to the farming operation 
themselves.
    Farming operation. A farming operation is a business enterprise 
engaged in the production of agricultural products that is operated by 
an individual, entity, or joint operation and is eligible to receive 
payments, directly or indirectly, under one or more of the programs 
specified in Sec.  1400.1. An entity or individual may have more than 
one farming operation if such individual or entity is a member of one or 
more joint operations.
    Interest in a Farming Operation. An individual, entity or joint 
operation has an interest in a farming operation if the individual, 
entity or joint operation:
    (1) Owns or rents the land;
    (2) Has an interest in the agricultural commodities produced; or
    (3) Is a member of a joint operation that either owns or rents the 
land or has an interest in the agricultural commodities produced.
    Irrevocable trust. All trusts shall be considered to be revocable 
trusts, except a trust may be considered to be an irrevocable trust if 
it is a trust:
    (1) That may not be modified or terminated by the grantor;
    (2) In the corpus of which the grantor does not have any future, 
contingent or remainder interest; and
    (3) If established after January 1, 1987, that does not provide for 
the transfer of the corpus of the trust to the remainder beneficiary in 
less than 20 years from the date the trust is established except in 
cases where the transfer is contingent upon either the remainder 
beneficiary achieving at least the age of majority or the death of the 
grantor or income beneficiary.
    Joint operation. A joint operation is a general partnership, joint 
venture, or other similar business organization.
    Land. Land is farmland that meets the specific requirements of the 
applicable program.
    (1) With respect to a farming operation conducted by an individual, 
a joint operation in which the land is contributed by a member of the 
joint operation, or an entity, such land contributed to meet the 
requirements of:
    (i) Section 1400.201(b) must be contributed directly by the 
individual or entity and must not be acquired as a result of a loan made 
to, guaranteed, or secured by:
    (A) Any other individual, joint operation, or entity that has an 
interest in such farming operation;
    (B) Such individual, joint operation, or entity by any other 
individual, joint operation, or entity that has an interest in such 
farming operation; or
    (C) Any other individual, joint operation, or entity in whose 
farming operation such individual, joint operation, or entity has an 
interest; and
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the individual or entity and if acquired as a result of a loan made to, 
guaranteed, or

[[Page 296]]

secured by the individuals, joint operations, or entities listed in 
paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the loan must 
bear the prevailing interest rate; and
    (2) With respect to a farming operation conducted by a joint 
operation in which the land is contributed by such joint operation, such 
land contributed to meet the requirements of:
    (i) Section 1400.201(b) must be contributed directly by the joint 
operation and must not be acquired as a result of a loan made to, 
guaranteed, or secured by:
    (A) Any individual, entity, or other joint operation that has an 
interest in such farming operation, including either joint operation's 
members;
    (B) Such joint operation by any individual, entity, or other joint 
operation that has an interest in such farming operation; or
    (C) Any individual, entity, or other joint operation in whose 
farming operation such joint operation has an interest; and
    (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by 
the joint operation and if acquired as a result of a loan made to, 
guaranteed, or secured by the individuals, entities, or joint operations 
provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, 
the loan must bear the prevailing interest rate.
    (3) Such land may be leased from any source. If such land is leased 
from another individual or entity with an interest in the farming 
operation, such land must be leased at a fair market value.
    Loan commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, extra long staple cotton, rice, soybeans, other oilseeds, 
dry peas, lentil, small chickpeas, wool, mohair, peanuts and honey.
    Payment means:
    (1) Payments made in accordance with part 1412 of this chapter;
    (2) Loan gains and loan deficiency payments made in accordance with 
parts 1421 and 1427 of this chapter;
    (3) CRP annual rental payments made in accordance with part 1410 of 
this chapter;
    (4) Non-Insured Crop Disaster Assistance Program (NAP) payments made 
in accordance with part 1437 of this chapter; and
    (5) For other programs, any payments designated in individual 
program regulations or elsewhere in this part.
    Permitted entity. A permitted entity is an entity designated 
annually by an individual that is to receive a payment, loan, or benefit 
under a program specified in Sec.  1400.1(a).
    Person. (1) A person is:
    (i) An individual, including any individual participating in a 
farming operation as a partner in a general partnership, a participant 
in a joint venture, or a participant in a similar entity;
    (ii) A corporation, joint stock company, association, limited 
partnership, limited liability partnership, limited liability company, 
irrevocable trust, revocable trust combined with the grantor of the 
trust, estate, or charitable organization, including any such entity or 
organization participating in the farming operation as a partner in a 
general partnership, a participant in a joint venture, a grantor of a 
revocable trust, or as a participant in a similar entity; and
    (iii) A State, political subdivision, or agency thereof.
    (2) In order for an individual or entity, other than an individual 
or entity that is a member of a joint operation, to be considered a 
separate person for the purposes of this part, in addition to other 
provisions of this part, the individual or entity must:
    (i) Have a separate and distinct interest in the land or the crop 
involved;
    (ii) Exercise separate responsibility for such interest; and
    (iii) Maintain funds or accounts separate from that of any other 
individual or entity for such interest.
    (3) With respect to an individual or entity that is a member of a 
joint operation, such individual or entity will have met the 
requirements of paragraph (2) of this definition if the joint operation 
meets the requirements of such paragraph.
    (4) Any cooperative association of producers that markets 
commodities for producers shall not be considered a person with respect 
to the commodities so marketed for producers.

[[Page 297]]

    Public school. A public school is a primary, elementary, secondary 
school, college, or university that is directly administered under the 
authority of a governmental body or that receives a predominant amount 
of its financing from public funds.
    Sharecropper. An individual who performs work in connection with the 
production of the crop under the supervision of the operator and who 
receives a share of such crop in return for the provision of such labor.
    Significant contribution. A significant contribution is the 
provision of the following to a farming operation by an individual or 
entity:
    (1)(i) With respect to land, capital, or equipment contributed by an 
individual or entity, a contribution that has a value at least equal to 
50 percent of the individual's or entity's commensurate share of:
    (A) The total value of the capital necessary to conduct the farming 
operation;
    (B) The total rental value of the land necessary to conduct the 
farming operation;
    (C) The total rental value of the equipment necessary to conduct the 
farming operation; or
    (ii) If the contribution by an individual or entity consists of any 
combination of land, capital, and equipment, such combined contribution 
must have a value at least equal to 30 percent of the individual's or 
entity's commensurate share of the total value of the farming operation;
    (2) With respect to active personal labor, an amount which is the 
smaller of:
    (i) 1,000 hours per calendar year; or
    (ii) 50 percent of the total hours that would be necessary to 
conduct a farming operation that is comparable in size to such 
individual's or entity's commensurate share in the farming operation;
    (3) With respect to active personal management, activities that are 
critical to the profitability of the farming operation, taking into 
consideration the individual's or entity's commensurate share in the 
farming operation; and
    (4) With respect to a combination of active personal labor and 
active personal management, when neither contribution individually meets 
the requirements of paragraphs (2) and (3) of this definition, a 
combination of active personal labor and active personal management 
that, when viewed together, results in a critical impact on the 
profitability of the farming operation in an amount at least equal to 
either the significant contribution of active personal labor or active 
personal management as provided in paragraphs (2) and (3) of this 
definition.
    Substantial amount of active personal labor. Substantial amount of 
active personal labor means the provision of active personal labor in an 
amount that is the smaller of:
    (1) 1,000 hours per calendar year; or
    (2) 50 percent of the total hours that would be necessary to conduct 
a farming operation that is comparable in size to such individual's or 
entity's commensurate share in the farming operation.
    Substantial beneficial interest. A substantial beneficial interest 
in an entity is an interest of 10 percent or more. In determining 
whether such an interest equals at least 10 percent, all interests in 
the entity that are owned by an individual or entity directly or 
indirectly through such means as ownership of a corporation that owns 
the entity shall be taken into consideration. In order to ensure that 
the provisions of this part are not circumvented by an individual or 
entity, the Deputy Administrator may determine that an ownership 
interest requirement of less than 10 percent shall be applied to such 
individual or entity.
    Total value of the farming operation. The total value of the farming 
operation is the total of the costs, excluding the value of active 
personal labor and active personal management contributed by a person 
who is a member of the farming operation, needed to carry out the 
farming operation for the year for which the determination is made.

[61 FR 37566, July 18, 1996, as amended at 67 FR 61470, Oct. 1, 2002]



Sec.  1400.4  Indian tribal ventures.

    An individual American Indian who receives payments through other 
than an Indian tribal venture is required to

[[Page 298]]

certify that they will not accrue total payments, including payments 
made to the Indian tribal venture and to the individual American Indian, 
in excess of the applicable payment limitation for programs specified in 
Sec.  1400.1.



Sec.  1400.5  Scheme or device.

    (a) All or any part of the payment otherwise due a person on all 
farms in which the person has an interest may be withheld or be required 
to be refunded if the person adopts or participates in adopting a scheme 
or device designed to evade this part or that has the effect of evading 
this part. Such acts shall include, but are not limited to:
    (1) Concealing information that affects the application of this 
part;
    (2) Submitting false or erroneous information; or
    (3) Creating fictitious entities for the purpose of concealing the 
interest of a person in a farming operation.
    (b) If the Deputy Administrator determines that a person has adopted 
a scheme or device to evade, or that has the purpose of evading, the 
provisions of sections 1001, 1001A, or 1001C of the Food Security Act of 
1985, as amended (7 U.S.C. 1281 note) such person shall be ineligible to 
receive payments under the programs specified in Sec.  1400.1 with 
respect to the year for which such scheme or device was adopted and the 
succeeding year.

[61 FR 37566, July 18, 1996, as amended at 67 FR 61470, Oct. 1, 2002]



Sec.  1400.6  Commensurate contributions.

    In order to be considered eligible to receive payments under the 
programs specified in Sec.  1400.1 an individual or entity specified in 
Sec. Sec.  1400.202 through 1400.210 must have:
    (a) A share of the profits or losses from the farming operation that 
is commensurate with the individual's or entity's contribution to the 
operation; and
    (b) Contributions to the farming operation that are at risk.



Sec.  1400.7  Joint and several liability.

    If two or more individuals or entities are considered to be one 
person and the total payment received is in excess of the applicable 
payment limitation provision, such individuals or entities shall be 
jointly and severally liable for any liability that arises therefrom. 
The provisions of this section shall be applicable in addition to any 
liability that arises under a criminal or civil statute.



Sec.  1400.8  Equitable adjustments.

    Actions taken by an individual or an entity in good faith on action 
or advice of an authorized representative of the Deputy Administrator 
may be accepted as meeting the requirements of this part to the extent 
the Deputy Administrator deems necessary to provide fair and equitable 
treatment to such individual or entity.



Sec.  1400.9  Appeals.

    (a) Any person may obtain reconsideration and review of 
determinations made under this part in accordance with the appeal 
regulations set forth at part 780 of this title. With respect to such 
appeals, the applicable reviewing authority shall:
    (1) Schedule a hearing with respect to the appeal within 45 days 
following receipt of the written appeal; and
    (2) Issue a determination within 60 days following the hearing.
    (b) The time limitations provided in paragraph (a) shall not apply 
if:
    (1) The appellant, or the appellant's representative, requests a 
postponement of the scheduled hearing;
    (2) The appellant, or the appellant's representative, requests 
additional time following the hearing to present additional information 
or a written closing statement;
    (3) The appellant has not timely presented information to the 
reviewing authority; or
    (4) An investigation by the Office of Inspector General is ongoing 
or a court proceeding is involved that affects the amount of payments a 
person may receive.
    (c) If the deadlines provided in paragraphs (a) and (b) of this 
section are not met, the relief sought by the producer's appeal will be 
granted for the applicable crop year unless the Deputy Administrator 
determines that the producer did not follow the farm operating plan 
initially presented to the county

[[Page 299]]

committee for the year that is the subject of the appeal.
    (d) An appellant may waive the provisions of paragraphs (a) and (b) 
of this section.



Sec.  1400.10  Paperwork Reduction Act assigned number.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) under the 
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control 
number 0560-0096.



                    Subpart B--Person Determinations



Sec.  1400.100  Timing for determining status of persons.

    (a) Except as otherwise set forth in this part, for the 1996 program 
or fiscal year, the status of an individual or entity on July 12, 1996, 
shall be the basis on which determinations are made in accordance with 
this part. Except as otherwise set forth in this part, for 1997 and 
subsequent years, the status of an individual or entity on April 1 of 
the applicable program or fiscal year, shall be the basis on which 
determinations are made in accordance with this part.
    (b) Actions taken by an individual or entity after the applicable 
status date set forth in paragraph (a) of this section, but on or before 
the final harvest date of the last contract commodity in the area, as 
determined by the Deputy Administrator, shall not be used to determine 
whether there has been an increase in the number of persons for the 
applicable program or fiscal year. Actions taken by a person after the 
status date set forth in paragraph (a) of this section, but on or before 
the harvest of the last contract commodity in the area, shall be used to 
determine whether there has been a decrease in the number of persons for 
the applicable program or fiscal year.



Sec.  1400.101  Limited partnerships, limited liability partnerships, 
limited liability companies, corporations and other similar entities.

    (a) A limited partnership, limited liability partnership, limited 
liability company, corporation, or other similar entity shall be 
considered to be a person separate from an individual partner, 
stockholder, or member except that a limited partnership, limited 
liability partnership, limited liability corporation, corporation, or 
other similar entity in which more than 50 percent of the interest in 
such limited partnership, limited liability partnership, limited 
liability corporation, corporation, or other similar entity is owned by 
an individual (including the interest owned by the individual's spouse, 
minor children, and trusts for the benefit of such minor children) or by 
an entity shall not be considered as a separate person from such 
individual or entity.
    (b) If the same two or more individuals or entities own more than 50 
percent of the interest in each of two or more limited partnerships, 
corporations, or other similar entities engaged in farming, all such 
limited partnerships, limited liability partnership, limited liability 
company, corporations, or other similar entities shall be considered to 
be one person.
    (c) The percentage share of the interest in a limited partnership, 
limited liability partnership, limited liability company, corporation, 
or other similar entity that is owned by an individual or other entity 
shall be determined as of the status date set forth in paragraph (a) of 
this section. If a partner, stockholder, or member acquires an interest 
in the limited partnership, corporation, or other similar entity after 
such date, and on or before the harvest of the last contract commodity 
in the area as determined by the Deputy Administrator, the amount of any 
such interest shall be included in determining the total ownership 
interest of such partner, stockholder, or member.
    (d) Where there is only one class of stock or other similar unit of 
ownership, an individual's or entity's percentage share of the limited 
partnership, limited liability partnership, limited liability company, 
corporation, or other similar entity shall be based upon the outstanding 
shares of stock or other similar unit of ownership held by the 
individual or entity and compared to the total outstanding shares of 
stock or other similar unit of ownership. If the limited partnership, 
limited liability partnership, limited liability

[[Page 300]]

company, corporation, or other similar entity has more than one class of 
stock or other unit of ownership, the percentage share of the limited 
partnership, limited liability partnership, limited liability company, 
corporation, or other similar entity owned by an individual or entity 
shall be determined by the Deputy Administrator on the basis of market 
quotations. If market quotations are lacking or are too scarce to be 
recognized, such percentage share shall be determined by the Deputy 
Administrator on the basis of all relevant factors affecting the fair 
market value of such stock or other unit of ownership, including the 
various rights and privileges that are attributed to each such class.



Sec.  1400.102  Joint operations.

    Members of joint operations may be separately treated as a person in 
accordance with the requirements of this part. However, members of a 
joint operation may request to be jointly treated as one person for the 
purposes of this part.



Sec.  1400.103  Trusts.

    (a) A trust shall be considered to be a person separate from the 
individual income beneficiaries of the trust except that a trust that 
has a sole income beneficiary shall not be considered to be a separate 
person from such income beneficiary.
    (b) Where two or more irrevocable trusts have common income 
beneficiaries (including a spouse and minor children) with more than a 
50 percent interest, all such trusts shall be considered to be one 
person.
    (c) A revocable trust and the grantor of such revocable trust shall 
be considered to be one person.



Sec.  1400.104  Estates.

    If the deceased individual had lived and would have been considered 
to be one person with respect to an heir, the estate shall also be 
considered to be one person with such heir.



Sec.  1400.105  Husband and wife.

    (a) With respect to any married couple, the husband and wife shall 
be considered to be one person except that a husband and wife, who:
    (1) Prior to their marriage were separately engaged in unrelated 
farming operations, will be determined to be separate persons with 
respect to such farming operations so long as such operations remain 
separate and distinct from any farming operation conducted by the other 
spouse; or
    (2) Except as provided in paragraph (b), do not hold, directly or 
indirectly, a substantial beneficial interest in more than one entity 
(including themselves) engaged in farm operations that also receive 
payments as a separate person from either spouse, the spouses may be 
considered as separate persons if each spouse otherwise meets the 
requirements under this part to be considered a separate person and is 
otherwise eligible to receive payment.
    (b) With respect to any interest in an estate, for 2 program years 
after the program year in which the individual died, a husband and wife 
shall not be considered as having an interest in an entity to the extent 
resulting from such interest in an estate for purposes of determining 
persons.



Sec.  1400.106  Minor children.

    (a) Except as provided in paragraph (b) of this section, a minor, 
including a minor who is the beneficiary of a trust or who is an heir of 
an estate, and the parent or any court-appointed person such as a 
guardian or conservator who is responsible for the minor shall be 
considered to be one person.
    (b) A minor may be considered to be a separate person from the 
minor's parent or any court appointed person such as a guardian or 
conservator who is responsible for the minor, if the minor is a producer 
on a farm and the minor's parent or any court appointed person such as 
guardian or conservator who is responsible for the minor does not have 
any interest in the farm on which the minor is a producer or in any 
production from such farm. In addition the minor must:
    (1) Have established and maintain a separate household from the 
minor's parents or any court-appointed person such as a guardian or 
conservator who is responsible for the minor and such

[[Page 301]]

minor personally carries out the farming activities with respect to the 
minor's farming operation for which there is a separate accounting; or
    (2) Not live in the same household as such minor's parent and:
    (i) Be represented by a court-appointed guardian or conservator who 
is responsible for the minor; and
    (ii) Have ownership of the farm vested in the minor.
    (c) A person shall be considered to be a minor until the age 18 is 
reached. Court proceedings conferring majority on a person under 18 
years of age will not change such person's status as a minor.



Sec.  1400.107  States, political subdivisions, and agencies thereof.

    A State, political subdivision and agencies thereof shall be 
considered to be one person.



Sec.  1400.108  Charitable organizations.

    A charitable organization, including a club, society, fraternal or 
religious organization, shall be considered to be a separate person to 
the extent that such an entity is engaged in the production of crops as 
a separate person, except where the land or the proceeds from the 
farming operation may transfer to an entity that exercises control or 
authority over such organization.



Sec.  1400.109  Changes in farming operations.

    Any change in a farming operation that would increase the number of 
persons to which the provisions of this part apply must be bona fide and 
substantive. If bona fide, the following shall be considered to be 
substantive changes in the farming operation:
    (a) The addition of a family member to a farming operation in 
accordance with Sec.  1400.208, except that such an addition will not 
affect the status of any other individual or entity that is added to the 
farming operation;
    (b) With respect to a landowner only, a change from a cash rent to a 
share rent;
    (c) An increase through the acquisition of cropland not previously 
involved in the farming operation of approximately 20 percent or more in 
the total cropland involved in the farming operation, if such cropland 
has planting history of an amount at least normal for the area;
    (d) A change in ownership by sale or gift of a significant amount of 
equipment from an individual or entity who previously has been engaged 
in a farming operation to an individual or entity who has not been 
involved in such operation. The sale or gift of equipment will be 
considered to be bona fide and substantive only if the transferred 
amount of such equipment is commensurate with the new individual's or 
entity's share of the farming operation;
    (e) A change in ownership by sale or gift of a significant amount of 
land from an individual or entity who previously has been engaged in a 
farming operation to an individual or entity who has not been involved 
in such operation. The sale or gift of land will be considered to be 
substantive only if the transferred amount of such land is commensurate 
with the new individual's or entity's share of the farming operation.



          Subpart C--Actively Engaged in Farming Determinations



Sec.  1400.201  General provisions for determining whether an individual 
or entity is actively engaged in farming.

    (a) To be considered a person who is eligible to receive payments 
with respect to a particular farming operation, a person must be an 
individual or entity actively engaged in farming with respect to such 
operation.
    (b) Actively engaged in farming means, except as otherwise provided 
in this part, that the individual or entity, independently makes a 
significant contribution to a farming operation, of:
    (1) Capital, equipment, or land, or a combination of capital, 
equipment, or land; and
    (2) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management.
    (c) In determining if the individual or entity is actively 
contributing a significant amount of active personal labor or active 
personal management the following factors shall be taken into 
consideration:

[[Page 302]]

    (1) The types of crops and livestock produced by the farming 
operation;
    (2) The normal and customary farming practices of the area; and
    (3) The total amount of labor and management necessary for such a 
farming operation in the area.
    (d) In order to be considered to be actively engaged in farming an 
individual or entity specified in Sec. Sec.  1400.202 through 1400.210 
must have:
    (1) A share of the profits or losses from the farming operation 
commensurate with the individual's or entity's contribution to the 
operation; and
    (2) Contributions to the farming operation that are at risk.



Sec.  1400.202  Individuals.

    An individual shall be considered to be actively engaged in farming 
with respect to a farming operation if the individual makes a 
significant contribution of:
    (a) Capital, equipment, or land, or a combination of capital, 
equipment, or land; and
    (b) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management.



Sec.  1400.203  Joint operations.

    (a) A member of a joint operation shall be considered to be actively 
engaged in farming with respect to a farming operation if the member 
makes a significant contribution of:
    (1) Capital, equipment, or land or a combination of capital, 
equipment, or land; and
    (2) Active personal labor or active personal management or a 
combination of active personal labor and active personal management.
    (b) If a joint operation separately makes a significant contribution 
of capital, equipment, or land, or a combination of capital, equipment, 
or land, and the joint operation meets the provisions of Sec.  
1400.201(d), the members of the joint operation who make a significant 
contribution of active personal management, or a combination of active 
personal labor and active personal management to the farming operation 
shall be considered to be actively engaged in farming with respect to 
such farming operation.



Sec.  1400.204  Limited partnerships, limited liability partnerships, 
limited liability companies, corporations and other similar entities.

    A limited partnership, limited liability partnership, limited 
liability company, corporation, or other similar entity shall be 
considered to be actively engaged in farming with respect to a farming 
operation if:
    (a) The entity separately makes a significant contribution to the 
farming operation of capital, equipment, or land, or a combination of 
capital, equipment, or land; and
    (b) The partners, stockholders, or members collectively make a 
significant contribution, whether compensated or not compensated, of 
active personal labor, active personal management, or a combination of 
active personal labor and active personal management to the farming 
operation. The combined beneficial interest of all the partners, 
stockholders, or members providing active personal labor or active 
personal management, or a combination of active personal labor and 
active personal management must be at least 50 percent.



Sec.  1400.205  Trusts.

    A trust shall be considered to be actively engaged in farming with 
respect to a farming operation if:
    (a) The entity separately makes a significant contribution to the 
farming operation of capital, equipment, or land, or a combination of 
capital, equipment, or land;
    (b) The income beneficiaries collectively make a significant 
contribution of active personal labor or active personal management, or 
a combination of active personal labor and active personal management to 
the farming operation. The combined interest of all the income 
beneficiaries providing active personal labor or active personal 
management, or a combination of active personal labor and active 
personal management must be at least 50 percent;
    (c) The trust has provided a tax identification number of the trust 
unless the trust is a revocable trust and the grantor is the sole income 
beneficiary; and

[[Page 303]]

    (d) The trust has provided a copy of the trust agreement to the 
county committee unless the trust is a revocable trust.



Sec.  1400.206  Estates.

    (a) For 2 program years after the program year in which an 
individual dies the individual's estate shall be considered to be 
actively engaged in farming if:
    (1) The estate makes a significant contribution of either:
    (i) Capital, equipment, or land; or
    (ii) A combination of capital, equipment, or land; and
    (2) The personal representative or heirs of the estate collectively 
make a significant contribution of either:
    (i) Active personal labor or active personal management; or
    (ii) A combination of active personal labor and active personal 
management.
    (b) After the period set forth in paragraph (a) of this section, the 
deceased individual's estate shall not be considered to be actively 
engaged in farming unless, on a case by case basis, the Deputy 
Administrator determines that the estate has not been settled primarily 
for the purpose of obtaining program payments.



Sec.  1400.207  Landowners.

    A person who is a landowner, including landowners with an undivided 
interest in land, making a significant contribution of owned land to the 
farming operation, shall be considered to be actively engaged in farming 
with respect to such owned land, if the landowner receives rent or 
income for such use of the land based on the land's production or the 
operation's operating results. A landowner also includes a member of a 
joint operation if the joint operation holds title to land in the name 
of the joint operation and if the joint operation or its members submit 
adequate documentation to determine that, upon dissolution of the joint 
operation, the title to the land owned by the joint operation will 
revert to such member of such joint operation.



Sec.  1400.208  Family members.

    With respect to a farming operation conducted by persons, a majority 
of whom are individuals who are family members, an adult family member 
who makes a significant contribution of active personal management, 
active personal labor, or a combination of active personal labor and 
active personal management shall be considered to be actively engaged in 
farming.



Sec.  1400.209  Sharecroppers.

    A sharecropper who makes a significant contribution of active 
personal labor to the farming operation shall be considered to be 
actively engaged in farming.



Sec.  1400.210  Deceased and incapacitated individuals.

    The determining authority shall take into consideration the 
circumstances involving individuals who have died or become 
incapacitated during the program year or fiscal year, as applicable. If 
the individual dies or is incapacitated before a determination is made 
that the individual is ``actively engaged in farming,'' the 
representative of the deceased individual's estate or the incapacitated 
individual, or other person if necessary, must provide the determining 
authority information to verify that such individual did make a 
conscious effort to and would have been determined to be actively 
engaged in farming if not for the individual's death or incapacitation. 
If the individual dies or is incapacitated after being determined to be 
``actively engaged in farming,'' the determining authority shall allow 
such determination to be in effect for that program year or fiscal year, 
as applicable. However, the following year such individual or the 
individual's estate must meet all necessary requirements in order to be 
determined to be ``actively engaged in farming'' for that year.



Sec.  1400.211  Persons not considered to be actively engaged in farming.

    An individual or entity who does not satisfy all of the provisions 
of Sec. Sec.  1400.202 through 1400.210 and a landowner who rents land 
to a farming operation for cash or a crop share guaranteed as to the 
amount of the commodity shall not be considered to be actively engaged 
in farming.

[[Page 304]]



Sec.  1400.212  Hybrid seed producers.

    The existence of a hybrid seed contract for a producer shall not be 
taken into account when making an actively engaged in farming 
determination with respect to such producer. However, such producer must 
satisfy all other applicable provisions of this part.



Sec.  1400.213  Military personnel.

    If an individual is called to active duty in the military because of 
Operation Iraqi Freedom, or any other similar military operation, before 
a determination is made that the individual is actively engaged in 
farming, the individual may be considered to be actively engaged in 
farming if the determining authority determines that such individual did 
make a conscious effort to, and would have been determined to be, 
actively engaged in farming if the individual would not have been called 
to active duty. If the individual is called to active duty after being 
determined to be actively engaged in farming, such determination shall 
remain in effect for the program year.

[68 FR 33346, June 4, 2003]



                      Subpart D--Permitted Entities



Sec.  1400.301  Limitation on the number of entities through which an 
individual or entity may receive a payment and required notification.

    (a) An individual may receive a payment under a program specified in 
Sec.  1400.1(a) either directly or indirectly from no more than three 
permitted entities. An individual who receives such a payment shall 
notify the county committee in the county in which such individual 
maintains a farming operation whether or not the farming operation is to 
be considered a permitted entity. An individual may only receive such 
payments as a result of a farming operation conducted by:
    (1) The individual and by no more than two entities in which the 
individual holds a substantial beneficial interest; or
    (2) No more than three entities in which the individual holds a 
substantial beneficial interest.
    (b) Except for entities specified in paragraph (c) of this section, 
each entity entering into a contract or agreement under a program 
specified in Sec.  1400.1(a) shall, by the date the contract or 
agreement is submitted to the county committee, notify in writing:
    (1) Each individual or other entity that acquires or holds an 
interest in such entity of the requirements and limitations provided in 
this part; and
    (2) The county committee of the name and social security number of 
each individual and the name and taxpayer identification number of each 
entity that holds or acquires a substantial beneficial interest in such 
entity.
    (c) Entities shall not be subject to the provisions of paragraph (b) 
of this section if, as determined by the Deputy Administrator:
    (1) Because of the number of members of such entity no member is 
likely to have a substantial beneficial interest in such entity; and
    (2) Such provisions would cause undue financial hardship on such 
entity.
    (d)(1) An individual or entity that holds a substantial beneficial 
interest in more than the number of permitted entities specified in 
paragraph (a) of this section for which a contract or agreement has been 
submitted to the county committee shall notify the county committee in 
writing, in each county in which they conduct a farming operation, of 
those entities that shall be considered as permitted entities by a date 
as determined by the Deputy Administrator following the date the 
contract or agreement was submitted to the county committee.
    (2) The remaining entities in which the individual or entity holds a 
substantial beneficial interest shall be notified that such entity is 
subject to reductions in the payments earned by the remaining entity. 
Such a reduction shall be made in an amount that bears the same 
relationship to the full payment that the individual's interest in the 
entity bears to all interests in the entity. The remaining entity's 
members shall have the opportunity to adjust among themselves their 
proportionate shares of the program benefits in the designated entity or 
entities before such reductions are made.
    (e) If an individual or entity fails to make such a notification as 
specified

[[Page 305]]

in paragraph (d) of this section, all entities in which the individual 
or entity holds a substantial beneficial interest shall be subject to a 
reduction in payments in the manner specified in paragraph (d)(2).



                      Subpart E--Cash Rent Tenants



Sec.  1400.401  Eligibility.

    (a) Any tenant that is actively engaged in farming in accordance 
with the provisions of subpart C and conducts a farming operation in 
which the tenant rents the land for cash, for a crop share guaranteed as 
to the amount of the commodity, or by any arrangement in which the 
tenant does not compensate the landlord by cash or a crop share, and 
receives benefits, with respect to such land under a program specified 
in Sec.  1400.1(a) shall be ineligible to receive any payment with 
respect to such cash-rented land unless the tenant makes a significant 
contribution to the farming operation of:
    (1) Active personal labor; or
    (2) Active personal management and equipment. If such equipment is 
leased by the tenant from:
    (i) The landlord, the lease must reflect the fair market value of 
the equipment leased; and
    (ii) The same individual or entity that is providing hired labor to 
the farming operation, the contracts for the lease of the equipment and 
for the hired labor must be two separate contracts that reflect the fair 
market value of the leased equipment and the hired labor and the tenant 
must exercise complete control over the use of a significant amount of 
the equipment during the current crop year.
    (b) [Reserved]



                       Subpart F-- Foreign Persons



Sec.  1400.501  Eligibility.

    (a) Any person who is not a citizen of the United States or a lawful 
alien shall be ineligible to receive payments, loans and benefits, with 
respect to any commodity produced, or land set aside from production, on 
a farm that is owned or operated by such person unless such person is an 
individual who is providing land, capital, and a substantial amount of 
active personal labor on such farm.
    (b)(1) A corporation or other entity shall be ineligible to receive 
payments, loan, and benefits if more than 10 percent of the beneficial 
ownership of the entity is held by persons who are not citizens of the 
United States or lawful aliens unless each foreign individual who is a 
stockholder or other type of member provides a substantial amount of 
active personal labor in the production of crops on a farm owned or 
operated by such an entity. However, upon the written request of the 
entity, the Deputy Administrator may make payments in an amount 
determined by the Deputy Administrator to be representative of the 
percentage interest of the entity that is owned by citizens of the 
United States and lawful aliens or foreign stockholders or other type of 
member who provide a significant contribution of active personal labor 
in the production of crops on a farm owned or operated by such entity.
    (2) In determining whether more than 10 percent of the beneficial 
ownership of an entity is held by persons who are not citizens of the 
United States or by lawful aliens, the beneficial ownership interest 
shall be the higher of the amount of such interest on:
    (i) The date the applicable program contract or agreement is 
executed by the entity; or
    (ii) Any other date prior to the final harvest date that is 
determined and announced by the Deputy Administrator to be normal in the 
area for the applicable program crop.
    (3) A corporation or other entity shall inform the county committee 
of any increase in such ownership that occurs after the applicable 
program contract or agreement is executed.
    (4) In the event of an increase in such ownership after a payment, 
loan, or benefit has been made, the entity shall refund such payment, 
loan, or benefit.
    (5) Where there is only one class of stock or other similar unit of 
ownership, an individual's or entity's percentage share of the limited 
partnership, corporation or other similar entity shall be based upon the 
outstanding shares of stock or other similar unit of

[[Page 306]]

ownership held by the individual or entity and compared to the total 
outstanding shares of stock or other similar unit of ownership. If the 
limited partnership, corporation or other similar entity has more than 
one class of stock or other unit of ownership, the percentage share of 
the limited partnership, corporation or other similar entity owned by an 
individual or entity shall be determined by the Deputy Administrator on 
the basis of market quotations. If market quotations are lacking or are 
too scarce to be recognized, such percentage share shall be determined 
by the Deputy Administrator on the basis of all relevant factors 
affecting the fair market value of such stock or other unit of 
ownership, including the various rights and privileges that are 
attributed to each such class.
    (c) A citizen of the United States, lawful alien, or entity that is 
not subject to this part who is in lawful possession, through a lease or 
otherwise, of a farm owned by an individual or entity who is subject to 
this part may receive a payment, loan, and benefit without regard to 
this part.



Sec.  1400.502  Notification.

    (a) Any entity, whether foreign or domestic, that executes a program 
contract or agreement under which a payment, loan, or benefit may be 
available must provide written notification to the county committee in 
the county where the entity conducts its farming operation if:
    (1) Any individual, group of individuals, entity, or group of 
entities holds more than a 10 percent beneficial interest in such 
entity; and
    (2) Such individual, group of individuals, entity, or group of 
entities, in accordance with Sec.  1400.501, are ineligible to receive a 
payment, loan and benefit.
    (b) Such written notification must, if known, include the name and 
social security number or taxpayer identification number of such 
individual or entity and of all individuals and entities that hold a 
beneficial interest.
    (c) The failure of the entity to provide this information will 
result in the ineligibility of the entity to receive any payment, loan, 
or benefit.



           Subpart G--Average Adjusted Gross Income Limitation

    Source: 68 FR 33346, June 4, 2003, unless otherwise noted.



Sec.  1400.600  Applicability.

    (a) For the 2003 through 2007 crop years, program years, or fiscal 
years, an individual or entity is not eligible for any payment or 
benefit identified in Sec.  1400.1 as being subject to this part if the 
individual's or entity's average adjusted gross income exceeds $2.5 
million for the three tax years immediately preceding the applicable 
crop, program or fiscal year. Payments may also be reduced under the 
commensurate share rules set out in Sec.  1400.603.
    (b) Notwithstanding paragraph (a) of this section, the individual or 
entity may be considered to meet the requirements of this subpart if not 
less than 75 percent of the individual's or entity's average adjusted 
gross income for the three tax years immediately preceding the 
applicable crop, program or fiscal year, is derived from farming, 
ranching, or forestry operations.
    (c) In addition to payments or benefits identified under Sec.  
1400.1, this subpart applies to benefits provided to participants under 
contracts or agreements entered into for the 2003 through 2007 crop, 
program or fiscal years for the following programs:
    (1) The program authorized by part 1466 of this chapter or its 
successor regulations;
    (2) The program authorized by part 1467 of this chapter or its 
successor regulations;
    (3) The program authorized by part 636 of this chapter or its 
successor regulations;
    (4) Any other program authorized by Title XII of the 1985 Act, as 
amended, or Title II of the 2002 Act.
    (5) Any other program to which this subpart is made applicable by 
statute or regulation.
    (d) Determinations made under this subpart with regard to the 
programs described in paragraphs (c)(1) through (c)(5) of this section 
will be based on the year for which the contract or agreement is 
approved and that determination will apply for the entire term of the 
subject agreement or contract.

[[Page 307]]

    (e) Vendors that receive payment for technical services or 
assistance provided in conjunction with programs under Title II of the 
2002 Act and Title XII of the 1985 Act, but who are not beneficiaries of 
the program, are not subject to this subpart for services that are of 
the type that are also performed by the Federal Government in connection 
with such programs.
    (f) Payments to an escrow agent or other of similar capacity in 
which the recipient is maintaining temporary custody of the funds for 
eventual disbursement to an eligible program participant are not subject 
to this subpart so long as the party ultimately receiving the payment is 
eligible under this subpart.
    (g) Payments to States, counties, political subdivisions and 
agencies thereof, and Indian tribes are not subject to this subpart.



Sec.  1400.601  Determination of average adjusted gross income.

    (a) For purposes of this subpart, income from farming, ranching or 
forestry operations means income of an individual or entity derived 
from:
    (1) Producing crops, livestock or unfinished raw forestry products;
    (2) Selling (including the sale of easements and development rights) 
their own farm, ranch or forestry land or water rights;
    (3) Selling, but not as a dealer, equipment purchased to conduct 
farm, ranch or forestry operations when the equipment is otherwise 
subject to depreciation expense on the IRS Form 4835 or Schedule F;
    (4) Renting land used for farming, ranching or forestry operations; 
and
    (5) Payments made under any program authorized under chapters VI, 
VII or XIV of this title.
    (b) For purposes of this subpart, except as otherwise provided in 
this subpart, adjusted gross income means:
    (1) For an individual filing a separate tax return, the amount 
reported as ``adjusted gross income'' on the final federal income tax 
return for the individual for the applicable tax year;
    (2) For an individual filing a joint tax return, the amount reported 
as ``adjusted gross income'' on the final federal income tax return for 
the applicable tax year unless a certified statement is provided by a 
certified public accountant or attorney specifying the manner in which 
such income would have been declared and reported if the individuals had 
filed two separate returns and that this calculation is consistent with 
the information actually supporting the filed joint return;
    (3) For a corporation, including a subchapter S corporation, the 
total reported ``taxable income'' as reported to the Internal Revenue 
Service plus the amount of the charitable contributions as reported on 
the final federal income tax return for the applicable tax year;
    (4) For a tax exempt entity, the ``unrelated business taxable 
income'' of the entity as reported to the Internal Revenue Service on 
the final federal income tax return, less any other income CCC 
determines to be from non-commercial activities;
    (5) For a limited liability company, limited partnership, limited 
liability partnership or similar type of organization, the income from 
trade or business activities plus the amount of guaranteed payments to 
the members as reported to the Internal Revenue Service on the final 
federal income tax return for the applicable tax year; and
    (6) For an estate or trust, the adjusted total income plus 
charitable deductions as reported to the Internal Revenue Service on the 
final federal income tax return for the applicable tax year, or the 
amount of net increase in the estate's or trust's value resulting from 
its business or investment interests.
    (c) For purposes of applying this subpart and calculating the three-
year average referenced in Sec.  1400.600, that average shall be for the 
adjusted gross income for the three tax years immediately preceding the 
applicable crop, program or fiscal year, as determined by CCC. For an 
entity that is not required to file a federal income tax return, or an 
individual or entity that did not have taxable income in one or more tax 
years, the average shall be the adjusted gross income, including losses, 
averaged for the three tax years immediately preceding the applicable 
crop, program or fiscal year, as determined by CCC. However, a new 
entity will have its adjusted gross income averaged only for those years 
of the

[[Page 308]]

base period for which it was in business, but a new entity shall not be 
considered ``new'' to the extent it takes over a existing operation and 
has any elements of common ownership or interests with the preceding 
entity, or with individuals or entities with an interest in the ``old'' 
entity. When there is such commonality, income of the ``old'' entity 
will be averaged with that of the ``new'' entity for the base period.



Sec.  1400.602  Compliance.

    (a) To comply with the average adjusted gross income limitation, an 
individual or entity, including all interest holders in an entity, 
general partnership or joint venture, shall provide the following as 
required by CCC:
    (1) A certification in the manner prescribed by CCC from a certified 
public accountant or attorney that the average adjusted gross income of 
the individual or entity does not exceed this limitation;
    (2) A certification in the manner prescribed by CCC from the 
individual or entity that the average adjusted gross income of the 
individual or entity does not exceed this limitation; or
    (3) Submission to CCC of the relevant Internal Revenue Service 
documents and supporting financial data as requested by CCC. Supporting 
financial data may include State income tax returns, financial 
statements, balance sheets, reports prepared for or provided to another 
Government agency, information prepared for a private lender, and other 
credible information relating to the amount and source of the 
individual's or entity's income.
    (b) Audits of certifications of average adjusted gross income may be 
conducted as necessary to determine compliance with the requirements of 
this subpart. As a part of this audit income tax returns may be 
requested and if requested must be supplied. Relevant income tax returns 
and documentation must be retained a minimum of two years after the end 
of the calendar year corresponding to the year for which payments or 
benefits are requested. If an individual or entity has submitted 
information to CCC, including a certification from a certified public 
accountant or attorney, that relied upon information from a form 
previously filed with the Internal Revenue Service, such individual or 
entity shall provide to CCC a copy of any amended form filed with the 
Internal Revenue Service within 30 days of the filing.
    (c) The individual or entity shall provide all information and 
documentation the reviewing authority determines necessary to verify any 
information or certification provided under this subpart, including all 
documents referred to in paragraph (a)(2) of this section. Failure to 
provide necessary and accurate information to verify compliance, or 
failure to comply with this subpart's requirements, will result in 
ineligibility for all program benefits subject to this subpart for the 
year or years subject to the request.
    (d) All information provided to CCC for the purposes of determining 
compliance with this subpart will remain confidential and not be subject 
to any request submitted under the Freedom of Information Act.



Sec.  1400.603  Commensurate reduction.

    (a) Any program payment or benefit subject to this subpart provided 
to an entity, general partnership or joint venture shall be reduced by 
an amount commensurate with the direct and indirect ownership interest 
in the entity, general partnership, or joint venture of each individual 
or entity determined to have an average adjusted gross income in excess 
of the limitation under the standards provided elsewhere in this subpart 
for the direct recipient of such payments.
    (b) Ownership interest in an entity shall be reviewed to the fifth 
level of ownership to determine whether a commensurate reduction is 
applicable and the extent of such reduction. If an ownership interest is 
not held by an individual in the fifth level of ownership in an entity, 
no payment or benefit shall be made with respect to such interest.

[[Page 309]]



PART 1401--COMMODITY CERTIFICATES, IN KIND PAYMENTS, AND OTHER FORMS OF 
PAYMENT--Table of Contents




Sec.
1401.1 Applicability.
1401.2 Payments in lieu of cash payments.
1401.3 Payments to persons with outstanding CCC loans.
1401.4 Commodity certificates.
1401.5 In kind payments.
1401.6 Assignments.
1401.7 Miscellaneous provisions.
1401.8 Subsequent holders.

    Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445d.

    Source: 51 FR 36921, Oct. 16, 1986, unless otherwise noted. 
Redesignated at 53 FR 20290, June 3, 1988, and at 61 FR 37575, July 18, 
1996.



Sec.  1401.1  Applicability.

    This part shall be applicable to payments and loans made in 
accordance with the programs administered by the Commodity Credit 
Corporation (CCC) or the Farm Service Agency (FSA) as determined and 
announced by the Secretary of Agriculture or a designee of the 
Secretary. The definitions of the terms applicable to 7 CFR part 713 set 
forth at Sec.  713.3 also shall be applicable to this part, except that 
the term ``commodity'' shall mean any agricultural commodity.



Sec.  1401.2  Payments in lieu of cash payments.

    (a) CCC will, in accordance with applicable program provisions, make 
payments in a form other than in cash to persons who otherwise are 
eligible to receive a cash payment from CCC. Further, subject only to 
statutory prohibition and notwithstanding any provisions of the contract 
to participate in a program administered by CCC or FSA, CCC may: at its 
option, make payments in a form other than in cash.
    (b) As determined by CCC, payments in a form other than in cash may 
be made in the following manner:
    (1) By delivery of a commodity to a person at a warehouse or other 
similar facility;
    (2) By transfer of negotiable warehouse receipts;
    (3) By the issuance of certificates which CCC shall redeem in 
accordance with this part;
    (4) By the acquisition and use of commodities pledged as collateral 
for CCC price support loans;
    (5) By the use of commodities owned by CCC; and
    (6) By such other methods as CCC determines appropriate, including 
methods to enable the producer to receive payments in order to assure 
that the producer receives the same total return as if the payments had 
been made in cash.
    (c) The value of the payments made in any manner set forth in 
paragraph (b) shall be determined by CCC.
    (d) Notwithstanding any other provision of this part, CCC may, with 
respect to producers who are members of a cooperative marketing 
association which has been determined in accordance with part 1425 of 
this title to be eligible to receive price support on behalf of its 
producer-members, enter into agreements with such producers and such 
cooperatives to facilitate the making of payments to such producers. 
Such agreements may include a provision which allows a producer to make 
available for the use of the cooperative the value of the non-cash 
payment which would otherwise be made to the producer.



Sec.  1401.3  Payments to persons with outstanding CCC loans.

    (a) Persons with outstanding CCC loans who are eligible to receive 
payments from CCC, including a person authorized to receive a payment on 
behalf of another person, may be required to liquidate such loans in 
accordance with this section in order to be eligible to receive a 
payment authorized by Sec.  1470.2.
    (b) A person with an outstanding CCC loan must, unless otherwise 
agreed upon by the person and CCC, redeem and sell to CCC a quantity of 
the commodity pledged as collateral for a CCC loan, as determined by 
CCC, in an amount equal in value to the value of the payment which would 
otherwise be made to such person. If the person has more than one 
outstanding CCC loan, CCC may, by contract or otherwise, prescribe which 
loan collateral the person shall be required to redeem in order to 
receive payment. The purchase

[[Page 310]]

price shall be equal to the cost of liquidating the loan or the portion 
of the loan for which the quantity of the commodity sold to CCC is 
pledged as collateral, except that, in the case of a special producer 
storage loan or a farmer-owned reserve loan, the purchase price will not 
include the amount of any unearned advance storage payments received 
with respect to the redeemed collateral. After redemption and the 
subsequent sale to CCC of the commodity pledged as collateral for such 
CCC loan, CCC shall make available to the person a like quantity of the 
commodity.



Sec.  1401.4  Commodity certificates.

    (a) General. CCC may issue commodity certificates as a form of 
payment. Commodity certificates will bear a dollar denomination. Such 
certificate may be transferred, exchanged for the inventory of CCC 
(including the receipt in accordance with paragraph (e) of this section 
of loan collateral by a person to whom a loan secured by such collateral 
is made): or exchanged for cash, as provided for in this section. 
Commodity certificates shall be subject to the provisions of this part, 
and to any terms, conditions and restrictions provided on the 
certificate, which are incorporated by reference herein.
    (b) Liens, encumbrances, and State law. (1) The provisions of this 
section or the commodity certificates shall take precedence over any 
state statutory or regulatory provisions which are inconsistent with the 
provisions of this section or with the provisions of the commodity 
certificates.
    (2) Commodity certificates shall not be subject to any lien, 
encumbrance, or other claim or security interest, except that of an 
agency of the United States Government arising specifically under 
Federal statute.
    (3) The provisions of this paragraph (b) shall apply without regard 
to the identity of the holder of the certificate.
    (c) Transferability. Any person may transfer a commodity certificate 
to any other person. However, any such transfer must be in the full 
amount of the certificate, and can be effected only by restrictive 
endorsement on the back of the certificate, showing the name of the 
transferee and the date of the transfer, and signed by the transferor. 
CCC will not honor any certificate bearing any endorsement to ``bearer'' 
or any other nonrestrictive endorsement, or otherwise transferred in a 
manner contrary to the regulations contained in this section. The person 
who submits a commodity certificate to CCC shall endorse the certificate 
to CCC.
    (d) Exchange of commodity certificate for CCC-owned commodities--(1) 
General. Except as otherwise provided in this paragraph and in 
paragraphs (f) and (g) of this section, any holder of a commodity 
certificate may exchange such certificate, by itself or together with 
other commodity certificates, for such commodities as are made available 
by CCC by endorsing and submitting the certificate to CCC. If a person 
submits commodity certificates for exchange in order that the person 
would be eligible to receive a quantity of a commodity which includes 
less than an entire unit in which the commodity is stored (e.g., less 
than an entire bale of cotton or an entire barrel of honey): (i) Such 
person may forfeit the partial unit of the commodity to CCC, or (ii) CCC 
may issue a check to such person for the partial unit of the commodity 
or permit such person to purchase the remainder of such unit at a price 
determined by CCC. A person may obtain information regarding commodities 
available for exchange and the procedure for exchange from Kansas City 
Commodity Office, FSA-USDA, Kansas City, MO 64141-0205.
    (2) Minimum quantities. A holder of an amount of commodity 
certificates sufficient to acquire a carload lot, or other quantity as 
may be determined by CCC, may present such amount for exchange at any 
time on or before the expiration date of such certificates. A holder who 
is permitted to exchange the certificate for CCC-owned commodities but 
who does not possess commodity certificates in the amount specified in 
the preceding sentence may, not to exceed once during a calendar month, 
submit such certificates to CCC. CCC will, at CCC's option, pay such 
holder by check in the amount of the certificate or transfer to such 
holder title to commodities owned by CCC.

[[Page 311]]

    (3) CCC-owned commodities stored by a person who submits commodity 
certificates to CCC. CCC may require or permit holders of commodity 
certificates to exchange such certificates for commodities owned by CCC 
which are stored by such holder, without making such commodities or 
kinds of commodities available to other holders of commodity 
certificates.
    (4) Valuation. Except as otherwise may be announced by CCC, CCC will 
determine the value of CCC-owned commodities made available to holders 
of commodity certificates.
    (5) Transfer of title. Title to commodities owned by CCC which are 
transferred to a person who submits commodity certificates to CCC shall 
be transferred in store, except as may be determined and announced by 
CCC. The person who submits certificates to CCC shall be responsible for 
all costs incurred in transferring title to the commodity, except as 
specifically provided by CCC. The transfer of title to such commodities 
shall occur without regard to any State law or any claim of lien against 
the commodity or proceeds thereof which may be asserted by any creditor 
except agencies of the U.S. Government whose lien arises specifically 
under Federal statute.
    (6) Expiration date. CCC may, at its option, discount or refuse to 
accept any commodity certificate presented for exchange after the 
expiration date stated on the certificate.
    (e) Use of commodity certificates to receive loan collateral--(1) 
General. Except as otherwise provided in this paragraph and in 
paragraphs (f) and (g) of this section, any holder of a commodity 
certificate may use such certificate to receive commodities pledged as 
collateral for CCC loans made to such person, at any time on or before 
the expiration date stated on the certificate. A holder of a commodity 
certificate who wishes to receive a quantity of a commodity pledged by 
such person as collateral for a CCC loan in exchange for a certificate 
shall redeem and sell to CCC a quantity of the commodity equal in value 
to the dollar denomination of the certificate, as determined by CCC. The 
purchase price shall be equal to the cost of liquidating the loan or the 
portion of the loan for which the quantity of the commodity sold to CCC 
is pledged as collateral, except that, in the case of a special producer 
storage loan or a farmer-owned reserve loan, the purchase price will not 
include the amount of any unearned advanced storage payments received 
with respect to the redeemed loan collateral. Upon submission of the 
certificate, which is endorsed to CCC, to the county FSA office which 
issued the loan, the holder of a commodity certificate will receive the 
quantity of the commodity which has been sold to CCC. Except as 
otherwise determined by CCC, if the holder of such certificate does not 
have commodities pledged as collateral for CCC loans equal in value to 
the dollar denomination of the certificate, as determined by CCC, CCC 
will, at CCC's option and after the producer has submitted the 
certificate, pay the difference to the person by check or in the form of 
a new commodity certificate.
    (2) Ineligible commodities. No person may use a commodity 
certificate to receive a quantity of tobacco, peanuts, or extra long 
staple cotton pledged as collateral for a CCC loan. No person may, 
before August 1, 1986, use a commodity certificate to receive a quantity 
of upland cotton pledged as collateral for a CCC loan.
    (f) Cash redemption start date. (1) The person to whom a generic 
certificate is issued which has a date entered in block D may submit 
such certificate, endorsed to CCC, at the issuing county FSA office for 
payment by check in the amount of the certificate on or after the date 
entered in block D through the expiration date of the certificate. Such 
person may not exchange the certificate for commodities owned by CCC, 
except as otherwise agreed upon between such person and CCC.
    (2) The person to whom a generic certificate is issued which has an 
entry of ``S/H'' in block D may exchange such certificate for 
commodities owned by CCC.
    (3) The person to whom a commodity specific certificate is issued 
which has a date entered in block D may submit such certificate, 
endorsed to CCC, to the Kansas City Commodity Office for the specific 
commodity entered in block C beginning on the date entered

[[Page 312]]

in block D through the expiration date of the certificate. Such 
certificate may not be exchanged for cash, except as otherwise agreed on 
by CCC.
    (4) All other certificates may be transferred and exchanged as 
determined and announced by CCC.
    (g) ``Generic'' and commodity-specific commodity certificates--(1) 
General. If a commodity certificate indicates that it is a ``generic'' 
certificate, such certificate may, subject to the provisions of 
paragraphs (a) through (f) of this section, be exchanged for any 
commodity made available by CCC or, as appropriate, used to receive a 
quantity of any commodity which serves as collateral for a CCC loan. If 
a certificate is not a ``generic certificate'', such certificate may be 
exchanged for the commodity specified on the certificate, except as may 
be determined and announced by CCC.
    (2) Cotton program payments. Certificates issued as payments under 
the 1991 through 1995 upland cotton program, including payments issued 
in accordance with section 103B(a)(5)(B) of the Agricultural Act of 
1949, may be exchanged for CCC-owned upland cotton only during such 
times as determined and announced by CCC.
    (3) Commodities not available in CCC inventory. Notwithstanding any 
other provision of this section, if a person submits a commodity 
specific certificate to CCC in exchange for a quantity of such commodity 
and CCC determines it is not possible to make such commodity available, 
CCC may: (i) Require such person to exchange the commodity specific 
certificate for a generic certificate; or (ii) refuse to accept 
submission of such certificate until CCC is able to make available a 
quantity of the commodity specified on such certificate.
    (h) CCC, at its option, may discount or refuse to accept any 
certificate made, transferred, or submitted in violation of this 
section.
    (i) Interest. With respect to producers who receive commodity 
certificates in accordance with the wheat, feed grains, upland cotton 
and rice price support and production adjustment programs authorized by 
parts 1413 and 1421 of this title, a producer to whom the certificate is 
issued who exchanges such a certificate with CCC for cash in accordance 
with subsection (f) of this section shall receive interest with respect 
to such certificate for a 150 day period. Such interest shall be the 
rate of interest determined in accordance with part 1405 of this Title 
which is in effect on the date the certificate is issued.

[51 FR 36921, Oct. 16, 1986, as amended at 51 FR 43580, Dec. 3, 1986; 52 
FR 45607, Dec. 1, 1987; 56 FR 361, Jan. 4, 1991]



Sec.  1401.5  In kind payments.

    (a) Subject to the provisions of Sec. Sec.  1470.2 and 1470.3, CCC 
may make payments in the form of commodities. Quantities of commodities 
made available as payment shall be based upon the value of the 
commodity, as determined by CCC. Such quantity may be adjusted by CCC to 
reflect the location, quality, and other similar factors which CCC 
determines to affect the value of the commodity.
    (b) The transfer of title to commodities made available in 
accordance with paragraph (a) of this section shall be in store, except 
as determined by CCC, and shall be made without regard to any State law 
or any claim of lien against the commodity, or proceeds thereof, which 
may be asserted by any creditor except agencies of the U.S. Government 
whose lien arises specifically under Federal statute. The recipient of 
such commodities shall be responsible for all costs incurred in 
transferring title to the commodity, except as specifically provided by 
CCC.



Sec.  1401.6  Assignments.

    Notwithstanding any other provision of this chapter, a payment made 
under this part may not be the subject of an assignment, except as 
determined and announced by CCC.



Sec.  1401.7  Miscellaneous provisions.

    Except as determined by CCC, the following provisions of this title 
shall apply to this part:
    (a) Part 13, Setoffs and Withholding.
    (b) Part 707, Payments Due Persons Who Have Died, Disappeared, or 
Been Declared Incompetent.
    (c) Part 718, Determination of Acreage and Compliance.
    (d) Part 780, Appeal Regulations.

[[Page 313]]

    (e) Part 790, Incomplete Performance Based Upon Actions or Advice of 
an Authorized Representative of the Secretary.
    (f) Part 791, Authority to Make Payments When There has been a 
Failure to Comply Fully with the Program.
    (g) Part 795, Payment Limitation.
    (h) Part 796, Denial of Program Eligibility for Controlled Substance 
Violations.
    (i) Part 1403, Interest on Delinquent Debts.
    (j) All other parts of the Code of Federal Regulations which are 
made applicable to this part.



Sec.  1401.8  Subsequent holders.

    (a) General. A person who acquires a commodity certificate from 
another person shall be considered to be a ``subsequent holder'' of the 
certificate. Subsequent holders of certificates who purchased a 
commodity certificate on or before January 1, 1990 may, after the 
expiration date specified on the certificate, submit the certificate to 
CCC for a payment from CCC determined in accordance with paragraph (b) 
of this section. All certificates must be submitted after January 2, 
1991 and on or before May 28, 1991. Certificates submitted after May 28, 
1991 shall not be accepted for payment. Certificates shall be considered 
to be submitted as of the date of the postmark on the envelope 
containing the certificate. All certificates submitted for payment must 
be submitted with, and in accordance with, Form CCC-8. All certificates 
submitted to CCC for payment shall be retained by CCC.
    (b) Payment rates. (1) Certificates with an expiration date of April 
30, 1989 or earlier shall not, in any instance, be eligible for payment 
by CCC. Certificates which are submitted 18 months after the expiration 
date specified on the certificate shall not be accepted for payment by 
CCC.
    (2) Persons who submit to CCC, in accordance with this section, 
certificates with an expiration date of May 31, 1989 or later shall 
receive a payment equal to 50 percent of the certificate's face value if 
such certificate is submitted within the period which:
    (i) Begins 6 months and one day after the expiration date specified 
on the certificate and
    (ii) Ends 18 months after such expiration date.
    (3) Persons who submit to CCC in accordance with this section 
certificates with an expiration date of May 31, 1989 or later shall 
receive a payment equal to 85 percent of the certificate's face value if 
such certificate is submitted within the period which:
    (i) Begins the day after the expiration date specified on the 
certificate and
    (ii) Ends 6 months after such expiration date.
    (c) Transitional rules. In order to provide full benefits under this 
section to parties whose certificates may decline in value from the date 
of enactment of section 1122 of the Food, Agriculture, Conservation, and 
Trade Act of 1990 (November 28, 1990) until the implementation of the 
provisions of such section, persons who, by January 31, 1991, submit to 
CCC in accordance with this section certificates with expiration dates 
of May 31, 1989, June 30, 1989, May 31, 1990, and June 30, 1990, shall 
receive payments for such certificates as if they had been submitted on 
November 30, 1990.
    (d) Payment limit. (1) No person, as defined in Sec.  719.2(r) of 
this title, shall receive a payment in excess of $1,000, except that any 
wholly-owned or wholly controlled entity, such as a corporation, shall 
be considered to be the same person as the person which owns or controls 
such entity. Any person who adopts or participates in adopting a scheme 
or device which is designed to evade this limitation or which has the 
effect of evading this limitation shall be ineligible to receive a 
payment under this section. Such acts include, but are not limited to:
    (i) Concealing information which affects the application of this 
section;
    (ii) Submitting false or erroneous information;
    (iii) Creating fictitious entities for the purpose of evading the 
application of this section.
    (2) No payment shall be paid to a person which is in excess of the 
amount which the person paid for the certificate.

[[Page 314]]

    (e) Application. In order to receive a payment under this section, a 
person must:
    (1) Submit certificates with an expiration date of May 31, 1989, or 
later with a completed Form CCC-8 to CCC postmarked by May 28, 1991;
    (2) Submit no earlier than January 2, 1991 all certificates and 
Forms CCC-8 to CCC by mail at the following address: CCC Expired 
Certificate Exchange, Attn: Claims and Collections Division, P.O. Box 
419205, Kansas City, Missouri, 64141-6205;
    (3) Submit evidence to CCC which establishes to the satisfaction of 
CCC:
    (i) The date the subsequent holder purchased the certificates;
    (ii) The price paid by the subsequent holder for the certificates; 
and
    (iii) If requested by CCC, the name and address of the person from 
whom the subsequent holder purchased the certificates.

[56 FR 362, Jan. 4, 1991]



PART 1402--POLICY FOR CERTAIN COMMODITIES AVAILABLE FOR SALE--Table of Contents




Sec.
1402.1 General.
1402.2 Submission of offers, terms, and conditions.
1402.3 Information.
1402.4 Other sales.

    Authority: 7 U.S.C. 7285; 15 U.S.C. 714b and 714c.

    Source: 61 FR 37575, July 18, 1996, unless otherwise noted.



Sec.  1402.1  General.

    To facilitate trade in private trade channels, the Commodity Credit 
Corporation (CCC) will disseminate general sales offering information in 
the CCC Sales List which is published in press release form. The CCC 
Sales List will be revised and republished as necessary. CCC reserves 
the right to make any amendments deleting or adding to the provisions of 
the CCC Sales List or changing prices or methods of sale, including but 
not limited to, changes in the minimum prices and carrying charges. 
These lists are issued for the purpose of public information and do not 
constitute an offer to sell by CCC or an invitation for offers to 
purchase from CCC. The CCC Sales List will set forth either the prices 
or the pricing basis at which commodity holdings of CCC are available 
for sale for unrestricted or restricted use, and for export. Information 
concerning barter and credit will also be included. To be placed on the 
mailing list for the CCC Sales List press release, requests should be 
made to the Director, Warehouse and Inventory Division, Stop 0553, 1400 
Independence Avenue, SW, Washington, DC 20250-9860.



Sec.  1402.2  Submission of offers, terms, and conditions.

    CCC will entertain offers from prospective buyers for the purchase 
of any commodities on the CCC Sales List. Offers accepted by CCC will be 
subject to terms and conditions prescribed by CCC. These terms include, 
among others, payment by cash or irrevocable letter of credit before 
delivery of the commodity, removal of the commodity from CCC storage 
within a reasonable period of time, and, in sales for export, proof of 
exportation.



Sec.  1402.3  Information.

    The terms and conditions of sale with respect to any commodity 
appearing on the CCC Sales List will be furnished upon request addressed 
to the Director, Warehouse and Inventory Division, Stop 0553, 1400 
Independence Avenue, SW, Washington, DC 20250-9860.



Sec.  1402.4  Other sales.

    The general policy of CCC of making sales on a competitive or 
negotiated basis will continue to apply to all sales not covered by this 
announcement. Inquiries with respect to such sales may be addressed to 
the Director, Warehouse and Inventory Division, Stop 0553, 1400 
Independence Avenue, SW, Washington, DC 20250-9860.



PART 1403--DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents




Sec.
1403.1 Applicability.
1403.2 Administration.
1403.3 Definitions.
1403.4 Demand for payment of debts.
1403.5 Collection by payment in full.

[[Page 315]]

1403.6 Collection by installment payments.
1403.7 Collection by administrative offset.
1403.8 Withholding.
1403.9 Late payment interest and administrative charges.
1403.10 Waiver of late payment interest and administrative charges.
1403.11 Administrative appeal.
1403.12 Additional administrative collection action.
1403.13 Contact with debtor's employing agency.
1403.14 Prior provision of rights with respect to debt.
1403.15 Discharge of debts.
1403.16 Referral of delinquent debts to credit reporting agencies.
1403.17 Referral of debts to Department of Justice.
1403.18 Referral of delinquent debts to IRS for tax refund offset.
1403.19 Reporting of discharged debts to IRS.
1403.20 Referral of debts to private collection agencies.
1403.21 Collection of 1988 and 1989 advance deficiency overpayments.

    Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445b-2(b).

    Source: 54 FR 52878, Dec. 22, 1989, unless otherwise noted.



Sec.  1403.1  Applicability.

    Except as may otherwise be provided by statute, this part sets forth 
the manner in which the Commodity Credit Corporation (CCC) will settle 
and collect debts by and against CCC.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]



Sec.  1403.2  Administration.

    The regulations in this part will be administered under the general 
supervision and direction of the Executive Vice President, CCC and the 
Administrator, Farm Service Agency (FSA).



Sec.  1403.3  Definitions.

    The following definitions shall be applicable to this part:
    Administrative charges means the additional costs of processing 
delinquent debts against the debtor, to the extent such costs are 
attributable to the delinquency. Such costs include, but are not limited 
to, costs incurred in obtaining a credit report, costs of employing 
commercial firms to locate debtor, costs of employing contractors for 
collection services, costs of selling collateral or property to satisfy 
the debt.
    Administrative offset means deducting money payable or held by the 
United States Government, or any agency thereof, to satisfy in whole or 
in part a debt owed the Government, or any agency thereof.
    FSA means the Farm Service Agency of the United States Department of 
Agriculture (USDA).
    Carrier means a person or other entity, including but not limited to 
railroads, motor carriers, ocean carriers or piggyback enterprises, 
which provide transportation or other transportation-related services 
for compensation.
    Certified financial statement means an account of the assets, 
liabilities, income and expenses of a debtor, executed in accordance 
with generally accepted accounting principles and attested to as 
accurate by the preparer, under penalty of perjury.
    CCC means the Commodity Credit Corporation.
    Claim means an amount of money or property which has been determined 
by CCC, after a notice of delinquency and a demand for the payment of 
the debt has been made by CCC, to be owed to CCC by any person other 
than a Federal agency.
    Credit reporting agency means:
    (1) A reporting agency as defined at 4 CFR 102.5(a), or
    (2) Any entity which has entered into an agreement with USDA 
concerning the referral of credit information.
    Debt means any amount owed to CCC or owed by CCC which has not been 
satisfied through payment or otherwise.
    Debt record refers to the account, register, balance sheet, file, 
ledger, data file, or similar record of debts owed to CCC, FSA, or any 
other Government Agency with respect to which collection action is being 
pursued, and which is maintained in an FSA office.
    Delinquent debt means:
    (1) Any debt owed to CCC that has not been paid by the date 
specified in the applicable statute, regulation, contract, or agreement; 
or
    (2) any debt that has not been paid by the date of an initial 
notification of indebtedness mailed or hand-delivered pursuant to Sec.  
1403.4.

[[Page 316]]

    Discharged debt means any debt, or part thereof, which CCC has 
determined is uncollectible.
    IRS means the Internal Revenue Service.
    Late payment interest rate means the amount of interest charged on 
delinquent debts and claims. The late payment interest rate shall be 
determined as of the date a debt becomes delinquent and shall be equal 
to the rate of interest assessed under the Prompt Payment Act.
    Person means an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable, the Federal Government or a State government, or 
any agency thereof.
    Salary offset means the deduction of money from the current pay 
account of a present or former Government employee payable by the United 
States Government to, or held by the Government for, such person to 
satisfy a debt that person owes the Government.
    Settlement means any final disposition of a debt or claim.
    Shipment means a carload, truckload, containerload, or other 
conveyance load of freight shipped from one location by one shipper for 
delivery. Such shipment must move in accordance with the terms of a 
commercial or ocean bill or lading, or other similar agreement between 
the carrier and CCC. In the case of export shipments, the agreement may 
also be between the carrier and a private voluntary organization, 
foreign government, or the Agency for International Development.
    System of records means a group of any records under the control of 
CCC or FSA from which information is retrieved by the name of the 
individual, organization or other entity or by some identifying number, 
symbol, or other identification assigned to the individual, organization 
or other entity.
    Withholding means the taking of action to temporarily prevent the 
payment of some or all amounts to a debtor under one or more contracts 
or programs.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]



Sec.  1403.4  Demand for payment of debts.

    (a) When a debt is due CCC, an initial written demand for payment of 
such amount shall be mailed or hand-delivered to the debtor. If the debt 
is not paid in full by the date specified in the initial demand letter, 
or if a repayment schedule acceptable to CCC has not been arranged with 
the debtor, the initial demand may be followed by two subsequent written 
demands at approximately 30-day intervals. The initial or subsequent 
demand letters shall specify the following:
    (1) The basis for and the amount of the debt determined to be due 
CCC, including the principal, applicable interest, costs and other 
charges;
    (2) CCC's intent to establish an account on a debt record 30 days 
after the date of the letter, or other applicable period of time, if the 
debt is not paid within that time;
    (3) The applicable late payment interest rate.
    (i) If a late payment interest rate is specified in the contract, 
agreement or program regulation, the debtor shall be informed of that 
rate and the date from which the late payment interest has been 
accruing;
    (ii) If a late payment interest rate is not specified in the 
contract, agreement or program regulation, the debtor shall be informed 
of the applicable late payment interest rate set out in Sec.  1403.9.
    (4) CCC's intent, if applicable, to collect the debt 30 days from 
the date of the initial demand letter, or other applicable period of 
time, by administrative offset from any CCC or FSA payments due or to 
become due to the debtor, and that the claim may be reported to other 
agencies of the Federal government for offset from any amounts due or to 
become due to the debtor;
    (5) If not previously provided, the debtor's right to request 
administrative review by an authorized CCC official, and the proper 
procedure for making such request. If the request relates to the:
    (i) Existence or amount of the debt, it must be made within 15 days 
from the date of the letter, unless a different time period is specified 
in the contract, agreement or program regulation;

[[Page 317]]

    (ii) Appropriateness of reporting to a credit reporting agency, it 
must be made within 30 days from the date of the letter; or
    (iii) Appropriateness of referral to IRS for tax refund offset, it 
must be made within 60 days from the date of the letter.
    (6) The debtor's right to a full explanation of the debt and to 
dispute any information in the records of CCC concerning the debt;
    (7) That CCC maintains the right to initiate legal action to collect 
the amount of the debt;
    (8) That if any portion of the debt remains unpaid or if a repayment 
schedule satisfactory to CCC has not been arranged 90 days after the due 
date, an additional interest rate shall be assessed on the unpaid 
balance of the debt as prescribed in Sec.  1403.9(e);
    (9) CCC's intent, if applicable, under Sec.  1403.16, to report any 
delinquent debt to a credit reporting agency no sooner than 60 days from 
the date of the letter;
    (10) CCC's intent, if applicable, under Sec.  1403.18, to refer any 
delinquent debt to the IRS, no sooner than 60 days from the date of the 
letter, to be considered for offset against any tax refund due or to 
become due the debtor.
    (b) When CCC deems it necessary to protect the Government's 
interest, written demand may be preceded by other appropriate actions.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]



Sec.  1403.5  Collection by payment in full.

    Except as CCC may provide in accordance with Sec.  1403.6, CCC shall 
collect debts owed to the Government, including applicable interest, 
penalties, and administrative costs, in full, whenever feasible whether 
the debt is being collected by administrative offset or by another 
method, including voluntary payment. If a debt is paid in one lump sum 
after the due date, CCC will impose late payment interest, as provided 
in Sec.  1403.9, unless such interest is waived as provided in Sec.  
1403.10.



Sec.  1403.6  Collection by installment payments.

    (a) Payments in installments may be arranged, at CCC's discretion, 
if a debtor furnishes satisfactory evidence of inability to pay a claim 
in full by the specified date. The size and frequency of installment 
payments shall:
    (1) Bear a reasonable relation to the size of the debt and the 
debtor's ability to pay; and
    (2) Normally be of sufficient size and frequency to liquidate the 
debt in not more than three years.
    (b) Except as otherwise determined by CCC, no installment 
arrangement will be considered unless the debtor submits a certified 
financial statement which reflects the debtor's assets, liabilities, 
income, and expenses. The financial statement shall not be required to 
be submitted sooner than 15 business days following its request by CCC.
    (c) All installment payment agreements shall be in writing and may 
require the payment of interest at the late payment interest rate in 
effect on the date such agreement is executed. The installment agreement 
shall specify all the terms of the arrangement and include provision for 
accelerating the debt in the event the debtor defaults. A confession of 
judgment provision may be included in the agreement.
    (d) CCC may deem a repayment plan to be abrogated if the debtor 
fails to comply with its terms.
    (e) If the debtor's financial statement or other information 
discloses the ownership of assets which are not encumbered, the debtor 
may be required to secure the payment of an installment note by 
executing a security agreement and financing agreement which provides 
CCC a security interest in the assets until the debt is paid in full.
    (f) If the debtor owes more than one debt to CCC, CCC may allow the 
debtor to designate the manner in which a voluntary installment payment 
is to be applied. If the debtor does not designate the application of a 
voluntary installment or partial payment, the payment will be applied to 
such debts as determined by CCC.



Sec.  1403.7  Collection by administrative offset.

    (a) The provisions of this section shall apply to all debts due CCC 
except as otherwise provided in this part and part 1404 of this Chapter. 
This section is not applicable to:

[[Page 318]]

    (1) CCC requests for administrative offset against money payable to 
a debtor from the Civil Service Retirement and Disability Fund and CCC 
requests for salary offset against a present or former employee of the 
Federal Government which shall be made in accordance with regulations at 
part 3 of this title;
    (2) CCC requests for administrative offset against a Federal income 
tax refund payable to a debtor which shall be made in accordance with 
Sec.  1403.18;
    (3) Cases in which CCC must adjust, by increasing or decreasing, a 
payment which is to be paid under a contract in order to properly make 
other payments due by CCC;
    (4) Any case in which collection of the type of debt involved by 
administrative offset is explicitly provided for or prohibited by 
statute; and
    (5) IRS Notices of Levy which shall be honored in accordance with 
IRS statutes and regulations.
    (b) Debts due CCC may be collected by administrative offset from 
amounts payable by CCC when:
    (1) The debtor has been provided written notification of the basis 
and amount of the debt and has been given an opportunity to make 
payment. Such written notification and opportunity includes notice of 
the right to pursue an administrative appeal in accordance with part 780 
of this Title or any other applicable appeal procedures, if not 
previously provided;
    (2) The debtor has been provided an opportunity to request to 
inspect and copy the records of CCC related to the debt;
    (3) The debtor has been notified in writing that the debt may be 
collected by administrative offset if not paid; and
    (4) The debt has not been delinquent for more than ten years or 
legal action to enforce the debt has not been barred by an applicable 
period of limitation, whichever is later.
    (c) Administrative offset shall also be effected against amounts 
payable by CCC:
    (1) When requested or approved by the Department of Justice; or
    (2) When a person is indebted under a judgment in favor of CCC.
    (d) Debts due CCC from carriers for overcharges shall be offset 
against amounts due such carriers under freight bills involving 
shipments if:
    (1) The carrier, without reasonable justification, has declined 
payment of the debt or has failed to pay the debt after being given a 
reasonable opportunity to make payment; and
    (2) The period of limitation prescribed at 49 U.S.C. 11706(f) has 
not expired.
    (e) Debts due CCC from carriers for loss or damage shall be offset 
against amounts due such carriers under freight bills involving 
shipments if:
    (1) Timely demand for payment was made on the carrier;
    (2) The carrier has declined payment of the debt without reasonable 
justification or has ignored the claim; and
    (3) The period of limitation prescribed at 49 U.S.C. 11707(e) has 
not expired.
    (f) Any overcharge or loss or damage debt due CCC on which the 
applicable period of limitation has run may be offset against any 
amounts owing by CCC to the carrier which are subject to a defense of 
limitation.
    (g) A payment due any person may be offset when there is a breach of 
a contract or a violation of CCC program requirements, and offset is 
considered necessary by CCC to protect the financial interests of the 
Government.
    (h) In the case of any procurement contract with CCC which provides 
for invoicing at the time of shipment with delivery to be made at 
designated destination points when:
    (1) Payment is made to the contractor prior to receipt of evidence 
of delivery, and
    (2) CCC thereafter determines that the Contractor is indebted to CCC 
because of losses sustained from shortage, damage to or deterioration of 
the commodity while in transit and prior to delivery, CCC may offset 
such indebtedness against amounts due and payable to the Contractor 
under any other contract with CCC providing the Contractor has not 
assigned the proceeds of such contract in accordance with part 1404 of 
this chapter.
    (i) CCC may effect administrative offset against a payment to be 
made to a

[[Page 319]]

debtor prior to completion of the procedures required by (b)(1-3) of 
this section if:
    (1) Failure to take the offset would substantially prejudice CCC's 
ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (j)(1) Debts due any agency other than CCC shall be offset against 
amounts payable by CCC to a debtor when an agency of the U.S. Government 
has submitted a written request for offset which is mailed or hand-
delivered to the appropriate FSA State office, Kansas City Management 
Office or Kansas City Commodity Office. Such written request must:
    (i) Bear the signature of an authorized representative of the 
requesting agency;
    (ii) Include a certification that all requirements of the law and 
the regulations for collection of the debt and for requesting offset 
have been complied with;
    (iii) State the name, address (including county), and, where legally 
available, the social security number or employer ID number of the 
debtor and a brief description of the basis of the debt, including 
identification of the judgment, if any.
    (iv) State the amount of the debt separately as to principal, 
interest, penalties, and administrative costs. Interest, if any, shall 
be computed on a daily basis to a date shown in the request. The amount 
to be offset shall not exceed the principal sum owed by the debtor, plus 
interest computed in accordance with the request, and any late payment 
interest, penalties and administrative costs that have been assessed;
    (v) Certify that the debtor has not filed for bankruptcy. If the 
debtor has filed for bankruptcy, a copy of the order of the bankruptcy 
court relieving the agency from the automatic stay must be included; and
    (vi) State the name, address, and telephone number of a contact 
person within the agency and the address to which payment should be 
sent.
    (2) Unless prohibited by law, the head of an agency, or a designee, 
may defer or subordinate in whole or in part the right of the agency to 
recover through offset all or part of any indebtedness to such agency, 
or may withdraw a request for offset. Notice of such action must be sent 
to the appropriate FSA office.
    (k)(1) After CCC has complied with the provisions of this part, CCC 
may request other agencies of the Government to offset amounts payable 
by them to persons indebted to CCC.
    (2) In the case of a request to IRS for a tax refund offset, the 
provisions at Sec.  1403.18 shall apply.
    (l)(1) Debts shall be collected by offset in the following order of 
priority without regard to the date of the request for such collection:
    (i) Debts to CCC.
    (ii) Debts to other agencies of USDA as determined by CCC.
    (iii) Debts to other government agencies as determined by CCC.
    (2) In the case of multiple debts involving the same debtor, CCC 
may, at its discretion, deviate from the usual order of priority in 
applying recovered amounts to debts owed other agencies when considered 
to be in the Government's best interest. Such decision shall be made by 
CCC based on the facts and circumstances of the particular case.
    (m)(1) No amounts payable to a debtor by CCC shall be paid to an 
assignee until there have been collected any amounts owed by the debtor 
except as provided in this subsection.
    (2) A payment which is assigned in accordance with part 1404 of this 
Chapter by execution of Form CCC-36 shall be subject to offset for any 
debt owed to CCC or FSA without regard to the date notice of assignment 
was accepted by CCC or FSA.
    (3) A payment which is assigned in accordance with part 1404 of this 
Chapter by execution of Form CCC-252 shall be offset:
    (i) Against any debt of the assignor entered on the debt record of 
the applicable FSA office prior to the filing of such form with CCC or 
FSA, or
    (ii) At anytime, regardless of the date of filing of such form with 
CCC or FSA, if the debt which is the basis for the offset arises under 
the same contract under which the payment is earned by the assignor.

[[Page 320]]

    (4) With respect to all other Federal agencies, offset shall be made 
of any amounts due any other Federal agency which are entered on the 
debt record of the appropriate FSA office prior to the date the notice 
of assignment was accepted by CCC or FSA.
    (5) Any amount due and payable to the assignor which remains after 
deduction of amounts paid to the assignee shall be available for offset.
    (n) Amounts recovered by offset for CCC and FSA debts but later 
found not to be owed to the Government shall be promptly refunded.
    (o) The debtor shall be notified whenever any offset action has been 
taken.
    (p) Offsets made pursuant to this section shall not deprive a debtor 
of any right he might otherwise have to contest the debt involved in the 
offset action either by administrative appeal or by legal action.
    (q) Any action authorized by the provisions of this section may be 
taken:
    (1) Against a debtor's pro rata share of payments due any entity 
which the debtor participates in, either directly or indirectly, as 
determined by CCC.
    (2) When CCC determines that the debtor has established an entity, 
or reorganized, transferred ownership of, or changed in some other 
manner, their operation, for the purpose of avoiding the payment of the 
claim or debt.
    (r) The amount to be offset shall not exceed the actual or estimated 
amount of the debt, including interest, administrative charges, and 
penalties, unless the Department of Justice requests that a larger 
specified amount be offset.
    (s) Offset action will not be taken against payments when:
    (1) The payment represents loan or purchase proceeds for a commodity 
which is subject to the rights of the holder of a prior valid 
enforceable lien. However, any amount that exceeds the amount of the 
prior lien shall be available for offset.
    (2) A debt has been discharged as provided in Sec.  1403.15.
    (3) The amount payable to the debtor is used to satisfy a prior lien 
on property pledged as collateral for a CCC loan or sold to CCC. 
However, any amount exceeding the amount of the prior lien shall be 
available for offset.
    (4) CCC determines such action will unduly interfere with the 
administration of a CCC or FSA program.
    (5) The debt has been delinquent for more than ten years or legal 
action to enforce the debt due CCC is barred by an applicable period of 
limitation, whichever is later.
    (t)(1) Notwithstanding the provisions of paragraph (b) of this 
section and Sec.  1403.4, with respect to debts which are based upon an 
unsettled CCC loan, offset action may be taken when the debtor has been:
    (i) Provided written notification of the maturity date of the loan 
and the debtor has not repaid the loan by the maturity date or, in the 
case of a nonrecourse price support loan, has not repaid the loan or 
forfeited the loan collateral to CCC by the date specified by CCC;
    (ii) Notified of CCC's intent to establish an account on a debt 
record 30 days after the maturity date, or other applicable period of 
time, if the loan is not settled in accordance with the loan agreement;
    (iii) Notified of the right to pursue an administrative appeal in 
accordance with part 780 of this title if such an opportunity has not 
been previously provided;
    (iv) Provided an opportunity to inspect and copy CCC records related 
to the debt; and
    (v) Notified in writing that the debt may be collected by 
administrative offset if the loan is not repaid or, with respect to 
nonrecourse loans only, settled through forfeiture of the loan 
collateral.
    (2) After a claim has been established by CCC with respect to a loan 
which has not been settled by the date specified in the loan agreement:
    (i) In the event CCC takes possession of the collateral which is 
security for a nonrecourse of recourse loan made in accordance with 
parts 1421, 1427, 1434, or 1435 of this chapter, the value of such loan 
collateral shall be determined by CCC in accordance with the provisions 
of such parts which are used to determine the settlement value of the 
collateral. The value of such collateral shall be applied to the claim. 
Any amount remaining due on the claim must be paid by the debtor.

[[Page 321]]

    (ii) In the event CCC takes possession of the collateral which is 
the security for any other loan, the value of such collateral, as 
determined by CCC, less any costs incurred by CCC in taking possession 
and disposing of the collateral, shall be applied to the claim. Any 
amount remaining due on the claim must be paid by the debtor.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991; 
60 FR 43706, Aug. 23, 1995]



Sec.  1403.8  Withholding.

    (a) Withholding of a payment prior to the completion of an 
applicable offset procedure may be made from amounts payable to a debtor 
by CCC to ensure that the interests of CCC and the United States will be 
protected as provided in this section.
    (b) A payment may be withheld to protect the interests of CCC or the 
United States only if CCC determines that:
    (1) There has been a serious breach of contract or violation of 
program requirements and the withholding action is considered necessary 
to protect the financial interests of CCC;
    (2) There is substantial evidence of violations of criminal or civil 
frauds statutes and criminal prosecution or civil frauds action is of 
primary importance to program operations of CCC;
    (3) Prior experience with the debtor indicates that collection will 
be difficult if amounts payable to the debtor are not withheld;
    (4) There is doubt that the debtor will be financially able to pay a 
judgment on the claim of CCC;
    (5) The facts available to CCC are insufficient to determine the 
amount to be offset or the proper payee;
    (6) A judgment on a claim of CCC has been obtained; or
    (7) Such action has been requested by the Department of Justice.
    (c) Except for debts due CCC or FSA, withholding action by CCC on 
amounts payable to debtors of other Government agencies may not be made 
unless requested by the Department of Justice.

[54 FR 52878, Dec. 22, 1989]



Sec.  1403.9  Late payment interest and administrative charges.

    (a)(1) The provisions of this section are applicable to all persons 
whose debt to CCC becomes delinquent after January 1, 1990, unless the 
debtor and CCC agree otherwise.
    (2) Late payment interest provisions of this section shall not 
apply:
    (i) To debts owed by Federal agencies and State and local 
governments. Interest on debts owed by such entities shall be charged in 
accordance with applicable statutes or, if none are applicable, at the 
rate of interest charged by the U.S. Treasury for funds borrowed by CCC 
on the day the debt became delinquent;
    (ii) If an applicable statute, regulation, agreement or contract 
either prohibits the charging of such interest or specifies the interest 
or charges applicable to the debt involved;
    (iii) If the late payment interest is waived by CCC.
    (b) CCC will assess late payment interest on the full amount of 
delinquent debts. For purposes of this section, the term ``full amount 
of the delinquent debt'' means the sum of the principal, accrued regular 
loan interest or accrued program interest, and any other charges which 
are otherwise due and owing to CCC on the delinquent debt at the time 
the late payment interest is assessed, except as provided in paragraphs 
(a)(2) and (d)(3) of this section.
    (c) The late payment interest shall be expressed as an annual rate 
of interest which CCC charges on delinquent debts. The late payment 
interest rate shall be equal to the higher of the Treasury Department's 
current value of funds rate or the rate of interest assessed under the 
Prompt Payment Act, determined as of the date specified in paragraphs 
(d)(1) and (d)(2) of this section.
    (d)(1) When a debt results from a statute, regulation, contract or 
other agreement with specific provisions for late payment interest and 
payment due date, late payment interest shall accrue on the amount of 
the debt from the first day the debt became delinquent, unless otherwise 
provided by statute.

[[Page 322]]

    (2) With respect to debts not resulting from a statute, regulation, 
contract or agreement containing specific provisions for late payment 
interest and payment due date, late payment interest shall begin to 
accrue from the date on which notice of the debt is first mailed or 
hand-delivered to the debtor, except that, with respect to debts 
resulting from price support loans, late payment interest shall begin to 
accrue from the date on which a claim is established.
    (3) The rate of late payment interest initially assessed will be 
fixed for the duration of the indebtedness, except when a debtor has 
defaulted on a repayment agreement and seeks to enter into a new 
agreement. CCC may then set a new rate of interest which reflects the 
late payment interest rate in effect at the time the new agreement is 
executed. All charges which accrued, but which were not collected under 
the defaulted agreement, shall be added to the principal to be paid 
under a new repayment agreement.
    (4) The late payment interest on delinquent debts will accrue on a 
daily basis.
    (e)(1) Except as specified in paragraphs (a)(2) and (e)(2) of this 
section, an additional interest rate of three (3) percent per annum will 
be assessed on any portion of a debt which remains unpaid 90 days after 
the date described in paragraph (d)(1) or (d)(2) of this section, if no 
repayment schedule satisfactory to CCC has been agreed upon. Such rate 
will be assessed retroactively from the date late payment interest began 
to accrue and apply on a daily basis. Such rate shall continue to accrue 
until the delinquent debt has been paid.
    (2) With respect to debts resulting from price support loans, an 
additional interest rate of three (3) percent per annum will be assessed 
on a portion of a debt which remains unpaid 60 days after the date on 
which a claim was established. Such rate will be assessed retroactively 
from the date of claim establishment and apply on a daily basis. Such 
rate shall continue to accrue until the delinquent debt has been paid.
    (f) CCC shall assess as administrative charges the additional costs 
of processing delinquent debts against the debtor, to the extent such 
costs are attributable to the delinquency. Such costs include, but are 
not limited to, costs incurred in obtaining a credit report, costs of 
employing commercial firms to locate debtor, costs of employing 
contractors for collection services, costs of selling collateral or 
property to satisfy the debt.
    (g) When a debt is paid in partial or installment payments, payments 
will be applied first to administrative charges, second to additional 
interest assessed in accordance with paragraph (e) of this section and 
late payment interest, and third to outstanding principal.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991; 
60 FR 43706, Aug. 23, 1995]



Sec.  1403.10  Waiver of late payment interest, additional interest and 
administrative charges.

    (a) Except for debts resulting from price support loans, CCC shall 
waive the collection of late payment interest and administrative charges 
on a debt or any portion of a debt which is paid within 30 days after 
the date on which late payment interest began to accrue.
    (b) CCC may waive the assessment and collection of all or a portion 
of the additional interest on debts which are appealed in accordance 
with 7 CFR part 780, or other applicable appeal procedures, from either 
the date of the appeal or the date of delinquency, as determined by CCC, 
until the date a final administrative determination is issued. However, 
with respect to CCC programs administered by the Foreign Agricultural 
Service, CCC shall waive the assessment and collection of additional 
interest on debts which are appealed in accordance with 7 CFR part 780, 
or other applicable appeal procedures, from the date of delinquency 
until 30 days after the date of the letter informing the appellant of 
the final administrative determination. The waiver provisions of the 
paragraph shall not apply during any period of delay due to:
    (1) The appellant's request for a postponement of the scheduled 
hearing;
    (2) The appellant's request for an additional time following the 
hearing to

[[Page 323]]

present additional information or a written closing statement; or
    (3) The appellant's failure to timely present information to the 
reviewing authority.
    (c) Assessment and collection of late payment interest, additional 
interest and administrative charges under this part may be waived by CCC 
in full, or in part, if it is determined that such action is in the best 
interest of CCC.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66956, Dec. 27, 1991]



Sec.  1403.11  Administrative appeal.

    If the opportunity to appeal the determination has not previously 
been provided under part 24 or 780 of this title or any other appeal 
procedure, a debtor may obtain an administrative review under part 780 
of this title, or other applicable appeal procedures, of CCC's 
determination concerning the existence or amount of a debt, if a request 
is filed with the authority who made the determination within 15 days of 
the date of CCC's initial demand letter, unless a longer period is 
specified in the initial demand letter.

[56 FR 66956, Dec. 27, 1991]



Sec.  1403.12  Additional administrative collection action.

    Nothing contained in this part shall preclude the use of any other 
administrative or contractual remedy which may be available to CCC to 
collect debts owed to the Government.

[56 FR 66956, Dec. 27, 1991]



Sec.  1403.13  Contact with debtor's employing agency.

    When a debtor is employed by the Federal Government or is a member 
of the military establishment or the Coast Guard, and collection by 
offset cannot be accomplished in accordance with 5 U.S.C. 5514, CCC may 
contact the employing agency to arrange for payment of the debt by 
allotment or otherwise, in accordance with section 206 of Executive 
Order No. 11222, May 8, 1965, 30 FR 6469.



Sec.  1403.14  Prior provision of rights with respect to debt.

    CCC will not provide an administrative appeal with respect to issues 
which were subject to administrative review at the debtor's request as 
provided under another statute or regulation before:
    (a) Effecting administrative offset;
    (b) Referring the debt to private collection or credit reporting 
agencies;
    (c) Referring the debt to the Office of Personnel Management (OPM) 
for salary offset against the current pay of a present or former 
Government employee; or
    (d) Referring the debt to IRS for tax refund offset.



Sec.  1403.15  Discharge of debts.

    (a) Except as required by other applicable regulation or statute, a 
debt or part thereof owed CCC shall be discharged and the records and 
accounts on that debt closed in the following situations:
    (1) When an obligation or part thereof is discharged in bankruptcy;
    (2) When an obligation or part thereof is the subject of a final 
judgment entered by a court of competent jurisdiction which is adverse 
to CCC;
    (3) When a debt or part thereof is compromised and paid, the amount 
of such compromise;
    (4) When collection of a debt by administrative offset is barred in 
accordance with Sec.  1403.7(s)(5).
    (b) A debt or part thereof owed CCC may be discharged and the 
records and accounts on that debt closed when the Controller, CCC, has 
determined that such action is in the best interest of CCC.
    (c) A claims official or claims officer may discharge a delinquent 
debt if such debt arises under the terms of the authority delegated to 
such official or officer in the following circumstances:
    (1) The delinquent debt is owed by an entity which has been 
liquidated or dissolved and no legal remedy is feasible.
    (2) The delinquent debt is owed by an individual who:
    (i) Is declared legally insane or incompetent;
    (ii) Possessed of no assets or other means of payment; and
    (iii) Possessed of no reasonable prospects of being able to pay the 
debt in the future.
    (3) The delinquent debt was incurred by an individual who is 
deceased, and

[[Page 324]]

from whose estate recovery cannot be made.
    (d) Debts discharged in accordance with this section may be reported 
to the Internal Revenue Service pursuant to Sec.  1403.19.



Sec.  1403.16  Referral of delinquent debts to credit reporting agencies.

    (a) This section specifies the procedures that will be followed by 
CCC and the rights that will be afforded to farm producers when CCC 
reports delinquent debts to credit reporting agencies.
    (b) Before disclosing information to a credit reporting agency in 
accordance with this part, CCC shall review the claim and determine that 
it is valid and delinquent.
    (c) Before a debt may be referred to a credit reporting agency, the 
debtor must be notified, pursuant to Sec.  1403.4, of CCC's intent to 
make such a report. Such notification shall include:
    (1) CCC's intent to disclose to a credit reporting agency that the 
debtor is responsible for the debt, and that such disclosure will be 
made not less than 60 days after notification to such debtor.
    (2) The information intended to be disclosed to the credit reporting 
agency under paragraph (g)(1) of this section.
    (3) The debtor's right to enter a repayment agreement on the debt, 
including, at the discretion of CCC, installment payments, and that if 
such an agreement is reached, the debt will not be referred to a credit 
reporting agency.
    (4) The debtor's right to review of this action in accordance with 
paragraph (i) of this section.
    (d) The debtor shall be notified, in writing at the debtor's last 
known address, when CCC has reported any delinquent debt to a credit 
reporting agency.
    (e)(1) CCC shall notify each credit reporting agency to which an 
original disclosure of delinquent debt information was made of any 
substantial change in the condition or amount of the claim.
    (2) CCC shall promptly verify or correct, as appropriate, 
information about the debt on request of a credit reporting agency. The 
records of the debtor shall reflect any correction resulting from such 
request.
    (f) Information reported to a credit reporting agency on delinquent 
debts shall be derived from the system of records maintained by CCC.
    (g) CCC shall limit delinquent debt information disclosed to credit 
reporting agencies to:
    (1) The name, address, taxpayer identification number, and other 
information necessary to establish the identity of the debtor;
    (2) The amount, status, and history of the claim; and
    (3) The program under which the claim arose.
    (h) Reasonable action shall be taken to locate a debtor for whom CCC 
does not have a current address before reporting delinquent debt 
information to a credit reporting agency.
    (i)(1) Before disclosing delinquent debt information to a credit 
reporting agency, CCC shall, upon request of the debtor, provide for a 
review of the debt in accordance with Sec.  1403.11. This review shall 
only consider defenses or arguments which were not available or could 
not have been available at any previous appeal proceeding permitted 
under Sec.  1403.11.
    (2) Upon receipt of a request for review within 30 days from the 
date of notice to the debtor of intent to refer delinquent debt 
information to a credit reporting agency, CCC shall suspend its schedule 
for disclosure to a credit reporting agency until a final decision 
regarding the appropriateness of disclosure to a credit reporting agency 
is made.
    (3) Upon completion of the review, the reviewing official shall 
transmit to the debtor a written notification of the decision. If 
appropriate, the debtor shall be notified of the scheduled date on or 
after which the debt will be referred to the credit reporting agency. 
The debtor will also be notified of any changes from the initial 
notification in the information to be disclosed.
    (j)(1) In accordance with guidelines established by the Executive 
Vice President, CCC, the responsible claims official shall report to 
credit reporting agencies delinquent debt information specified in 
paragraph (g) of this section.

[[Page 325]]

    (2) The agreements entered into by USDA and credit reporting 
agencies shall provide the necessary assurances to CCC that the credit 
reporting agencies to which information will be provided are in 
compliance with the provisions of all the laws and regulations of the 
United States relating to providing credit information.
    (3) CCC shall not report delinquent debt information to credit 
reporting agencies when:
    (i) The debtor has entered a repayment agreement covering the debt 
with CCC, and such agreement is still valid; or
    (ii) CCC has suspended its schedule for disclosure of delinquent 
debt information pursuant to paragraph (i)(2) of this section.
    (k) Disclosures made under this section shall be in accordance with 
the requirements of the Privacy Act, as amended (5 U.S.C. 552a).
    (l) Notwithstanding the provisions of paragraphs (a) through (k) of 
this section, all commercial debts owed by debtors other than farm 
producers may be reported to credit reporting agencies.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66956, Dec. 27, 1991]



Sec.  1403.17  Referral of debts to Department of Justice.

    Debts which cannot be collected in accordance with these regulations 
may be referred to the Department of Justice for collection action.



Sec.  1403.18  Referral of delinquent debts to IRS or tax refund offset.

    CCC may refer legally enforceable delinquent debts to IRS to be 
offset against tax refunds due to debtors under 26 U.S.C. 6402, in 
accordance with the provisions of 31 U.S.C. 3720A and Treasury 
Department regulations.



Sec.  1403.19  Reporting discharged debts to IRS.

    (a) In accordance with IRS regulations, CCC may report to IRS as 
discharged debts on IRS Form 1099-G only the amounts specified in 
paragraph (b) of this section.
    (b) The following discharged debts may be reported to IRS:
    (1) The amount of a debt discharged under a compromise agreement 
between CCC and the debtor, except for compromises made due to doubt 
about the Government's ability to prove its case in court for the full 
amount of the debt.
    (2) The amount of a debt discharged by the running of the statutory 
period of limitation for collecting the debt by administrative offset 
specified in 31 U.S.C. 3716.
    (3) The amount of a debt discharged by CCC in accordance with Sec.  
1403.15(b).



Sec.  1403.20  Referral of debts to private collection agencies.

    If CCC's collection efforts have been unsuccessful after 90 days and 
the delinquent debt remains unpaid, CCC may refer the debt to a private 
collection agency for collection.



Sec.  1403.21  Collection of 1988 and 1989 advance deficiency overpayments.

    (a) The provisions of this section set forth the policies and 
procedures for collection of 1988 and 1989 advance deficiency 
overpayments (``overpayments'').
    (b) The following definition shall be applicable to this section:
    Financial hardship means that condition of a producer in which 
payment of the debt by lump sum would jeopardize the producer's ability 
to provide food, shelter, and medical care to his immediate family, or 
to continue the producer's farming operation, as determined by CCC.
    (c) This section applies to collection of overpayments from those 
producers who are suffering financial hardship, as determined by CCC, 
and who also meet the following conditions, as determined by CCC:
    (1) Who received an advance deficiency payment for the 1988 or 1989 
crop of a commodity under part 1413 of this chapter;
    (2) Who are required to provide a refund of at least $1,500 of such 
payment, as a result of the increase in market prices of the commodity;
    (3) Who reside in a county, or in a county that is contiguous to a 
county where CCC has determined that farming, ranching, or aquaculture 
operations have been substantially affected

[[Page 326]]

as evidenced by a reduction in normal production for the county of at 
least 30 percent during two of the three crop years 1988, 1989, and 1990 
by:
    (i) A natural disaster designated by the Secretary of Agriculture;
    (ii) A major disaster or emergency designated by the President under 
the Robert T. Stafford Disaster and Emergency Assistance Act (42 U.S.C. 
5121 et seq.);
    (4) Where the total quantity of the 1988 or 1989 crop of the 
commodity that the producers were able to harvest is less than the 
result of multiplying 65 percent of the farm payment yield established 
CCC for the crop by the sum of the acreage planted for the harvest and 
the acreage prevented from being planted (because of the disaster or 
emergency referred to in paragraph (c)(3) of this section) for the crop; 
and
    (5) Who have applied to the County Farm Service Agency Office which 
issued the advance deficiency payment, no later than May 31, 1991, for a 
determination of eligibility for the repayment provisions of this 
section.
    (d) CCC shall assess interest on delinquent debts for 1988 or 1989 
overpayments as follows:
    (1) CCC shall establish a regional annual interest rate for each of 
12 geographic regions, corresponding to the extent practicable, as 
determined by CCC, with the 12 geographic districts of the Farm Credit 
System.
    (2) Each regional annual interest rate shall not exceed the average 
of the interest rates charged by Farm Credit System institutions within 
the region to high-risk borrowers on 1-year operating loans, as 
determined by CCC based upon information provided to CCC by the Farm 
Credit System.
    (3) Interest shall accrue at the established regional annual 
interest rate for the region in which the debt arose, beginning November 
28, 1990.
    (e) CCC shall not offset, in each of the crop years 1990, 1991, and 
1992, more than \1/3\ of the farm program payments otherwise due a 
producer, as a result of the producer's delinquency in repaying the 
overpayment.
    (f) CCC shall permit producers to repay the overpayment in three 
equal installments during each of the crop years 1990, 1991, and 1992, 
if the producers document to CCC that they have entered into agreements 
to obtain multiperil crop insurance policies for the 1991 and 1992 crop 
years.

[56 FR 32319, July 16, 1991]



PART 1404--ASSIGNMENT OF PAYMENTS--Table of Contents




Sec.
1404.1 General statement.
1404.2 Definitions.
1404.3 Payments which may be assigned.
1404.4 Execution of assignment form.
1404.5 [Reserved]
1404.6 Payment to the assignee.
1404.7 Misrepresentations.
1404.8 Liability of the Secretary or disbursing agents.
Sec.  1404.9 OMB Control Numbers assigned pursuant to the Paperwork 
          Reduction Act.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 590h(g).

    Source: 54 FR 52883, Dec. 22, 1989, unless otherwise noted.



1404.1  General statement.

    This part sets forth the manner in which a person may assign a cash 
payment which is made by the Farm Service Agency (FSA) or the Commodity 
Credit Corporation (CCC). Such payments may only be assigned in the 
manner set forth in this part.



Sec.  1404.2  Definitions.

    (a)(1) Assignee means any person, including any agency of the 
Federal Government, to whom an assignment of an FSA or CCC payment is 
made in accordance with this part.
    (2) Assignor means any person who is the recipient of a payment from 
FSA or CCC who assigns the payment to another person in accordance with 
this part.
    (3) Payment means a cash payment and excludes
    (i) Any payment made in accordance with part 1470 of this title;
    (i) Price support loan or purchase agreement proceeds; and
    (iii) Any payments made in accordance with parts 1487, 1488, 1491, 
1492, and 1493 of this title.
    (b) The terms defined in parts 719, 1413, 1421 and 1427 shall also 
be applicable to this part.

[[Page 327]]



Sec.  1404.3  Payments which may be assigned.

    Except as otherwise provided in this part or in individual program 
regulations, contracts and agreements entered into by FSA or CCC, any 
payment due a person from FSA or CCC may be assigned.

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]



Sec.  1404.4  Execution of assignment form.

    (a)(1) The assignment of any FSA or CCC payment must be made by the 
execution of Form CCC-36 or Forms CCC-251 and CCC-252. Form CCC-36 is 
applicable to payments made under programs administered in accordance 
with 7 CFR parts 701, 704, 1413, 1430, 1468, 1472 and 1475. Such form is 
also applicable to any other program which is administered by a county 
ASC committee. Forms CCC-251 and 252 are applicable to all other CCC or 
FSA programs and contracts.
    (2)(i) To be recognized by FSA or CCC, Form CCC-36 must be filed in 
the county FSA office prior to the time the county committee approves 
the making of the payment covered by the assignment. To be recognized by 
FSA or CCC, Forms CCC-251 and 252 must be filed with the FSA or CCC 
office from which the payment will be made prior to the making of the 
payment.
    (ii) Form CCC-36 or Forms CCC-251 and 252 must be signed by both the 
assignor and the assignee.
    (3) The assignor and the assignee shall promptly notify the 
appropriate FSA or CCC office of any change affecting the assignment.
    (b) [Reserved]

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]



1404.5  [Reserved]



Sec.  1404.6  Payment to the assignee.

    (a) The assignee shall be paid the smaller of the amount specified 
on Form CCC-36 or CCC-251 or the amount of the payment earned under the 
program or contract covered by the assignment. Any indebtedness owed by 
the assignor to CCC, FSA, or any other agency of the United States shall 
be subject to offset.
    (b) Any indebtedness owed by the assignor to CCC or FSA shall be 
offset from any payment which is owed by CCC or FSA without regard to 
the date of filing of a Form CCC-36 with the applicable FSA or CCC 
office. Except as provided in paragraph (d) of this section, any 
indebtedness owed by the assignor to CCC or FSA shall be offset from any 
payment which is owed by CCC or FSA if such indebtedness was entered on 
the debt record of the applicable FSA or CCC office prior to the date of 
the filing of Forms CCC-251 and 252 with the applicable FSA or CCC 
office.
    (c) Any indebtedness owed by the assignor to any agency of the 
United States other than CCC or FSA which was entered on the debt record 
of the applicable FSA or CCC office prior to the date of filing of the 
Form CCC-36 or Forms CCC-251 and 252 with such office shall be offset 
prior to the making of any payment to the assignee.
    (d) Any indebtedness arising under a contract between the assignor 
and FSA or CCC which is the subject of the assignment shall be offset 
from the payment prior to the making of any payment to the assignee 
under such contract without regard to the date of the filing of Form 
CCC-36 or Forms CCC-251 and 252 with the appropriate FSA or CCC office.



Sec.  1404.7  Misrepresentations.

    If FSA or CCC has reason to believe that any material 
misrepresentation was made by the assignor or the assignee in executing 
Forms CCC-36, CCC-251 or CCC-252, FSA or CCC shall give notice thereof 
to the assignor and the assignee. If, after investigation and 
opportunity for the assignor and assignee to be heard, FSA or CCC finds 
that any material misrepresentation was in fact made, FSA or CCC shall 
notify the assignor and the assignee of such finding, and void such 
assignment, and insofar as concerns FSA, CCC or any other agency of the 
United States, the assignment shall be of no effect.



Sec.  1404.8  Liability of the Secretary or disbursing agents.

    Neither the United States, the CCC, the Secretary nor any disbursing 
agent

[[Page 328]]

shall be liable in any suit if payment is made to the assignor without 
regard to the existence of any assignment, and nothing contained herein 
shall be construed to authorize any suit against the United States, the 
CCC, the Secretary or any disbursing agent if payment is not made to the 
assignee, or if payment is made to only one of several assignees.



Sec.  1404.9  OMB Control Numbers assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget under the 
provisions of 44 U.S.C. 35 and have been assigned OMB control number 
0560-0004.



PART 1405--LOANS, PURCHASES, AND OTHER OPERATIONS--Table of Contents




Sec.
1405.1 Interest.
1405.2 Basic rule of fractions.
1405.3 Effect of changes in regulations.
1405.4 Delegations of authority.
1405.5 Notice and comment.
1405.6 Crop insurance requirement.
1405.7 Uruguay Round Agreements Act.
1405.8 Disqualification due to Federal crop insurance fraud.

    Authority: 7 U.S.C. 1515; 7 U.S.C. 7991(e); 15 U.S.C. 714b and 714c.

    Source: 61 FR 37575, July 18, 1996, unless otherwise noted.



Sec.  1405.1  Interest.

    (a) Except as may otherwise be determined by CCC as provided in 
individual program regulations, program contracts or such other means as 
deemed appropriate by CCC the rate of interest that is applicable to CCC 
loans shall be equal to the rate of interest charged by the U.S. 
Treasury for funds borrowed by CCC on the date the loan is disbursed by 
CCC, plus 1 percent. This rate of interest shall be in effect until the 
earlier of the maturity of the loan or the next January 1.
    (b) The rate of interest applicable to all CCC loans that are 
outstanding as of January 1 of any year shall be adjusted as of such 
date to equal the rate of interest charged by the U.S. Treasury for 
funds borrowed by CCC on such date, plus 1 percent. This rate shall be 
in effect until the earlier of the maturity of the loan or the next 
January 1. The rate of interest applicable to CCC loans as of January 1 
of any year shall be announced by CCC by press release or other means.



Sec.  1405.2  Basic rule of fractions.

    Fractions shall be rounded in accordance with the provisions of 7 
CFR part 718.



Sec.  1405.3  Effect of changes in regulations.

    Unless otherwise indicated, the regulations in effect in this 
chapter as of April 4, 1996, shall continue to apply to the 1991 through 
1995 crops of agricultural commodities, to milk produced on or before 
May 1, 1996, and to contracts entered into prior to any amendments to 
this chapter after that date.



Sec.  1405.4  Delegations of authority.

    The delegations of authority relating to the CCC programs and 
activities are set forth in the by-laws of CCC and in dockets approved 
by the CCC Board of Directors. Copies of the By-laws and the dockets may 
be obtained from the Secretary of CCC.



Sec.  1405.5  Notice and comment.

    The level of loans, purchases and payments made in accordance with 
the programs set forth in this chapter shall be determined without 
regard to the notice and comment provisions of 5 U.S.C. 553.



Sec.  1405.6  Crop insurance requirement.

    (a) To be eligible for any benefits or payments under 7 CFR part 
1410 the producer must obtain at least the catastrophic level of 
insurance for each crop of economic significance in which the producer 
has an interest or provide a written waiver to the Secretary that waives 
any eligibility for emergency crop loss assistance in connection with 
the crop, if insurance is available in the county for the crop. In 
meeting this requirement, the producer may:
    (1) Obtain at least the catastrophic level of crop insurance in all 
counties for each crop of economic significance in which the producer 
has an interest;
    (2) Obtain at least the catastrophic level of crop insurance for 
some, but

[[Page 329]]

not all, crops of economic significance for which the producer has an 
interest, and sign a waiver; or
    (3) Sign a waiver that waives any eligibility for crop loss 
assistance in connection with the producer's crop.
    (b) Crop of economic significance. The term ``crop of economic 
significance'' means a crop that has contributed in the previous year, 
or is expected to contribute in the current crop year, 10 percent or 
more of the total expected value of all crops grown by the producer. 
However, notwithstanding the preceding sentence, if the total expected 
liability under the catastrophic risk protection endorsement is equal to 
or less than the administrative fee required for the crop, such crop 
will not be considered a crop of economic significance.

[61 FR 37575, July 18, 1996, as amended at 68 FR 32337, May 30, 2003]



Sec.  1405.7  Uruguay Round Agreements Act.

    In the event the outlays by the United States for domestic support 
measures will exceed, in any required reporting period, the allowable 
levels under the Uruguay Round Agreements (as defined in section 2 of 
the Uruguay Round Agreements Act), CCC will, as determined by the 
Secretary of Agriculture, reduce the amount of payments and benefits to 
be made in any such reporting period, and/or collect a refund of 
payments or benefits previously made with respect to such reporting 
period, under parts 1412, 1413, 1421, 1427, 1430, 1434 and 1435 of this 
chapter in order to ensure that the level of domestic support provided 
by the United States complies with the commitments of the United States 
in the Uruguay Round Agreements.

[67 FR 64751, Oct. 21, 2002]



Sec.  1405.8  Disqualification due to Federal crop insurance fraud.

    (a) Section 515(h) of the Federal Crop Insurance Act (FCIA) provides 
that a person who willfully and intentionally provides any false or 
inaccurate information to the Federal Crop Insurance Corporation (FCIC) 
or to an approved insurance provider with respect to a policy or plan of 
FCIC insurance after notice and an opportunity for a hearing on the 
record, will be subject to one or more of the sanctions described in 
section 515(h)(3). In section 515(h)(3), the FCIA specifies that in the 
case of a violation committed by a producer, the producer may be 
disqualified for a period of up to 5 years from receiving any monetary 
or non-monetary benefit under a number of programs. The list includes, 
but is not limited to, benefits under:
    (1) Title V of the FCIA.
    (2) The Agricultural Market Transition Act (7 U.S.C. 7201 et seq.), 
including the Noninsured Crop Disaster Assistance Program under section 
196 of that Act (7 U.S.C. 7333).
    (3) The Agricultural Act of 1949 (7 U.S.C. 1421 et seq.).
    (4) The Commodity Credit Corporation Charter Act (15 U.S.C. 714 et 
seq).
    (5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 et seq.).
    (6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et 
seq.).
    (7) Any law that provides assistance to a producer of an 
agricultural commodity affected by a crop loss or a decline in prices of 
agricultural commodities.
    (b) Violation determinations are made by FCIC. However, upon notice 
from FCIC to CCC that a producer has been found to have committed a 
violation to which paragraph (a) of this section applies, that person 
shall be considered ineligible for payments under the programs specified 
in paragraph (a) of this section that are funded by CCC for the same 
period of time for which, as determined by FCIC, the producer will be 
ineligible for crop insurance benefits of the kind referred to in 
paragraph (a)(1) of this section. Appeals of the determination of 
ineligibility will be administered under the rules set by FCIC.
    (c) Other sanctions may also apply.

[68 FR 39448, July 2, 2003]



PART 1407--DEBARMENT AND SUSPENSION--Table of Contents




Sec.
1407.1 Purpose.
1407.2 Nonprocurement debarment and suspension.

[[Page 330]]

1407.3 Procurement debarment and suspension.

    Authority: 15 U.S.C. 714b.

    Source: 64 FR 67471, Dec. 2, 1999, unless otherwise noted.



Sec.  1407.1  Purpose.

    This part specifies the policies that CCC will follow in taking 
action to debar or suspend individuals or firms from participation in 
Federal nonprocurement and procurement activities.



Sec.  1407.2  Nonprocurement debarment and suspension.

    (a) CCC will proceed under 7 CFR part 3017 when taking action to 
debar or suspend participants or potential participants in CCC's 
nonprocurement activities.
    (b) The debarring and suspending official for nonprocurement actions 
taken by CCC shall be as follows: For actions initiated on behalf of CCC 
by the Foreign Agricultural Service (FAS), the Food and Nutrition 
Service (FNS), or the Agricultural Marketing Service (AMS), the 
debarring and suspending official will be the Vice President, CCC, who 
is the Administrator FAS, FNS, or AMS, respectively. For actions 
initiated on behalf of CCC by the Natural Resources Conservation Service 
(NRCS), the official will be the Vice President, CCC, who is the Chief, 
NRCS.



Sec.  1407.3  Procurement debarment and suspension.

    CCC will proceed under this part when taking action to debar or 
suspend contractors with CCC or participants or potential participants 
in CCC's procurement activities. CCC will apply the provisions of 48 CFR 
part 409, subpart 409.4, in such actions, with the exception that the 
debarring and suspending official will be the Executive Vice President, 
CCC, or a designee.



PART 1409--MEETINGS OF THE BOARD OF DIRECTORS OF COMMODITY CREDIT 
CORPORATION--Table of Contents




Sec.
1409.1 General statement.
1409.2 Definitions.
1409.3 Open meetings.
1409.4 Exemptions.
1409.5 Closure of meetings.
1409.6 Notices to the public.
1409.7 Records retention.
1409.8 Public inspection and copying of records; applicable fees.
1409.9 Report to Congress.

    Authority: Sec. 3(a), 90 Stat. 1244 (5 U.S.C. 552b), and sec. 4, 62 
Stat. 1070, as amended (15 U.S.C. 714b).

    Source: 42 FR 14673, Mar. 16, 1977, unless otherwise noted.



Sec.  1409.1  General statement.

    (a) It is the policy of Commodity Credit Corporation, under the 
provisions of the ``Government in the Sunshine Act'' (5 U.S.C. 552b) to 
make available to the public, to the fullest extent practicable, 
information regarding the decision process of the Board of Directors of 
Commodity Credit Corporation.
    (b) This part sets forth the procedural requirements designed to 
provide the public with such information while continuing to protect the 
rights of individuals and to maintain the capabilities of Commodity 
Credit Corporation in carrying out its responsibilities under the 
statutes administered by Commodity Credit Corporation.



Sec.  1409.2  Definitions.

    (a) The term Board means the Board of Directors of Commodity Credit 
Corporation.
    (b) The term Director means an individual who is a member of the 
Board of Directors of Commodity Credit Corporation and includes the 
Secretary of Agriculture, who is by statute an ex-officio director and 
Chairman of the Board.
    (c) The term General Counsel means the General Counsel or the 
Assistant General Counsel of Commodity Credit Corporation.
    (d) The term meeting means the deliberations of at least five 
(quorum) Directors of the Board of Directors of Commodity Credit 
Corporation where such deliberations determine or result in the joint 
conduct or disposition of official Board business but shall not include 
deliberations for:
    (1) Closing a portion or portions of a meeting or series of meetings 
as provided in Sec.  1409.5 (a) and (b) of this part, or

[[Page 331]]

    (2) Calling a meeting at a date earlier than announced as provided 
in paragraph 1409.6(a)(2) of this part; or
    (3) Changing the subject matter of a publicly announced meeting as 
provided in Sec.  1409.6(b) of this part; or
    (4) Determining whether or not to withhold from disclosure 
information pertaining to a meeting or portions of a meeting or series 
of meetings as provided in Sec.  1409.5(b) of this part.
    (e) The term public observation means the right of any member of the 
public to attend and observe, but not participate or interfere in any 
way in an open meeting of the Board, within the limits of reasonable and 
comfortable accommodations made available for such purpose by Commodity 
Credit Corporation.



Sec.  1409.3  Open meetings.

    Every portion of every meeting of the Board of Directors will be 
open to public observation except as provided in Sec. Sec.  1409.4 and 
1409.5 of this part.



Sec.  1409.4  Exemptions.

    (a) A portion or portions of a Board meeting may be closed to the 
public and any information pertaining to such meeting otherwise required 
by Sec.  1409.3 of this part to be disclosed to the public may be 
withheld, where the Board determines that public disclosure of 
information to be discussed at such meetings is likely to--
    (1) Disclose matters that are:
    (i) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interests of national defense 
or foreign policy and
    (ii) In fact properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practice of 
Commodity Credit Corporation;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than the Freedom of Information Act, 5 U.S.C. 552), 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings,
    (ii) Deprive a person of a right to a fair trial or to an impartial 
adjudication,
    (iii) Constitute an unwarranted invasion of personal privacy, or
    (iv) Disclose the identity of a confidential source, and, in the 
case of a record compiled by a criminal enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source,
    (v) Disclose investigative techniques and procedures, or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to: (i) Lead to significant financial speculation in agricultural 
commodities or significantly endanger the stability of any financial 
institution; or
    (ii) Significantly frustrate implementation of a proposed Board 
action except where the Board has already disclosed to the public the 
content or nature of its proposed action or where Commodity Credit 
Corporation is required by law to make such disclosure on its own 
initiative prior to taking final action on such proposal; or

[[Page 332]]

    (10) Specifically concern Commodity Credit Corporation's 
participation in a civil action or proceedings.
    (b) Any Board meeting or portion thereof, which may be closed, or 
any information which may be withheld under paragraph (a) of this 
section, will not be closed or withheld, respectively, in any case where 
the Board finds the public interest requires otherwise.



Sec.  1409.5  Closure of meetings.

    (a) Procedure for closing a majority of the meetings. (1) A majority 
of the meetings of the Board will be closed to the public pursuant to 
exemptions 4, 8, (9)(i) and 10 of Sec.  1409.4(a) of this part. These 
meetings will include deliberations such as those relating to the levels 
of price support for various agricultural commodities, the allocation of 
quantities of commodities for export programs, and the interest rates 
for commodity loans and farm storage facility loans. Board meetings will 
be closed pursuant to exemptions 4, 8, (9)(i) and 10 when at least five 
Directors vote at the beginning of such meeting, or portion thereof, to 
close the exempt portion or portions of the meeting. A copy of the vote, 
reflecting the vote of each Director on the question, will be made 
available to the public. The Board will, except to the extent that such 
information is exempt from disclosure under the exemptions in Sec.  
1409.4(a) of this part, provide the public with public announcement of 
the time, place, and subject matter of the meeting and of each portion 
thereof, at the earliest practicable time.
    (2) The provisions of paragraph (b) of this section and Sec.  
1409.6, except Sec.  1409.6(e), of this part will not apply to any 
meeting or portion thereof to which paragraph (a) of this section 
applies.
    (b) Procedure for closing other meetings. (1) A separate vote of the 
entire membership of the Board will be taken with respect to each Board 
meeting a portion or portions of which are proposed to be closed to the 
public or any information which is proposed to be withheld from the 
public on the basis of one or more of the exemptions in Sec.  1409.4(a) 
of this part. The vote of each Director will be recorded and no proxy 
shall be allowed.
    (2) A portion or portions of a meeting may be closed on the basis of 
one or more of the exemptions in Sec.  1409.4(a) of this part only when 
at least five Directors vote to take such action.
    (3) A single vote of the entire membership of the Board may be taken 
with respect to a series of meetings, a portion or portions of which are 
proposed to be closed to the public or with respect to the withholding 
of any information concerning such series of meetings, on the basis of 
one or more of the exemptions in Sec.  1409.4(a) of this part. Each 
meeting in such series must involve the same particular matters and must 
be scheduled to be held no more than thirty days after the initial 
meeting in such series. The vote of each Director participating in such 
vote will be recorded and no proxy vote shall be allowed.
    (4) Whenever any person whose interests may be directly affected by 
a portion of a Board's meeting requests that the Board close such 
portion to the public on the basis of exemptions (5), (6), or (7) of 
Sec.  1409.4(a) of this part, the Board, upon the request of any one of 
its members, will vote whether or not to close such portion of the 
meeting. The vote of each Director participating in such vote will be 
recorded and no proxy shall be allowed.
    (c) General counsel's certification. Before every Board meeting 
closed on the basis of one or more of the exemptions in Sec.  1409.4(a) 
of this part, the General Counsel will publicly certify that, in his 
opinion, the meeting may be closed to the public and shall state each 
relevant exemption.



Sec.  1409.6  Notices to the public.

    (a)(1) The Secretary of the Board will make a public announcement at 
least one week before each Board meeting of (i) the time and place of 
the meeting, (ii) subject matter of the meeting, except to the extent 
that such information is exempt from disclosure under Sec.  1409.4(a) of 
this part, (iii) whether the meeting is to be open or closed to the 
public and (iv) the name and business telephone number of the Secretary 
of the Board.
    (2) Notwithstanding paragraph (a)(1) of this section, less than one 
week advance public notice for a meeting may

[[Page 333]]

be given when at least five Directors determine by recorded vote that 
the Board business requires that a meeting be called at an earlier date, 
but in such case, announcement of the meeting will be made at the 
earliest practicable time.
    (b)(1) When the Board votes on whether to close a portion or 
portions of a meeting or a series of meetings, or with respect to 
withholding any information concerning such meeting or series of 
meetings, in accordance with Sec.  1409.5(b) of this part, the Secretary 
of the Board will make available to the public a written copy of such 
vote reflecting the vote of each member on the question within one 
business day of such vote.
    (2) If the Board votes to close a portion or portions of a meeting 
or a series of meetings in accordance with Sec.  1409.5(b) of this part, 
the Secretary of the Board will make available to the public within one 
business day of such vote, (i) a list of the names and affiliations of 
persons expected to be present at such closed portion or portions of the 
meeting or series of meetings and (ii) a full written explanation of the 
Board's action in closing the portion of portions of the meeting or 
series of meetings, unless such disclosure would reveal the information 
that the meeting itself was closed to protect.
    (c) The time or place of a board meeting may be changed following 
the public announcement as required by paragraph (a)(1) of this section 
only if the Board publicly announces such change or changes at the 
earliest practicable time.
    (d) The subject matter of a Board meeting or the determination of 
the Board to open or close a meeting or portions thereof to the public, 
may be changed following the public announcement as required by 
paragraph (a)(1) of this section only if (i) five Directors determine by 
recorded vote that Board business so requires and that no earlier 
announcement of the change was possible and (ii) the Board publicly 
announces such change and the vote of each Director upon such change at 
the earliest practicable time.
    (e) The Secretary of the Board shall use all reasonable means to 
keep the public promptly and fully informed of public announcements 
including the use of a bulletin board outside the office of the 
Secretary of the Board at the address indicated in Sec.  1409.8(b) of 
this part. Requests for information concerning Board meetings should be 
addressed to the Secretary of the Board.
    (f) Immediately following each public announcement required by this 
section, the information provided in such public announcement will be 
submitted for publication in the Federal Register.
    (g) The Board usually meets in room 200-A, Administration Building, 
United States Department of Agriculture, 14th Street and Independence 
Avenue, SW., Washington, DC. Each person interested in attending an open 
meeting of the Board should notify the Secretary of the Board at least 
one business day prior to the open meeting of their intention to attend 
the meeting. Any person who fails to do so may not be accommodated if 
there is insufficient space in the meeting room.



Sec.  1409.7  Records retention.

    (a) The Secretary of the Board will maintain the following records 
for each Board meeting, or portion thereof which is closed to the public 
pursuant to a vote under Sec.  1409.5 of this part:
    (1) A copy of the General Counsel's certification required by Sec.  
1409.5(c) of this part;
    (2) A copy of a statement from the presiding officer which sets 
forth the time and place of the closed meeting or portion thereof and 
list of persons present; and
    (3) A complete verbatim transcript or electronic recording adequate 
to record fully the proceedings of each Board meeting or portion of a 
meeting, except that in the case of a meeting or portion of a meeting 
closed to the public on the basis of exemptions (8), (9)(i) or (10) of 
Sec.  1409.4(a) of this part, the Secretary of the Board will maintain 
either a transcript, electronic recording, or a complete set of minutes. 
Such minutes shall fully and clearly describe all matters discussed and 
shall provide a full and accurate summary of actions taken and the 
reasons therefor, including a description of each of the views expressed 
on any item and the record

[[Page 334]]

of any roll-call vote reflecting the vote of each member on the 
question. All documents considered in connection with any action will be 
identified in such minutes.
    (b) The retention period for the rec ords required by paragraph (a) 
of this section will be for a period of at least two years after the 
particular Board meeting, or until one year after the conclusion of any 
Board proceeding with respect to which the meeting or portion thereof 
was held, whichever occurs later.



Sec.  1409.8  Public inspection and copying of records; applicable fees.

    (a) The Secretary of the Board will make promptly available to the 
public the transcript, electronic recording, transcription of the 
recording, or minutes of the discussion of any item on the agenda of a 
Board meeting, or any item of the testimony of any witness received at 
the meeting except for such item or items of such discussion or 
testimony as the Secretary of the Board determines to contain 
information which may be withheld on the basis of one or more of the 
exemptions in Sec.  1409.4(a) of this part.
    (b) Requests for public inspection of electronic recording, 
transcripts or minutes of Board meetings shall be made to the Secretary 
of the Board of Directors of Commodity Credit Corporation, Room 218-W, 
Administration Building, United States Department of Agriculture, 14th 
Street and Independence Avenue, SW., Washington, DC 20250.
    (c) The transcripts, minutes, or transcriptions of electronic 
recordings of a Board meeting will disclose the identity of each 
speaker, and will be furnished to any person at the actual cost of 
transcription or duplication.



Sec.  1409.9  Report to Congress.

    The Secretary of Agriculture will annually report to the Congress 
regarding the Board's compliance with the Government in the Sunshine 
Act, including a tabulation of the total number of open meetings, the 
total number of closed meetings, the reasons for closing such meetings 
and a description of any litigation brought against the Board pursuant 
to the Government in the Sunshine Act, including any costs assessed 
against Commodity Credit Corporation in such litigation.

[[Page 335]]



          SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS



    Editorial Note: For Federal Register citations to regulations for 
previous program years not included in this volume, see the List of CFR 
Sections Affected, which appears in the Finding Aids section of the 
printed volume and on GPO Access.



PART 1410--CONSERVATION RESERVE PROGRAM--Table of Contents




Sec.
1410.1 Administration.
1410.2 Definitions.
1410.3 General description.
1410.4 Maximum county acreage.
1410.5 Eligible persons.
1410.6 Eligible land.
1410.7 Duration of contracts.
1410.8 Conservation priority areas.
1410.9 Conversion to trees.
1410.10 Restoration of wetlands.
1410.11 Farmable Wetlands Program.
1410.12-1410.19 [Reserved]
1410.20 Obligations of participant.
1410.21 Obligations of the Commodity Credit Corporation.
1410.22 CRP Conservation Plan.
1410.23 Eligible practices.
1410.24-1410.29 [Reserved]
1410.30 Signup.
1410.31 Acceptability of offers.
1410.32 CRP contract.
1410.33 Contract modifications.
1410.34-1410.39 [Reserved]
1410.40 Cost-share payments.
1410.41 Levels and rates for cost-share payments.
1410.42 Annual rental payments.
1410.43 Method of payment.
1410.44 Adjusted Gross Income
1410.45-1410.49 [Reserved]
1410.50 Enhancement programs.
1410.51 Transfer of land.
1410.52 Violations.
1410.53 Executed CRP contract not in conformity with regulations.
1410.54 Performance based upon advice or action of the Department.
1410.55 Access to land under contract.
1410.56 Division of payments and provisions about tenants and 
          sharecroppers.
1410.57 Payments not subject to claims.
1410.58 Assignments.
1410.59 Appeals.
1410.60 Scheme or device.
1410.61 Filing of false claims.
1410.62 Miscellaneous.
1410.63 Permissive uses.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3801-3847.

    Source:  68 FR 24835, May 8, 2003, unless otherwise noted.



Sec.  1410.1  Administration.

    (a) The regulations in this part will be implemented under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), the Administrator, Farm Service 
Agency (FSA), or a designee, or the Deputy Administrator, FSA. In the 
field, the regulations in this part will be implemented by the FSA State 
and county committees (``State committees'' and ``county committees,'' 
respectively).
    (b) State executive directors, county executive directors, and State 
and county committees do not have the authority to modify or waive any 
of the provisions in this part unless specifically authorized by the 
Deputy Administrator.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee, but which has not been 
taken by such committee, such as:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation of authority herein to a State or county committee 
shall preclude the Executive Vice President, CCC, the Administrator, 
FSA, or a designee, or the Deputy Administrator, from determining any 
question arising under this part or from reversing or modifying any 
determination made by a State or county committee.
    (e) Data furnished by prospective participants will be used to 
determine eligibility for program benefits. Furnishing the data is 
voluntary; however, the failure to provide data could result in program 
benefits being withheld or denied.

[[Page 336]]

    (f) Notwithstanding other provisions of this section, the 
Erodibility Index (EI), suitability of land for permanent vegetative or 
water cover, factors for determining the likelihood of improved water 
quality, and adequacy of the planned practice to achieve desired 
objectives shall be determined by the Natural Resource Conservation 
Service (NRCS) or other sources approved by CCC, in accordance with the 
Field Office Technical Guide (FOTG) of NRCS or other guidelines deemed 
appropriate by NRCS. In no case shall such determination compel CCC to 
execute a contract that CCC does not believe will serve the purposes of 
the program established by this part. Any approved technical authority 
shall utilize CRP guidelines established by CCC.
    (g) CCC may consult with the Forest Service (FS), a State forestry 
agency, or other organizations as determined by CCC to be necessary for 
developing and implementing conservation plans that include tree 
planting as the appropriate practice or as a component of a practice.
    (h) CCC may consult with the Cooperative State Research, Education, 
and Extension Service to coordinate a related information and education 
program as deemed appropriate to implement the Conservation Reserve 
Program (CRP).
    (i) CCC may consult with the National Marine Fisheries Service, U.S. 
Fish and Wildlife Service (FWS), or State wildlife agencies for such 
assistance as is determined necessary by CCC to implement the CRP.
    (j) The regulations governing the CRP as of May 12, 2002, shall 
continue to govern contracts in effect as of that date (see 7 CFR part 
1410 contained in the edition of 7 CFR Parts 1200 to 1599 revised as of 
January 1, 2003). This part shall apply to contracts executed on or 
after May 13, 2002



Sec.  1410.2  Definitions.

    (a) The definitions in part 718 of this chapter shall be applicable 
to this part and all documents issued in accordance with this part, 
except as otherwise provided in this section.
    (b) The following definitions shall be applicable to this part:
    Agricultural commodity means any crop planted and produced:
    (1) By annual tilling of the soil;
    (2) On an annual basis by one-trip planters; or
    (3) Sugarcane planted or produced in a State.
    Annual rental payment means, unless the context indicates otherwise, 
the annual payment specified in the CRP contract that, subject to the 
availability of funds, is made to a participant to compensate a 
participant for placing eligible land in the CRP.
    Conservation district means a political subdivision of a State, 
Indian Tribe, or territory, organized pursuant to the State or 
territorial soil conservation district law, or Tribal law. The 
subdivision may be a conservation district, soil conservation district, 
soil and water conservation district, resource conservation district, 
natural resource district, land conservation committee, or similar 
legally constituted body.
    Conservation plan means a record of the participant's decisions and 
supporting information for treatment of a unit of land or water, and 
includes a schedule of operations, activities, and estimated 
expenditures needed to solve identified natural resource problems by 
devoting eligible land to permanent vegetative cover, trees, water, or 
other comparable measures.
    Conservation priority area means an area designated with actual and 
adverse water quality, wildlife habitat, air quality, or other natural 
resource impacts related to agricultural production activities or to 
assist agricultural producers to comply with Federal and State 
environmental laws or to meet other conservation needs, such as for air 
quality, as determined by the Deputy Administrator.
    Conserving use means any alfalfa, other multi-year grasses and 
legumes planted during 1996 through 2001, and any summer fallow during 
1996 through 2001.
    Considered planted means: land devoted to a conserving use or land 
enrolled in the WBP during the crop year or during any of the 2 years 
preceding the crop year if the contract expired or will expire during 
calendar year 2000, 2001, or 2002; cropland enrolled in CRP; or land for 
which the producer received

[[Page 337]]

insurance indemnity payment for prevented planting.
    Contour grass strip means a vegetation area that follows the contour 
of the land that complies with the FOTG and a conservation plan 
developed under this part.
    Contract period means the term of the contract which is not less 
than 10, nor more than 15 years.
    Cost-share payment means the payment made by CCC to assist program 
participants in establishing the practices required in a contract.
    Cropland means land defined as cropland in part 718 of this title, 
except for land in terraces that are no longer capable of being cropped.
    Cropped wetlands means farmed wetlands and wetlands farmed under 
natural conditions.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, the CRP Program Manager, or a designee.
    Erodibility Index (EI) is, as prescribed by CCC, used to determine 
the inherent erodibility (water or wind) of a soil.
    Farmed wetlands means land defined as farmed wetlands in part 12 of 
this title.
    Federally-owned land means land owned by the Federal Government or 
any department, instrumentality, bureau, or agency thereof, or any 
corporation whose stock is wholly owned by the Federal Government.
    Field means a part of a farm that is separated from the balance of 
the farm by permanent boundaries such as fences, roads, permanent 
waterways, woodlands, other similar features, or crop-lines, as 
determined by CCC.
    Field Office Technical Guide (FOTG) means the official USDA 
guidelines, criteria, and standards for planning and applying 
conservation treatments and conservation management systems. It contains 
detailed information on the conservation of soil, water, air, plant, 
animal resources, and cultural resources applicable to the local area 
for which it is prepared.
    Field windbreak, shelterbelt, and/or living snowfence mean a 
vegetative barrier with a linear configuration composed of trees, 
shrubs, or other vegetation, as determined by CCC, that are designated 
as such in a conservation plan and that are planted for the purpose of 
reducing wind erosion, controlling snow, improving wildlife habitat, or 
conserving energy.
    Filter strip means a strip or area of vegetation adjacent to a body 
of water the purpose of which is to remove nutrients, sediment, organic 
matter, pesticides, and other pollutants from surface runoff and 
subsurface flow by deposition, absorption, plant uptake, and other 
processes, thereby reducing pollution and protecting surface water and 
subsurface water quality and of a width determined appropriate for the 
purpose by the Deputy Administrator.
    Highly Erodible Land (HEL) means land determined to have an EI equal 
to or greater than 8 on the acreage offered.
    Infeasible to farm means an area that is too small or isolated to be 
economically farmed, as determined by the Deputy Administrator.
    Landlord means a person who rents or leases acreage to another 
person.
    Local FSA office means the FSA office serving the area in which the 
FSA records are located for the farm or ranch.
    Offer means, unless the context indicates otherwise, if required by 
CCC, the per-acre rental payment requested by the owner or operator in 
such owner's or operator's request to participate in the CRP.
    Offeror means an eligible person as determined by CCC who submits an 
offer of eligible acreage for enrollment into the CRP to enter into a 
CRP contract.
    Operator means a person who is in general control of the farming 
operation on the farm, as determined by CCC.
    Payment period means the 10- to 15-year contract period for which 
the participant receives an annual rental payment.
    Perennial crop means an agricultural commodity that is produced from 
the same root structure for two or more years, as determined by CCC.
    Permanent vegetative cover means perennial stands of approved 
combinations of certain grasses, legumes, forbs, shrubs and trees with a 
life span of 10 or more years.

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    Permanent wildlife habitat means a vegetative cover with the 
specific purpose of providing habitat, food, or cover for wildlife and 
protecting other environmental concerns for the life of the contract.
    Practice means a conservation, wildlife habitat, or water quality 
measure with appropriate operations and management as agreed to in the 
conservation plan to accomplish the desired program objectives according 
to CRP and FOTG standards and specifications as a part of a conservation 
management system.
    Riparian buffer means a strip or area of vegetation adjacent to a 
river or stream of sufficient width as determined by the Deputy 
Administrator to remove nutrients, sediment, organic matter, pesticides, 
and other pollutants from surface runoff and subsurface flow by 
deposition, absorption, plant uptake, and other processes, thereby 
reducing pollution and protecting surface water and subsurface water 
quality, which are also intended to provide shade to reduce water 
temperature for improved habitat for aquatic organisms and supply large 
woody debris for aquatic organisms and habitat for wildlife.
    Soil loss tolerance (T) means the maximum average annual erosion 
rate specified in the FOTG that will not adversely impact the long-term 
productivity of the soil.
    State means State agencies, departments, districts, county or city 
governments, municipalities or any other State or local government of 
the State.
    State Technical Committee means a committee established pursuant to 
part 610 of this chapter to provide information, analysis, and 
recommendations to the U.S. Department of Agriculture.
    State water quality priority areas means any area so designated by 
the State committee, in consultation with the State Technical Committee, 
where agricultural pollutants contribute to water degradation or create 
the potential for failure to meet applicable water quality standards or 
the goals and requirements of Federal or State water quality laws. These 
areas may include areas designated under section 319 of the Federal 
Water Pollution Control Act (33 U.S.C. 1329) as water quality protection 
areas, sole source aquifers or other designated areas that result from 
agricultural nonpoint sources of pollution. Acreage in these areas may 
be determined eligible as conservation priority areas.
    Technical assistance means the assistance provided in connection 
with the CRP to owners or operators as approved by CCC, for developing 
conservation and/or tree planting plans, determining the eligibility of 
land and practices, implementing and certifying practices, and ensuring 
contract performance.
    Violation means an act by the participant, either intentional or 
unintentional, that would cause the participant to no longer be eligible 
for all or a portion of cost-share, incentive, or annual contract 
payments.
    Water Bank Program (WBP) means the program authorized by the Water 
Bank Act of 1970, as amended, in which eligible persons enter into 10-
year agreements to preserve, restore, and improve wetlands.
    Water cover means flooding of land by water either to develop or 
restore shallow water areas for wildlife or wetlands, or as a result of 
a natural disaster.
    Wellhead protection area means the area designated by EPA or the 
appropriate State agency with an Environmental Protection Agency 
approved Wellhead Protection Program for water being drawn for public 
use, as defined for public use by the Safe Drinking Water Act, as 
amended.
    Wetland means land defined as wetland in accordance with provisions 
of part 12 of this title.
    Wetlands farmed under natural conditions means land defined as 
wetlands farmed under natural conditions in accordance with provisions 
of part 12 of this title.
    Wetlands Reserve Program (WRP) means the program authorized by part 
1467 of this chapter in which eligible persons enter into long-term 
agreements to restore and protect wetlands.

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Sec.  1410.3  General description.

    (a) Under the CRP, CCC will enter into contracts with eligible 
participants to convert eligible land to a conserving use during the 
contract period in return for financial and technical assistance.
    (b) A participant must obtain and adhere to a conservation plan 
prepared in accordance with CRP guidelines, as established and 
determined by CCC. A conservation plan for eligible acreage must be 
obtained by a participant and must be approved by the conservation 
district in which the lands are located unless the conservation district 
declines to review the plan, in which case the provider of technical 
assistance may take such further action as is needed to account for lack 
of such review.
    (c) The objectives of the CRP are to cost-effectively reduce water 
and wind erosion, protect the Nation's long-term capability to produce 
food and fiber, reduce sedimentation, improve water quality, create and 
enhance wildlife habitat, and other objectives including encouraging 
more permanent conservation practices and tree planting.
    (d) Except as otherwise provided, a participant may, in addition to 
any payments under this part, receive cost-share assistance, rental or 
easement payments, tax benefits, or other payments from a State or a 
private organization in return for enrolling lands in CRP. However, a 
participant may not receive or retain CRP cost-share assistance if other 
Federal cost-share assistance is provided for such acreage under any 
law, as determined by the Deputy Administrator. Further, under no 
circumstances may the cost-share payments received under this part, or 
otherwise, exceed the cost of the practice, as determined by CCC.



Sec.  1410.4  Maximum county acreage.

    (a) Except as provided in paragraph (b) of this section, the maximum 
acreage that may be placed in the CRP and the WRP may not exceed 25 
percent of the total cropland in the county; further, no more than 10 
percent of the cropland may be subject, in the aggregate, to a CRP or 
WRP easement.
    (b) The restrictions in paragraph (a) of this section may be waived 
by CCC if CCC determines that such action would not adversely affect the 
local economy of the county and that operators in the county are having 
difficulties complying with conservation plans implemented under part 12 
of this title.
    (c) These restrictions on participation shall be in addition to any 
other restriction imposed by law.



Sec.  1410.5  Eligible persons.

    (a) In order to be eligible to enter into a CRP contract in 
accordance with this part, a person must be an owner, operator, or 
tenant of eligible land and:
    (1) If an operator of eligible land, seeking to participate without 
the owner, must have operated such land for at least 12 months prior to 
the close of the applicable signup period and must provide satisfactory 
evidence that such operator will be in control of such eligible land for 
the full term of the CRP contract period;
    (2) If an owner of eligible land, must have owned such land for at 
least 12 months prior to the close of the applicable signup period, 
unless:
    (i) The new owner acquired such land by will or succession as a 
result of the death of the previous owner;
    (ii) The only ownership change in the 12-month period occurred due 
to foreclosure on the land and the owner of the land, immediately before 
the foreclosure, exercises a timely right of redemption from the 
mortgage holder in accordance with State law; or
    (iii) As determined by the Deputy Administrator, the circumstances 
of the acquisition are such that present adequate assurance that the new 
owner of such eligible land did not acquire such land for the purpose of 
placing it in the CRP; or
    (3) If a tenant, the tenant is a participant with an eligible owner 
or operator.
    (b) Notwithstanding paragraph (a) of this section, under continuous 
signup provisions authorized by Sec.  1410.30, an otherwise eligible 
person must have owned or operated, as appropriate, the eligible land 
for at least 12 months before submitting the offer.

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Sec.  1410.6  Eligible land.

    (a) In order to be eligible to be placed in the CRP, land must be 
one of the following:
    (1) Cropland that is subject to a conservation plan and has been 
annually planted or considered planted, as defined in Sec.  1410.2, to 
an agricultural commodity in 4 of the 6 crop years from 1996 through 
2001, as determined by the Deputy Administrator, provided further that 
field margins that are incidental to the planting of crops may also be 
considered qualifying cropland to the extent determined appropriate by 
the Deputy Administrator; and is physically and legally capable of being 
planted in a normal manner to an agricultural commodity, as determined 
by the Deputy Administrator; or
    (2) Marginal pasture land, as determined by the Deputy 
Administrator, that:
    (i) Is enrolled in the crop year or has been enrolled during any of 
the 2 years preceding the crop year in the WBP; and
    (A) The WBP contract of the owner or operator of the cropland 
expired or will expire in calendar year 2000, 2001, or 2002; and
    (B) The acreage is not classified as naturally occurring type 3 
through 7 wetlands, as determined by the Deputy Administrator, 
regardless of whether the acreage is or is not protected by a Federal 
agency easement or mortgage restriction (types 3 through 7 wetlands that 
are normally artificially flooded shall not be precluded from 
eligibility), and;
    (C) Enrollment in CRP would enhance the environmental benefits of 
the site, as determined by Deputy Administrator; or
    (ii) Is determined to be suitable for use as a riparian buffer. A 
field or portion of a field of marginal pasture land may be considered 
to be suitable for use as a riparian buffer only if, as determined by 
CCC, it:
    (A) Is located adjacent to permanent stream corridors excluding 
corridors that are considered gullies or sod waterways; and
    (B) Is capable, when permanent grass, forbs, shrubs, or trees, are 
grown, or when planted with appropriate vegetation for the area, 
including vegetation suitable for wetland restoration or wildlife 
habitat, as determined appropriate by the Deputy Administrator, of 
substantially reducing sediment and/or nutrient runoff that otherwise 
would be delivered to the adjacent stream or waterbody or for water 
quality purposes; or
    (3) Must be acreage enrolled in the CRP during the final year of the 
CRP contract provided the scheduled expiration date of the current CRP 
contract is before the effective date the new CRP contract, as 
determined by the Deputy Administrator.
    (b) Land qualifying under paragraphs (a)(1) or (a) (2) of this 
section must also meet one of the following criteria, to be eligible for 
a contract:
    (1) Be a field or portion of a field determined to be suitable for 
use, as determined by the Deputy Administrator, as a permanent wildlife 
habitat, filter strip, riparian buffer, contour grass strip, grass 
waterway, field windbreak, shelterbelt, living snowfence, other uses as 
determined by the Deputy Administrator, land devoted to vegetation on 
salinity producing areas, including any applicable recharge area, or any 
area determined eligible for CRP based on wetland or wellhead protection 
area criteria. A field or portion of a field may be considered to be 
suitable for use as a filter strip or riparian buffer only if it, as 
determined by CCC:
    (i) Is located adjacent to a stream, other waterbody of a permanent 
nature (such as a lake, pond, or sinkhole), or wetland; excluding such 
areas as gullies or sod waterways; and
    (ii) Is capable, when permanent grass, forbs, shrubs or trees are 
grown, of substantially reducing sediment or nutrient runoff that 
otherwise would be delivered to the adjacent stream or waterbody;
    (2) Be a field that has evidence of scour erosion caused by out-of-
bank flows of water, as determined by CCC:
    (i) In addition, such land must:
    (A) Be expected to flood a minimum of once every 10 years; and
    (B) Have evidence of scour erosion as a result of such flooding.
    (ii) To the extent practicable, be the actual affected cropland 
areas of a field; however, the entire cropland area of an eligible field 
may be enrolled if:

[[Page 341]]

    (A) The size of the field is 9 acres or less; or
    (B) More than one third of the cropland in the field is land that 
lies between the water source and the inland limit of the scour erosion.
    (iii) Or, if the full field is not eligible for enrollment under 
this paragraph, be the cropland between the waterbody and inland limit 
of the scour erosion together with, as determined by the Deputy 
Administrator, additional areas that would otherwise be unmanageable and 
would be isolated by the eligible areas.
    (iv) Be planted to an appropriate tree species according to the 
FOTG, unless tree planting is determined to be inappropriate by NRCS, in 
consultation with the Forest Service, in which case the eligible 
cropland shall be devoted to another acceptable permanent vegetative 
cover in accordance with the FOTG;
    (3) Be cropland that would facilitate a net savings in groundwater 
or surface water of the agricultural operation of the producer as 
determined by CCC;
    (4) Be cropland in a portion of a field not enrolled in the CRP, if 
more than 50 percent of the remainder of the field is enrolled as a 
buffer practice, if the portion of the field not enrolled in the CRP 
will be enrolled as part of the buffer practice, and if as determined by 
CCC:
    (i) The remainder of the field is infeasible to farm; and
    (ii) The remainder of the field is enrolled at an annual payment 
rate not to exceed the maximum annual calculated soil rental rate;
    (5) Be contributing to the degradation of water quality or posing an 
on-site or off-site environmental threat to water quality if such land 
remains in production;
    (6) Be devoted to certain covers, as determined by the Deputy 
Administrator, that are established and maintained according to the 
FOTG, provided such acreage is not required to be maintained as such 
under any life-span obligations, as determined by the Deputy 
Administrator;
    (7) Be non-irrigated or irrigated cropland that produces or serves 
as the recharge area, as determined by the Deputy Administrator, for 
saline seeps, or acreage that is functionally related to such saline 
seeps, or where a rising water table contributes to increased levels of 
salinity at or near the ground surface;
    (8) Have an EI of greater than or equal to 8 calculated by using the 
weighted average of the EI's of soil map units within the field;
    (9) Be within a public wellhead protection area;
    (10) Be within a designated conservation priority area;
    (11) Be designated as a cropped wetland and appropriate associated 
acreage, as determined by the Deputy Administrator;
    (12) Be cropland that, as determined by the Deputy Administrator, is 
associated with noncropped wetlands and would provide significant 
environmental benefits; or
    (13) Notwithstanding paragraph (a)(1) of this section, be cropland 
devoted to a perennial crop, as determined by CCC; such cropland will 
only be eligible for continuous signup practices authorized by Sec.  
1410.30 and CREP practices authorized by Sec.  1410.50(b).
    (c) Notwithstanding paragraphs (a) and (b) of this section, land 
shall be ineligible for enrollment if, as determined by the Deputy 
Administrator, land is:
    (1) Federally-owned land unless the applicant has a lease for the 
contract period;
    (2) Land on which the use of the land is restricted through deed or 
other restriction prior to enrollment in CRP prohibiting the production 
of agricultural commodities during any part of the contract term except 
for eligible land under paragraph (a)(2) and (3) of this section, as 
determined by CCC; or
    (3) Land already enrolled in the CRP unless authorized by Sec.  
1410.6(a)(3), as determined by the Deputy Administrator.



Sec.  1410.7  Duration of contracts.

    (a) Except as provided in paragraphs (b) or (c) of this section, 
contracts under this part shall be for a term of 10 years.
    (b) In the case of land devoted to riparian buffers, filter strips, 
restoration of wetlands, hardwood trees,

[[Page 342]]

shelterbelts, windbreaks, wildlife corridors, or other practices deemed 
appropriate by CCC under the original terms of a contract subject to 
this part or for land devoted to eligible practices under a contract 
modified under Sec.  1410.10, the participant may specify the duration 
of the contract between 10 years and 15 years in length.
    (c) All contracts shall expire on September 30 of the appropriate 
year.



Sec.  1410.8  Conservation priority areas.

    (a) CCC may designate National conservation priority areas according 
to paragraph (c) of this section.
    (b) Subject to CCC review, State FSA committees, in consultation 
with NRCS and the State Technical Committee, may designate conservation 
priority areas within guidelines established by the Deputy 
Administrator. Such designation must clearly define conservation and 
environmental objectives and provide analysis of how CRP can cost-
effectively address such objectives. Generally, the total acreage of all 
conservation priority areas, in aggregate, shall not total more than 33 
percent of the cropland in a State unless there are identified and 
documented extraordinary environmental needs, as determined by the 
Deputy Administrator.
    (c) As determined by the Deputy Administrator, a region shall be 
eligible for designation as a priority area only if the region has 
actual significant adverse water quality, air quality, wildlife habitat, 
or other natural resource impacts related to activities of agricultural 
production, or if the designation helps agricultural producers to comply 
with Federal and State environmental laws.
    (d) Conservation priority area designations shall expire after 5 
years unless re-designated, except they may be withdrawn:
    (1) At the request of the appropriate State water quality agency; or
    (2) By the Deputy Administrator.
    (e) In those areas designated as conservation priority areas, under 
this section, cropland is considered eligible for enrollment according 
Sec.  1410.6(b)(10) based on identified environmental concerns. These 
concerns may include water quality, such as assisting agricultural 
producers to comply with nonpoint source pollution requirements, air 
quality, or wildlife habitat (especially for threatened and endangered 
species or those species that may become threatened and endangered), as 
determined by the Deputy Administrator.



Sec.  1410.9  Conversion to trees.

    An owner or operator who has entered into a CRP contract prior to 
November 28, 1990, may elect to convert areas of highly erodible 
cropland, subject to such contract, that is devoted to permanent 
vegetative cover, from such cover to hardwood trees, (including alley 
cropping and riparian buffers of hardwood trees, where permitted by 
CCC), windbreaks, shelterbelts, or wildlife corridors.
    (a) For any contract modified under this section, the participant 
may elect to extend such contract in accordance with the provisions of 
Sec.  1410.7(b).
    (b) For any contract modified under this section in which such areas 
are converted to windbreaks, shelterbelts, or wildlife corridors, the 
owner must agree to maintain such plantings for a time period 
established by the Deputy Administrator at the time of the contract 
modification.
    (c) CCC shall, as it determines appropriate, pay up to 50 percent of 
the eligible cost of establishing new conservation measures authorized 
under this section, except that the total cost-share paid under such 
contract, including cost-share assistance paid when the original cover 
was established, may not exceed the amount by which CCC would have paid 
had such land been originally devoted to such new conservation measures.
    (d) For any contract modified under this section, the participant 
must participate in the Forest Stewardship Program (16 U.S.C. 2103a).



Sec.  1410.10  Restoration of wetlands.

    (a) An owner or operator who entered into a CRP contract on land 
that is suitable for restoration to wetlands or that was restored to 
wetlands while under such contract, may, if approved by CCC, subject to 
any restrictions as may be imposed by law, apply to transfer such 
eligible acres subject to such

[[Page 343]]

contract that are devoted to an approved cover from the CRP to the WRP. 
Transferred acreage shall be terminated from the CRP effective the day a 
WRP easement is filed. Participants will receive a prorated CRP annual 
payment for that part of the year the acreage was enrolled in the CRP 
according to Sec.  1410.42. Refunds of cost-share payments or applicable 
incentive payments need not be refunded unless specified by the Deputy 
Administrator.
    (b) An owner or operator who has enrolled acreage in the CRP may, as 
determined and approved by CCC, restore suitable acres to wetlands with 
cost-share assistance provided that Federal cost-share assistance has 
not been received for wetland restoration on the same land. In addition 
to the cost-share limitation in Sec.  1410.41, an additional one-time 
financial incentive may be provided to encourage restoration of the 
hydrology of the site.



Sec.  1410.11  Farmable Wetlands Program.

    (a) In addition to other allowable enrollments, land may be enrolled 
in this program through the Farmable Wetlands Program within the overall 
Conservation Reserve Program provided for in this part.
    (b) As determined by the Deputy Administrator, owners and/or 
operators may enroll cropland that has been planted or considered 
planted to an agricultural commodity, as defined in Sec.  1410.2 in 
three of the ten most recent crop years, provided that the cropland:
    (1) Is a wetland, including a converted wetland, as determined by 
CCC, that does not exceed the size limitations of this section; and
    (2) Subject to other provisions of this section, is buffer acreage 
that provides protection for and is contiguous to the wetland.
    (c) An owner or operator may not enroll in this program any wetland, 
or land in a flood plain, that:
    (1) Is located adjacent to a perennial riverine system wetland as 
identified on the final national wetland inventory map of the Department 
of the Interior; or
    (2) Is located adjacent to a perennial stream identified on a 1-
24,000 scale map of the United States Geological Survey, when the area 
is not delineated on a final national wetland inventory map.
    (d) Total enrollment in the CRP under this section shall not exceed 
1 million acres.
    (e) The maximum size of a wetland enrolled under this section shall 
be 10 contiguous acres of which only the first 5 acres shall be eligible 
for payments.
    (f) The maximum size of any buffer acreage described in paragraph 
(b)(2)(ii) of this section shall be the greater of:
    (1) An area three times the size of the wetland described in 
paragraph (b)(1) of this section; or
    (2) An area that continues no more than 150 feet from the edge of 
the wetland.
    (g) The maximum total acreage enrolled in the CRP under this 
section, including any wetland and buffer acreage described in paragraph 
(b)(2) of this section, in a tract, as determined by the Deputy 
Administrator, of an owner or operator, is 40 acres.
    (h) All participants subject to a CRP contract under this section 
must agree to restore the hydrology of the wetland described in 
paragraph (b)(1) of this section to the maximum extent possible, as 
determined by the Deputy Administrator, in accordance with the FOTG.
    (i) Offers for contracts under this section shall be submitted under 
continuous signup provisions as authorized in Sec.  1410.30.
    (j) Except as otherwise determined by the Deputy Administrator, all 
other requirements of this part shall apply to enrollments under this 
section, and the Deputy Administrator by contract or otherwise may add 
such other requirements or conditions as are deemed necessary. Such 
additional conditions include but are not limited to payment 
limitations, adjusted gross income limitations, and limitations on the 
amount of acreage that can be enrolled in any one county.



Sec. Sec.  1410.12-1410.19  [Reserved]



Sec.  1410.20  Obligations of participant.

    (a) All participants subject to a CRP contract must agree to:
    (1) Carry out the terms and conditions of such CRP contract;

[[Page 344]]

    (2) Implement the conservation plan, which is part of such contract, 
in accordance with the schedule of dates included in such conservation 
plan unless the Deputy Administrator determines that the participant 
cannot fully implement the conservation plan for reasons beyond the 
participant's control, and CCC agrees to a modified plan. However, a 
contract will not be terminated for failure to establish an approved 
vegetative or water cover on the land if, as determined by the Deputy 
Administrator:
    (i) The failure to plant or establish such cover was due to 
excessive rainfall, flooding, or drought;
    (ii) The land subject to the contract on which the participant could 
practicably plant or establish to such cover is planted or established 
to such cover; and
    (iii) The land on which the participant was unable to plant or 
establish such cover is planted or established to such cover after the 
wet or drought conditions that prevented the planting or establishment 
subside;
    (3) Establish temporary vegetative cover either when required by the 
conservation plan or, as determined by the Deputy Administrator, if the 
permanent vegetative cover cannot be timely established;
    (4) Comply with part 12 of this title;
    (5) Not allow grazing, harvesting, or other commercial use of any 
crop from the cropland subject to such contract except for those periods 
of time approved in accordance with instructions issued by the Deputy 
Administrator;
    (6) Establish and maintain the required vegetative or water cover 
and the required practices on the land subject to such contract and take 
other actions that may be required by CCC to achieve the desired 
environmental benefits and to maintain the productive capability of the 
soil throughout the contract period;
    (7) Comply with noxious weed laws of the applicable State or local 
jurisdiction on such land;
    (8) Control on land subject to such contract all weeds, insects, 
pests and other undesirable species to the extent necessary to ensure 
that the establishment and maintenance of the approved cover as 
necessary or may be specified in the CRP conservation plan and to avoid 
an adverse impact on surrounding land, taking into consideration water 
quality, wildlife, and other needs, as determined by the Deputy 
Administrator; and
    (9) Be jointly and severally responsible, if the participant has a 
share of the payment greater than zero, with the other contract 
participants in compliance with the provisions of such contract and the 
provisions of this part and for any refunds or payment adjustments that 
may be required for violations of any of the terms and conditions of the 
CRP contract and this part.



Sec.  1410.21  Obligations of the Commodity Credit Corporation.

    CCC shall, subject to the availability of funds:
    (a) Share up to 50 percent of the cost with participants of 
establishing eligible practices specified in the conservation plan at 
the levels and rates of cost-sharing determined in accordance with the 
provisions of this part; and
    (b) Pay to the participant for a period of years not in excess of 
the contract period an annual rental payment, including applicable 
incentive payments, in such amounts as may be specified in the CRP 
contract.



Sec.  1410.22  CRP conservation plan.

    (a) The producer shall obtain a CRP conservation plan that complies 
with CCC guidelines and is approved by the conservation district for the 
land to be entered in the CRP. If the conservation district declines to 
review the CRP conservation plan, or disapproves the conservation plan, 
such approval may be waived by CCC.
    (b) The practices included in the CRP conservation plan and agreed 
to by the participant must cost-effectively reduce erosion necessary to 
maintain the productive capability of the soil, improve water quality, 
protect wildlife or wetlands, protect a public well head, or achieve 
other environmental benefits as applicable.
    (c) If applicable, a tree planting plan shall be developed and 
included in the CRP conservation plan. Such tree planting plan may allow 
up to 3 years to complete plantings if 10 or more

[[Page 345]]

acres of hardwood trees are to be established.
    (d) If applicable, the CRP conservation plan shall address the goals 
included in the conservation priority area designation authorized under 
Sec.  1410.8.
    (e) All CRP conservation plans and revisions of such plans shall be 
subject to the approval of CCC.
    (f) Mid-cover management shall be conducted according to an approved 
conservation plan as part of the CRP contractual obligation such as 
light discing and burning as determined by the Deputy Administrator.



Sec.  1410.23  Eligible practices.

    (a) Eligible practices are those practices specified in the 
conservation plan that meet all standards needed to cost-effectively:
    (1) Establish permanent vegetative or water cover, including 
introduced or native species of grasses and legumes, forest trees, and 
permanent wildlife habitat;
    (2) Meet other environmental benefits, as applicable, for the 
contract period; and
    (3) Accomplish other purposes of the program.
    (b) Water cover is eligible cover for purposes of paragraph (a) of 
this section only if approved by the Deputy Administrator for purposes 
such as the enhancement of wildlife or the improvement of water quality. 
Such water cover shall not include ponds for the purpose of watering 
livestock, irrigating crops, or raising aquiculture for commercial 
purposes.



Sec. Sec.  1410.24-1410.29  [Reserved]



Sec.  1410.30  Signup.

    Offers for contracts shall be submitted only during signup periods 
as announced periodically by the Deputy Administrator, except that CCC 
may hold a continuous signup for land to be devoted to particular uses, 
as CCC deems necessary. Generally, continuous signup is limited to those 
offers that would otherwise rank highly under Sec.  1410.31(b) and may 
include high priority practices such as filter strips, riparian buffers, 
shelterbelts, field windbreaks, and living snow fences, grass waterways, 
shallow water areas for wildlife, salt-tolerant vegetation, and 
practices to benefit certain approved public wellhead protection areas.



Sec.  1410.31  Acceptability of offers.

    (a) Except as provided in paragraph (c) of this section, producers 
may submit offers for the amounts they are willing to accept as rental 
payments to enroll their acreage in the CRP. The offers may, to the 
extent practicable, be evaluated on a competitive basis in which the 
offers selected will be those where the greatest environmental benefits 
relative to cost are generated, and provided that the offer is not in 
excess of the maximum acceptable payment rate established by the Deputy 
Administrator for the for the area offered. Acceptance or rejection of 
any offer, however, shall be in the sole discretion of the CCC and 
offers may be rejected for any reason as determined needed to accomplish 
the goals of the program.
    (b) In evaluating contract offers, different factors, as determined 
by CCC, may be considered from time to time for priority purposes to 
accomplish the goals of the program. Such factors may include, but are 
not limited to:
    (1) Soil erosion;
    (2) Water quality (both surface and ground water);
    (3) Wildlife benefits;
    (4) Soil productivity;
    (5) Likelihood that enrolled land will remain in non-agriculture use 
beyond the contract period, considering, for example, tree planting, 
permanent wildlife habitat, or commitments by a participant to a State 
or other entity to extend the conservation plan;
    (6) Air quality; and
    (7) Cost of enrolling acreage in the program.
    (c) Acreage determined eligible for continuous signup, as provided 
in Sec.  1410.30, may be automatically accepted in the program if the:
    (1) Land is eligible under Sec.  1410.6, as determined by the Deputy 
Administrator;
    (2) A producer is eligible under Sec.  1410.5; and
    (3) A producer accepts either the maximum payment rate CCC is 
willing

[[Page 346]]

to offer to enroll the acreage in the program or a lesser rate.



Sec.  1410.32  CRP contract.

    (a) In order to enroll land in the CRP, the participant must enter 
into a contract with CCC.
    (b) The CRP contract is comprised of:
    (1) The terms and conditions for participation in the CRP;
    (2) The CRP conservation plan; and
    (3) Any other materials or agreements determined necessary by CCC.
    (c)(1) In order to enter into a CRP contract, the producer must 
submit an offer to participate as provided in Sec.  1410.30;
    (2) An offer to enroll land in the CRP shall be irrevocable for such 
period as is determined and announced by CCC. The producer shall be 
liable to CCC for liquidated damages if the applicant revokes an offer 
during the period in which the offer is irrevocable as determined by the 
Deputy Administrator. CCC may waive payment of such liquidated damages 
if CCC determines that the assessment of such damages, in a particular 
case, is not in the best interest of CCC and the program.
    (d) The CRP contract must, within the dates established by CCC, be 
signed by:
    (1) The producer; and
    (2) The owners of the cropland to be placed in the CRP and other 
eligible participants, if applicable.
    (e) The Deputy Administrator is authorized to approve CRP contracts 
on behalf of CCC.
    (f) CRP contracts may be terminated by CCC before the full term of 
the contract has expired if:
    (1) The owner loses control of or transfers all or part of the 
acreage under contract and the new owner does not wish to continue the 
contract;
    (2) The participant voluntarily requests in writing to terminate the 
contract and obtains the approval of CCC according to terms and 
conditions as determined by CCC;
    (3) The participant is not in compliance with the terms and 
conditions of the contract;
    (4) Acreage is enrolled in another Federal, State or local 
conservation program;
    (5) The CRP practice fails or is not established after a certain 
time period, as determined by the Deputy Administrator, and the cost of 
restoring the practice outweighs the benefits received from the 
restoration;
    (6) The CRP contract was approved based on erroneous eligibility 
determinations; or
    (7) CCC determines that such a termination is needed in the public 
interest.
    (g)(1) Contracts for land enrolled in CRP before January 1, 1995, 
that have been continuously in effect may be unilaterally terminated by 
all CRP participants on a contract except for contract acreage:
    (i) Located within a certain distance determined appropriate by the 
applicable FOTG of a perennial stream, or other permanent waterbody to 
reduce pollution and to protect surface and subsurface water quality;
    (ii) On which a CRP easement is filed;
    (iii) That is considered to be a wetland by USDA according to part 
12 of this title;
    (iv) Located within a wellhead protection area;
    (v) That is subject to frequent flooding, as determined by the 
Deputy Administrator;
    (vi) That may be required to serve as a wetland buffer according to 
the FOTG to protect the functions and values of a wetland; or
    (vii) On which there exist one or more of the following practices, 
installed or developed as a result of participation in the CRP or as 
otherwise required by the conservation plan:
    (A) Grass waterways;
    (B) Filter strips;
    (C) Shallow water areas for wildlife;
    (D) Bottom land timber established on wetlands;
    (E) Field windbreaks; and
    (F) Shelterbelts.
    (2) With respect to terminations under this paragraph:
    (i) Any land for which an early termination is sought by the 
participant must have an EI of 15 or less;
    (ii) The termination shall become effective 60 days from the date 
the participant submits notification to CCC of the participant's desire 
to terminate the contract;

[[Page 347]]

    (iii) Acreage terminated under this provision is eligible to be re-
offered for CRP during future signup periods, provided that the acreage 
otherwise meets the current eligibility criteria; and
    (iv) Participants must meet conservation compliance requirements of 
part 12 of this title to the extent applicable to other land.
    (h) Except as allowed and approved by CCC where the new owner of 
land enrolled in CRP is a Federal agency that agrees to abide by the 
terms and conditions of the terminated contract, the participant in a 
contract that has been terminated must refund all or part of the 
payments made with respect to the contract plus interest thereon, as 
determined by CCC, and shall pay liquidated damages as provided for in 
the contract. CCC may permit the amount to be repaid to be reduced to 
the extent that such a reduction will not impair the purposes of the 
program. Further, a refund of all payments need not be required from a 
participant who is otherwise in full compliance with the CRP contract 
when the land is purchased by or for the United States, as determined by 
CCC.



Sec.  1410.33  Contract modifications.

    (a) As agreed between CCC and the participant, a CRP contract may be 
modified in order to:
    (1) Decrease acreage in the CRP;
    (2) Permit the production of an agricultural commodity under 
extraordinary circumstances during a crop year on all or part of the 
land subject to the CRP contract as determined by the Deputy 
Administrator;
    (3) Facilitate the practical administration of the CRP; or
    (4) Accomplish the goals and objectives of the CRP, as determined by 
the Deputy Administrator.
    (b) CCC may modify CRP contracts to add, delete, or substitute 
practices when, as determined by the Deputy Administrator:
    (1) The installed practice failed to adequately provide for the 
desired environmental benefit through no fault of the participant; or
    (2) The installed measure deteriorated because of conditions beyond 
the control of the participant; and
    (3) Another practice will achieve at least the same level of 
environmental benefit.
    (c) Offers to extend contracts may be made as allowed by law.
    (d) CCC may terminate a CRP contract if the participant agrees to 
such termination and CCC determines such termination to be in the public 
interest.



Sec. Sec.  1410.34-1410.39  [Reserved]



Sec.  1410.40  Cost-share payments.

    (a) Cost-share payments shall be made available upon a determination 
by CCC that an eligible practice, or an identifiable unit thereof, has 
been established in compliance with the appropriate standards and 
specifications.
    (b) Except as otherwise provided for in this part, cost-share 
payments may be made only for the cost-effective establishment or 
installation of an eligible practice, as determined by CCC.
    (c) Except as provided in paragraph (d) of this section, cost-share 
payments shall not be made to the same owner or operator on the same 
acreage for any eligible practices that have been previously 
established, or for which such owner or operator has received cost-share 
assistance from any Federal agency.
    (d) Except as provided for under Sec.  1410.9(c), cost-share 
payments may be authorized for the replacement or restoration of 
practices for which cost-share assistance has been previously allowed 
under the CRP, only if:
    (1) Replacement or restoration of the practice is needed to achieve 
adequate erosion control, enhance water quality, wildlife habitat, or 
increase protection of public wellheads; and
    (2) The failure of the original practice was due to reasons beyond 
the control of the participant.
    (e) The cost-share payment made to a participant shall not exceed 
the participant's actual contribution to the cost of establishing the 
practice and the amount of the cost-share may not be an amount that, 
when added to such assistance from other sources, exceeds the cost of 
the practices.
    (f) CCC shall not make cost-share payments with respect to a CRP 
contract if any other Federal cost-share

[[Page 348]]

assistance has been, or is being, made with respect to the establishment 
of the cover crop on land subject to such contract.



Sec.  1410.41  Levels and rates for cost-share payments.

    (a) As determined by the Deputy Administrator, CCC shall not pay 
more than 50 percent of the actual or average cost of establishing 
eligible practices specified in the conservation plan. CCC may allow 
cost-share payments for maintenance costs, consistent with the 
provisions of Sec.  1410.40 and CCC may determine the period and amount 
of such cost-share payments.
    (b) The average cost of performing a practice may be determined by 
CCC based on recommendations from the State Technical Committee. Such 
cost may be the average cost in a State, a county, or a part of a State 
or county, as determined by the Deputy Administrator.
    (c) Except as otherwise provided, a participant may, in addition to 
any payment under this part, receive cost-share assistance, rental 
payments, or tax benefits from a State or a private organization in 
return for enrolling lands in CRP. However, as provided under Sec.  
1410.40(f), a participant may not receive or retain CRP cost-share 
assistance if other Federal cost-share assistance is provided for such 
acreage, as determined by the Deputy Administrator. Further, under no 
circumstances may the cost-share payments received under this part, or 
otherwise, exceed the cost of the practice, as determined by CCC.



Sec.  1410.42  Annual rental payments.

    (a) Subject to the availability of funds, annual rental payments 
shall be made in such amount and in accordance with such time schedule 
as may be agreed upon and specified in the CRP contract.
    (b) Annual rental payments, except for land accepted that was 
formerly enrolled under the WBP, include a payment based on a weighted 
average soil rental rate or marginal pastureland rental rate, as 
appropriate, and an incentive payment as a portion of the annual payment 
of certain practices, as determined by the Deputy Administrator. 
Payments for land accepted that was formerly enrolled under the WBP are 
limited to annual rental payments received under the WBP.
    (c) The annual rental payment shall be divided among the 
participants on a single contract as agreed to in such contract.
    (d) The maximum amount of rental payments that a person may receive 
under the CRP for any fiscal year shall not exceed $50,000. The 
regulations set forth at part 1400 of this chapter shall be applicable 
in making eligibility and ``person'' determinations as they apply to 
payment limitations under this part.
    (e) In the case of a contract succession, annual rental payments 
shall be divided between the predecessor and the successor participants 
as agreed to among the participants and approved by CCC. If there is no 
agreement among the participants, annual rental payments shall be 
divided in such manner deemed appropriate by the Deputy Administrator 
and such distribution may be prorated based on the actual days of 
ownership of the property by each party.
    (f) CCC shall, when appropriate, prepare a schedule for each county 
that shows the maximum soil rental rate CCC may pay which may be 
supplemented to reflect special contract requirements. As determined by 
the Deputy Administrator, such schedule will be calculated based on the 
relative productivity of soils within the county using NRCS data and 
local FSA average cash rental estimates. The schedule will be available 
in the local FSA office and, as determined by the Deputy Administrator, 
shall indicate, when appropriate, that:
    (1) Offers of contracts by producers who request rental payments 
greater than the schedule for their soil(s) will be rejected;
    (2) Offers of contracts submitted under continuous signup authorized 
at Sec.  1410.30 may be accepted without further evaluation when the 
requested rental rate is less than or equal to the calculated weighted 
soil rental rate, based on the three predominant soils listed; and

[[Page 349]]

    (3) Otherwise qualifying offers shall be ranked competitively based 
on factors established under Sec.  1410.31 of this part in order to 
provide the most cost-effective environmental benefits, as determined by 
the Deputy Administrator.
    (g) Additional financial incentives may be provided to producers who 
offer contracts expected to provide especially high environmental 
benefits, as determined by the Deputy Administrator.



Sec.  1410.43  Method of payment.

    Except as provided in Sec.  1410.50, payments made by CCC under this 
part may be made in cash or other methods of payment in accordance with 
part 1401 of this chapter, unless otherwise specified by CCC.



Sec.  1410.44  Adjusted Gross Income.

    Benefits under this part shall not be available to persons whose 
adjusted gross income exceeds 2.5 million dollars annually as determined 
under the standards set out in part 1400 of this chapter which shall be 
applicable in making adjusted gross income determinations as they apply 
to the CRP.



Sec. Sec.  1410.45-1410.49  [Reserved]



Sec.  1410.50  Enhancement programs.

    (a) For contracts to which a State, political subdivision, or agency 
thereof, has succeeded in connection with an approved conservation 
reserve state enhancement program, payments shall be made in the form of 
cash only. The provisions that limit the amount of payments per year 
that a person may receive under this part shall not be applicable to 
payments received by such State, political subdivision, or agency 
thereof in connection with agreements entered into under such 
enhancement programs carried out by such State, political subdivision, 
or agency thereof that has been approved for that purpose by CCC.
    (b) CCC may enter into other conservation reserve enhancement 
program agreements in accordance with terms deemed appropriate by CCC, 
with a State, political subdivision, or agency thereof, to use the CRP 
to cost-effectively further specific conservation and environmental 
objectives of that State and the nation.



Sec.  1410.51  Transfer of land.

    (a)(1) If a new owner or operator purchases or obtains the right and 
interest in, or right to occupancy of, the land subject to a CRP 
contract, as determined by the Deputy Administrator, such new owner or 
operator, upon the approval of CCC, may become a participant to a new 
CRP contract with CCC for the transferred land.
    (2) For the transferred land, if the new owner or operator becomes a 
successor to the existing CRP contract, the new owner or operator shall 
assume all obligations of the CRP contract of the previous participant.
    (3) If the new owner or operator is approved as a successor to a CRP 
contract with CCC, then, except as otherwise determined appropriate by 
the Deputy Administrator:
    (i) Cost-share payments shall be made to the past or present 
participant who established the practice; and
    (ii) Annual rental payments to be paid during the fiscal year when 
the land was transferred shall be divided between the new participant 
and the previous participant in the manner specified in Sec.  1410.42.
    (b) If a participant transfers all or part of the right and interest 
in, or right to occupancy of, land subject to a CRP contract and the new 
owner or operator does not become a successor to such contract within 60 
days, or such other time as the Deputy Administrator determines to be 
appropriate, of such transfer, such contract shall be terminated with 
respect to the affected portion of such land and the original 
participant:
    (1) Forfeits all rights to any future payments for that acreage;
    (2) Shall refund all previous payments received under the contract 
by the participant or prior participants, plus interest, except as 
otherwise specified by the Deputy Administrator. The provisions of Sec.  
1410.32(h) shall apply.
    (c) Federal agencies acquiring property, by foreclosure or 
otherwise, that contains CRP contract acreage cannot be a party to the 
contract by succession. However, through an addendum

[[Page 350]]

to the CRP contract, if the current operator of the property is one of 
the contract participants, such operator may, as permitted by CCC, 
continue to receive payments under such contract if:
    (1) The property is maintained in accordance with the terms of the 
contract;
    (2) Such operator continues to be the operator of the property; and
    (3) Ownership of the property remains with such federal agency.



Sec.  1410.52  Violations.

    (a)(1) If a participant fails to carry out the terms and conditions 
of a CRP contract, CCC may terminate the CRP contract.
    (2) If the CRP contract is terminated by CCC in accordance with this 
paragraph:
    (i) The participant shall forfeit all rights to further payments 
under such contract and refund all payments previously received 
together, plus interest; and
    (ii) Pay liquidated damages to CCC in an amount as specified in the 
contract.
    (b) If the Deputy Administrator determines such failure does not 
warrant termination of such contract, the Deputy Administrator may 
authorize relief as the Deputy Administrator deems appropriate.
    (c) CCC may reduce a demand for a refund under this section to the 
extent CCC determines that such relief would be appropriate and will not 
deter the accomplishment of the goals of the program.



Sec.  1410.53  Executed CRP contract not in conformity with regulations.

    If, after a CRP contract is approved by CCC, it is discovered that 
such CRP contract is not in conformity with this part, these regulations 
shall prevail, and CCC may, at its sole discretion, terminate or modify 
the CRP contract, effective immediately or at a later date as CCC 
determines appropriate.



Sec.  1410.54  Performance based upon advice or action of the Department.

    The provisions of Sec.  718.8 of this chapter relating to 
performance based upon the action or advice of an authorized 
representative of the Department shall be applicable to this part, and 
may be considered as a basis to provide relief to persons subject to 
sanctions under this part to the extent that relief is otherwise 
required by this part.



Sec.  1410.55  Access to land under contract.

    (a) Any representative of the U.S. Department of Agriculture, or 
designee thereof, shall, for purposes related to this program, be 
provided by the offeror or participant as the case may be, with access 
to land that is:
    (1) The subject of an application for a contract under this part; or
    (2) Under contract or otherwise subject to this part.
    (b) For land identified in paragraph (a) of this section, the 
participant or producer shall provide such representatives with access 
to examine records for the land to determine land classification, 
erosion rates, or other purposes and to determine whether it is in 
compliance with the terms and conditions of the CRP contract.



Sec.  1410.56  Division of payments and provisions about tenants and 
sharecroppers.

    (a) Payments received under this part shall be divided as specified 
in the applicable contract and CCC shall ensure that producers who would 
have an interest in acreage being offered receive treatment that is 
equitable, as determined by the Deputy Administrator. CCC may refuse to 
enter into a contract when there is a disagreement among persons seeking 
enrollment as to a person's eligibility to participate in the contract 
as a tenant and there is insufficient evidence to indicate whether the 
person seeking participation as a tenant does or does not have an 
interest in the acreage offered for enrollment in the CRP.
    (b) CCC may remove an operator or tenant from a CRP contract when:
    (1) The operator or tenant requests in writing to be removed from 
the CRP contract;
    (2) The operator or tenant files for bankruptcy and the trustee or 
debtor in possession fails to affirm the contract, to the extent 
permitted by applicable bankruptcy laws;

[[Page 351]]

    (3) The operator or tenant dies during the contract period and the 
administrator of the estate fails to succeed to the contract within a 
period of time determined by the Deputy Administrator; or
    (4) A court of competent jurisdiction orders the removal from the 
CRP contract of the operator or tenant and such order is received by 
FSA, as determined by the Deputy Administrator.
    (c) In addition to paragraph (b) of this section, tenants shall 
maintain their tenancy throughout the contract period in order to remain 
on a contract. Tenants who fail to maintain tenancy on the acreage under 
contract, including failure to comply with applicable State law, may be 
removed from a contract by CCC. CCC shall assume the tenancy is being 
maintained unless notified otherwise by a party to contract.



Sec.  1410.57  Payments not subject to claims.

    Subject to part 1403 of this chapter, any cost-share or annual 
payment or portion thereof due any person under this part shall be 
allowed without regard to questions of title under State law, and 
without regard to any claim or lien in favor of any creditor, except 
agencies of the United States Government.



Sec.  1410.58  Assignments.

    Participants may assign the right to receive such cash payments, in 
whole or in part, as provided in part 1404 of this chapter.



Sec.  1410.59  Appeals.

    (a) Except as provided in paragraph (b) of this section, a 
participant or person seeking participation may appeal or request 
reconsideration of an adverse determination in accordance with the 
administrative appeal regulations at parts 11 and 780 of this title.
    (b) Determinations by NRCS assigned to make such determination for 
the Deputy Administrator may be appealed in accordance with procedures 
established under part 614 of this title or otherwise established by 
NRCS.



Sec.  1410.60  Scheme or device.

    (a) If CCC determines that a person has employed a scheme or device 
to defeat the purposes of this part, or any part, of any program, 
payment otherwise due or paid such person during the applicable period 
may be required to be refunded with interest thereon as determined 
appropriate by CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of cost-share 
assistance or annual rental payments, or obtaining a payment that 
otherwise would not be payable.
    (c) A new owner or operator or tenant of land subject to this part 
who succeeds to the contract responsibilities shall report in writing to 
CCC any interest of any kind in the land subject to this part that is 
retained by a previous participant. Such interest shall include a 
present, future, or conditional interest, reversionary interest, or any 
option, future or present, on such land, and any interest of any lender 
in such land where the lender has, will, or can legally obtain, a right 
of occupancy to such land or an interest in the equity in such land 
other than an interest in the appreciation in the value of such land 
occurring after the loan was made. Failure to fully disclose such 
interest shall be considered a scheme or device under this section.



Sec.  1410.61  Filing of false claims.

    If CCC determines that any participant has knowingly supplied false 
information or has knowingly filed a false claim, such participant shall 
be ineligible for payments under this part with respect to the program 
year in which the false information or claim was filed and the contract 
may be terminated, in which case a full refund of all prior payments may 
be demanded. False information or false claims include, but are not 
limited to, claims for payment for practices that do not comply with the 
conservation plan. Any amounts paid under these circumstances shall be 
refunded, together plus with interest as determined by CCC, and any 
amounts otherwise due to the participant shall be withheld. The remedies 
provided for in this section shall be in addition to any and all

[[Page 352]]

other remedies, criminal and/or civil, that may apply.



Sec.  1410.62  Miscellaneous.

    (a) Except as otherwise provided in this part, in the case of death, 
incompetency, or disappearance of any participant, any payments due 
under this part shall be paid to the participant's successor(s) under 
part 707 of this title.
    (b) Unless otherwise specified in this part, payments under this 
part shall be subject to the requirements of part 12 of this title 
concerning highly erodible land and wetland conservation and payments.
    (c) Any remedies permitted CCC under this part shall be in addition 
to any other remedy, including, but not limited to, criminal remedies, 
or actions for damages in favor of CCC, or the United States, as may be 
permitted by law; provided further the Deputy Administrator may add to 
the contract such additional terms as needed to enforce these 
regulations that shall be binding on the parties and may be enforced to 
the same degree as provisions of these regulations.
    (d) Absent a scheme or device to defeat the purpose of the program, 
when an owner loses control of CRP acreage due to foreclosure and the 
new owner chooses not to continue the contract in accordance with Sec.  
1410.51, refunds shall not be required from any participant on the 
contract to the extent that the Deputy Administrator determines that 
forgiving such repayment is appropriate in order to provide fair and 
equitable treatment.
    (e) Cropland enrolled in CRP shall be classified as cropland for the 
time period enrolled in CRP and, after the time period of enrollment, 
may be removed from such classification upon a determination by the 
county committee that such land no longer meets the definition in part 
718 of this title.
    (f) Research projects may be submitted by the State committee and 
authorized by the Deputy Administrator to further the purposes of CRP. 
The research projects must include objectives that are consistent with 
this part, provide economic and environmental information, not adversely 
affect local agricultural markets, and be conducted and monitored by a 
bona fide research entity, as determined by the Deputy Administrator.



Sec.  1410.63  Permissive uses.

    (a) Unless otherwise specified by the Deputy Administrator, no uses 
of any kind are authorized on designated CRP acreage during the contract 
period.
    (b) Commercial shooting preserves may be operated on CRP acreage 
provided:
    (1) The commercial shooting preserve is licensed by a State agency 
such as the State fish and wildlife agency or State department of 
natural resources;
    (2) The commercial shooting preserve is operated in a manner 
consistent with the applicable State agency rules governing commercial 
shooting preserves;
    (3) CRP cover is maintained according to the conservation plan; and
    (4) No barrier fencing or boundary limitations exist that prohibit 
wildlife access to or from the CRP acreage unless required by State law.
    (c) The following activities may be permitted on CRP enrolled land:
    (1) Managed haying and grazing, including the harvest of biomass:
    (i) In exchange for a reduction of the annual payment in an amount 
determined by the Deputy Administrator;
    (ii) Not to exceed once every three years after the CRP vegetative 
cover has been established; and
    (iii) According to an approved CRP conservation plan consistent with 
the conservation of soil, water quality, and wildlife habitat (including 
habitat during nesting and brood rearing seasons) and in accordance with 
FOTG standards.
    (2) Managed grazing that is incidental to the gleaning of crop 
residue, but only in exchange for a reduction in the annual rental 
payment, as determined appropriate by the Deputy Administrator.
    (3) Wind turbines on CRP land installed in numbers and locations as 
determined appropriate by the Deputy Administrator considering the 
location, size, and other physical characteristics of the land, the 
extent to which the land contains wildlife, wildlife habitat, and the 
purposes of the CRP.

[[Page 353]]

    (4) Spot grazing, if necessary for control of weed infestation, not 
to exceed a 30-day period according to an approved conservation plan, 
but only in exchange for a payment reduction determined by the Deputy 
Administrator.
    (5) Forestry maintenance such as pruning, thinning, and timber stand 
improvement on lands converted to forestry use only in accordance with a 
conservation plan and in exchange for an applicable reduction in the 
annual rental payment as determined by the Deputy Administrator.
    (6) The sale of carbon, water quality, or other environmental 
credits, as determined by the Deputy Administrator.



PART 1412--DIRECT AND COUNTER-CYCLICAL PROGRAM AND PEANUT QUOTA BUYOUT 
PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1412.101 Applicability.
1412.102 Administration.
1412.103 Definitions.
1412.104 Appeals.

     Subpart B--Establishment of Base Acres for a Farm for Covered 
                               Commodities

1412.201 Election of base acres.
1412.202 Failure to make election.
1412.203 Base acres and Conservation Reserve Program.
1412.204 Limitation of total base acreage on a farm.

   Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
                                Payments

1412.301 Direct payment yields for covered commodities, except soybeans 
          and other oilseeds.
1412.302 Direct payment yield for soybeans and other oilseeds.
1412.303 Payment yield for counter-cyclical payments for covered 
          commodities.
1412.304 Submitting production evidence.
1412.305 Incorrect or false production evidence.

   Subpart D--Direct and Counter-Cyclical Program Contract Terms and 
Enrollment Provisions for Covered Commodities 2002 through 2007 and for 
                       Peanuts 2003 through 2007.

1412.401 Direct and counter-cyclical program contract.
1412.402 Eligible producers.
1412.403 Reconstitutions.
1412.404 Notification of base acres.
1412.405 Reducing base acreage.
1412.406 Succession-in-interest to a direct and counter-cyclical program 
          contract.
1412.407 Planting flexibility.
1412.408 Redistributing base acreage.

    Subpart E--Financial Considerations Including Sharing Direct and 
                       Counter-Cyclical Payments.

1412.501 Limitation of direct and counter-cyclical payments.
1412.502 Direct payment provisions.
1412.503 Counter-cyclical payment provisions.
1412.504 Sharing of contract payments.
1412.505 Provisions relating to tenants and sharecroppers.

        Subpart F--Contract Violations and Diminution in Payments

1412.601 Contract Violations.
1412.602 Fruit, vegetable and wild rice acreage reporting violations.
1412.603 Contract Liability.
1412.604 Misrepresentation and scheme or device.
1412.605 Offsets and assignments.
1412.606 Acreage reports.
1412.607 Compliance with highly erodible land and wetland conservation 
          provisions.
1412.608 Controlled substance violations.

Subpart G--Establishment and Assignment of Peanut Base Acres and Yields 
                               for a Farm

1412.701 Determination of 4-year peanut acreage average.
1412.702 Determination of average peanut yield
1412.703 Assignment of average peanut yields and average peanut acreages 
          to farms.

                 Subpart H--Peanut Quota Buyout Program

1412.801 Applicability.
1412.802 Administration.
1412.803 Definitions.
1412.804 Appeals.
1412.805 Enrollment; special filing and payment provisions for persons 
          who are not the peanut quota holder of record.
1412.806 Eligible peanut quota holder.
1412.807 Contract provisions.
1412.808 Contract liability.
1412.809 Misrepresentation and scheme or device.
1412.810 Offsets and assignments.
1412.811 Other regulations.


[[Page 354]]


    Authority: 7 U.S.C. 7911-7918, 7951-7956; 15 U.S.C. 714b and 714c.



                      Subpart A--General Provisions

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.



Sec.  1412.101  Applicability.

    This part governs:
    (a) How crop acreage bases and farm program payment yields are 
established or updated by owners of a farm for the purpose of 
calculating direct and counter-cyclical payments for wheat, corn, grain 
sorghum, barley, oats, upland cotton, rice, peanuts, soybeans, sunflower 
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 
sesame seed, and other oilseeds, as determined and announced by the 
Commodity Credit Corporation (CCC), for the years 2002 through 2007;
    (b) The month in which producers on a farm may enter into annual 
Direct and Counter-cyclical Program (DCP) contracts with CCC for each of 
the years 2002 through 2007;
    (c) The month in which peanut producers may establish such bases and 
yields in order to receive 2002 direct and counter-cyclical payments; 
and
    (d) The month in which peanut producers may assign such bases and 
yields to a farm for each of the years 2003 through 2007.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]



Sec.  1412.102  Administration.

    (a) The program is administered under the general supervision of the 
Executive Vice-President, CCC, and shall be carried out by Farm Service 
Agency (FSA) State and county committees (State and county committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee shall take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee shall also:
    (1) Correct, or require a county committee to correct any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No provision or delegation to a State or county committee shall 
preclude the Executive Vice President, or a designee, from determining 
any question arising under the program or from reversing or modifying 
any determination made by a State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines, except statutory deadlines, and 
other non-statutory requirements in cases where lateness or failure to 
meet such other requirements does not adversely affect operation of the 
program.
    (f) A representative of CCC may execute the FSA forms entitled 
``Direct and Counter-Cyclical Program Contract''; and ``2002 Peanut 
Direct and Counter-Cyclical Program Contract'' only under the terms and 
conditions determined and announced by the Executive Vice President, 
CCC. Any contract that is not executed in accordance with such terms and 
conditions, including any purported execution prior to the date 
authorized by the Executive Vice President, CCC, is null and void and 
shall not be considered to be a contract between CCC and the operator or 
any other producer on the farm.



Sec.  1412.103  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the DCP. The terms defined in part 718 of 
this title and part 1400 of this chapter shall also be applicable, 
except where those definitions conflict with the definitions set forth 
in this section.
    Base acres means the number of acres established with respect to a 
covered commodity on a farm by the election made by the owner of the 
farm in accordance with subpart B of this part.
    Base acres for peanuts means the number of acres assigned to a farm 
by historic peanut producers in accordance with subpart G of this part.

[[Page 355]]

    Contract means the CCC-approved standard, uniform forms and 
appendixes specified by CCC which constitute the agreement for 
participation in the Direct and Counter-Cyclical Program, and the 2002 
Peanut Direct and Counter-Cyclical Program.
    Counter-cyclical payment means a payment made to eligible producers 
on a farm in accordance with subpart E of this part for covered 
commodities and peanuts and subpart G of this part for 2002 historic 
peanut producers.
    Covered commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, rice, soybeans, sunflower seed, rapeseed, canola, 
safflower, flaxseed, mustard seed, crambe, sesame seed, and other 
oilseeds as determined by the Secretary.
    DCP cropland means DCP cropland as defined in part 718 of this 
title.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Direct payment means a payment made to eligible producers on a farm 
for peanuts and covered commodities in accordance with subpart E and for 
2002 historic peanut producers under subpart G.
    Dry peas means Austrian, wrinkled seed, yellow, Umatilla, and green, 
excluding peas grown for the fresh, canning, or frozen market.
    Effective price means the price calculated by the Secretary in 
accordance with Sec.  1412.503 for covered commodities and peanuts to 
determine whether counter-cyclical payments are required to be made 
under that section for a crop year.
    Excess base acres means the number of base acres established on the 
farm that exceeds the total 2002 Production Flexibility Contract acres 
on the farm established under the Federal Agriculture Improvement and 
Reform Act of 1996.
    Historic peanut producer means a producer on a farm in the United 
States that planted or was prevented from planting peanuts during any or 
all of the 1998 through 2001 crop years.
    Marketing year means the 12-month period beginning in the calender 
year the crop is normally harvested as follows:
    (1) Barley, oats, wheat, canola, flax, and rapeseed: June 1-May 31;
    (2) Upland cotton, peanuts, and rice: August 1-July 31; and
    (3) Corn, grain sorghum, soybeans, sunflowers, safflower, and 
mustard: September 1-August 31.
    Other oilseeds means a crop of sunflower seed, rapeseed, canola, 
safflower, flaxseed, mustard seed, crambe, sesame seed, or, if 
determined and announced by CCC, another oilseed.
    Payment acres means:
    (1) For the 2002 crop year, 85 percent of the average acres 
determined in accordance with Sec.  1412.701 for a historic peanut 
producer.
    (2) For the 2003 through 2007 crop years, 85 percent of the base 
acres for peanuts assigned to a farm in accordance with Sec.  1412.703.
    (3) For the 2002 through 2007 crop years, 85 percent of the base 
acres of a covered commodity on a farm, as established in accordance 
with subpart B.
    Payment yield means:
    (1) For peanuts, the yield determined in accordance with Sec.  
1412.702.
    (2) For covered commodities, the yield established in accordance 
with subpart C for a farm for a covered commodity.
    Prevented planted means, for the purpose of establishing base acres 
under Sec.  1412.201, the inability to plant a crop with proper 
equipment during the established planting period for the crop or 
commodity. A producer must prove that the producer intended to plant the 
crop and that such crop could not be planted due to a natural disaster 
rather than managerial decisions. The natural disaster that caused the 
prevented planting must have occurred during the established planting 
period for the crop.
    Target price means, for peanuts, the price per ton; and for covered 
commodities, the price per bushel (or other appropriate unit in the case 
of upland cotton, rice, and other oilseeds) used to determine the 
payment rate for counter-cyclical payments.
    Updated payment yield means the payment yield of covered 
commodities, elected by the owner of a farm under Sec.  1412.303, to be 
used in calculating the

[[Page 356]]

counter-cyclical payments for the farm.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]



Sec.  1412.104  Appeals.

    A producer may obtain reconsideration and review of any adverse 
determination made under this part in accordance with the appeal 
regulations found at parts 11 and 780 of this title.



     Subpart B--Establishment of Base Acres for a Farm for Covered 
                               Commodities

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.



Sec.  1412.201  Election of base acres.

    (a) No later than April 1, 2003, owners on a farm may select one of 
the following methods to establish base acres for all covered 
commodities on the farm:
    (1) Subject to the limitations in accordance with paragraph (d) of 
this section and Sec.  1412.204, the base acres for each covered 
commodity shall be equal to the sum of the following:
    (i) For each covered commodity, the 4-year average of the acreage 
planted to the covered commodity during each of the 1998 through 2001 
crop years for harvest, grazing, haying, silage, or other similar 
purposes, as determined by the Secretary, plus
    (ii) For each covered commodity, the 4-year average of the acreage 
prevented from being planted to covered commodities during each of the 
1998 through 2001 crop years, for reasons beyond the control of the 
producer, as determined by the Deputy Administrator.
    (2) The sum of the following:
    (i) For each covered commodity, the contract acreage used to 
calculate the fiscal year 2002 Production Flexibility Contract payment 
for the covered commodity on the farm in accordance with the regulations 
of this part in effect on January 1, 2002 (see 7 CFR part 1412 revised 
as of January 1, 2002), plus
    (ii) Subject to paragraphs (b) and (c) of this section, the 4-year 
average of eligible oilseed acreage on the farm for the 1998 through 
2001 crop years, as determined in a manner provided in paragraph (a)(1) 
of this section, except that the limitation in paragraph (d) of this 
section shall not apply.
    (b) Subject to paragraph (c) of this section, the total acreage of 
soybeans and other oilseeds on the farm calculated in accordance with 
paragraph (a)(2)(ii) of this section shall not exceed:
    (1) The total acreage determined in accordance with paragraph (a)(1) 
of this section for the crop year, minus
    (2) The total contract acreage for all covered commodities 
determined in accordance with paragraph (a)(2)(i) of this section.
    (c) If the calculation in paragraph (b) of this section results in a 
negative number, the soybean and other oilseed acreage on the farm for 
that crop year shall be zero for the purposes of determining the 4-year 
average, in accordance with paragraph (a)(2)(ii) of this section.
    (d) If the acreage planted or prevented from being planted was 
devoted to a different covered commodity in the same crop year (other 
than a covered commodity produced under an established practice of 
double-cropping), the owner may select the commodity to be used for base 
purposes for that crop year in determining the 4-year average, but shall 
not select both the initial commodity and subsequent commodity.
    (e)(1) An owner may increase the eligible acres of soybeans and 
other oilseeds on a farm by reducing the contract acreage determined in 
accordance with paragraph (a)(2)(i) of this section for one or more 
covered commodities on an acre-for-acre basis, except that the total 
base acreage for soybeans and each other oilseed on the farm may not 
exceed the four-year average of each oilseed determined under paragraph 
(a)(2)(ii) of this section.
    (2) For the purpose of determining a 4-year average acreage for a 
farm under this section, any crop year in which a covered commodity was 
not planted shall not be excluded.
    (f) For the purposes of this section, acreage planted, or prevented 
from being planted, to popcorn shall be considered as acreage planted to 
corn.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]

[[Page 357]]



Sec.  1412.202  Failure to make election.

    If an owner fails to make an election for establishing base acres on 
a farm by April 1, 2003 in accordance with Sec.  1412.201, that owner 
shall be deemed to have made the election to determine all base acres 
for all covered commodities on the farm as set forth in Sec.  
1412.201(a)(2).



Sec.  1412.203  Base acres and Conservation Reserve Program.

    (a) Subject to paragraphs (d) and (e) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of crop acreage base acres protected by a Conservation 
Reserve Program contract entered into under section 1231 of the Food 
Security Act of 1985 (1985 Act) that expired or was voluntarily 
terminated on or after May 13, 2002.
    (b) Subject to paragraphs (d) and (e) of this section, eligible 
producers may, at the beginning of each fiscal year, adjust the base 
acres for covered commodities and peanuts with respect to the farm by 
the number of cropland acres reduced by a producer on a CCC-approved 
standard, uniform form designated by CCC in order to enroll such acres 
in a conservation reserve program contract entered into under section 
1231 of the 1985 Act. Eligible producers may adjust base acres only when 
the Conservation Reserve Program contract entered into under section 
1231 of the 1985 Act expires or is voluntarily terminated on or after 
May 13, 2002.
    (c) Subject to paragraphs (d) and (e) of this section, if neither 
paragraphs (a) nor (b) of this section apply, the Deputy Administrator 
may allow eligible producers to adjust base acres for covered 
commodities and peanuts with respect to the farm in a manner determined 
acceptable by the Deputy Administrator when a Conservation Reserve 
Program contract entered into under section 1231 of the 1985 Act expires 
or is voluntarily terminated on or after May 13, 2002.
    (d) The total base acreage on a farm shall not exceed the limitation 
in accordance with Sec.  1412.204.
    (e) Adjustments to base acreage on a farm in accordance with this 
section must be completed by no later than April 1 of the fiscal year 
following the fiscal year the conservation reserve program contract 
expired or was voluntarily terminated.
    (f) For the fiscal year in which an adjustment to base acres under 
this section is made, the owner of the farm shall elect to receive 
either direct payments and counter-cyclical payments with respect to the 
base acres added to the farm under this section or a prorated payment 
under the conservation reserve contract, but not both.



Sec.  1412.204  Limitation of total base acreage on a farm.

    (a) The sum of the following shall not exceed the total DCP cropland 
acreage on the farm, plus approved double-cropped acreage for the farm:
    (1) The sum of all base acres established for the farm in accordance 
with this subpart, plus
    (2) Any base acres established for the farm for peanuts in 
accordance with subpart G of this part, plus
    (3) Any cropland acreage on the farm enrolled in a conservation 
reserve program contract in accordance with part 1410 of this chapter, 
plus
    (4) Any cropland acreage on the farm enrolled in a wetland reserve 
program contract in accordance with part 1467 of this chapter, plus
    (5) Any other acreage on the farm enrolled in a conservation program 
for which payments are made in exchange for not producing an 
agricultural commodity on the acreage.
    (b) The Deputy Administrator shall give the owner of the farm the 
opportunity to select the covered commodity base acres or peanut base 
acres, against which the reduction required in this section will be 
made.
    (c) In applying paragraph (a) of this section, CCC will take into 
account the practice of double cropping on a farm, as determined by CCC.



   Subpart C--Establishment of Yields for Direct and Counter-Cyclical 
                                Payments

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.

[[Page 358]]



Sec.  1412.301  Direct payment yields for covered commodities, except 
soybeans and other oilseeds.

    (a)(1) The direct payment yield for each covered commodity, except 
soybeans and other oilseeds, shall be the payment yield established for 
the commodity for the farm in accordance with the regulations for feed 
grain, rice, upland cotton and extra long staple cotton, wheat and 
related programs at part 1413 of this chapter in effect on January 1, 
1996 (see 7 CFR part 1413, revised as of January 1, 1996). CCC shall 
adjust the payment yield to reflect the additional payments made in 
accordance with 7 CFR 1413.15.
    (2) In the case of a farm for which a payment yield in accordance 
with paragraph (a)(1) of this section is unavailable for a covered 
commodity, except soybeans and other oilseeds, the county committee 
shall assign a payment yield for such covered commodity on the farm 
based upon the direct payment yield for such covered commodity on at 
least three similar farms physically located in the county with similar 
yield capability, including similar land and cultural practices.
    (i) If fewer than three similar farms are physically located in the 
county, the State committee shall assign a payment yield for such 
covered commodity based upon the direct payment yield for such covered 
commodity on at least three similar farms in the surrounding area with 
similar yield capability, including similar land and cultural practices, 
or as determined by the Deputy Administrator.
    (ii) Payment yields of similar farms shall be based on the farms' 
payment yields before such yields are updated in accordance with this 
section.
    (b) For the purposes of this section popcorn shall beconsidered as 
corn.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]



Sec.  1412.302  Direct payment yield for soybeans and other oilseeds.

    (a) The direct payment yield for soybeans and each other oilseed for 
the farm shall be determined by multiplying the weighted average yield 
per planted acre for the crop on the farm, as determined in accordance 
with paragraph (b) of this section, times the ratio resulting from:
    (1) The national average yield for the crop for the 1981 through 
1985 crop years, as determined by CCC, divided by
    (2) The national average yield for the crop for the 1998 through 
2001 crop years, as determined by CCC.
    (b)(1) The yield per planted acre for soybeans and each other 
oilseed on the farm, to be used for direct payment purposes, is 
calculated as follows:
    (i) The sum of the production of the crop for the 1998 through 2001 
crop years, as determined in accordance with paragraph (b)(2) of this 
section; divided by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years shall be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case the 
production for the crop for such year shall be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.  1412.304; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) harvested 
acreage yields for the crop using the 1998 through 2001 crop years.
    (3) The NASS harvested acreage yield to be used in paragraph (b)(2) 
of this section shall be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties

[[Page 359]]

for which the yields in paragraphs (b)(3)(i) and (ii) of this section 
are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator shall assign a yield to be used in paragraph 
(b)(2)(ii)(B) of this section.



Sec.  1412.303  Payment yield for counter-cyclical payments for covered 
commodities.

    (a)(1) The counter-cyclical payment yield for covered commodities on 
the farm shall be equal to the direct payment yield for the covered 
commodity on the farm unless the owner elects to partially update the 
yield for all covered commodities on the farm in accordance with 
paragraph (b) of this section.
    (2) Only owners who establish base acres for the farm in accordance 
with Sec.  1412.201(a)(1) shall have the opportunity to partially update 
the counter-cyclical payment yield for the covered commodities on the 
farm.
    (3) The partially updated yield shall be used for the calculation of 
the counter-cyclical payments only. The partially updated counter-
cyclical yield shall not be used for the calculation of any direct 
payments for any covered commodity.
    (4) Owners who elect to partially update counter-cyclical payment 
yields in accordance with this section must:
    (i) Make such election at the same time such owner makes the base 
election in accordance with Sec.  1412.201; and
    (ii) Update counter-cyclical payment yields for all covered 
commodities on the farm using the same method. Updating counter-cyclical 
payment yields for fewer than all covered commodities on the farm is not 
allowed. Updating counter-cyclical payment yields for covered 
commodities on a farm using different methods for different covered 
commodities is not allowed.
    (b) Owners on a farm who established base acres for the farm in 
accordance with Sec.  1412.201(a)(1) may select one of the following 
methods to partially update counter-cyclical payment yields for all 
covered commodities on the farm. The same method must be used to 
partially update the counter-cyclical payment yield for all covered 
commodities on the farm.
    (1) The sum of the following:
    (i) The payment yield calculated for the covered commodity in 
accordance with Sec. Sec.  1412.301 or 1412.302, as applicable, plus
    (ii) 70 percent of the result of:
    (A) The average yield per planted acre for the crop on the farm, as 
determined in accordance with paragraph (c) of this section, minus
    (B) The payment yield calculated for the covered commodity in 
accordance with Sec. Sec.  1412.301 or 1412.302, as applicable.
    (2) 93.5 percent of the average yield per planted acre for the crop 
on the farm, as determined in accordance with paragraph (c) of this 
section.
    (c)(1) The yield per planted acre for covered commodities on the 
farm is calculated as follows:
    (i) The sum of the production of the crop for 1998 through 2001 crop 
years, as determined in accordance with paragraph (c)(2) of this 
section, divided by
    (ii) The sum of the total planted acres of the crop for the 1998 
through 2001 crop years.
    (2) The production of the crop for each of the 1998 through 2001 
crop years shall be the higher of the following, except in a year in 
which the acreage planted to the crop was zero, in which case, the 
production for the crop for such year shall be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec.  1412.304; or
    (ii) The amount equal to the product of:
    (A) The total planted acres for the crop, times
    (B) 75 percent of the harvested average county yield for that crop 
determined, where practicable, by calculating the weighted 4-year 
average of the National Agricultural Statistics Service (NASS) harvested 
acreage yields for the crop using the 1998 through 2001 crop years.
    (3) The NASS harvested acreage yield to be used in paragraph (c)(2) 
of this section shall be based on:
    (i) NASS harvested irrigated yield for the crop, if available, for 
producers

[[Page 360]]

who irrigated the crop in the applicable years;
    (ii) NASS harvested non-irrigated yield for the crop, if available, 
for producers who did not irrigate the crop in the applicable years; or
    (iii) NASS harvested blended yield for all acreage, regardless of 
whether or not the acres were irrigated or non-irrigated, for all crops 
in all counties where the yields in paragraphs (c)(3)(i) and (ii) of 
this section are unavailable.
    (4) If NASS harvested acreage yield data is not available, the 
Deputy Administrator shall assign a yield to be used in paragraph 
(c)(2)(ii)(B) of this section.



Sec.  1412.304  Submitting production evidence.

    (a)(1) Reports of production evidence must be submitted by producers 
when the owner elects to:
    (i) Partially update the yield for all covered commodities on the 
farm in accordance with Sec.  1412.303; or
    (ii) Establish a direct payment yield for soybeans or other oilseeds 
for the farm in accordance with Sec.  1412.302.
    (2) Producer or third-party certification shall not be accepted as 
proof of production evidence.
    (3) Reports of production evidence for all covered commodities shall 
be provided to the county committee of the county where the farm is 
administratively located, by farm and crop in such manner as required by 
CCC on a CCC-approved standard, uniform form designated by CCC.
    (b)(1) When disposition of production has been through commercial 
channels, CCC may require the producer to furnish documentary evidence 
in order to verify the information provided on the report of production. 
Acceptable evidence may include, but is not limited to, such items as:
    (i) Production approved by the county committee for Loan Deficiency 
Payments;
    (ii) Commercial receipts;
    (iii) Gin records;
    (iv) Settlement sheets;
    (v) Warehouse ledger sheets;
    (vi) Elevator receipts or load summaries, supported by other 
evidence showing disposition, such as sales documents;
    (vii) Evidence from harvested or appraised acreage, approved for 
FCIC or multi-peril crop insurance loss adjustment settlement; or
    (viii) Other production evidence determined acceptable by the Deputy 
Administrator.
    (2) Such production evidence must show:
    (i) The producer's name,
    (ii) The commodity,
    (iii) The buyer or name of storage facility,
    (iv) The Date of transaction or delivery, and
    (v) The quantity.
    (c) When production of a covered commodity has been disposed of 
through non-commercial channels, such as used for feed, grazing, or 
silage, if Loan Deficiency Payments are not available, but crop 
insurance records or other FSA records indicate that the use of the crop 
was for silage, hay, or grazing, then county committee will assign 
production for that year based on the actual grain yield of three 
similar farms for the applicable year. If producers cannot meet any of 
these requirements or their crop suffered a low yield, then 75 percent 
of the county average yield as determined in accordance with Sec.  
1412.302(b)(4) will be used.
    (d) CCC may verify the production evidence submitted with records on 
file at the warehouse, gin, or other entity which received or may have 
received the reported production.



Sec.  1412.305  Incorrect or false production evidence.

    (a) If production evidence is false or incorrect, as determined by 
the county committee, the county committee shall determine whether the 
owner or producer submitting the production evidence for a farm acted in 
good faith or took action to defeat the purpose of the program.
    (b)(1) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence did not act in good faith or took 
action to defeat the purpose of the program, the county committee shall:
    (i) Require a refund of all direct and counter-cyclical payments 
earned for

[[Page 361]]

the farm for the first year such payments were made;
    (ii) Reduce the counter-cyclical payment yields for all crops on the 
farm to equal the direct payment yield for all crops except oilseeds. 
For all oilseeds on the farm, both the direct and counter-cyclical 
payment yields shall be reduced to 75 percent of the county average 
yield as determined in accordance with Sec.  1412.302(b)(4). That yield 
shall then be reduced by the applicable direct payment yield factor in 
accordance with Sec.  1412.302(a)(1); and
    (iii) Subject to paragraph (a)(2)(i) of this section, require a 
refund of an amount equal to the following for each covered commodity 
and peanuts for each year the false, incorrect or unacceptable yield was 
used to make payments under the contract:
    (A) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (B) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (b)(1)(ii) 
of this section.
    (2) Notwithstanding paragraph (b)(1) of this section, if the county 
committee determines that the production evidence submitted is false, 
incorrect, or unacceptable, and the owner or producer who submitted the 
evidence did not act in good faith or took action to defeat the purpose 
of the program, the Deputy Administrator may take further action, 
including but not limited to any or all of the following:
    (i) Make a further yield reduction for part or all of the covered 
commodities and peanuts on the farm;
    (ii) Make further payment reductions or refunds;
    (iii) Determine that the owner or producer who submitted the 
evidence is ineligible for participation in future contracts; or
    (iv) Take other legal action.
    (c) If the county committee determines the production evidence 
submitted is false, incorrect, or unacceptable, and the owner or 
producer who submitted the evidence acted in good faith and did not take 
action to defeat the purpose of the program, the county committee shall:
    (1) Correct the counter-cyclical yield for the applicable crop to 
equal the yield that would have been calculated in accordance with Sec.  
1412.303 based on accurate production evidence; and
    (2) Require a refund of an amount equal to the following for each 
covered commodity and peanuts for each year the false, incorrect or 
unacceptable yield was used to make payments under the contract:
    (i) The sum of the direct and counter-cyclical payments made using 
the false, incorrect or unacceptable evidence, minus
    (ii) The sum of the direct and counter-cyclical payments that would 
have been made based on the yields established in paragraph (c)(1) of 
this section.



   Subpart D--Direct and Counter-Cyclical Program Contract Terms and 
Enrollment Provisions for Covered Commodities 2002 through 2007 and for 
                        Peanuts 2003 through 2007

    Source: 67 FR 64751, Oct. 21, 2002, unless othewise noted.



Sec.  1412.401  Direct and counter-cyclical program contract.

    (a)(1) With respect to Fiscal Year 2002 payments, CCC will offer to 
enter into a contract with eligible producers of covered commodities and 
historical peanut producers on October 1, 2002 through the date 
announced by CCC. With respect to Fiscal Years 2003 through 2007, CCC 
shall offer to annually enter into a contract with an eligible producer 
on a farm having base acreage with respect to a covered commodity; and 
for a farm with peanut base acreage and yield assigned in accordance 
with subpart G of this part, at the beginning of each such fiscal year 
2003 through 2007 through the date announced by CCC for each such year.
    (2)(i) Eligible producers may execute and submit a contract to the 
county FSA office where the records for the farm are administratively 
maintained not later than June 1 of the fiscal year in which the direct 
and counter-cyclical payments are requested.

[[Page 362]]

    (ii) Because CCC will incur additional expenses which may not be 
possible to quantify with certainty, including the additional cost to 
ensure payments are issued timely to all producers, a late signup fee in 
the amount of $100 per farm will be assessed by CCC for any farm 
enrolled after June 1 of the fiscal year in which the direct and 
counter-cyclical payments are requested unless the Deputy Administrator 
determines a waiver of the late signup fee is appropriate. Enrollment is 
not allowed after September 30 of the fiscal year in which the direct 
and counter-cyclical payments are requested.
    (3) Eligible producers who elect to enter into a contract with CCC 
must enroll all base acres on the farm. Enrollment of fewer than all 
base acres on the farm is not allowed.
    (b) Eligible producers may withdraw from a contract at any time on 
or before September 30 of the year of the contract provided all 
signatories to the contract, including CCC, agree to the withdraw.
    (c) All contracts shall expire on September 30 of the fiscal year of 
the contract unless:
    (1) Withdrawn in accordance with paragraph (b) of this section;
    (2) Terminated in accordance with paragraphs (d) or (e) of this 
section; or
    (3) Terminated at an earlier date by mutual consent of all parties, 
including CCC.
    (d) A transfer or change in the interest of a producer in base acres 
on the farm subject to a contract shall result in the termination of the 
contract with respect to such interest, and a refund of applicable 
direct and counter-cyclical payments issued for the farm. The contract 
termination shall be effective on the date of the transfer or change. 
Successors-in-interest on a farm subject to a contract may assume all 
obligations under the contract no later than September 30 of the 
contract year, and receive payment under the contract only after 
applicable direct and counter-cyclical payments previously issued to the 
predecessor for the farm have been refunded to CCC, or a debt for any 
amount not refunded to CCC has been established for the predecessor.
    (e) In the event a farm reconstitution is completed in accordance 
with part 718 of this title, all producers with an interest in the base 
acres on the farm must sign a new contract and provide supporting 
documentation as specified in part 12 of this title, and parts 1400, and 
1412 of this chapter not later than September 30 of the fiscal year 
direct and counter-cyclical payments are requested, after receiving 
written notification by the county committee indicating the 
reconstitution is completed. If all producers have not signed the new 
contract by September 30, no producers on the contract will be eligible 
for a direct or counter-cyclical payment for that farm for the year the 
contract was terminated.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]



Sec.  1412.402  Eligible producers.

    Producers eligible to enter into a contract are:
    (a)(1) An owner of a farm who assumes all or a part of the risk of 
producing a crop;
    (2) A producer, other than an owner, on a farm with a share-rent 
lease for such farm, regardless of the length of the lease, if the owner 
of the farm enters into the same contract;
    (3) A producer, other than an owner, on a farm who cash rents such 
farm under a lease expiring on or after September 30 of the year of the 
contract in which case the owner is not required to enter into the 
contract;
    (4) A producer, other than an owner, on an eligible farm who cash 
rents such farm under a lease expiring before September 30 of the year 
of the contract. The owner of such farm must also enter into the same 
contract; or
    (5) An owner of an eligible farm who cash rents such farm and the 
lease term expires before September 30 of the year of the contract, if 
the tenant declines to enter into a contract for the applicable year. In 
the case of an owner covered by this paragraph, direct and counter-
cyclical payments shall not begin under the contract until the lease 
held by the tenant ends.
    (b) A minor child shall be eligible to enter into a contract only if 
one of the following conditions exist:

[[Page 363]]

    (1) The right of majority has been conferred upon the minor by court 
proceedings or 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 a surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec.  1412.403  Reconstitutions.

    Farms shall be reconstituted in accordance with part 718 of this 
title.



Sec.  1412.404  Notification of base acres.

    The owner and all producers on a farm shall be notified in writing 
of the number of base acres eligible for enrollment in a contract, 
unless such owner or producer requests in writing that such owner or 
producer not be furnished with the notice.



Sec.  1412.405  Reducing base acreage.

    (a)(1) Subject to the limitation in paragraph (a)(ii) of this 
section, a permanent reduction of all or a portion of a farm's base 
acreage shall be allowed when all owners of the farm execute and submit 
a written request for such reduction on a CCC-approved standard, uniform 
form designated by CCC to the FSA county office where the records for 
the farm are administratively maintained.
    (2) A permanent reduction of all or a portion of a farm's base 
acreage to negate or reduce a program violation is not allowed.
    (b) When base acres on a farm are converted to a non-agricultural 
commercial or industrial use, the total base acreage on the farm shall 
be reduced accordingly regardless of the submission of a request for 
such reduction.



Sec.  1412.406  Succession-in-interest to a direct and counter-cyclical 
program contract.

    (a) A succession in interest to a contract may be permitted if there 
has been a change in the operation of a farm, such as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number of partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in producer shares to reflect changes in the producer's 
share of the crop(s) that were originally approved on the contract; or
    (5) As otherwise determined by the Deputy Administrator, if the 
succession will not adversely affect nor defeat the purpose of the 
program.
    (b) A succession in interest to the contract is not permitted if CCC 
determines that the change:
    (1) Results in a violation of the landlord-tenant provisions set 
forth in Sec.  1412.505; or
    (2) Adversely affects or otherwise defeats the purpose of the 
program.
    (c) If a producer who is entitled to receive direct and counter-
cyclical payments dies, becomes incompetent, or is otherwise unable to 
receive the payment, CCC will make the payment in accordance with part 
707 of this title.
    (d) A producer or owner must inform the county committee of changes 
in interest in base acres on the farm not later than:
    (1) August 1 of the fiscal year in which the change occurs if the 
change requires a reconstitution be completed in accordance with part 
718 of this title; or
    (2) September 30 of the fiscal year in which the change occurs if 
the change does not require a reconstitution be completed in accordance 
with part 718 of this title.
    (e)(1) In any case in which either a direct or counter-cyclical 
payment has previously been made to a predecessor, such payment shall 
not be paid to the successor unless payment has been refunded by the 
predecessor, or a debt for any amount not refunded to CCC has been 
established for the predecessor.
    (2) A succession in interest shall not increase the liability of 
CCC.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003]



Sec.  1412.407  Planting flexibility.

    (a) Any crop may be planted and harvested on base acreage on a farm, 
except as limited elsewhere in this section. Any crop may be planted on 
DCP

[[Page 364]]

cropland in excess of the base acreage on a farm.
    (b) Base acreage may be hayed or grazed at any time.
    (c) Harvesting non-perennial fruits, vegetables (except lentils, 
mung beans, and dry peas) or wild rice, as determined by the Deputy 
Administrator, or designee, is prohibited on base acreage of a farm 
enrolled in a contract. Planting perennial fruits, vegetables (except 
lentils, mung beans, and dry peas) or wild rice, as determined by the 
Deputy Administrator, is prohibited on base acreage of a farm enrolled 
in a contract.
    (d) Notwithstanding the provisions of paragraph (c) of this section, 
perennial fruits, vegetables and wild rice may be planted on base 
acreage of a farm enrolled in a contract, and non-perennial fruits, 
vegetables and wild rice may be harvested on base acreage of a farm 
enrolled in a contract if:
    (1) A producer double-crops fruits, vegetables or wild rice with a 
covered commodity or peanuts in any region described in paragraph (e) of 
this section, in which case direct and counter-cyclical payments will 
not be reduced for the planting or harvesting of the fruit, vegetable or 
wild rice;
    (2) The farm has a history of planting fruits, vegetables, or wild 
rice, as determined by the CCC, in any one of the crop years 1991 
through 1995 or 1998 through 2001, in which case the payment acres for 
the farm shall be reduced on an acre-for-acre basis; or
    (3) The producer has a history of planting a specific fruit, 
specific vegetable or wild rice, as determined by CCC, the producer may 
plant and harvest the specific fruit, specific vegetable or wild rice 
for which the producer has a planting history, subject to the following:
    (i) The acreage harvested shall not exceed the simple average of the 
sum of acreage of the specific fruit, specific vegetable or wild rice 
planted for harvest by the producer during the crop years 1991 through 
1995 or 1998 through 2001, but not both, as determined by the producer, 
excluding any year in which the specific fruit, specific vegetable or 
wild rice was not planted; and
    (ii) The payment acres for the farm shall be reduced on an acre-for-
acre basis;
    (e) Double-cropping for purposes of this section means planting for 
harvest fruits, vegetables or wild rice on the same acres in cycle with 
a covered commodity or peanuts planted and harvested for grain or lint 
in a 12-month period under normal growing conditions for the region and 
being able to repeat the same cycle in the following 12-month period. 
For purposes of this part, the following counties have been determined 
to be regions having a history of double-cropping covered commodities or 
peanuts with fruits, vegetables or wild rice. State committees have 
established the following counties as regions within their respective 
States:

                                 Alabama

    Baldwin, Barbour, Butler, Chambers, Chilton, Clarke, Covington, 
Cullman, Geneva, Greene, Houston, Jackson, Jefferson, Lee, Madison, 
Mobile, Montgomery, Randolph, Sumter, Talladega, Walker, and Washington.

                                 Alaska

    None.

                                Arkansas

    Ashley, Benton, Clay, Crawford, Cross, Faulkner, Franklin, 
Independence, Jackson, Jefferson, Lee, Lincoln, Logan, Lonoke, Phillips, 
Pulaski, St. Francis, Sebastian, Woodruff, and Yell.

                                 Arizona

    Cochise, Graham, Greenlee, LaPaz, Maricopa, Pima, Pinal, and Yuma..

                               California

    Alameda, Amador, Butte, Colusa, Contra Costa, Fresno, Glenn, 
Imperial, Kern, Kings, Madera, Merced, Riverside, Sacramento, San 
Benito, San Joaquin, Santa Clara, Siskiyou, Solano, Sonoma, Stanislaus, 
Sutter, Tehama, Tulare, Yolo, and Yuba.

                            Caribbean Office

    None.

                               Connecticut

    None.

                                Colorado

    None.

[[Page 365]]

                                Delaware

    Kent, New Castle, and Sussex.

                                 Florida

    All counties except Monroe.

                                 Georgia

    All counties.

                                 Hawaii

    None.

                                  Idaho

    None.

                                Illinois

    Bureau, Calhoun, Cass, Clark, Crawford, DeKalb, Edgar, Effingham, 
Gallatin, Iroquois, Jersey, Kankakee, Lawrence, LaSalle, Lee, Madison, 
Marion, Mason, Monroe, Randolf, St. Clair, Tazewell, Union, Vermilion, 
White, and Whiteside.

                                 Indiana

    Allen, Bartholemew, Gibson, Hamilton, Jackson, Knox, LaGrange, Lake, 
LaPorte, Madison, Miami, Posey, Sullivan, Vandenberg, and Warrick.

                                  Iowa

    Kossuth, Mitchell, Palo Alto, and Winnebago.

                                 Kansas

    None.

                                Kentucky

    Daviess.

                                Louisiana

    Avoyelles, Franklin, Grant, Morehouse, Rapides, and West Carroll.

                                  Maine

    None.

                                Maryland

    Baltimore, Calvert, Caroline, Carroll, Dorchester, Harford, Kent, 
Queen Annes, St. Mary's, Somerset, Talbot, Wicomico, and Worcester.

                              Massachusetts

    None.

                                Michigan

    None.

                                Minnesota

    Blue Earth, Brown, Carver, Cottonwood, Dakota, Dodge, Faribault, 
Fillmore, Freeborn, Goodhue, Houston, Kandiyohi, Le Sueur, Martin, 
McLeod, Meeker, Mower, Nicollet, Olmsted, Redwood, Renville, Rice, 
Scott, Sibley, Steele, Waseca, Wabasha, Watonwan, and Winona.

                               Mississippi

    Calhoun, Carroll, Coahoma, Covington, DeSoto, George, Humphreys, 
Jefferson Davis, Lowndes, Madison, Marshall, Monroe, Montgomery, 
Prentiss and Rankin.

                                Missouri

    Barton, Butler, Cape Girardeau, Dade, Dunklin, Jasper, Lawrence, 
Mississippi, New Madrid, Newton, Ripley, Scott, and Stoddard.

                                 Montana

    None.

                                Nebraska

    None.

                                 Nevada

    None.

                               New Jersey

    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Salem, Somerset, 
Sussex, and Warren.

                              New Hampshire

    None.

                               New Mexico

    Chaves, Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, Quay, Roosevelt, 
San Juan, and Sierra.

                                New York

    Orange and Suffolk.

                             North Carolina

    Beaufort, Bertie, Bladen, Brunswick, Cabarrus, Camden, Carteret, 
Caswell, Catawba, Chatham, Chowan, Cleveland, Columbus, Craven, 
Cumberland, Currituck, Dare, Duplin, Edgecombe, Franklin, Gaston, Gates, 
Granville, Greene, Halifax, Harnett, Hertford, Hoke, Hyde, Johnston, 
Jones, Lee, Lenoir, Lincoln, Martin, Mecklenburg, Montgomery, Moore, 
Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender, 
Perquimans, Pitt, Richmond, Robeson, Rockingham, Rutherford, Sampson, 
Scotland, Stokes, Tyrell, Union, Wake, Warren, Washington, Wayne, 
Wilkes, Wilson, and Yadkin.

                              North Dakota

    None.

[[Page 366]]

                                  Ohio

    Champaign, Clermont, Fulton, Lucas, Miami, Morgan, Muskingham, 
Scioto, and Stark.

                                Oklahoma

    Adair, Alfalfa, Beckham, Blaine, Bryan, Caddo, Canadian, Carter, 
Cherokee, Cleveland, Cotton, Custer, Delaware, Dewey, Ellis, Garfield, 
Garvin, Grady, Grant, Greer, Harmon, Haskell, Hughes, Jackson, 
Jefferson, Kay, Kingfisher, Kiowa, LeFlore, Logan, Love, McClain, 
McIntosh, Major, Marshall, Mayes, Muskogee, Noble, Nowata, Okmulgee, 
Osage, Pawnee, Payne, Pittsburg, Pottawatomie, Roger Mills, Rogers, 
Sequoyah, Stephens, Tillman, Tulsa, Wagoner, Washita, Woods, and 
Woodward.

                                 Oregon

    Benton, Clackamas, Columbia, Jackson, Josephine, Lane, Linn, Marion, 
Morrow, Multnomah, Polk, Umatilla, Washington, and Yamhill.

                              Pennsylvania

    Adams, Bucks, Centre, Chester, Clinton, Cumberland, Delaware, 
Franklin, Indiana, Lancaster, Montgomery, Northumberland, Schuylkill, 
and York.

                               Puerto Rico

    None.

                              Rhode Island

    None.

                             South Carolina

    All counties.

                              South Dakota

    None.

                                Tennessee

    Bledsoe, Cannon, Cocke, Coffee, Crockett, Dickson, Dyer, Fayette, 
Gibson, Giles, Greene, Grundy, Hardeman, Haywood, Jefferson, Knox, Lake, 
Lauderdale, Lawrence, Lincoln, Madison, Maury, Obion, Overton, Pickett, 
Rhea, Robertson, Rutherford, Sumner, Unicoi, VanBuren, Warren, 
Washington, Wayne, White, Williamson, and Wilson.

                                  Texas

    Atascosa, Bailey, Baylor, Brooks, Cameron, Castro, Cochran, Cottle, 
Dallam, Dawson, Deaf Smith, Dimmit, Duval, Floyd, Foard, Frio, Gaines, 
Hale, Hartley, Haskell, Hidalgo, Hockley, Jim Wells, Kleberg, Knox, 
Lamb, LaSalle, Lubbock, Lynn, Maverick, Medina, Moore, Parmer, Presidio, 
San Patricio, Sherman, Starr, Swisher, Terry, Uvalde, Webb, Willacy, 
Wilson, Yoakum, and Zavala.

                                  Utah

    None.

                                 Vermont

    None.

                                Virginia

    Accomack, Albemarle, Alleghany, Amelia, Amherst, Appomattox, 
Augusta, Bath, Bedford, Bland, Botetourt, Brunswick, Buchanan, 
Buckingham, Campbell, Caroline, Carroll, Charles City, Charlotte, 
Chesapeake, Chesterfield, Clarke, Craig, Culpeper, Cumberland, 
Dickenson, Dinwiddie, Essex, Fairfax, Fauquier, Floyd, Fluvanna, 
Franklin, Frederick, Giles, Gloucester, Goochland, Grayson, Greene, 
Greensville, Halifax, Hanover, Henrico, Henry, Highland, Isle of Wight, 
James City, King and Queen, King George, King William, Lancaster, Lee, 
Loudoun, Louisa, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, 
Montgomery, Nelson, New Kent, Northampton, Northumberland, Nottoway, 
Orange, Page, Patrick, Pittsylvania, Powhatan, Prince Edward, Prince 
George, Prince William, Pulaski, Rappahannock, Richmond, Roanoke, 
Rockbridge, Rockingham, Russell, Scott, Shenandoah, Smyth, Southampton, 
Spotsylvania, Stafford, Suffolk, Surry, Sussex, Tazewell, Virginia 
Beach, Warren, Washington, Westmoreland, Wise, Wythe, and York.

                               Washington

    Yakima.

                              West Virginia

    None.

                                Wisconsin

    Adams, Calumet, Columbia, Dane, Dodge, Dunn, Fond du Lac, Green, 
Green Lake, Iowa, Kenosha, Milwaukee, Portage, Racine, Richland, Rock, 
St. Croix, Sauk, Walworth, Waukesha, Waushara, and Winnebago.

                                 Wyoming

    None.

    (f) Any acreage reduction required by paragraph (d) of this section 
will be applied beginning with the covered commodity with lowest direct 
payment amount per acre until the acreage reduction amount is satisfied. 
Producers may agree to adjust the acre reduction between covered 
commodities on the farm, only to the extent the total acre reduction 
amount does not change for the farm, and all producers affected by the 
adjustment agree to the adjustment in writing.

[[Page 367]]

    (g) For the purposes of this part, fruits, vegetables and wild rice 
planted on base acreage of a farm under contract:
    (1) Shall be considered harvested at the time of planting, unless 
the producer pays a fee to cover the cost of a farm visit, in accordance 
with part 718 of this title, to verify that the fruit, vegetable or wild 
rice has been destroyed before harvest, as determined by the Deputy 
Administrator.
    (2) Shall not be considered as planted to a fruit, vegetable or wild 
rice when reported by a producer on the farm with an intended use of 
green manure or forage, as determined by the Deputy Administrator, and a 
fee to cover the cost of a farm visit is paid by the producer, in 
accordance with part 718 of this title, to verify that the crop has not 
been harvested.
    (h) Fruits and vegetables include but are not limited to all nuts 
except peanuts, certain fruit-bearing trees and: acerola (barbados 
cherry), antidesma, apples, apricots, aragula, artichokes, asparagus, 
atemoya (custard apple), avocados, babaco papayas, bananas, beans 
(except soybeans, mung, adzuki, faba, and lupin), beets--other than 
sugar, blackberries, blackeye peas, blueberries, bok spare choy, 
boysenberries, breadfruit, broccoflower, broccolo-cavalo, broccoli, 
brussel sprouts, cabbage, cailang, caimito, calabaza, carambola (star 
fruit), calaboose, carob, carrots, cascadeberries, cauliflower, 
celeriac, celery, chayote, cherimoyas (sugar apples), canary melon, 
cantaloupes, cardoon, casaba melon, cassava, cherries, chickpeas/
garbanzo beans, chinese bitter melon, chicory, chinese cabbage, chinese 
mustard, chinese water chestnuts, chufes, citron, citron melon, coffee, 
collards, cowpeas, crabapples, cranberries, cressie greens, crenshaw 
melons, cucumbers, currants, cushaw, daikon, dasheen, dates, dry edible 
beans, dunga, eggplant, elderberries elut, endive, escarole, etou, 
feijoas, figs, gai lien, gailon, galanga, genip, gooseberries, 
grapefruit, grapes, guambana, guavas, guy choy, honeydew melon, 
huckleberries, jackfruit, jerusalem artichokes, jicama, jojoba, kale, 
kenya, kiwifruit, kohlrabi, kumquats, leeks, lemons, lettuce, limequats, 
limes, lobok, loganberries, longon, loquats, lotus root, lychee 
(litchi), mandarins, mangos, marionberries, mar bub, melongene, mesple, 
mizuna, mongosteen, moqua, mulberries, murcotts, mushrooms, mustard 
greens, nectarines, ny Yu, okra, olallieberries, olives, onions, opo, 
oranges, papaya, paprika, parsnip, passion fruits, peaches, pears, peas, 
all peppers, persimmon, persian melon, pimentos, pineapple, pistachios, 
plantain, plumcots, plums, pomegranates, potatoes, prunes, pummelo, 
pumpkins, quinces, radiochio, radishes, raisins, raisins (distilling), 
rambutan, rape greens, rapini, raspberries, recao, rhubarb, rutabaga, 
santa claus melon, salsify, saodilla, sapote, savory, scallions, 
shallots, shiso, spinach, squash, strawberries, suk gat, swiss chard, 
sweet corn, sweet potatoes, tangelos, tangerines, tangos, tangors, 
taniers, taro root, tau chai, teff, tindora, tomatillos, tomatoes, 
turnips, turnip greens, watercress, watermelons, white sapote, yam, and 
yam yu choy.
    (i) For 2002 contracts only, fruits, vegetables, and wild rice may 
be planted on excess base acres. Such plantings shall:
    (1) Not be a violation of the contract
    (2) Result in a reduction of direct and counter-cyclical payments in 
accordance with paragraph (f) of this section.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 16184, Apr. 3, 2003; 68 
FR 37939, June 26, 2003]



Sec.  1412.408  Redistributing base acreage.

    (a)(1) Subject to the limitation in paragraph (a)(3) of this 
section, the redistribution of a farm's base acreage shall be allowed 
when all owners of the farm execute and submit a written request on a 
CCC-approved form for such redistribution to the FSA county office where 
the records for the farm are administratively maintained.
    (2) If the land of the farm is subject to a deed of trust, lien, or 
mortgage, the holder of the deed of trust, lien, or mortgage must agree 
to the redistribution of base acreage.
    (3) Redistribution of a farm's base acreage to negate or reduce a 
program violation is prohibited.

[68 FR 37939, June 26, 2003]

[[Page 368]]



    Subpart E--Financial Considerations Including Sharing Direct and 
                        Counter-Cyclical Payments

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.



Sec.  1412.501  Limitation of direct and counter-cyclical payments.

    (a) The sum total of all annual direct payment amounts shall not 
exceed the amounts specified in part 1400 of this chapter.
    (b) The sum total of all annual counter-cyclical payment amounts 
shall not exceed the amounts specified in part 1400 of this chapter.
    (c) The amount of 2002 direct and counter-cyclical payments for a 
farm shall not exceed the maximum amount that would have been paid based 
on the number of persons as determined in accordance with part 1400 of 
this chapter on the farm as of May 13, 2002.
    (d) The provisions of part 1400 of this chapter apply to this part.



Sec.  1412.502  Direct payment provisions.

    (a) For 2003 through 2007 contracts, a final direct payment shall be 
made to eligible producers on a farm enrolled in a contract with respect 
to covered commodities and peanuts for which payment yields and base 
acres are established on or after October 1 of the fiscal year following 
the fiscal year of the contract in which the direct payment was earned.
    (b) For 2003 through 2007 contracts, at the option of the producer, 
50 percent of the direct payment for the farm with respect to covered 
commodities and peanuts for which payment yields and base acres are 
established, shall be paid in any month from December through September 
of the fiscal year of the contract, as requested by the producer, as an 
advance direct payment. For any producer to receive an advance direct 
payment, all producers sharing in the direct payments for the farm must:
    (1) Be in compliance with all requirements of the contract and the 
requirements in this part at the time of the advance payment; and
    (2) Sign the contract designating payment shares and provide 
supporting documentation as specified in part 12 of this title and parts 
1400 and 1405 of this chapter, if applicable. If all producers on the 
farm have not signed the contract designating payment shares in 
accordance with this paragraph, then no producer shall be eligible for 
any payment for that farm for that contract.
    (c) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the direct 
payment computed for the farm in accordance with the provisions of this 
section:
    (1) The payment or portions thereof shall not become available for 
any other producer; and
    (2) The producer shall refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter 
shall be applicable to all unearned payments.
    (d) The payment rates used to calculate direct payments with respect 
to covered commodities and peanuts on a farm enrolled in a contract 
shall be as follows:

(1) Wheat--$0.52/bu.
(2) Corn--$0.28/bu.
(3) Grain sorghum--$0.35/bu.
(4) Barley--$0.24/bu.
(5) Oats--$0.024/bu.
(6) Upland cotton--$0.0667/lb.
(7) Rice--$2.35/cwt.
(8) Soybeans--$0.44/bu.
(9) Other oilseeds--$0.0080/lb.
(10) Peanuts--$36.00/ton.

    (e) For 2003 through 2007 contracts, subject to the limitation in 
accordance with Sec.  1412.501 and part 1400 of this chapter, the final 
direct payment amount to be paid to the producers on a farm enrolled in 
a contract with respect to the covered commodities and peanuts for which 
payment yields and base acres are established shall be equal to the 
product of:

    (1) The payment rate specified in paragraph (d) of this section, 
multiplied by
    (2) The payment acres of the covered commodity and peanuts on the 
farm enrolled in a contract, minus any acre reduction in accordance with 
Sec.  1412.407(g), multiplied by

[[Page 369]]

    (3) The payment yield for the covered commodity and peanuts on the 
farm enrolled in a contract as determined in accordance with Sec.  
1412.301, Sec.  1412.302 and subpart G of this part, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part, minus
    (5) Any advance payment received in accordance with paragraph (b) of 
this section.

    (f) For 2002 contracts, the direct payment amount to be paid to the 
producers on a farm enrolled in a contract with respect to the covered 
commodities for which payment yields and base acres are established 
shall be equal to the result of the amount calculated in accordance with 
paragraphs (e)(1) through (3) of this section minus all of the 
following:
    (1) Any amount of payment received under a production flexibility 
contract for fiscal year 2002 in accordance with the Federal Agriculture 
Improvement and Reform Act of 1996;
    (2) Any reduction calculated in accordance with subpart F of this 
part, with credit for any amount reduced under the production 
flexibility contract for the farm for fiscal year 2002 for the same 
contract violation; and
    (3) Any reduction calculated in accordance with Sec.  1412.407(j).
    (g)(1) The payment of any amount due any producer on a farm enrolled 
in a contract shall be made only after all the producers subject to the 
contract are determined to be in full compliance with the contract and 
the requirements in this part.
    (2) A producer on a farm enrolled in a contract may receive a 
payment amount due without respect to the eligibility of other producers 
on the farm if:
    (i) The producer is in full compliance with the contract and the 
requirements in this part;
    (ii) The payment of such amount does not affect adversely nor defeat 
the purpose of the program, as determined by the Deputy Administrator; 
and
    (iii) The payment is approved by the Deputy Administrator.
    (h) For 2002 contracts, the direct payment amount to be paid to the 
historical peanut producer shall be made to the historical peanut 
producer on the base and yield established for the historical peanut 
producer, in accordance with subpart G of this part.



Sec.  1412.503  Counter-cyclical payment provisions.

    (a) For the 2002 through 2007 contracts, a counter-cyclical payment 
shall be made to eligible producers on a farm enrolled in a contract 
with respect to covered commodities for which payment yield and base 
acres are established, and with respect to peanuts on a farm enrolled in 
a contract for 2003 through 2007:
    (1) Only if the effective price for the covered commodity or 
peanuts, as determined in accordance with paragraph (b) of this section, 
is less than the target price of the covered commodity or peanuts, 
respectively, as determined in accordance with paragraph (c) of this 
section.
    (2) As soon as practical, as determined by the Deputy Administrator, 
after the end of the 12-month marketing year for the covered commodity 
or peanuts, as applicable.
    (b) For the purposes of paragraphs (a) and (g) of this section, the 
effective price for a covered commodity and peanuts, respectively, is 
equal to the sum of the following:
    (1) The higher of:
    (i) The national average market price received by producers during 
the 12-month marketing year for the covered commodity or peanuts, as 
applicable, as determined by the Secretary; or
    (ii) For 2002 and 2003 crop years the following rates:

(A) Wheat--$2.80/bu.
(B) Corn--$1.98/bu.
(C) Grain sorghum--$1.98/bu.
(D) Barley--$1.88/bu.
(E) Oats--$1.35/bu.
(F) Upland cotton--$0.52/lb.
(G) Rice--$6.50/cwt.
(H) Soybeans--$5.00/bu.
(I) Other oilseeds--$0.0960/lb.
(J) Peanuts--$355.00/ton.

    (iii) For 2004 through 2007 crop years the following rates:

(A) Wheat--$2.75/bu.
(B) Corn--$1.95/bu.
(C) Grain sorghum--$1.95/bu.
(D) Barley--$1.85/bu.
(E) Oats--$1.33/bu.
(F) Upland cotton--$0.52/lb.

[[Page 370]]

(G) Rice--$6.50/cwt.
(H) Soybeans--$5.00/bu.
(I) Other oilseeds--$0.0930/lb.
(J) Peanuts--$355.00/ton.

    (2) The direct payment rate for the covered commodity as provided in 
Sec.  1412.502(d).
    (c) For the purposes of paragraphs (a) and (g) of this section, the 
target prices are as follows:
    (1) For 2002 and 2003 crop years:

(i) Wheat--$3.86/bu.
(ii) Corn--$2.60/bu.
(iii) Grain sorghum--$2.54/bu.
(iv) Barley--$2.21/bu.
(v) Oats--$1.40/bu.
(vi) Upland cotton--$0.7240/lb.
(vii) Rice--$10.50/cwt.
(viii) Soybeans--$5.80/bu.
(ix) Other oilseeds--$0.0980/lb.
(x) Peanuts--$495.00/ton.
    (2) For 2004 through 2007 crop years:

(i) Wheat--$3.92/bu.
(ii) Corn--$2.63/bu.
(iii) Grain sorghum--$2.57/bu.
(iv) Barley--$2.24/bu.
(v) Oats--$1.44/bu.
(vi) Upland cotton--$0.7240/lb.
(vii) Rice--$10.50/cwt.
(viii) Soybeans--$5.80/bu.
(ix) Other oilseeds--$0.1010/lb.
(x) Peanuts--$495.00/ton.

    (d) The payment rate used to calculate counter-cyclical payments 
with respect to covered commodities and peanuts for which payment yields 
and base acres are established on a farm enrolled in a contract is equal 
to the result of:
    (1) The target price of the covered commodity as determined in 
accordance with paragraph (c) of this section, minus
    (2) The effective price of the covered commodity as determined in 
accordance with paragraph (b) of this section.
    (e) For 2002 through 2007 contracts, when counter-cyclical payments 
are required in accordance with paragraph (a) of this section, subject 
to the limitation in accordance with Sec.  1412.501 and part 1400 of 
this chapter, the final counter-cyclical payment amount to be paid to 
producers on a farm enrolled in a contract with respect to the covered 
commodities and peanuts for which payment yields and base acres are 
established shall be equal to the product of:
    (1) The payment rate determined in accordance with paragraph (d) of 
this section, multiplied by
    (2) The payment acres of the covered commodity and peanuts, as 
applicable, minus any acre reduction in accordance with Sec.  
1412.407(g), multiplied by
    (3)(i) The payment yield for the covered commodity or peanuts on the 
farm enrolled in a contract as determined in accordance with Sec.  
1412.303 and subpart G of this part if the owner of the farm elected 
base acreage for the farm in accordance with Sec.  1412.201(a)(2), or 
the owner elected to not update the payment yields for the covered 
commodities on the farm, or
    (ii) The updated payment yield for the covered commodity on the farm 
enrolled in a contract as determined in accordance with Sec.  1412.303 
if the owner of the farm elected base acreage for the farm in accordance 
with Sec.  1412.201(a)(1) and elected to update the yields for the 
covered commodities on the farm in accordance with Sec.  1412.303, minus
    (4) Any reduction calculated in accordance with subpart F of this 
part that was not satisfied by a reduction in the direct payments for 
the farm calculated in accordance with Sec.  1412.502(e), minus
    (5) Any partial advance payment received in accordance with 
paragraphs (f) or (g) of this section.
    (f) For 2002 through 2006 contracts, advance counter-cyclical 
payments shall be paid, at the request of the producer, if the Secretary 
determines that a counter-cyclical payment for the covered commodity or 
peanuts, respectively, will be required in accordance with paragraph 
(a)(1) of this section.
    (1) The first advance counter-cyclical payment shall:
    (i) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section;
    (ii) Be an amount determined by the Secretary not to exceed 35 
percent of the projected counter-cyclical payment for the covered 
commodity or peanuts, respectively;
    (iii) Not be made earlier than October 1 after the end of the 
contract year in which the counter-cyclical payment was earned; and
    (iv) To the maximum extent practical, be made no later than October 
31

[[Page 371]]

after the end of the contract year in which the counter-cyclical payment 
was earned.
    (2) The second partial advance counter-cyclical payment shall:
    (i) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section.
    (ii) Be an amount determined by the Secretary not to exceed the 
result of:
    (A) 70 percent of the projected counter-cyclical payment, including 
any revision thereof, for the covered commodity or peanuts, 
respectively, minus
    (B) The amount of payment made under paragraph (f)(1) of this 
section; and
    (iii) Not be made earlier than February 1 after the end of the 
contract year in which the counter-cyclical payment was earned.
    (g) For 2002 contract, the counter-cyclical payment amount to be 
paid to the historic peanut producer shall be made using the base and 
yield established for the historic peanut producer, in accordance with 
subpart G of this part.
    (h) For 2007 contracts, an advance counter-cyclical payment shall be 
paid, at the request of the producer, if the Secretary determines that a 
counter-cyclical payment for the covered commodity or peanuts will be 
required in accordance with paragraph (a)(1) of this section. The 
advance payment shall:
    (1) Be calculated in accordance with paragraphs (e)(1) through 
(e)(4) of this section;
    (2) Not exceed 40 percent of the projected counter-cyclical payment 
for the covered commodity or peanuts, respectively, as determined by the 
Secretary; and
    (3) Be made after the first 6 months of the marketing year of the 
covered commodity or peanuts, as applicable.
    (i) If a producer declines to accept, or is determined to be 
ineligible for all or any part of the producer's share of the counter-
cyclical payment computed for the farm in accordance with the provisions 
of this section:
    (1) The payment or portions thereof shall not become available for 
any other producer; and
    (2) The producer shall refund to CCC any amounts representing 
payments that exceed the payments determined by CCC to have been earned 
under the program authorized by this part. Part 1403 of this chapter 
shall be applicable to all unearned payments.
    (i)(A) The payment of any amount due any producer on a farm enrolled 
in a contract shall be made only after all the producers subject to the 
contract are determined to be in full compliance with the contract and 
the requirements in this part.
    (B) A producer on a farm enrolled in a contract may receive a 
payment amount due without regard to the eligibility of other producers 
on the farm if:
    (1) The producer is in full compliance with the contract and the 
requirements in this part;
    (2) The payment of such amount does not adversely affect nor defeat 
the purpose of the program, as determined by the Deputy Administrator, 
or designee; and
    (3) The payment is approved by the Deputy Administrator, or 
designee.
    (j) The producers on a farm who receive any advance counter-cyclical 
payment shall refund the portion of such advance payments that exceeds 
the actual counter-cyclical payment to be made for the covered commodity 
or peanuts, as applicable.



Sec.  1412.504  Sharing of contract payments.

    (a) Each eligible producer on a farm shall be given the opportunity 
to annually enroll in a contract and receive direct and counter-cyclical 
payments determined to be fair and equitable as agreed to by all the 
producers on the farm and approved by the county committee.
    (1) Each producer must provide a copy of their written lease to the 
county committee and, in the absence of a written lease, must provide to 
the county committee a complete written description of the terms and 
conditions of any oral agreement or lease.
    (2) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed sum certain cash payment, or a fixed 
quantity of the crop

[[Page 372]]

(for example, cash, pounds, or bushels per acre).
    (3) If a lease contains provisions that require the payment of rent 
on the basis of the amount of crop produced or the proceeds derived from 
the crop, or the interest such producer would have had if the crop had 
been produced, or combination thereof, such agreement shall be 
considered to be a share lease. The leasing of grazing or haying 
privileges is not considered cash leasing.
    (4) If a lease provides for the greater of a guaranteed amount or 
share of the crop or crop proceeds, such agreement shall be considered a 
share lease if the lease provides for both:
    (i) A guaranteed amount such as a fixed dollar amount or quantity; 
and
    (ii) A share of the crop proceeds.
    (5) If the lease is a cash lease, the landlord is not eligible for 
direct or counter-cyclical payments.
    (b) When contract acreage is leased on a share basis, neither the 
landlord nor the tenant shall receive 100 percent of the contract 
payment for the farm.
    (c) CCC will approve a contract for enrollment and approve the 
division of payment when all of the following apply:
    (1) The landlords, tenants and sharecroppers sign the contract and 
agree to the payment shares shown on the contract;
    (2) CCC determines that the interests of tenants and sharecroppers 
are being protected; and
    (3) CCC determines that the payment shares shown on the contract do 
not circumvent the provisions of part 1400 of this chapter.



Sec.  1412.505  Provisions relating to tenants and sharecroppers.

    Neither direct nor counter-cyclical payments shall be made by CCC 
if:
    (a) The landlord or operator has adopted a scheme or device for the 
purpose of depriving any tenant or sharecropper of the payments to which 
such person would otherwise be entitled under the program. If any of 
such conditions occur or are discovered after payments have been made, 
all or any such part of the payments as the State committee may 
determine shall be refunded to CCC; or
    (b) The landlord terminated a lease in violation of state law as 
determined by a state court.



        Subpart F--Contract Violations and Diminution in Payments

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.



Sec.  1412.601  Contract violations.

    (a) Except as provided in paragraph (b) of this section, violations 
of contract requirements shall result in the termination of the 
contract. Upon such termination, all producers subject to the contract 
shall forfeit all rights to receive direct and counter-cyclical payments 
on the farm for the contract year and shall refund all direct and 
counter-cyclical payments received, plus interest, as determined in 
accordance with part 1403 of this chapter.
    (b)(1) If there is a violation of Sec.  1412.407 and CCC determines 
that a violation is not serious enough to warrant termination of the 
contract under paragraph (a) of this section, direct and counter-
cyclical payments may be made to the producers specified on the 
contract, but in an amount that is reduced by an amount equal to the sum 
of:
    (i) The per-acre market value of the fruits, vegetables, and wild 
rice, as determined by the State Committee, times the number of acres in 
violation, plus
    (ii) The direct and counter-cyclical payments for each such acre.
    (2) Producers must protect land enrolled in DCP from weeds, 
including noxious weeds, and erosion, including providing sufficient 
cover if determined necessary by the county committee. The first 
violation of this provision will result in a reduction in the direct 
payments for the farm by an amount equal to three times the cost of 
maintenance of the acreage, but not to exceed 50 percent of the total 
direct payments for the farm. The second violation of this provision 
will result in a reduction in the direct payments for the farm by an 
amount equal to three times the cost of maintenance of the acreage, not 
to exceed the total direct payments for the farm.

[[Page 373]]



Sec.  1412.602  Fruit, vegetable and wild rice acreage reporting violations.

    (a)(1) If an acreage report of fruits, vegetables or wild rice 
planted on base acreage of a farm enrolled in DCP is inaccurate but 
within tolerance as provided in paragraph (b) of this section and CCC 
determines the producer made a good faith effort to comply with the 
provisions of this section, the producers shall accept a reduction in 
the direct and counter-cyclical payments for each such acre.
    (2) If an acreage report of fruits, vegetables or wild rice planted 
on base acreage of a farm enrolled in DCP is inaccurate and exceeds the 
tolerance as provided in paragraph (b) of this section, but CCC 
determines the producer made a good faith effort to comply with the 
provisions of this section, the producers shall accept a reduction in 
the direct and counter-cyclical payments for the farm in an amount equal 
to the sum of:
    (i) The direct and counter-cyclical payments for each such acre, 
plus
    (ii) Twice the average dollar value of the direct payment for the 
covered commodity and peanut base acreage reduced because of the fruit, 
vegetable, and wild rice plantings on such acreage, multiplied by the 
total number of acres in violation.
    (3) The contract shall be terminated if an acreage report of fruits, 
vegetables or wild rice planted on base acreage of a farm enrolled in 
DCP is inaccurate, and the county committee determines the producer did 
not make a good faith effort to comply with the provisions of this 
section. Upon such termination, producers subject to such contract 
shall:
    (i) Forfeit all rights to receive direct and counter-cyclical 
payments for the farm;
    (ii) Refund all direct and counter-cyclical payments received for 
the farm, plus interest as determined in accordance with part 1403 of 
this chapter; and
    (iii) Be ineligible for all program benefits according to part 718 
of this title.
    (b) For the purposes of this section, tolerance is the amount by 
which the determined acreage may differ from the reported acreage and 
still be considered in compliance with program requirements. Tolerance 
for fruits, vegetables and wild rice plantings is 5 percent of the 
reported fruit, vegetable and wild rice acreage, not to exceed 50 acres.



Sec.  1412.603  Contract liability.

    All signatories to a contract are jointly and severally liable for 
contract violations and resulting repayments and penalties.



Sec.  1412.604  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented any 
fact affecting a program determination made in accordance with this part 
shall not be entitled to either direct or counter-cyclical payments and 
must refund all such payments received, plus interest as determined in 
accordance with part 1403 of this chapter.
    (b) A producer shall refund to CCC all direct and counter-cyclical 
payments, plus interest as determined in accordance with part 1403 of 
this chapter, received by such producer with respect to all contracts if 
the producer is determined to have knowingly done any of the following. 
In addition, the producer's interest in all such contracts shall be 
terminated.
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.



Sec.  1412.605  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
shall be applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing the assignment of payments found 
at part 1404 of this chapter.

[[Page 374]]



Sec.  1412.606  Acreage reports.

    As a condition of eligibility for direct and counter-cyclical 
payments, the operator or owner must submit a report of all cropland 
acreage on the farm in accordance with part 718 of this title. If such 
operator or owner does not report all cropland acreage on the farm in 
accordance with part 718 of this title, the contract shall be terminated 
with respect to such farm unless the provisions part 718 of this title 
are applicable.



Sec.  1412.607  Compliance with highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this part.



Sec.  1412.608  Controlled substance violations.

    The provisions of part 718 of this title apply to this part.



Subpart G--Establishment and Assignment of Peanut Base Acres and Yields 
                               for a Farm

    Source: 67 FR 64751, Oct. 21, 2002, unless otherwise noted.



Sec.  1412.701  Determination of 4-year peanut acreage average.

    (a) The Deputy Administrator shall determine, for each historic 
peanut producer under this part, the 4-year average of the following:
    (1) The acreage planted to peanuts on each farm on which the 
historic peanut producer planted peanuts for harvest for the 1998 
through 2001 crop years; and
    (2) Any acreage on each farm that the historic peanut producer was 
prevented from planting to peanuts during the 1998 through 2001 crop 
years because of natural disaster, or any other condition beyond the 
control of the historic peanut producers, as determined by the Deputy 
Administrator.
    (b) For the purposes of determining the 4-year acreage average for a 
historic peanut producer under this part, the Deputy Administrator shall 
not exclude any crop year in which the producer did not plant peanuts.
    (c) If more than one historic peanut producer shared in the risk of 
producing the crop on a farm, the historic peanut producers shall 
receive the proportional share of the number of acres planted or 
prevented from being planted to peanuts for harvest on the farm, based 
on the sharing arrangement that was in effect among the producers for 
the crop.
    (d) When a historic peanut producer is no longer living or when an 
entity composed of historic peanut producers has been dissolved, and in 
other similar situations, the Deputy Administrator shall make the base 
determinations under this subpart in the manner determined to be fair 
and reasonable.



Sec.  1412.702  Determination of average peanut yield.

    (a) The Deputy Administrator shall determine, for each historic 
peanut producer, the average yield for peanuts on each farm the historic 
peanut producer planted peanuts for harvest for the 1998 through 2001 
crop years, excluding any crop year in which the producer did not plant 
or was prevented from planting peanuts. Production information reported 
according to part 729 of this chapter will be used by the Deputy 
Administrator for determining yields under this section.
    (b)(1) For the purposes of determining the 4-year average yield for 
a historic peanut producer under paragraph (a) of this section, the 
historic peanut producer may elect to substitute for a farm for not more 
than 3 of the 1998 through 2001 crop years in which the historic peanut 
producer planted peanuts on the farm, the average harvested yield for 
peanuts produced in the county in which the farm is located for the 1990 
through 1997 crop years.
    (2) The average harvested yield for peanuts produced in a county 
which will be used in paragraph (b)(1) of this section shall be the NASS 
irrigated and non-irrigated yields or, in States and counties where the 
irrigated and non-irrigated NASS data is unavailable, the NASS blended 
yield for the county.
    (3) If NASS harvested peanut yield data is unavailable, for the 
purposes

[[Page 375]]

set forth in paragraph (b)(1) of this section, the harvested county 
average peanut yield, determined according to peanut production 
information reported according to part 729 of this chapter, shall be 
used.
    (c) The average harvested yield, to be used at the producer's option 
in paragraph (b)(1) of this section, shall be determined by calculating 
the weighted 7-year average for each type of yield for the years 1990 
through 1997 of:
    (1) The NASS harvested peanut irrigated yield for the county for 
each year;
    (2) The NASS harvested peanut non-irrigated yield for the county for 
each year;
    (3) The NASS harvested peanut blended yield for all counties where 
the yields in paragraphs (c)(1) and (c)(2) of this section are 
unavailable for each year for all acreage regardless of whether or not 
the acres were irrigated or nonirrigated;
    (4) The average yield for the county, determined in accordance with 
paragraph (b)(3) of this section for each year.



Sec.  1412.703  Assignment of average peanut yields and average peanut 
acreages to farms.

    (a) The Deputy Administrator shall give each historical peanut 
producer an opportunity to assign the average peanut yield determined in 
accordance with Sec.  1412.702 and average acreage determined in 
accordance with Sec.  1412.701 for each farm of the historic peanut 
producer to cropland on that farm or another farm in the same State or a 
contiguous State.
    (b) Notwithstanding paragraph (a) of this section, the average 
acreage determined under Sec.  1412.701 for a farm may be assigned to a 
farm in a contiguous state only if either of the following apply:
    (1) The historic peanut producer making the assignment produced 
peanuts in that State during at least one of the 1998 through 2001 crop 
years; or
    (2) As of March 31, 2003, the historic peanut producer is a producer 
on a farm in that State.
    (c) The Deputy Administrator shall provide notice to historic peanut 
producers regarding the opportunity to assign average peanut yields and 
average acreages to farms under paragraph (a) of this section. The 
notice shall provide the following information:
    (1) Notice that the opportunity to make the assignments is being 
provided only once;
    (2) A description of the limitations in paragraph (b) of this 
section on their ability to make their assignments; and
    (3) Information regarding the manner in which the assignments must 
be made and the time periods and manner in which notice of the 
assignments must be submitted to the Deputy Administrator.
    (d) Not later than March 31, 2003, an historic peanut producer shall 
submit to the Deputy Administrator notice of the assignments made by the 
producer under this section. If a historic peanut producer fails to 
submit such notice by that date, that base and yield shall be assigned 
to the most recent farm associated with such base and yield, as 
determined by FSA records.
    (e) The average of all yields assigned by a historic peanut producer 
under paragraph (a) of this section to a farm shall be considered to be 
the payment yield for that farm for the purpose of making direct and 
payments and counter-cyclical payments under this part, beginning with 
crop year 2003.
    (f) The total number of acres assigned by historic peanut producers 
under paragraph (b) of this section to a farm shall be considered to be 
the farm's base acres for peanuts for the purpose of making direct 
payments and counter-cyclical payments under this part, beginning with 
crop year 2003.

[67 FR 64751, Oct. 21, 2002, as amended at 68 FR 37939, June 26, 2003; 
68 FR 67939, Dec. 5, 2003]



                 Subpart H--Peanut Quota Buyout Program

    Source: 67 FR 61472, Oct. 1, 2002, unless otherwise noted. 
Redesignated at 67 FR 64751, Oct. 21, 2002.



Sec.  1412.801  Applicability.

    The regulations in this subpart govern the Peanut Quota Buyout 
Program of the Commodity Credit Corporation (CCC). Generally, CCC will 
enter into contracts with eligible peanut quota

[[Page 376]]

holders that provide for payments to such holders based upon the amount 
of the 2001 crop peanut quota assigned to farms owned by such holders as 
of May 13, 2002.



Sec.  1412.802  Administration.

    (a) The program will be administered under the general supervision 
of the Executive Vice President, CCC, and shall be carried out by the 
Farm Service Agency (FSA) State and county committees (State and county 
committees).
    (b) State and county committees, their representatives and 
employees, have no authority to modify or waive provisions of this 
subpart, except as provided in paragraph (e) of this section.
    (c) The State committee shall take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee shall also:
    (1) Correct, or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No provision or delegation to a State or county committee shall 
preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines, except statutory deadlines, and 
other non-statutory requirements in cases where lateness or failure to 
meet such other requirements does not adversely affect operation of the 
program.
    (f) A representative of CCC may execute a contract for a quota 
buyout only under the terms and conditions of this part, and as 
determined and announced by the Executive Vice President, CCC. Any 
contract that is not executed in accordance with such terms and 
conditions, including any purported execution prior to the date 
authorized by the Executive Vice President, CCC, is null and void and 
shall not be considered to be a contract between CCC and any person 
executing the contract.



Sec.  1412.803  Definitions.

    The definitions in this section shall apply for all purposes of 
administering the Peanut Quota Buyout. The terms defined in part 718 of 
this title and part 1400 of this chapter shall also be applicable, 
except where those definitions conflict with the following definitions 
in this section:
    Contract means a Peanut Quota Buyout Program Contract, and its 
Appendix for the Peanut Quota Buyout Program to be executed on a form 
and in a manner as prescribed by CCC.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Eligible Quota means the amount of peanut quota owned by an eligible 
peanut quota holder as of May 13, 2002, based on the 2001 quota for the 
purposes of determining Peanut Quota Buyout Program payments. Eligible 
quota does not include peanut quota established for seed or experimental 
purposes and quotas subject to a temporary lease or transfer.



Sec.  1412.804  Appeals.

    A person may obtain reconsideration and review of any adverse 
determination made under this part in accordance with the appeal 
regulations found at parts 11 and 780 of this title.



Sec.  1412.805  Enrollment; special filing and payment provisions for 
persons who are not the peanut quota holder of record.

    (a) Enrollment for the Peanut Quota Buyout Program begins September 
3, 2002, and ends November 22, 2002. Application for payment must be 
made by signing the contract. Payments will be made by CCC to eligible 
peanut quota holders as soon as practicable beginning October 11, 2002.
    (b)(1) If contracts or other written claims are provided to CCC by 
October 11, 2002, by two or more persons with respect to the same peanut 
quota used to calculate a Peanut Quota Buyout Program payment, CCC will 
not issue such payment until CCC has determined the eligibility status 
of each claimant.

[[Page 377]]

    (2) If CCC has made a payment to a peanut quota holder, as 
identified on FSA records, for a farm and after October 11, 2002, a 
person who is not a peanut quota holder, as identified on FSA records, 
for such farm submits a contract or other written claim with CCC for the 
same quota used to issue the initial payment, CCC will issue no further 
payments for such farm until CCC has determined the eligibility status 
of each person who has filed a contract or other written claim for such 
farm and the occurrence of the earlier of:
    (i) Repayment of the initial payment made by CCC; or
    (ii) The establishment, in accordance with part 1403 of this 
chapter, by CCC of a claim for repayment of the initial payment.
    (c) Payments to a person who CCC has determined to be an eligible 
peanut quota holder with respect to a farm but who, as of September 3, 
2002, were not the peanut quota holder, as identified on FSA records as 
of May 13, 2002, for such farm will be made by CCC after November 22, 
2002, unless prior to November 22, 2002, CCC has received an 
acknowledgment from the peanut quota holders, as identified on FSA 
records as of May 13, 2002, that they:
    (1) Will not file a contract for such peanut quota; and
    (2) Transferred the peanut quota to such other party prior to May 
13, 2002.



Sec.  1412.806  Eligible peanut quota holder.

    (a) A person shall be eligible for a payment under this part only if 
CCC has determined the person to be an ``eligible peanut quota holder'' 
for purposes of this part. To be an eligible peanut quota holder, a 
person must, as of May 13, 2002:
    (1) Have owned a farm, or had a life estate interest in a farm, to 
which paragraphs (a)(2) and (b) of this section do not apply, that was 
eligible for a permanent peanut quota under part 729 of this title, as 
in effect on January 1, 2002, without regard to quotas established for 
seed or experimental purposes or quotas subject to temporary leases or 
temporary transfers;
    (2) Be a party to a written contract for the purchase of all or a 
portion of the farm identified in paragraph (a)(1) of this section that 
was in effect on or before May 13, 2002. If the parties to the contract 
are unable to agree to the division of the applicable peanut quota on 
the land subject to the written contract, the Deputy Administrator, 
taking into account any incomplete or permanent transfer of the peanut 
quota that has otherwise been agreed to, shall provide for the equitable 
division of the payments made under this part by determining the 
eligible peanut quota holders and allocating the disputed amount of the 
peanut quota to such holders. This allocation will take into account the 
ratio of cropland on the unsold portion of the farm and the cropland on 
the portion of the farm subject to the purchase contract;
    (3) Be a party to a written contract that was in effect on or before 
May 13, 2002, for the permanent transfer of a peanut quota to such 
party's farm but was not completed by that date. In such a case, the 
eligible peanut quota holder is the owner of the farm, as of May 13, 
2002, to which the peanut quota was to be transferred; or
    (4) Have owned a farm with a peanut quota which is protected under a 
Conservation Reserve Program contract in accordance with part 1410 of 
this chapter;
    (b) Notwithstanding any provision of paragraph (a) of this section, 
CCC may determine that a person is an eligible peanut quota holder with 
respect to an amount of peanut quota for the purposes of this section, 
to the exclusion of all other persons in order to provide for the fair 
and equitable administration of this part so long as the total amount of 
eligible quota pounds for all program participants does not exceed the 
quantity of peanut quota that was available to all quota holders in the 
2001 crop year.
    (c) Sales and transfers of farms and peanut quotas may be 
disregarded by CCC when:
    (1) Such sales and transfers were required to be reported to FSA 
under part 729 of this title; or
    (2) It is otherwise determined by CCC that it would be unfair and 
inequitable in the overall administration of the program to make or 
modify an eligibility determination based on claims of

[[Page 378]]

transfers or sales that preceded January 1, 2002.



Sec.  1412.807  Contract provisions.

    (a)(1) CCC will, on a per-farm basis, offer to enter into a contract 
with each eligible peanut quota holder on such farm under which CCC will 
provide a payment in five equal installments in each of the 2002 though 
2006 fiscal years or in one lump sum payment in any such fiscal year as 
selected by such holder.
    (2) Eligible peanut quota holders who elect to receive five equal 
installments payments will receive the fiscal year 2002 payment no later 
than December 31, 2002 and, as determined by CCC, between January 2 and 
January 31 in each of the years 2003 through 2006.
    (3) Eligible peanut quota holders who elect to receive one lump sum 
payment may specify the fiscal year in which they wish to receive a 
payment. CCC will determine the day in such fiscal year that the payment 
will be made by CCC.
    (b) The amount of each payment made under paragraph (a)(2) of this 
section shall be the product determined by multiplying:
    (1) $0.11 per pound; times
    (2) The amount of eligible quota pounds of the eligible peanut quota 
holder.
    (c) The amount of each payment made under paragraph (a)(3) of this 
section shall be the product determined by multiplying the product 
determined under paragraph (b) of this section times five.
    (d) After a payment option has been selected under paragraph (a) of 
this section and a payment has been made by CCC, no change in the 
payment option will be allowed except as authorized by the Executive 
Vice President, CCC.



Sec.  1412.808  Contract liability.

    All signatories to a contract are jointly and severally liable for 
contract violations and resulting repayments and liquidated damages.



Sec.  1421.809  Misrepresentation and scheme or device.

    A person who is determined to have:
    (a) Erroneously represented any fact affecting a program 
determination made in accordance with this subpart;
    (b) Adopted any scheme or device that tends to defeat the purpose of 
the program; or
    (c) Made any fraudulent representation affecting a program 
determination made in accordance with this subpart, must refund all 
payments received on all contracts entered into under this subpart, plus 
interest as determined in accordance with part 1403 of this chapter, and 
pay to CCC liquidated damages as specified in the contract.



Sec.  1412.810  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof made to any person under this subpart shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the peanut quota or the farm for which a 
peanut quota had been established under part 729 of this title by any 
creditor or any other person.
    (b) Any person eligible to receive a payment made under this subpart 
may assign the payment in accordance with part 1404 of this chapter.



Sec.  1412.811  Other regulations.

    (a) The provisions of part 12 of this title, the controlled 
substance provisions of part 718 of this title, and the payment 
limitation provisions of part 1400 of this chapter shall not be 
applicable to payments made under this subpart.
    (b) The provisions of part 707 of this title relating to the making 
of payments in the event of the death of a program participant and in 
the event of other special circumstances shall apply to payments made 
under this subpart.



PART 1413--HARD WHITE WHEAT INCENTIVE PROGRAM--Table of Contents




Sec.
1413.101 Applicability.
1413.102 Administration.
1413.103 Definitions.
1413.104 Signup and application process.
1413.105 Eligibility.
1413.106 Quality.

[[Page 379]]

1413.107 Availability of funds and maximum eligible acreage and 
          production.
1413.108 Applicant's maximum payment quantity.
1413.109 Calculation of assistance.
1413.110 Offsets and withholdings.
1413.111 Assignments.
1413.112 Appeals.
1413.113 Other regulations

    Authority: 7 U.S.C. 7999; 15 U.S.C. 714b and 714c.

    Source: 68 FR 5207, Feb. 3, 2003, unless otherwise noted.



Sec.  1413.101  Applicability.

    (a) These regulations in this part set forth the terms and 
conditions of the Hard White Wheat Incentive Program. The Farm Security 
and Rural Investment Act of 2002 provides that $20,000,000 of the funds 
of CCC shall be available during the 2003 through the 2005 crop years 
for producers to produce and market hard white wheat limits this program 
to not more than a total of 2,000,000 acres or an equivalent volume of 
120,000,000 bushels of production for the 2003 through 2005 crop years.
    (b) A production payment incentive shall be available only for hard 
white wheat that grades U.S.  2 grade or higher, established by 
the Federal Grain Inspection Service, that is produced and harvested in 
the United States.
    (c) A certified seed incentive payment shall be available for each 
acre planted to certified hard white wheat seed, as approved by CCC. 
Producers are eligible to receive incentive payments for the production 
incentive or the certified seed incentive, or both. Each incentive 
payment is independent of the other.

[68 FR 5207, Feb. 3, 2003, as amended at 68 FR 16185, Apr. 3, 2003]



Sec.  1413.102  Administration.

    (a) The program is administered under the general supervision of the 
Executive Vice-President, CCC, and shall be carried out by the Farm 
Service Agency (FSA) State and county committees (State and county 
committees).
    (b) State and county committees, their representatives and 
employees, have no authority to modify or waive any of the provisions of 
the regulations of this part, except as provided in paragraph (e) of 
this section.
    (c) The State committee shall take any action required by the 
regulations of this part that the county committee has not taken. 
TheState committee shall also:
    (1) Correct, or require a county committee to correct any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this part.
    (d) No provision or delegation of this part to a State or county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements do not adversely affect the operation of this program 
and does not violate statutory limitations on the program.
    (f) Any payment applications not executed in accordance with the 
terms and conditions determined and announced by CCC, including any 
purported execution prior to the dates authorized by the Executive Vice 
President, CCC, is null and void and shall not be considered to be a 
contract between CCC and any person executing the contract.



Sec.  1413.103  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Hard White Wheat Incentive Program 
established by this part.
    Application period means the date established by the Deputy 
Administrator for producers of hard white wheat to apply for program 
benefits.
    CCC means the Commodity Credit Corporation.

[[Page 380]]

    Certified seed means hard white wheat seed grown from acceptable 
seedstock and sold, according to rules imposed by a State's Certified 
Seed Board, as determined acceptable by the Deputy Administrator.
    County committee means the FSA county committee.
    County office means the FSA office.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), Farm Service Agency or a designee.
    Eligible bushels means hard white wheat bushels that were produced 
in the United States anytime during the 2003 through 2005 crop years, 
and for which an acceptable settlement sheet has been provided to the 
county committee.
    Farm Service Agency or FSA means the Farm Service Agency of the 
United States Department of Agriculture.
    Payment means the bushels of wheat or seed production for which an 
operation is eligible to be paid under this part.
    Settlement sheet means a document provided to a seller of hard white 
wheat upon delivery of hard white wheat to a CCC-approved warehouse, or 
other hard white wheat purchasing facility determined acceptable by CCC, 
with information which includes, but is not limited to: the name and 
address of buyer and seller; gross quantity; net quantity; price per 
bushel; and type and grade of the delivered hard white wheat.



Sec.  1413.104  Signup and application process.

    (a) Signup for the Hard White Wheat Incentive Program shall be 
conducted by CCC for each of the 2003 through 2005 crop years during the 
application period announced by the Deputy Administrator. Applications 
are available from any county FSA office. Applicants must submit a 
complete application to FSA during the application period.
    (b) The producer shall submit one application for all farms within 
in a particular county. On the application, the applicant must certify 
to: The total number and location of acres planted to hard white wheat 
and the number of eligible bushels sold. Applicants must also provide a 
settlement sheet, to FSA upon disposal of the production certified to on 
the application.
    (c) Each applicant for a certified seed incentive payment must 
submit an acceptable seed receipt for the certified seed to FSA, and 
certify to the number and location of acres planted with certified seed.
    (d) Producers requesting benefits under this part must certify to 
the accuracy and truthfulness of the information provided in their 
application. All information provided is subject to verification by FSA.



Sec.  1413.105  Eligibility.

    (a) The certified seed incentive payment and the production 
incentive payments are available to eligible producers under Sec.  
1413.101(b) and (c) for any or all of the years 2003 through 2005. 
Producers are eligible to receive both the certified seed and production 
incentive in the same year. Where an acre of land receives both the 
certified seed incentive and production incentive payment in the same 
year, only one acre shall be counted under the total 2,000,000 acreage 
limitation of Sec.  1413.101(a).
    (b) To be eligible to receive the certified seed incentive payment, 
a producer must:
    (1) Submit a complete application during the application period.
    (2) Submit a receipt for the purchase of certified seed to FSA.
    (c) To be eligible to receive the production incentive payment, a 
producer must:
    (1) Submit a complete application during the application period.
    (2) Produce hard white wheat of the quality required under Sec.  
1413.106;
    (3) Have an interested buyer with the intent to use the wheat for 
all purposes except for feed use.

[68 FR 5207, Feb. 3, 2003, as amended at 68 FR 16185, Apr. 3, 2003]



Sec.  1413.106  Quality.

    The hard white wheat must be grade 2 or higher under the 
grading standards, established by the Federal Grain Inspection Service 
(FGIS).

[[Page 381]]



Sec.  1413.107  Availability of funds and maximum eligible acreage and 
production.

    The total available program funds for the 2003 through 2005 crop 
years is $20 million. To ensure that funds are available for each of the 
2003 through 2005 crop years, payments may be factored based on total 
eligible producers for any year the eligible payments exceed the total 
funds available to be spent. The maximum hard white wheat acreage and 
production for which payments may be issued for the 2003 through 2005 
crop year is to total 2,000,000 acres, or 120,000 bushels, whichever is 
greater. The certified seed incentive may be discontinued, as determined 
by the DeputyAdministrator, in any year sufficient funds are determined 
to be unavailable.



Sec.  1413.108  Applicant's maximum payment quantity.

    (a) The maximum payment quantity of hard white wheat for which an 
applicant may be approved under the production incentive payment for any 
year shall be the smaller of:
    (1) The actual number of bushels harvested from the acres certified 
on the application; or
    (2) The product of:
    (i) The number of acres certified on the application;
    (ii) Times 60 bushels per acre.
    (b) [Reserved]



Sec.  1413.109  Calculation of assistance.

    (a) Payment for the production incentive shall be the product of:
    (1) The bushels determined in accordance with Sec.  1413.108
    (2) Times $0.20.
    (b) Payment for the certified hard white wheat planting incentive 
shall be the product of:
    (1) The number of acres certified on the application;
    (2) Times $2.00 per acre.



Sec.  1413.110  Offsets and withholdings.

    CCC may offset or withhold payments approved under this part in 
accordance with part 1403 of this chapter.



Sec.  1413.111  Assignments.

    Persons entitled to a HWWIP payment may assign their rights to such 
payments in accordance with part 1404 of this chapter.



Sec.  1413.112  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this part may request reconsideration or appeal such determination in 
accordance with parts 11 and 780 of this title.



Sec.  1413.113  Other regulations.

    (a) The provisions of part 12 of this title, and the controlled 
substance provisions of part 718 of this title apply to payments made 
under this part.
    (b) The payment limitation provisions of part 1400 of this title 
shall not be applicable to payments made under this part.
    (c) The provisions of part 707 of this title relating to the making 
of payments in the event of the death of a program participant or and in 
the event of other special circumstances shall apply to payments made 
under this part.



PART 1421--GRAINS AND SIMILARLY HANDLED COMMODITIES--MARKETING ASSISTANCE 

LOANS AND LOAN DEFICIENCY PAYMENTS FOR THE 2002 THROUGH 2007 CROP YEARS
--Table of Contents




                           Subpart A--General

Sec.
1421.1 Applicability.
1421.2 Administration.
1421.3 Definitions.
1421.4 Eligible producers.
1421.5 Eligible commodities.
1421.6 Beneficial interest.
1421.7 Requesting marketing assistance loans and loan deficiency 
          payments.
1421.8 Eligible quantity.
1421.9 Basic loan rates.
1421.10 Market rates.
1421.11 Spot checks.
1421.12 Production evidence.
1421.13 Handling payments and collections.
1421.14 Obtaining peanut loans.

                  Subpart B--Marketing Assistance Loans

1421.100 Applicability.
1421.101 Maturity dates.
1421.102 Adjustment of basic loan rates.
1421.103 Approved storage.
1421.104 Marketing assistance loan making.
1421.105 Farm-stored marketing assistance loans.

[[Page 382]]

1421.106 Warehouse-stored marketing assistance loan collateral.
1421.107 Warehouse receipts.
1421.108 Transfers and reconcentrations.
1421.109 Personal liability of the producer.
1421.110 Repayments.
1421.111 Commodity certificate exchanges.
1421.112 Loan settlement.
1421.113 Foreclosure.
1421.114 Recourse loans.

                   Subpart C--Loan Deficiency Payments

1421.200 Applicability.
1421.201 Loan deficiency payment rate.
1421.202 Loan deficiency payment quantity.
1421.203 Personal liability of the producer.

 Subpart D--Grazing Payments for 2002	2007 Crop Years of Wheat, Barley, 
                           Oats and Triticale

1421.300 Applicability.
1421.301 Administration.
1421.302 Definitions.
1421.303 Eligible producer and eligible land.
1421.304 Time and method for application.
1421.305 Payment amount.
1421.306 Misrepresentation and scheme or device.
1421.307 Refunds; joint and several liability.

Subpart E--Standards for Approval of Warehouses for Grain, and Similarly 
                           Handled Commodities

1421.5551 General statement and administration.
1421.5552 Basic standards.
1421.5553 Bonding requirements for net worth.
1421.5554 Examination of warehouses.
1421.5555 Exceptions.
1421.5556 Approval of warehouses, requests for reconsideration.
1421.5557 Exemption from requirements.
1421.5558 Contract and application and inspection fees.
1421.5559 OMB control numbers assigned pursuant to Paperwork Reduction 
          Act.

    Authority: 7 U.S.C. 7231-7237 and 7931 et seq.; 15 U.S.C. 714b, 
714c.



                           Subpart A--General

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.  1421.1  Applicability.

    (a) The regulations of this subpart are applicable to the 2002 
through 2007 crops of barley, small chickpeas, corn, grain sorghum, 
lentils, oats, dry peas, peanuts, rice, wheat, wool, mohair, oilseeds 
and other crops designated by Commodity Credit Corporation (CCC). These 
regulations set forth the general provisions under which marketing 
assistance loans and loan deficiency payments (LDP) will be administered 
by the CCC. Additional terms and conditions are in the note and security 
agreement and the loan deficiency payment application that must be 
executed by a producer to receive marketing assistance loans and LDP's.
    (b)(1) The basic loan rates, the schedule of premiums and discounts, 
and forms applicable to the marketing assistance and loan deficiency 
payment programs for the commodities specified in paragraph (a) of this 
section are available in Farm Service Agency (FSA) State and county 
offices. The forms for use in these programs will be prescribed by CCC.
    (2) Loan deficiency payments shall be available for unshorn pelts, 
hay and silage.
    (c) Marketing assistance loans and loan deficiency payments will not 
be available for any commodity produced on land owned or otherwise in 
the possession of the United States if such land is occupied without the 
consent of the United States.
    (d) Producers who produced eligible loan commodities are eligible 
for marketing assistance loans or loan deficiency payments.



Sec.  1421.2  Administration.

    (a) The marketing assistance loan and loan deficiency payment 
program shall be administered under the general supervision of the 
Executive Vice President, CCC and shall be carried out in the field by 
FSA State and county committees, respectively.
    (b) State and county committees, and representatives and employees 
thereof, cannot modify or waive any requirement of this part, except as 
provided in paragraph (e) of this section.
    (c) The State committee shall take any required action not taken by 
the county committee. The State committee shall also:
    (1) For the 2001 crop year only, allow producers who violated the 
terms and conditions of the note and security agreement which resulted 
in the producer losing beneficial interest in the commodity before 
repaying the loan

[[Page 383]]

and the county committee determined the producer acted in good faith, to 
repay the loan at a rate that is the lesser of the loan plus interest; 
or the alternative repayment rate, as determined under Sec.  1421.10, in 
effect on the date the beneficial interest was lost. In cases, where a 
locked-in repayment rate under Sec.  1421.110 was applicable, the 
prescribed form is considered null and void.
    (2) Correct or require correction of an action taken by a county 
committee that is not in compliance with this part; or
    (3) Require a county committee to not take an action or implement a 
decision that is not under the regulations of this part.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under these programs, or reverse or modify a 
determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements does not adversely affect the operation of the 
marketing assistance loan and loan deficiency payment program.
    (f) A representative of CCC may execute marketing assistance loan 
and loan deficiency payment applications and related documents only 
under the terms and conditions determined and announced by CCC. Any 
document not executed under such terms and conditions, including any 
purported execution before the date authorized by CCC, shall be null and 
void.



Sec.  1421.3  Definitions.

    The definitions in this section apply for all purposes of program 
administration. Terms defined in part 718 of this title and parts 1412 
and 1425 of this chapter also apply, except where they conflict with the 
definitions in this section.
    Basic loan rate means the loan rate established by CCC for a 
commodity before any adjustment for premiums and discounts.
    Charges means all fees, costs, and expenses incurred in insuring, 
carrying, handling, storing, conditioning, and marketing the commodity 
tendered to CCC for loan. Charges also include any other expenses 
incurred by CCC in protecting CCC's or the producer's interest in such 
commodity.
    Commodity certificate exchange means the exchange, as provided for 
in part 1401 of this chapter, of commodities pledged as collateral for a 
marketing assistance loan at a rate determined by CCC in the form of a 
commodity certificate bearing a dollar denomination. Such certificate 
may not be transferred or exchanged for the inventory of CCC.
    Designated marketing association means a marketing association or 
cooperative, approved by the Secretary, to issue marketing loan benefits 
on behalf of CCC for peanuts.
    Field direct loan deficiency payment means a loan deficiency payment 
issued to producers who:
    (1) Will lose beneficial interest immediately at harvest or;
    (2) Immediately feed the commodity during harvest.
    High moisture commodities means corn and grain sorghum normally 
harvested and intended to be stored or marketed in a high moisture 
condition.
    Incorrect certification means the certifying of a quantity of a 
commodity for the purpose of obtaining a marketing assistance loan or a 
loan deficiency payment in excess of the quantity eligible for such 
marketing assistance loan or loan deficiency payment or the making of 
any fraudulent representation with respect to obtaining loans or loan 
deficiency payments.
    Loan commodities means wheat, corn, grain sorghum, barely, oats, 
rice, soybeans, other oilseeds, peanuts, wool, mohair, dry peas, 
lentils, and small chickpeas and other crops designated by CCC.
    Loan deficiency payment means a payment received in lieu of a loan 
when the CCC-determined value is below the applicable county loan rate.
    Mohair means the hair sheared from a live Angora goat. Mohair does 
not include pelts, or hides or mohair shorn from pelts or hides.
    Oilseeds means any crop of sunflower seed, canola, rapeseed, 
safflower, flaxseed, mustard seed, crambe, sesame

[[Page 384]]

seed, and other oilseeds as determined and announced by CCC.
    Other crops designated by CCC means with respect to eligibilities 
for benefits under this part:
    (1) Those crops harvested as other than grain, such as silage, 
haulage, earlage;
    (2) Specific crops designated for grazing; or
    (3) As otherwise designated by CCC.
    Pulse crops means any crop of dry peas, lentils, and small chickpeas 
as defined by CCC.
    Servicing agent bank means the bank designated as the financial 
institution for a CMA or a designated marketing association.
    Small chickpea means any chickpea that meets the definition of a 
chickpea according to the Grain Inspection, Packers and Stockyards 
Administration (GIPSA), Federal Grain Inspection Service (FGIS) and 
falls below a 20/64th sieve.
    Unauthorized disposition means the conversion of any loan quantity 
pledged as collateral for a farm-stored loan without prior written 
authorization from the county committee.
    Unauthorized removal means the movement of any farm-stored loan 
quantity from the storage structure in which the commodity was stored or 
structures that were designated when the loan was approved to any other 
storage structure, whether or not such structure is located on the 
producer's farm, without prior written authorization from the county 
committee.
    Unshorn pelt means the removed skin and attached wool from a 
slaughtered lamb that has never been shorn.
    Warehouse receipt means a receipt containing the required 
information prescribed in this part and is:
    (1) A pre-numbered, negotiable warehouse receipt issued under the 
authority of the U.S. Warehouse Act, a state licensing authority, or by 
an approved CCC warehouse in such format authorized and approved, in 
advance, by CCC;
    (2) An electronic warehouse receipt issued by such warehouse 
recorded in a central filing system or system maintained in one or more 
locations which are approved by FSA to operate such system; or
    (3) Other such acceptable evidence of title, as determined by CCC.
    Wool means the fiber sheared from a live sheep.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 37940, June 26, 2003]



Sec.  1421.4  Eligible producers.

    (a) To be an eligible producer, the producer must:
    (1) Be an individual, partnership, association, corporation, estate, 
trust, State or political subdivision or agency thereof, or other legal 
entity that produces an eligible commodity as a landowner, landlord, 
tenant, or sharecropper, or in the case of rice, furnishes land, labor, 
water, or equipment for a share of the rice crop. With respect to wool 
and mohair, the producer must own, other than through a security 
interest mortgage, or lien, the sheep and goats that produced the wool 
and mohair respectively for a period of not less than 30 days.
    (2) Comply with all provision of this part and:
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation;
    (ii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iii) 7 CFR part 1400--Payment Limitation & Payment Eligibility;
    (iv) 7 CFR part 1403--Debt Settlement Policies and Procedures;
    (v) 7 CFR part 1405--Loans, Purchases and Other Operations.
    (3) Have made a acreage certification with respect to all the 
cropland on the farm.
    (b) A receiver or trustee of an insolvent or bankrupt debtor's 
estate, an executor or an administrator of a deceased person's estate, a 
guardian of an estate of a ward or an incompetent person, and trustees 
of a trust shall be considered to represent the insolvent or bankrupt 
debtor, the deceased person, the ward or incompetent, and the 
beneficiaries of a trust, respectively. The production of the receiver, 
executor, administrator, guardian, or trustee shall be considered to be 
the production of the person or estate represented by the receiver, 
executor, administrator, guardian, or trustee. Marketing assistance 
loans and loan deficiency payment documents executed by any such person 
will be accepted by CCC

[[Page 385]]

only if they are legally valid and such person has the authority to sign 
the applicable documents.
    (c) A minor who is otherwise an eligible producer is eligible to 
receive marketing assistance loans or loan deficiency payments only if 
the minor meets one of the following requirements:
    (1) The right of majority has been conferred on the minor by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable marketing assistance loan or loan deficiency payment 
documents are signed by the guardian;
    (3) Any note or loan deficiency payment program application signed 
by the minor is cosigned by a person determined by the county committee 
to be financially responsible; or
    (4) A bond is furnished under which a surety guarantees to protect 
CCC from any loss incurred for which the minor would be liable had the 
minor been an adult.
    (d) If more than one producer executes a note and security agreement 
with CCC, each such producer shall be jointly and severally liable for 
the violation of the terms and conditions of the note and the 
regulations in this part. Each such producer shall also remain liable 
for repayment of the entire marketing assistance loan amount until the 
loan is fully repaid without regard to such producer's claimed share in 
the commodity pledged as collateral for the loan. In addition, such 
producer may not amend the note and security agreement with respect to 
the producer's claimed share in such commodities, or loan proceeds, 
after execution of the note and security agreement by CCC.
    (e)(1) The county committee may deny a producer a marketing 
assistance loan on farm-stored commodities if the producer has:
    (i) Made a misrepresentation in connection with the marketing 
assistance loan or LDP program;
    (ii) Previously not allowed a representative access to the site 
where commodities pledged as collateral for CCC loans were stored or 
otherwise failed to corporate in the settlement of a marketing 
assistance loan; or
    (iii) Failed to adequately protect the interests of CCC in the 
commodity pledged as collateral for a farm-stored loan.
    (2) A producer who is denied a farm-stored loan will be eligible to 
pledge a commodity as collateral for a warehouse-stored loan or provide 
some other form of financial assurance to obtain a farm-stored loan.
    (f) A CMA may obtain a marketing assistance loan and loan deficiency 
payment on eligible production of a loan commodity on behalf of its 
members who are eligible to receive marketing assistance loans or loan 
deficiency payments with respect to a crop of a commodity. For purposes 
of this subpart, the term ``producer'' includes a CMA.
    (g) In case of the death, incompetency, or disappearance of any 
producer who is entitled to the payment of any sum in settlement of a 
marketing assistance loan or loan deficiency payment, payment shall, 
upon proper application to the FSA county service center that disbursed 
the marketing assistance loan or loan deficiency payment, be made to the 
persons who would be entitled to such producer's payment under the 
regulations contained in part 707 of this title.



Sec.  1421.5  Eligible commodities.

    (a) Commodities eligible to be pledged as collateral for a loan made 
under this part are:
    (1) Barley, corn, grain sorghum, oats, canola, peanuts, soybeans, 
oilseeds, wheat, dry peas, lentils, small chickpeas, rice and other 
crops designated by CCC produced and mechanically harvested in the 
United States;
    (2) Dual purpose sorghum varieties as determined by CCC; and
    (3) Wool and mohair produced and shorn from live animals in the 
United States.
    (b) A commodity produced on land owned or otherwise in the 
possession of the United States that is occupied without the consent of 
the United States is not an eligible commodity.
    (c)(1) To be an eligible commodity, the commodity must be 
merchantable for food, feed, or other uses determined by CCC and must 
not contain mercurial compounds, toxin producing

[[Page 386]]

molds, or other substances poisonous to humans or animals. A commodity 
containing vomitoxin, aflatoxin or Aspergillus mold may not be pledged 
for a loan made under this part, except as provided by CCC in the 
marketing assistance loan note and security agreement.
    (2) The determination of class, grade, grading factor, milling 
yields, and other quality factors, including the determination of type, 
quality, and quantity for peanuts:
    (i) With respect to barley, canola, corn, flaxseed, grain sorghum, 
oats, rice, soybeans, sunflower seed for extraction of oil, wheat and 
other commodities designated by CCC, shall be based upon the Official 
United States Standards for Grain, United States Standards for Whole Dry 
Peas, Split Peas, and Lentils for dry peas and lentils, United States 
Standards for Beans for small chickpeas and the United States Standards 
for Rice as applied to rough rice whether or not such determinations are 
made on the basis of an official inspection.
    (ii) With regard to mustard seed, rapeseed, safflower seed, flaxseed 
and sunflower seed used for a purpose other than to extract oil, shall 
be based on quality requirements established and announced by CCC, 
whether or not such determinations are made on the basis of an official 
inspection. The costs of an official quality determination may be paid 
by CCC. The quality requirements that are used in administering 
marketing assistance loans and loan deficiency payments for the oilseeds 
in this paragraph are available in USDA State and county FSA service 
centers.
    (iii) With regard to farm-stored peanuts, shall be determined at the 
time of delivery to CCC by a Federal or State Inspector authorized or 
licensed by the Secretary.
    (d) Eligible wool and mohair must:
    (1) Have been produced and sheared from live sheep and goats, of 
domestic origin and located in the U.S. for a period of not less than 30 
calendar days prior to shearing.
    (2) Be of merchantable quality deemed by CCC to be suitable for loan 
and must have been shorn in the United States.
    (e) When certifying acreage on farms in which an interest is held, 
the producer must provide acceptable evidence of the commodity from 
which the county committee may determine whether the eligible production 
claimed by the producer is reasonable for the production practices on 
such farm or similar farms in the same county; or have either the 
eligible or ineligible commodity measured by a representative of the 
county FSA service center at the producer's expense, before commingling.



Sec.  1421.6  Beneficial interest.

    (a)(1) To be eligible to receive marketing assistance loans or loan 
deficiency payments, a producer must have the beneficial interest in the 
commodity that is tendered to CCC for a marketing assistance loan or 
loan deficiency payment. The producer must always have had the 
beneficial interest in the commodity unless, before the commodity was 
harvested, sheared or slaughtered in the case of unshorn pelts, the 
producer, and a former producer whom the producer tendering the 
commodity to CCC has succeeded, had such an interest in the commodity. 
Commodities obtained by gift, barter or purchase shall not be eligible 
to be tendered to CCC for marketing assistance loans or loan deficiency 
payments. Heirs who succeed to the beneficial interest of a deceased 
producer or who assume the decedent's obligations under an existing 
marketing assistance loan or loan deficiency payment shall be eligible 
to receive marketing assistance loans and loan deficiency payments 
whether succession to the commodity occurs before or after harvest, 
shearing or slaughter so long as the heir otherwise complies with this 
part.
    (2) A producer shall not be considered to have divested the 
beneficial interest in the commodity if the producer retains control, 
title, and risk of loss in the commodity, including the right to make 
all decisions regarding the tender of such commodity to CCC for 
marketing assistance loans or loan deficiency payments, including those 
cases where the producer takes either of the actions in paragraph 
(a)(2)(i) or (a)(2)(ii) of this section as follows:

[[Page 387]]

    (i) Executes an option to purchase, whether or not a payment is made 
by the potential buyer for such option to purchase, for such commodity 
if all other eligibility requirements are met and the option to purchase 
contains the following:

    Notwithstanding any other provision of this option to purchase, 
title; risk of loss; and beneficial interest in the commodity, as 
specified in 7 CFR 1421.6, shall remain with the producer until the 
buyer exercises this option to purchase the commodity. This option to 
purchase shall expire, notwithstanding any action or inaction by either 
the producer or the buyer, at the earlier of:
    (1) The maturity of any Commodity Credit Corporation (CCC) loan that 
is secured by such commodity;
    (2) The date CCC claims title to such commodity; or
    (3) Such other date as provided in this option;

    (ii) Enters into a contract to sell the commodity if the producer 
retains title, risk of loss, and beneficial interest in the commodity 
and the purchaser pays no advance payment amount or any incentive 
payment amount to enter into such contract to the producer, except as 
provided in part 1425 of this chapter.
    (3) If marketing assistance loans and loan deficiency payments are 
made available to producers through an approved CMA under part 1425 of 
this chapter, the beneficial interest in the commodity must always have 
been in the producer-member who delivered the commodity to the CMA or 
its member CMA's, except as otherwise provided in this section. 
Commodities delivered to such a CMA shall not be eligible to receive 
marketing assistance loans or loan deficiency payments if the producer-
member who delivered the commodity does not retain the right to share in 
the proceeds from the marketing of the commodity as provided in part 
1425 of this chapter.
    (b) With respect to wool, mohair, dry peas, lentils and small 
chickpeas produced in the 2002 crop year, producers who lost beneficial 
interest before October 11, 2002 are eligible for a loan deficiency 
payment based on the date the producer lost beneficial interest in the 
applicable commodity.
    (c) For peanuts produced in the 2002 crop year, producers who lost 
beneficial interest in the 2002 crop of peanuts are eligible for a loan 
deficiency payment based on the date the producer lost beneficial 
interest in the applicable commodity.



Sec.  1421.7  Requesting marketing assistance loans and loan deficiency 
payments.

    (a) A producer must, unless authorized by CCC, request marketing 
assistance loans and loan deficiency payments at the county office that, 
under part 718 of this title, is responsible for administering programs 
for the farm on which the commodity was produced.
    (b) A marketing assistance loan or loan deficiency payment may be 
requested in person, by mail or electronic format designated by CCC. 
Forms prescribed by CCC may be obtained from the USDA, Farm Service 
Agency Web site.
    (c) To receive marketing assistance loans or loan deficiency 
payments for a crop of a commodity, a producer must execute a note and 
security agreement or loan deficiency payment application on or before 
the applicable final loan availability date, as follows:
    (1) March 31 of the year following the year in which the following 
crops are normally harvested: barley, canola, flaxseed, oats, rapeseed, 
and wheat.
    (2) May 31 of the year following the year in which the following 
crops are normally harvested: corn, grain sorghum, mustard seed, rice, 
safflower, soybeans, sunflower seed, dry peas, lentils, and small 
chickpeas.
    (3) January 31 of the year following the year in which peanuts are 
normally harvested or wool and mohair are normally sheared.
    (d) With respect only to loan deficiency payments for eligible loan 
commodities produced in the 2001 crop year, whether or not produced on a 
farm covered by a production flexibility contract, the applicable final 
loan availability for such payment is November 12, 2002.



Sec.  1421.8  Eligible quantity.

    (a) With respect to marketing assistance loans and loan deficiency 
payments for:
    (1) Farm-stored commodities, all determinations of weight, and 
quality,

[[Page 388]]

except as otherwise agreed to or required by CCC, shall be determined at 
the time of delivery of the commodity to CCC or at the time the loan 
deficiency payment application is filed for measured requests, if 
applicable or selected for spot-check for certified requests.
    (2) Warehouse-stored commodities, all determinations of grade, 
weight and quality, except as otherwise agreed to or required by CCC, 
shall be determined at the time the loan or LDP is requested when 
acceptable documentation, under Sec.  1421.106, accompanies the loan or 
LDP request.
    (b)(1) A producer may, before the final date for obtaining a 
marketing assistance loan for a commodity, repledge as collateral for 
securing a marketing assistance loan any commodity that had been 
previously pledged as collateral for a marketing assistance loan, except 
with respect to:
    (i) Commodities that have been acquired with commodity certificate 
exchanges under part 1401 of this chapter;
    (ii) Commodities that have been redeemed at the prevailing world 
market price for rice, or the alternative repayment rate for all other 
commodities, as determined by CCC.
    (iii) Commodities on which a loan deficiency payment has been 
received.
    (2) The commodity repledged as security for the subsequent loan 
shall have the same maturity date, under Sec.  1421.101 as the original 
loan.
    (c)(1) The marketing assistance loan documents shall not be 
presented for disbursement unless the commodity subject to the note and 
security agreement is an eligible harvested commodity, is in existence, 
and is in approved farm or warehouse storage, as determined by CCC. If 
the commodity was not either an eligible commodity, in existence, or in 
approved storage at the time of disbursement, the total amount disbursed 
under the marketing assistance loan and charges plus interest shall be 
refunded promptly by the producer.
    (2) Marketing assistance loans may be disbursed to eligible 
producers who store eligible commodities in unlicensed storage 
facilities only if the producer agrees to redeem the marketing 
assistance loan on the date in which the loan is disbursed with a 
commodity certificate exchange.
    (3) CCC shall limit the total marketing assistance loan quantity for 
a loan disbursement, or loan deficiency payment quantity for a loan 
deficiency payment, based on a subsequent increase in the quantity of an 
eligible commodity by the final loan availability date to 100 percent of 
the outstanding quantity of such marketing assistance loan or loan 
deficiency payment application. A producer may obtain a separate 
marketing assistance loan or loan deficiency payment before the final 
loan availability date for the commodity for quantities in excess of 100 
percent of such quantity if such quantities are an otherwise eligible 
commodity.



Sec.  1421.9  Basic loan rates.

    (a) Basic marketing assistance loan rates for a commodity may be 
established on a State, regional, county basis or other basis and may be 
adjusted by CCC to reflect quality and location and other factors 
applicable to the commodity and as otherwise provided in this section.
    (b) The basic marketing assistance loan rates for wheat, corn, 
barley, oats, grain sorghum, rice, peanuts, soybean, canola, flaxseed, 
mustard seed, rapeseed, safflower, sunflower seed, dry peas, lentils, 
small chickpeas, wool, mohair and other crops designated by CCC will be 
determined by CCC and made available at State and county offices.
    (c)(1) For all commodities except rice, warehouse-stored loans shall 
be disbursed at levels based on the basic county marketing assistance 
loan rate for the county where the commodity is stored, adjusted for the 
schedule of premiums and discounts established for the commodity on the 
basis of quality factors set forth on warehouse receipts or supplemental 
certificates and for other quality factors, as determined and announced 
by CCC.
    (2) For rice, warehouse-stored loans shall be disbursed at levels 
based on the milling yields times the whole and broken kernel marketing 
assistance loan rates, adjusted for the schedule of discounts on the 
basis of quality factors set forth on warehouse receipts or

[[Page 389]]

supplemental certificates and for other quality factors, as determined 
and announced by CCC.



Sec.  1421.10  Market rates.

    (a)(1) For the 2002 through 2007 crops of barley, corn, grain 
sorghum, oats, wheat, dry peas, lentils, small chickpeas, oilseeds, and 
other crops as designated by CCC, a producer may repay a nonrecourse 
marketing assistance loan at a rate that is the lesser of:
    (i) The marketing assistance loan rate and charges, plus interest 
determined for such crop; or
    (ii) The alternative repayment rate for such crop.
    (2) To the extent practicable, CCC shall determine and announce the 
alternative repayment rate, based upon the market prices at appropriate 
U.S. markets as determined by CCC, to minimize loan forfeitures, 
minimize the Federal Government-owned inventory of the commodities, 
minimize the storage costs incurred by the Federal Government 
domestically and internationally, and minimize discrepancies in 
marketing loan benefits across State boundaries and across county 
boundaries. The alternative repayment rate may be adjusted to reflect 
quality and location for each crop of a commodity as follows:
    (i) On a weekly basis in each county for oilseeds, except soybeans;
    (ii) On a daily basis in each county for barley, corn, grain 
sorghum, oats, soybeans, and wheat; and
    (iii) On a weekly basis nationally for dry peas, lentils and small 
chickpeas.
    (b)(1) For the 2002 through 2007 crops of peanuts, wool and mohair, 
a producer may repay a nonrecourse loan at a rate that is the lesser of:
    (i) The loan rate and charges interest, plus interest determined for 
such crop; or
    (ii) The alternative repayment rate for such crop.
    (2) To the extent practicable, CCC shall determine and announce 
periodically an alternative repayment rate for peanuts, wool, and mohair 
to minimize loan forfeitures, minimize the Federal Government-owned 
inventory of the commodities, minimize the storage costs incurred by the 
Federal Government domestically and internationally, and minimize 
discrepancies in marketing loan benefits across State boundaries and 
across county boundaries.
    (c)(1) The prevailing world market price for a class of rice shall 
be determined by CCC based upon a review of prices at which rice is 
being sold in world markets and a weighting of such prices through the 
use of information such as changes in supply and demand of rice, tender 
offers, credit concessions, barter sales, government-to-government 
sales, special processing costs for coatings or premixes, and other 
relevant price indicators, and shall be expressed in U.S. equivalent 
values F.O.B. vessel, U.S. port of export, per hundredweight as follows:
    (i) U.S. grade No. 2, 4 percent broken kernels, long grain milled 
rice;
    (ii) U.S. grade No. 2, 4 percent broken kernels, medium grain milled 
rice; and
    (iii) U.S. grade No. 2, 4 percent broken kernels, short grain milled 
rice.
    (2) Export transactions involving rice and all other related market 
information will be monitored on a continuous basis. Relevant 
information may be obtained for this purpose from USDA field reports, 
international organizations, public or private research entities, 
international rice brokers, and other sources of reliable information.
    (3) The prevailing world market price for a class of rice adjusted 
to U.S. quality and location the adjusted world price (AWP), as 
determined under paragraph (c)(5) of this section, shall apply to this 
section.
    (4) The adjusted world price for each class of rice shall equal the 
prevailing world market price for a class of rice (U.S. equivalent 
value) as determined under paragraphs (a)(2) and (3) of this section and 
adjusted to U.S. quality and location as follows:
    (i) The prevailing world market price for a class of rice shall be 
adjusted to reflect an F.O.B. mill position by deducting from such 
calculated price an amount that is equal to the estimated national 
average costs associated with:
    (A) The use of bags for the export of U.S. rice, and
    (B) The transfer of such rice from a mill location to F.O.B. vessel 
at the

[[Page 390]]

U.S. port of export with such costs including, but not limited to, 
freight, unloading, wharfage, insurance, inspection, fumigation, 
stevedoring, interest, banking charges, storage, and administrative 
costs.
    (ii) The price determined under paragraph (c)(4)(i) of this section 
shall be adjusted to reflect the market value of the total quantity of 
whole kernels contained in milled rice by deducting the world value of 
broken kernels it contains, with the value of the broken kernels 
determined by multiplying the quantity of broken kernels (4 percent per 
hundredweight) by the world market value of broken kernels. The world 
market value of broken kernels shall be based upon the relationship of 
whole and broken kernel world prices as estimated from observations of 
prices at which rice is being sold in world markets.
    (iii) The price determined under paragraph (c)(4)(ii) of this 
section shall be adjusted to reflect the per-pound market value of whole 
kernels by dividing the price by the quantity of whole milled kernels 
contained in the milled rice (96 percent per hundredweight).
    (iv) The price determined under paragraph (c)(4)(iii) of this 
section shall be adjusted to reflect the market value of whole kernels 
contained in 100 pounds of rough rice by multiplying such price by the 
estimated national average quantity of whole kernel rice by class 
obtained from milling 100 pounds of rough rice.
    (v) The price determined under paragraph (c)(4)(iv) of this section 
shall be adjusted to reflect the total market value of rough rice by:
    (A) Adding to such price:
    (1) The market value of bran contained in the rough rice, computed 
by multiplying the domestic unit market value of bran by the estimated 
national average quantity of bran produced in milling 100 pounds of 
rice; and
    (2) The market value of broken kernels contained in the rough rice, 
computed by multiplying the estimated world market value of broken 
kernels by the estimated national average quantity of broken kernels 
produced in milling 100 pounds of rice;
    (B) Deducting from such price:
    (1) An estimated cost of milling rough rice; and
    (2) An estimated cost of transporting rough rice from farm to mill 
locations.
    (vi) The price determined under paragraph (c)(4)(v) of this section 
may be adjusted to a whole kernel loan rate basis by deducting the 
estimated world market value of the total quantity of broken kernels 
contained in such rice and dividing the resulting value by the estimated 
national average quantity of milled whole kernels produced in milling 
100 pounds of rice.
    (5)(i) The adjusted world price for each class for rice, loan rate 
basis, shall be determined by CCC and announced, to the extent 
practicable, on or after 3:00 p.m. Eastern Standard time each Tuesday, 
or more frequently, as determined necessary by CCC, continuing through 
the later of:
    (A) The last Tuesday of July 2007; or
    (B) The last Tuesday of the latest month the 2007-crop rice loans 
mature.
    (ii) In the event that Tuesday is a non-workday, the determination 
will be made on the next workday, on or after 3:00 p.m. Eastern Standard 
time.
    (iii) The announced prices will be effective upon announcement and 
will remain in effect for a period as announced by the CCC.
    (6) On the day of the announcement of the adjusted world price, 
applications for loan deficiency payments for rice that specify the 
payment rate will not be accepted between 2:00 p.m. Eastern Standard 
time and the time of the world price announcement.



Sec.  1421.11  Spot checks.

    (a) CCC may inspect the collateral for marketing assistance loans, 
and producers with such loans shall allow CCC access to the farm and 
storage facility as necessary to conduct collateral inspections, or 
``spot checks'' as they are called. Spot checks will verify that the 
quality and quantity of farm-stored commodities pledged as collateral 
for marketing assistance loans are maintained by the producer.
    (b) Loan deficiency payments are selected for spot check to ensure 
that all eligibility requirements, as required by CCC, are met in order 
to receive such loan deficiency payment.

[[Page 391]]

    (c) Producers must present production evidence for commodities 
acceptable to CCC when a spot check is conducted.



Sec.  1421.12  Production evidence.

    (a) Producers who redeem marketing assistance loan collateral at the 
prevailing world market price for rice, or the alternative repayment 
rate for all other commodities, as CCC determines or receives a loan 
deficiency payment may be required to provide CCC with:
    (1) Evidence of production of the collateral such as:
    (i) Evidence of sales,
    (ii) Delivery evidence,
    (iii) Load summaries from warehouse, processor, or buyer,
    (iv) Warehouse receipts
    (v) Paid measurement service
    (vi) Spot check measurements with paid measurement service
    (vii) Cleaning tickets for seed(viii) Scale tickets, if not issued 
by the producer for the producer's own production
    (ix) Core tests for wool and mohair
    (x) Maximum eligible quantity as determined by CCC
    (2) The storage location of the collateral that has not been 
otherwise disposed of and access to such collateral;
    (3) Permission to inspect, examine, and make copies of the records 
and other written data as deemed necessary to verify the eligibility of 
the producer and commodity;
    (4) In the case of wool and mohair, permission to examine and 
inspect the sheep herd; and
    (5) Any other evidence requested by the county FSA service center or 
the Deputy Administrator, FSA.
    (b) A producer who fails to provide acceptable evidence of 
production shall be required to repay the market gain or loan deficiency 
payment and charges, plus interest, as determined by CCC.



Sec.  1421.13  Handling payments and collections.

    (a) Amounts of $9.99 or less due a producer will be paid only upon 
the producer's request.
    (b) Deficiencies of $9.99 or less, including interest, may be 
disregarded unless demand for payment is made by CCC.



Sec.  1421.14  Obtaining peanut loans.

    (a) Peanuts loans to individual producers may be obtained through:
    (1) County offices; or
    (2) A designated Marketing Association or a CMA approved by CCC.
    (b) The loan documents shall not be presented for disbursement 
unless the peanuts pledged as collateral for the marketing assistance 
loan is eligible in accordance with Sec.  1421.8. If the peanuts were 
ineligible at the time of the disbursement, the total amount disbursed 
under loan, or as an LDP, plus charges and interest shall be refunded 
promptly.



                  Subpart B--Marketing Assistance Loans

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.  1421.100  Applicability.

    This subpart provides the terms and conditions for marketing 
assistance loans offered by CCC. Additional terms and conditions are 
also in the note and security agreement which the producer must sign to 
receive such marketing assistance loans.



Sec.  1421.101  Maturity dates.

    (a)(1) All marketing assistance loans shall mature on demand by CCC 
and no later than the last day of the 9th calendar month following the 
month in which the note and security agreement is filed and approved 
except, for transferred marketing assistance loan collateral. The 
maturity date for transferred marketing assistance loan collateral will 
be the maturity date applicable to the original loan that was 
transferred.
    (2) CCC may at any time call the marketing assistance loan by 
notifying the producer at least 30 days in advance of the accelerated 
maturity date.



Sec.  1421.102  Adjustment of basic loan rates.

    (a) Basic loan rates are established under Sec.  1421.9 and will be 
adjusted or not adjusted as follows:

[[Page 392]]

    (1) For farm-stored commodities, except for peanuts, that exceed 
acceptable levels of contamination, the loan rate will be discounted to 
10 percent of the base county marketing assistance loan rate.
    (2) For farm-stored commodities where the test weight discounts are 
on the:
    (i) Crop year specific schedules of premiums and discounts, the loan 
rate shall be adjusted for the higher of the discount for test weight or 
grade based on test weight.
    (ii) Additional schedule of discounts, the marketing assistance loan 
rate shall be reduced to 20 percent of the county average marketing 
assistance loan rate.
    (3) With respect to commodities harvested, excluding silage or hay, 
as other than grain and pledged as collateral for a nonrecourse 
marketing assistance loan, the marketing assistance loan rate shall be 
discounted to 30 percent of the base county loan rate.
    (4) With respect to farm-stored wheat, the basic county marketing 
assistance loan rate shall not be adjusted to reflect the protein 
content.
    (5) With respect to Segregation 2 and 3 peanuts as determined by 
CCC, the marketing assistance loan rate shall be discounted to 35 
percent of the applicable loan rate.



Sec.  1421.103  Approved storage.

    (a) Approved farm storage is:
    (1) A storage structure located on or off the farm, (excluding 
public warehouses that do not enter into an agreement with CCC), that 
CCC determines to be controlled by the producer which affords safe 
storage of collateral pledged for a marketing assistance loan;
    (2) If determined and announced to be available in a State or 
county, on ground storage and other temporary storage structures 
approved by CCC.
    (3) As determined by CCC, temporary approved storage may also 
include:
    (i) On-ground storage or;
    (ii) Other storage arrangements.
    (b) CCC may reduce the quantity of a commodity pledged as collateral 
for a loan made available under paragraph (a)(2) of this section to not 
more than 75 percent of such otherwise eligible quantity in order to 
protect the interests of CCC. CCC may also limit the length of time the 
commodity may be stored on-ground or in temporary structures to not more 
than 90 days. A marketing assistance loan made with respect to such 
commodity which is not moved to a structure specified in (a)(2) within 
90 days of the date the loan was disbursed may be called by CCC.
    (c) Approved warehouse storage shall consist of a public warehouse 
for which a CCC storage agreement for the commodity is in effect that is 
approved by CCC for price support purposes. Such a warehouse is referred 
to in this by part as an approved warehouse. The names of approved 
warehouses may be obtained from the FSA, Kansas City Commodity Office, 
P.O. Box 419205, Kansas City, Missouri 64141-6205, from State and county 
offices, or at the FSA web site on the Internet.



Sec.  1421.104  Marketing assistance loan making.

    (a)(1) The FSA county service center shall file or record, as 
required by State law, all security agreements that are issued with 
respect to commodities pledged as collateral for marketing assistance 
loans.
    (i) The cost of filing and recording shall be paid by CCC.
    (ii) The cost for terminating the financing statement before the end 
of the term shall be paid by the producer.
    (2) If there are any liens or encumbrances on the commodity, waivers 
that fully protect the CCC's interest must be obtained even though the 
liens or encumbrances are satisfied from the loan proceeds. No 
additional liens or encumbrances shall be placed on the commodity after 
the marketing assistance loan is approved.
    (b) Fees, charges, and interest must be paid by the producer to CCC 
at a rate CCC determines. Such fees, charges, and interest include:
    (1) A non-refundable loan service fee;
    (2) Interest that accrues on a loan under part 1405 of this chapter;
    (3) For each soybean crop, the producer as defined in the Soybean 
Promotion, Research and Consumer Information Act (7 U.S.C. Chapter 
6301), shall remit to CCC an assessment that

[[Page 393]]

CCC determines when it acquires the commodity and shall be equal to one-
half of 1 percent of the amount determined under Sec.  1412.112.
    (c) For peanuts, charges associated with warehouse stored loans 
including but not limited to storage and in charges, as determined by 
CCC are paid by CCC to the producer.
    (d) The cost of terminating a financing statement shall be paid by 
the producer.



Sec.  1421.105  Farm-stored marketing assistance loans.

    (a) The producer of a commodity pledged as security for a farm-
storage loan shall:
    (1) Certify the quantity of such commodity on the loan application, 
or;
    (2) Have such quantity measured by CCC at the measurement service 
rate established by CCC.
    (b) The State committee may establish a marketing assistance loan 
percentage not to exceed a percentage CCC establishes or it may apply 
quality discounts to the loan rate in each year for each commodity on a 
Statewide basis or for specified areas within the State. Before 
approving a county committee request to establish a different loan 
percentage, or to apply quality discounts, the State committee shall 
consider conditions in the State or areas within a State to determine if 
the marketing assistance loan percentage should be reduced below the 
maximum marketing assistance loan percentage or the quality discounts 
should be applied to the basic county marketing assistance loan rate to 
provide CCC with adequate protection. Marketing assistance loans 
disbursed based upon loan percentages previously lowered and loan rates 
adjusted for quality shall not be altered if conditions within the State 
or areas within the State change to substantiate removing such 
reductions. Percentages established or loan rates adjusted for quality 
under this section shall apply only to new marketing assistance loans 
and not to outstanding marketing assistance loans. In determining loan 
percentages or the necessity to apply quality discounts, the State 
committee shall consider any factor at its discretion, including the 
following:
    (1) General crop conditions;
    (2) Factors affecting quality peculiar to an area within the State; 
and
    (3) Climatic conditions affecting storability.
    (c) An eligible quantity of a commodity that is commingled with an 
ineligible quantity of the commodity is not eligible to be collateral 
for a marketing assistance loan unless the producer, when requesting a 
marketing assistance loan designates all structures that may be used for 
storage of the marketing assistance loan collateral.
    (1) In such cases, the producer is not required to obtain prior 
written approval from the county committee before moving marketing 
assistance loan collateral from one designated structure to another 
designated structure.
    (2) In all other instances, if the producer intends to move 
marketing assistance loan collateral from a designated structure to 
another undesignated structure, the producer must request prior approval 
from the county committee. Such approval shall be written and the 
eligible or ineligible commodity must be measured by a representative of 
the county office, at the producer's expense, before commingling. Prior 
to commingling, with respect to wool and mohair, a representative of the 
county committee may determine an average production of the wool and 
mohair in a manner approved by CCC.
    (d)(1) Two or more producers may obtain:
    (i) A single joint marketing assistance loan for commodities that 
are stored in the same farm storage facility; or
    (ii) Individual marketing assistance loans for their share of the 
commodity that is commingled in a farm storage facility with commodities 
owned by other producers if such other producers execute an agreement 
that provides that such producers shall obtain the permission of a 
representative of the county committee before removal of any quantity of 
the commodity from the storage facility. All producers who store a 
commodity in a farm storage facility in which commodities that have been 
pledged as collateral for a marketing assistance loan shall be liable 
for any damage incurred by CCC for

[[Page 394]]

the deterioration or unauthorized removal or disposition of such 
commodities.
    (2) In such cases, each producer must execute a note and security 
agreement with CCC, and each such producer shall be jointly and 
severally liable for the violation of the terms and conditions of the 
note and the requirements of this part. Each producer is also liable for 
repayment of the entire marketing assistance loan amount until the 
marketing assistance loan is fully repaid without regard to their share 
in the commodity pledged as collateral. In addition, such producer may 
not amend the note and security agreement for the producer's claimed 
share in such commodities, or marketing assistance loan proceeds, after 
execution of the note and security agreement by CCC.
    (e)(1) A producer, when requesting a marketing assistance loan, 
shall designate in writing specific storage structures.
    (2) The producer is not required to request prior approval before 
moving marketing assistance loan collateral between such designated 
structures.
    (3) Movement of marketing assistance loan collateral to any other 
structures not designated or the disposal of such loan collateral 
without prior written approval of the county committee, shall subject 
the producer to administrative actions.
    (4) The producer is responsible for any loss in quantity or quality 
of the farm-stored commodity pledged as collateral.
    (5) CCC shall not assume any loss in quantity or quality of the 
marketing assistance loan collateral for farm-stored loans.



Sec.  1421.106  Warehouse-stored marketing assistance loan collateral.

    (a) A commodity may be pledged as collateral for a warehouse-stored 
marketing assistance loan in the quantity delivered to CCC for storage 
at a warehouse that meets standards for approval at part 1423 of this 
chapter. Such quantity shall be the net weight specified on the 
warehouse receipt or supplemental certificate.
    (b) Two or more producers may obtain a single joint marketing 
assistance loan for commodities stored in an approved warehouse if the 
warehouse receipt pledged as collateral is issued jointly to the 
producers.
    (c) If more than one producer executes a note and security agreement 
with CCC, each such producer shall be jointly and severally liable for 
the violation of the terms and conditions of the note and the 
regulations in this part. Each such producer shall also remain liable 
for repayment of the entire marketing assistance loan amount until the 
marketing assistance loan is fully repaid without regard to such 
producer's claimed share in the commodity pledged as collateral for the 
marketing assistance loan. In addition, such producer may not amend the 
note and security agreement with respect to the producer's claimed share 
in such commodities, or marketing assistance loan proceeds, after 
execution of the note and security agreement by CCC.
    (d) Handling and storage rates that CCC has approved to be deducted 
from marketing assistance loan proceeds are available in USDA State and 
county FSA service centers. Deductions shall be based upon entries on 
the warehouse receipt or supplemental certificate, but the storage rate 
shall not exceed the storage rate CCC has approved. No storage deduction 
shall be made if written evidence acceptable to CCC is submitted 
indicating that:
    (1) Storage charges through the maturity date have been prepaid; or
    (2) The producer has arranged with the warehouse operator for the 
payment of storage charges through the maturity date and the warehouse 
operator enters an endorsement in substantially the following form on 
the warehouse receipt:

    Storage arrangements have been made by the depositor of the 
commodity covered by this receipt through (date through which storage 
has been provided). No lien will be asserted by the warehouse operator 
against CCC or any subsequent holder of the warehouse receipt for the 
storage charges that accrued before the specified date.

    (e) The beginning date to be used for computing storage deductions 
on the commodity stored in an approved warehouse shall be the later of 
the following:
    (1) The date the commodity was received or deposited in the 
warehouse;

[[Page 395]]

    (2) The date the storage charges start; or
    (3) The day following the date through which storage charges have 
been paid.
    (f) For hard red winter and hard red spring wheat tendered to CCC 
and stored in an approved warehouse, producers must obtain official 
protein content determinations or, as CCC determines is acceptable, 
protein content may be determined by mutual agreement between the 
producer and the warehouse operator. Costs of determinations shall not 
be paid by CCC.
    (g) For warehouse-stored peanuts, CCC will pay storage charges and 
in-charges and other fees as determined by CCC, to ensure proper storage 
of CCC loan collateral. The beginning date to be used for computing 
storage deductions on the CCC peanut loan collateral stored in an 
approved warehouse shall be the later of the following:
    (1) The date the commodity was received or deposited in the 
warehouse;
    (2) The date the storage charges start; or
    (3) The day following the date through which storage charges have 
been paid.
    (4) The date all required marketing assistance loan documents are 
received in the county office.



Sec.  1421.107  Warehouse receipts.

    (a) Warehouse receipts tendered to CCC under Sec.  1421.3 for 
marketing assistance loans must meet the provisions of this section and 
all other provisions of this part, and CCC program documents.
    (b) Warehouse receipts must be issued in the name of the eligible 
producer or CCC. If issued in the name of the eligible producer, the 
receipt must be properly endorsed on its reverse side certifying that 
the crop is free of encumbrances in order for title to vest in the 
holder. Receipts must be issued by an approved warehouse and must 
represent a commodity that is deemed to be stored commingled. The 
receipts must be negotiable and must represent a commodity that is the 
same quantity and quality as the eligible commodity actually in storage 
in the warehouse of the original deposit.
    (c) If the receipt is issued for a commodity that is owned by the 
warehouse operator either solely, jointly, or in common with others, the 
fact of such ownership shall be stated on the receipt. In States where 
the pledge of warehouse receipts issued by a warehouse operator on the 
warehouse operator's commodity is invalid, the warehouse operator may 
offer the commodity to CCC for a marketing assistance loan if such 
warehouse is licensed under the U.S. Warehouse Act.
    (d) Each warehouse receipt or accompanying supplemental certificate 
representing a commodity stored in an approved warehouse that has a 
storage agreement with CCC shall indicate that the commodity is insured 
under such agreement. CCC shall not be responsible for the cost of such 
insurance.
    (e) A separate warehouse receipt must be submitted for each grade 
and class of any commodity tendered to CCC and, for rice, such receipt 
must also state the milling yield of the rice, and for wool, such 
receipts must also state the yield and micron of the wool.
    (f) With respect to peanuts, a warehouse receipt must be submitted 
exhibiting grade, type, and segregation for peanuts tendered to CCC.
    (g)(1) Each warehouse receipt, or a supplemental certificate (in 
duplicate) that properly identifies the warehouse receipt, must be 
issued under the applicable CCC storage agreement or the U.S. Warehouse 
Act, as applicable, and must indicate:
    (i) The name and location of the storing warehouse;
    (ii) The warehouse code assigned by CCC;
    (iii) The warehouse receipt number;
    (iv) The date the receipt was issued;
    (v) The type of commodity;
    (vi) The date the commodity was deposited or received;
    (vii) The date to which storage has been paid or the storage start 
date;
    (viii) Whether the commodity was received by rail, truck or barge;
    (ix) The amount per bushel, pound, or hundredweight of prepaid in or 
out charges;
    (x) The signature of the warehouse operator or the authorized agent; 
and
    (xi) For warehouses operating under a merged warehouse code 
agreement

[[Page 396]]

(KC-385), the location and county to which the producer delivered the 
commodity.
    (2) In addition to the information specified in paragraph (f)(1) of 
this section, additional commodity specific requirements shall be 
determined by CCC and be available at State and county offices and the 
Kansas City Commodity Office.
    (h) If a warehouse receipt indicates that the commodity tendered for 
loan grades ``infested'' or ``contains excess moisture'', or both, the 
receipt must be accompanied by a supplemental certificate in order for 
the commodity to be eligible for a marketing assistance loan. The grade, 
grading factors, and quantity to be delivered must be shown on the 
certificate as follows:
    (1) When the warehouse receipt shows ``infested'' and the commodity 
has been conditioned to correct the infested condition, the supplemental 
certificate must show the same grade without the ``infested'' 
designation and the same grading factors and quantity as shown on the 
warehouse receipt.
    (2)(i) When the warehouse receipt shows that the commodity contained 
excess moisture and the commodity has been dried or blended, the 
supplemental certificate must show the grade, grading factors, and 
quantity after drying or blending of the commodity. Such entries shall 
reflect a drying or blending shrinkage as provided in paragraph 
(g)(2)(iv) of this section.
    (ii) When a supplemental certificate is issued under paragraphs 
(g)(1) and (g)(2)(i) of this section, the grade, grading factors and the 
quantity shown on such certificate shall supersede the entries for such 
items on the warehouse receipt.
    (iii) If the commodity has been dried or blended to reduce the 
moisture content, the quantity specified on the warehouse receipt or the 
supplemental certificate shall represent the quantity after drying or 
blending.
    (iv) For commodities dried or blended under paragraph (g)(2)(iii) of 
this section, such quantity shall reflect a minimum shrinkage in the 
receiving weight excluding dockage:
    (A) For the following commodities, 1.3 times the percentage 
difference between the moisture content of the commodity received and 
the following percentages for the specified commodity:
    (1) Barley: 14.5 percent;
    (2) Corn: 15.5 percent;
    (3) Grain sorghum: 14.0 percent;
    (4) Oats: 14.0 percent;
    (5) Rice: 14.0 percent;
    (6) Soybeans: 14.0 percent;
    (7) Wheat: 13.5 percen; and
    (8) Peanuts: 10.0 percent.
    (B) For the following commodities, 1.1 times the percentage 
difference between the moisture content of the commodity received and 
the following percentages for the specified commodity:
    (1) Canola: 10.0 percent;
    (2) Flaxseed: 9.0 percent;
    (3) Mustard Seed: 10.0 percent;
    (4) Rapeseed: 10.0 percent;
    (5) Safflower Seed: 10.0 percent;
    (6) Sunflower Seed: 10.0 percent;
    (7) Crambe: 10.0 percent; and
    (8) Sesame Seed: 10.0 percent.
    (i)(1) If, under paragraph (g) of this section, a supplemental 
certificate is issued in connection with a warehouse receipt, such 
certificate must state that no lien for processing will be asserted by 
the warehouse operator against CCC or any subsequent holder of such 
receipt.
    (2) Warehouse receipts and the commodities represented by such 
receipts that are stored in an approved warehouse that is operating 
under a CCC storage agreement may be subject to a lien for warehouse 
charges as specified in the applicable storage agreement. For all 
commodities except peanuts, the producer who pledged such a receipt as 
collateral for a loan under this part shall pay to CCC all costs 
incurred by CCC as result of the existence of the lien. In no event 
shall a warehouse operator be entitled to satisfy such a lien by sale of 
the commodities when CCC is the holder of such receipt.
    (j) Warehouse receipts representing commodities that have been 
shipped by rail or by barge, must be accompanied by supplemental 
certificates completed under paragraph (f) of this section.



Sec.  1421.108  Transfers and reconcentrations.

    (a) Upon request by the producer before transfer, the county 
committee may approve the transfer of a quantity

[[Page 397]]

of a commodity that is pledged as collateral for a farm-stored loan to a 
warehouse-stored loan at any time during the loan period.
    (1) Liquidation of the farm-stored loan or part thereof shall be 
made through the pledge of warehouse receipts for the commodity placed 
under warehouse-stored loan and the immediate payment by the producer of 
the amount by which the warehouse-stored loan is less than the farm-
stored loan or part thereof and charges plus interest. The loan quantity 
for the warehouse-stored loan cannot exceed 110 percent of the loan 
quantity transferred from the farm-stored loan.
    (2) Any amounts due the producer shall be disbursed by the FSA 
county service center.
    (b) Upon request by the producer before the transfer, the county 
committee may approve the transfer of a warehouse-stored loan or part 
thereof to a farm-stored loan at any time during the marketing 
assistance loan period. Quantities pledged as collateral for a farm-
stored loan shall be based on a measurement or a calculation of average 
production of wool and mohair, such measurement or calculation to be 
made by a representative of the county office before approving the farm-
stored loan. The producer must immediately repay the amount by which the 
farm-stored loan is less than the warehouse-stored loan and charges plus 
interest on the shortage. The maturity date of the farm-stored loan 
shall be the maturity date applicable to the warehouse-stored loan that 
was transferred.
    (c) Upon the filing of the Reconcentration Agreement and Trust 
Receipt by the producer and warehouse operator, CCC may, during the 
marketing assistance loan period, approve the reconcentration in another 
CCC-approved warehouse for all or part of a commodity that is pledged as 
collateral for a warehouse-stored loan. Any such approval shall be 
subject to the terms and conditions in the Reconcentration Agreement and 
Trust Receipt. A producer may, before the new warehouse receipt is 
delivered to CCC, pay to CCC:
    (1) The principal amount of the marketing assistance loan and 
charges plus interest and applicable charges; or
    (2) If CCC so announces, an amount less than the principal amount of 
the marketing assistance loan and charges plus interest under the terms 
and conditions specified by CCC at the time the producer redeems the 
commodity pledged as collateral for such marketing assistance loan.



Sec.  1421.109  Personal liability of the producer.

    (a) When a producer obtains a commodity marketing assistance loan, 
the producer agrees, in writing, not to:
    (1) Provide an incorrect certification of the quantity or make any 
fraudulent or erroneous representation for the marketing assistance 
loan; or
    (2) Remove or dispose of a quantity of commodity that is collateral 
for a CCC farm-stored loan without prior written approval from CCC.
    (3) The violation of the terms and conditions of the note and 
security agreement, will cause harm or damage to CCC in that funds may 
be disbursed to the producer for a quantity of a commodity that is not 
actually in existence or for a quantity on which the producer is not 
eligible.
    (b) Such violations as are referred to in paragraph (a)(3) of this 
section may include:
    (1) Incorrect certification;
    (2) Unauthorized removal; and
    (3) Unauthorized disposition.
    (c) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC for such violations. 
Accordingly, if the county committee determines that the producer has 
committed such violations, liquidated damages shall be assessed on the 
quantity of the commodity that is involved in the violation.
    (d) In the case of violations, if CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by:
    (i) 10 percent of the marketing assistance loan rate applicable to 
the loan note for the first offense; or
    (ii) 25 percent of the marketing assistance loan rate applicable to 
the loan note for the second offense; or

[[Page 398]]

    (2) Did not act in good faith about the violation, or for cases 
other than the first or second offense, liquidated damages will be 
assessed by multiplying the quantity involved in the violation by 25 
percent of the marketing assistance loan rate applicable to the loan 
note.
    (e) For violations and the liquidated damages under paragraph (d)(1) 
of this section, the county committee shall:
    (1) Require repayment of the marketing assistance loan quantity 
removed or disposed of at the lesser of:
    (i) The applicable loan principal, and charges, plus interest, or:
    (ii) The announced alternative repayment rate in effect on date the 
violation occurred, plus 15 percent of the loan rate, or as otherwise 
determined by the Deputy Administrator, and
    (2) If the producer fails to pay such amount within 30 days from the 
date of notification, accelerate the marketing assistance loan in 
default and require repayment of all loan principal, charges, and 
interest.
    (f) For violations committed and the liquidated damages were 
assessed under paragraph (d)(2) of this section, the county committee 
shall call the loan involved in the violation, and require repayment of 
the entire loan principal, charges and interest.
    (g) The county committee may waive imposing liquidated damages if it 
determines that the violation was inadvertent, accidental, or 
unintentional.
    (h) If, for any violation, the county committee determines that 
CCC's interest is not or will not be protected, the county committee 
shall call all of the producer's farm-stored loans, and deny future 
farm-stored loans and loan deficiency payments without production 
evidence for 24 months after the date the violation is discovered. 
Depending on the severity of the violation, the county committee may 
deny future farm-stored loans and loan deficiency payments without 
production evidence for an additional period CCC designates.
    (i) If the county committee determines that the producer has 
committed a violation, the county committee shall notify the producer in 
writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances that caused the violation, to 
the county committee; and
    (2) Administrative actions will be taken.
    (j) If the loan is accelerated, the producer may not repay the loan 
at the lower alternative loan repayment rate and may not utilize 
commodity certificate exchanges, unless authorized by CCC.
    (k) Producers rejected for a farm-stored loan under this section may 
apply for a warehouse-stored loan.
    (l) The loan plus other charges shall be payable to CCC upon demand 
if a producer:
    (1) Makes any fraudulent representation in obtaining a marketing 
assistance loan, maintaining, or settling a loan; or
    (2) Disposes or moves the loan collateral without the approval of 
CCC.
    (m) A producer shall be personally liable for damages resulting from 
a commodity delivered to or removed by CCC containing mercurial 
compounds, toxin producing molds, or other substances poisonous or 
harmful to humans or animals or property.
    (n) If the amount disbursed under a marketing assistance loan or in 
settlement thereof, exceeds the amount authorized by this part, the 
producer shall be liable for repayment of such excess and charges, plus 
interest.
    (o) If the amount collected from the producer in satisfaction of the 
marketing assistance loan is less than the amount required under this 
part, the producer shall be personally liable for repayment of the 
amount of such deficiency and charges, plus interest.
    (p) In the case of joint loans or loan deficiency payments, the 
personal liability for the amounts specified in this section shall be 
joint and several on the part of each producer signing the note or loan 
deficiency payment application.
    (q) Any or all of the liquidated damages assessed may be waived as 
determined by CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 67939, Dec. 5, 2003]

[[Page 399]]



Sec.  1421.110  Repayments.

    (a) CCC may allow a producer to repay a nonrecourse marketing 
assistance loan at a rate that is the lesser of:
    (1) The loan rate and charges, plus interest determined for a crop; 
or
    (2) The prevailing world market price, as determined by CCC, for 
rice or the alternative repayment rate for all other commodities, as 
determined by CCC.
    (b)(1) On a form prescribed by CCC, a producer may request to lock 
in the applicable repayment rate for a period of:
    (i) 60 calendar days; or
    (ii) not less than 14 calendar days before the maturity date of the 
loan, but not both.
    (2) The request to lock in the applicable repayment rate must be 
received in the FSA county service center that disbursed the loan.
    (3) The repayment rate that is locked in is the rate in effect when 
the request to lock in is approved.
    (4) The repayment rate may be locked in on outstanding farm-stored 
or warehouse-stored loans.
    (5) The repayment rate that is locked in will expire the earlier of:
    (i) 60 calendar days from date of approval, or;
    (ii) 14 calendar days before loan maturity.
    (6) The requests can only be completed one time for a designated 
quantity.
    (7) The requests can be made in person or by facsimile.
    (8) The requests cannot be canceled, terminated, or changed after 
approval.
    (9) The locked-in applicable repayment rate will not transfer to any 
loan disbursed outside of the originating county where the commodity was 
stored.
    (10) Once a repayment rate is locked in it cannot be extended.
    (c) If a producer fails to repay a marketing assistance loan within 
the time prescribed by CCC under the terms and conditions of the request 
to lock in a market loan repayment rate, the producer may repay the 
loan:
    (1) On or before maturity, at the lesser of:
    (i) Principal plus interest as determined by CCC;
    (ii) The repayment rate in effect on the day the repayment is 
received in the FSA county service center.
    (2) After maturity at principal plus interest.
    (d) When the proceeds of the sale of the commodity are needed to 
repay all or a part of a farm-stored loan, the producer must request and 
obtain prior written approval on a CCC approved form and comply with the 
terms and conditions of such form, to remove a specified quantity of the 
commodity from storage. Approval does not constitute release of CCC's 
security interest in the commodity or release of producer liability for 
amounts due CCC for the marketing assistance loan indebtedness if 
payment in full is not received by the county office. Failure to repay a 
marketing assistance loan within the time period prescribed by CCC in 
the case of a farm-stored loan and delivery of the pledged collateral to 
a buyer, is a violation of the agreement. In the case of such violation, 
the producer must repay the loan principal and interest or another 
amount as determined by the Deputy Administrator, FSA, under Sec.  
1421.109.
    (e) The producer may obtain county committee approval of a release 
of all or part of pledged collateral for a warehouse-stored loan at or 
before the maturity of such loan by paying to CCC:
    (1) The principal amount of the marketing assistance loan and 
charges plus interest, or
    (2) An amount less than the principal amount of the marketing 
assistance loan and charges plus interest under the terms and conditions 
specified by CCC at the time the producer redeems the collateral for 
such loan.
    (f) A partial release of marketing assistance loan collateral must 
cover all of the commodity represented by one warehouse receipt. 
Warehouse receipts redeemed by repayment of the marketing assistance 
loan shall be released only to the producer. However, such receipt may 
be released to persons designated in a written authorization that is 
filed with the county office by the producer within 15 days before the 
date of repayment.

[[Page 400]]

    (g) The note and security agreement shall not be released until the 
marketing assistance loan has been satisfied in full.
    (h)(1) If the commodity is moved from storage without obtaining 
prior approval to move such commodity, such removal shall constitute 
unauthorized removal or disposition, as applicable under Sec.  
1421.109(b), unless the removal occurred on a non-workday and the 
producer notified the county office on the next workday of such removal.
    (2) Any loan quantities involved in a violation of Sec.  1421.109 
must be repaid under Sec.  1421.109(e).



Sec.  1421.111  Commodity certificate exchanges.

    (a) For any outstanding marketing assistance loan, a producer may 
purchase a commodity certificate and exchange that commodity certificate 
for the marketing assistance loan collateral.
    (b) The exchange rate is the lessor of:
    (1) The loan rate and charges, plus interest applicable to the loan;
    (2) The prevailing world market price, as determined by CCC, for 
rice or the alternative repayment rate for all other commodities, as 
determined by CCC.
    (c) Commodity certificate exchanges may not be used when locking in 
a repayment rate under Sec.  1421.110.
    (d) Producers must request a commodity certificate exchange in 
person at the FSA county service center that disbursed the marketing 
assistance loan by:
    (1) Completing a written request as CCC determines.
    (2) Purchasing a commodity certificate for the exact amount required 
to exchange the marketing assistance loan collateral.
    (3) Immediately exchanging the purchased commodity certificate for 
the outstanding loan collateral.



Sec.  1421.112  Loan settlement.

    (a) The value of the settlement of marketing assistance loan shall 
be made by CCC on the following basis:
    (1) For nonrecourse marketing assistance loans, the schedule of 
premiums and discounts for the commodity provided that:
    (i) If, the value of the collateral at settlement is less than the 
amount due, the producer shall pay to CCC the amount of such deficiency 
and charges, plus interest on such deficiency; or
    (ii) If, the value of the collateral at settlement is greater than 
the amount due, such excess shall be retained by CCC and CCC shall have 
no obligation to pay such amount to any party.
    (2) For recourse marketing assistance loans, the proceeds from the 
sale of the commodity provided that:
    (i) If, the value of the collateral at settlement is less than the 
amount due, the producer shall pay to CCC the amount of such deficiency 
and charges, plus interest on such deficiency; or
    (ii) If, the proceeds received from the sale of the commodity are 
greater than the sum of the amount due, plus any cost incurred by CCC in 
conducting the sale of the commodity, the amount of such excess shall be 
paid to the producer or, if applicable, to a secured creditor of the 
producer.
    (3) If CCC sells the commodity described in paragraphs (a)(1) or 
(a)(2) of this section in settlement of the marketing assistance loan, 
the sales proceeds shall be applied to the amount owed CCC by the 
producer. The producer shall be responsible for any costs incurred by 
CCC in completing the sale. CCC may deduct such amount from the sales 
proceeds.
    (b) Settlements made by CCC for eligible commodities that are 
acquired by CCC and that are stored in an approved warehouse shall be 
made on the basis of the entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (c) Settlements made by CCC for peanuts acquired by CCC and stored 
in an approved warehouse shall be based on the settlement value at the 
time of the loan disbursement and the entries in the applicable 
warehouse receipt, supplemental certificate, and accompanying documents 
subject to adjustments for changes in quality and other factors.
    (1) All eligible commodities that are stored in other than approved 
warehouses shall be delivered to CCC as CCC instructs. Settlement shall 
be based on

[[Page 401]]

entries in the applicable warehouse receipt, supplemental certificate, 
and accompanying documents.
    (2) For eligible loan commodities that are delivered from other than 
an approved warehouse, settlement shall be made by CCC on the basis of 
the basic marketing assistance loan rate that is in effect for the 
commodity at the producer's customary delivery point, as determined by 
CCC.
    (d) In all cases, settlements may be adjusted for changes in quality 
and other factors affecting the value of the commodity.



Sec.  1421.113  Foreclosure.

    (a)(1) Upon maturity and nonpayment of a warehouse-stored loan, 
title to the unredeemed collateral securing the marketing assistance 
loan shall immediately vest in CCC.
    (2) Upon maturity and nonpayment of a farm-stored marketing 
assistance loan, title to the unredeemed collateral shall automatically 
transfer to CCC upon CCC demand.
    (3) When CCC acquires title to the unredeemed collateral, CCC shall 
not pay for any market value that such collateral may have in excess of 
the marketing assistance loan indebtedness, (the unpaid amount of the 
note and charges plus interest).
    (b) If the total amount due on a farm-stored loan (the unpaid amount 
of the note plus charges, and interest) is not satisfied upon maturity, 
CCC may remove the commodity from storage, and assign, transfer, and 
deliver the commodity or documents evidencing title thereto when, how, 
and upon terms as CCC determines. Disposition may also be effected 
without removing the commodity from storage. The commodity may be 
processed before sale and CCC may become the purchaser of the whole or 
any part of the commodity at either a public or private sale.
    (1) The value of settlement for a farm-stored commodity removed by 
CCC from storage and shall be as provided in Sec.  1421.112.
    (2) If a deficiency exists after the collateral is sold, a claim for 
such deficiency will be established in accordance with part 1403 of this 
title.



Sec.  1421.115  Recourse marketing assistance loans.

    (a) CCC shall make recourse marketing assistance loans available to 
eligible producers of high moisture corn, high moisture grain sorghum 
and other eligible loan commodities as determined by the Deputy 
Administrator, Farm Programs.
    (b) Repayment must be paid in full on or before the loan maturity 
date.
    (c) Recourse marketing assistance loan collateral may not be 
delivered or forfeited to CCC in satisfaction of the loan indebtedness.



                   Subpart C--Loan Deficiency Payments

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec.  1421.200  Applicability.

    (a) During the loan availability period, loan deficiency payments 
will be made available to eligible producers when the alternative 
repayment rate is less than the applicable county loan rate.
    (b) To be eligible to receive loan deficiency payments a producer 
must:
    (1) Comply with all marketing assistance loan eligibility including 
beneficial interest requirements.
    (2) Agree to forgo obtaining such loan, if applicable; and
    (3) File in person, by mail or electronically a request for payment 
on a form prescribed by CCC; and
    (4) Otherwise comply with all program requirements.
    (c) A producer must submit a completed request for:
    (1) A field direct loan deficiency payment to CCC on or before the 
date of harvesting or shearing a quantity of an eligible commodity, 
provided further that the producer must have beneficial interest in such 
quantity on the date the commodity is harvested or sheared.
    (2) A field direct loan deficiency payment to CCC for unshorn pelts 
on or before the date of slaughter of the quantity of live lambs, before 
the loss by the producer of beneficial interest in the lamb and the 
unshorn pelt produced from such lamb.

[[Page 402]]

    (3) All other types of loan deficiency payment requests after 
harvest or shearing and before beneficial interest is lost in the 
commodity, but not later than the loan availability date.
    (d) For unshorn pelts, the lamb must be owned for a period of not 
less than 30 days in advance of the application and sold for immediate 
slaughter or slaughtered for personal use. Producers must submit 
acceptable production evidence to CCC under Sec.  1421.12 at the time of 
request. Producers who do not sell lambs for immediate slaughter are 
ineligible for a loan deficiency payment.



Sec.  1421.201  Loan deficiency payment rate.

    (a) The loan deficiency payment rate for a crop shall be the amount 
by which the loan rate for the crop exceeds the rate at which CCC has 
announced that producers may repay their loans under Sec.  1421.10.
    (b) Such rate shall be the amount determined:
    (1) For loan deficiency payments other than field direct:
    (i) On the day the producer submits a completed request for a loan 
deficiency payment to the FSA county service center;
    (ii) Using the rate in effect for the FSA county service center 
where the commodity is stored.
    (2) For field direct loan deficiency payments:
    (i) On the date the commodity was delivered to the processor, buyer, 
warehouse or CMA;
    (ii) Using the rate in effect for the FSA county service center 
where the farm records are kept.
    (3) For rice loan deficiency payments, the adjusted world price 
under Sec.  1421.10(c).
    (c) The loan deficiency payment applicable to such crop shall be 
computed by multiplying the loan deficiency payment rate, as determined 
under paragraph (b) of this section, by the quantity of the crop the 
producer is eligible to pledge as collateral for a nonrecourse loan for 
which the loan deficiency payment is requested.



Sec.  1421.202  Loan deficiency payment quantity.

    (a) A loan deficiency payment may be based on 100 percent of the net 
eligible quantity specified on acceptable evidence of production of the 
commodity certified as eligible for loan deficiency payment if such 
production evidence is provided for such commodity under Sec.  1421.12.
    (b) Two or more producers may obtain a single joint loan deficiency 
payment for commodities that are stored in the same storage facility. 
Two or more producers may obtain individual loan deficiency payments for 
their share of the commodity that is stored commingled in a farm storage 
facility with commodities for which a loan deficiency payment has been 
requested and shall be liable for any damage incurred by CCC for 
incorrect certification of such commodities under Sec.  1421.203.
    (c) Two or more producers may obtain a single joint loan deficiency 
payment for commodities that are stored in an approved or unapproved 
warehouse if the acceptable documentation representing an eligible 
commodity for which a loan deficiency payment is requested is completed 
jointly for such producers.



Sec.  1421.203  Personal liability of the producer.

    (a) When a producer requests a loan deficiency payment, the producer 
agrees:
    (1) When signing the Loan Deficiency Payment Application and 
Certification or the Direct Loan Deficiency Payment Agreement, as 
applicable, that the producer will not provide an incorrect 
certification of the quantity or make any fraudulent representation for 
loan deficiency payment purpose; and
    (2) That violation of the terms and conditions of the loan 
deficiency payment request, as applicable, will cause harm or damage to 
CCC in that funds may be disbursed to the producer for a quantity of a 
commodity that is not actually in existence or for a quantity on which 
the producer is not eligible, if CCC determines that the producer has 
violated the terms and conditions of the applicable forms prescribed by

[[Page 403]]

CCC, liquidated damages shall be assessed on the quantity of the 
commodity that is involved in the violation.
    (b) If CCC determines that the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by:
    (i) 10 percent of the loan deficiency payment rate for the first 
offense; or
    (ii) 25 percent of the loan deficiency payment rate for the second 
offense.
    (2) Did not act in good faith about the violation, or for cases 
other than the first or second offense, liquidated damages will be 
assessed by multiplying the quantity involved in the violation by 25 
percent of the loan deficiency payment rate.
    (c) For violations to which paragraph (b)(1) of this section 
applies, the producer must repay the loan deficiency payment applicable 
to the loan deficiency quantity incorrectly certified, and charges, plus 
interest applicable to the amount repaid. If the producer fails to pay 
such amounts within 30 days from the date of notification, the producer 
must repay the entire loan deficiency payment and charges plus interest.
    (d) For violations to which paragraph (b)(2) of this section 
applies, the producer shall repay of the entire loan deficiency payment 
and charges plus interest.
    (e) CCC may waive the liquidated damages taken applicable to 
paragraph (b) of this section if the CCC determines that the violation 
occurred inadvertently, accidentally, or unintentionally.
    (f) If, for any violation to which paragraph (b) of this section 
applies, the county committee determines that CCC's interest is not or 
will not be protected, the county committee shall:
    (1) Call the producer's farm-stored loans;
    (2) Deny future farm-stored loans for the current and 2 following 
crop years;
    (3) Deny loan deficiency payments for the current and 2 following 
crop years unless production evidence is presented to CCC. Depending on 
the severity of the violation, the county committee may deny future 
farm-stored loan and loan deficiency payments without production 
evidence.
    (g) If the county committee determines that the producer has 
committed a violation, the county committee shall notify the producer in 
writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances that caused the violation, to 
the county committee; and
    (2) Administrative action will be taken under this section.
    (h) If the amount disbursed under loan deficiency payments exceeds 
the amount authorized by this part, the producer shall be liable for 
repayment of such excess and charges, plus interest.
    (i) In the case of joint loan deficiency payments, the personal 
liability for the amounts specified in this section shall be joint and 
several on the part of each producer signing the loan deficiency payment 
application.
    (j) Any or all of the liquidated damages assessed under the 
provisions of paragraph (b) of this section may be waived as determined 
by CCC.



 Subpart D--Grazing Payments for 2002	2007 Crop of Wheat, Barley, Oats 
                              and Triticale

    Source: 66 FR 13404, Mar. 6, 2001, unless otherwise noted. 
Redesignated at 67 FR 63511, Oct. 11, 2002.



Sec.  1421.300  Applicability.

    (a) The regulations in this subpart are applicable to the 2002-2007 
crops of eligible acreage planted to wheat, barley, oats or triticale 
that is grazed by livestock and not harvested in any other manner. This 
subpart sets forth the terms and conditions under which a grazing 
payment in lieu of a loan deficiency payment will be made by CCC.
    (b) The form that is used in administering these payments is 
available in State and county FSA offices and shall be prescribed by 
CCC.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63523, Oct. 11, 2002]

[[Page 404]]



Sec.  1421.301  Administration.

    (a) This subpart shall be administered by the Farm Service Agency 
(FSA) under the general direction and supervision of the Executive Vice 
President, CCC or designee. The program shall be carried out in the 
field by State and county FSA employees under the general direction and 
supervision of the 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 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 Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator for Farm Programs (DAFP), 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. In addition, DAFP may establish other conditions for payments 
that will assist in achieving the goals of the program and may include 
such provisions in the program agreement or other program documents.



Sec.  1421.302  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration under this subpart:
    COC means the FSA county office committee.
    CCC means the Commodity Credit Corporation.
    Department means the United States Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency (FSA) or a designee of that person.
    FSA means the Farm Service Agency of the Department.
    Secretary means the Secretary of the United States Department of 
Agriculture, or the Secretary's delegate.
    STC means the FSA State committee.



Sec.  1421.303  Eligible producer and eligible land.

    (a) To be an eligible producer for a payment under this subpart, the 
person must be a producer of wheat, barley, oats, or triticale in the 
2002 through 2007 crop years. Also, to be an eligible producer, the 
person must meet all other qualifications for payment that are set out 
in this subpart, set out in parts 12, 718, 1400, and 1405 of this title. 
A person will not be considered the producer of the crop unless that 
person was responsible for the planting of the crop and had the risk of 
loss in the crop at all times, including, at the time of planting and 
the time of the request for a payment under, this subpart.
    (b) A minor may participate in the program if the right of majority 
has been conferred on the minor by court order or by statute, or if the 
minor participates through a guardian authorized to act on the minor's 
behalf in these matters. Alternatively, a minor may participate if the 
program documents are all signed by an acceptable (to CCC) guarantor or 
if bond, acceptable to CCC, is provided by a surety.
    (c) For the crop to be eligible, the crop, in addition to other 
standards that may apply, must be grown on land that is classified as 
``cropland'' in FSA farm records or on land that FSA determines has been 
cropped in the last 3 years except that the land may also qualify if the 
land is committed to a crop rotation, normal for the locality, that 
includes harvesting the subject crop for grain. These rules are designed

[[Page 405]]

to assure, to the extent practicable, the available payment did not 
produce plantings that otherwise would not have occurred and the CCC may 
deny payments in any instance in which there is reason to believe that 
the planting was done for that purpose. To that end, if the commodity 
involved has not been previously grown by the producer or is not one 
which is not predominately produced locally, the producer must submit 
evidence of seed purchases for planting the commodities and other 
evidence deemed needed or appropriate by the COC in order to assure that 
the program goals are made and that the land was not planted to an 
eligible commodity simply to obtain a payment. Also, the land to be 
eligible must, for the year involved, be grazed and cannot, during the 
crop year, be harvested at any time for any purpose, except as 
determined by the Deputy Administrator to accommodate producers with a 
history of double-cropping when the crop to be harvested is not the crop 
for which a payment is to be made under this subpart. Land will be 
considered grazed only to the extent that the crop on the land is 
consumed in the field as live plants by livestock for the normal period 
of time for grazing in the area.
    (d)(1) A producer must, at the time of the agreement made under this 
part to obtain a payment, meet all other eligible criteria for obtaining 
loan deficiency payments.
    (2) For producers of triticale who obtain a payment under this 
subpart the producer must enter into an agreement with CCC to forgo any 
harvesting of triticale on the acreage for which such a payment is made.
    (e)(1) No payment will be made if the crop could not have been 
harvested because of weather conditions or any other reason.
    (2) The producer must retain the control, title and risk of loss in 
the commodity for which the payment is sought from the date of planting 
through the date on which mechanical harvesting of the crop would 
normally occur.
    (f) Producers who elect to graze 2002-2007 crop wheat, barley, oats, 
or triticale will not be eligible for an indemnity under the Federal 
Crop Insurance Program provision of Chapter IV of this title or a 
payment under Noninsured Crop Assistance Program authorized under part 
1437 of this chapter.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63523, Oct. 11, 2002]



Sec.  1421.304  Time and method for application.

    Application for the program provided in this subpart must be 
received, at the county office that is responsible for administering 
programs for the farm, no earlier than the date on which eligible crops 
would normally be harvested and no later than the final loan 
availability date as determined in accordance with Sec.  1421.5. The 
application must describe the land to be grazed and, in accordance with 
standards set by CCC, the tract/field location. The COC will determine 
the first harvest date which shall take into account the date on which 
such crops are, locally, normally harvested for any purpose. Where 
multiple producers are involved, the form must reflect each producer's 
share in the crop. No producer must receive payments under this subpart 
except to the extent that the payments are commensurate with that share. 
Should a person who is entitled to receive a payment under this subpart 
die, that payment, as earned, may be made to other persons as provided 
for in the rules set out in part 707. Third parties may also receive 
payments to the extent provided for in that part for other situations 
involving an incapacitation of the producer. Refusals to allow CCC to 
verify information on any form or report utilized for this subpart can 
result in program ineligibility and producers must provide CCC and its 
agent to the property involved and to all records as may be relevant to 
the making of payments under this subpart. Further, false statements 
will disqualify the producer from the program and may be subject to 
other sanctions including criminal sanctions.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63524, Oct. 11, 2002]



Sec.  1421.305  Payment amount.

    (a) The grazing payment rate shall be the loan deficiency payment in 
effect

[[Page 406]]

for the farm on the date which the producer submits a complete program 
application to CCC. For triticale, the loan deficiency payment rate will 
be equal to the rate for the predominant class of wheat in the county 
where the farm is located in effect as of the date of the application is 
filed.
    (b) The payable units of production shall be computed by multiplying 
the eligible grazed acres by the applicable yield determined under 
paragraph (c) of this section.
    (c) The payment yield shall be the yield in effect for the 
calculation of direct payments under part 1412 of this chapter. In a 
case of a farm for which a farm program payment yield is unavailable for 
a covered commodity, an appropriate payment yield for the covered 
commodity on the farm will be determined by CCC taking into 
consideration the farm program payment yields applicable to the 
commodity using three (3) similar farms. For triticale, the payment 
yield shall be the yield for wheat from three (3) similar farms in that 
county.
    (d) No payment may be received or retained under this subpart to the 
extent that the payment, were they considered to be LDP's, would place 
that person over the per person per year payment limit that applies to 
LDP's. The producer agrees that the CCC may collect any payment 
considered to be an overpayment by reason of this subsection by 
withholding LDP payments until the matter is resolved, by treating the 
LDP as being not payable to the extent that a grazing refund would 
otherwise be due , by setoff, or by any other means available to CCC.
    (e) Payments can be withheld until the actual grazed acreage is 
verified and justified in connection with any other reports filed with 
FSA with respect to the farm (or filed with some other person or agency) 
and until all other necessary information is obtained. The CCC may 
require such other verification as it deems appropriate to assure that 
the program goals are met.
    (f) To receive the payment, the eligible producer must submit a 
request for payment on an application form as prescribed by CCC or FSA. 
The application may be obtained from the county FSA office, or from the 
USDA or FSA web site in the Internet. The form must be submitted to the 
county by the close of business on or before March 31 of the applicable 
crop year.
    (g) The producer will ineligible for payments under this subpart if 
any discrepancies between the reported acreage on the program form and 
other reports of acreage by the producer are not resolved by a date set 
by the CCC.
    (h) Unless otherwise authorized by the Deputy Administrator, all 
payment shall be made no later than September 28, 2001.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63524, Oct. 11, 2002]



Sec.  1421.306  Misrepresentation and scheme or device.

    (a) A producer shall be ineligible to receive payments under this 
subpart if it is determined by DAFP, 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 subpart to a producer 
engaged in a misrepresentation, scheme, or device, or to any other 
person as a result of the producer's actions, shall be refunded with 
interest together with such other sums as may become due. Any producer 
engaged in acts prohibited by this section and any person receiving 
payment under this subpart, as a result of such acts, shall be jointly 
and severally liable for any refund due under this section and for 
related charges. The remedies provided in this subpart shall be in 
addition to other civil, criminal, or administrative remedies which may 
apply.



Sec.  1421.307  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 this application, or 
this subpart, and if any refund of a payment to CCC shall become due for 
that or other reason in connection with the application, or

[[Page 407]]

this subpart, all payments made under this subpart to any producer shall 
be refunded to CCC together with interest as determined in accordance 
with paragraph (c) of this section and late-payments charges as provided 
for in part 1402 of this chapter.
    (b) All persons listed on an application shall be jointly and 
severally liable for any refund due in connection with that application 
and for any related charges which may be determined to be due for any 
reason.
    (c) Interest shall be applicable to refunds required of the 
producer. Such interest shall be charged at the rate of interest which 
the United States Treasury charges CCC for funds, as of the date CCC 
made such benefits available. Such interest shall accrue from the date 
such benefits were made available to the date of repayment but the 
interest rate shall increase to reflect any increase in the rate charged 
to CCC by Treasury for any percent of time for which the interest 
assessment is collected. CCC may waive the accrual of interest if CCC 
determines that the cause of the erroneous determination was not due to 
any action of the producer.
    (d) Late payment interest shall be assessed on refunds in accordance 
with the provisions of, and subject to the rates in 7 CFR part 1403.
    (e) Producers must refund to CCC any excess payments made by CCC 
with respect to any application in which they have an interest. Such 
refund shall be subject to interest at the same rate that applies to 
other refunds.



Subpart E--Standards for Approval of Warehouses for Grain, and Similarly 
                           Handled Commodities

    Source: 44 FR 67078, Nov. 23, 1979, unless otherwise noted. 
Redesignated at 67 FR 63511, Oct. 11, 2002.



Sec.  1421.5551  General statement and administration.

    (a) This subpart prescribes the requirements which must be met and 
the procedures which must be followed by a warehouseman in the United 
States or Puerto Rico who desires the initial or continuing approval by 
the Commodity Credit Corporation (hereinafter referred to as ``CCC'') of 
warehouse(s) for the storage and handling of:
    (1) Wheat, oats, corn, rye, barley, sorghums, flaxseed, soybeans, 
sunflower seed, canola, rapeseed, safflower, mustard, and such other 
oilseeds as the Secretary may determine under a Uniform Grain Storage 
Agreement (which commodities are hereinafter referred to as ``grain''),
    (2) Rough rice under a Uniform Rice Storage Agreement,
    (3) Milled rice under a Milled Rice Storage Agreement,
    (4) Dry Edible Beans under a Bean Storage Agreement, and
    (5) Seed under a Seed Storage Agreement, which are owned by CCC or 
held by CCC as security for price support loans.

This subpart is not applicable to grain, rough and milled rice, dry 
edible beans, and seed purchased in store for prompt shipment or to 
handling operations of a temporary nature.
    (b) Copies of the CCC storage agreement and forms required for 
obtaining approval under this subpart may be obtained from the Kansas 
City Commodity Office, U.S. Department of Agriculture, P.O. Box 205, 
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').
    (c) A warehouse must be approved by KCCO and a storage contract or 
agreement must be in effect between CCC and the warehouseman before CCC 
will use such warehouse. The approval of a warehouse or the entering 
into of a storage contract or agreement does not constitute a commitment 
that CCC will use the warehouse, and no official or employee of the U.S. 
Department of Agriculture is authorized to make any such commitment.
    (d) A warehouseman, when applying for approval under this subpart, 
shall submit to CCC at KCCO:
    (1) A completed Form CCC-24, ``Application for Approval of Warehouse 
for Grain, Rice, Dry Edible Beans, and Seed'', and a completed Form CCC-
24-1, ``Supplement to Application for Approval of Warehouse for Grain, 
Rice, Dry Edible Beans, and Seed'',

[[Page 408]]

    (2) A current financial statement prepared in accordance with 
generally accepted accounting principles meeting the following 
requirements:
    (i) Each financial statement shall include, but not be limited to 
the following:
    (A) A balance sheet;
    (B) A statement of income (profit and loss);
    (C) Statement of retained earnings; and
    (D) A statement of changes in the financial position.
    (ii) Each financial statement shall be accompanied by one of the 
following:
    (A) A report of audit or review conducted by an independent CPA or 
an independent public accountant in accordance with standards 
established by the American Institute of Certified Public Accountants. 
The accountant's report of audit or review shall include the 
accountant's certifications, assurances, opinions, comments, and notes 
with respect to such financial statement, or
    (B) A compilation report of the financial statement which is 
prepared by a grain commission firm or a management firm if such firm 
has been authorized by the Deputy Vice President, CCC (Deputy 
Administrator, Commodity Operations, FSA) to provide a compilation 
report of financial statements of warehousemen.
    (iii) All financial statements shall be accompanied by a 
certification by the chief executive officer of the warehouseman, under 
penalty of perjury, that the financial statement(s) accurately reflects 
the financial condition of the warehouseman for the period specified in 
such statement.
    (iv) A current financial statement on Form WA-51-2, ``Financial 
Statement'', supported by such supplemental schedules as CCC may 
request. Financial statements may be submitted on forms other than Form 
WA-51-2 with approval of the Director, KCCO, or the Director's designee.
    (v) Only one financial statement is required for a chain of 
warehouses owned or operated by a single business entity. If approved by 
the Director, KCCO, or the Director's designee, the financial statement 
of a parent company, which includes the financial position of a wholly-
owned subsidiary, may be used to meet the CCC standards for approval for 
the wholly-owned subsidiary.
    (3) Evidence that the warehouseman is licensed by the appropriate 
licensing authority as required under Sec.  1421.5552(a)(2) and such 
other documents or information as CCC may require.
    (e) The provisions of paragraph (d)(2) of this section shall also be 
applicable to warehousemen who have an existing storage contract with 
CCC. Such warehousemen with existing storage contracts shall submit 
their financial statements to CCC in the manner prescribed reflecting 
their financial condition as of the close of the warehouseman's fiscal 
or calendar year's operation, whichever is applicable. Thereafter, the 
financial statements and the audit, review or compilation reports shall 
be furnished annually to reflect the warehouseman's fiscal or calendar 
year's operation, whichever is applicable, and at such other times as 
may be required by the AMS or CCC.

[44 FR 67078, Nov. 23, 1979, as amended at 47 FR 22502, May 25, 1982; 
Amdt. 4, 50 FR 29640, July 22, 1985; 56 FR 46371, Sept. 12, 1991]



Sec.  1421.5552  Basic standards.

    Unless otherwise provided in this subpart, each warehouseman and 
each of the warehouses owned or operated by such warehouseman for which 
CCC approval is sought for the storage or handling of CCC owned or loan 
commodities shall meet the following standards:
    (a) The warehouseman shall:
    (1) Be an individual, partnership, corporation, association, or 
other legal entity engaged in the business of storing or handling for 
hire, or both, the applicable commodity. The warehouseman, if a 
corporation, shall be authorized by its charter to engage in such 
business,
    (2) Have a current and valid license for the kind of storage 
operation for which the warehouseman seeks approval if such a license is 
required by State or local laws or regulations,
    (3) Have a net worth which is the greater of $50,000 or an amount 
which is

[[Page 409]]

computed by multiplying the maximum storage capacity of the warehouse 
(the total quantity of the commodity which the warehouseman desires to 
store and which the warehouse can accommodate when stored in the 
customary manner) under the approved contract with CCC times twenty-five 
(25) cents per bushel in the case of grain, fifty (50) cents per 
hundredweight in the case of rough rice, eighty-five (85) cents per 
hundredweight in the case of milled rice, and sixty (60) cents per 
hundredweight in the case of dry edible beans. In the case of seed, the 
net worth of the warehouseman shall be at least equal to an amount which 
is computed by multiplying the estimated number of pounds of seed to be 
stored times seven (7) cents per pound. If this calculated net worth 
requirement exceeds $50,000, the warehouseman may satisfy any deficiency 
in net worth between the $50,000 minimum requirement and such calculated 
net worth requirement by furnishing bonds, irrevocable letters of 
credit, or other acceptable substitute security meeting the requirements 
of Sec.  1421.5553.
    (4) Have available sufficient funds to meet ordinary operating 
expenses,
    (5) Have satisfactorily corrected upon request by CCC, any 
deficiencies in the performance of any storage contract or agreement 
with CCC,
    (6) Maintain accurate and complete inventory and operating records,
    (7) Use only prenumbered warehouse receipts and scale tickets,
    (8) Have available at the warehouse adequate and operable 
firefighting equipment for the type of warehouse and applicable stored 
commodity, and
    (9) Have a work force and equipment available to complete load out 
within sixty (60) working days of that quantity of grain, rice, beans, 
or seed for which the warehouse is or may be approved under the Uniform 
Grain Storage Agreement, Uniform Rice Storage Agreement, Milled Rice 
Storage Agreement, Bean Storage Agreement, or Seed Storage Agreement. 
Notwithstanding the provisions of this paragraph, the load out capacity 
of any warehouse at a single location need not exceed the equivalent of 
200 railroad cars per day.
    (b) The warehouseman, officials, or supervisory employees of the 
warehouseman in charge of the warehouse operations shall have the 
necessary experience, organization, technical qualifications, and skills 
in the warehousing business regarding the applicable commodities to 
enable them to provide proper storage and handling services.
    (c) Warehouseman, officials, and each of the supervisory employees 
of the warehouseman in charge of the warehouse operations shall:
    (1) Have a satisfactory record of integrity, judgment, and 
performance, and
    (2) Be neither suspended nor debarred under applicable CCC 
suspension and debarment regulations.
    (d) The warehouse shall:
    (1) Be of sound construction, in good state of repair, and 
adequately equipped to receive, handle, store, preserve, and deliver the 
applicable commodity,
    (2) Be under the control of the contracting warehouseman at all 
times, and
    (3) Not be subject to greater than normal risk of fire, flood, or 
other hazards.

[44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July 
22, 1985; 51 FR 32627, Sept. 15, 1986; 55 FR 11572, Mar. 29, 1990]



Sec.  1421.5553  Bonding requirements for net worth.

    A bond furnished by a warehouseman under this subpart must meet the 
following requirements:
    (a) Such bond shall be executed by a surety which:
    (1) Has been approved by the U.S. Treasury Department, and
    (2) Maintains an officer or representative authorized to accept 
service of legal process in the State where the warehouse is located.
    (b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'', 
except that a bond furnished under State law (statutory bond) or under 
operational rules of nongovernmental supervisory agencies may be 
accepted in an equivalent amount as a substitute for a bond running 
directly to CCC if:
    (1) CCC determines that such bond provides adequate protection to 
CCC,

[[Page 410]]

    (2) It has been executed by a surety specified in paragraph (a) of 
this section or has a blanket rider and endorsement executed by such a 
surety with the liability of the surety under such rider or endorsement 
being the same as that of the surety under the original bond, and
    (3) It is noncancellable for not less than ninety (90) days or 
includes a rider providing for not less than ninety (90) days' notice to 
CCC before cancellation. Excess coverage on a substitute bond for one 
warehouse will not be accepted or applied by CCC against insufficient 
bond coverage on other warehouses.
    (c) Cash and negotiable securities offered by a warehouseman may be 
accepted by CCC in lieu of the equivalent amount of required bond 
coverage. Any such cash or negotiable securities accepted by CCC will be 
returned to the warehouseman when the period for which coverage was 
required has ended and there appears to CCC to be no liability under the 
storage contract or agreement.
    (d) A legal liability insurance policy may be accepted by CCC in 
lieu of the required amount of bond coverage provided such policy 
contains a clause or rider making the policy payable to CCC, CCC 
determines that it affords protection equivalent to a bond, and the 
Office of the General Counsel, U.S. Department of Agriculture, approves 
it for legal sufficiency.
    (e) An irrevocable letter of credit may be accepted by CCC in lieu 
of the required amount of bond coverage provided that the issuing bank 
is a commercial bank insured by the Federal Deposit Insurance 
Corporation. Such standby letter of credit shall be on Form CCC-33A, 
``Irrevocable Letter of Credit'', or on such other form as may be 
specifically approved by the Director, KCCO, or the Director's designee.

[44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July 
22, 1985]



Sec.  1421.5554  Examination of warehouses.

    Except as otherwise provided in this subpart, a warehouse must be 
examined by a person designated by CCC before it may be approved by CCC 
for the storage or handling of commodities and periodically thereafter 
to determine its compliance with CCC's standards and requirements.



Sec.  1421.5555  Exceptions.

    Notwithstanding any other provisions of this subpart:
    (a) The financial, bond, and original and periodic warehouse 
examination provisions of this subpart do not apply to any warehouseman 
approved or applying for approval for the storage and handling of 
commodities under CCC programs if the warehouse is licensed under the 
U.S. Warehouse Act for such commodities but a special examination shall 
be made of such warehouse whenever CCC determines such action is 
necessary.
    (b) A warehouseman who has a net worth of at least $50,000 but who 
fails or whose warehouse fails to meet one or more of the other 
standards of this subpart may be approved if:
    (1) CCC determines that the warehouse services are needed and the 
warehouse storage and handling conditions provide satisfactory 
protection for the commodity, and
    (2) The warehouseman furnishes such additional bond coverage (or 
cash or acceptable negotiable securities or legal liability insurance 
policy) as may be prescribed by CCC.

[44 FR 67078, Nov, 23, 1979, as amended at 51 FR 32627, Sept. 15, 1986]



Sec.  1421.5556  Approval of warehouses, requests for reconsideration.

    (a) CCC will approve a warehouse if it determines that the warehouse 
meets the standards set forth in this subpart. CCC will send a notice of 
approval to the warehouseman. Approval under this subpart, however, does 
not relieve the warehouseman of the responsibility for performing the 
warehouseman's obligations under any agreement with CCC or any other 
agency of the United States.
    (b) Except as otherwise provided in this subpart:
    (1) CCC will not approve the warehouse if CCC determines that the 
warehouse does not meet the standards set forth in this subpart, and
    (2) CCC will send any notice of rejection of approval to the 
warehouseman. The notice will state the cause(s) for

[[Page 411]]

such action. Unless the warehouseman or any officials or supervisory 
employees of the warehouseman are suspended or debarred, CCC will 
approve the warehouse if the warehouseman establishes that the causes 
for CCC's rejection of approval have been remedied.
    (c) If rejection of approval by CCC is due to the warehouseman's 
failure to meet the standards set forth:
    (1) In Sec.  1421.5552, other than the standard set forth in 
paragraph (c)(2) thereof, the warehouseman may, at any time after 
receiving notice of such action, request reconsideration of the action 
and present to the Director, KCCO, in writing, information in support of 
such request. The Director shall consider such information in making a 
determination and notify the warehouseman in writing of such 
determination. The warehouseman may, if dissatisfied with the Director's 
determination, obtain a review of the determination and an informal 
hearing thereon by filing an appeal with the Deputy Administrator, 
Commodity Operations, Farm Service Agency (hereinafter referred to as 
``FSA''). The time of filing appeals, forms for requesting an appeal, 
nature of the informal hearing, determination and reopening of the 
hearing shall be as prescribed in the FSA regulations governing appeals, 
7 CFR part 780. When appealing under such regulations, the warehouseman 
shall be considered as a ``participant''; and
    (2) In Sec.  1421.5552(c)(2), the ware house man's administrative 
appeal rights with respect to suspension and debarment shall be in 
accordance with applicable CCC regulations. After expiration of a period 
of suspension or debarment, a warehouseman may, at any time, apply for 
approval under this subpart.

[Amdt. 4, 50 FR 29640, July 22, 1985]



Sec.  1421.5557  Exemption from requirements.

    If warehousing services in any area cannot be secured under the 
provisions of the subpart and no reasonable and economic alternative is 
available for securing such services for commodities under CCC programs, 
the President or Executive Vice President, CCC, may temporarily exempt, 
in writing, applicants for storage agreements and warehousemen who are 
currently under contract with CCC in such area from one or more of the 
standards of this subpart and may establish such other standards as are 
considered necessary to satisfactorily safeguard the interests of CCC.

[53 FR 8746, Mar. 17, 1988]



Sec.  1421.5558  Contract and application and inspection fees.

    (a) Each warehouseman who has a non-federally licensed grain or rice 
warehouse in States that do not have a Cooperative Agreement with CCC 
for warehouse examinations must pay an annual contract fee to CCC for 
each such warehouse which is approved by CCC or for which CCC approval 
is sought as follows:
    (1) A warehouseman who has an existing agreement with CCC for the 
storage or handling of CCC-owned commodities or commodities pledged to 
CCC as loan collateral must pay an annual contract fee for each 
warehouse approved under that agreement in advance of the renewal date 
of such agreement.
    (2) All grain and rice warehousemen who do not have an existing 
agreement with CCC for the storage and handling of CCC-owned commodities 
or commodities pledged to CCC as loan collateral but who desire such an 
agreement must pay an application and inspection fee for each warehouse 
for which CCC approval is sought prior to CCC conducting the original 
warehouse examination. The annual contract fee must be paid by the 
warehouseman to CCC prior to the time that the agreement is entered 
into.
    (3) The contract fee will be prorated based upon the total number of 
months for which the contract is to be effective.
    (4) CCC may, upon the request of a warehouseman, conduct an 
examination of a warehouse for the sole benefit of the warehouseman and 
such warehouseman shall pay to CCC a fee equal to 1\1/2\ times the 
amount of the warehouseman's annual contract fee for such examination.

[[Page 412]]

    (b) Any subsequent changes in the contract and application fees 
shall be announced in the Federal Register.

[Amdt. 4, 50 FR 29641, July 22, 1985, as amended at 51 FR 32627, Sept. 
15, 1986; 53 FR 10062, Mar. 29, 1988]



Sec.  1421.5559  OMB control numbers assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
(7 CFR part 1421) have been approved by the Office of Management and 
Budget under provisions of 44 U.S.C. Chapter 35 and have been assigned 
OMB Numbers 0560-0009 and 0560-0036.

[Amdt. 4, 50 FR 29641, July 22, 1985]



PART 1423--PROCESSED AGRICULTURAL COMMODITIES--Table of Contents




 Subpart--Standards for Approval of Dry and Cold Storage Warehouses for 
   Processed Agricultural Commodities, Extracted Honey, and Bulk Oils

Sec.
1423.1 General statement and administration.
1423.2 Basic standards.
1423.3 Bonding requirements for net worth.
1423.4 Examination of warehouses.
1423.5 Exceptions.
1423.6 Approval of warehouse, requests for reconsideration.
1423.7 Exemption from requirements.
1423.8 OMB control numbers assigned pursuant to Paperwork Reduction Act.

    Authority: Secs. 4 and 5, 62 Stat. 1070, as amended, (15 U.S.C. 714b 
and c).



 Subpart--Standards for Approval of Dry and Cold Storage Warehouses for 
   Processed Agricultural Commodities, Extracted Honey, and Bulk Oils

    Source: 44 FR 67081, Nov. 23, 1979, unless otherwise noted.



Sec.  1423.1  General statement and administration.

    (a) This subpart prescribes the requirements which must be met and 
the procedures which must be followed by a warehouseman in the United 
States or Puerto Rico who desires the approval by the Commodity Credit 
Corporation (hereinafter referred to as ``CCC'') of warehouse(s) for the 
storage and handling of:
    (1) Dry or refrigerated processed agricultural commodities under a 
Processed Commodities Storage Agreement (hereinafter referred to as 
``processed commodities''),
    (2) Bulk oils, under a Contract or Agreement for Tank Storage, which 
are owned by CCC or held by CCC as collateral for price support loans, 
and
    (3) Extracted Honey (hereinafter referred to as ``honey'') under a 
Honey Storage Agreement, either in bulk or in containers meeting 
specifications in the applicable honey price support regulations, which 
is owned by CCC or held by CCC as security for price support loans. This 
subpart shall not apply to processed commodities, extracted honey, and 
bulk oils purchased in store by CCC for prompt shipment or to handling 
of commodities.
    (b) Copies of the CCC storage agreement and forms required for 
obtaining approval under this subpart may be obtained from the Kansas 
City Commodity Office, U.S. Department of Agriculture, P.O. Box 205, 
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').
    (c) A warehouse must be approved by KCCO and a storage contract or 
agreement must be in effect between CCC and the warehouseman before CCC 
will use such warehouse. The approval of a warehouse or the entering 
into of a storage contract or agreement does not constitute a commitment 
that CCC will use the warehouse, and no official or employee of the U.S. 
Department of Agriculture is authorized to make any such commitment.
    (d) A warehouseman when applying for approval under this subpart, 
shall submit to CCC at KCCO:
    (1) A completed Form CCC-560, ``Application for Approval of 
Warehouse (Processed Commodities)'', or Form CCC-513, ``Application for 
Approval of Tank Farm'', or Form CCC-55, ``Application for Approval of 
Warehouse for Honey Storage Contract'', whichever is applicable,
    (2) A current financial statement on Form WA-51, ``Financial 
Statement'', supported by such supplemental schedules as CCC may 
request. Financial

[[Page 413]]

statements may be submitted on forms other than Form WA-51 with approval 
of the Director, KCCO, or the Director's designee. Financial statements 
shall show the financial condition of the warehouseman as of a date no 
earlier than ninety (90) days prior to the date of the warehouseman's 
application, or such other date as CCC may prescribe. Additional 
financial statements shall be furnished annually and at such other times 
as CCC may require. CCC also may require that financial statements 
prepared by the warehouseman or by a public accountant be examined by an 
independent certified public accountant in accordance with generally 
accepted auditing standards. Only one financial statement is required 
for a chain of warehouses owned or operated by a single business entity. 
If approved by the Director, KCCO, or the Director's designee, the 
financial statement of a parent company, which includes the financial 
position of a wholly-owned subsidiary, may be used to meet the CCC 
standards for approval for the wholly-owned subsidiary.
    (3) Copies of the warehouseman's tariff and any changes thereto, and
    (4) Evidence that the warehouseman is licensed by the appropriate 
licensing authority as required under Sec.  1423.2(a)(2) and such other 
documents or information as CCC may require.

[44 FR 67081, Nov. 23, 1979, as amended at 45 FR 84009. Dec. 22, 1980; 
Amdt. 3, 50 FR 42512, Oct. 21, 1985]



Sec.  1423.2  Basic standards.

    Unless otherwise provided in this subpart, each warehouseman and 
each of the warehouses owned or operated by such warehouseman for which 
CCC approval is sought for the storage or handling of CCC-owned or loan 
commodities shall meet the following standards:
    (a) The warehouseman shall:
    (1) Be an individual, partnership, corporation, association, or 
other legal entity engaged in the business of storing or handling for 
hire, or both, the applicable commodity. The warehouseman, if a 
corporation, shall be authorized by its charter to engage in such 
business.
    (2) Have a current and valid license for the kind of storage 
operation for which the warehouseman seeks approval if such a license is 
required by State or local laws or regulations.
    (3) Have a net worth which is the greater of $25,000 or (i) for 
dairy and other processed commodities (other than those shown in 
paragraph (a)(3)(ii) of this section, the amount which results from 
multiplying five (5) percent of the current purchase price, times the 
quantity of the commodity to be stored; (ii) for honey, sugar and bulk 
oils, the amount which results from multiplying the storage capacity of 
the flat warehouse space available to CCC or the maximum capacity of the 
bulk tank(s), whichever is applicable, times five (5) percent of the 
current loan value for honey and sugar and five (5) percent of the 
current market value for bulk oils. The net worth need not exceed 
$250,000. If the calculated net worth exceeds $25,000, the warehouseman 
may satisfy any deficiency in net worth between the $25,000 minimum 
requirement and such calculated net worth by furnishing bonds (or 
acceptable substitute security) meeting the requirements of Sec.  
1423.3,
    (4) Have available sufficient funds to meet ordinary operating 
expenses,
    (5) Have satisfactory corrected, upon request by CCC, any 
deficiencies in the performance of any storage contract or agreement 
with CCC,
    (6) Use only warehouse receipts or such other documents as CCC may 
prescribe,
    (7) Maintain accurate and complete inventory and operating records,
    (8) Have available at the warehouse adequate and operable 
firefighting equipment for the type of warehouse and applicable stored 
commodity, and
    (9) Have a work force and equipment available to complete loadout as 
stated below or as CCC may prescribe:
    (i) Forty-five (45) working days of the total quantity of all honey 
and processed commodities stored for CCC.
    (ii) Seventy-five (75) working days of that quantity of bulk oils 
for which the warehouse is or may be approved under a contract with CCC.
    (b) The warehouseman, officials, or supervisory employees of the 
warehouseman in charge of the warehouse operations shall have the 
necessary experience, organization technical qualifications, and skills 
in the warehousing

[[Page 414]]

business regarding the applicable commodity to enable them to provide 
proper storage and handling services.
    (c) Warehouseman, officials, and each of the supervisory employees 
of the warehouseman in charge of the warehouse operations shall:
    (1) Have a satisfactory record of integrity, judgment, and 
performance, and
    (2) Be neither suspended nor debarred under applicable CCC 
suspension and debarment regulations.
    (d) The warehouse shall:
    (1) Be of sound construction, in good state of repair, and 
adequately equipped to receive, handle, store, preserve, and deliver the 
applicable commodity,
    (2) Be under the control of the contracting warehouseman at all 
times. If a warehouse is leased by the warehouseman, a copy of the 
written lease agreement must be furnished to CCC at the time the 
warehouseman applies for approval under this subpart. The lease 
agreement must be renewable and must provide that the lessor cannot 
cancel the agreement without giving at least 120 days notice to the 
warehouseman. All leases are subject to approval by the CCC Contracting 
Officer, and
    (3) Not be subject to greater than normal risk of fire, flood or 
other hazards.

[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42512, Oct. 
21, 1985]



Sec.  1423.3  Bonding requirements for net worth.

    A bond furnished by a warehouseman under this subpart must meet the 
following requirements:
    (a) Such bond shall be executed by a surety which:
    (1) Has been approved by the U.S. Treasury Department, and
    (2) Maintains an officer or representative authorized to accept 
service of legal process in the State where the warehouse is located.
    (b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'', 
except that a bond furnished under State law (statutory bond) or under 
operational rules of nongovernmental supervisory agencies may be 
accepted in an equivalent amount as a substitute for a bond running 
directly to CCC if:
    (1) CCC determines that such bond provides adequate protection to 
CCC.
    (2) It has been executed by a surety specified in paragraph (a) of 
this section or has a blanket rider and endorsement executed by such a 
surety with the liability of the surety under such rider or endorsement 
being the same as that of the surety under the original bond, and
    (3) It is noncancellable for not less than one hundred twenty (120) 
days or includes a rider providing for not less than one hundred twenty 
(120) days' notice to CCC before cancellation. Excess coverage on a 
substitute bond for one warehouse will not be accepted or applied by CCC 
against insufficient bond coverage on other warehouses.
    (c) Cash and negotiable securities offered by a warehouseman may be 
accepted by CCC in lieu of the equivalent amount of required bond 
coverage. Any such cash or negotiable securities accepted by CCC will be 
returned to the warehouseman when the period for which coverage was 
required has ended and there appears to CCC to be no liability under the 
storage contract or agreement.
    (d) A legal liability insurance policy may be accepted by CCC in 
lieu of the required amount of bond coverage provided such policy 
contains a clause or rider making the policy payable to CCC, CCC 
determines that it affords protection equivalent to a bond, and the 
Office of the General Counsel, U.S. Department of Agriculture, approves 
it for legal sufficiency.
    (e) An irrevocable letter of credit may be accepted by CCC in lieu 
of the required amount of bond coverage provided that the issuing bank 
is a commercial bank insured by the Federal Deposit Insurance 
Corporation. Such standby letter of credit shall be on Form CCC-33A, 
``Irrevocable Letter of Credit'', or on such other form as may be 
specifically approved by the Director, KCCO, or the Director's designee.

(Pub. L. 80-89, 62 Stat. 1070, as amended (15 U.S.C. 714b))

[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42513, Oct. 
21, 1985]



Sec.  1423.4  Examination of warehouses.

    Except as otherwise provided in this subpart a warehouse must be 
examined

[[Page 415]]

by a person designated by CCC before it may be approved by CCC for the 
storage or handling of commodities and periodically thereafter to 
determine its compliance with CCC's standards and requirements.



Sec.  1423.5  Exceptions.

    Notwithstanding any other provisions of this subpart:
    (a) The financial, bond, and original and periodic warehouse 
examination provisions of this subpart do not apply to any warehouseman 
approved or applying for approval for the storage and handling of 
commodities under CCC programs if the warehouse is licensed under the 
U.S. Warehouse Act for such commodities, but a special examination shall 
be made of such warehouse whenever CCC determines such action is 
necessary.
    (b) A warehouseman who has a net worth of at least $25,000 but who 
fails, or whose warehouse fails, to meet one or more of the other 
standards of this subpart may be approved if:
    (1) CCC determines that the warehouse services are needed and the 
warehouse storage and handling conditions provide satisfactory 
protection for the commodity, and
    (2) The warehouseman furnishes such additional bond coverage (or 
cash or acceptable negotiable securities or legal liability insurance 
policy) as may be prescribed by CCC.

[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42513, Oct. 
21, 1985]



Sec.  1423.6  Approval of warehouse, requests for reconsideration.

    (a) CCC will approve a warehouse if it determines that the warehouse 
meets the standards set forth in this subpart. CCC will send a notice of 
approval to the warehouseman. Approval under this subpart, however, does 
not relieve the warehouseman of the responsibility for performing the 
warehouseman's obligations under any agreement with CCC or any other 
agency of the United States.
    (b) Except as otherwise provided in this subpart:
    (1) CCC will not approve the warehouse if CCC determines that the 
warehouse does not meet the standards set forth in this subpart; and
    (2) CCC will send any notice of rejection of approval to the 
warehouseman. The notice will state the cause(s) for such action. Unless 
the warehouseman or any officials or supervisory employees of the 
warehouseman are suspended or debarred, CCC will approve the warehouse 
if the warehouseman establishes that the causes for CCC's rejection of 
approval have been remedied.
    (c) If rejection of approval by CCC is due to the warehouseman's 
failure to meet the standards set forth:
    (1) In Sec.  1423.2, other than the standard set forth in paragraph 
(c)(2) thereof, the warehouseman may, at any time after receiving notice 
of such action, request reconsideration of the action and present to the 
Director, KCCO, in writing, information in support of such request. The 
Director shall consider such information in making a determination and 
notify the warehouseman in writing of such determination. The 
warehouseman may, if dissatisfied with the Director's determination, 
obtain a review of the determination and an informal hearing thereon by 
filing an appeal with the Deputy Administrator, Commodity Operations, 
Farm Service Agency (hereinafter referred to as ``FSA''). The time of 
filing appeals, forms for requesting an appeal, nature of the informal 
hearing, determination and reopening of the hearing shall be as 
prescribed in the FSA regulations governing appeals, 7 CFR part 780. 
When appealing under such regulations, the warehouseman shall be 
considered as a ``participant'''; and
    (2) In Sec.  1423.2(c)(2), the ware house man's administrative 
appeal rights with respect to suspension and debarment shall be in 
accordance with applicable CCC regulations. After expiration of a period 
of suspension or debarment, a warehouseman may, at any time, apply for 
approval under this subpart.

[Amdt. 3, 50 FR 42513, Oct. 21, 1985]



Sec.  1423.7  Exemption from requirements.

    (a) If warehousing services in any area cannot be secured under the 
provisions of this subpart, and no reasonable and economical alternative 
is available for securing such services, the President or Executive Vice 
President, CCC, may exempt, in writing, applicants in such area from one 
or more of the

[[Page 416]]

standards of this subpart and may establish such other standards as are 
considered necessary to safeguard satisfactorily the interests of CCC.
    (b) Warehousemen who are currently under contract with CCC will be 
required to meet the terms and conditions of these regulations at the 
time of renewal of their contract.



Sec.  1423.8  OMB control numbers assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
(7 CFR part 1423, Subpart--Standards for Approval for Dry and Cold 
Storage Warehouses for Processed Agricultural Commodities, Extracted 
Honey, and Oils) have been approved by the Office of Management and 
Budget under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB Numbers 0560-0052, 0560-0044, 0560-0064, 0560-0065, 0560-
0034, and 0560-0041.

[Amdt. 3, 50 FR 42513, Oct. 21, 1985]



PART 1424--BIOENERGY PROGRAM--Table of Contents




Sec.
1424.1 Applicability.
1424.2 Administration.
1424.3 Definitions.
1424.4 General eligibility rules.
1424.5 Agreement process.
1424.6 Payment application process.
1424.7 Gross payable units.
1424.8 Payment amounts.
1424.9 Reports required.
1424.10 Succession and control of facilities and production.
1424.11 Maintenance and inspection of records.
1424.12 Appeals.
1424.13 Misrepresentation and scheme or device.
1424.14 Offsets, assignments, interest and waivers.

    Authority: 7 U.S.C. 8108, 15 U.S.C. 714b and 714c.

    Source: 68 FR 24600, May 7, 2003, unless otherwise noted.



Sec.  1424.1  Applicability.

    This part sets out regulations for the Bioenergy Program (program). 
It sets forth, subject to the availability of funds as provided herein, 
or as may be limited by law, the terms and conditions a bioenergy 
producer must meet to obtain payments under this program and part from 
the Commodity Credit Corporation (CCC) for eligible bioenergy 
production. Additional terms and conditions may be set forth in the 
document required to request program benefits and in the program 
contract or agreement prescribed by CCC. This program is effective 
October 1, 2002, through September 30, 2006.



Sec.  1424.2  Administration.

    This part shall be administered by the Executive Vice President, 
CCC, under the general direction and supervision of the Executive Vice 
President or designee. The Executive Vice President or a designee may 
authorize a waiver or modification of deadlines and other program 
requirements in cases where lateness or failure to meet such other 
requirements does not adversely affect the operation of the program, and 
may set such additional requirements as will facilitate the operation of 
the program. The funds available for the program shall be limited as set 
by this rule, otherwise announced by the Executive Vice President, CCC, 
or limited by law.



Sec.  1424.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration under this subpart.
    Agreement means the Bioenergy Program Agreement or other form 
prescribed by CCC that must be executed for participation in the 
program.
    Application means the application form prescribed by CCC or another 
form that contains the same terms, conditions, and information required.
    ATF means the Bureau of Alcohol, Tobacco, Firearms, and Explosives 
of the United States Department of Justice.
    Base production means a biodiesel producer's current FY's biodiesel 
production from eligible commodities that is not an increase over 
biodiesel production in the previous FY to date.
    Biodiesel means a mono alkyl ester manufactured in the United States 
and its territories that meets the requirements of an appropriate 
American Society for Testing and Materials Standard.

[[Page 417]]

    Biodiesel producer means a producer that produces and sells 
biodiesel who is also registered and in compliance with section 211 (b) 
of the Environmental Protection Agency Clean Air Act Amendment of 1990.
    Bioenergy means ethanol and biodiesel produced from eligible 
commodities.
    Conversion factor means:
    (1) For ethanol production, a factor that converts the number of 
ethanol gallons back to commodity units as determined in the manner 
announced by CCC;
    (2) For biodiesel production, the factor that will treat 1.4 gallons 
of biodiesel produced as having involved the consumption of one bushel 
of soybeans in any case when the feedstock was an eligible commodity 
that has a corresponding oil or grease market price; if there is none, 
then the factor shall be as determined and announced by CCC.
    Eligible commodity means barley; corn; grain sorghum; oats; rice; 
wheat; soybeans; cotton seed; sunflower seed; canola; crambe; rapeseed; 
safflower; sesame seed; flaxseed; mustard seed; cellulosic crops, such 
as switchgrass and hybrid poplars; fats, oils, and greases (including 
recycled fats, oils and greases) derived from an agricultural product; 
and any animal byproduct (in addition to oils, fats and greases) that 
may be used to produce bioenergy, as CCC determines, that is produced in 
the United States and its territories.
    Eligible producer means a bioenergy producer who meets all 
requirements for program payments.
    Ethanol means anhydrous ethyl alcohol manufactured in the United 
States and its territories and sold either:
    (1) For fuel use, rendered unfit for beverage use, produced at a 
facility and in a manner approved by ATF for the production of ethanol 
for fuel; or
    (2) As denatured ethanol used by blenders and refiners and rendered 
unfit for beverage use.
    Ethanol producer means a person authorized by ATF to produce 
ethanol.
    FSA means the Farm Service Agency, USDA.
    FY means the fiscal year beginning each October 1 and ending 
September 30 of the following calendar year.
    KCCO means the FSA, Kansas City Commodity Office.
    Posted County Price means the same Posted County Price for different 
locations as is used under other CCC commodity programs for marketing 
loan gains and other matters.
    Producer is a legal entity (individual, partnership, cooperative, or 
corporation, etc.) who is a commercial bioenergy producer making 
application or otherwise involved under this program.
    Quarter means the respective time periods of October 1 through 
December 31, January 1 through March 31, April 1 through June 30, and 
July 1 through September 30 of each FY, as applicable.
    Sign-up period means the time period announced by CCC during which 
CCC will accept program agreements.
    USDA means the United States Department of Agriculture.



Sec.  1424.4  General eligibility rules.

    (a) An applicant must be determined eligible by KCCO and be assigned 
an agreement number.
    (b) To be eligible for program payments, a producer must maintain 
records indicating for all relevant FY's and FY quarters:
    (1) The use of eligible commodities in bioenergy production;
    (2) The quantity of bioenergy produced from an eligible commodity by 
location;
    (3) The quantity of eligible commodity used by location to produce 
the bioenergy referred to in paragraph (b)(2) of this section; and
    (4) All other records, needed, or required by the agreement to 
establish program eligibility and compliance.
    (c) A producer must allow verification by CCC of all information 
provided. Refusal to allow CCC or any other agency of USDA to verify any 
information provided will result in a producer being determined not 
eligible.
    (d) For producers not purchasing raw commodity inputs, the 
production must equal or exceed that amount of production that would be 
calculated using the raw commodity inputs and the conversion factor set 
out in Sec.  1424.3. A producer that purchases soy oil from

[[Page 418]]

a soybean crushing plant for further refinement into biodiesel must be 
able to prove to CCC's satisfaction both soy oil purchases and biodiesel 
production for the applicable quarter. Any special conversion factors 
needed will be the province of CCC and CCC alone and CCC's decision will 
be final.
    (e) A producer must meet all other conditions set out in these 
regulations, in the agreement, or in other program documents.



Sec.  1424.5  Agreement process.

    (a) To participate, an eligible producer must submit a signed 
agreement during the FY sign-up period. Agreements may be for single or 
multiple FY's. However, multiple FY agreements require producers to 
submit annual production estimate reports during each applicable FY 
sign-up period. Such reports must comply with the terms of the agreement 
and this part. In all cases, the accounting for compliance will be made 
on a per FY basis.
    (b) Sign-up each FY will be held for 30 calendar days beginning for:
    (1) FY 2003 on the date of publication of this rule;
    (2) FY 2004 and beyond on August 1 of the FY before the applicable 
FY.
    (c) After agreements are submitted:
    (1) If determined eligible by KCCO, an agreement number will be 
assigned, and a notification will be mailed to the producer;
    (2) If additional information is needed for KCCO to determine 
eligibility, the producer will be contacted as soon as practicable and 
requested to provide additional supporting documentation;
    (3) If determined ineligible by KCCO, producers will be notified in 
writing that their agreement was rejected and the reason for the 
determination.



Sec.  1424.6  Payment application process.

    (a) To apply for payments under this program during an FY, an 
eligible producer must:
    (1) Submit an application or eligibility report for each quarter. 
Submit the last quarterly application or report of the FY within 30 
calendar days of the end of the FY for which payment is requested. If 
the actual deadline is a non-workday, the deadline will be the next 
business day;
    (2) Certify with respect to the accuracy and truthfulness of the 
information provided;
    (3) Furnish CCC such certification, and access to such records, as 
CCC considers necessary to verify compliance with program provisions; 
and
    (4) Provide documentation as requested by CCC of both the producer's 
net purchases of eligible commodities and net production of bioenergy 
compared to such production at all locations during the relevant 
periods. CCC may adjust the formulaic payments otherwise payable to the 
producer if there is a difference between the amount actually used and 
certified and the amount of increased commodity use calculated under the 
formula.
    (b) After applications or reports are submitted, eligible producers:
    (1) Shall submit such additional supporting documentation as 
requested by KCCO when additional information is needed to determine 
eligibility;
    (2) Will be notified in writing of their ineligibility and reason 
for the determination, when the application is determined ineligible by 
KCCO; and
    (3) Shall promptly refund payments when a refund to CCC is due. If a 
refund is not made promptly, CCC may establish a claim.



Sec.  1424.7  Gross payable units.

    (a) For ethanol, producers will be eligible for payments on gross 
payable units for only their ethanol production from eligible inputs 
that exceeds, for the program year to date, their total comparable 
production at all locations as compared to the comparable portion of the 
previous year. Producers of ethanol are not eligible for base production 
payments. Producers shall not be paid twice for the same increase and 
any decline in relative production between quarters will require a 
comparable refund. For example, if at the end of the first quarter, a 
producer were to be paid for an increase of 500 gallons of ethanol, but 
at the end of the second quarter, that producer's year-to-date 
production was down to a net increase for the year of 450 gallons, then 
a refund would be due for the loss of the corresponding 50 gallons of 
net extra production. Repayment rates shall be based on previous payment

[[Page 419]]

rates. Unless otherwise determined by CCC, the extra ethanol production 
from eligible inputs will be converted to gross payable units by 
dividing the gallons of increased ethanol by the applicable conversion 
factor.
    (b) Biodiesel producers will be eligible for payments on gross 
payable units for all biodiesel production from eligible inputs. For 
eligibility purposes there will be two kinds of payment: additional 
production payments (APP), and base production payments (BPP). Repayment 
rates shall be based on previous payment rates. Unless otherwise 
determined by CCC, gross payable units for biodiesel production from 
eligible inputs will be calculated as follows:
    (1) For APP, by dividing the gallons of increased biodiesel by the 
biodiesel conversion factor of 1.4. APP payments will be made on 
increases as compared with the previous FY. Producers will not be paid 
twice for the same production. Failure to maintain year to date 
biodiesel production increases between quarters will require a 
comparable APP refund as specified below. That is, for example, if a 
producer were to be paid, at the end of the first quarter, for 500 
gallons of increased biodiesel production, but by the end of the second 
quarter that producer's production, for the year to date, was only 450 
gallons, then a refund of the APP premium would be due for the loss of 
the corresponding 50 gallons of net production increase.
    (2) For BPP, which will be made on production not eligible for the 
APP, by dividing the base production by the biodiesel conversion factor 
of 1.4 and multiplying the result by 0.5 in FY 2003, 0.3 in FY 2004, 
0.15 in FY 2005, or 0.0 (zero) in FY 2006 to determine base biodiesel 
production gross payable units.
    (3) Adding the APP and BPP to determine biodiesel gross payable 
units.
    (c) There shall only be one eligible producer per plant location.
    (1) When producers move production from one plant to another between 
FY's, the prior FY's production for the producer for program payment 
calculations tied to increases in production shall be the greater of:
    (i) The production at the plant operated by the producer in the 
prior FY, or
    (ii) The production in the prior FY at the plant being taken over by 
the producer in the current FY.
    (2) New producers who are taking over a plant with prior bioenergy 
production shall assume that production history for program purposes. 
For example: in FY 2002, Producer A produced 1,000 gallons of bioenergy 
in plant 1 and Producer B produced 500,000 of bioenergy in plant 2. In 
FY 2003, Producer A assumes operation of plant 2; Producer B moves to 
plant 3, which was not in the program in FY 2002, but with FY 2002 
production of 400,000 gallons from eligible commodities; and Producer C 
assumes operations of plant 1. In FY 2003, for program purposes solely 
based on these respective plants, Producer A would have a prior FY 
production of 500,000 gallons; Producer B would have a prior FY 
production of 500,000 gallons; and Producer C would have a prior FY 
production of 1,000 gallons. These examples would apply when a producer 
moves its entire operation from one plant to another. Otherwise, for 
purposes of computing whether a producer has increased production in the 
current year from the previous year, the determination will be made by 
comparing for the current year the producer's production figures from 
all locations in which the producer has an interest with, for the 
previous year, the sum of:
    (i) Production at those locations by any person including, but not 
limited to, the producer, and
    (ii) Additional production by the producer at any other location in 
that year.
    (3) Also, as needed to avoid frustrating the goals of the program, 
the Executive Vice President of CCC may treat producers with common 
interests, common ownership, or common facilities or arrangements as the 
same producer.



Sec.  1424.8  Payment amounts.

    (a) An eligible producer may be paid the amount specified in this 
section, subject to the availability of funds. Total available funds 
shall be as determined appropriate by CCC and shall

[[Page 420]]

not exceed $150 million in any of FY's 2003 through 2006.
    (b) For agreements submitted during an FY sign-up, applicants must 
project increases in production. Based on expected commodity prices, 
using the formula set out in this section, submissions will be assigned 
an expected payment value. When the payment value of all timely 
submitted and validly executed agreements exceed available funding, CCC 
may, at its discretion, prorate payments to be made under such 
agreements based on total available funding.
    (c) When the payment value of all timely submitted applications 
exceed available funding, CCC will prorate payments based on total 
available funding.
    (d) Subject to this section and conditions in the agreement, a 
producer's payment eligibility shall be adjusted at the end of each 
quarter, and calculated as follows:
    (1) Gross payable units, calculated and determined in accordance 
with Sec.  1424.7, shall be converted to net payable units for producers 
whose annual bioenergy production is:
    (i) Less than 65 million gallons, by dividing by 2.5;
    (ii) Equal to or more than 65 million gallons, by dividing by 3.5;
    (2) Net payable units calculated under paragraph (d)(1) of this 
section shall then be converted to a gross payment by multiplying net 
payable units by the per-unit value of the commodity as of the 10th 
business day before the start of the production quarter, determined as 
follows:
    (i) For ethanol:
    (A) For those agricultural commodities with an established Posted 
County Price, CCC will use the Posted County Price that CCC announces 
daily for the county in which the plant is located and applicable 
quality factors as CCC may establish.
    (B) For agricultural commodities that CCC determines do not have 
Posted County Prices, CCC will use market data CCC determines to be 
appropriate for the applicable commodity.
    (ii) For biodiesel made from:
    (A) Soybeans or soy oil, CCC will use the Posted County Price for 
soybeans for the county where the plant is located.
    (B) Eligible commodities other than soybeans or soy oil that have a 
corresponding oil or grease market price, CCC will first use the 
soybeans Posted County Price for Macon County, Illinois. Then, the 
applicable feedstock's oil or yellow grease (for animal fats and oils) 
market price, as determined by CCC, will be divided by the soy oil price 
published in the Agricultural Marketing Service's weekly ``Soybean Crush 
Report'' (Central Illinois (Decatur, Macon County, Illinois)) for the 
applicable date. The resulting percentage will be multiplied by the 
soybean gross payment to determine the producer's gross payment.
    (C) Eligible commodities that do not have a corresponding oil or 
grease market price, in a manner as determined by CCC.
    (3) The gross payment calculated under paragraph (d)(2) of this 
section shall be reduced to a net payment by multiplying the gross 
payment figure by the proration factor determined under paragraph (c) of 
this section.
    (4) Subject to other provisions of this section, producers shall be 
paid the net current payment, if positive, determined for the quarter, 
subject to the requirements and refund provisions of this part.
    (5) After the first quarter, adjustments shall be made based on 
changes in production. Refunds, when due, shall be due at the per unit 
values at which they were paid.
    (6) For an FY, no producer may receive more than 5 percent of the 
available funding for this program.
    (e) When the commodity's conversion factor has been established, 
that factor will, as practicable, be posted on the program's website.
    (1) If the commodity's conversion factor is not determined when the 
sign-up is announced, the conversion factor will be provided in a letter 
to producers with accepted agreements to the extent practicable.
    (2) After FY 2003, changes to established conversion factors shall 
be announced in a press release issued by CCC 90 calendar days before 
the applicable FY's sign-up, to the extent practicable.

[[Page 421]]



Sec.  1424.9  Reports required.

    Once an eligible producer has submitted a payment application, that 
producer shall file cumulative and per-plant information for each 
relevant bioenergy producing facility quarterly through the end of the 
applicable FY as specified by CCC or as otherwise needed to establish 
compliance with this part.



Sec.  1424.10  Succession and control of facilities and production.

    A person who obtains a facility that is under contract under this 
part may request permission to succeed to the program agreement and CCC 
may grant such request if it is determined that permitting such 
succession would serve the purposes of the program. If appropriate, CCC 
may require the consent of the original party to such succession. Also, 
CCC may terminate a contract and demand full refund of payments made if 
a contracting party loses control of a facility whose increased 
production is the basis of a program payment or otherwise fails to 
retain the ability to assure that all program obligations and 
requirements will be met.



Sec.  1424.11  Maintenance and inspection of records.

    For the purpose of verifying compliance with the requirements of 
this part, each eligible producer 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 
program that is within the control of such entity for not less than 
three years from the payment date.



Sec.  1424.12  Appeals.

    (a) A participant subject to an adverse determination under this 
part may appeal by submitting a written request to: Deputy 
Administrator, Commodity Operations, Farm Service Agency, United States 
Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW., 
Washington, D.C. 20250-0550. The appeal must be delivered in writing to 
the Deputy Administrator or postmarked within 30 days after the date the 
Agency decision is mailed or otherwise provided to the participant. The 
Deputy Administrator may consider a late appeal if determined warranted 
by the circumstances.
    (b) The regulations at 7 CFR part 11 apply to decisions made under 
this part.
    (c) Producers who believe they have been adversely affected by a 
determination by the Agency must seek review with the Deputy 
Administrator before any other review may be requested within the 
Agency.



Sec.  1424.13  Misrepresentation and scheme or device.

    (a) A producer shall be ineligible to receive payments under this 
program if CCC determines the producer:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program in this part;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to a producer engaged 
in a misrepresentation, scheme, or device, or to any other person as a 
result of the bioenergy producer's actions, shall be refunded with 
interest together with such other sums as may become due, plus damages 
as may be determined by CCC.
    (c) Any producer or person engaged in an act prohibited by this 
section and any producer or person receiving payment under this part 
shall be jointly and severally liable for any refund due under this part 
and for related charges.
    (d) The remedies provided in this part shall be in addition to other 
civil, criminal, or administrative remedies that may apply.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions and rates prescribed in part 1403 of this 
chapter.



Sec.  1424.14  Offsets, assignments, interest and waivers.

    (a) Any payment or portion thereof to any person shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the bioenergy, or proceeds thereof, in 
favor of the owner or any other creditor except agencies of the

[[Page 422]]

U.S. Government. The regulations governing offsets and withholdings 
found in part 1403 of this chapter shall be applicable to agreement 
payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing the assignment of payments found 
at part 1404 of this chapter.
    (c) Interest charged by CCC under this part shall be at the rate of 
interest that the United States Treasury charges CCC for funds, as of 
the date CCC made such funds available. Such interest shall accrue from 
the date such payments were made available to the date of repayment or 
the date interest increases as determined in accordance with applicable 
regulations.
    (d) CCC may waive the accrual of interest and/or damages if CCC 
determines that the cause of the erroneous determination was not due to 
any action of the bioenergy producer.



PART 1425--COOPERATIVE MARKETING ASSOCIATIONS--Table of Contents




Sec.
1425.1 Applicability.
1425.2 Administration.
1425.3 Definitions.
1425.4 Approval.
1425.5 Confidentiality.
1425.6 Approved CMA's.
1425.7 Suspension and termination of approval.
1425.8 Ownership and control.
1425.9 Open membership.
1425.10 Financial ratio requirement.
1425.11-1425.12 [Reserved]
1425.13 Uniform marketing agreement.
1425.14 Member business.
1425.15 Vested authority.
1425.16 Payment limitation.
1425.17 Eligible commodity and pooling.
1425.18 Distribution of proceeds.
1425.19 Member cooperatives.
1425.20 [Reserved]
1425.21 Records required.
1425.22 Inspection and investigation.
1425.23 Reports.
1425.24 OMB control number assigned pursuant to Paperwork Reduction Act.
1425.25 Appeals.

    Authority: 7 U.S.C. 1441 and 1421, 7 U.S.C. 7931-7939; and 15 U.S.C. 
714b, 714c, and 714j.

    Source: 63 FR 17312, Apr. 9, 1998, unless otherwise noted.



Sec.  1425.1  Applicability.

    This part sets forth the terms and conditions an approved 
Cooperative Marketing Association (CMA) must meet to obtain commodity 
marketing assistance loans (loans) and loan deficiency payments (LDP's) 
from CCC on behalf of its members. A CMA meeting these terms and 
conditions may obtain loans and LDP's for any eligible commodity for 
which a loan and LDP program is in effect.



Sec.  1425.2  Administration.

    On behalf of CCC, the Farm Service Agency will administer the 
provisions of this part under the general direction and supervision of 
the Deputy Administrator for Farm Programs. In the field, the provisions 
of this part will be administered by the State and county FSA 
committees.



Sec.  1425.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in parts 718 
of this title and parts 1421 and 1427 of this chapter shall also be 
applicable, except where those definitions conflict with the definitions 
in this section.
    Active member is a member who has utilized the services offered by a 
CMA in one of the three preceding CMA fiscal years or such shorter 
period as may be provided in the CMA's articles of incorporation or 
bylaws.
    Approved cooperative marketing association (CMA) is a cooperative 
approved by CCC to participate in loan and LDP programs for any 
authorized commodity.
    Authorized commodity is a commodity for which a CMA is approved by 
CCC to obtain marketing assistance loans or Loan deficiency payments.
    Cooperative is a business owned and controlled by the producers who 
use its services and operated under generally accepted cooperative 
principles.
    Eligible commodity is a commodity which meets the commodity's 
eligibility requirements set forth in chapter XIV of this title, and is 
produced and delivered to the CMA from a producer eligible for loan or 
LDP.

[[Page 423]]

    Loan pool is any CMA pool containing commodities used by the CMA to 
obtain either loans or LDP's.
    Market gain is the sum of loan rate, minus the repayment rate on 
loans repaid with less than the loan rate, plus for LDP's, the same 
rate, times the quantity of commodity. Market gains cannot exceed the 
producer's applicable payment limitation as set out in part 1400 of this 
chapter.
    Member is a producer who:
    (a) Has fully paid for membership stock or earned equity credits in 
the CMA;
    (b) Has executed a uniform marketing agreement with the CMA; and
    (c) Is entitled to all CMA membership rights.

[63 FR 17312, Apr. 9, 1998, as amended at 67 FR 64458, Oct. 18, 2002]



Sec.  1425.4  Approval.

    (a) For a cooperative to gain CMA status to participate in a 
marketing assistance loan or Loan deficiency payment program for the 
2002 through 2007 crop years, a cooperative must submit an application 
for approval to CCC. An application must include:
    (1) A completed Form CCC-846 indicating commodities for which it 
seeks approval;
    (2) A balance sheet, dated within the last year, prepared for the 
cooperative and accompanied by a letter from an independent Certified 
Public Accountant, certifying that the balance sheet was prepared in 
accordance with generally accepted accounting principles;
    (3) A copy of the articles of incorporation or articles of 
association and all marketing agreements for loan pools, together with a 
certification that this material is current;
    (4) Resolutions made by the cooperative's board of directors stating 
the cooperative will abide by provisions of this part, the 
nondiscrimination provisions thereof, and all other related CCC 
policies;
    (5) A detailed description of how proceeds from each loan pool will 
be distributed to members as provided for in Sec.  1425.18;
    (6) An executed form CCC-Cotton G, Cotton Cooperative Loan 
Agreement, by cooperatives applying for approval to participate in the 
cotton loan and LDP program; and
    (7) Other information as requested by CCC concerning the 
organizational, operational, financial or any other aspect of the 
cooperative requested by CCC related to the cooperative's proposed 
methods of conducting CCC loan and LDP business.
    (b) A CMA must submit, on an annual basis, the following information 
to CCC:
    (1) A completed Form CCC-846-1, which shall disclose:
    (i) The number of active and inactive CMA members;
    (ii) The CMA's allocated equity;
    (iii) The CMA's unallocated equity; and
    (iv) Quantity of each loan pool commodity delivered to the CMA for 
marketing and the portion of such commodities received from active 
members during the prior year.
    (2) The CMA's latest balance sheet. This balance sheet must be dated 
within the past year and be accompanied by a letter from an independent 
Certified Public Accountant certifying that the balance sheet was 
prepared in accordance with generally accepted accounting principles.
    (c) A CMA shall furnish information to CCC within thirty calendar 
days relating to any:
    (1) Change in its articles of incorporation and loan pool marketing 
agreements;
    (2) Resolution affecting loan or LDP operations;
    (3) Change to the CMA's name, address, phone number, or related data 
shown on the CCC-846-1;
    (4) Change in loan pool operations with an explanation and 
justification; and
    (5) Additional information CCC may request related to the CMA's 
continued approval by CCC.
    (d) CCC may require a CMA to submit a new initial application 
instead of a recertification application when it questions whether the 
CMA is operating according to documents previously submitted.

[63 FR 17312, Apr. 9, 1998, as amended at 67 FR 64458, Oct. 18, 2002]

[[Page 424]]



Sec.  1425.5  Confidentiality.

    Information submitted to CCC related to trade secrets, financial or 
commercial operations, or the financial condition of a CMA, whether for 
initial approval or continued approval, shall be kept confidential by 
the officers, agents, and employees of CCC and the Department of 
Agriculture except as required to be disclosed by law.



Sec.  1425.6  Approved CMA's.

    (a) CCC shall, in accordance with the provisions of this part, 
approve a CMA to obtain marketing assistance loans and LDP's.
    (b) CCC may approve a CMA to participate in a marketing assistance 
loan and Loan deficiency payment program for the 2002 through 2007 crops 
as:
    (1) Unconditionally approved; or
    (2) Conditionally approved.
    (c) If CCC determines a CMA is in substantial but not total 
compliance with the requirements of this part, CCC may make the approval 
conditional on CMA coming into full compliance within a reasonable 
period of time as specified in the notification of conditional approval.
    (d) A CMA is approved to participate in a marketing assistance loan 
and LDP program until the CMA's approval is suspended or terminated by 
CCC.

[63 FR 17312, Apr. 9, 1998, as amended at 67 FR 64459, Oct. 18, 2002]



Sec.  1425.7  Suspension and termination of approval.

    (a) CCC may suspend a CMA from obtaining loans and LDP's when CCC 
determines the CMA has not:
    (1) Operated according to the CMA's application for approval or its 
last recertification submission;
    (2) Complied with applicable regulations;
    (3) Corrected deficiencies of the CMA's operation as noted by CCC; 
or
    (4) Violated any of its agreements with CCC.
    (b) A suspension may be lifted when CCC determines the CMA has 
complied with all requirements for approval. When suspensions are not 
lifted within 1 year, or a shorter time period if so indicated in CCC's 
suspension notification, the CMA's approval automatically terminates.
    (c) CCC may terminate a CMA's approval by giving the CMA written 
notice of the termination.
    (d) A CMA may, when it does not have any marketing assistance loans 
outstanding, through written notice to CCC, voluntarily terminate its 
participation in a loan and LDP program.
    (e) CCC may, on demand, call all outstanding CCC loans made to a 
suspended or terminated CMA. When loans are called, CCC will provide at 
least 10 calendar days written notice to the CMA. Commodities pledged as 
collateral for loans must be repaid by the date specified by CCC. If 
redemption is not made by the date specified, title to the commodity 
shall vest in CCC and CCC shall have no obligation to pay the 
commodity's market value above the principal amount of such loans.



Sec.  1425.8  Ownership and control.

    (a) CMA's must be owned and controlled by active members of the CMA.
    (b) The CMA must provide evidence that:
    (1) Active members own more than 50 percent of its allocated equity; 
and
    (2) A majority of directors are active members of the CMA or 
authorized representatives of active members.
    (c) An applicant cooperative or a CMA, not under the ownership or 
control, of its active members, may be approved by CCC if it is able to 
establish that, by retiring the equity of its inactive members or by 
obtaining new members, it can vest ownership and control in its active 
members, as required by this section, by a date specified by CCC.



Sec.  1425.9  Open membership.

    (a) The CMA shall provide CCC documented proof that the CMA admits 
every membership applicant who is eligible under the statute regulating 
the CMA.
    (b) Notwithstanding paragraph (a) of this section, a CMA may refuse 
membership to an applicant whose admission would prejudice, hinder, or 
otherwise obstruct the interests or purposes of the CMA.

[[Page 425]]



Sec.  1425.10  Financial ratio requirement.

    To be financially able to make advances to their members and to 
market their commodities, CMA's shall have a current ratio of at least 1 
dollar of current assets for each 1 dollar of current liabilities 
(current ratio of 1:1 or better) on the balance sheet it submits to CCC 
with its initial application or annual recertification required in Sec.  
1425.4.



Sec. Sec.  1425.11-1425.12  [Reserved]



Sec.  1425.13  Uniform marketing agreement.

    (a) A CMA must enter into a uniform marketing agreement with each 
member who delivers a commodity to a loan pool.
    (b) The identification number used by the member to report acreage 
on applicable farms to FSA must appear on the marketing agreement.



Sec.  1425.14  Member business.

    (a) At least 50 percent of a crop of an authorized commodity 
acquired by, or delivered to, a CMA for marketing must be produced by 
its members for the CMA to obtain a loan or LDP for such crop. CCC may, 
for a period not to exceed 2 years, waive this requirement if:
    (1) The CMA can establish to CCC that such authorization is 
necessary for the efficient operation of the CMA; and
    (2) The CMA's plan, approved by CCC, will bring the CMA into 
compliance with the provisions of this section.
    (b) Commodities purchased or acquired from CCC and processed 
products acquired from other processors or merchandisers shall not be 
considered in determining the volume of member or nonmember business.



Sec.  1425.15  Vested authority.

    The marketing agreement between the CMA and its members shall give 
the CMA the authority to pledge the commodity as collateral for a loan, 
to place a lien on such commodity, and to market the commodity on behalf 
of its members even though the individual members retain the right, in 
effect, to determine the price at which the commodity can be marketed by 
the CMA.



Sec.  1425.16  Payment limitation.

    CMA's shall monitor market gains they receive from CCC on behalf of 
their members and not obtain market gains for a member above the 
member's payment limitation determined in accordance with part 1400 of 
this chapter.



Sec.  1425.17  Eligible commodity and pooling.

    (a) A CMA may establish separate loan pools as needed for quantities 
of a commodity.
    (b) Loans and, if applicable, LDP's will be available to CMA's for 
any eligible commodity in a loan pool as provided in paragraph (e) of 
this section and the beneficial interest provisions of parts 1421 and 
1427 of this chapter.
    (c) A pool shall be eligible for loans and LDP's if:
    (1) All of the commodity in the pool is eligible for loans or LDP's, 
except as provided in paragraphs (d) and (e) of this section;
    (2) The commodity was delivered by members to the CMA for their 
benefit;
    (3) The commodity was delivered and the members are eligible for 
loans and LDP's;
    (4) Members retain the right to share in marketing proceeds from the 
commodity in accordance with Sec.  1425.18; and
    (5) Members agreed to accept a payment of initial advances from the 
CMA in accordance with Sec.  1425.18(a).
    (d) Ineligible commodities may be included in eligible pools when:
    (1) The CMA inadvertently included ineligible quantities based on 
grade, quality, bale weight or repacking in the case of cotton, or other 
factors; or
    (2) There are eligibility discrepancies within FSA records, the 
producer has certified to the CMA that the commodity is eligible for 
loan, and there is no market gain or LDP involved in the loan pool for 
the crop year.
    (e) A CMA may, for a period of time as specified in Handbook 1-CMA, 
include a commodity that is ineligible based on FSA records when the 
producer has certified to the CMA the commodity is eligible. In these 
instances, CCC specifies a time period during which CMA's may obtain 
loan or LDP's on the applicable quantity while the eligibility status is 
resolved.

[[Page 426]]

If the final resolution is that the commodity was ineligible, the CMA 
must repay any loans outstanding with principal plus interest and any 
market gains obtained plus interest from the date of receiving the 
market gain through the repayment date.
    (f) The CMA must have in inventory a quantity of commodity delivered 
by members of each class and grade at least equal to the quantity each 
class and grade pledged as loan collateral.
    (g) Loans will be available to the CMA for the quantity of a farm-
stored commodity that is, pursuant to such CMA marketing agreement with 
a member, part of the CMA's loan pool.
    (h) A CMA shall have identity-preserved loan pool commodities stored 
in approved warehouses while the commodities are pledged as collateral 
for loan.
    (i) Loan eligibility for commingled commodities stored on a farm or 
in a warehouse may be transferred to an approved warehouse.
    (j) Commodities pledged as collateral for CCC loans shall be free 
and clear of all liens and encumbrances based on a CMA's financial 
agreements or the CMA shall obtain a completed form CCC-679, Lien 
Waiver. When liens are applicable based on CMA financial agreements, the 
CMA shall provide CCC the completed CCC-679. CMA's shall not take any 
action to cause a lien or encumbrance to be placed on a commodity after 
a loan is approved.
    (k) If a loan or LDP is obtained for any quantity in a loan pool, 
allocations of costs and expenses among separate pools for the commodity 
in the pool shall be made according to generally accepted accounting 
principles.
    (l) A CMA shall not apply marketing losses from a commodity not used 
to obtain a loan or LDP against the marketing proceeds of a commodity 
used to obtain a loan or LDP.
    (m) CMA's shall not carry forward losses from one loan pool and 
apply them against a subsequent loan pool without CCC's authorization. 
CCC may grant authorization when it determines that carrying forward the 
loss complies with CCC's loan and LDP program intent.
    (n) The CMA is responsible to CCC for any loss related to 
commodities the CMA pledged as collateral for loan or used to obtain LDP 
related to:
    (1) The CMA failing to comply with these regulations;
    (2) Changes in quantity or quality of either warehouse or farm 
stored commodities; or
    (3) Liens based on either the CMA's or its members' financial 
agreements.



Sec.  1425.18  Distribution of proceeds.

    (a)(1) If CCC makes loans or LDP's for any quantity in a loan pool, 
the related proceeds shall be distributed to members participating in 
the pool:
    (i) Based on the quantity and quality of the commodity delivered by 
each member;
    (ii) Less any authorized charges for services performed or paid by 
the CMA necessary to condition the commodity or otherwise make the 
commodity eligible for loans or LDP's; and
    (iii) Within 15 work days from the date the CMA receives loan or LDP 
proceeds from CCC, except when loans are redeemed within 15 work days of 
the date of the loan.
    (2) CMA's may credit advances to its members made before loans and 
LDP's are obtained against the distribution of loan and LDP proceeds 
requirement in paragraph (a)(1)(iii) of this section.
    (b)(1) Except as provided in paragraph (b)(2) of this section, loan 
pool proceeds shall not be combined with non-loan pool proceeds and the 
CMA shall distribute loan pool proceeds according to the information it 
provided CCC in accordance with Sec.  1425.4(b)(7).
    (2) Sales proceeds from a loan pool may be combined with sales 
proceeds from other pools if the proceeds from such pools are allocated 
among the pools according to the quantity and quality of the commodity 
included in the pools.
    (3) Loan and LDP proceeds shall only be issued to members involved 
in pools used for loans or LDP's.
    (4) When notified by CCC that loan and LDP distributions to a member 
must be reduced for a program year, farm, or crop, a CMA shall not make 
subsequent pool distributions and shall reimburse CCC for distributions 
previously issued, if applicable.

[[Page 427]]



Sec.  1425.19  Member cooperatives.

    A CMA may obtain loans or LDP's on behalf of a member cooperative 
when the member cooperative is itself a CMA operating in accordance with 
this part. Loans and LDP's are restricted based on the CMA obtaining the 
loan or LDP.



Sec.  1425.20  [Reserved]



Sec.  1425.21  Records required.

    (a) A CMA shall maintain records for each loan or LDP commodity 
showing the quantity:
    (1) Received from each member and nonmember;
    (2) Eligible for loans and LDP's;
    (3) By quality factors specified in the applicable commodity 
regulations including class, grade, and quality, where applicable; and
    (4) Of unprocessed inventory broken down by items 1 through 3 above.
    (b) Except as provided in paragraph (c) of this section, inventory 
shall be allocated in the following manner until all inventory in a loan 
pool is depleted:
    (1) For processed commodities, the pool's inventory shall be 
adjusted when the commodity is withdrawn from inventory for processing; 
and
    (2) For commodities that are not processed, the pool's inventory 
shall be allocated to the pool and the pool's inventories adjusted when 
the commodity is shipped.
    (c) Records of loan and non-loan pool dispositions do not have to be 
maintained separately when sales proceeds from pools are allocated 
according to the quantity and quality of commodity in the pools.



Sec.  1425.22  Inspection and investigation.

    (a) The books, documents, papers, and records of the CMA and 
subsidiaries shall be maintained for five years after the applicable 
crop year and shall be available to CCC for inspection and examination 
at all reasonable times.
    (b) At any time after an application is received, CCC shall have the 
right to examine all books, documents, papers, and determine whether the 
CMA is operating or has operated in accordance with the regulations in 
this part, its articles of incorporation or articles association, and 
agreements with producers, the representations made by the CMA in its 
application for approval, and, where applicable, its agreements with 
CCC.



Sec.  1425.23  Reports.

    (a) CMA's shall annually provide CCC a report of all commodity 
deliveries involved in loans and LDP's by FSA farm number for each 
member.
    (b) When requested by CCC, CMA's shall report market gains received 
on behalf of each member.



Sec.  1425.24  OMB control number assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR 1425) have been approved by the Office of Management 
and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have 
been assigned OMB number 0560-0040.



Sec.  1425.25  Appeals.

    Parts 11 and 780 of this title apply to this part.

[67 FR 64459, Oct. 18, 2002]



PART 1427--COTTON--Table of Contents




    Subpart A--Nonrecourse Cotton Loans and Loan Deficiency Payments

Sec.
1427.1 Applicability.
1427.2 Administration.
1427.3 Definitions.
1427.4 Eligible producer.
1427.5 General eligibility requirements.
1427.6 Disbursement of loans.
1427.7 Maturity of loans.
1427.8 Amount of loan.
1427.9 Classification of cotton.
1427.10 Approved storage.
1427.11 Warehouse receipts.
1427.12 Liens.
1427.13 Fees, charges and interest.
1427.14 [Reserved]
1427.15 Special procedure where funds are advanced.
1427.16 Reconcentration of cotton.
1427.17 Custodial offices.
1427.18 Liability of the producer.
1427.19 Repayment of loans.
1427.20 Handling payments and collections not exceeding $9.99.
1427.21 Settlement.
1427.22 Commodity certificate exchanges.
1427.23 Cotton loan deficiency payments.
1427.24 [Reserved]

[[Page 428]]

1427.25 Determination of the prevailing world market price and the 
          adjusted world price for upland cotton.

Subpart B [Reserved]

          Subpart C--Upland Cotton User Marketing Certificates

1427.100 Applicability.
1427.101-1427.102 [Reserved]
1427.103 Eligible upland cotton.
1427.104 Eligible domestic users and exporters.
1427.105 Upland Cotton Domestic User/Exporter Agreement.
1427.106 Form of payment.
1427.107 Payment rate.
1427.108 Payment.

                  Subpart D--Recourse Seed Cotton Loans

1427.160 Applicability.
1427.161 Administration.
1427.162 [Reserved]
1427.163 Disbursement of loans.
1427.164 Eligible producer.
1427.165 Eligible seed cotton.
1427.166 Insurance.
1427.167 Liens.
1427.168 [Reserved]
1427.169 Fees, charges, and interest.
1427.170 Quantity for loan.
1427.171 Approved storage.
1427.172 Settlement.
1427.173 Foreclosure.
1427.174 Maturity of seed cotton loans.
1427.175 Liability of the producer.

 Subpart E--Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

1427.1081 General statement and administration.
1427.1082 Basic standards.
1427.1083 Bonding requirements for net worth.
1427.1084 Examination of warehouses.
1427.1085 Exceptions.
1427.1086 Approval of warehouse, requests for reconsideration.
1427.1087 Exemption from requirements.
1427.1088 Contract fees.
1427.1089 OMB Control Numbers assigned pursuant to Paperwork Reduction 
          Act.

             Subpart F--2002-Crop Cottonseed Payment Program

1427.1100 Applicability.
1427.1101 Administration.
1427.1102 Definitions.
1427.1103 Eligible cottonseed.
1427.1104 Eligible first handlers.
1427.1105 Payment application.
1427.1106 Available funds.
1427.1107 Applicant payment quantity.
1427.1108 Total payment quantity.
1427.1109 Payment rate.
1427.1110 Payment calculation and form.
1427.1111 Liability of first handler.

   Subpart G--Extra Long Staple (ELS) Cotton Competitiveness Payment 
                                 Program

1427.1200 Applicability.
1427.1201 [Reserved]
1427.1202 Definitions.
1427.1203 Eligible ELS cotton.
1427.1204 Eligible domestic users and exporters.
1427.1205 ELS Cotton Domestic User/Exporter Agreement.
1427.1206 Form of payment.
1427.1207 Payment rate.
1427.1208 Payment.

    Authority: 7 U.S.C. 7213-7237; 15 U.S.C. 714b, 714c; Pub. L. 108-7.



     Subpart A--Nonrecourse Cotton Loan and Loan Deficiency Payments

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.  1427.1  Applicability.

    (a) The regulations of this subpart are applicable to the 2002 
through 2007 crops of upland cotton and extra long staple cotton. These 
regulations set forth the general provisions under which marketing 
assistance loans and loan deficiency payment programs shall be 
administered by the Commodity Credit Corporation (CCC). Additional terms 
and conditions are in the note and security agreement and the loan 
deficiency payment application that must be executed by a producer to 
receive marketing assistance loans and loan deficiency payments.
    (b) The basic loan rates, the schedule of premiums and discounts, 
and forms applicable to the cotton marketing assistance loan and loan 
deficiency payment programs are available from FSA offices. The forms 
for use in connection with the programs in this subpart shall be 
prescribed by CCC.
    (c) Marketing assistance loans and loan deficiency payments will not 
be available for any cotton produced on land owned or otherwise in the 
possession of the United States if such land is occupied without the 
consent of the United States.

[[Page 429]]

    (d) Notwithstanding the other provisions of this part, a producer 
may only receive the maximum assistance allowed by part 1400 of this 
chapter.
    (e) Eligible producers, under 7 CFR 1421.4, who produce upland 
cotton during the 2002 through 2007 crop years on a farm that is not 
covered under a direct and counter-cyclical program contract, as defined 
in part 1412 of this chapter, are eligible for marketing assistance 
loans or loan deficiency payments as are eligible producers who produced 
commodities on farms covered by such a contract.



Sec.  1427.2  Administration.

    (a) The marketing assistance loan and loan deficiency payment 
programs shall be administered under the general supervision of the 
Executive Vice President, CCC, or a designee and shall be carried out by 
FSA employees, and state and county committees.
    (b) No FSA employee or committee may modify or waive any requirement 
in this subpart, except as provided in paragraph (e) of this section.
    (c) The State committee shall take any required action not taken by 
the county committee. The State committee shall also:
    (1) For the 2001 crop year only, allow producers who, in good faith, 
violated the terms and conditions of the note and security agreement 
resulting in the producer losing beneficial interest in the commodity 
before repaying the loan, to repay the loan at a rate that is the lesser 
of the loan plus interest, or the adjusted world price, as determined 
under Sec.  1427.19, in effect on the date the beneficial interest was 
lost.
    (2) Correct, or require a correction of an action that is not in 
compliance with this part; or
    (3) Stop an employee from taking an action or decision that is not 
in accordance with the regulations of this part.
    (d) The Executive Vice President, CCC, or a designee may determine 
any question arising under these programs, and reverse or modify a 
determination made by an FSA employee or State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State or county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other program requirements does not adversely affect the operation of 
the marketing assistance and loan deficiency payment programs.
    (f) A representative of CCC may execute marketing assistance loan 
and Loan deficiency payment applications and related documents only 
under the terms and conditions determined and announced by CCC. Any 
document not executed under such terms and conditions, including any 
purported execution before the date authorized by CCC, shall be null and 
void.



Sec.  1427.3  Definitions.

    The definitions in this section shall apply for all purposes of 
program administration regarding the cotton loan and loan deficiency 
payment programs. The terms defined in part 718 of this title and parts 
1412, 1421, 1425 and 1434 of this chapter shall also apply, except where 
they conflict with definitions in this section.
    Adjusted spot price means the spot price adjusted to reflect any 
lack of data for base quality to make the adjusted spot price comparable 
to a spot price assuming the base quality. If base quality spot price 
data are not available, spot prices for other qualities will be used and 
adjusted by the average difference between base quality spot prices and 
those for other qualities over the available observations during the 
previous 12 months.
    Approved cooperative marketing association (CMA) means a cooperative 
marketing association approved under part 1425 of this chapter which has 
executed a Cotton Cooperative Loan Agreement on a form prescribed by 
CCC.
    Bale opening means the removal of the bagging and ties from a bale 
of eligible upland cotton in the normal opening area, immediately before 
use, by a manufacturer in a building or collection of buildings where 
the cotton in the bale will be used in the continuous process of 
manufacturing raw cotton into cotton products in the United States.
    Charges means all fees, costs, and expenses incurred by CCC in 
insuring,

[[Page 430]]

carrying, handling, storing, conditioning, and marketing the cotton 
tendered to CCC for loan. Charges also include any other expenses 
incurred by CCC in protecting CCC's or the producer's interest in such 
cotton.
    Commodity certificate exchange means the exchange, as provided in 
part 1404 of this chapter, of commodities pledged as collateral for a 
marketing assistance loan at a rate determined by CCC in the form of a 
commodity certificate bearing a dollar denomination. Such certificate 
may not be transferred or exchanged for the inventory of CCC.
    Consumption means the use of eligible cotton by a domestic user in 
the manufacture in the United States of cotton products.
    Cotton means upland cotton and extra loan staple cotton meeting the 
definition in the definitions of ``upland cotton'' and ``extra long 
staple (ELS) cotton'' in this section, respectively, and excludes cotton 
not meeting such definitions.
    Cotton clerk means a person approved by CCC to assist producers in 
preparing loan and loan deficiency documents.
    Cotton commercial bank means the bank designated as the financial 
institution for a CMA or loan servicing agent.
    Cotton product means any product containing cotton fibers that 
result from the use of a bale of cotton in manufacturing.
    Current shipment price means, during the period in which two daily 
price quotations are available for the growth quoted for M 1\3/32\-inch 
cotton, C.I.F. northern Europe, the price quotation for cotton for 
shipment no later than August/September of the current calendar year.
    Electronic Agent Designation is an electronic record that:
    (1) Designates the entity authorized by a producer to redeem all of 
the cotton pledged as collateral for a specific loan;
    (2) Is maintained by providers of electronic warehouse receipts; and
    (3) A producer may authorize CCC to use as the basis for the 
redemption and release of loan collateral.
    Extra long staple (ELS) cotton means any of the following varieties 
of cotton which is produced in the United States and is ginned on a 
roller gin:
    (1) American-Pima;
    (2) All other varieties of the Barbadense species of cotton, and any 
hybrid thereof; and
    (3) Any other variety of cotton in which one or more of these 
varieties predominate.
    False packed cotton means cotton in a bale containing substances 
entirely foreign to cotton; containing damaged cotton in the interior 
with or without any indiction of the damage on the exterior; composed of 
good cotton on the exterior and decidedly inferior cotton in the 
interior, but not detectable by customary examination; or, containing 
pickings or linters worked into the bale.
    Financial institution means:
    (1) A bank in the United States which accepts demand deposits; and
    (2) An association organized pursuant to Federal or State law and 
supervised by Federal or State banking authorities.
    Form A loan means a nonrecourse loan entered into between a producer 
and CCC.
    Form G loan means a CCC nonrecourse loan entered into between a CMA 
and CCC.
    Forward shipment price means, during the period in which two daily 
price quotations are available for the growths quoted for M 1\3/32\-inch 
cotton, C.I.F. northern Europe, the price quotation for cotton for 
shipment no earlier than October/November of the current calendar year.
    Lint Cotton means cotton that has passed through the ginning 
process.
    Loan deficiency payment means a payment received in lieu of a loan 
when the CCC-determined value is below the applicable county loan rate.
    Loan servicing agent means a legal entity that enters into a written 
agreement with CCC to act as a loan servicing agent for CCC in making 
and servicing Form A cotton loans. The loan servicing agent may perform, 
on behalf of CCC, only those services which are specifically prescribed 
by CCC including, but not limited to, the following:
    (1) Preparing and executing loan and loan deficiency payment 
documents;

[[Page 431]]

    (2) Disbursing loan and loan deficiency payment proceeds;
    (3) Handling reconcentration of cotton under Sec.  1427.16;
    (4) Accepting loan repayments;
    (5) Handling documents involved with forfeiture of loan collateral 
to CCC; and
    (6) Providing loan, loan deficiency payment, and accounting data to 
CCC for statistical purposes.
    Northern Europe current price means the average for the preceding 
Friday through Thursday of the current shipment prices for the five 
lowest-priced growths of the growths quoted for M 1\3/32\-inch cotton, 
C.I.F. northern Europe.
    Northern Europe forward price means the average for the preceding 
Friday through Thursday of the forward shipment prices for the five 
lowest-priced growths of the growths quoted for M 1\3/32\-inch cotton, 
C.I.F. northern Europe.
    Northern Europe price means, during the period in which only one 
daily price quotation is available for the growth quoted for M 1\3/32\-
inch cotton, C.I.F. northern Europe, the average of the price quotations 
for the preceding Friday through Thursday of the five lowest-priced 
growths of the growths quoted for M 1\3/32\-inch cotton, C.I.F. northern 
Europe.
    Reconcentration means the process for moving a warehouse stored loan 
commodity to another warehouse location.
    Seed cotton means cotton which has not passed through the ginning 
process.
    U.S. Northern Europe current price means the average for the 
preceding Friday through Thursday of the current shipment prices for the 
lowest-priced United States growth as quoted for M 1\3/32\-inch cotton, 
C.I.F. northern Europe.
    U.S. Northern Europe forward price means the average for the 
preceding Friday through Thursday of the forward shipment prices for the 
lowest-priced United States growth as quoted for M 1\3/32\-inch cotton, 
C.I.F. northern Europe.
    U.S. Northern Europe price means, during the period in which only 
one daily price quotation is available for the United States growths 
quoted for M 1\3/32\-inch cotton, C.I.F. northern Europe, the average of 
the price quotations for the preceding Friday through Thursday of the 
lowest-priced United States growth as quoted for M 1\3/32\-inch cotton, 
C.I.F. northern Europe.
    Upland cotton means planted and stub cotton which is produced in the 
United States from other than pure strain varieties of the Barbadense 
species, any hybrid thereof, or any other variety of cotton which one or 
more of these varieties predominate.
    Warehouse receipt means a receipt containing the required 
information prescribed in this part and is:
    (1) A pre-numbered, pre-punched negotiable warehouse receipt issued 
under the authority of the U.S. Warehouse Act, a state licensing 
authority, or by an approved CCC warehouse in such format authorized and 
approved, in advance, by CCC;
    (2) An electronic warehouse receipt record issued by such warehouse 
recorded in a central filing system or systems maintained in one or more 
locations that are approved by FSA to operate such system; or
    (3) Other such acceptable evidence of title, as determined by CCC.



Sec.  1427.4  Eligible producer.

    (a) To be an eligible producer, the producer must:
    (1) Be an individual, partnership, association, corporation, estate, 
trust, State or political subdivision or agency thereof, or other legal 
entity that produces cotton as a landowner, landlord, tenant, or 
sharecropper;
    (2) Comply with all provisions of this part; and
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation:
    (ii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iii) 7 CFR part 1400--Payment Limitation and Payment Eligibility;
    (iv) 7 CFR part 1403--Debt Settlement Policies and Procedures; and
    (v) 7 CFR part 1405--Loans, Purchases and Other Operations; and
    (3) Have made an acreage certification with respect to all the 
cropland on the farm.
    (b) A receiver or trustee of an insolvent or bankrupt debtor's 
estate, an

[[Page 432]]

executor or an administrator of a deceased person's estate, a guardian 
of an estate of a ward or an incompetent person, and trustees of a trust 
estate shall be considered to represent the insolvent or bankrupt 
debtor, the deceased person, the ward or incompetent, and the 
beneficiaries of a trust, respectively. The production of the receiver, 
executor, administrator, guardian, or trustee shall be considered to be 
the production of the person or estate represented by the receiver, 
executor, administrator, guardian, or trust. Loan and loan deficiency 
payment documents executed by any such person will be accepted by CCC 
only if they are legally valid and such person has the authority to sign 
the applicable documents.
    (c) A minor who is otherwise an eligible producer shall be eligible 
to receive loans and loan deficiency payments only if the minor meets 
one of the following requirements:
    (1) The right of majority has been conferred on the minor by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable loan or loan deficiency payment documents are signed by 
the guardian;
    (3) Any note and security agreement or loan deficiency payment 
application signed by the minor is co-signed by a person determined by 
CCC to be financially responsible; or
    (4) A bond is furnished under which a surety guarantees to protect 
CCC from any loss incurred for which the minor would be liable had the 
minor been an adult.
    (d)(1) If more than one producer executes a note and security 
agreement with CCC, each such producer shall be jointly and severally 
liable for the violation of the terms and conditions of the note and the 
regulations in this part. Each such producer shall also remain liable 
for repayment of the entire marketing assistance loan amount until the 
loan is fully repaid without regard to such producer's claimed share in 
the commodity pledged as collateral for the loan. In addition, such 
producer may not amend the note and security agreement with respect to 
the producer's claimed share in such commodities, or loan proceeds, 
after execution of the note and security agreement by CCC.
    (2) The cotton in a bale may have been produced by two or more 
eligible producers on one or more farms if the bale is not a repacked 
bale.
    (e) A CMA may obtain a marketing assistance loan and loan deficiency 
payments on eligible cotton on behalf of its members who are eligible to 
receive loans or loan deficiency payments for a crop of cotton. For 
purposes of this subpart, the term ``producer'' includes a CMA.
    (f) In case of death, incompetency, or disappearance of any producer 
who is entitled to the payment of any sum in settlement of a marketing 
assistance loan or loan deficiency payment, payment shall, upon 
application to CCC, be made to the persons who would be entitled to the 
producer's payment under the regulations contained in part 707 of this 
title.



Sec.  1427.5  General eligibility requirements.

    (a) To receive loans or loan deficiency payments for a crop of 
cotton, a producer must execute a note and security agreement or loan 
deficiency payment application on or before May 31 of the year following 
the year in which such crop is normally harvested.
    (1) Form A loan documents or loan deficiency payment applications 
must be signed by the applicant and submitted to CCC or a loan servicing 
agent. Submissions by cotton clerks must occur within 15 calendar days 
after the producer signs the forms and within the period of loan 
availability. A producer, except for a CMA, must request loans and loan 
deficiency payments:
    (i) At the county office that is responsible under part 718 of this 
title for administering programs for the farm on which the cotton was 
produced; or
    (ii) From a loan servicing agent.
    (2) Form G loan documents and requests for loan deficiency payments 
by a CMA must be signed by the CMA and delivered to CCC or the cotton 
commercial bank within the period of loan availability.

[[Page 433]]

    (b) For a bale of cotton to be eligible to be pledged as collateral 
for a marketing assistance loan or a subject of a loan deficiency 
payment application, the bale must:
    (1) Be tendered to CCC by an eligible producer;
    (2) Be in existence and good condition, be covered by fire 
insurance, be stored in a warehouse with an existing cotton storage 
agreement under Sec. Sec.  1427.1081 through 1427.1089 at the time of 
disbursement of the loan or loan deficiency payment proceeds, except as 
provided in Sec.  1427.23(f), and be stored in approved storage as 
determined under Sec.  1427.10;
    (3) Be represented by a warehouse receipt meeting the requirements 
of Sec.  1427.11, except as provided in Sec. Sec.  1427.10(e) and 
1427.23(a)(4);
    (4) Not be false-packed, water-packed, mixed-packed, re-ginned, or 
repacked;
    (5) Not be compressed to universal density at a warehouse where side 
pressure has been applied;
    (6) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the cotton to CCC as collateral for a loan or to 
obtain a loan deficiency payment;
    (7) Not have been previously sold and repurchased or pledged as 
collateral for a CCC loan and redeemed except as provided in Sec.  
1427.172(b)(4);
    (8) Not be cotton for which a loan deficiency payment has been 
previously made;
    (9) Weigh at least 325 pounds net weight; bales of more than 600 
pounds may be pledged for loan at 600 pounds.
    (10) Be packaged in materials which meet the specifications adopted 
by the Joint Cotton Industry Bale Packaging Committee sponsored by the 
National Cotton Council of America for the applicable year or which are 
identified and approved by the Joint Industry Bale Packaging Committee 
as experimental packaging materials for the applicable crop year, except 
that producers approved for the outside storage of 2003 and subsequent 
crops of ELS cotton as provided for in Sec.  1427.10(e) must assure that 
the packaging materials used for bales stored outside must meet the 
materials, sealing, and humidity specifications contained in the 
outside-storage addendum to their ELS cotton marketing assistance loan 
agreement.
    (11) Be ginned by a ginner which:
    (i) Has entered the tare weight of the bale (bagging and ties used 
to wrap the bale) on the gin bale tag or otherwise furnish warehouse 
operator the tare weight; and
    (ii) Has entered into a Cooperating Ginners' Bagging and Bale Ties 
Certification and Agreement on a form prescribed by CCC, or certified 
that the bale is wrapped with bagging and bale ties meeting the 
requirements of paragraph (b)(10) of this section and;
    (12) Be production from acreage that has been reported timely under 
part 718 of this title.
    (c) In addition to the requirements of paragraph (b) of this 
section, for ELS cotton the bale must:
    (1) Be a grade and staple length specified in the schedule of loan 
rates and premiums and discounts for ELS cotton
    (2) Have a micronaire specified in the schedule of micronaire 
premiums and discounts for ELS cotton; and
    (3) Have an extraneous matter specified in the schedules of premiums 
and discounts for extraneous matter for ELS cotton.
    (d) In addition to the requirements of paragraph (b) of this 
section, for upland cotton the bale must:
    (1) Have been graded by using a High Volume Instrument;
    (2) Be a grade, staple length, and leaf specified in the schedule of 
premiums and discounts for grade, staple, and leaf for upland cotton;
    (3) Have a strength reading specified in the schedule of strength 
premiums and discounts for upland cotton;
    (4) Have a micronaire specified in the schedule of micronaire 
premiums and discounts for upland cotton;
    (5) Have an extraneous matter within the limits specified in the 
schedule of discounts for extraneous matter for upland cotton; and
    (6) Have a uniformity specified in the schedule of uniformity 
premiums and discounts for upland cotton.

[[Page 434]]

    (e)(1) To be eligible to receive marketing assistance loans or loan 
deficiency payments, a producer must have the beneficial interest in the 
cotton which is tendered to CCC for a marketing assistance loan or loan 
deficiency payment. The producer must always have had the beneficial 
interest in the cotton unless, before the cotton was harvested, the 
producer, and a former producer whom the producer tendering the cotton 
to CCC has succeeded, had such an interest in the cotton. Cotton 
obtained by gift, barter or purchase shall not be eligible to be 
tendered to CCC for marketing assistance loans or loan deficiency 
payments. Heirs who succeed to the beneficial interest of a deceased 
producer or who assume the decedent's obligations under an existing 
marketing assistance loan shall be eligible to receive marketing 
assistance loans and loan deficiency payments whether succession to the 
cotton occurs before or after harvest so long as the heir otherwise 
complies with this part.
    (2) A producer shall not be considered to have divested the 
beneficial interest in the cotton if the producer retains control, 
title, and risk of loss in the cotton, including the right to make all 
decisions regarding the tender of the cotton to CCC for marketing 
assistance loans or loan deficiency payments including those cases where 
the producer:
    (i) Executes an option to purchase, whether or not a payment is made 
by the potential buyer for such option to purchase, for such cotton if 
all other eligibility requirements are met and the option to purchase 
contains the following:

    Notwithstanding any other provision of this option to purchase, 
title; risk of loss; and beneficial interest in the commodity, as 
specified in 7 CFR 1427.5, shall remain with the producer until the 
buyer exercises this option to purchase the commodity. This option to 
purchase shall expire, notwithstanding any action or inaction by either 
the producer or the buyer, at the earlier of: (1) The maturity of any 
Commodity Credit Corporation (CCC) loan which is secured by such 
commodity; (2) the date CCC claims title to such commodity; or (3) such 
other date as provided in this option.

    (ii) Enters into a contract to sell the cotton if the producer 
retains title, risk of loss, and beneficial interest in the commodity 
and the purchaser pays no advance payment amount or any incentive 
payment amount to enter into such contract, except as provided in part 
1425 of this chapter; or
    (iii) Executes a designation of agent on a form prescribed by CCC. 
Such designation:
    (A) Allows the producer to authorize an agent or subsequent agent to 
redeem all or a portion of the cotton pledged as collateral for a 
marketing assistance loan;
    (B) Identifies the warehouse receipts for which the authorization is 
given;
    (C) Expires upon maturity of the marketing assistance loan;
    (D) Allows agents so designated by the producer to designate a 
subsequent agent by endorsement of the form by the agent;
    (E) Must be presented at the time the marketing assistance loan is 
repaid at the county office or loan servicing agent where such loan 
originated if the agent or subsequent agent exercises any authority 
granted by the producer, unless the producer provides authorization to 
CCC to use an electronic agent designation as the basis for accepting 
redemption of some or all bales of the specified loan; and
    (F) May be canceled by the producer by providing the custodial 
office a written request signed and dated by the producer showing the 
name of the agent, the loan number, and the bales applicable to the 
Cooperating Ginners' Bagging and Bale Ties Certification and Agreement 
that was provided by the Agency. The effective date of the cancellation 
shall be the date the request is received by the custodial office.
    (3) If marketing assistance loans or loan deficiency payments are 
made available to producers through a CMA under part 1425 of this 
chapter, the beneficial interest in the cotton must always have been in 
the producer-member who delivered the cotton to the CMA or its member, 
except as otherwise provided in this section. Cotton delivered to such a 
CMA shall not be eligible to receive a marketing assistance loan or a 
loan deficiency payment if the producer-member who delivered the cotton 
does not retain the right to

[[Page 435]]

share in the proceeds from the marketing of the cotton as provided in 
part 1425 of this chapter.
    (f) If the person tendering cotton for a loan or a loan deficiency 
payment is a landowner, landlord, tenant, or sharecropper, such cotton 
must represent such person's separate share of the crop and must not 
have been acquired by such person directly or indirectly from a 
landowner, landlord, tenant, or sharecropper.
    (g) Each bale of upland cotton sampled by the warehouse operator 
upon initial receipt which has not been sampled by the ginner must not 
show more than one sample hole on each side of the bale. If more than 
one sample is desired when the bale is received by the warehouse 
operator, the sample shall be cut across the width of the bale, broken 
in half or split lengthwise, and otherwise drawn under Agricultural 
Marketing Service (AMS) dimension and weight requirements. This 
requirement will not prohibit sampling of the cotton at a later date if 
authorized by the producer.
    (h) Marketing assistance loans may be disbursed to eligible 
producers who store upland cotton in unlicenced storage facilities only 
if the producer agrees to redeem the marketing assistance loan on the 
date on which the loan is disbursed with a commodity certificate 
exchange.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003]



Sec.  1427.6  Disbursement of loans.

    (a) Disbursement of loans to individual producers may be made by:
    (1) County in CCC and FSA offices;
    (2) Loan servicing agents; or
    (3) An approved cotton clerk who has entered into a written 
agreement with CCC on a form prescribed by CCC.
    (b) Loan proceeds may be disbursed by CCC or a cotton commercial 
bank.
    (c) The loan documents shall not be presented for disbursement 
unless the cotton covered by the mortgage or pledged as security is 
eligible under Sec.  1427.5. If the cotton was not eligible cotton at 
the time of disbursement, the total amount disbursed under the loan, and 
charges plus interest shall be refunded promptly.



Sec.  1427.7  Maturity of loans.

    (a)(1) Form A loans and Form G loans mature on demand by CCC and no 
later than the last day of the 9th calendar month following the month in 
which the note and security agreement is filed under Sec.  1427.5(a).
    (2) CCC may at any time accelerate the loan maturity date by 
providing the producer notice of such acceleration at least 30 days in 
advance of the accelerated maturity date.
    (b) If the loan is not repaid by the loan maturity date, title to 
the cotton shall vest in CCC the day after such maturity date and CCC 
shall have no obligation to pay for any market value which such cotton 
may have in excess of the amount of the loan, plus interest and charges.



Sec.  1427.8  Amount of loan.

    (a) The loan rates for crops of upland cotton and ELS cotton will be 
determined and announced by CCC and made available at State and county 
offices.
    (b) The quantity of cotton which may be pledged as collateral for a 
loan shall be the net weight of the eligible cotton as shown on the 
warehouse receipt issued by an approved warehouse, except that in the 
case of a bale which has a net weight of more than 600 pounds, the 
weight to be used in determining the amount of the loan on the bale 
shall be 600 pounds. Cotton pledged as collateral for loans on the basis 
of reweights will not be accepted by CCC.
    (c) The amount of the loan for each bale will be determined by 
multiplying the net weight of the bale, as determined under paragraph 
(b) of this section by the applicable loan rate.
    (d) CCC will not increase the amount of the loan made for any bale 
of cotton as a result of a redetermination of the quantity or quality of 
the bale after it is tendered to CCC, except that if it is established 
to the satisfaction of CCC that a bona fide error was made for the 
weight of the bale or the classification for the bale, such error may be 
corrected.



Sec.  1427.9  Classification of cotton.

    (a) References made to ``classification'' in this subpart shall 
include

[[Page 436]]

color grade, leaf, staple length, extraneous matter and micronaire, and 
for upland cotton, strength readings. All cotton tendered for loan must 
be classed by an AMS Cotton Classing Office or other entity approved by 
CCC and tendered on the basis of such classification.
    (b) An AMS cotton classification or other entity's classification 
acceptable by CCC showing the classification of a bale must be based 
upon a representative sample drawn from the bale under instructions to 
samplers drawing samples under AMS procedures.
    (c) If the producer's cotton has not been classed or sampled in a 
manner acceptable by CCC, the warehouse shall sample such cotton and 
forward the samples to the AMS Cotton Classing Office or other entity 
approved by CCC serving the district in which the cotton is located. 
Such warehouse must be licensed by AMS or be approved by CCC to draw 
samples for submission to the AMS Cotton Classing Office or other entity 
approved by CCC.
    (d) If a sample has been submitted for classification, another 
sample shall not be drawn, except for a review classification.
    (e) Where review classification is not involved, if through error or 
otherwise two or more samples from the same bale are submitted for 
classification, the loan rate shall be based on the classification 
having the lower loan value.
    (f) If a review classification is obtained, the loan value of the 
cotton represented thereby will be based on such review classification.



Sec.  1427.10  Approved storage.

    (a) Eligible cotton may be pledged as collateral for loans only if 
stored at warehouses approved by CCC.
    (1) Persons desiring approval of their facilities should contact the 
Kansas City Commodity Office, P.O. Box 419205, Kansas City, Missouri 
64141-6205.
    (2) The names of approved warehouses may be obtained from the Kansas 
City Commodity Office or from State or county offices.
    (b) When the operator of a warehouse receives notice from CCC that a 
loan has been made by CCC on a bale of cotton, the operator shall, if 
such cotton is not stored within the warehouse, promptly place such 
cotton within such warehouse.
    (c) Warehouse charges paid by a producer will not be refunded by 
CCC.
    (d) The approved storage requirements provided in this section may 
be waived by CCC if the producer requests a loan deficiency payment 
pursuant to the loan deficiency payment provisions contained in Sec.  
1427.23.
    (e) With respect to 2003 and subsequent crops of ELS cotton, a 
producer may obtain a loan on cotton that is not stored as otherwise 
provided in this section if such cotton is stored:
    (1) At a commercial entity that is involved in the handling or 
storage of cotton in a county where the 10-year average level of 
precipitation is 10 inches or less;
    (2) The site is constructed so as to prevent the accumulation of 
water under such cotton; and
    (3) As otherwise provided in the loan agreement. The collateral for 
such loan shall be as specified in the loan agreement and may include 
the actual bale of cotton or a document of title representing such 
cotton.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003]



Sec.  1427.11  Warehouse receipts.

    (a) Producers may obtain loans on eligible cotton represented by 
warehouse receipts only if the warehouse receipts meet the definition of 
a warehouse receipt and provide for delivery of the cotton to bearer or 
are properly assigned by endorsement in blank, so as to vest title in 
the holder of the receipt or are otherwise acceptable to CCC. The 
warehouse receipt must:
    (1) Contain the gin bale number;
    (2) Contain the warehouse receipt number;
    (3) Be dated on or before the date the producer signs the note and 
security agreement.
    (b) Warehouse receipts, under Sec.  1427.3, when issued as block 
warehouse receipts will be accepted when authorized by CCC only if the 
owner of the warehouse issuing the block warehouse receipt owns the 
cotton represented by the block warehouse receipt and the warehouse is 
not licensed under the U.S. Warehouse Act.

[[Page 437]]

    (c)(1) Each receipt must set out in its written or printed terms the 
tare and the net weight of the bale represented thereby. The net weight 
shown on the warehouse receipt shall be the difference between the gross 
weight as determined by the warehouse at the warehouse site and the tare 
weight. The warehouse receipt may show the net weight established at a 
gin if:
    (i) The gin is in the immediate vicinity of the warehouse and is 
operated under common ownership with such warehouse or in any other case 
in which the showing of gin weights on the warehouse receipts is 
approved by CCC; and
    (ii) Gin weights are permitted by the licensing authority for the 
warehouse.
    (2) The tare shown on the receipt shall be the tare furnished to the 
warehouse by the ginner or entered by the ginner on the gin bale tag. A 
machine card type warehouse receipt reflecting an alteration in gross, 
tare, or net weight will not be accepted by CCC unless it bears, on the 
face of the receipt, the following legend or similar wording approved by 
CCC, duly executed by the warehouse or an authorized representative of 
the warehouse:

Corrected (gross, tare, or net) weight,
(Name of warehouse),
By (Signature or initials),
Date.

    (3) Alterations in other inserted data on a machine card type 
warehouse receipt must be initialed by an authorized representative of 
the warehouse.
    (d) If warehouse storage charges have been paid, the receipt must 
show that date through which the storage charges have been paid.
    (e) If warehouse receiving charges have been paid or waived, the 
warehouse receipt must show such fact. Except for bales stored in the 
States of Alabama, Florida, Georgia, North Carolina, South Carolina, and 
Virginia, if receiving charges due on the bale include a charge, if any, 
for a new set of ties for compressing flat bales tied with ties which 
cannot be reused, the warehouse receipt must indicate the receiving 
charges and include a charge for new set of ties. If the bale is stored 
at a warehouse not having compress facilities and bales shipped from the 
warehouse are normally compressed in transit, the warehouse receipt must 
show the bale ties are not suitable for reuse when the bale is 
compressed and charges will be assessed by the nearest compress in line 
of transit for furnishing new bale ties.
    (f) In any case where loan collateral is forfeited, any unpaid 
storage or receiving charges, not to exceed the amount that accrued from 
the date that all necessary documents were received by CCC to the 
maturity date, will be paid to the warehouse by CCC after loan maturity 
or as soon as practicable after the cotton is ordered shipped by CCC.
    (g) The warehouse receipt must show the compression status of the 
bale; i.e., flat, modified flat, standard, gin standard, standard 
density (short), gin universal, universal density (short), or warehouse 
universal density. The receipt must show if the compression charge has 
been paid, or if the warehouse claims no lien for such compression.



Sec.  1427.12  Liens.

    If there are any liens or encumbrances on the cotton tendered as 
collateral for a loan, waivers that fully protect the interest of CCC 
must be obtained before disbursement even though the liens or 
encumbrances are satisfied from the loan proceeds. No additional liens 
or encumbrances shall be placed on the cotton after the loan is 
approved.



Sec.  1427.13  Fees, charges and interest.

    (a) A producer shall pay a nonrefundable loan service fee to CCC or, 
if applicable, to a loan servicing agent, at a rate determined by CCC. 
Such fee shall be in addition to a cotton clerk fee paid under paragraph 
(b) of this section. The fee amounts are available in State and county 
offices and are shown on the note and security agreement. Fees shall be 
deducted from the loan proceeds.
    (b) Cotton clerks may only charge fees for the preparation of loan 
or loan deficiency payment documents at the rate determined by CCC.
    (1) Such fees may be deducted from the loan or loan deficiency 
payment proceeds instead of the fees being paid in cash.

[[Page 438]]

    (2) The amount of such fees is available from CCC and is shown on 
the note and security agreement.
    (c) Interest which accrues for a loan shall be determined under part 
1405 of this chapter. All or a portion of such interest may be waived 
for a quantity of upland cotton which has been redeemed under Sec.  
1427.19 at a level which is less than the principal amount of the loan 
plus charges and interest.
    (d) For each crop of upland cotton, the producer, as defined in the 
Cotton Research and Promotion Act (7 U.S.C. 2101), shall remit to CCC an 
assessment which shall be transmitted by CCC to the Cotton Board and 
shall be deducted from the:
    (1) Loan proceeds for a crop of cotton and shall be at a rate equal 
to one dollar per bale plus up to one percent of the loan amount; and
    (2) Loan deficiency payment proceeds for a crop of cotton and shall 
be at a rate equal to up to one percent of the loan deficiency payment 
amount.
    (e) If the producers elects to forfeit the loan collateral to CCC, 
the producer shall pay to CCC, at the rates that are specified in the 
storage agreement between the warehouse and CCC, the following accrued 
warehouse charges:
    (1) All warehouse storage charges associated with the forfeited 
cotton that accrued before the date that all required documents were 
provided to CCC; and
    (2) Any accrued warehouse receiving charges associated with the 
forfeited cotton, including, if applicable, charges for new ties as 
specified in Sec.  1427.11.



Sec.  1427.14  [Reserved]



Sec.  1427.15  Special procedure where funds are advanced.

    (a) This special procedure is provided to assist persons or firms 
which, in the course of their regular business of handling cotton for 
producers, have made advances to eligible producers on cotton eligible 
to be pledged as collateral for a marketing assistance loan or to 
receive a loan deficiency payment. A person, firm, or financial 
institution which has made advances to eligible producers on eligible 
cotton may also obtain reimbursement for the amounts advanced under this 
procedure.
    (b) This special procedure shall apply only:
    (1) If such person or firm is entitled to reimbursement from the 
proceeds of the marketing assistance loans or loan deficiency payments 
for the amounts advanced and has been authorized by the producer to 
deliver the loan or loan deficiency payment documents to a county office 
for disbursement of the loans or loan deficiency payments; and
    (2) To marketing assistance loan or loan deficiency payment 
documents covering cotton on which a person or firm has advanced to the 
producers, including payments to prior lienholders and other creditors, 
the note amounts shown on the Form A loan documents, except for:
    (i) Authorized cotton clerk fees;
    (ii) The research and promotion fee to be collected for transmission 
to the Cotton Board by CCC; and
    (iii) CCC loan service charges.
    (c)(1) All marketing assistance loan or loan deficiency payment 
documents shall be mailed or delivered to the appropriate county office 
and shall show the entire proceeds of the marketing assistance loans or 
loan deficiency payments, except for CCC loan service charges and 
research and promotion fees, for disbursement to:
    (i) The financial institution which is to allow credit to the person 
or firm which made the loan or loan deficiency payment advances or to 
such financial institution and such person or firm as joint payees; or
    (ii) The person, firm, or financial institution which made the 
marketing assistance loan or loan deficiency payment advances to the 
producers.
    (2) The documents shall be accompanied by a Transmittal Schedule of 
Loan and Loan Deficiency Payment Documents (Transmittal) on a form 
prescribed by CCC, in original and two copies, numbered serially for 
each county office by the person, firm, or financial institution which 
made the marketing assistance loan or loan deficiency payment advance. 
The Transmittal shall show the amounts invested by the person, firm, or 
financial institution in the marketing assistance loans or loan 
deficiency payments.

[[Page 439]]

    (3) Upon receipt of the marketing assistance loan or loan deficiency 
payment documents and Transmittal, the county office will stamp one copy 
of the Transmittal to indicate receipt of the documents and return this 
copy to the person, firm, or financial institution.
    (d) The person, firm, or financial institution shall be deemed to 
have invested funds in the loans or loan deficiency payment as of the 
date marketing assistance loan or loan deficiency payment documents 
acceptable to CCC were delivered to a county office or, if received by 
mail, the date of mailing as indicated by postmark or the date of 
receipt in a county office if no postmark date is shown. Patron postage 
meter date stamp will not be recognized as a postmark date.
    (e) Interest will be computed on the total amount invested by the 
person, firm, or financial institution in the marketing assistance loan 
or loan deficiency payment represented by accepted documents from and 
including the date of investment of funds by the person, firm, or 
financial institution to, but not including, the date of disbursement by 
CCC.
    (1) Interest will be paid at the rate in effect for CCC loans as 
provided in part 1405 of this chapter.
    (2) Interest earned by the person, firm, or financial institution on 
the investment in loans disbursed during a month will be paid by CCC 
after the end of the month.



Sec.  1427.16  Reconcentration of cotton.

    (a) CCC may under certain conditions, before loan maturity, 
compress, store, insure, or reinsure the cotton against any risk, or 
otherwise handle or deal with the cotton as it may deem necessary or 
appropriate for the purpose of protecting the interest therein of the 
producer or CCC.
    (b) CCC may reconcentrate the cotton pledged for the marketing 
assistance loan from one CCC-approved warehouse to another with the 
written consent of the producer and upon the request of the local 
warehouse and certification that there is congestion and lack of storage 
facilities in the area. However, if CCC determines such cotton is 
improperly warehoused and subject to damage, or if any of the terms of 
the loan agreement are violated, or if carrying charges are 
substantially in excess of the average of carrying charges available 
elsewhere and the local warehouse, after notice, declines to reduce such 
charges, such written consent need not be obtained.
    (1) An FSA official, the loan servicing agent, or CMA shall arrange 
for reconcentration of the cotton under the direction of CCC and CCC 
shall obtain new warehouse receipts.
    (2) Any reconcentration charges, fees, costs, or expenses incident 
to such actions shall be charged against the cotton, and must be repaid 
for bales redeemed from loan.



Sec.  1427.17  Custodial offices.

    Collateral warehouse receipts, using forms prescribed by CCC, and 
related documents will be maintained in the custody of CCC, its 
designee, the loan servicing agent, or the cotton commercial bank, 
whichever disbursed the loan evidenced by such documents.



Sec.  1427.18  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a marketing assistance loan or loan deficiency payment or in 
maintaining or settling a loan, or disposes of or moves the loan 
collateral without the prior written approval of CCC, such loan or loan 
deficiency payment shall be payable upon demand by CCC. The producer 
shall be liable for:
    (i) The amount of the marketing assistance loan or loan deficiency 
payment;
    (ii) Any additional amounts paid by CCC for the loan or loan 
deficiency payment;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts;
    (v) Liquidated damages under paragraph (e) of this section; and
    (vi) About amounts due for a loan, the payment of such amounts may 
not be satisfied by the forfeiture of loan collateral to CCC of cotton 
with a settlement value that is less than the

[[Page 440]]

total of such amounts or by repayment of such loan at the lower loan 
repayment rate as prescribed in Sec.  1427.19.
    (2) If a producer makes a fraudulent representation or if the 
producer has disposed of, or moved, the loan collateral without prior 
written approval from CCC, the value of such collateral delivered to or 
acquired by CCC shall be equal to the sales price of the cotton less any 
costs incurred by CCC in completing the sale.
    (b) If the amount disbursed under a marketing assistance loan, or in 
settlement thereof, or loan deficiency payment exceeds the amount 
authorized by this subpart, the producer shall be liable for repayment 
of such excess, plus interest. In addition, the commodity pledged as 
collateral for such loan shall not be released to the producer until 
such excess is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
marketing assistance loan or loan deficiency payment is less than the 
amount required under this subpart, the producer shall be personally 
liable for repayment of the amount of such deficiency plus applicable 
interest.
    (d) If more than one producer executes a note and security agreement 
or loan deficiency payment application with CCC, each such producer 
shall be jointly and severally liable for the violation of the terms and 
conditions of the note and security agreement or loan deficiency payment 
application and this subpart. Each producer shall also remain liable for 
repayment of the entire loan or loan deficiency payment amount until the 
loan is fully repaid without regard to their share in the cotton pledged 
as collateral for the loan or for which the loan deficiency payment was 
made. In addition, such producer may not amend the note and security 
agreement or loan deficiency payment application for the producer's 
claimed share in such cotton after execution of the note and security 
agreement or loan deficiency payment application by CCC.
    (e) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC if a producer makes 
any fraudulent representation in obtaining a loan or loan deficiency 
payment or in maintaining or settling a loan or disposing of or moving 
the loan collateral without the prior written approval of CCC. 
Accordingly, if CCC determines that the producer has violated the terms 
or conditions of their requests for a loan or any applicable form 
required by CCC, liquidated damages shall be assessed on the quantity of 
the cotton which is involved in the violation. If CCC determines the 
producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by:
    (i) 10 percent of the loan rate applicable to the loan note or the 
loan deficiency payment rate for the first offense; or
    (ii) 25 percent of the loan rate applicable to the loan note or the 
loan deficiency payment rate for the second offense; or
    (2) Did not act in good faith about the violation, or for cases 
other than first or second offense, liquidated damages will be assessed 
by multiplying the quantity involved in the violation by 25 percent of 
the loan rate applicable to the loan note or the loan deficiency payment 
rate.
    (f) For first and second offenses, if CCC determines that a producer 
acted in good faith when the violation occurred, CCC shall:
    (1) Require repayment of the loan principal and charges, plus 
interest applicable to the loan quantity affected by the violation or 
for loan deficiency payment, the loan deficiency payment amount 
applicable to the loan deficiency quantity involved with the violation, 
and charges plus interest from the date the loan deficiency payment was 
made; and
    (2) Assess liquidated damages under paragraph (e) of this section;
    (3) If the producer fails to pay such amounts within 30 calendar 
days from the date of notification, CCC shall call the applicable 
marketing assistance loan involved in the violation and require 
repayment of any market gain previously realized for the applicable 
loan, plus any interest previously waived and any storage paid by CCC, 
or fora loan deficiency payment, require repayment of the loan 
deficiency payment and charges plus interest from

[[Page 441]]

the date the loan deficiency payment was made.
    (g) For cases other than first or second offenses, or any offense 
for which CCC cannot determine good faith when the violation occurred, 
CCC shall:
    (1) Assess liquidated damages under paragraph (e) of this section; 
and
    (2) Call the applicable marketing assistance loan involved in the 
violation and require repayment of any market gain previously realized 
for the applicable loan, plus any interest previously waived and any 
storage paid by CCC, and for a loan deficiency payment, require 
repayment of the loan deficiency payment and charges plus interest from 
the date the loan deficiency payment was made.
    (h) If the county committee acting on behalf of CCC determines that 
the producer has committed a violation under paragraph (e) of this 
section, CCC shall notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances which caused the violation, to 
the county committee; and
    (2) Administrative actions will be taken under paragraph (f) or (g) 
of this section.
    (i) If the marketing assistance loan is called under this section, 
the producer must repay the loan at principal and charges, plus interest 
and may not repay the loan at the lower of the loan repayment rate under 
Sec.  1427.19 or utilize the provisions of part 1401 of this chapter for 
such loan.
    (j) Any or all of the liquidated damages assessed under paragraph 
(e) of this section may be waived as determined by CCC.
    (k)(1) Notwithstanding any other provision of this part, for ELS 
cotton stored as provided in Sec.  1427.10(e), the producer shall be 
liable for all costs associated with the storage of the cotton while it 
is stored outside. CCC shall make no storage payment or any other 
payment with respect to ELS cotton stored as provided in Sec.  
1427.10(e).
    (2) The producer of ELS cotton which is stored as provided in Sec.  
1427.10(e) shall:
    (i) Certify the quantity of such cotton on the loan application;
    (ii) Be responsible for any loss in quantity or quality of such 
cotton;
    (iii) If the loan is satisfied by forfeiting the cotton to CCC, be 
responsible for all costs associated with delivering such cotton to a 
warehouse designated by CCC, all costs associated with any re-
classification and repackaging that may be required by CCC or the 
warehouse operator to whom the cotton is delivered, all charges by the 
receiving warehouse for receiving the cotton and issuing an electronic 
warehouse receipt for the cotton, and other charges as may be levied by 
the warehouse specific to outside-stored cotton; and
    (iv) Not move such cotton after the loan application is submitted to 
CCC without prior written approval of the county committee. Failure of 
the producer to receive such permission shall subject the producer to 
administrative actions.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003]



Sec.  1427.19  Repayment of loans.

    (a) Warehouse receipts will not be released except as provided in 
this section.
    (b) A producer, an authorized agent or anyone subsequently 
designated by the producer in the manner prescribed by CCC may redeem 
one or more bales of cotton pledged as collateral for a loan by payment 
to CCC of an amount applicable to the bales of cotton being redeemed 
determined under this section. CCC, upon proper payment for the amount 
due, shall release the warehouse receipts applicable to such cotton.
    (c) A producer or agent or subsequent agent authorized in writing in 
a manner prescribed by CCC may repay the loan amount for one or more 
bales of cotton pledged as collateral for a marketing assistance loan:
    (1) For upland cotton, at a level that is the lesser of:
    (i) The loan level and charges, plus interest determined for such 
bales; or
    (ii) The adjusted world price, as determined by CCC under Sec.  
1427.25, in effect on the day the repayment is received by the county 
office, loan servicing agent, or cotton commercial bank that disbursed 
the loan.

[[Page 442]]

    (2) For ELS cotton, by repaying the loan amount and charges, plus 
interest determined for such bales.
    (d) CCC shall determine and publicly announce the adjusted world 
price for each crop of upland cotton on a weekly basis.
    (e) The difference between the loan level, excluding charges and 
interest, and the loan repayment level is the market gain. The total 
amount of any market gain realized by a person is subject to part 1400 
of this chapter.
    (f) Repayment of loans will not be accepted after CCC acquires title 
to the cotton under Sec.  1427.7.
    (g) In the event that Thursday is a non-workday, such loan 
repayments will not be accepted beginning at 7 a.m. Eastern Standard 
time the next workday until an announcement of the adjusted world price 
for the succeeding weekly period has been made under Sec.  1427.25(e).
    (h) If the upland cotton pledged as collateral is eligible to be 
redeemed at a rate less than the loan level and charges, plus interest, 
and the adjusted world price determined under Sec.  1427.25:
    (1) Below the national average loan rate for upland cotton, CCC will 
pay at the time of loan repayment to the producer or agent or subsequent 
agent authorized by the producer in the manner prescribed by CCC, the 
warehouse storage charges which have accrued, for the cotton pledged as 
collateral for such loan, during the period the cotton was pledged for 
loan;
    (2) Above the national average loan rate by less than the sum of the 
accrued interest and warehouse storage charges, that accrued during the 
period the cotton was pledged for loan, CCC will pay at the time of loan 
repayment to the producer or agent or subsequent agent authorized by the 
producer in the manner prescribed by CCC, that portion of the warehouse 
storage charges, that accrued during the period the cotton was pledged 
for loan, that are determined to be necessary to permit the loan to be 
repaid at the adjusted world price without regard to any warehouse 
charges that accrued before the cotton was pledged for loan; or
    (3) Above the national average loan rate by as much as or more than 
the sum of the accrued interest and warehouse storage charges that 
accrued during the period the cotton was pledged for loan, CCC shall not 
pay any of the accrued warehouse storage charges.
    (i) Repayment of loans will not be accepted after CCC acquires title 
to the cotton in accordance with Sec.  1427.7.



Sec.  1427.20  Handling payments and collections not exceeding $9.99.

    Amounts of $9.99 or less will be paid to the producer only at their 
request. Deficiencies of $9.99 or less, including interest, may be 
disregarded unless CCC demands in writing that they be paid.



Sec.  1427.21  Settlement.

    (a) The settlement of loans shall be made by CCC on the basis of the 
quality and quantity of the cotton delivered to CCC by the producer or 
acquired by CCC.
    (b) Settlements made by CCC for eligible cotton which are acquired 
by CCC which are stored in an approved warehouse shall be made on the 
basis of the entries set forth on the applicable warehouse receipt and 
other accompanying documents.
    (c) If a producer does not pay CCC the amount due under a loan, CCC 
shall take title to the cotton as provided in Sec.  1427.7(b).
    (d) With respect to ELS cotton which is stored as provided in Sec.  
1427.10(e), settlement of loans shall be made based upon the 
determination of the quantity and quality made by CCC at the time of 
acceptance of the cotton by CCC at the warehouse designated by CCC as 
provided in Sec.  1427.18(k).

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49329, Aug. 18, 2003]



Sec.  1427.22  Commodity certificate exchanges.

    (a) For any outstanding marketing assistance loan, a producer may 
purchase a commodity certificate and exchange that commodity certificate 
for the marketing assistance loan collateral.
    (b) The exchange rate is the lesser of:
    (1) The loan rate and charges, plus interest applicable to the loan, 
or

[[Page 443]]

    (2) The adjusted world price for cotton as determined by CCC.
    (c) Producers must request a commodity certificate exchange in 
person at the FSA county service center that disbursed the marketing 
assistance loan by:
    (1) Completing a written request as CCC determines,
    (2) Purchasing a commodity certificate for the exact amount required 
to exchange the marketing assistance loan collateral, and
    (3) Immediately exchanging the purchased commodity certificate for 
the outstanding loan collateral.



Sec.  1427.23  Cotton loan deficiency payments.

    (a) In order to be eligible to receive such loan deficiency 
payments, the producer of the upland cotton must:
    (1) Comply with all of the upland cotton marketing assistance loan 
eligibility requirements under this subpart;
    (2) Agree to forgo obtaining such loans unless denied a loan 
deficiency payment due to payment limitation;
    (3) File a request for payment for a quantity of eligible cotton 
under Sec.  1427.5(a) on a form approved by CCC;
    (4) Provide warehouse receipts or, as determined by CCC, a list of 
gin bale numbers for such cotton showing, for each bale, the net weight 
established at the gin;
    (5) For loan deficiency payments requested before ginning of the 
cotton based on a locked-in adjusted world price, provide identifying 
numbers for modules or other storage units that will correspond to the 
gin-assigned numbers of the bales produced from the unginned cotton; and
    (6) Otherwise comply with all program requirements.
    (b) The loan deficiency payment applicable to a crop of cotton shall 
be computed by multiplying the applicable loan deficiency payment rate, 
as determined under paragraph (c) of this section, by the quantity of 
the crop the producer is eligible to pledge as collateral for a loan, 
excluding any quantity for which the producer obtains a marketing 
assistance loan.
    (c) The loan deficiency payment rate for a crop of upland cotton 
shall be the amount by which the loan rate determined for a bale of such 
crop exceeds the adjusted world price, as determined by CCC under Sec.  
1427.25, in effect on the day the request is received by, the county 
office, loan servicing agent, or cotton commercial bank. In no case 
shall the loan deficiency payment rate for a bale exceed the value of 
the bale had it been pledged as collateral for a marketing assistance 
loan.
    (d) The total amount of any loan deficiency payments that a person 
may receive is subject to part 1400 of this chapter.
    (e) If the producer enters into an agreement with CCC on or before 
the date of ginning a quantity of eligible upland cotton, and the 
producer has the beneficial interest in such quantity as specified under 
Sec.  1427.5(c) on the date the cotton was ginned, and the producer 
meets all the other requirements in paragraph (a) of this section on or 
before the final date to apply for a loan deficiency payment under Sec.  
1427.5, the loan deficiency payment rate applicable to such cotton will 
be:
    (1) Based on the date the cotton was ginned if payment application 
is made in the manner prescribed by CCC for obtaining such rate; or
    (2) Based on the date of request for lock-in of the adjusted world 
price if payment application is made in the manner prescribed by CCC for 
obtaining such rate; or
    (3) Based on the date a completed request including production 
evidence is submitted in the manner prescribed by CCC for obtaining such 
rate.
    (f) In the event that Thursday is a non-workday, such applications 
for loan deficiency payments will not be accepted beginning at 7 a.m. 
Eastern Standard time the next workday until an announcement of the 
adjusted world price for the succeeding weekly period has been made 
under Sec.  1427.25(e).
    (g) With respect only to loan deficiency payments for upland cotton 
produced in the 2001 crop year, whether or not produced on a farm 
covered by a production flexibility contract, the applicable final 
availability for such payment is November 18, 2002.

[[Page 444]]



Sec.  1427.24  [Reserved]



Sec.  1427.25  Determination of the prevailing world market price and 
the adjusted world price for upland cotton.

    (a) CCC shall determine the world market price for upland cotton as 
follows:
    (1) During the period when only one daily price quotation is 
available for each growth quoted for Middling one and three-thirty-
second inch (M 1\3/32\ inch) cotton, C.I.F. (cost, insurance, and 
freight) northern Europe, the prevailing world market price for upland 
cotton shall be based upon the average of the quotations for the 
preceding Friday through Thursday for the 5 lowest-priced growths of the 
growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe.
    (2) During the period when both a price quotation for cotton for 
shipment no later than August/September of the current calendar year 
(current shipment price) and a price quotation for cotton for shipment 
no earlier than October/November of the current calendar year (forward 
shipment price) are available for growths quoted for M 1\3/32\ inch 
cotton, C.I.F. northern Europe, the prevailing world market price for 
upland cotton shall be based upon the following: Beginning with the 
first week covering the period Friday through Thursday which includes 
April 15 or, if both the average of the current shipment prices for the 
preceding Friday through Thursday for the 5 lowest-priced growths of the 
growths quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe 
(Northern Europe current price (NEc)), and the average of the forward 
shipment prices for the preceding Friday through Thursday for the 5 
lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, 
C.I.F. northern Europe (Northern Europe forward price (NEf)), are not 
available during that period, beginning with the first week covering the 
period Friday through Thursday after the week which includes April 15 in 
which both the NEc and NEf price are available, the prevailing world 
market price for upland cotton shall be based upon the result calculated 
by the following procedure:
    (i) Weeks 1 and 2: ((2 x NEc) + NEf)/3.
    (ii) Weeks 3 and 4: (NEc + NEf)/2.
    (iii) Weeks 5 and 6: (NEc + (2 x NEf))/3.
    (iv) Week 7 through July 31: NEf.
    (3) The upland cotton prevailing world market price as determined 
under paragraphs (a)(1) or (a)(2) of this section shall hereinafter be 
referred to as the ``Northern Europe price (NE).''
    (4) If quotes are not available for 1 or more days in the 5-day 
period, the available quotes during the period will be used. If no 
quotes are available during the Friday through Thursday period, the 
prevailing world market price shall be based upon the best available 
world price information, as CCC determines.
    (b) The upland cotton prevailing world market price, adjusted under 
paragraph (c) of this section (adjusted world price (AWP)), shall be 
applicable to the 2002 through 2007 crops of upland cotton.
    (c) The upland cotton AWP shall equal the NE price as determined 
under paragraph (a) of this section, adjusted as follows:
    (1) The NE shall be adjusted to average designated U.S. spot market 
location by deducting the average difference in the immediately 
preceding 52-week period between:
    (i)(A) The average of price quotations for the U.S. Memphis 
territory and the California/Arizona territory as quoted each Thursday 
for M 1\3/32\ inch cotton, C.I.F. northern Europe, during the period 
when only one daily price quotation for such growths is available, or
    (B) The average of the current shipment prices for U.S. Memphis 
territory and the California/Arizona territory as quoted each Thursday 
for M 1\3/32\ inch cotton, C.I.F. northern Europe, during the period 
when both current shipment prices and forward shipment prices for such 
growths are available; and
    (ii) The average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per 
tex, length uniformity 80 through 82 percent) cotton, as quoted each 
Thursday in the designated U.S. spot markets.
    (2) The price determined under paragraph (c)(1) of this section 
shall be adjusted to reflect the price of Strict Low

[[Page 445]]

Middling (SLM) 1\1/16\ inch, leaf 4, (micronaire 3.5 through 3.6 and 4.3 
through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 
80 through 82 percent) cotton (U.S. base quality) by deducting the 
difference, as CCC announces, between the applicable loan rate for an 
upland cotton crop for M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 
3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, 
length uniformity 80 through 82 percent) cotton and the loan rate for an 
upland cotton crop of the U.S. base quality.
    (3) The price determined under paragraph (c)(2) of this section 
shall be adjusted to average U.S. location by deducting the difference 
between the average loan rate for an upland cotton crop of the U.S. base 
quality in the designated U.S. spot markets and the corresponding crop 
year national average loan rate for an upland cotton crop of the U.S. 
base quality, as CCC announces.
    (4)(i) The prevailing world market price, adjusted under paragraphs 
(c)(1) through (c)(3) of this section, may be further adjusted if it is 
determined that:
    (A) Such price is less than 115 percent of the current crop-year 
loan level for U.S. base quality cotton, and
    (B) The Friday through Thursday average price quotation for the 
lowest-priced U.S. growth as quoted for M 1\3/32\ inch cotton, C.I.F. 
northern Europe (U.S. Northern Europe price (USNE)), is greater than the 
average of the quotations for the preceding Friday through Thursday for 
the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch 
cotton, C.I.F. northern Europe.
    (ii) During the period when both current shipment prices and forward 
shipment prices are available for growths quoted for M 1\3/32\ inch 
cotton, C.I.F. northern Europe, the USNE provided in paragraph 
(c)(4)(i)(B) of this section shall be determined as follows: Beginning 
with the week covering the period Friday through Thursday which includes 
April 15 or, if both the average of the current shipment prices for the 
preceding Friday through Thursday of the lowest-priced U.S. growth, as 
quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe (U.S. Northern 
Europe current price (USNEc)), and the average of the forward shipment 
prices for the preceding Friday through Thursday of the lowest-priced 
United States growth quoted for M 1\3/32\ inch cotton C.I.F. northern 
Europe (U.S. Northern Europe forward price (USNEf)), are not available 
during that period, beginning with the first week covering the period 
Friday through Thursday after the week which including April 15 in which 
both the average of the USNEc and the average of the USNEf are 
available, the result calculated by the following procedure:
    (A) Weeks 1 and 2: ((2 x USNEc) + (USNEf))/3.
    (B) Weeks 3 and 4: ((USNEc) + (USNEf))/2.
    (C) Weeks 5 and 6: ((USNEc) + (2 x USNEf))/3.
    (D) Week 7 through July 31: USNEf.
    (iii) In determining the USNE as provided in paragraphs (c)(4)(i)(B) 
and (c)(4)(ii):
    (A) If quotes for either the U.S. Memphis territory or the 
California/Arizona territory are not available for any week, the 
available quotations will be used.
    (B) If quotes are not available for one or more days in the 5-day 
period, the available quotes during the period will be used.
    (C) If no quotes are available for either the U.S. Memphis territory 
or the California/Arizona territory during the Friday through Thursday 
period, no adjustment will be made.
    (iv)(A) The adjustment shall be based on some or all of the 
following data, as available:
    (1) The U.S. share of world exports;
    (2) The current level of cotton export sales and shipments; and
    (3) Other data CCC determines relevant in establishing an accurate 
prevailing world market price, adjusted to U.S. quality and location.
    (B) The adjustment may not exceed the difference between the USNE, 
as determined in paragraphs (c)(4)(i) through (c)(4)(iii) of this 
section, and the NE, as determined in paragraph (a) of this section.

[[Page 446]]

    (d) In determining the average difference in the 52-week period as 
provided in paragraph (c)(1) of this section:
    (1) If the difference between the average price quotations for the 
U.S. Memphis territory and the California/Arizona territory, as quoted 
for M 1\3/32\ inch cotton, C.I.F. northern Europe, and the average price 
of M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 
4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 
through 82 percent) cotton as quoted each Thursday in the designated 
U.S. spot markets for any week is:
    (i) More than 115 percent of the estimated actual cost associated 
with transporting U.S. cotton to northern Europe, then 115 percent of 
such actual cost shall be substituted in lieu thereof for such week.
    (ii) Less than 85 percent of the estimated actual cost associated 
with transporting U.S. cotton to northern Europe, then 85 percent of 
such actual cost shall be substituted in lieu thereof for such week.
    (2) If a Thursday price quotation for either the U.S. Memphis 
territory or the California/Arizona territory, as quoted for M 1\3/32\ 
inch cotton, C.I.F. northern Europe, is not available for any week, CCC:
    (i) May use the available northern Europe quotation to determine the 
difference between the average price quotations for the U.S. Memphis 
territory and the California/Arizona territory, as quoted for M 1\3/32\ 
inch cotton, C.I.F. northern Europe, and the average price of M 1\3/32\ 
inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 
25.5 through 29.4 grams per tex, length uniformity 80 through 82 
percent) cotton, as quoted each Thursday in the designated U.S. spot 
markets for that week, or
    (ii) May not take that week into consideration.
    (3) If Thursday price quotations for any week are not available for 
either,
    (i) Both the Memphis territory and the California/Arizona territory 
as quoted for M 1\3/32\ inch cotton, C.I.F. northern Europe, or
    (ii) The average price of M 1\3/32\ inch, leaf 3, (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per 
tex, length uniformity 80 through 82 percent) cotton, as quoted in the 
designated U.S. spot markets, that week will not be considered.
    (e) The upland cotton AWP, determined under paragraph (c) of this 
section, and the amount of the additional adjustment determined under 
paragraph (f) of this section, shall be announced, to the extent 
practicable, at 5 p.m. Eastern Standard time each Thursday continuing 
through the last Thursday of July, 2008. In the event that Thursday is a 
non-workday, the determination will be announced, to the extent 
practicable, at 8 a.m. Eastern Standard time the next work day.
    (f)(1)(i) The AWP, as determined under paragraph (c) of this 
section, shall be subject to further adjustments as provided in this 
section regarding all qualities of upland cotton eligible for loan 
except the following upland cotton grades with a staple length of 1\1/
16\ inch or longer:
    (A) White Grades--Strict Middling and better, leaf 1 through leaf 6; 
Middling, leaf 1 through leaf 6; Strict Low Middling, leaf 1 through 
leaf 6; and Low Middling, leaf 1 through leaf 5;
    (B) Light Spotted Grades--Strict Middling and better, leaf 1 through 
leaf 5; Middling, leaf 1 through leaf 5; and Strict Low Middling, leaf 1 
through leaf 4; and
    (C) Spotted Grades--Strict Middling and better, leaf 1 through leaf 
2; and
    (ii) Grade and staple length must be determined under Sec.  1427.9. 
If no such official classification is presented, the coarse count 
adjustment shall not be made.
    (2) The adjustment for upland cotton provided under paragraph (f)(1) 
of this section shall be determined by deducting from the AWP:
    (i) The difference between the NE, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``coarse count'' cotton, C.I.F. northern Europe, is 
available the average of the quotations for the corresponding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``coarse count'' cotton, C.I.F. northern Europe; or

[[Page 447]]

    (B) During the period when both current shipment prices and forward 
shipment prices are available for the growths quoted for ``coarse 
count'' cotton, C.I.F. northern Europe, the result calculated by the 
following procedure: Beginning with the first week covering the period 
Friday through Thursday including April 15 or, if both the average of 
the current shipment prices for the preceding Friday through Thursday 
for the three lowest-priced growths of the growths quoted for ``coarse 
count'' cotton, C.I.F. northern Europe (Northern Europe coarse count 
current price (NECCc)), and the average of the forward shipment prices 
for the preceding Friday through Thursday for the three lowest-priced 
growths of the growths quoted for ``coarse count'' cotton, C.I.F. 
northern Europe (Northern Europe coarse count forward price (NECCf)), 
are not available during that period, beginning with the first week 
covering the period Friday through Thursday after the week including 
April 15 in which both the Northern Europe coarse count current price 
and the Northern Europe coarse count forward price are available:
    (1) Weeks 1 and 2: (2 x NECCc) + NECCf)/3;
    (2) Weeks 3 and 4: (NECCc + NECCf)/2;
    (3) Weeks 5 and 6: (NECCc + (2 x NECCf))/3; and
    (4) Week 7 through July 31: The NECCf, minus:
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for M 1\3/32\ inch, leaf 3, (micronaire 3.5 through 3.6 and 
4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length 
uniformity 80 through 82 percent) cotton and the loan rate for an upland 
cotton crop for SLM 1\1/16\ inch, leaf 4, (micronaire 3.5 through 3.6 
and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length 
uniformity 80 through 82 percent) cotton.
    (iii) The result of the calculation as determined under this 
paragraph shall hereinafter be referred to as the ``Northern Europe 
coarse count price.''
    (3) Regarding the determination of the Northern Europe coarse count 
price under paragraph (f)(2)(i) of this section:
    (i) If no quotes are available for one or more days of the 5-day 
period, the available quotes will be used;
    (ii) If quotes for three growths are not available for any day in 
the 5-day period, that day will not be considered; and
    (iii) If quotes for three growths are not available for at least 3 
days in the 5-day period, that week will not be considered, in which 
case the adjustment determined under paragraph (f)(2) of this section 
for the latest available week will continue to be applicable.
    (g) If the 6-week transition period from using current shipment 
prices to using forward shipment prices in the determination of the NE 
under paragraph (a)(2) of this section, and the Northern Europe coarse 
count price under paragraph (f)(2)(i)(B) of this section do not begin at 
the same time, CCC shall use either current shipment prices, forward 
shipment prices, or any combination thereof to determine the NE and/or 
the Northern Europe coarse count price used in the determination of the 
adjustment for upland cotton under paragraph (f)(1) of this section and 
determined under paragraph (f)(2) of this section to prevent distortions 
in such adjustment.
    (h) The AWP determined under paragraph (c) of this section, shall be 
subject to further adjustments to a value no less than zero, as CCC 
determines, based upon the Schedule of Premiums and Discounts and the 
location differentials applicable to each warehouse location as 
announced under the loan program for an upland cotton crop.

Subpart B [Reserved]



          Subpart C--Upland Cotton User Marketing Certificates

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.  1427.100  Applicability.

    (a) Regulations in this subpart are applicable during the period 
beginning August 1, 1991, and ending July 31, 2008. These regulations 
set forth the terms and conditions under which CCC shall make payments, 
in the form of commodity certificates or cash, to eligible

[[Page 448]]

domestic users and exporters of upland cotton who entered into an Upland 
Cotton Domestic User/Exporter Agreement with CCC to participate in the 
upland cotton user marketing certificate program under section 1207 of 
the Farm Security and Rural Investment Act of 2002.
    (b) During the period beginning August 1, 1991, and ending July 31, 
2008, CCC shall issue marketing certificates or cash payments to 
domestic users and exporters under this subpart in a week following a 
consecutive 4-week period in which:
    (1) The Friday through Thursday average price quotation for the 
lowest-priced United States growth, as quoted for Middling one and three 
thirty-seconds inch (M 1\3/32\ inch) cotton, delivered C.I.F. (cost, 
insurance and freight) northern Europe, (U.S. Northern Europe (USNE) 
price) exceeds the Friday through Thursday average price quotation for 
the five lowest-priced growths, as quoted for M 1\3/32\-inch cotton, 
delivered C.I.F. northern Europe, (Northern Europe (NE) price) by:
    (i) During the period beginning May 15, 2002, and ending July 31, 
2006, more than zero; and
    (ii) During the period beginning August 1, 2006, and ending July 31, 
2008, more than 1.25 cents per pound;
    (2) The adjusted world price (AWP) for upland cotton, determined 
under Sec.  1427.25, does not exceed 134 percent of the crop loan level 
for upland cotton.
    (c) Additional terms and conditions are in the Upland Cotton 
Domestic User/Exporter Agreement which the domestic user or exporter 
must execute in order to receive such payments.
    (d) CCC shall prescribe forms used in administering the upland 
cotton user marketing certificate program.



Sec. Sec.  1427.101-1427.102  [Reserved]



Sec.  1427.103  Eligible upland cotton.

    (a) For purposes of this subpart, eligible upland cotton is 
domestically produced baled upland cotton which bale is opened by an 
eligible domestic user on or after August 1, 1991, and on or before July 
31, 2008, or exported by an eligible exporter on or after July 18, 1996, 
and on or before July 31, 2008, during a Friday through Thursday period 
in which a payment rate, determined under Sec.  1427.107, is in effect 
and which meets the requirements of paragraphs (b) and (c) of this 
section.
    (b) Eligible upland cotton must be either:
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade;
    (2) Loose;
    (3) Semi-processed motes which are of a quality suitable, without 
further processing, for spinning, papermaking or bleaching;
    (4) Re-ginned (processed) motes.
    (c) Eligible upland cotton must not be:
    (1) Cotton for which a payment, under the provisions of this 
subpart, has been made available;
    (2) Imported cotton;
    (3) Raw (unprocessed) motes; or
    (4) Textile mill wastes.



Sec.  1427.104  Eligible domestic users and exporters.

    (a) For purposes of this subpart, the following persons shall be 
considered eligible domestic users and exporters of upland cotton:
    (1) A person regularly engaged in the business of opening bales of 
eligible upland cotton for the purpose of manufacturing such cotton into 
cotton products in the United States (domestic user), who has entered 
into an agreement with CCC to participate in the upland cotton user 
marketing certificate program; or
    (2) A person, including a producer or a cooperative marketing 
association approved under part 1425 of this chapter, regularly engaged 
in selling eligible upland cotton for exportation from the United States 
(exporter), who has entered into an agreement with CCC to participate in 
the upland cotton user marketing certificate program.
    (b) Applications for payment under this subpart must contain 
documentation required by the provisions of the Upland Cotton Domestic 
User/Exporter Agreement and instructions CCC issues.

[[Page 449]]



Sec.  1427.105  Upland Cotton Domestic User/Exporter Agreement.

    (a) Payments under this subpart shall be made available to eligible 
domestic users and exporters who have entered into an Upland Cotton 
Domestic User/Exporter Agreement with CCC and who have complied with the 
terms and conditions in this subpart, the Upland Cotton Domestic User/
Exporter Agreement and instructions issued by CCC.
    (b) Upland Cotton Domestic User/Exporter Agreements may be obtained 
from Contract Reconciliation Division, Kansas City Commodity Office, 
P.O. Box 419205, Stop 8758, Kansas City, Missouri 64141-6205. In order 
to participate in the program authorized by this subpart, domestic users 
and exporters must execute the Upland Cotton Domestic User/Exporter 
Agreement and forward the original and one copy to KCCO.



Sec.  1427.106  Form of payment.

    Payments under this subpart shall be made available in the form of 
commodity certificates issued under part 1401 of this chapter, or in 
cash, at the option of the program participant.



Sec.  1427.107  Payment rate.

    (a) Beginning July 18, 1996, and ending July 31, 2008, the payment 
rate for purposes of calculating payments made under this subpart shall 
be determined as follows for exporters for cotton shipped on or after 
July 18, 1996, and for domestic users:
    (1) Beginning the Friday following August 1 and ending the week in 
which the Northern Europe current (NEc) price, the Northern Europe 
forward (NEf) price, the U.S. Northern Europe current (USNEc) price, and 
the U.S. Northern Europe forward (USNEf) price first become available, 
the payment rate shall be:
    (i) Beginning August 1, 1991, and ending May 14, 2002, the 
difference between the U.S. Northern Europe (USNE) price, minus 1.25 
cents per pound, and the Northern Europe (NE) price;
    (ii) Beginning May 15, 2002, and ending July 31, 2006, the 
difference between the USNE price and the NE price; and
    (iii) Beginning August 1, 2006, and ending July 31, 2008, the 
difference between the USNE price, minus 1.25 cent per pound, and the NE 
price in the fourth week of a consecutive 4-week period in which the 
USNE price exceeded the NE price each week by:
    (iv) During the period beginning August 1, 1991, and ending May 14, 
2002, more than 1.25 cents per pound;
    (v) During the period beginning May 15, 2002, and ending July 31, 
2006, more than zero; and
    (vi) During the period beginning August 1, 2006 and ending July 31, 
2008, more than 1.25 cents per pound; and the adjusted work price (AWP) 
did not exceed the loan level for upland cotton by more than 134 percent 
in any week of the 4-week period; and
    (2) Beginning the Friday through Thursday week after the week in 
which the NEc, the NEf, the USNEc, and the USNEf prices first become 
available and ending the Thursday following July 31, the payment rate 
shall be:
    (i) Beginning August 1, 1991, and ending May 14, 2002, the 
difference between the USNEc price, minus 1.25 cents per pound, and the 
NEc price;
    (ii) Beginning May 15, 2002, and ending July 31, 2006, the 
difference between the USNEc price and the NEc price; and
    (iii) Beginning August 1, 2006, and ending July 31, 2008, the 
difference between the USNEc price, minus 1.25 cents per pound, and the 
NEc price in the fourth week of a consecutive 4-week period in which the 
USNEc price exceeded the NEc price each week by:
    (iv) During the period beginning August 1, 1991, and ending May 14, 
2002, more than 1.25 cents per pound;
    (v) During the period beginning May 15, 2002, and ending July 31, 
2006, more than zero; and
    (vi) During the period beginning August 1, 2006 and ending July 31, 
2008, more than 1.25 cents per pound; and the adjusted world price (AWP) 
did not exceed the loan level for upland cotton by more than 134 percent 
in any week of the 4-week period.
    (3) If either or both the USNEc price and the NEc price are not 
available, the payment rate may be:
    (i) Beginning August 1, 1991, and ending May 14, 2002, the 
difference between the USNEf price, minus 1.25 cents per pound, and the 
NEf price;

[[Page 450]]

    (ii) Beginning May 15, 2002, and ending July 31, 2006, the 
difference between the USNEf price and the NEf price; and
    (iii) Beginning August 1, 2006, and ending July 31, 2008, the 
difference between the USNEf price, minus 1.25 cents per pound, and the 
NEf price.
    (b) Whenever a 4-week period under paragraph (a) of this section 
contains a combination of NE, NEc, and NEf prices only for one to three 
weeks, such as occurs in the spring when the NE price is succeeded by 
the NEc and the NEf prices (Spring transition), and at the start of a 
new marketing year when the NEc and the NEf prices are succeeded by the 
NE price (marketing year transition), under paragraphs (a)(1) and (a)(2) 
of this section, during both the spring transition and the marketing 
year transition periods, to the extent practicable, the NEc and USNEc 
prices in combination with the NE and the USNE prices shall be taken 
into consideration during such 4-week periods to determine whether a 
payment is to be issued. During both the spring transition and the 
marketing year transition periods, if either or both the USNEc price and 
the NEc price are not available, the USNEf and NEf prices in combination 
with the USNE and NE prices shall be taken into consideration during 
such 4-week periods to determine whether a payment is to be issued.
    (c) For purposes of this subpart:
    (1) For the determination of the USNE, USNEc, USNEf, NE, NEc, and 
the NEf prices:
    (i) If daily quotations are not available for one or more days of 
the 5-day period, the available quotations during the period will be 
used;
    (ii) CCC will not consider a week in which no daily quotes are 
available for the entire 5-day period for either or both the USNE and 
the NE during the period when only one daily price quotation is 
available for each growth quoted for M 1\3/32\-inch cotton, delivered 
cost insurance, and freight (C.I.F.) northern Europe, or the USNEc and 
the NEc, or the USNEf and the NEf. In that case, CCC may establish a 
payment rate at a level it determines to be appropriate, taking into 
consideration the payment rate determined under paragraph (a) of this 
section for the most recent available week; and
    (iii) Beginning July 18, 1996, if no daily quotes are available for 
the entire 5-day period for either or both the USNEc and the NEc, the 
marketing year transition shall be implemented immediately.
    (2) Regarding the determination of the USNE, the USNEc, and the 
USNEf, if a quotation for either the U.S. Memphis territory or the 
California/Arizona territory, as quoted for M 1\3/32\-inch cotton, 
delivered C.I.F. northern Europe, is not available for each day or any 
day of the 5-day period, available quotation(s) will be used.
    (d) Payment rates for semi-processed motes that are of a quality 
suitable, without further processing, for spinning, papermaking or 
bleaching shall be based on a percentage of the basic rate for baled 
lint, as specified in the Upland Cotton Domestic User/Exporter 
Agreement.



Sec.  1427.108  Payment.

    (a) Payments under this subpart shall be determined by multiplying:
    (1) The payment rate, determined under Sec.  1427.107, by
    (2) The net weight (gross weight minus the weight of bagging and 
ties), determined under paragraph (b) of this section, of eligible 
upland cotton bales an eligible domestic user opens or an eligible 
exporter sold for export during the Friday through Thursday period 
following a week in which a payment rate is established.
    (b) For the purposes of this subpart, the net weight shall be 
determined based upon:
    (1) For domestic users, the weight on which settlement for payment 
of the cotton was based (landed mill weight);
    (2) For reginned motes processed by an end user who converted such 
motes, without rebaling, to an end use in a continuous manufacturing 
process, the net weight of the reginned motes after final cleaning;
    (3) For exporters, the shipping warehouse weight or the gin weight 
if the cotton was not placed in a warehouse, of the eligible cotton 
unless the exporter obtains and pays the cost of

[[Page 451]]

having all the bales in the shipment reweighed by a licensed weigher and 
furnishes a copy of the certified reweights.
    (c) For the purposes of this subpart, eligible upland cotton will be 
considered--
    (1) Consumed by the domestic user on the date the bale is opened for 
consumption; and
    (2) Exported by the exporter on the date CCC determines is the date 
on which the cotton is shipped through July 31, 2008.
    (d) Payments under this subpart shall be made available upon 
application for payment and submission of supporting documentation, 
including proof of purchase and consumption of eligible cotton by the 
domestic user or proof of export of eligible cotton by the exporter, as 
required by the CCC-issued provisions of the Upland Cotton Domestic 
User/Exporter Agreement.



                  Subpart D--Recourse Seed Cotton Loans

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.  1427.160  Applicability.

    (a) This subpart is applicable to the 2002 through 2007 crops of 
upland and extra long staple seed cotton. These regulations set forth 
the terms and conditions under which recourse seed cotton loans shall be 
made available by CCC. Such loans will be available through March 31 of 
the year following the calendar year in which such crop is normally 
harvested. CCC may change the loan availability period to conform to 
State or locally imposed quarantines. Additional terms and conditions 
are in the note and security agreement which must be executed by a 
producer in order to receive such loans.
    (b) Loan rates and the forms which are used in administering the 
recourse seed cotton loan program for a crop of cotton are available in 
FSA State and county offices. Loan rates shall be based upon the 
location at which the loan collateral is stored.
    (c) A producer must, unless otherwise authorized by CCC, request the 
loan at the county office which, under part 718 of this title, is 
responsible for administering programs for the farm on which the cotton 
was produced. A CMA must, unless otherwise authorized by CCC, request 
the loan at a central county office designated by the State committee. 
All note and security agreements and related documents necessary for the 
administration of the recourse seed cotton loan program shall be 
prescribed by CCC and shall be available at State and county offices.
    (d) Loans shall not be available for seed cotton produced on land 
owned or otherwise in the possession of the United States if such land 
is occupied without the consent of the United States.



Sec.  1427.161  Administration.

    (a) The recourse seed cotton loan program which is applicable to a 
crop of cotton shall be administered under the general supervision of 
the Executive Vice President, CCC, or a designee and shall be carried 
out in the field by State and county FSA committees (State and county 
committees, respectively).
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this subpart.
    (c) The State committee shall take any action required by these 
regulations which has not been taken by the county committee. The State 
committee shall also:
    (1) Correct, or require a county committee to correct, an action 
taken by such county committee which is not under the regulations of 
this subpart; or
    (2) Require a county committee to withhold taking any action which 
is not under the regulations of this subpart.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC (Administrator, FSA), 
or a designee from determining any question arising under the recourse 
seed cotton program or from reversing or modifying any determination 
made by the State or county committee.
    (e) The Deputy Administrator, FSA, may authorize waiver or 
modification

[[Page 452]]

of deadlines and other program requirements where lateness or failure to 
meet such other requirements does not adversely affect the operation of 
the recourse seed cotton loan program.
    (f) A representative of CCC may execute loan applications and 
related documents only under the terms and conditions determined and 
announced by CCC. Any such document which is not executed under such 
terms and conditions, including any purported execution before the date 
authorized by CCC, shall be null and void.



Sec.  1427.162  [Reserved]



Sec.  1427.163  Disbursement of loans.

    (a) A producer or the producer's agent shall request a loan at the 
county office for the county which, under part 718 of this title, is 
responsible for administering programs for the farm on which the cotton 
was produced and which will assist the producer in completing the loan 
documents, except that CMA's designated by producers to obtain loans in 
their behalf may, unless otherwise authorized by CCC, obtain loans 
through a central county office designated by the State committee.
    (b) Disbursement of each loan will be made by the county office of 
the county which is responsible for administering programs for the farm 
on which the cotton was produced, except that CMA's designated by 
producers to obtain loans in their behalf may, unless otherwise 
authorized by CCC, obtain disbursement of loans at a central county 
office designated by the State committee. Service charges shall be 
deducted from the loan proceeds. The producer or the producer's agent 
shall not present the loan documents for disbursement unless the cotton 
is in existence and in good condition. If the cotton is not in existence 
and in good condition at the time of disbursement, the producer or the 
agent shall immediately return the check issued in payment of the loan 
or, if the check has been negotiated, the total amount disbursed under 
the loan, and charges plus interest shall be refunded promptly.



Sec.  1427.164  Eligible producer.

    An eligible producer must meet the requirements of Sec.  1427.4.



Sec.  1427.165  Eligible seed cotton.

    (a) Seed cotton pledged as collateral for a loan must be tendered to 
CCC by an eligible producer and must:
    (1) Be in existence and in good condition at the time of 
disbursement of loan proceeds;
    (2) Be stored in identity-preserved lots in approved storage meeting 
requirements of Sec.  1427.171;
    (3) Be insured at the full loan value against loss or damage by 
fire;
    (4) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the seed cotton to CCC as collateral for a loan;
    (5) Not have been previously sold and repurchased; or pledged as 
collateral for a CCC loan and redeemed;
    (6) Be production from acreage that has been reported timely under 
part 718 of this title; and
    (b) The quality of cotton which may be pledged as collateral for a 
loan shall be the estimated quality of lint cotton in each lot of seed 
cotton as determined by the county office, except that if a control 
sample of the lot of cotton is classed by an Agricultural Marketing 
Service (AMS) Cotton Classing Office or other entity approved by CCC, 
the quality for the lot shall be the quality shown on the applicable 
documentation issued for the control sample.
    (c) To be eligible for loan, the beneficial interest in the seed 
cotton must be in the producer who is pledging the seed cotton as 
collateral for a loan as provided in Sec.  1427.5(c).



Sec.  1427.166  Insurance.

    The seed cotton must be insured at the full loan value against loss 
or damage by fire.



Sec.  1427.167  Liens.

    If there are any liens or encumbrances on the seed cotton tendered 
as collateral for a loan, waivers that fully

[[Page 453]]

protect the interest of CCC must be obtained even though the liens or 
encumbrances are satisfied from the loan proceeds. No additional liens 
or encumbrances shall be placed on the cotton after the loan is 
approved.



Sec.  1427.168  [Reserved]



Sec.  1427.169  Fees, charges, and interest.

    (a) A producer shall pay a non-refundable loan service fee to CCC at 
a rate determined by CCC.
    (b) Interest which accrues for a loan shall be determined under part 
1405 of this chapter.



Sec.  1427.170  Quantity for loan.

    (a) The quantity of lint cotton in each lot of seed cotton tendered 
for loan shall be determined by the county office by multiplying the 
weight or estimated weight of seed cotton by the lint turnout factor 
determined under paragraph (b) of this section.
    (b) The lint turnout factor for any lot of seed cotton shall be the 
percentage determined by the county committee representative during the 
initial inspection of the lot. If a control portion of the lot is 
weighed and ginned, the turnout factor determined for the portion of 
cotton ginned will be used for the lot. If a control portion is not 
weighed and ginned, the lint turnout factor shall not exceed 32 percent 
for machine-picked cotton and 22 percent for machine-stripped cotton 
unless acceptable proof is furnished showing that the lint turnout 
factor is greater.
    (c) Loans shall not be made on more than a percentage established by 
the county committee of the quantity of lint cotton determined as 
provided in this section. If the seed cotton is weighed, the percentage 
to be used shall not be more than 95 percent. If the quantity is 
determined by measurement, the percentage to be used shall not be more 
than 90 percent. The percentage to be used in determining the maximum 
quantity for any loan may be reduced below such percentages by the 
county committee when determined necessary to protect the interests of 
CCC on the basis of one or more of the following risk factors:
    (1) Condition or suitability of the storage site or structure;
    (2) Condition of the cotton;
    (3) Location of the storage site or structure; and
    (4) Other factors peculiar to individual farms or producers which 
related to the preservation or safety of the loan collateral. Loans may 
be made on a lower percentage basis at the producer's request.



Sec.  1427.171  Approved storage.

    Approved storage shall consist of storage located on or off the 
producer's farm (excluding public warehouses) which is determined by a 
county committee representative to afford adequate protection against 
loss or damage and which is located within a reasonable distance, as 
determined by CCC, from an approved gin. If the cotton is not stored on 
the producer's farm, the producer must furnish satisfactory evidence 
that the producer has the authority to store the cotton on such property 
and that the owner of such property has no lien for such storage against 
the cotton. The producer must provide satisfactory evidence that the 
producer and any person having an interest in the cotton including CCC, 
have the right to enter the premises to inspect and examine the cotton 
and shall permit a reasonable time to such persons to remove the cotton 
from the premises.



Sec.  1427.172  Settlement.

    (a) A producer may, at any time before maturity of the loan, obtain 
release of all or any part of the loan seed cotton by paying to CCC the 
amount of the loan, plus interest and charges.
    (b)(1) A producer or the producer's agent shall not remove from 
storage any cotton which is pledged as collateral for a loan until prior 
written approval has been received from CCC for removal of such cotton. 
If a producer or the producer's agent obtains such approval, they may 
remove such cotton from storage, sell the seed cotton, have it ginned, 
and sell the lint cotton and cottonseed obtained therefrom. The ginner 
shall inform the county office in writing immediately after the seed 
cotton removed from storage has been ginned and furnish the county 
office the loan number, producer's name, and applicable gin bale 
numbers. If the seed

[[Page 454]]

cotton is removed from storage, the loan principal plus interest and 
charges thereon must be satisfied not later than the earlier of:
    (i) The date established by the county committee;
    (ii) 5 days after the date of the producer received the AMS 
classification under Sec.  1427.9 (and the warehouse receipt, if the 
cotton is delivered to a warehouse), representing such cotton; or
    (iii) The loan maturity date.
    (2) If the seed cotton or lint cotton is sold, the loan principal, 
interest, and charges must be satisfied immediately.
    (3) A producer, except a CMA, may obtain a nonrecourse loan or loan 
deficiency payment under subpart A of this part, on the lint cotton, 
but:
    (i) The loan principal, interest, and charges on the seed cotton 
must be satisfied from the proceeds of the nonrecourse loan under 
subpart A of this part; or
    (ii) The loan deficiency payment must be applied to the loan 
principal, interest, and charges on the outstanding seed cotton loan.
    (4) A CMA must repay the seed cotton loan principal, interest, and 
charges before pledging the cotton for a nonrecourse loan or before a 
loan deficiency payment can be approved under subpart A of this part, on 
the lint cotton. If CMA's authorized by producers to obtain loans in 
their behalf remove seed cotton from storage before obtaining approval 
to move such cotton, such removal shall constitute conversion of such 
cotton unless the CMA:
    (i) Notifies the county office in writing the following morning by 
mail or otherwise that such cotton has been moved and is on the gin 
yard;
    (ii) Furnishes CCC an irrevocable letter of credit if requested; and
    (iii) Repays the loan principal, plus interest and charges, within 
the time specified by the county committee.
    (5) Any removal from storage shall not be deemed to constitute a 
release of CCC's security interest in the seed cotton or to release the 
producer or CMA from liability for the loan principal, interest, and 
charges if full payment of such amount is not received by the county 
office.
    (c) If, either before or after maturity, the producer discovers that 
the cotton is going out of condition or is in danger of going out of 
condition, the producer shall immediately notify the county office and 
confirm such notice in writing. If the county committee determines that 
the cotton is going out of condition or is in danger of going out of 
condition, the county committee will call for repayment of the loan 
principal, plus interest and charges on or before a specified date. If 
the producer does not repay the loan or have the cotton ginned and 
obtain a nonrecourse loan under subpart A of this part on the lint 
cotton produced therefrom within the period as specified by the county 
committee, the cotton shall be considered abandoned.
    (d) If the producer has control of the storage site and if the 
producer subsequently loses control of the storage site or there is 
danger of flood or damage to the seed cotton or storage structure making 
continued storage of the cotton unsafe, the producer shall immediately 
either repay the loan or move the seed cotton to the nearest approved 
gin for ginning and shall, at the same time, inform the county office. 
If the producer does not do so, the seed cotton shall be considered 
abandoned.



Sec.  1427.173  Foreclosure.

    Any seed cotton pledged as collateral for a loan which is abandoned 
or which has not been ginned and pledged as collateral for a nonrecourse 
loan under subpart A of this part by the seed cotton loan maturity date 
may be removed from storage by CCC and ginned and the resulting lint 
cotton warehoused for the account of CCC. The lint cotton and cottonseed 
may be sold, at such time, in such manner, and upon such terms as CCC 
may determine, at public or private sale. CCC may become the purchaser 
of the whole or any part of such cotton and cottonseed. If the proceeds 
received from the sales of the cotton are less than the amount due on 
the loan (including principal, interest, ginning charges, and any other 
charges incurred by CCC), the producer shall be liable for such 
difference. If the proceeds received from sale of the cotton are greater 
than the sum of the amount

[[Page 455]]

due plus any cost incurred by CCC in conducting the sale of the cotton, 
the amount of such excess shall be paid to the producer or, if 
applicable, to any secured creditor of the producer.



Sec.  1427.174  Maturity of seed cotton loans.

    Seed cotton loans mature on demand by CCC but no later than May 31 
following the calendar year in which such crop is normally harvested.



Sec.  1427.175  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a loan, maintaining a loan, or settling a loan or if the 
producer disposes of or moves the loan collateral without the prior 
approval of CCC, such loan amount shall be refunded upon demand by CCC. 
The producer shall be liable for:
    (i) The amount of the loan;
    (ii) Any additional amounts paid by CCC for the loan;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts; and
    (v) Liquidated damages under paragraph (e) of this section.
    (2) Notwithstanding any provision of the note and security 
agreement, if a producer has made any such fraudulent representation or 
if the producer has disposed of, or moved, the loan collateral without 
prior written approval from CCC, the value of such collateral acquired 
by CCC shall be equal to the sales price of the cotton less any costs 
incurred by CCC in completing the sale.
    (b) If the amount disbursed under a loan, or in settlement thereof, 
exceeds the amount authorized by this subpart, the producer shall be 
liable for repayment of such excess, plus interest. In addition, seed 
cotton pledged as collateral for such loan shall not be released to the 
producer until such excess is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
loan is less than the amount required under this subpart, the producer 
shall be personally liable for repayment of the amount of such 
deficiency plus applicable interest.
    (d) If more than one producer executes a note and security agreement 
with CCC, each such producer shall be jointly and severally liable for 
the violation of the terms and conditions of the note and security 
agreement and the regulations in this subpart. Each such producer shall 
also remain liable for repayment of the entire loan amount until the 
loan is fully repaid without regard to such producer's claimed share in 
the seed cotton pledged as collateral for the loan. In addition, such 
producer may not amend the note and security agreement for the 
producer's claimed share in such seed cotton, after execution of the 
note and security agreement by CCC.
    (e) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC if a producer makes 
any fraudulent representation in obtaining a loan or in maintaining or 
settling a loan or disposing of or moving the collateral without the 
prior approval of CCC. Accordingly, if CCC or the county committee 
determines that the producer has violated the terms or conditions of the 
note and security agreement, liquidated damages shall be assessed on the 
quantity of the seed cotton which is involved in the violation. If CCC 
or the county committee determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by:
    (i) 10 percent of the loan rate applicable to the loan note for the 
first offense;
    (ii) 25 percent of the loan rate applicable to the loan note for the 
second offense; or
    (2) Did not act in good faith about the violation, or for cases 
other than first or second offense, liquidated damages will be assessed 
by multiplying the quantity involved in the violation by 25 percent of 
the loan rate applicable to the loan note.
    (f) For first and second offenses, if CCC or the county committee 
determines that a producer acted in good faith when the violation 
occurred, the county committee shall:

[[Page 456]]

    (1) Require repayment of the loan principal applicable to the loan 
quantity affected by the violation, and charges plus interest applicable 
to the amount repaid;
    (2) Assess liquidated damages under paragraph (e) of this section; 
and
    (3) If the producer fails to pay such amount within 30 calendar days 
from the date of notification, call the applicable loan involved in the 
violation.
    (g) For cases other than first or second offenses, or any offense 
for which CCC or the county committee cannot determine good faith when 
the violation occurred, the county committee shall:
    (1) Assess liquidated damages under paragraph (e) of this section;
    (2) Call the applicable loan involved in the violation.
    (h) If CCC or the county committee determines that the producer has 
committed a violation under paragraph (e) of this section, the county 
committee shall notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information to the county committee regarding the circumstances which 
caused the violation, and
    (2) Administrative actions will be taken under paragraphs (f) or (g) 
of this section.
    (i) Any or all of the liquidated damages assessed under the 
provision of paragraph (e) of this section may be waived as determined 
by CCC.



 Subpart E--Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

    Authority: Secs. 4 and 5, 62 Stat. 1070, as amended, 1072, as 
amended (15 U.S.C. 714 b and c).

    Source: 44 FR 67085, Nov. 23, 1979, unless otherwise noted.



Sec.  1427.1081  General statement and administration.

    (a) This subpart prescribes the requirements which must be met and 
the procedures which must be followed by a warehouseman in the United 
States or Puerto Rico who desires the approval by the Commodity Credit 
Corporation (hereinafter referred to as ``CCC'') of warehouse(s) for the 
storage and handling of cotton and cotton linters, under a Cotton 
Storage Agreement, which are owned by CCC or held by CCC as security for 
price support loans. This subpart is not applicable to cotton or cotton 
linters purchased in storage for prompt shipment or to handling 
operations of a temporary nature.
    (b) Copies of the CCC storage agreement and forms required for 
obtaining approval under this subpart may be obtained from the Kansas 
City Commodity Office, U.S. Department of Agriculture, P.O. Box 205, 
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').
    (c) A warehouse must be approved by the KCCO and a storage agreement 
must be in effect between CCC and the warehouseman before CCC will use 
such warehouse. The approval of a warehouse or the entering into of a 
storage agreement does not constitute a commitment that CCC will use the 
warehouse, and no official or employee of the U.S. Department of 
Agriculture is authorized to make any such commitment.
    (d) A warehouseman, when applying for approval under this subpart 
shall submit to CCC at KCCO:
    (1) A completed Form CCC-49, ``Application for Approval of Warehouse 
for Storage of Cotton and/or Cotton Linters,''
    (2) A current financial statement on Form WA-51, ``Financial 
Statement'', supported by such supplemental schedules as CCC may 
request. Financial statements may be submitted on forms other than Form 
WA-51 with approval of the Director, KCCO, or the Director's designee. 
Financial statements shall show the financial condition of the 
warehouseman as of a date no earlier than ninety (90) days prior to the 
date of the warehouseman's application, or such other date as CCC may 
prescribe. Additional financial statements shall be furnished annually 
and at such other times as CCC may require. CCC also may require that 
financial statements prepared by the warehouseman or by a public 
accountant be examined by an independent certified public accountant in 
accordance with generally accepted auditing standards.

[[Page 457]]

Only one financial statement is required for a chain of warehouses owned 
or operated by a single business entity. If approved by the Director, 
KCCO, or the Director's designee, the financial statement of a parent 
company, which includes the financial position of a wholly-owned 
subsidiary, may be used to meet the CCC standards for approval for the 
wholly-owned subsidiary.
    (3) Evidence that the warehouseman is licensed by the appropriate 
licensing authority as required under Sec.  1427.1082(a)(2) and such 
other documents or information as CCC may require,
    (4) For warehouseman not operating under the U.S. Warehouse Act, a 
sample copy of the warehouseman's receipts and bale tags, and
    (5) Evidence of applicable fire insurance rates.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16454, Apr. 
26, 1985]



Sec.  1427.1082  Basic standards.

    Unless otherwise provided in this subpart, each warehouseman and 
each of the warehouses owned or operated by such warehouseman for which 
CCC approval is sought for the storage or handling of CCC-owned or -loan 
commodities shall meet the following standards:
    (a) The warehouseman shall:
    (1) Be an individual, partnership, corporation, association, or 
other legal entity engaged in the business of storing or handling for 
hire, or both, the applicable commodity. The warehouseman, if a 
corporation, shall be authorized by its charter to engage in such 
business,
    (2) Have a current and valid license for the kind of storage 
operation for which the warehouseman seeks approval if such a license is 
required by State or local laws or regulations,
    (3) Have a net worth which is the greater of $25,000 or the amount 
which results from multiplying the maximum storage capacity of the 
warehouse (the total number of bales of cotton or cotton linters which 
the warehouse can accommodate when stored in the customary manner) times 
ten (10) dollars per bale. The net worth need not exceed $250,000. If 
the calculated net worth exceeds $25,000, the warehouseman may satisfy 
any deficiency in net worth between the $25,000 minimum requirement and 
such calculated net worth by furnishing bond (or acceptable substitute 
security) meeting the requirements of Sec.  1427.1083,
    (4) Have available sufficient funds to meet ordinary operating 
expenses,
    (5) Have satisfactorily corrected, upon request by CCC, any 
deficiencies in the performance of any storage agreement with CCC,
    (6) Maintain accurate and complete inventory and operating records,
    (7) Use only card type warehouse receipts which are pre-numbered and 
pre-punched or such other document as CCC may prescribe,
    (8) Have available at the warehouse adequate and operable 
firefighting equipment for the type of warehouse and applicable stored 
commodity, and
    (9) Have a work force and equipment available to provide adequate 
storage and handling service.
    (b) The warehouseman, officials, or supervisory employees of the 
warehouseman in charge of the warehouse operation shall have the 
necessary experience, organization, technical qualifications, and skills 
in the warehousing business regarding the applicable commodities to 
enable them to provide proper storage and handling services.
    (c) Warehouseman, officials and each of the supervisory employees of 
the warehouseman in charge of the warehouse operation shall:
    (1) Have a satisfactory record of integrity, judgment, and 
performance, and
    (2) Be neither suspended nor debarred under applicable CCC 
suspension and debarment regulations.
    (d) The warehouse shall:
    (1) Be of sound construction, in good state of repair, and 
adequately equipped to receive, handle, store, preserve, and deliver the 
applicable commodity,
    (2) Be under the control of the contracting warehouseman at all 
times, and
    (3) Not be subject to greater than normal risk of fire, flood, or 
other hazards.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985]

[[Page 458]]



Sec.  1427.1083  Bonding requirements for net worth.

    A bond furnished by a warehouseman under this subpart must meet the 
following requirements:
    (a) Such bond shall be executed by a surety which:
    (1) Has been approved by the U.S. Treasury Department, and
    (2) Maintains an officer or representative authorized to accept 
service of legal process and in the State where the warehouse is 
located.
    (b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'', 
except that a bond furnished under State law (statutory bond) or under 
operational rules of nongovernmental supervisory agencies may be 
accepted in an equivalent amount as a substitute for a bond running 
directly to CCC if:
    (1) CCC determines that such bond provides adequate protection to 
CCC.
    (2) It has been executed by a surety specified in paragraph (a) of 
this section or has a blanket rider and endorsement executed by such a 
surety with the liability of the surety under such rider or endorsement 
being the same as that of the surety under the original bond, and
    (3) It is noncancellable for not less than ninety (90) days or 
includes a rider providing for not less than ninety (90) days' notice to 
CCC before cancellation. Excess coverage on a substitute bond for one 
warehouse will not be accepted or applied by CCC against insufficient 
bond coverage on other warehouses.
    (c) Cash and negotiable securities offered by a warehouseman may be 
accepted by CCC in lieu of the equivalent amount of required bond 
coverage. Any such cash or negotiable securities accepted by CCC will be 
returned to the warehouseman when the period for which coverage was 
required has ended and there appears to CCC to be no liability under the 
storage agreement.
    (d) A legal liability insurance policy may be accepted by CCC in 
lieu of the required amount of bond coverage provided such policy 
contains a clause or rider making the policy payable to CCC, CCC 
determines that it affords protection equivalent to a bond, and the 
Office of the General Counsel, U.S. Department of Agriculture, approves 
it for legal sufficiency.
    (e) An irrevocable letter of credit may be accepted by CCC in lieu 
of the required amount of bond coverage provided that the issuing bank 
is a commercial bank insured by the Federal Deposit Insurance 
Corporation. Such standby letter of credit shall be on Form CCC-33A, 
``Irrevocable Letter of Credit'', or on such other form as may be 
specifically approved by the Director, KCCO, or the Director's designee.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985]



Sec.  1427.1084  Examination of warehouses.

    Except as otherwise provided in this subpart, a warehouse must be 
examined by a person designated by CCC before it may be approved by CCC 
for the storage and handling of the commodity and periodically 
thereafter to determine its compliance with CCC's standards and 
requirements.



Sec.  1427.1085  Exceptions.

    Notwithstanding any other provisions of this report:
    (a) The financial bond and original and periodic warehouse 
examination provisions of this subpart do not apply to any warehouseman 
approved or applying for approval for the storage and handling of cotton 
or cotton linters under CCC programs if the warehouse is licensed under 
the U.S. Warehouse Act for such commodity but a special examination 
shall be made of such warehouse whenever CCC determines such action is 
necessary.
    (b) A warehouseman who has a net worth of at least $25,000 but who 
fails, or whose warehouse fails, to meet one or more of the other 
standards of this subpart may be approved if:
    (1) CCC determines that the warehouse services are needed and the 
warehouse storage and handling conditions provide satisfactory 
protection for the commodity,
    (2) The warehouseman furnishes such additional bond coverage (or 
cash or acceptable negotiable securities or

[[Page 459]]

legal liability insurance policy) as may be prescribed by CCC.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985; 56 FR 11502, Mar. 19, 1991]



Sec.  1427.1086  Approval of warehouse, requests for reconsideration.

    (a) CCC will approve a warehouse if it determines that the warehouse 
meets the standards set forth in this subpart. CCC will send a notice of 
approval to the warehouseman. Approval under this subpart, however, does 
not relieve the warehouseman of the responsibility for performing the 
warehouseman's obligations under any agreement with CCC or any other 
agency of the United States.
    (b) Except as otherwise provided in this subpart:
    (1) CCC will not approve the warehouse if CCC determines that the 
warehouse does not meet the standards set forth in this subpart, and
    (2) CCC will send any notice of rejection of approval to the 
warehouseman. This notice will state the cause(s) for such action. 
Unless the warehouseman or any officials or supervisory employees of the 
warehouseman are suspended or debarred, CCC will approve the warehouse 
if the warehouseman establishes that the causes for CCC's rejection of 
approval have been remedied.
    (c) If rejection of approval by CCC is due to the warehouseman's 
failure to meet the standards set forth:
    (1) In Sec.  1427.1082, other than the standard set forth in 
paragraph (c)(2) thereof, the warehouseman may, at any time after 
receiving notice of such action, request reconsideration of the action 
and present to the Director, KCCO, in writing, information in support of 
such request. The Director shall consider such information in making a 
determination of notify the warehouseman in writing of such 
determination. The warehouseman may, if dissatisfied with the Director's 
determination, obtain a review of the determination and an informal 
hearing thereon by filing an appeal with the Deputy Administrator, 
Commodity Operations, Farm Service Agency (hereinafter referred to as 
``FSA''). The time of filing appeals, forms for requesting an appeal, 
nature of the informal hearing, determination and reopening of the 
hearing shall be as prescribed in the FSA regulations governing appeals, 
7 CFR part 780. When appealing under such regulations, the warehouseman 
shall be considered as a ``participant''; and
    (2) In Sec.  1427.1082(c)(2), the ware house man's administrative 
appeal rights with respect to suspension and debarment shall be in 
accordance with applicable CCC regulations. After expiration of a period 
of suspension or debarment, a warehouseman may, at any time, apply for 
approval under this subpart.

[Amdt. 3, 50 FR 16455, Apr. 26, 1985]



Sec.  1427.1087  Exemption from requirements.

    (a) If warehousing services in any area cannot be secured under the 
provisions of this subpart and no reasonable and economical alternative 
is available for securing such services for commodities under CCC 
programs, the President or Executive Vice President, CCC may exempt, in 
writing, applicants in such area from one or more of the standards of 
this subpart and may establish such other standards as are considered 
necessary to safeguard satisfactorily the interests of CCC.
    (b) Warehousemen who are currently under contract with CCC will be 
required to meet the terms and conditions of these regulations at the 
time of renewal of their contract.

[44 FR 67085, Nov. 23, 1979, as amended at 44 FR 74797, Dec. 18, 1979]



Sec.  1427.1088  Contract fees.

    (a) Each warehouseman who has a non-federally licensed cotton 
warehouse must pay an annual contract fee for each such warehouse for 
which the warehouseman requests renewal of an existing Cotton Storage 
Agreement or approval of a new Cotton Storage Agreement as follows:
    (1) A warehouseman who has an existing Cotton Storage Agreement with 
CCC for the storage and handling of CCC-owned cotton or cotton pledged 
to CCC as loan collateral must pay an annual contract fee for each 
warehouse approved under such agreement in advance of the renewal date 
of such agreement.

[[Page 460]]

    (2) A warehouseman who does not have an existing Cotton Storage 
Agreement with CCC for the storage and handling of CCC-owned cotton or 
cotton pledged to CCC as loan collateral but who desires such an 
agreement must pay a contract fee for each warehouse for which CCC 
approval is sought prior to the time that the agreement is approved by 
CCC.
    (b) The amount of the contract fee shall be determined and announced 
annually in the Federal Register.

[Amdt. 4, 50 FR 36569, Sept. 9, 1985]



Sec.  1427.1089  OMB Control Numbers assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
(7 CFR part 1427) have been approved by the Office of Management and 
Budget under provisions of 44 U.S.C. Chapter 35 and have been assigned 
OMB Numbers 0560-0040, 0560-0074, 0560-0027, and 0560-0059.

[Amdt. 3, 50 FR 16455, Apr. 26, 1985. Redesignated by Amdt. 4, 50 FR 
36569, Sept. 9, 1985]



             Subpart F--2002-Crop Cottonseed Payment Program

    Source: 68 FR 20332, Apr. 25, 2003, unless otherwise noted.



Sec.  1427.1100  Applicability.

    (a) This subpart sets forth the terms and conditions under which the 
Commodity Credit Corporation (CCC) shall provide payments under the 
cottonseed payment program for the 2002 crop of cottonseed. Additional 
terms and conditions may be set forth in the application or other forms 
which must be executed to participate in the cottonseed payment program.
    (b) Payments shall be available only for cottonseed produced and 
ginned in the United States.



Sec.  1427.1101  Administration.

    (a) The cottonseed payment program shall be administered by the 
Executive Vice President, CCC, or a designee and carried out by 
employees of the Farm Service Agency (FSA).
    (b) Representatives and employees of FSA have no authority to modify 
or waive any of the provisions of the regulations of this subpart.
    (c) The Executive Vice President, CCC, or a designee, may determine 
any question arising under the program or reverse or modify any 
determination made by any FSA official or employee.
    (d) The Deputy Administrator for Farm Programs, FSA, may specify, 
waive or modify deadlines and other program requirements where lateness 
or failure to meet such other requirements do not affect adversely the 
operation of the cottonseed payment program.
    (e) A representative of CCC may execute cottonseed payment program 
applications and related documents only under the terms and conditions 
determined and announced by CCC.
    (f) Payment applications and related documents not executed in 
accordance with the terms and conditions determined and announced by 
CCC, including any purported execution outside of the dates authorized 
by CCC, shall be null and void except as otherwise provided in this 
part.



Sec.  1427.1102  Definitions.

    The definitions in this section shall apply to the cottonseed 
payment program provided for in this subpart. The terms defined in Sec.  
1427.3 of this part shall also be applicable to this subpart.
    Application period means a period, as announced by CCC, during which 
applications for payments under the Cottonseed Payment Program must be 
received to be considered for payment.
    Cottonseed means the seed from any varieties of upland cotton and 
extra long staple (ELS) cotton produced and ginned in the United States.
    Gin means a person (i.e., an individual, partnership, association, 
corporation, cooperative marketing association, estate, trust, State or 
political subdivision or agency thereof, or other legal entity) that 
removes cotton seed from cotton lint in commercial quantities.
    Lint means cotton lint as contained in bales of cotton ordinarily 
marketed as cotton and excludes any linters, raw motes, re-ginned motes, 
cleaned motes, and any other gin waste or byproduct not traditionally 
defined as cotton lint.

[[Page 461]]

    Number of ginned cotton bales means the number of ginned running 
bales of cotton based on individual bale weights unadjusted to a uniform 
bale weight.
    Running bale means a bale of cotton lint that has a minimum weight 
of 425 pounds and is not a bale of motes, linters, gin waste, or other 
gin byproduct.
    Ton means a unit of weight equal to 2,000 pounds avoirdupois (907.18 
kilograms).



Sec.  1427.1103  Eligible cottonseed.

    To be eligible for payments under this subpart, cottonseed must:
    (a) Have been grown in the United States during the 2002-crop 
production period.
    (b) Have been ginned by the applicant from 2002-crop cotton.
    (c) Not have been destroyed or damaged by fire, flood, or other 
events such that its loss or damage was compensated by other local, 
State, or Federal government or private or public insurance or disaster 
relief payments.



Sec.  1427.1104  Eligible first handlers.

    (a) For the purpose of this subpart, an eligible first handler of 
cottonseed shall be a gin that ginned 2002-crop cotton.
    (b) Applicants must comply with the terms and conditions set forth 
in this subpart and instructions issued by CCC, and sign and submit an 
accurate, legible and complete Cottonseed Payment Program Application 
and Certification.
    (c) Applicants signing the cottonseed payment application or 
receiving payment under this subpart must share any payment with the 
producer of the cotton that was the basis of the cottonseed payment to 
the extent that the effect of low cottonseed prices was borne by the 
producer rather than the gin. To the extent that such funds will be 
shared with the producer by the gin, those funds will be considered to 
have been received by the applicant on behalf of such producers.



Sec.  1427.1105  Payment application.

    (a) Payments in accordance with this subpart shall be made available 
only to eligible first handlers of cottonseed based on information 
provided on a Cottonseed Payment Program Application and Certification.
    (b) Payment applications must be received by the program application 
deadline announced by CCC. Applications received after such application 
deadline will not be accepted for payment.
    (c) Cottonseed Payment Program Application and Certifications may be 
obtained from the CCC as announced by press release. In order to 
participate in the cottonseed payment program under this subpart, first 
handlers of cottonseed must execute and submit to CCC according to 
announced instructions the Cottonseed Payment Program Application and 
Certification.



Sec.  1427.1106  Available funds.

    The total available program funds shall be $50 million for 2002-crop 
cottonseed.



Sec.  1427.1107  Applicant payment quantity.

    The applicant's payment quantity of cottonseed will be determined by 
CCC based on the eligible number of ginned cotton bales and the cotton 
lint weight from those bales as submitted on the Cottonseed Payment 
Application and Certification and/or obtained by CCC, with the agreement 
of the applicant, from the Agricultural Marketing Service. The 
applicant's payment quantity of cottonseed shall be calculated by 
multiplying:
    (a) The applicant's weight of eligible lint for which payment is 
requested, as approved by CCC, by;
    (b) The national Olympic average of estimated pounds of cottonseed 
per pound of ginned cotton lint, as determined by CCC for the 5 years 
preceding the 2002 crop year.



Sec.  1427.1108  Total payment quantity.

    The total quantity of 2002-crop cottonseed produced in the United 
States is potentially eligible for payment under this subpart. The total 
payment quantity of cottonseed will be the total of eligible quantities 
of cottonseed for which completed applications for payment are received 
within the application period announced by CCC. Eligible cottonseed for 
which no application is

[[Page 462]]

received according to announced application instructions shall not be 
included in the total payment quantity of cottonseed. The total payment 
quantity of cottonseed (ton-basis) shall be calculated by multiplying:
    (a) The weight of cotton lint (ton-basis) for which payment is 
requested by all applicants, as approved by CCC, by
    (b) The national Olympic average of estimated pounds of cottonseed 
per pound of ginned cotton lint, as determined by CCC for the 5 years 
preceding the crop year for which the cottonseed payments are provided.



Sec.  1427.1109  Payment rate.

    The payment rate (dollars per ton) for the purpose of calculating 
payments made available in accordance with this subpart shall be 
determined by CCC by dividing the total available program funds by the 
total eligible payment quantity of cottonseed unless the calculation 
would provide an excess rate of payment in which case an alternative 
method will be used as determined appropriate by CCC.



Sec.  1427.1110  Payment calculation and form.

    (a) Payments in accordance with this subpart shall be determined for 
individual applicants by multiplying:
    (1) The payment rate, determined in accordance with Sec.  1427.1109, 
by
    (2) The eligible payment quantity of the applicant, determined in 
accordance with Sec.  1427.1107 and other provisions of this subpart.
    (b) After receipt of the application for payment, CCC will issue 
payments to the applicant by electronic funds transfer to the 
applicant's account except that applicants may request that payment be 
made by mailed check.



Sec.  1427.1111  Liability of first handler.

    (a) If any person makes any erroneous or fraudulent representation 
in obtaining a cottonseed payment under this part, or in connection with 
such a payment engages in a scheme or device that tends to defeat the 
purposes of this program, the person shall be liable to CCC for the 
amount of the payment and interest on such payment as determined by CCC. 
Such remedy will be in addition to whatever additional remedies may be 
allowed by law.
    (b) If more than one person executes a program payment application 
with CCC and payments are made thereunder, each such person shall be 
jointly and severally liable for any violation of the terms and 
conditions for any payment made to anyone under that application or for 
any refund due from any person signing that application. Such liability 
shall remain until payment in full is made of any such refund and its 
related charges.
    (c) If a person receives a program payment in excess of the amount 
authorized by this subpart, that person shall refund to CCC an amount 
equal to the excess payment, plus interest thereon, as determined by 
CCC.
    (d) From the date of the payment application until the earlier of 3 
years after the date of the application or July 31, 2006, the applicant 
shall keep records, including records supporting the quantity of 
cottonseed for which payment was requested, and furnish such information 
and reports relating to the application to CCC as requested. Such 
records shall be available at all reasonable times for an audit or 
inspection by authorized representatives of CCC, United States 
Department of Agriculture, or the Comptroller General of the United 
States. Failure to keep, or make available, such records may result in 
refund to CCC of all payments received, plus interest thereon, as 
determined by CCC. In the event of a controversy concerning payments or 
questions involving the payments, records must be kept for such longer 
period as may be specified by CCC until such controversy is resolved.



  



   Subpart G--Extra Long Staple (ELS) Cotton Competitiveness Payment 
                                 Program

    Source: 67 FR 64459, Oct. 18, 2002, unless otherwise noted.



Sec.  1427.1200  Applicability.

    (a) These regulations set forth the terms and conditions under which 
CCC shall make payments, in the form of

[[Page 463]]

commodity certificates or cash, to eligible domestic users and exporters 
of extra long staple (ELS) cotton who have entered into an ELS Cotton 
Domestic User/Exporter Agreement with CCC to participate in the ELS 
cotton competitiveness payment program under section 136A(c) of the 
Federal Agriculture Improvement and Reform Act of 1996 and section 1208 
of the Farm Security and Rural Investment Act of 2002.
    (b) During the effective period of these regulations, CCC may issue 
marketing certificates or cash payments to domestic users and exporters, 
at the option of the recipient under this subpart, in any week following 
a consecutive 4-week period in which:
    (1) The lowest adjusted Friday through Thursday average price 
quotation for foreign growths (LFQ), as quoted for ELS cotton, delivered 
C.I.F. (cost, insurance and freight) Northern Europe, is less than the 
Friday through Thursday adjusted average domestic spot price quotation 
for base quality U.S. Pima cotton, as determined by the Secretary for 
purposes of administering the ELS Cotton Competitiveness Payment 
Program, uncompressed, F.O.B. warehouse; and
    (2) The LFQ, determined under Sec.  1427.1207, is less than 134 
percent of the current crop year loan level for the base quality U.S. 
Pima cotton as determined by the Secretary.
    (c) Additional terms and conditions may be in the ELS Cotton 
Domestic User/Exporter Agreement, which the domestic user or exporter 
must execute in order to receive such payments.
    (d) CCC shall prescribe the forms to be used in administering the 
ELS cotton competitiveness payment program.



Sec.  1427.1201  [Reserved]



Sec.  1427.1202  Definitions.

    Consumption means, the use of eligible ELS cotton by a domestic user 
in the manufacture in the United States of ELS cotton products.
    Cotton product means any product containing cotton fibers that 
result from the use of an eligible bale of ELS cotton in manufacturing.
    Current shipment price means, during the period in which two daily 
price quotations are available for the LFQ for the foreign growth, 
quoted C.I.F. northern Europe, the price quotation for cotton for 
shipment no later than August/September of the current calendar year.
    Forward shipment price means, during the period in which two daily 
price quotations are available for the LFQ for foreign growths, quoted 
C.I.F. northern Europe, the price quotation for cotton for shipment no 
earlier than October/November of the current calendar year.
    LFQ means, during the period in which only one daily price quotation 
is available for the growth, the lowest average for the preceding Friday 
through Thursday week of the price quotations for foreign growths of ELS 
cotton, quoted cost, insurance, and freight C.I.F. northern Europe, 
after each respective average is adjusted for quality differences 
between the respective foreign growth and U.S. Pima, of the base 
quality, provided that the lowest adjusted quotation becomes the LFQ 
after it is further adjusted to reflect the estimated cost of 
transportation between an average U.S. location and northern Europe.
    (1) Current LFQ means the preceding Friday through Thursday average 
of the current shipment prices for the lowest adjusted foreign growth, 
C.I.F. northern Europe.
    (2) Forward LFQ means the preceding Friday through Thursday average 
of the forward shipment prices for the lowest adjusted foreign growth, 
quoted C.I.F. northern Europe.
    Spot price means the Friday through Thursday weekly average of the 
domestic spot prices reported by the Agricultural Marketing Service, 
USDA, for base quality U.S. Pima, uncompressed, F.O.B. warehouse, for 
the San Joaquin and Desert Southwest markets. When both San Joaquin 
Valley and Desert Southwest spot quotations are available, the U.S. 
quotation will be a weighted average of the two quotations, as 
determined by the Secretary. If only one quotation is available, that 
quotation will be used.

[[Page 464]]



Sec.  1427.1203  Eligible ELS cotton.

    (a) For the purposes of this subpart, eligible ELS cotton is 
domestically produced baled ELS cotton that is:
    (1) Opened by an eligible domestic user on or after October 1, 1999, 
or
    (2) Exported by an eligible exporter on or after October 1, 1999, 
during a Friday through Thursday period in which a payment rate, 
determined under Sec.  1427.1207, is in effect, and that meets the 
requirements of paragraphs (b) and (c) of this section;
    (b) Eligible ELS cotton must be either:
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade; or
    (2) Loose.
    (c) Eligible ELS cotton must not be:
    (1) ELS for which a payment, under the provisions of this subpart, 
has been made available;
    (2) Imported ELS cotton;
    (3) Raw (unprocessed) motes;
    (4) Textile mill wastes; or
    (5) Semi-processed or reginned (processed) motes.



Sec.  1427.1204  Eligible domestic users and exporters.

    (a) For the purposes of this subpart, the following persons shall be 
considered eligible domestic users and exporters of ELS cotton:
    (1) A person regularly engaged in the business of opening bales of 
eligible ELS cotton to manufacturing such cotton into cotton products in 
the United States (domestic user), and who has entered into an agreement 
with CCC to participate in the ELS cotton competitiveness payment 
program; or
    (2) A person, including a producer or a cooperative marketing 
association approved under part 1425 of this chapter, regularly engaged 
in selling eligible ELS cotton for exportation from the United States 
(exporter), and who has entered into an agreement with CCC to 
participate in the ELS Cotton Competitiveness Payment Program.
    (b) Payment applications under this subpart must contain 
documentation required by the CCC-issued provisions of the ELS Cotton 
Domestic User/Exporter Agreement and instructions.



Sec.  1427.1205  ELS Cotton Domestic User/Exporter Agreement.

    (a) Payments under this subpart shall be made available to eligible 
domestic users and exporters who have entered into an ELS Cotton 
Domestic User/Exporter Agreement with CCC and who have complied with the 
terms and conditions in this subpart, the ELS Cotton Domestic User/
Exporter Agreement and CCC-issued instructions.
    (b) ELS Cotton Domestic User/Exporter Agreements may be obtained 
from CCC. To participate in the program authorized by this subpart, 
domestic users and exporters must execute the ELS Cotton Domestic User/
Exporter Agreement and forward the original and one copy to CCC.



Sec.  1427.1206  Form of payment.

    Payments under this subpart shall be made available in the form of 
commodity certificates issued under part 1401 of this chapter, or in 
cash, at the option of the participant, as CCC determines and announces.



Sec.  1427.1207  Payment rate.

    (a) The payment rate for payments made under this subpart shall be 
determined as follows:
    (1) Beginning the Thursday following August 1 and ending the week in 
which the current LFQ and the forward LFQ may first become available, 
the payment rate shall be the difference between the U.S. Pima spot 
price and the LFQ in the fourth week of a consecutive 4-week period in 
which the U.S. Pima spot price exceeded the LFQ each week, and the LFQ 
was less than 134 percent of the current crop year loan level for U.S. 
base quality Pima cotton in all weeks of the 4-week period; and
    (2) Beginning the Friday through Thursday week after the week in 
which the current LFQ and the forward LFQ may first become available and 
ending the Thursday following July 31, the payment rate shall be the 
difference between the U.S. Pima spot price and the current LFQ in the 
fourth week of a consecutive 4-week period in which the U.S. Pima spot 
price exceeded the current LFQ each week, and the current LFQ was less 
than 134 percent of the current crop year loan level for base quality 
U.S. Pima in all weeks of

[[Page 465]]

the 4-week period. If the current LFQ is not available, the payment rate 
may be the difference between the U.S. Pima spot price and the forward 
LFQ.
    (b) Whenever a 4-week period under paragraph (a) of this section 
contains a combination of LFQ, current LFQ and forward LFQ for only one 
to three weeks, such as may occur in the spring when the LFQ price is 
succeeded by the current LFQ and the forward LFQ (Spring transition) and 
at the start of a new marketing year when the current LFQ and the 
forward LFQ are succeeded by the LFQ (marketing year transition), under 
paragraphs (a)(1) and (a)(2) of this section, during both the spring 
transition and the marketing year transition periods, to the extent 
practicable, the current LFQ in combination with the LFQ shall be 
considered during such 4-week periods to determine whether a payment is 
to be issued. During both the spring transition and the marketing year 
transition periods, if the current LFQ is not available, the forward LFQ 
in combination with the LFQ shall be taken into consideration during 
such 4-week periods to determine whether a payment is to be issued.
    (c) For purposes of this subpart, regarding the determination of the 
U.S. Pima spot price, the LFQ, the current LFQ and the forward LFQ:
    (1) If daily quotations are not available for one or more days of 
the 5-day period, the available quotations during the period will be 
used;
    (2) If the U.S. Pima spot price is not available or if none of the 
LFQ, current LFQ or forward LFQ is available, the payment rate shall be 
zero and shall remain zero unless and until sufficient U.S. Pima spot 
prices and/or LFQ again become available, the U.S. Pima spot price 
exceeds the LFQ, the current LFQ or the forward LFQ, as the case may be, 
and the LFQ, the current LFQ, or the forward LFQ, as the case may be, is 
less than 134 percent of the current crop year loan rate for base 
quality U.S. Pima for 4 consecutive weeks.
    (d) Payment rates for loose, reginned motes and semi-processed motes 
that are of a quality suitable, without further processing, for 
spinning, papermaking or bleaching shall be based on a percentage of the 
basic rate for baled lint, as specified in the ELS Cotton Domestic User/
Exporter Agreement.



Sec.  1427.1208  Payment.

    (a) Payments under this subpart shall be determined by multiplying:
    (1) The payment rate, determined under Sec.  1427.127, by
    (2) The net weight (gross weight minus the weight of bagging and 
ties) determined under paragraph (b) of this section, of eligible ELS 
cotton bales that an eligible domestic user opens or an eligible 
exporter exports during the Friday through Thursday period following a 
week in which a payment rate is established.
    (b) For the purposes of this subpart, the net weight shall be based 
upon:
    (1) For domestic users, the weight on which settlement for payment 
of the ELS cotton was based (landed mill weight);
    (2) For reginned motes processed by an end user who converted such 
motes, without rebaling, to an end use in a continuous manufacturing 
process, the net weight of the reginned motes after final cleaning;
    (3) For exporters, the shipping warehouse weight or the gin weight 
if the ELS cotton was not placed in a warehouse, of the eligible cotton 
unless the exporter obtains and pays the cost of having all the bales in 
the shipment reweighed by a licensed weigher and furnishes a copy of the 
certified reweights.
    (c) For the purposes of this subpart, eligible ELS cotton will be 
considered:
    (1) Consumed by the domestic user on the date the bale is opened for 
consumption; and
    (2) Exported by the exporter on the date that CCC determines is the 
date on which the cotton is shipped for export.
    (d) Payments under this subpart shall be made available upon 
application for payment and submission of supporting documentation, as 
required by the CCC-issued provisions of the ELS Cotton Domestic User/
Exporter Agreement.

[[Page 466]]



PART 1430--DAIRY PRODUCTS--Table of Contents




                Subpart A--Price Support Program for Milk

Sec.
1430.1 Definitions.
1430.2 Price support levels and purchase conditions.

              Subpart B--Milk Income Loss Contract Program

1430.200 Applicability.
1430.201 Administration.
1430.202 Definitions.
1430.203 Eligibility.
1430.204 Requesting benefits.
1430.205 Selection of starting month.
1430.206 Transition payments.
1430.207 Dairy operation payment quantity.
1430.208 Payment rate and dairy operation payment.
1430.209 Proof of marketings.
1430.210 MILC agents.
1430.211 Duration of contracts.
1430.212 Contract modifications.
1430.213 Reconstitutions.
1430.214 Violations.
1430.215 [Reserved]
1430.216 Contracts not in conformity with regulations.
1430.217 Offsets and withholdings.
1430.218 Assignments.
1430.219 Appeals.
1430.220 Misrepresentation and scheme or device.
1430.221 Estates, trusts, and minors.
1430.222 Death, incompetency, or disappearance.
1430.223 Maintenance and inspection of records.
1430.224 Refunds; joint and several liability.
1430.225 Violations of highly erodible land and wetland conservation 
          provisions.
1430.226 Violations regarding controlled substances.

Subpart C [Reserved]

             Subpart D--Dairy Market Loss Assistance Program

1430.500 Applicability.
1430.501 Administration.
1430.502 Definitions.
1430.503 Time and method for application.
1430.504 Eligibility.
1430.505 Proof of production.
1430.506 Payment rate and dairy operation payment.
1430.507 Misrepresentation and scheme or device.
1430.508 Maintaining records.
1430.509 Refunds; joint and several liability.
1430.510 New producers.
1430.511 Supplemental payments.

    Authority: 7 U.S.C. 7981 and 7982; 15 U.S.C. 714b and 714c.



                Subpart A--Price Support Program for Milk

    Source: 67 FR 64476, Oct. 18, 2002, unless otherwise noted.



Sec.  1430.1  Definitions.

    For purposes of this subpart, unless the context indicates 
otherwise, the following definitions shall apply:
    AMS means the Agricultural Marketing Service, USDA.
    CCC means the Commodity Credit Corporation, USDA.
    FSA means the Farm Service Agency, USDA.
    USDA means the United States Department of Agriculture.



Sec.  1430.2  Price support levels and purchase conditions.

    (a)(1) The level of price support provided to farmers marketing milk 
containing 3.67 percent milkfat from dairy cows is $9.90 per 
hundredweight for calendar year 2002 through 2007.
    (2) Subject to paragraph (b) of this section, price support for milk 
will be made available through CCC purchases of butter, nonfat dry milk, 
and Cheddar cheese, offered subject to the terms and conditions of FSA's 
purchase announcements.
    (3) CCC purchase prices for dairy products will be announced by a 
USDA news release.
    (4) CCC may, by special announcement, offer to purchase other dairy 
products to support the price of milk.
    (5) Purchase announcements setting forth terms and conditions of 
purchase may be obtained upon request from CCC.
    (b)(1) The block cheese purchased shall be U.S. Grade A or higher, 
except that the moisture content shall not exceed 38.5 percent; the 
barrel cheese shall be U.S. Extra Grade, except that the moisture 
content shall not exceed 36.5 percent.
    (2) The nonfat dry milk purchased shall be U.S. Extra Grade, except 
that the moisture content shall not exceed 3.5 percent.
    (3) The butter purchased shall be U.S. Grade A or higher.

[[Page 467]]

    (c) The products purchased shall be manufactured in the United 
States from milk produced in the United States and shall not have been 
previously owned by CCC.
    (d) Purchases will be made in carlot weights specified in the 
announcements. Grade and weights shall be evidenced by USDA-issued 
inspection certificates.



              Subpart B--Milk Income Loss Contract Program

    Source: 67 FR 64476, Oct. 18, 2002, unless otherwise noted.



Sec.  1430.200  Applicability.

    (a) This subpart governs the Milk Income Loss Contract Program. This 
program provides financial assistance to dairy operations in connection 
with milk production that is sold in the commercial market.



Sec.  1430.201  Administration.

    (a) This program is administered under the general supervision of 
the Executive Vice President, CCC, or a designee, and shall be carried 
out by Farm Service Agency (FSA) State and county committees and 
employees.
    (b) State and county committees, and their employees may not waive 
or modify any requirement of this subpart, except as provided in 
paragraph (e) of this section.
    (c) The State committee shall take any action required when not 
taken by the county committee, require correction of actions not in 
compliance, or require the withholding of any action that is not in 
compliance with this subpart.
    (d) The Executive Vice President, CCC, or a designee, may determine 
any question arising under the program or reverse or modify any decision 
of the State or county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may waive or 
modify program requirements where failure to meet such requirements does 
not adversely affect the operation of the Milk Income Loss Contract 
Program.
    (f) A representative of CCC may execute Milk Income Loss Contracts 
and related documents under the terms and conditions determined and 
announced by CCC. Any document not under such terms and conditions, 
including any purported execution before the date authorized by CCC, 
shall be null and void.



Sec.  1430.202  Definitions.

    The definitions in this section shall be applicable for all purposes 
of administering the Milk Income Loss Contract (MILC) program 
established by this subpart.
    CCC means the Commodity Credit Corporation of the Department.
    Class I Milk means milk, including milk components, classified as 
Class I milk under a Federal milk marketing order.
    Contract application means a Milk Income Loss Contract as executed 
on a form prescribed by CCC.
    Contract application period means the date established by the Deputy 
Administrator for producers to apply for program benefits.
    County committee means the FSA county committee.
    County office means the FSA office responsible for administering FSA 
programs to farms located in a specific area in a state.
    Dairy operation means any person or group of persons who as a single 
unit as determined by CCC, produce and market milk commercially produced 
from cows and whose production facilities are located in the United 
States.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), FSA or a designee.
    Eligible production means milk that was produced by cows in the 
United States and marketed commercially anytime during the period of 
December 1, 2001, through September 30, 2005, up to a maximum of 2.4 
million pounds per dairy operation per fiscal year.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Federal Milk Marketing Order means an order issued under section 8c 
of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937.

[[Page 468]]

    Fiscal Year means the year beginning October 1 (except December 1 
for fiscal year 2002) and ending the following September 30 and such 
that, for example, fiscal year 2003 will run from October 1, 2002 
through September 30, 2003.
    Hundredweight or cwt. means 100 pounds.
    Marketed commercially means sold to the market to which the dairy 
operation normally delivers whole milk and receives a monetary amount.
    MILC means the Milk Income Loss Contract program or the form upon 
which CCC and the producer agree to the terms of the payment to be made 
under the MILC program.
    Milk handler means the marketing agency to or through which the 
producer commercially markets whole milk.
    Milk marketing means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial use.
    Participating State means each of the 50 States in the United States 
of America, including the District of Columbia, and the Commonwealth of 
Puerto Rico, or any other State, territory, or possession of the United 
States.
    Payment pounds means the pounds of milk production for which an 
operation is eligible to be paid under this subpart.
    Producer 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 
of, or legal resident alien in the United States, and who directly or 
indirectly, as determined by the Secretary, shares in the risk of 
producing milk, and makes contributions (including land, labor, 
management, equipment, or capital) to the dairy farming operation of the 
individual or entity that are at least commensurate with the share of 
the individual or entity of the proceeds of this operation.
    Transition period means the period from December 1, 2001, until the 
time the dairy operation enters into MILC contract with CCC, provided 
that CCC may set such a deadline for the signing of the transition 
contract as it deems appropriate in order to accomplish the purposes of 
the contract.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico, or any 
other State, territory, or possession of the United States.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed and that can be verified 
by CCC through an independent source.



Sec.  1430.203  Eligibility.

    To be eligible to receive payments under this subpart, a dairy 
operation must:
    (a) Have produced milk in the United States and commercially 
marketed the milk produced anytime during the period of December 1, 
2001, through September 30, 2005;
    (b) Enter into a MILC during the contract application period;
    (c) Agree to all terms and conditions in the MILC and those that are 
otherwise contained in this subpart and comply with instructions issued 
by CCC;
    (d) Provide proof of monthly milk production commercially marketed 
by all persons in the dairy operation during the contract period, to 
determine the total pounds of milk that will be converted to 
hundredweight (cwt.) used for payment;
    (e) Submit timely production evidence according to Sec.  1430.209;
    (f) Be actively engaged in the business of producing and marketing 
agricultural products at the time of signing the Milk Income Loss 
Contract.
    (g) In administering this program, the eligibility determination of 
``dairy operation'' shall be made in the same manner as Dairy Market 
Loss Assistance (DMLA) contracts in that State. New MILC operations must 
be unaffiliated with prior DMLA operations.



Sec.  1430.204  Requesting benefits.

    (a) A request for benefits or contract application, under this 
subpart must be submitted on a form as prescribed by the Agency. 
Contract applications shall be submitted to the FSA office

[[Page 469]]

serving the county where the dairy operation is located. Contract 
applications must be received by FSA by the close of business on the 
date established by the Deputy Administrator. Contract applications 
received after such date shall be disapproved.
    (b) The dairy operation requesting MILC benefits must certify the 
accuracy and truthfulness of the information in their contract 
application. All information provided is subject to verification by CCC. 
Refusal to allow CCC or any other agency of the Department to verify any 
information provided will result in disapproval.
    (c) Contract applications will be approved by execution by FSA and 
producer of a MILC. All persons who share in the risk of a dairy 
operation's total production must sign and certify the contract 
application.



Sec.  1430.205  Selection of starting month.

    (a) Except as provided in Sec.  1430.206 and beginning with the 2003 
Fiscal Year, a dairy operation that enters into a MILC, and does not 
want its payments to begin with the first month of the fiscal year, must 
designate the starting month that it desires CCC to begin making 
payments to them. The starting month must be selected on or before the 
15th of the month before the month for which payment is sought. A dairy 
operation cannot select a month for payment which:
    (1) Has already begun;
    (2) Has already passed; or
    (3) During which no milk was produced by the dairy operation.
    (b) Dairy operations may change the starting month on or before the 
first day of 15th of the month before the month previously selected. 
Otherwise, the starting month cannot be changed until the next Fiscal 
Year. If the selected starting month is never modified, it will remain 
the same throughout the duration of the contract.
    (c) MILC payments will be made consecutively to the dairy operation 
on a monthly basis after the starting month has been designated until 
the earlier of the following:
    (1) The maximum payment quantity is reached as determined in 
accordance with Sec.  1430.207; or
    (2) The end of the applicable Fiscal Year.
    (d)(1) Dairy operations that do not designate the month to begin 
receiving payments from CCC will be issued consecutive payments on a 
monthly basis, on marketed milk production beginning in the first month 
of the fiscal year, unless FSA is otherwise notified that selection will 
be made at a later date.
    (2) Dairy operations that desire payments to begin with the first 
month of the fiscal year will receive payments made by CCC consecutively 
on a monthly basis until the earlier of the following:
    (i) The maximum payment quantity is reached as determined in 
accordance with Sec.  1430.207; or
    (ii) The end of the applicable fiscal year.
    (e) All producers involved in the dairy operation must agree to the 
month designated. The dairy operation assumes the risk of not reaching 
the maximum payment quantity based on the month selected by the dairy 
operation. Payments will not be issued for past months for the sole 
purpose of reaching the maximum payment quantity.



Sec.  1430.206  Transition payments.

    (a) MILC program participants shall receive a payment calculated 
under Sec.  1430.208 on the quantity of eligible production marketed by 
the dairy operation during the period beginning December 1, 2001, and 
ending on the last day of the month preceding the month the operation's 
MILC is executed.
    (b) Transition payments are subject to the following:
    (1) The maximum payment quantity on eligible production, as 
described in Sec.  1430.207;
    (2) Consecutive monthly payments beginning on December 1, 2001, and 
if applicable the beginning of the fiscal year thereafter, until the 
earlier of the following is reached for a particular fiscal year:
    (i) The maximum applicable payment quantity is reached as determined 
in accordance with Sec.  1430.207; or
    (ii) The end of the applicable fiscal year.

[[Page 470]]

    (c) With respect to the 2002 Fiscal Year, the dairy operation may 
elect to forgo their transition payment and choose to begin receiving 
payments in September, 2002 in accordance with Sec.  1430.205.
    (d) Notwithstanding any other provisions in this subpart, dairy 
operations that go out of business after December 1, 2001, may enter 
into a MILC with CCC for a transition payment on the quantity of 
eligible production marketed by the dairy operation during the 
transition period while the dairy operation was in business.



Sec.  1430.207  Dairy operation payment quantity.

    (a) The applicant's payment quantity of milk will be determined by 
CCC, based on the quantity of milk that was produced and commercially 
marketed by each dairy operation per fiscal year.
    (b) The maximum quantity of eligible production for which dairy 
operations are eligible for payment per any fiscal year, including any 
in the transition year, under this subpart shall be 2.4 million pounds 
(24,000 cwt.) per separate and distinct operation. In accordance with 
these regulations, the Deputy Administrator shall determine what is a 
separate and distinct operation and that decision shall be final.



Sec.  1430.208  Payment rate and dairy operation payment.

    (a) Payments under this subpart may be made to dairy operations when 
the Boston Class I milk price under the applicable Federal milk 
marketing order is below $16.94 per cwt. No payments will be made to 
dairy operations for marketings during the months that the Boston Class 
I milk price under the applicable milk marketing order exceeds $16.94.
    (b) A per-hundredweight payment rate will be determined for the 
applicable month by:
    (1) Subtracting from $16.94 the Class I milk price per cwt in 
Boston; and
    (2) Multiplying the difference, if positive, by 45 percent.
    (c) Each eligible dairy operation payment will be calculated, as 
determined by the Secretary, by:
    (1) Converting whole pounds of milk to hundredweight; and
    (2) Multiplying the payment rate determined in paragraph (b) of this 
section by the quantity of eligible production marketed by the operation 
during the applicable month as determined according to Sec.  1430.205 
and other provisions of these regulations.
    (d) Payments under this subpart may be made to a dairy operation 
only up to the first 2.4 million pounds of eligible milk production per 
applicable fiscal year, including any year in the transition period.
    (e) Dairy operations receiving benefits under this subpart, will 
receive payments on a monthly basis according to the MILC, to the extent 
practicable, not later than 60 days after the production evidence and 
all supporting documents for the applicable month are received by CCC. 
Payments issued by CCC later than 60 days after all production evidence 
and supporting documentation are received by CCC will be subject to 
prompt payment interest as allowed by law.



Sec.  1430.209  Proof of marketings.

    (a) A dairy operation entering into an MILC must, based on 
instructions issued by the Deputy Administrator, provide adequate proof 
of the dairy operation's eligible production during the months of each 
fiscal year designated in the MILC. The dairy operation must also 
provide proof that the eligible production was commercially marketed 
during the months beginning December 1, 2001, and ending September 30, 
2005. Evidence of milk production claimed for payment shall be provided 
to CCC with supporting documentation under paragraph (b) of this 
section. All information provided is subject to verification, spot 
check, and audit by FSA. Further verification information may be 
obtained from the dairy operation's milk handler or marketing 
cooperative if deemed necessary by CCC to verify provided information. 
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 for benefits under this subpart.
    (b) Eligible dairy operations marketing milk during the period 
specified in the MILC shall provide any available supporting documents 
from all

[[Page 471]]

producers in the dairy operation to assist CCC in verifying that the 
dairy operation produced and marketed milk commercially from the 
designated starting month and thereafter. Examples of supporting 
documentation include, but are not limited to: milk marketing payment 
stubs, tank records, milk handler records, daily milk marketings, copies 
of any payments received as compensation from other sources, or any 
other documents available to confirm the production and production 
history of the dairy operation. Producers may also be required to allow 
CCC to examine the herd of cattle as production evidence. If supporting 
documentation requested is not presented to CCC or FSA, the request for 
MILC benefits will be disapproved.



Sec.  1430.210  MILC agents.

    (a) MILC benefits may be disbursed by a dairy marketing cooperative 
that serves special groups or communities, such as an Amish or Mennonite 
community. Producers in such groups in a dairy operation may authorize 
an agent of a dairy cooperative or milk handler affiliated with such 
cooperative to obtain and disburse MILC benefits to the dairy operation.
    (b) The authorized MILC agent must on behalf of the dairy operation 
do the following:
    (1) Obtain an acceptable power of attorney or acceptable equivalent 
for the producers of the dairy operation that authorizes the agent to 
enter into an MILC contract;
    (2) Enter into a written agreement with CCC for approval to act as a 
MILC agent on a form prescribed by CCC;
    (3) Provide the dairy operation's monthly production evidence to the 
appropriate FSA office;
    (4) Disburse payment to the dairy operation in the producer's 
monthly milk check or in an otherwise approved manner.



Sec.  1430.211  Duration of contracts.

    (a) Except as provided in Sec. Sec.  1430.205 and 1430.206, or 
elsewhere in this subpart, contracts under this subpart entered into by 
producers in a dairy operation shall cover eligible production marketed 
by the producers in the dairy operation during the period beginning with 
the first day of the month the producers in the dairy operation enter 
into contract and ending on September 30, 2005.
    (b) If a dairy goes out of business during the contract period, the 
MILC will be terminated immediately, except as applicable to earned 
payments.



Sec.  1430.212  Contract modifications.

    (a) Producers in a dairy operation must notify FSA immediately of 
any changes that may affect their MILC. Changes include, but are not 
limited to changes to the starting month to receive payment for the next 
fiscal year, death of producer on the contract, new member joining the 
operation, member exiting the operation, transfer of shares by sale or 
other transfer action, or farm reconstitutions undertaken in accordance 
with Sec.  1430.213.
    (b) CCC may modify an MILC if such modifications are desirable to 
carry out purposes of the program or to facilitate the program's 
administration.



Sec.  1430.213  Reconstitutions.

    (a) A dairy operation receiving MILC benefits may reorganize or 
restructure such that the constitution or makeup of their operation is 
reconstituted in another organizational framework. However, any 
operation that changes after December 1, 2001, is subject to a review by 
FSA to determine if the operation was reorganized for the sole purpose 
of receiving multiple payments.
    (b) A dairy operation that FSA determines has reorganized solely to 
receive additional MILC payments will be in violation of its contract 
and dealt in accordance with Sec.  1430.214.
    (c) If during the contract period a change in the dairy operation 
occurs, the modification to the MILC will not take effect until the 
first day of the fiscal year following the month FSA received 
notification of the changes. Changes include but are not limited to any 
producer affiliated with a dairy operation that has an approved MILC 
with CCC forming a new dairy operation that is not formed solely to 
receive additional MILC payments.

[[Page 472]]

    (d) Changes resulting in the following will take effect immediately 
upon notification to CCC, in accordance with Sec.  1430.212:
    (1) Increases or reductions of shareholders or producers and their 
corresponding share amounts in the dairy operation; or
    (2) Purchases of a new dairy operation by a producer or producers 
not affiliated with an existing dairy operation that has an approved 
MILC with CCC.



Sec.  1430.214  Violations.

    (a) If producers in a dairy operation violates the MILC or the 
requirements of this subpart, CCC may:
    (1) Terminate the MILC for the remainder of the fiscal year in which 
the violation occurs, and allow the producer to retain any payments 
received under the contract; or
    (2) Allow the MILC to remain in effect and require the producer to 
repay a portion of the payments received commensurate with the 
violation's severity, as CCC determines.
    (3) If the MILC is terminated under this section, the participant 
shall forfeit all rights to further MILC benefits and shall refund all 
or part of the payments received as CCC determines appropriate.
    (4) A producer or operation with a violation, as determined by CCC, 
shall refund all MILC funds disbursed under of this part. The remedies 
provided in this subpart shall be in addition to other civil, criminal, 
or administrative remedies which may apply.
    (b) A MILC is violated by the following actions:
    (1) Failure to comply with the terms and conditions of the MILC and 
addendum;
    (2) Reconstitutions of the dairy operation for the sole purpose of 
receiving multiple program benefits;
    (3) Failure to comply with highly erodible land conservation and 
wetland provisions of this 7 CFR part 12 or their successor regulations;
    (4) Failure to meet the definition of a dairy operation according to 
Sec.  1430.202;
    (5) Any action that tends to defeat the purpose of the program, as 
CCC determines.
    (c) The Deputy Administrator for Farm Programs (DAFP) of the Farm 
Service Agency may terminate any MILC by mutual agreement upon request 
of the participant if DAFP determines that termination is in the best 
interest of the public.
    (d) The DAFP may determine that failure of the dairy operation to 
perform the MILC does not warrant termination and may require the 
participant to refund part of the payments received or accept 
adjustments in the payment as the DAFP determines to be appropriate.



Sec.  1430.215  [Reserved]



Sec.  1430.216  Contracts not in conformity with regulations.

    If it is discovered that an MILC contract does not comply with this 
subpart as the result of a misunderstanding by someone who has signed 
the contract, the contract may be modified by mutual agreement. If the 
parties to the MILC cannot reach agreement for such modification, it 
shall be terminated and all payments paid or payable under the contract 
shall be forfeited or refunded to CCC, except as may otherwise be 
allowed under Sec.  1430.214.



Sec.  1430.217  Offsets and withholdings.

    CCC may offset or withhold any amount due CCC under this subpart 
under the provisions of part 1403 of this chapter or any successor 
regulations.



Sec.  1430.218  Assignments.

    Any producer may assign a payment to be made under this part in 
accordance with part 1404 of this chapter or successor regulations as 
designated by the Department.



Sec.  1430.219  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination under part 11 or 780 of this title.



Sec.  1430.220  Misrepresentation and scheme or device.

    (a) A dairy operation shall be ineligible for the MILC program if 
FSA determines that it knowingly:

[[Page 473]]

    (1) Adopted a scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a determination under this 
program. CCC will take steps deemed necessary to protect the interests 
of the government.
    (b) Any funds disbursed to a producer or operation engaged in a 
misrepresentation, scheme, or device, shall be refunded to CCC. The 
remedies provided in this subpart shall be in addition to other civil, 
criminal, or administrative remedies which may apply.



Sec.  1430.221  Estates, trusts, and minors.

    (a) Program documents executed by producers legally authorized to 
represent estates or trusts will be accepted only if such producers 
furnish evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible for assistance under this part 
must also:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show that 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.  1430.222  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a producer that is eligible to receive benefits under this part, such 
persons as are specified in part 707 of this title may receive such 
benefits, as determined appropriate by FSA.



Sec.  1430.223  Maintenance and inspection of records.

    (a) Producers approved for benefits under this program must maintain 
accurate records and accounts that will document that they meet all 
eligibility requirements specified herein, as may be requested by CCC or 
FSA. Such records and accounts must be retained for 3 years after the 
date of payment to the dairy operation under this program. Destruction 
of the records 3 years after the date of payment shall be the risk of 
the party undertaking the destruction.
    (b) At all times during regular business hours, authorized 
representatives of CCC, the Department, or the Comptroller General of 
the United States shall have access to the premises of the dairy 
operation in order to inspect the herd of cattle, examine, and make 
copies of the books, records, and accounts, and other written data as 
specified in paragraph (a) of this section.
    (c) Any funds disbursed pursuant to this part to any producers or 
operation who does not comply with the provisions of paragraphs (a) or 
(b) of this section, or who otherwise receives a payment for which they 
are not eligible, shall be refunded with interest.



Sec.  1430.224  Refunds; joint and several liability.

    (a) In the event of an error on a MILC application, a failure to 
comply with any term, requirement, or condition for payment arising 
under the MILC application, or this subpart, all improper payments shall 
be refunded to CCC together with interest from the date payment was 
received through the date the refund is received by CCC.
    (b) All producers signing a dairy operation's application for 
payment as having an interest in the operation shall be jointly and 
severally liable for any refund, including related charges, that is 
determined to be due for any reason under the terms and conditions of 
the contract application and addendum or this part for such operation.



Sec.  1430.225  Violations of highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this part.



Sec.  1430.226  Violations regarding controlled substances.

    The provisions of Sec.  718.11 of this title apply to this part.

Subpart C [Reserved]

[[Page 474]]



             Subpart D--Dairy Market Loss Assistance Program

    Authority: Pub. L. 105-277, 112 Stat. 2681; Pub. L. 106-78, 113 
Stat. 1135; Pub. L. 106-387, 114 Stat. 1549.

    Source: 64 FR 24934, May 10, 1999, unless otherwise noted.



Sec.  1430.500  Applicability.

    This subpart establishes the Dairy Market Loss Assistance Program. 
The purpose of this program is to provide benefits to dairy operations 
under Public Law 105-277, 112 Stat. 2681; sections 805 and 825 of Public 
Law 106-78; and section 805 of Public Law 106-387 only, in order to 
provide financial assistance to dairy operations in connection with 
normal milk production that is sold on the commercial market.

[64 FR 24934, May 10, 1999, as amended at 65 FR 7956, Feb. 16, 2000; 66 
FR 15176, Mar. 15, 2001]



Sec.  1430.501  Administration.

    (a) The provisions of Sec. Sec.  1430.351, 1430.352, 1430.354, 
1430.355, and 1430.360 shall be applied to this subpart in the same 
manner as they are applied to the subpart in which they are located.
    (b) The provisions of Sec. Sec.  1430.1 through 1430.349, 1430.353, 
1430.356 through 1430.359, 1430.361 through 1430.362, and 1430.400 
through 1430.410 are not applicable to this subpart.
    (c) This subpart shall be administered by the Farm Service Agency 
(FSA) under the general direction and supervision of the Executive Vice 
President, CCC or designee. The program shall be carried out in the 
field by State and county FSA committees under the general direction and 
supervision of the State and county FSA committees.
    (d) 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 subpart.
    (e) The State committee shall take any action required by this 
subpart 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 subpart; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this subpart.
    (f) No delegation in this subpart to a State or county committee 
shall preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (g) 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.  1430.502  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Dairy Market Loss Assistance Program 
established by this subpart.
    Application means the Dairy Market Loss Assistance Program Payment 
application, CCC-1040.
    Application period means April 12, 1999 through February 28, 2001.
    Base period means the calendar year, either 1997 or 1998, as 
selected by the dairy operation, during which milk was produced and 
marketed.
    Commodity Credit Corporation means the Commodity Credit Corporation.
    Dairy operation means any person or group of persons who as a single 
unit as determined by CCC, produce and market milk commercially produced 
from cows and whose production and facilities are located in the United 
States.
    Department means the United States Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), Farm Service Agency (FSA) or a designee.
    Eligible production means milk that had been produced by cows in the 
United States and marketed commercially in the United States anytime 
during the 1997 and or 1998 calendar

[[Page 475]]

year, subject to a maximum of 26,000 cwt per dairy operation.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Fourth quarter of 1998 means the period from October 1, 1998 through 
December 31, 1998.
    Marketed commercially means sold to the market to which the dairy 
operation normally delivers whole milk and receives a monetary amount.
    Milk handler means the marketing agency to or through which the 
producer commercially markets whole milk.
    Milk marketing means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial use.
    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.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.

[64 FR 24934, May 10, 1999, as amended at 65 FR 7956, Feb. 16, 2000; 66 
FR 15177, Mar. 15, 2001]



Sec.  1430.503  Time and method for application.

    (a) Dairy operations may obtain an application, Form CCC-1040 (Dairy 
Market Loss 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 CCC-1040 at http://
www.fsa.usda.gov/dafp/psd/.
    (b) A request for benefits under this subpart must be submitted on a 
completed Form CCC-1040. The Form CCC-1040 should be submitted to the 
county FSA office serving the county where the dairy operation is 
located but, in any case, must be received by the county FSA office by 
the close of business on February 28, 2001. Applications not received by 
the close of business on February 28, 2001, will be disapproved as not 
having been timely filed and the dairy operation will not be eligible 
for benefits under this program.
    (c) All persons who share in the milk production of a dairy 
operation that marketed milk during the fourth quarter of 1998 must 
certify on the same CCC-1040 in order to obtain the total milk 
production of the dairy operation before the application is complete.
    (d) The dairy operation requesting benefits under this subpart 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 CCC. Refusal to allow CCC 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 24934, May 10, 1999, as amended at 65 FR 7956, Feb. 16, 2000; 66 
FR 15177, Mar. 15, 2001]



Sec.  1430.504  Eligibility.

    (a) To be eligible to receive cash payments under this subpart, a 
dairy operation must:
    (1) Have produced and marketed milk commercially in the United 
States anytime during the fourth quarter of 1998;
    (2) Indicate all milk commercially marketed by all persons in the 
dairy operation during calendar year 1997 and 1998 to establish the base 
period for determining the total pounds of milk that will be converted 
to hundredweight (cwt) used for payment; and
    (3) Apply for payments during the application period.
    (b) A dairy operation must submit a timely application and comply 
with all

[[Page 476]]

other terms and conditions of this subpart and those that are otherwise 
contained in the application to be eligible for benefits under this 
subpart.



Sec.  1430.505  Proof of production.

    (a) Dairy operations selected for spotchecks by CCC must, in 
accordance with instructions issued by the Deputy Administrator, provide 
adequate proof that the dairy operation was commercially marketing milk 
anytime during the fourth quarter of 1998. The dairy operation must also 
provide proof of production for the 1997 or 1998 calendar year to verify 
the base period. The documentary evidence of milk production claimed for 
payment shall be reported to CCC together with any supporting 
documentation under paragraph (b) of this section. The pounds of 1997 or 
1998 calendar year milk production must be documented using actual 
records.
    (b) All persons involved in such dairy operation marketing milk 
during the fourth quarter of 1998 shall provide any available supporting 
documents to assist the county FSA office in verifying that the dairy 
operation produced and marketed milk commercially during the fourth 
quarter of 1998 and the base period milk marketings indicated on Form 
CCC-1040. Examples of supporting documentation include, but are not 
limited to: tank records, milk handler records, milk marketing payment 
stubs, daily milk marketings, copies of any payments received as 
compensation from other sources, or any other documents available to 
confirm the production and production history of the dairy operation. In 
the event that supporting documentation is not presented to the county 
FSA office requesting the information, dairy operations will be 
determined ineligible for benefits.



Sec.  1430.506  Payment rate and dairy operation payment.

    (a) Payments under this subpart may be made to dairy operations only 
on the first 26,000 cwt of milk produced by them from cows in the United 
States actually marketed in the United States during the base period. A 
payment rate will be determined after the conclusion of the application 
period, and shall be calculated by:
    (1) Converting whole pounds of milk to cwt;
    (2) Totaling the eligible cwt (not to exceed 26,000 cwt) of milk 
marketed commercially during the base period from all approved 
applications; and
    (3) Dividing the amount available for Dairy Market Loss Assistance 
Program by the total eligible cwt submitted and approved for payment.
    (b) Each dairy operation payment will be calculated by multiplying 
the payment rate determined in paragraph (a) (3) of this section by the 
dairy operation's eligible production.
    (c) In the event that approval of all eligible applications would 
result in expenditures in excess of the amount available, CCC shall 
reduce the payment rate in such manner as CCC, in its sole discretion, 
finds fair and reasonable.



Sec.  1430.507  Misrepresentation and scheme or device.

    (a) A dairy 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 dairy operation 
engaged in a misrepresentation, scheme, or device, or to any other 
person as a result of the dairy operation's actions, shall be refunded 
with interest together with such other sums as may become due. Any dairy 
operation or person engaged in acts prohibited by this section and any 
dairy operation or person receiving payment under this subpart shall be 
jointly and severally liable for any refund due under this section and 
for related charges. The remedies provided in this subpart shall be in 
addition to other civil, criminal, or administrative remedies which may 
apply.



Sec.  1430.508  Maintaining records.

    Dairy operations making application for benefits under this program 
must

[[Page 477]]

maintain accurate records and accounts that will document that they meet 
all eligibility requirements specified in this subpart and the pounds of 
milk marketed commercially during the fourth quarter of 1998 and the 
base period. Such records and accounts must be retained for at least 
three years after the date of the cash payment to dairy operations under 
this program.



Sec.  1430.509  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 subpart, and if any refund of a payment to CCC shall otherwise 
become due in connection with the application, or this subpart, all 
payments made under this subpart to any dairy operation shall be 
refunded to CCC 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 dairy 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 subpart.
    (c) Interest shall be applicable to refunds required of the dairy 
operation if CCC 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 CCC for funds, as of the date CCC 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. CCC may waive the accrual of interest if CCC determines 
that the cause of the erroneous determination was not due to any action 
of the dairy operation.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived by CCC with respect to refunds required of the 
dairy operation because of unintentional misaction on the part of the 
dairy operation, as determined by CCC.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in 7 CFR part 1403.
    (f) Dairy operations must refund to CCC any excess payments made by 
CCC 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.



Sec.  1430.510  New producers.

    Notwithstanding other provisions of this subpart, producers who were 
new producers in 1999 or 2000 and not affiliated with other eligible 
producers may receive payments from sums made available after October 
27, 2000 based on their 1999 production levels or for 2000, on their 
production levels from October 1, 1999 through September 30, 2000.

[66 FR 15177, Mar. 15, 2001]



Sec.  1430.511  Supplemental payments.

    (a) Supplemental payments under Public Law 106-387 will be made 
available to dairy operations in connection with normal milk production 
that is sold on the commercial market.
    (b) For supplemental payments made under this section, the payment 
rate shall be $0.6468 per cwt.
    (c) For dairy operations that received a payment under sections 805 
and 825 of Public Law 106-78 on less than 12 months production, an 
annual production level will be calculated by subtracting from the dairy 
operation's production level for the period of October 1, 1999 through 
September 30, 2000 the production level on which previous payments were 
received.

[66 FR 15177, Mar. 15, 2001]



PART 1434--NONRECOURSE MARKETING ASSISTANCE LOAN AND LDP REGULATIONS 
FOR HONEY--Table of Contents




Sec.
1434.1 Applicability.
1434.2 Administration.
1434.3 Definitions.
1434.4 Eligible producer.

[[Page 478]]

1434.5 Eligible honey.
1434.6 Beneficial interest.
1434.7 Approved storage.
1434.8 Containers and drums.
1434.9 Determination of quantity.
1434.10 Application, availability, disbursement, and maturity.
1434.11 Fees and interest.
1434.12 Liens.
1434.13 Transfer of producer's interest prohibited.
1434.14 Loss or damage.
1434.15 Personal liability of the producer.
1434.16 Release of the honey pledged as collateral for a loan.
1434.17 Liquidation of loans.
1434.18 Loan repayments.
1434.19 Settlement.
1434.20 Foreclosure.
1434.21 Loan deficiency payments.
1434.22 Handling payments and collections not exceeding $9.99.
1434.23 Death, incompetency, or disappearance; appeals; other loan 
          provisions.

    Authority: 7 U.S.C. 7931.

    Source: 66 FR 15177, Mar. 15, 2001, unless otherwise noted.



Sec.  1434.1  Applicability.

    This part provides the terms and conditions of Commodity Credit 
Corporation (CCC) nonrecourse marketing assistance loans or loan 
deficiency payments for honey. Marketing loan gains and loan deficiency 
payments shall be limited per person in the amounts set out in part 1400 
of this chapter.

[67 FR 64480, Oct. 18, 2002]



Sec.  1434.2  Administration.

    (a) The regulations of this part shall be administered under the 
general supervision of the Executive Vice President, CCC, and shall be 
carried out in the field by State and county Farm Service Agency (FSA) 
committees.
    (b) State and county committees, representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee shall take any action required by the 
regulations of this part that 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 that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this part.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, or a designee, 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 affect adversely the operation of the 
program.
    (f) An approving official of CCC may execute loans and related 
documents only under the terms and conditions determined and announced 
by CCC. Any such document that is not executed in accordance with such 
terms and conditions, including any purported execution before the date 
authorized by CCC, shall be null and void unless affirmed by the 
Executive Vice President, CCC.



Sec.  1434.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in part 718 of 
this title shall also be applicable except where those definitions are 
inconsistent with the definitions set forth in this section or for 
purpose of program instruments created under this part.
    Approving official is a representative of CCC who is authorized by 
the Executive Vice President, CCC, to approve loan documents prepared 
under this part.
    Charge is a fee, cost, and expense (including foreclosure costs) 
incident to insuring, carrying, handling, storing, conditioning, and 
marketing the honey and otherwise protecting the honey.
    CMA is a cooperative marketing association engaged in marketing 
honey.
    County office is the local FSA office.
    Crop year is the calendar year in which honey is extracted.

[[Page 479]]

    Ineligible honey is honey not eligible for a loan under this part 
for which ineligibility shall include, but is not limited to, honey from 
applicable floral sources regardless of whether the honey meets other 
eligibility requirements.
    Intermediate Bulk Container (IBC) is a bulk container with a 
polyethylene inner bottle with a galvanized steel protective cage with a 
275 and 330 gallon capacity and is reusable.
    Loan is a nonrecourse marketing assistance loan on honey.
    Nontable honey is honey having a predominant flavor of limited 
acceptability for table use even though such honey may be considered 
suitable for table use.
    Person is an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable a State, political subdivision of a State, or any 
agency thereof.
    Table honey is any honey having a good flavor of the predominant 
floral source which can be readily marketed for table use.
    Representative is a receiver, executor, administrator, guardian, or 
trustee representing the interests of a person or an estate.



Sec.  1434.4  Eligible producer.

    (a) To be eligible to receive an individual or joint loan or loan 
deficiency payments under this part, a person must:
    (1) Have produced honey in the United States during the calendar 
year for which a loan is requested and extracted on or before December 
31 of such calendar year;
    (2) Be responsible for the risk of keeping the bees and producing 
honey;
    (3) Have a continuous beneficial interest in the honey from the time 
the honey was extracted through date of repayment of the loan;
    (4) Store the honey pledged as loan collateral in eligible storage 
and in eligible containers that meet the requirements of Sec.  1434.7 
and Sec.  1434.8, respectively; and
    (5) Adequately protect the interests of CCC by providing security 
for a loan in accordance with the requirements in Sec.  1434.8 and by 
maintaining in good condition the honey pledged as security for a loan.
    (b) A person who complies with paragraph (a) of this section, who 
enters into a contract to sell the honey used as collateral for a loan 
but retains a beneficial interest in the honey and who does not receive 
an advance payment from the purchaser to enter into the contract unless 
the purchaser is a cooperative marketing association (CMA) that is 
eligible under paragraph (g) of this section, remains eligible for a 
loan.
    (c) Two or more applicants may be eligible for a joint loan if:
    (1) The conditions in paragraphs (a) and (b) of this section are met 
with respect to the commingled honey collateral stored in the same 
eligible containers they are tendering for a loan; and
    (2) The commingled honey is not used as collateral for an individual 
loan that has not been repaid.
    (d) Heirs who succeed to a beneficial interest in the honey are 
eligible for a loan if they:
    (1) Assume the decedent's obligation under a loan if such loan has 
already been obtained; and
    (2) Assure continued safe storage of the honey if such honey has 
been pledged as collateral for a loan.
    (e) A representative may be eligible to receive a loan on behalf of 
a person or estate who or which meets the requirements in paragraphs 
(a), (b), (c), and (d) of this section and that the honey tendered as 
collateral by the representative, in the capacity of a representative, 
shall be considered as tendered by the person or estate being 
represented.
    (f) A minor who otherwise meets the requirements of this part for a 
loan shall be eligible to receive a loan only if the minor meets one of 
the following requirements:
    (1) A court or statute has conferred the right of majority on the 
minor;
    (2) A guardian has been appointed to manage the minor's property and 
the applicable loan documents are signed by the guardian;
    (3) Any note signed by the minor is cosigned by a person determined 
by the county committee to be financially responsible; or

[[Page 480]]

    (4) A surety, by furnishing a bond, guarantees to protect CCC from 
any loss incurred for which the minor would be liable had the minor been 
an adult.
    (g) A CMA that the Executive Vice President, CCC, determines meets 
the requirements for CMA's in part 1425 of this title may be eligible to 
obtain a loan on behalf of those members who themselves are eligible to 
obtain a loan provided that:
    (1) The beneficial interest in the honey must always, until loan 
repayment or forfeiture, remain in the member who delivered the honey to 
the eligible CMA or its member CMA's, except as otherwise provided in 
this part; and
    (2) The honey delivered to an eligible CMA shall not be eligible for 
a loan if the member who delivered the honey does not retain the right 
to share in the proceeds from the marketing of the honey as provided in 
part 1425 of this title.



Sec.  1434.5  Eligible honey.

    To be eligible for a loan, the honey must:
    (a) Have been produced by an eligible producer;
    (b) Have been produced in the United States during the calendar year 
for which a loan is requested and extracted on or before December 31 of 
such calendar year;
    (c) Be of merchantable quality deemed by CCC to be suitable for 
loan; that is, the honey:
    (1) Is not adulterated;
    (2) Has not been scorched, burned, or subjected to excessive heat 
resulting in objectionable flavor, color deterioration or carmelization;
    (3) Does not contain any ineligible honey floral sources; such as 
andromeda, bitterweed, broomweed, cajeput (melaleuca), carrot, 
chinquapin, dog fennel, desert hollyhock, gumweed, mescal, onion, 
prickly pear, prune, queen's delight, rabbit brush, snowbrush 
(ceanothus), snow-on-the-mountain, spurge (leafy spurge), tarweed, and 
similar objectionably-flavored honey or blends of honey as determined by 
the Director, Price Support Division, FSA. If any blends of honey 
contain such ineligible honey, the lot as a whole shall be considered 
ineligible for loan;
    (4) Does not contain excessive bees or bee parts, paint chips, wood 
chips, or other foreign matter; and
    (5) Is not fermenting; and
    (d) Be stored in acceptable containers.



Sec.  1434.6  Beneficial interest.

    (a) To be eligible to receive marketing assistance loans under this 
part a producer must have the beneficial interest in the honey that is 
tendered to CCC for a loan. The producer must always have had the 
beneficial interest in the honey unless, before the honey was extracted, 
the producer and a former producer whom the producer tendering the honey 
to CCC has succeeded had such an interest in the honey. Honey obtained 
by gift or purchase shall not be eligible to be tendered to CCC for 
loans. Heirs who succeed to the beneficial interest of a deceased 
producer or who assume the decedent's obligations under an existing loan 
shall be eligible to receive loans whether succession to the honey 
occurs before or after extraction so long as the heir otherwise complies 
with the provisions of this part.
    (b) For the 2002 crop of honey, in the case of producers that would 
be eligible for a loan deficiency payment under this section except for 
the fact that the producers lost beneficial interest in the crop before 
October 18, 2002, the producers shall be eligible for a loan deficiency 
payment as of the date producers marketed or otherwise lost beneficial 
interest in the honey, as determined by the Secretary.
    (c) A producer shall not be considered to have divested the 
beneficial interest in the honey if the producer retains control, title, 
and risk of loss in the honey including the right to make all decisions 
regarding the tender of such honey to CCC for a loan, and the producer:
    (1) Executes an option to purchase, whether or not a payment is made 
by the potential buyer for such option to purchase, with respect to such 
honey if all other eligibility requirements are met and the option to 
purchase contains the following provision:


[[Page 481]]


    Notwithstanding any other provision of this option to purchase, 
title, risk of loss, and beneficial interest in the honey, as specified 
in 7 CFR part 1434, shall remain with the producer until the buyer 
exercises this option to purchase the honey. This option to purchase 
shall expire, notwithstanding any action or inaction by either the 
producer or the buyer, at the earlier of: (1) The maturity of any CCC 
loan which is secured by such honey; (2) the date the CCC claims title 
to such honey; or (3) such other date as provided in this option.''


or:

    (2) Enters into a contract to sell the honey if the producer retains 
title, risk of loss, and beneficial interest in the honey and the 
purchaser does not pay to the producer any advance payment amount or any 
incentive payment amount to enter into such contract except as provided 
in part 1425 of this chapter.
    (d) If loans are made available to producers through an approved CMA 
in accordance with part 1425 of this chapter, the beneficial interest in 
the honey must always have been in the producer-member who delivered the 
honey to the CMA or its member CMA's, except as otherwise provided in 
this section. Honey delivered to such a CMA shall not be eligible for 
loans if the producer-member who delivered the honey does not retain the 
right to share in the proceeds from the marketing of the honey as 
provided in part 1425 of this chapter.
    (e) A producer may, before the final date for obtaining a loan for 
honey, re-offer as loan honey any honey that has been previously pledged 
if the loan was repaid with principal plus interest, the loan on such 
re-offered honey shall have the same maturity date as the original loan.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64480, Oct. 18, 2002]



Sec.  1434.7  Approved storage.

    (a) Loans will be made only on honey in approved storage, which 
shall consist of a storage structure located on or off the farm that is 
determined by CCC to be under the control of the producer and affords 
safe storage for honey pledged as collateral for a loan. If the honey 
located in a farm storage structure is pledged as collateral that 
secures more than one loan, the honey must be segregated so as to 
preserve the identity of the honey securing such loan. Honey securing a 
loan must also be segregated from any honey not pledged as collateral 
for a loan that is stored in the same structure.
    (b) Producers may also obtain loans on honey packed in eligible 
containers and stored in facilities owned by third parties in which the 
honey of more than one person is stored if the honey that is to be 
pledged as collateral for a loan and that is stored identity preserved 
or is segregated from all other honey. Each container of the segregated 
quantity of honey shall be marked with the producer's name, loan number, 
and lot number so as to identify the honey from other honey stored in 
the structure.



Sec.  1434.8  Containers and drums.

    (a)(1) The honey must be packed in plastic Intermediate Bulk 
Container (IBC) or metal containers of a capacity of not less than 5 
gallons or greater than 70 gallons. The IBC container is a bulk 
container with a polyethylene inner bottle with a galvanized steel 
protective cage with a 275 and 330 gallon capacity and is reusable. The 
metal containers must meet the requirements of the Federal Food, Drug, 
and Cosmetic Act, as amended, and regulations issued thereunder and must 
be generally fit for the purpose for which they are to be used;
    (2) The 5-gallon containers must hold approximately 60 pounds of 
honey, and must be new, clean, sound, uncased, and free from appreciable 
dents and rust. The handle of each container must be firm and strong 
enough to permit carrying the filled container. The cover and can 
opening must not be damaged in any way that will prevent a tight seal. 
Cans that are punctured or have been punctured and resealed by soldering 
will not be acceptable; and
    (3) The steel drums must be an open-end type and filled no closer 
than 2 inches from the top of the drums. Such drums must be new or must 
be used drums that have been reconditioned inside and outside. The steel 
drums must be clean, treated inside and outside to prevent rusting, 
fitted with gaskets that provide a tight seal and have an

[[Page 482]]

inside coating suitable for honey storage.
    (b) Honey shall not be eligible to be pledged as collateral for 
loans if such honey is stored in:
    (1) 55-gallon steel drums having a tare weight less than 38 pounds, 
30-gallon steel drums having a tare weight less than 26 pounds, or drums 
having removable liners of polyethylene or other materials;
    (2) Bung-type drums;
    (3) Bulk tanks;
    (4) Plastic buckets and containers;
    (5) Steel drums that are severely enough dented as to cause damage 
to their lining, improper seal, or stacking capabilities; and
    (6) Rusted drums with corroded areas.



Sec.  1434.9  Determination of quantity.

    The amount of a marketing assistance loan and loan deficiency 
payment shall be based on 100 percent of the net weight in pounds of 
such quantity certified by the producer and verified by the county 
office representative for honey on Form CCC-633 (Honey) that is eligible 
to be pledged as security for the loan or LDP Estimates of the quantity 
of honey shall be made on the basis of 12 pounds for each gallon of 
rated capacity of the container.



Sec.  1434.10  Application, availability, disbursement, and maturity.

    (a) A producer must, unless otherwise authorized by CCC, request 
loans and loan deficiency payments at the appropriate FSA county office 
responsible for administering the program as provided under part 718 of 
this title. To receive loans and loan deficiency payments for honey, a 
producer shall execute a note and security agreement or loan deficiency 
payment application on or before March 31 of the year following the year 
in which the honey was extracted.
    (b) A producer must request a loan at the county office of the 
county where the honey is stored if the honey is stored at the 
producer's farm. A producer who requests a loan on honey stored in 
eligible storage other than the producer's farm, may request loans at 
either the county office of the county where the storage facility is 
located or at the county office of the county where the producer's main 
place of business is located. A CMA must request loans at the county 
office for the county in which the principal office of the CMA is 
located unless the State committee designates another county office. If 
the CMA has operations in two or more States, the CMA must file its loan 
applications at the county office for the county in which its principal 
office for each State is located.
    (c) Loans will be made on the honey as declared and certified by the 
producer on Form CCC-633 (Honey), (Honey Loan Certification and 
Worksheet) at the time the honey is pledged as collateral for a loan. 
The producer is also required to declare and certify on Form CCC-633 
(Honey) the class (table or nontable) and floral source of the honey at 
the time the honey is pledged as collateral for a loan.
    (d) The request for a loan shall not be approved until all producers 
having an interest in the honey sign the note and security agreement and 
CCC approves such note and security agreement. The disbursement of loans 
will be made by county offices on behalf of CCC, for honey that:
    (1) Has been extracted;
    (2) Is in eligible storage; and
    (3) Has not been blended or mixed with ineligible honey.
    (e) Loans mature on demand but not later than the last day of the 
ninth calendar month following the month in which the note and security 
agreement was approved. When the final maturity date falls on a non-
workday for county offices, CCC shall extend the final date to the next 
workday. Before the date determined in paragraph (a) of this section, a 
producer may re-offer as loan collateral any eligible honey that has 
been offered previously for a CCC loan and the loan has been repaid at 
principal plus interest only.
    (f) If, after a loan is made, CCC determines that the producer or 
the honey collateral is not in compliance with any of the provisions of 
this part, the producer shall refund the total amount disbursed under 
loan and charges plus interest, including late payment interest as 
provided in part 1403 of this title.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002]

[[Page 483]]



Sec.  1434.11  Fees and interest.

    (a) A producer shall pay a nonrefundable loan service fee to CCC. 
The loan service fee shall be the smaller of one-half of 1 percent 
(.005) times the gross loan amount or $45 per loan plus $3 for each 
storage structure over one.
    (b) Interest that accrues with respect to a loan shall be determined 
in accordance with part 1405 of this chapter.



Sec.  1434.12  Liens.

    (a) CCC's security interest in the honey pledged as collateral is 
first and superior to all other security interests.
    (b) The county office shall file or record, as required by State 
law, all financing statements needed to perfect a security interest in 
honey pledged as collateral for a loan. The cost of filing and recording 
shall be for the account of CCC.
    (c) If there are any other security interests, liens, or 
encumbrances on the honey, CCC shall obtain waivers that fully protect 
the interest of CCC even though the security interests, liens, or 
encumbrances are satisfied from the loan proceeds. No additional 
security interests, liens, or encumbrances shall be placed on the honey 
after the loan is approved.



Sec.  1434.13  Transfer of producer's interest prohibited.

    Absent written approval from CCC, the producer shall not transfer 
either the remaining interest in, or right to redeem, the honey pledged 
as collateral for a loan on honey nor shall anyone acquire such interest 
or right. Subject to the provisions of Sec.  1434.17, a producer who 
wishes to liquidate all or part of a loan by contracting for the sale of 
the honey must obtain written approval from the county office on a form 
prescribed by CCC to remove a specified quantity of the honey from 
storage. Any such approval shall be subject to the terms and conditions 
set forth in the applicable form, copies of which may be obtained by 
producers at the county office.



Sec.  1434.14  Loss or damage.

    The producer is responsible for any loss in quantity or quality of 
the honey pledged as collateral for a loan. CCC shall not assume any 
loss in quantity or quality of the loan collateral.



Sec.  1434.15  Personal liability of the producer.

    (a) When applying for an individual or joint loan or loan deficiency 
payment, each producer agrees:
    (1) When signing Form CCC-633 (Honey), Honey Loan Certification and 
Worksheet and Form CCC-677, Farm Storage Note and Security Agreement, 
that the producer will:
    (i) Provide correct, accurate, and truthful certifications and 
representations of the loan quantity and all other matters of fact and 
interest; and
    (ii) Not remove or dispose of any amount of the loan quantity 
without prior written approval from CCC in accordance with this section.
    (2) That violation of the terms and conditions of this part and Form 
CCC-677 will cause harm or damage to CCC in that funds may be disbursed 
to the producer for a loan quantity that is not actually in existence or 
for a quantity for which the producer is not eligible.
    (b) For the purposes of this section, violations include any failure 
to comply with this part or the loan agreement, including but not 
limited to any incorrect certification or:
    (1) Unauthorized removal of honey, which shall include, but is not 
limited to, the movement of any loan quantity of honey from the storage 
structure in the commodity was stored when the loan was approved to any 
other storage structure whether or not such structure is located on the 
producer's farm without prior written authorization from the county 
committee in accordance with Sec.  1434.14;
    (2) Any unauthorized disposition, which shall include, but is not 
limited to, the conversion of any loan quantity pledged as collateral 
for a loan without prior written authorization from the county committee 
in accordance with this section.
    (c) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC for conduct that is in 
violation of this section. Accordingly, if the county

[[Page 484]]

committee determines that the producer has engaged in any such 
violation, liquidated damages shall be assessed in addition to any loan 
refund and other charges that may be due. The amount of such damages 
shall be computed using the quantity of honey that is involved in the 
violation and the following formula. If CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed by multiplying the quantity involved in the 
violation by:
    (i) 10 percent of the loan rate applicable to the loan note for the 
first offense; or
    (ii) 25 percent of the loan rate applicable to the loan note for the 
second offense; or
    (2) Did not act in good faith with regard to the violation, or for 
cases other than the first or second offense, liquidated damages will be 
assessed by multiplying the quantity involved in the violation by 25 
percent of the loan rate applicable to the loan note.
    (d) For liquidated damages assessed in accordance with paragraph 
(c)(1) of this section, the county committee shall:
    (1) Require repayment of the loan principal applicable to the loan 
quantity involved in the violation plus charges and interest; and
    (2) If the producer fails to pay such amount within 30 calendar days 
from the date of notification, call the applicable loan for all of the 
honey under loan, plus charges and interest.
    (e) For liquidated damages assessed in accordance with paragraph 
(c)(2) of this section, the county committee shall call the loan 
involved in the violation, and charges plus interest.
    (f) The county committee:
    (1) May waive the administrative actions taken in accordance with 
paragraphs (c)(1) and (d) of this section if the county committee 
determines that:
    (i) The violation occurred inadvertently, accidentally, or 
unintentionally; or
    (ii) The producer acted to prevent spoilage of the commodity.
    (2) Shall not consider the following acts as inadvertent, 
accidental, or unintentional:
    (i) Movement of loan collateral off the farm;
    (ii) Movement of loan collateral from one storage structure to 
another on the farm; and (iii) Consumption of loan collateral.
    (g) If there is any violation of the loan agreement or this part, 
the loan may be terminated in which case there must be a full refund of 
the loan plus interest and costs.
    (h) If the county committee determines that the producer has 
violated this part or the loan agreement, the county committee shall 
notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information regarding the circumstances that caused the violation, to 
the county committee, and
    (2) Administrative actions will be taken in accordance with 
paragraphs (d) or (e) of this section.
    (i)(1) If a producer:
    (i) Makes any fraudulent or misleading representation in obtaining a 
loan, maintaining, or settling a loan; or
    (ii) Disposes or moves the loan collateral without the approval of 
CCC, such loan shall become payable upon demand by CCC. The producer 
shall be liable for:
    (A) The amount of the loan;
    (B) Any additional amounts paid by CCC with respect to the loan;
    (C) All other costs that CCC would not have incurred but for the 
fraudulent representation, the unauthorized disposition or movement of 
the loan collateral;
    (D) Interest on such amounts;
    (E) Late payment interest as may be provided for in part 1403 of 
this title; and
    (F) Liquidated damages assessed under paragraph (c) of this section; 
and
    (2) Notwithstanding any provisions of the note and security 
agreement, if a producer has made any such fraudulent or misleading 
representation to CCC or if the producer has disposed of, or moved, the 
loan collateral without prior written approval from CCC in accordance 
with this section, the value of the settlement for such collateral 
removed by CCC shall be determined by CCC according to this section.

[[Page 485]]

    (j) A producer shall be personally liable for any damages resulting 
from honey removed by CCC, containing mercurial compounds or other 
substances poisonous to humans, animals, or food commodities that are 
contaminated.
    (k) If the amount disbursed under a loan or in settlement thereof 
exceeds the amount authorized under this part, the producer shall be 
personally liable for repayment of such excess and charges, plus 
interest, and for any other sanction as may be allowed by law.
    (l) If the amount collected from the producer in satisfaction of the 
loan is less than the amount required in accordance with this part, the 
producer shall be personally liable for repayment of the amount of such 
deficiency and charges, plus interest.
    (m) In the case of joint loans, the personal liability for the 
amounts specified in this section shall be joint and several on the part 
of each producer signing the loan note. Further, each producer who is a 
party to a joint loan will be jointly and severally liable for any 
violation of the terms and conditions of the note and security 
agreement, and the regulations set forth in this part. Each such 
producer shall also remain liable for repayment of the entire loan 
amount until the loan is fully repaid without regard to such producer's 
claimed share in the honey, or loan proceeds, after execution of the 
note and security agreement by CCC.
    (n) Any or all of the liquidated damages assessed in accordance with 
the provisions of paragraph (c) of this section may be waived as 
determined by CCC.
    (o) Remedies set out in this section are in addition to remedies the 
CCC will have through its security interest on honey that secures the 
repayment of the loan made on the honey.
    (p) All remedies provided for in this section or part are in 
addition to any remedies as may otherwise be provided for in law.



Sec.  1434.16  Release of the honey pledged as collateral for a loan.

    (a)(1) A producer shall not move or dispose of any honey pledged as 
collateral for a loan until prior written approval for such removal or 
disposition has been received from the county committee in accordance 
with this section.
    (2) A producer may at any time obtain a release of all or part of 
the honey remaining as loan collateral by paying to CCC the amount of 
the loan and any charges that had been made by CCC to the producer with 
respect to the quantity of the honey released, plus interest.
    (3) When the proceeds of a sale of honey are needed to repay all or 
part of a loan, the producer must request and obtain prior written 
approval of the county office on a form prescribed by CCC in order to 
remove a specified quantity of the honey from storage. Any such approval 
shall be subject to the terms and conditions set forth in the applicable 
form, copies of which may be obtained by producers at the county office. 
Any such approval shall not constitute a release of CCC's security 
interest in the commodity or release the producer from liability for any 
amounts due and owing to CCC with respect to any loan indebtedness if 
full payment of such amounts is not received by the county office.
    (b) The note and security agreement shall not be released until all 
loan liability has been satisfied in full.
    (c) After satisfaction of a loan, CCC shall release CCC's security 
interest in the honey at the producer's request. The producer shall be 
responsible for payment of any fee for such release if such fee can be 
determined.



Sec.  1434.17  Liquidation of loans.

    (a) The producer is required to repay the loan on or before maturity 
by payment of the amount of loan, plus any charges, plus interest.
    (b) If a producer fails to settle the loan in accordance with 
paragraph (a) of this section within 30 calendar days from the maturity 
date of such loan, or other reasonable time period as established by 
CCC, a claim for the loan amount, plus charges, plus interest shall be 
established. CCC shall inform the producer before the maturity date of 
the loan of the date by which the loan must be settled or a claim will 
be established in accordance with part 1403 of this title.

[[Page 486]]



Sec.  1434.18  Loan repayments.

    (a) A honey producer may repay a nonrecourse marketing assistance 
loan at a rate that is the lesser of:
    (1) The principal, plus interest; or
    (2) The alternative repayment rate for honey as determined by the 
Secretary.
    (b) To the extent practicable, CCC shall determine and announce the 
alternative repayment rate, based upon the prevailing domestic market 
price for honey, on a monthly basis.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002]



Sec.  1434.19  Settlement.

    The value of the settlement of loans shall be made by CCC on the 
following basis:
    (a) With respect to nonrecourse loans, the schedule of premiums and 
discounts for the commodity:
    (1) If the value of the collateral at settlement is less than the 
amount due, the producer shall pay to CCC the amount of such deficiency 
and charges, plus interest on such deficiency; or
    (2) If the value of the collateral at settlement is greater than the 
amount due, such excess shall be retained by CCC and CCC shall have no 
obligation to pay such amount to any party.
    (b) With respect to honey that is delivered from other than an 
approved warehouse, settlement shall be made by CCC on the basis of the 
basic loan rate that is in effect for the commodity at the producer's 
customary delivery point, as determined by CCC.



Sec.  1434.20  Foreclosure.

    (a) Upon maturity and nonpayment of the loan, title to the 
unredeemed honey securing the loan shall vest in CCC.
    (b) If the total amount due on a loan or the unpaid amount of the 
note and charges, plus interest is not satisfied upon maturity, CCC may 
remove the honey from storage and assign, transfer, and deliver the 
honey or documents evidencing title thereto at such time, in such 
manner, and upon such terms as CCC may determine at public or private 
sale. Any such disposition may also be effected without removing the 
honey from storage. The honey may be processed before sale and CCC may 
become the purchaser of the whole or any part of the honey at either a 
public or private sale.
    (1) If the value of the collateral computed at settlement is less 
than the amount due, the producer shall pay to CCC the amount of such 
deficiency and charges, plus interest on such deficiency and CCC may 
take any action against the producer to recover the deficiency; or
    (2) If the proceeds received from the sale of the honey so computed 
are greater than the sum of the amount due plus any cost incurred by CCC 
in conducting the sale of the honey, such excess shall be paid to the 
producer or, if applicable, to any secured creditor of the producer.



Sec.  1434.21  Loan deficiency payments.

    (a) Loan deficiency payments shall be available for 2002-2007 crop 
honey.
    (b) In order to be eligible to receive loan deficiency payment for a 
crop of honey, the producer must:
    (1) Comply with all of the program requirements to be eligible to 
obtain loan in accordance with this part;
    (2) Agree to forego obtaining such loans;
    (3) Submitted a request for a honey Loan deficiency payment on the 
form as CCC prescribes.
    (4) Comply with Sec. Sec.  1434.7 and 1434.8 or provide evidence of 
production as determined by CCC for such quantity; and
    (5) Otherwise comply with all program requirements.
    (c) The loan deficiency payment rate for a crop shall be the amount 
by which the marketing assistance loan rate exceeds the rate at which 
CCC has announced that producers may repay their marketing assistance 
loan in accordance with Sec.  1434.18.
    (d) The loan deficiency payment applicable to a crop of honey shall 
be computed by multiplying the loan deficiency payment rate, as 
determined in accordance with paragraph (e) of this section, by the 
quantity of honey the producer is eligible to pledge as collateral for a 
price support loan for which a loan deficiency payment is required.

[[Page 487]]

    (e) Notwithstanding any provisions in this section, loan deficiency 
payments may be based on 100 percent of the net quantity specified on 
acceptable evidence of disposition of the honey certified as eligible 
for a loan deficiency payment if CCC determines that such quantity 
represented the quantity for the number of containers of honey initially 
certified for the loan deficiency payment when the payment was made.
    (f) When applying for an individual loan deficiency payment, each 
producer agrees:
    (1) The producer will provide correct, accurate, and truthful 
certifications and representations of the loan quantity and all other 
matters of fact and interest when submitting a request for a honey loan 
deficiency payment; and
    (2) That violation of the terms and conditions of this part will 
cause harm or damage to CCC in that funds may be disbursed to the 
producer for a LDP quantity that is not actually in existence or for a 
quantity for which the producer is not eligible.
    (g) For the purposes of this section, violations include any failure 
to comply with this part or the loan agreement, including but not 
limited to any incorrect certification.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002]



Sec.  1434.22  Handling payments and collections not exceeding $9.99.

    In order to avoid administrative costs of making small payments and 
handling small accounts, amounts of $9.99 or less that are due the 
producer will be paid only upon the producer's request. Deficiencies of 
$9.99 or less, including interest, may be disregarded unless demand for 
payment is made by CCC.



Sec.  1434.23  Death, incompetency, or disappearance; appeals; other 
loan provisions.

    (a) In the case of death, incompetency, or disappearance of any 
producer who is entitled to the payment of any sum in settlement of a 
loan, payment shall, upon proper application to the county office that 
made the loan, be made to the persons who would be entitled to such 
producer's share under the regulations contained in part 707 of this 
title. Applications for loans may be made upon application of a 
representative of the producer as allowed under standard practice for 
farm programs.
    (b) Appeals of adverse decisions made under this part shall be 
subject to the provisions of 7 CFR parts 11 and 780.

[66 FR 15177, Mar. 15, 2001, as amended at 67 FR 64481, Oct. 18, 2002]



PART 1435--SUGAR PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1435.1 Applicability.
1435.2 Definitions.
1435.3 Maintenance and inspection of records.
1435.4 Administration.
1435.5 Other regulations.

                         Subpart B--Loan Program

1435.100 Applicability.
1435.101 Loan rates.
1435.102 Eligibility requirements.
1435.103 Availability, disbursement, and maturity of loans.
1435.104 Loan maintenance.
1435.105 Loan settlement and foreclosure.
1435.106 Miscellaneous provisions.

     Subpart C--Information Reporting and Recordkeeping Requirements

1435.200 Information reporting.
1435.201 Civil penalties.

           Subpart D--Flexible Marketing Allotments For Sugar

1435.300 Applicability.
1435.301 Annual estimates and quarterly re-estimates.
1435.302 Establishment and suspension of allotments.
1435.303 Overall allotment quantity.
1435.304 Adjustment of overall allotment quantity.
1435.305 Beet sugar and cane sugar allotments.
1435.306 State cane sugar allotment.
1435.307 Allocation of marketing allotments to processors.
1435.308 Transfer of allocations, new entrants.
1435.309 Reassignment of deficits.
1435.310 Sharing processors' allocations with producers.
1435.311 Proportionate shares for sugarcane producers.

[[Page 488]]

1435.312 Establishment of acreage bases under proportionate shares.
1435.313 Permanent transfer of acreage base histories under 
          proportionate shares.
1435.314 Temporary transfer of proportionate share due to disasters.
1435.315 Adjustments to proportionate shares.
1435.316 Acreage reports for purposes of proportionate shares.
1435.317 Revision of allocations and proportion shares.
1435.318 Penalties and assessments.
1435.319 Appeals and arbitration.

        Subpart E--Processor Sugar Payment-In-Kind (PIK) Program

1435.400 General statement.
1435.401 Bid submission procedures.
1435.402 Bid selection procedures.
1435.403 In-kind payments.
1435.404 Timing of distribution of CCC-owned sugar.
1435.405 Miscellaneous provisions.

    Authority: 7 U.S.C. 1359aa-1359jj and 7272 et seq.; 15 U.S.C. 714b 
and 714c.

    Source: 67 FR 54928, Aug. 26, 2002, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1435.1  Applicability.

    These regulations set forth the terms and conditions for the 2002-
2007 crop years under which the Commodity Credit Corporation (CCC) will:
    (a) Make loans and enter agreements with eligible processors,
    (b) Collect data from sugarcane processors, sugar beet processors, 
cane refiners, and importers of sugar, syrup, and molasses,
    (c) Administer sugar marketing allotments, and
    (d) Administer an inventory disposition program to exchange CCC 
inventory for processor reductions in production.



Sec.  1435.2  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of program administration. Terms defined in part 718 of this 
title are also applicable.
    Ability to market means the estimated quantity of sugar, raw value, 
as CCC determines, that will be produced in the cane State or by the 
sugarcane processor, as appropriate, during the applicable crop year.
    Allocation means the division of the beet sugar allotment among the 
sugar beet processors in the United States and the division of each 
State's cane sugar allotment among the State's sugarcane processors.
    Beet sugar means sugar that is processed directly or indirectly from 
sugar beets or sugar beet molasses.
    Beet sugar allotment means that portion of the overall allotment 
quantity allocated to sugar beet processors.
    Cane sugar means sugar derived directly or indirectly from sugarcane 
produced in the United States, including sugar produced from sugarcane 
molasses.
    Cane sugar allotment means that portion of the overall allotment 
quantity allocated to sugarcane processors.
    Cane sugar refiner means a person who processes raw sugar into 
refined crystalline sugar or liquid sugar.
    Carry-in stocks means inventories of sugar owned by sugar beet 
processors, sugarcane processors, cane sugar refiners, and CCC and 
physically located in the United States at the beginning of the fiscal 
year.
    Crop year means the period from October 1 through September 30, 
inclusive, and is identified by the year in which the crop year begins. 
For example, the 2002 crop year begins on October 1, 2002. The 2002 crop 
of sugar beets or sugar cane means domestically grown sugar beets or 
sugar cane processed during the 2002 crop year. The 2002 crop of sugar 
means sugar processed from domestically-grown sugar beets or sugarcane 
during the 2002 crop year. Sugar from de-sugaring molasses is considered 
to be from the crop year the de-sugaring occurred.
    Deputy Administrator means the Deputy Administrator, Farm Programs, 
FSA, or designee.
    Deficit means the quantity of sugar covered by an allocation of an 
allotment that CCC estimates a sugar beet processor or sugarcane 
processor will be unable to market during the crop year in which 
marketing allotments are in effect.
    Edible molasses means molasses that is not to be further refined or 
improved in quality and that is to be distributed

[[Page 489]]

for human consumption, either directly or in molasses-containing 
products.
    Edible syrups means syrups that are not to be further refined or 
improved in quality and that are to be distributed for human 
consumption, either directly or in syrup-containing products.
    Executive Vice President, CCC, means the Executive Vice President, 
CCC, or designee.
    Farm means that entity as defined in Sec.  718 of this title, except 
that when a State is subject to proportionate shares, producers will not 
be allowed to have farms reconstituted across State lines even if the 
farm land is adjoining.
    Fiscal year means that year beginning October 1 and ending the 
following September 30.
    FSA means Farm Service Agency.
    Imports means sugar originating in foreign countries or areas and 
entered, or to be entered, into the United States customs territory.
    In-process sugar means the intermediate sugar containing products, 
as CCC determines, produced in the processing of domestic sugar beets 
and sugarcane. It does not include raw sugar, liquid sugar, invert 
sugar, invert syrup, or other finished products that are otherwise 
eligible for a loan.
    Market or marketing means the transfer of title associated with the 
sale or other disposition of sugar in United States commerce, including 
the forfeiture of sugar loan collateral under Subpart B, and for any 
integrated processor and refiner, the movement of raw cane sugar into 
the refining process. Marketings do not include sales for nondomestic or 
nonhuman consumption, or sales of sugar to enable another processor to 
fulfill an allocation established for such processor.
    Nonrecourse loan means a loan for which eligible sugar offered as 
loan collateral may be forfeited to CCC, at loan maturity, in 
satisfaction of loan indebtedness.
    Overall allotment quantity means, on a national basis, the total 
quantity of sugar, raw value, processed from domestically produced 
sugarcane or domestically produced sugar from sugar beets, and the raw 
value equivalent of sugar in sugar products, that is permitted to be 
marketed by processors, during a crop year or other period in which 
marketing allotments are in effect.
    Past marketings means, for purposes of determining State cane sugar 
allotments and sugarcane processor allocations for States other than 
Louisiana, the average of the 2 highest years of sugar production during 
the 1996 through 2000 crop years; for Louisiana sugarcane processor 
allocations, the average of the 2 highest years of sugar production 
during the 1997 through 2001 crop years.
    Past processing means, for determining Hawaii and Puerto Rico's 
allotments, the 3-year average of the 1998 through 2000 crop years; and 
for determining the remaining cane State allotments, the 3 crop years 
with the greatest production (in the States collectively) during the 
1991 through 2000 crop years. Past processing, for determining the 
sugarcane processor allocation for States other than Louisiana, means 
the average of the 3 highest years of production during the 1996 through 
2000 crop years; and, for determining sugarcane processor allocations in 
Louisiana, the average of the 2 highest years of sugar production during 
the 1997 through 2001 crop years.
    Per-acre yield goal means a State's yield level that is established 
at not less than the State's two highest average per-acre yield years 
from among the 1999 through 2001 crop years as CCC determines to ensure 
an adequate net return per pound to State producers.
    Proportionate share means the total acreage from which a producer 
may harvest sugarcane for sugar or seed during any crop year or other 
period in which marketing allotments are in effect.
    Raw sugar means any sugar that is to be further refined or improved 
in quality other than in-process sugar.
    Raw value of any quantity of sugar means its equivalent in terms of 
raw sugar testing 96 sugar degrees, as determined by a polarimetric test 
performed under procedures recognized by the International Commission 
for Uniform Methods of Sugar Analysis (ICUMSA). Direct-consumption sugar 
derived from sugar beets and testing 92 or more sugar degrees by the 
polariscope shall be translated into terms of raw value by multiplying 
the actual

[[Page 490]]

number of pounds of such sugar by 1.07. Sugar derived from sugarcane and 
testing 92 sugar degrees or more by the polariscope shall be translated 
into terms of raw value in the following manner:raw value = 
{[lsqb](actual degree of polarization - 92) x 0.0175[rsqb] + 0.93{time}  
x actual weight.For sugar testing less than 92 sugar degrees by the 
polariscope, derive raw value by dividing the number of pounds of the 
``total sugar content'' (i.e., the sum of the sucrose and invert sugars) 
thereof by 0.972.
    Reasonable carryover stocks means desirable inventories of sugar 
owned by sugar beet processors, sugarcane processors, cane sugar 
refiners, and CCC and on hand in the United States at the end of the 
fiscal year, as CCC determines.
    State means any of the 50 States, the District of Columbia, or the 
Commonwealth of Puerto Rico.
    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane or sugar beets and consisting of, 
or containing, sucrose or invert sugar, including raw sugar, refined 
crystalline sugar, liquid sugar, edible molasses, and edible cane syrup. 
For allotments, sugar means any grade or type of saccharine product 
processed, directly or indirectly, from sugarcane or sugar beets 
(including sugar produced from sugar beet or sugarcane molasses), 
produced for human consumption, and consisting of, or containing, 
sucrose or invert sugar, including raw sugar, refined crystalline sugar, 
edible molasses, edible cane syrup, and liquid sugar.
    Sugar beet processor means a person who commercially produces sugar, 
directly or indirectly, from sugar beets (including sugar produced from 
sugar beet molasses), has a viable processing facility, and a supply of 
sugar beets for the applicable allotment year.
    Sugar products means products for human consumption, other than 
sugar, that contain 50 percent or more of sucrose, on a dry weight 
basis, and that are marketed by a sugar beet processor or sugarcane 
processor. In determining sugar subject to marketing allocations, only 
the sugar content of such products will be counted against the 
allocation.
    Sugarcane processor means a person who commercially produces sugar, 
directly or indirectly, from sugarcane, has a viable processing 
facility, and a supply of sugarcane for the applicable allotment year.
    Ton means a short ton or 2,000 pounds.
    United States means the 50 States, the District of Columbia, and the 
Commonwealth of Puerto Rico.
    U.S. market value means, for sugarcane, the daily New York Board of 
Trade No. 14 contract price for raw sugar, or other price, as determined 
by CCC; for sugar beets, the Midwest refined beet sugar price published 
in Milling and Baking News, or other price, as determined by CCC.
    USDA means the United States Department of Agriculture.



Sec.  1435.3  Maintenance and inspection of records.

    (a) CCC, as well as any other U.S. Government agency, has the right 
of access to the premises of any sugar beet processor, sugarcane 
processor, cane sugar refiner, importer of sugars, syrups, and molasses, 
or of any other person having custody of records that the examining 
agency deems necessary to verify compliance with this part's 
requirements. The examining agency has the right to inspect, examine, 
and make copies of such books, records, accounts, and other written or 
electronic data as the examining agency deems relevant.
    (b) Each sugar beet processor, sugarcane processor, importer of 
sugars, syrups and molasses, and cane sugar refiner or any person having 
custody of the records shall retain such books, records, accounts, and 
other written or electronic data for not less than 3 years from the 
date:
    (1) A loan is disbursed under subpart B;
    (2) Market data are reported to CCC under subpart C of this part; 
and
    (3) Marketings are conducted under marketing allotments under 
subpart D of this part.



Sec.  1435.4  Administration.

    (a) This program shall be administered under the general supervision 
of the Executive Vice President, CCC, and

[[Page 491]]

may be carried out in the field by FSA State and county committees.
    (b) State and county committees, and representatives and employees 
thereof, may not modify or waive any of the provisions of part 1435.
    (c) The State committee shall take any action required by this part 
that the county committee has not taken. The State committee shall also:
    (1) Correct, or require a county committee to correct, a county 
committee action not under this part; or
    (2) Require a county committee to withhold taking any action not 
under this part.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, from determining any 
question arising under the program or from reversing or modifying any 
State or county committee determination.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines and other program requirements 
in cases where lateness or failure to meet such requirements do not 
adversely affect program operation.
    (f) A CCC representative may execute loans and related documents 
only under the terms and conditions CCC determines and announces. Any 
such document not executed under such terms and conditions, including 
any purported execution before the CCC-authorized date, shall be null 
and void.



Sec.  1435.5  Other regulations

    The following are applicable to this part:
    (a) Part 707--Payments due persons who have died, disappeared, or 
have been declared incompetent.
    (b) Part 718--Provisions applicable to multiple programs.
    (c) Part 780--Appeal regulations.
    (d) Part 1403--Debt settlement policies and procedures.
    (e) Part 1405--Loans, purchases, and other operations.



                         Subpart B--Loan Program



Sec.  1435.100  Applicability.

    (a) The regulations of this subpart set forth the terms and 
conditions under which CCC will make nonrecourse loans available to 
eligible processors. Additional terms and conditions are set forth in 
the loan application and note and security agreement that a processor 
must execute to receive a loan.
    (b) Loan rates used in administering the loan program are available 
in FSA State and county offices.
    (c) Loans shall not be available for sugar produced from imported 
sugar beets, sugarcane, molasses, syrups and in-process sugar.



Sec.  1435.101  Loan rates.

    (a) The national average loan rate for raw cane sugar produced from 
domestically-grown sugarcane is 18 cents per pound.
    (b) The national average loan rate for refined beet sugar from 
domestically-grown sugar beets is 22.90 cents per pound.
    (c) Loan rates for eligible sugar are adjusted to reflect the 
processing location of the sugar offered as loan collateral.
    (d) Loan rates for eligible in-process sugar shall equal 80 percent 
of the loan rate applicable to raw cane sugar or beet sugar on the basis 
of the expected production of raw sugar or beet sugar from the in-
process sugar or syrups.



Sec.  1435.102  Eligibility requirements.

    (a) An eligible producer is the owner of a portion or all of the 
domestically-grown sugar beets or sugarcane, including share rent 
landowners, at both the time of harvest and the time of delivery to the 
processor, except those producers determined to be ineligible as a 
result of the regulations governing highly erodible land and wetland 
conservation found at 7 CFR part 12, regulations governing crop 
insurance at 7 CFR part 400, or regulations governing controlled 
substance violations at 7 CFR part 718.
    (b) In addition to all other provisions of this part, a sugar beet 
or sugarcane processor is eligible for loans only if the processor has 
agreed to all the terms and conditions in the loan application, and has 
executed a note and security agreement, and storage agreement with CCC. 
No loan proceeds will

[[Page 492]]

be distributed by CCC before CCC's approval of the note and security 
agreement and the CCC storage agreement.
    (c) Sugar pledged as collateral during the crop year:
    (1) May not exceed the quantity derived from processing 
domestically-grown sugar beets or sugarcane from eligible producers 
during the applicable crop year;
    (2) Must be processed and owned by the eligible processor and stored 
in a CCC-approved warehouse;
    (3) May not have been processed from imported sugarcane, sugar 
beets, or molasses;
    (4) Must have been processed in the United States; and
    (5) Must have processor certification in the loan application that 
the sugar or in-process sugar syrups are eligible and available to be 
pledged as collateral.
    (d) Sugar and in-process sugar must meet the following minimum 
quality requirements to be eligible to be pledged as loan collateral:
    (1) Refined beet sugar to be pledged as loan collateral must be:
    (i) Dry and free flowing;
    (ii) Free of excessive sediment; and
    (iii) Free of any objectionable color, flavor, odor, or other 
characteristic that would impair its merchantability or that would 
impair or prevent its use for normal commercial purposes.
    (2) Raw cane sugar to be pledged as loan collateral must be:
    (i) Of reasonable grain size; and
    (ii) Free of objectionable color, flavor, odor, moisture or other 
characteristic that would impair its merchantability or that would 
impair or prevent its use for normal refining and commercial purposes.
    (3) Edible sugarcane syrup or edible molasses must be free from any 
objectionable color, flavor, odor, or other characteristic that would 
impair the merchantability of such syrup or molasses or would impair or 
prevent the use of such syrup or molasses for normal commercial 
purposes.
    (4) In-process sugar must be of at least the minimum quality 
expected to commercially yield raw cane sugar or refined beet sugar, as 
determined by CCC.
    (e) The loan collateral must be stored in a CCC-approved warehouse 
as described in 7 CFR part 1423.



Sec.  1435.103  Availability, disbursement, and maturity of loans.

    (a) Before obtaining a loan, a processor must:
    (1) File a loan application, as CCC prescribes, no earlier than 
October 1 and no later than September 30 of the applicable crop year, 
with the State committee of the State where such processor is 
headquartered, or with a county committee designated by the State 
committee.
    (2) Execute a note and security agreement, and storage agreement 
with CCC;
    (3) Provide quantity and quality information as prescribed by CCC of 
the commodity to be pledged as collateral;
    (4) Pay CCC a loan service fee, as determined by CCC, for the 
disbursement of each loan.
    (5) If there are any liens or encumbrances on sugar or in-process 
sugar pledged as loan collateral, obtain waivers that fully protect 
CCC's interest even though the liens or encumbrances are satisfied from 
the loan proceeds. No additional liens or encumbrances shall be placed 
on the sugar after loan approval; and
    (6) Agree to reimburse CCC for any costs incurred as a result of the 
failure of the processor to obtain the waivers specified in subparagraph 
(5).
    (b) No loan proceeds may be disbursed until the sugar and in-process 
sugar have actually been produced and are otherwise established as being 
eligible to be pledged as loan collateral.
    (c)(1) A processor may, within the loan availability period, 
repledge as collateral sugar that previously served as loan collateral 
for a repaid loan. In making application for such a loan, the processor 
shall:
    (i) Specify that the loan collateral should be treated as a quantity 
of eligible sugar that previously served as loan collateral for a repaid 
loan; and
    (ii) Designate the loan to which the reoffered loan collateral was 
originally pledged.
    (2) The subsequent loan shall have the same maturity date as the 
original loan.

[[Page 493]]

    (3) Loan collateral repledged that was previously redeemed from CCC 
is not included in determining the total quantity of sugar on which 
loans have been obtained for purposes of Sec.  1435.102.
    (d) Raw cane sugar loan disbursements shall be made without regard 
to the actual polarity or quality factors of the sugar pledged as loan 
collateral but shall be made on the assumption that the polarity of such 
sugar is 96 degrees by the polariscope.
    (e)(1) Loans will mature at the earlier of:
    (i) the end of the 9-month period beginning on the 1st day of the 
first month after the month in which the loan is made; or
    (ii) September 30 following disbursement of the loan.
    (2) CCC may accelerate loan maturity dates under Sec.  1435.105(h).
    (f) Processors receiving loans in July, August, or September may 
repledge the sugar as collateral for a supplemental loan. Such 
supplemental loan shall:
    (1) Be requested by the processor during the following October;
    (2) Be made at the loan rate in effect at the time the supplemental 
loan is made; and
    (3) Mature in 9 months minus the number of whole months that the 
initial loan was in effect.



Sec.  1435.104  Loan maintenance.

    (a) All processors receiving loans shall:
    (1) Abide by the terms and conditions of the loan application, note 
and security agreement and storage agreement;
    (2) Pay interest on the principal at a rate determined in part 1405 
of this chapter.
    (b) The security interests CCC obtains as a result of the execution 
of security agreements by sugarcane and sugar beet processors shall be 
superior to all statutory and common law liens on raw cane sugar, 
refined beet sugar, and in-process sugar for the producers of sugarcane 
and sugar beets and all prior recorded and unrecorded liens on the crops 
of sugarcane and sugar beets from which the sugar was derived.
    (c) A processor receiving a loan under this part shall pay all 
eligible producers who have delivered or will deliver sugar beets or 
sugarcane to such processors for processing not less than the minimum 
payment levels CCC specifies for the applicable crop year.
    (1) In the case of sugar beets, the minimum payment shall not exceed 
the rate of payment provided for under the applicable contract between a 
sugar beet producer and a sugar beet processor.
    (2) CCC will not reject a loan application from a beet sugar 
processor from eligibility to obtain a loan under this section solely 
because of the failure of the processor to provide the appropriate 
minimum payment established under this subsection if the failure:
    (i) Occurred during a crop year before the date of enactment of the 
Farm Security and Rural Investment Act of 2002; and
    (ii) Was related, at least in part, to the effects of a natural 
disaster, including freeze damage.
    (3) In the case of sugarcane, CCC will annually determine and 
announce the annual grower minimum payment.
    (4) Processors are ineligible for loans for the crop year following 
their failure to meet the required minimum grower payment.
    (d)(1) A processor shall maintain eligible sugar or in-process sugar 
of sufficient quality and quantity as collateral to satisfy the 
processor's loan indebtedness to CCC. CCC shall not assume any loss in 
quantity or quality of the loan collateral.
    (2) The processor is responsible for storage costs through the loan 
maturity date or title transfer to CCC, whichever occurs later.
    (3) Sugar and in-process sugar pledged as loan collateral need not 
be stored identity preserved.
    (4) When the proceeds of the sale of loan collateral are needed to 
repay all or part of a sugar loan, the processor may request and obtain 
prior written approval from the loan making office by executing a loan 
collateral release request, as prescribed by CCC, to remove a specified 
quantity of the loan collateral from storage for the purpose of 
delivering it to a buyer before loan repayment. Any such approval shall 
be subject to the terms and conditions set forth in the applicable form. 
The loan making office shall not approve such a request unless the buyer 
of the sugar

[[Page 494]]

agrees to pay CCC an amount necessary to satisfy the processor's loan 
indebtedness regarding collateral being sold. Any such approval shall 
not:
    (i) Constitute a release of CCC's security interest in the loan 
collateral; or
    (ii) Relieve the processor of liability for the full amount of the 
loan indebtedness, including interest.



Sec.  1435.105  Loan settlement and foreclosure.

    (a) A processor may, any time before loan maturity, redeem all or 
any part of the loan collateral by paying CCC the applicable principal 
and interest.
    (b) Forfeiture of sugar loan collateral will be accepted as payment 
in full of the principal and interest due under a nonrecourse loan, 
applicable to the quality and quantity of sugar delivered, subject to 
applicable premiums and discounts.
    (c)(1) Forfeiture of in-process sugar serving as loan collateral 
will be accepted as payment in full of principal and interest if the 
processor converts the in-process sugar into raw cane sugar or refined 
beet sugar of acceptable grade and quality for sugar eligible for loans 
within 1 month of loan maturity.
    (2) The in-process sugar must be fully processed into raw cane sugar 
or refined beet sugar, the processor shall transfer the sugar to CCC.
    (3) On transfer of the sugar, CCC shall make a payment to the 
processor in an amount equal to the amount obtained by multiplying the 
difference between the loan rate for raw cane sugar or refined beet 
sugar, as appropriate, and the in-process loan rate the processor 
received by the quantity of sugar transferred to CCC. The loan agreement 
shall specify the quantity of sugar that can be forfeited to CCC.
    (d) If the processor does not forfeit the collateral, but instead 
further processes the in-process sugar into raw cane sugar or refined 
beet sugar and repays the loan on the in-process sugar;
    (1) the processor may obtain a loan for the raw cane sugar or 
refined beet sugar, as appropriate, and
    (2) the term of a loan made under this subsection for a quantity of 
in-process sugar, when combined with the term of a loan made for the raw 
cane sugar or refined beet sugar derived from the in-process sugar, may 
not exceed 9 months.
    (e) CCC shall not accept delivery of sugar in settlement of a 
nonrecourse loan in excess of the quantity of sugar that is shown on the 
note and security agreement minus any quantity that was redeemed or 
released for removal under this section.
    (f) If the processor does not redeem any of the nonrecourse loan 
collateral, title to the unredeemed nonrecourse loan collateral as 
described in the note and security agreement will, without further CCC 
or processor action transfer to CCC in-store at the CCC-approved 
warehouse at 12 a.m. the day following the maturity date of the loan. 
Title, all rights, and interest to such sugar shall immediately vest in 
CCC.
    (g) The value of the settlement of loans shall be made by CCC 
according to the CCC schedule of premiums and discounts.
    (h) CCC may, at any time, accelerate the date for loan repayment 
including interest. CCC will give the processor notice of such 
acceleration at least 15 days in advance of the accelerated loan 
maturity date.
    (i) If a processor's nonrecourse loan indebtedness is not satisfied 
under the provisions of this section or if forfeited in-process sugar is 
not converted to raw or refined sugar within the prescribed time:
    (1) Interest on the processor's indebtedness shall accrue as 
specified in part 1403 of this title and shall accrue until the debt is 
paid;
    (2) CCC may, upon notice, with or without removing the collateral 
from storage, sell such collateral at either a public or private sale;
    (3) The processor shall be liable for the deficiency if the net 
proceeds are less than the amount of principal, interest, and any other 
charges CCC incurs; and
    (4) If the processor forfeits the in-process sugar loan collateral 
but does not transfer raw or refined sugar of suitable quality to CCC 
within 1 month, CCC will charge liquidated damages, as provided in the 
loan agreement.

[[Page 495]]



Sec.  1435.106  Miscellaneous provisions.

    (a) The regulations governing setoffs and withholding set forth at 
parts 3 and 1403 of this title are applicable to the program set forth 
in this subpart.
    (b) A producer or processor may obtain reconsideration and review of 
determinations made under this subpart under the regulations at parts 11 
and 780 of this title.
    (c) Any false certification, including those made for the purpose of 
enabling a processor to obtain a loan to which it is not entitled, will 
subject the person making such certification to liability under 
applicable Federal civil and criminal statutes.



     Subpart C--Information Reporting and Recordkeeping Requirements



Sec.  1435.200  Information reporting.

    (a) Every sugar beet processor, sugarcane processor, cane sugar 
refiner, and importer of sugar, syrup, and molasses shall report, on a 
monthly basis on CCC required forms, its imports and receipts, 
processing inputs, production, distribution, stocks, and other 
information necessary to administer sugar programs.
    (b) Any processor must, upon CCC's request, provide such information 
as CCC deems appropriate for determining regional loan rates.
    (c) Any processor must, upon CCC's request, provide such information 
as CCC deems appropriate for determining whether processors of sugarcane 
or sugar beets will be able to market their respective sugar 
allocations.
    (d) Each sugarcane producer located in Louisiana shall report, in 
the manner CCC prescribes, sugarcane yields and sugarcane planted acres.
    (e) Importers of sugars, syrups, or molasses to be used for domestic 
human consumption or to be used for the extraction of sugar for domestic 
human consumption shall report, in the manner CCC prescribes, the 
quantities of the products imported and the sugar content or equivalent 
of the products. This requirement shall not apply to sugars, syrups, or 
molasses within the quantities of tariff-rate quotas subject to the 
lower rate of duties.
    (f) Based on the information received under this subsection, the 
Secretary shall publish on a monthly basis composite data on sugar 
production, imports, distribution, and stock levels.
    (g) The sugar information reporting and recordkeeping requirements 
of this subpart are administered under the general supervision of the 
Executive Vice President, CCC.



Sec.  1435.201  Civil penalties.

    (a) Any processor, refiner, or importer of sugar, syrup, and 
molasses who willfully fails or refuses to furnish the information, or 
who willfully furnishes false data required under Sec.  1435.200, is 
subject to a civil penalty of no more than $10,000 for each such 
violation.
    (b) The Controller, CCC, shall assess civil penalties and interest.
    (c) Affected processors, refiners, and importers of sugar, syrup, 
and molasses may request reconsideration of civil penalties by filing a 
request, within 30 days of receipt of certified written notification 
from the Controller, CCC, of such assessment of civil penalties, with 
the Executive Vice President, CCC, Stop 0501, 1400 Independence Ave. 
SW., Washington, DC 20250-0501.
    (d) After reconsideration, affected processors, refiners, or 
importers of sugar, syrup, and molasses may appeal civil penalties by 
filing a notice of appeal, within 30 calendar days of receipt of 
certified written notification from the Executive Vice President, CCC, 
of an affirmation of the assessment of civil penalties, with the 
National Appeals Division under part 780 of this title.



           Subpart D--Flexible Marketing Allotments For Sugar



Sec.  1435.300  Applicability.

    (a) This subpart applies to the establishment and allocation of 
marketing allotments for:
    (1) Processor marketings of sugar domestically processed from sugar 
beets,
    (2) Processor marketings of sugar processed from domestically 
produced sugarcane,
    (3) Distribution of a processor's allocation to producers in 
proportionate share States, and

[[Page 496]]

    (4) Harvesting sugarcane by producers subject to proportionate 
shares.
    (b) This subpart does not apply to:
    (1) Marketing sugar for nondomestic or nonhuman consumption,
    (2) Marketing imported raw or refined sugar,
    (3) Exportation of sugar from the United States customs territory.
    (c) This subpart applies throughout the United States and Puerto 
Rico.



Sec.  1435.301  Annual estimates and quarterly re-estimates.

    (a) Not later than August 1 before the beginning of the crop year, 
CCC will estimate, and make re-estimates as necessary but not later than 
the beginning of each quarter of such crop year, the:
    (1) Quantity of sugar that will be consumed in the United States 
(other than sugar imported for the production of polyhydric alcohol or 
to be refined and re-exported in refined form or in sugar-containing 
products);
    (2) Quantity of sugar that will provide for reasonable carryover 
stocks;
    (3) Quantity of sugar that will be available for consumption from 
carry-in stocks;
    (4) Quantity of sugar that will be available for consumption from 
domestic processing of sugarcane and sugar beets; and
    (5) Quantity of sugars, syrups, and molasses that will be imported 
for human consumption or for the extraction of sugar for human 
consumption in the United States and Puerto Rico (other than sugar 
imported for the production of polyhydric alcohol or to be refined and 
re-exported in refined form or in sugar-containing products), whether 
such articles are included in a tariff-rate quota or not.
    (b) Calculation of all allotments, allocations, estimates, and re-
estimates in this subpart will use available USDA statistics and 
estimates of production, consumption, and stocks, taking into account, 
where appropriate, data supplied in reports submitted pursuant to the 
reporting requirements set forth in Sec.  1435.200.



Sec.  1435.302  Establishment and suspension of allotments.

    (a) By the beginning of the crop year, CCC will establish the 
overall allotment quantity, beet sugar and cane sugar allotments, State 
cane sugar allotments, and allocations for processors marketing sugar 
domestically processed from sugar beets and domestically produced 
sugarcane at a level estimated to result in no sugar loan collateral 
forfeitures to CCC.
    (b) Marketing allotments will be suspended whenever CCC determines 
that imports of sugars, syrups, and molasses for domestic human 
consumption or to be used for the extraction of sugar for domestic human 
consumption, whether under a tariff-rate quota or not, will exceed 
1,532,000 short tons, raw value, excluding any imports attributable to a 
reassignment of allotments, and that the imports would lead to a 
reduction in the overall allotment quantity. The suspension of marketing 
allotments will be lifted if CCC subsequently determines that imports 
are estimated to be no higher than 1,532,000 short tons, raw value.
    (c) Each determination under this section to establish or suspend 
marketing allotments will be published in the Federal Register and 
accompanied by a statement of the reasons for the determination.



Sec.  1435.303  Overall allotment quantity.

    The overall allotment quantity for the crop year will be calculated 
by deducting from the sum of estimated sugar consumption and reasonable 
carryover stocks:
    (a) 1,532,000 short tons, raw value; and
    (b) Carry-in stocks.



Sec.  1435.304  Adjustment of the overall allotment quantity.

    (a) The overall allotment quantity will be adjusted, as CCC 
determines appropriate,
    (1) To avoid forfeiture of sugar loan collateral to CCC, and
    (2) To reflect changes in estimated consumption, stocks, production, 
or imports based on re-estimates under Sec.  1435.301.
    (b) Each determination to adjust the overall allotment quantity will 
be published in the Federal Register and accompanied by a statement of 
the reasons for the determination.

[[Page 497]]

    (c) The beet sugar allotment, cane sugar allotment, State cane sugar 
allotments, proportionate shares, and allocations to each sugar beet 
processor and sugarcane processor will be increased or decreased, as 
appropriate, to reflect an overall allotment quantity adjustment.
    (d) If the overall allotment quantity is reduced under paragraph (a) 
of this section and the quantity of sugar and sugar products any 
individual processor marketed by the time of the reduction exceeds the 
processor's reduced allocation, the quantity of excess sugar or sugar 
products marketed will be deducted from the processor's allocation under 
an allotment next established.



Sec.  1435.305  Beet and cane sugar allotments.

    (a) The allotment for beet sugar will be 54.35 percent of the 
overall allotment quantity.
    (b) The allotment for cane sugar will be 45.65 percent of the 
overall allotment quantity.
    (c) A sugar beet processor allocated a share of the beet sugar 
allotment may use only beet sugar to fill such allocation. A sugarcane 
processor allocated a share of the cane sugar allotment may use only 
cane sugar to fill such allocation.



Sec.  1435.306  State cane sugar allotments.

    (a) Hawaii and Puerto Rico will be allotted a total of 325,000 short 
tons, raw value, of the cane sugar allotment.
    (b) A new entrant cane State will receive an allotment to 
accommodate a new processor's allocation under 1435.308(f).
    (c) Subject to paragraphs (a) and (b) of this section, the remaining 
cane States will be allotted, in aggregate, the remaining cane sugar 
allotment.
    (d) The individual cane State allotments, other than a new entrant 
cane State, will be based on:
    (1) Past marketings of cane sugar,
    (2) Past processing of cane sugar, and
    (3) The ability to market the sugar covered under the allotment 
assigned to the State.
    (e) Past marketings and past processings will each be weighted by 
0.25 and the ability to market will be weighted by 0.50 in determining 
the States' respective cane sugar allotments. The weights may be 
adjusted, as CCC deems appropriate, for the crop year.
    (f) Except when deficits are reassigned as provided in Sec.  
1435.309, a processor may fill an allocation of a cane sugar allotment 
only with sugar processed from sugarcane grown in the State for which 
the allotment was established.



Sec.  1435.307  Allocation of marketing allotments to processors.

    (a) Each sugar beet processor's allocation of the beet allotment 
will be calculated as the beet processor's share times the beet sector 
allotment:
    (1) A beet processor's share is calculated as the beet processor's 
adjusted weighted average sugar production divided by the sum of all 
beet processors' adjusted weighted average sugar production.
    (2) A beet processor's weighted average sugar production equals 0.25 
times its 1998-crop sugar production plus 0.35 times its 1999-crop sugar 
production plus 0.40 times its 2000-crop sugar production, with the 2000 
sugar PIK payments added to its 2000-crop sugar production.
    (3) A beet processor's weighted average sugar production shall be 
adjusted by the following, as CCC determines:
    (i) Increased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for opening a sugar factory during the 
1996 through 2000 crop years;
    (ii) Decreased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for closing a sugar factory during the 
1998 through 2000 crops years;
    (iii) Increased 0.25 percent of the sum of all beet processors' 
weighted average sugar production for opening a molasses desugarization 
facility during the 1998 through 2000 crop years; and
    (iv) Increased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for suffering a substantial quality 
loss on stored beets, as CCC determines, during the 1998 through 2000 
crop years.
    (b) Each sugarcane processors' allocation from a State cane sugar 
allotment will be calculated as the cane

[[Page 498]]

processor's share times the State cane sector allotment.
    (1) Each cane processor's share, other than a new entrant, will be 
calculated as the processor's production base divided by the sum of the 
State's processor production bases.
    (2) A processor's production base, other than a new entrants, is the 
sum of 0.50 times its ability to market plus 0.25 times its past 
processings plus 0.25 times its past marketings. These weights may be 
adjusted as CCC deems appropriate for the crop year.
    (3) CCC will calculate an allocation for the Talisman processing 
facility, based on paragraph (b)(2) of this section and distribute the 
allocation among Florida processors according to the agreements between 
cane processors and the Secretary of the Interior dated March 25, and 
March 26, 1999.
    (c) An informal hearing will be held in August of each year, if 
requested by affected sugarcane processors and growers by July 15th, to 
afford all interested persons the opportunity to comment on the next 
crop year's marketing allotments and allocations. After consideration of 
comments obtained at the hearing, a final determination on cane State 
allotments and processor allocations will be announced.
    (d) During any crop year in which marketing allotments are in effect 
and allocated to processors, the quantity of sugar and sugar products 
that a processor markets shall not exceed the quantity of the 
processor's allocation.
    (e) Paragraph (d) of this section shall not apply to:
    (1) Any sugar marketings to facilitate the export of sugar or sugar-
containing products,
    (2) Any sugar marketings for nonhuman consumption, and
    (3) Any processor marketings of sugar to another processor made to 
enable the purchasing processor to fulfill its allocation if such sales:
    (i) Are made before May 1, and
    (ii) Reported to CCC within 5 days of the date of sale.
    (f) CCC may charge liquidated damages as specified in a surplus 
allocation survey and agreement on such sales made after May 1 if the 
purchasing processor had surplus allocation after May 1 because the 
purchasing processor provided incomplete or erroneous information to 
CCC.



Sec.  1435.308  Transfer of allocation, new entrants

    (a) If a sugar beet or sugarcane processing facility is closed and 
the growers that delivered their crops to the closed facility elect to 
deliver their crops to another processor, the growers may petition the 
Executive Vice President, CCC, to transfer the share of allocation 
commensurate with the growers' production history from the processor 
that closed the facility to their new processor. CCC may grant the 
request to transfer the allocation upon:
    (1) Written approval of the processing company that will accept the 
additional deliveries, and
    (2) Evidence satisfactory to CCC that the new processor has the 
capacity to accommodate the production of petitioning growers.
    (b) Subject to paragraph (a) of this section, CCC will eliminate the 
allocation of the processor who has been dissolved or liquidated in a 
bankruptcy proceeding and the allocation will be distributed to all 
other processors on a pro-rata basis.
    (c) If the purchasing processor is not a new entrant, then the 
purchased plants must operate for the initial season and the following 
crop year for the purchasing processor to permanently obtain the 
allocation. CCC shall reassign the allocation on a pro rata basis if the 
purchased plants do not operate for the required 2 crop years.
    (d) If the purchasing processor is a new entrant, then CCC shall 
immediately transfer allocation commensurate with the purchased 
factories' production history with no requirement on operating the 
facility for 2 crop years.
    (e) Allocations, equal to the number of acres of proportionate 
shares being transferred times the State's per-acre yield goal, will be 
transferred between mills in proportionate share States, if the 
transfers are based on:
    (1) Written consent of the crop-share owners, or their 
representative representatives,

[[Page 499]]

    (2) Written consent of the processing company holding the allocation 
for the subject proportionate shares,
    (3) Written consent of the processing company that will accept the 
additional sugarcane deliveries, and
    (4) Evidence, satisfactory to CCC, that the additional sugarcane 
deliveries will not exceed the processing capacity of the receiving 
company.
    (f) New entrants, not acquiring existing facilities, may apply to 
the Executive Vice President, CCC, for an allocation.
    (1) Applicants must demonstrate their ability to process, produce, 
and market sugar for the applicable crop year.
    (2) CCC will consider adverse effects of the allocation upon 
existing processors and producers.
    (3) New entrant cane processors are limited to 50,000 short tons, 
raw value, the first crop year.
    (4) New entrant cane processors will be provided, as determined by 
CCC,
    (i) A share of their State's cane allotment if the processor is 
located in Hawaii, Puerto Rico, Florida, Louisiana, or Texas, or
    (ii) A share of the overall cane allotment if the processor is 
located in any state not listed in paragraph (f)(4)(i) of this section.
    (5) If a new entrant acquires and reopens a factory that previously 
produced beet sugar from sugar beets and sugar beet molasses, but the 
factory last operated during the 1997 crop year, CCC will:
    (i) Assign an allocation to the new entrant not less than the 
greater of 1.67 percent of the adjusted weighted average quantities of 
beet sugar produced by all processors during the 1998 through 2000 crop 
years, as determined under Sec.  1435.307, or 1,500,000 hundredweight.
    (ii) Reduce all other beet processor allocations on a pro rata 
basis.

[67 FR 54928, Aug. 26, 2002, as amended at 67 FR 65690, Oct. 28, 2002]



Sec.  1435.309  Reassignment of deficits.

    (a) CCC will determine, by May 1, whether sugar beet or sugarcane 
processors will be able to market their respective allocations.
    (b) Sugarbeet and sugarcane processors will report to CCC, by April 
15, current inventories, estimated production, expected marketings, and 
any other pertinent factors CCC deems appropriate to determine a 
processor's ability to market its allocation.
    (c) If CCC determines a sugarcane processor will be unable to market 
its full allocation for the crop year in which an allotment is in 
effect, the deficit will:
    (1) First, be reassigned proportionately to allocations of other 
sugarcane processors within that State, depending on the capacity of 
each other processor to fill the portion of the deficit to be reassigned 
to it, and accounting for interests of associated producers;
    (2) If the deficit cannot be eliminated after reassignment within 
the same State, be reassigned to the other cane States based on the 
ability of processors in such States to market the deficit to be 
reassigned to such States, with the reassigned quantity to each State 
being allocated among its processors in proportion to initial processor 
allocations;
    (3) If the deficit cannot be eliminated by paragraphs (c)(1) and 
(c)(2) of this section, be reassigned to CCC. CCC shall sell such 
quantity from inventory unless CCC determines such sales would have a 
significant effect on the sugar price.
    (4) If any portion of the deficit remains after paragraphs (c)(1), 
(c)(2), and (c)(3) of this section have been implemented, be reassigned 
to imports.
    (d) If CCC determines that a sugar beet processor is unable to 
market its full allocation for the crop year in which an allotment is in 
effect, the deficit will:
    (1) First, be reassigned proportionately to allocations of other 
sugar beet processors, depending on the capacity of other processors to 
fill the portion of the deficit to be reassigned to them, accounting for 
the interests of associated producers.
    (2) If the deficit cannot be eliminated by paragraph (d)(1) of this 
section, be reassigned to CCC. CCC shall sell such quantity from 
inventory unless CCC determines such sales would have a significant 
effect on the sugar price.

[[Page 500]]

    (3) If any portion of the deficit remains after paragraphs (d)(1) 
and (d)(2) of this section have been implemented, be reassigned to 
imports.
    (e) The crop year allocation of each sugar beet or sugarcane 
processor who receives a reassignment will be increased accordingly for 
that year.



Sec.  1435.310  Sharing processors' allocations with producers.

    (a) Every sugar beet and sugarcane processor must provide CCC a 
certification that:
    (1) The processor intends to share its allocation among its 
producers fairly and equitably, and in a manner adequately reflecting 
each producer's production history, and
    (2) The processor has, in the previous allotment year, shared its 
allocation among producers fairly and equitably, reflecting each 
producer's production history. If a processor is unable to provide such 
certification, CCC may reduce or eliminate its marketing allocation.
    (b) Any producer or processor may request arbitration of a dispute 
regarding the sharing of the processor's allocation among the producers. 
Arbitration will be available on behalf of CCC at the State FSA office 
for the State in which the processor is located. Subsequent review of 
the arbitration decision is available at the discretion of the Executive 
Vice President, CCC. Any arbitration is subject to appeal to the Office 
of the Administrative Law Judge, USDA.



Sec.  1435.311  Proportionate shares for sugarcane producers.

    (a) Proportionate shares and the provisions of this section and 
Sec. Sec.  1435.312 through 1435.316 apply only to Louisiana sugarcane 
farms.
    (b) CCC will determine whether Louisiana sugar production, in the 
absence of proportionate shares, will exceed the quantity needed to 
enable processors to fill the State cane sugar allotment and provide a 
normal carryover inventory. If the determination is made that the 
quantity of sugar produced in Louisiana, plus a normal carryover 
inventory, will exceed the State's allotment, CCC will establish for 
each sugarcane producing farm a proportionate share that limits the 
sugarcane acreage that may be harvested on the farm for sugar or seed.
    (c) For purposes of determining proportionate shares CCC will:
    (1) Establish the State's per-acre yield goal at a level not less 
than the average per-acre yield in the State for the 2 highest years 
from among the 1999 through 2001 crop years;
    (2) Adjust the per-acre yield goal by the State average recovery 
rate;
    (3) Convert the State cane sugar allotment into a State acreage 
allotment by dividing the State allotment by the adjusted per-acre yield 
goal;
    (4) Establish a uniform reduction percentage for the crop by 
dividing the State acreage allotment by the sum of all adjusted acreage 
bases in the State as determined under Sec.  1435.312; and
    (5) Apply the uniform reduction percentage to the acreage base 
established for each sugarcane producing farm in the State to determine 
the farm's proportionate share of sugarcane acreage that may be 
harvested for sugar or seed.



Sec.  1435.312  Establishment of acreage bases under proportionate shares.

    (a) CCC will establish a sugarcane crop acreage base for each farm 
subject to proportionate shares as the simple average of the acreage 
planted and considered planted for harvest for sugar or seed on the farm 
in the 2 highest of the 1999 through 2001 crop years. Acreage considered 
planted shall be determined under Sec.  1435.315.
    (b) In establishing crop acreage bases, CCC will:
    (1) Not consider acreage prevented from planting, and
    (2) Consider acreage planted to sugarcane that fails.
    (c) In establishing crop acreage bases, CCC will allow producers who 
have not previously reported their sugarcane acreage to do so by a date 
CCC determines and announces. Late-filed acreage reports will be 
accepted as the Deputy Administrator determines appropriate.
    (d) The farm's crop acreage base shall be used to determine the 
farm's proportionate share.
    (e) The regulations at part 718 of this title shall apply to this 
subpart, except

[[Page 501]]

reconstitution of farms with a sugar crop acreage base shall not be 
allowed across State lines.



Sec.  1435.313  Permanent transfer of acreage base histories under 
proportionate shares.

    (a) A sugarcane producer on a farm may transfer all or a portion of 
the producer's acreage base history of land owned, operated, or 
controlled to any other farm in the State that the producer owns, 
operates, or controls under the Deputy Administrator-issued 
instructions. The transfer will reduce permanently the transferring 
farm's sugarcane acreage base history and increase the receiving farm's 
crop acreage base.
    (b) All farm owners must agree in writing to the transfer.
    (c) Producers may transfer sugarcane acreage base histories under 
this section by the date the State FSA committee establishes annually.



Sec.  1435.314  Temporary transfer of proportionate share due to disasters.

    (a) If, for reasons beyond the control of a producer on a farm, such 
producer is unable to harvest sugarcane acreage relative to all or a 
portion of the proportionate share established for the farm, the 
Secretary may preserve, on producer application and written consent of 
all owners of the farm, for a period of not more than 5 consecutive 
years, the acreage base history of the farm to the extent of the 
proportionate share involved.
    (b) Such proportionate share may be transferred, with the written 
consent of all owners of the farm, for 1 crop year to other farm owners 
or operators subject to the following conditions:
    (1) The acreage base history of the transferring farm will be 
preserved for a period from 1 to 5 years; and
    (2) Acreage base history will not be increased on the receiving 
farm.
    (c) Producers who transfer a proportionate share under this section 
will be required to:
    (1) Initiate the transfer in the county FSA office where the 
proportionate shares are established; and
    (2) Obtain approval from the transferring county FSA committee.
    (d) All transfers made under this section must be completed by the 
date the State FSA committee establishes.



Sec.  1435.315  Adjustments to proportionate shares.

    Whenever CCC determines that, because of a natural disaster or other 
condition beyond the control of producers adversely affecting a 
sugarcane crop, the amount of sugarcane produced by producers subject to 
proportionate shares will not be sufficient to enable state processors 
to produce sufficient sugar to meet the State's cane sugar allotment and 
provide a normal carryover of sugar, CCC may uniformly allow producers 
to harvest sugarcane in excess of their proportionate shares, or suspend 
proportionate shares entirely.



Sec.  1435.316  Acreage reports for purposes of proportionate shares.

    (a) A report of planted and failed acreage shall be required on 
farms that produce sugarcane for sugar or seed. Such report shall also 
specify the total acreage intended for harvest for sugar and seed.
    (b) The reports required under paragraph (a) of this section shall 
be on forms prescribed by CCC and shall be filed annually with the 
county FSA committee by the applicable final reporting date CCC 
establishes. The farm operator or farm owner shall file such reports.
    (c) Acreage reports will be used to determine compliance with 
proportionate shares and acreage bases for future proportionate shares.
    (d) An acreage report may be accepted after the established date for 
reporting if physical evidence is still available for inspection that 
may be used to make a determination relative to:
    (1) Existence of the crop;
    (2) Use made of the crop;
    (3) Lack of crop; or
    (4) Disaster condition affecting the crop.
    (e) The farm operator shall pay the cost of a farm visit by an 
authorized FSA employee unless the county FSA committee has determined 
that failure to report in a timely manner was beyond the producer's 
control.

[[Page 502]]

    (f) The farm operator may revise an acreage report. Revised reports 
shall be filed in accordance with CCC instructions and shall be accepted 
at any time if:
    (1) Evidence exists for inspection and determination of:
    (i) Existence of the crop;
    (ii) Use made of the crop;
    (iii) Lack of crop; or
    (iv) Disaster condition affecting the crops.
    (2) The farm has not already been inspected and the acreage already 
determined or harvesting of sugarcane already begun.
    (g) Provisions of part 718 of this chapter will apply for field 
inspections, tolerance, and variance. Assessments for false acreage 
reporting will be applied under Sec.  1435.318.



Sec.  1435.317  Revisions of allocations and proportionate shares.

    The Executive Vice President, CCC, may modify any processor's 
allocation or any producer's proportionate share on the same basis as 
the initial allocation or proportionate share was required to be 
established.



Sec.  1435.318  Penalties and assessments.

    (a) Under Sec.  359b(c)(3) of the Agricultural Adjustment Act of 
1938, as amended, any sugar beet or sugarcane processor who knowingly 
markets sugar or sugar products in excess of the processor's allocation 
in violation of Sec.  1435.307 shall be liable to CCC for a civil 
penalty in an amount equal to 3 times the U.S. market value, at the time 
the violation was committed, of that quantity of sugar involved in the 
violation.
    (b) Under Sec.  359f(c)(5) of the Agricultural Adjustment Act of 
1938, as amended, any producer of sugarcane whose farm has a 
proportionate share, and who knowingly harvests or allows to be 
harvested an acreage of sugarcane for sugar or seed in excess of the 
farm's proportionate share shall pay to CCC a civil penalty in an amount 
equal to 1.5 times the U.S. market value of the quantity of sugar that 
is marketed by the processor of such sugarcane in excess of the 
allocation of such processor, for the year in which the violation was 
committed. However, civil penalties will not be assessed when the 
producer harvests acreage for sugar or seed in excess of the farm's 
proportionate share, if the excess sugarcane harvested is:
    (1) Processed by a sugarcane processor that does not exceed its 
marketing allocation; or
    (2) Diverted to a use other than sugar or seed if:
    (i) The sugarcane producer requests and pays for a CCC field 
inspection, and
    (ii) CCC verifies the disposition of the excess harvest is not for 
sugar or seed.
    (c) Any penalty assessed under paragraph (b) of this section shall 
be prorated among the producers of all sugarcane acquired by the 
processor from excess acres.
    (d) Any person filing a false acreage report that exceeds tolerance 
will be subject to an assessment not to exceed $10,000. Whenever the 
failure of a producer to comply fully with the terms and conditions 
applicable to proportionate shares would result in an assessment, the 
Deputy Administrator may authorize the waiver or reduction of the 
assessment in such amounts as determined to be equitable about the 
seriousness of the failure, the producer's good-faith effort to comply 
fully with such terms and conditions, and the producer's substantial 
performance.
    (e) Any person who knowingly violates any provision of this subpart 
other than paragraph (d) of this section is subject to the assessment of 
a civil penalty by CCC of not more than $5,000 for each violation.



Sec.  1435.319  Appeals and arbitration.

    (a) A person adversely affected by any determination made under this 
subpart may request reconsideration of such determination by filing a 
written request with the Executive Vice President, CCC, detailing the 
basis of the request within 10 days of such determination. Such a 
request must be submitted at: Executive Vice President, CCC, Stop 0501, 
1400 Independence Ave., SW, Washington, DC 20250-0501.
    (b) For issues arising under Sec. Sec.  359d, 359f(b) and (c), and 
359(i) of the Agricultural Adjustment Act of 1938, as amended, after 
completion of the process provided in paragraph (a) of this

[[Page 503]]

section, a person adversely affected by a reconsidered determination may 
appeal such determination by filing a written notice of appeal within 20 
days of the issuance of the reconsidered determination with the Hearing 
Clerk, USDA. The notice of appeal must be submitted at: Hearing Clerk, 
USDA, Room 1081, South Building, 1400 Independence Ave., SW., 
Washington, DC, 20250-9200. Any hearing conducted under this paragraph 
shall be by the Judicial Officer.
    (c) For issues arising under Sec. Sec.  359a-359c, 359e, and 359g of 
the Agricultural Adjustment Act of 1938, as amended, after completion of 
the process provided in paragraph (a) of this section, a person 
adversely affected by the reconsidered determination may appeal such 
determination by filing a written notice of appeal with the Director, 
National Appeals Division, USDA, as provided in part 11 of this title. 
For issues arising under Sec.  359f(a) of the Agricultural Adjustment 
Act of 1938, as amended, such disputes shall be resolved through 
arbitration under the direction of the Executive Vice President, CCC. A 
request for arbitration must be filed in writing at the address 
specified in paragraph (a) of this section.



        Subpart E--Processor Sugar Payment-In-Kind (PIK) Program



Sec.  1435.400  General statement.

    This subpart shall be applicable to sugar beet and sugarcane 
processors throughout the United States who, acting in conjunction with 
the producers of the sugarcane or sugar beets processed by the 
processors, reduce sugar production in return for a payment of sugar 
from CCC when CCC determines that such action will reduce forfeitures of 
sugar pledged as collateral for a CCC loan.



Sec.  1435.401  Bid submission procedures.

    (a) After announcement by CCC that a program authorized by this 
subpart is in effect, processors who desire to participate in the 
program must submit a bid to CCC, on a form prescribed by CCC, that 
specifies:
    (1) For a program involving acreage diversion, the amount of acreage 
to be reduced by producers who have contracts for delivery of sugar 
beets or sugar cane to the processor and contains the information CCC 
determines necessary to conduct the program and includes but is not 
limited to:
    (i) The number of acres that the processor, acting in conjunction 
with the producers, will divert;
    (ii) The previous consecutive 3-year simple average sugar beet or 
sugarcane yield on that acreage while under contract (years with no 
production contracted with a producer will not be considered (for first-
time producers, however, the previous consecutive 3-year simple average 
sugar beet or sugarcane yield for all the producers under contract who 
delivered to the applicable factory will be used);
    (iii) The previous 3-year simple average sugar content of the 
producer's beets or sugarcane (for first-time producers, the previous 3-
year simple average sugar content for all beets or cane delivered to 
that factory will be used);
    (iv) The processor's previous 3-year simple average recovery rate 
(for processors that have not been fully operational during the last 3 
years, the simple average for those years that they were fully 
operational);
    (v) The value of CCC sugar to be received as payment; and
    (vi) Other information CCC deems necessary for program 
administration; or
    (2) The sugar production capacity to be removed from production by 
the processor.
    (b) The following acreage is ineligible for enrollment in the PIK 
program:
    (1) If planted, acreage not currently under contract for delivery of 
sugar beets to a sugar beet processor or sugarcane to a sugarcane 
processor for sugar production.
    (2) If planted, acreage that is not harvestable,
    (3) Acreage devoted to roads or other non-producing areas, or
    (4) If planted, acreage on which a crop insurance indemnity or 
replant payment was received for the current crop or for which a claim 
has been, or will be, filed to receive a crop insurance indemnity or 
replant payment for the current crop, except for replant

[[Page 504]]

payments for acreage actually replanted before the end of the normal 
planting period.
    (c) If planted, the diverted acres cannot be grazed until after the 
sugar beets or sugarcane are destroyed by disking, plowing, or other 
means of mechanical destruction. In addition, the sugar beets or 
sugarcane on the diverted acres may not be used for any commercial 
purpose.
    (d) The acreage offered must meet the following requirements:
    (1) If less than or equal to 15 acres, then the acreage bid must 
consist of one of the following:
    (i) One contiguous area of land,
    (ii) One or more entire permanent fields, or
    (iii) One or more entire permanent fields and one contiguous area of 
land to complete the balance;
    (2) If more than 15 acres, then the acreage bid must consist of one 
of the following:
    (i) One or more areas of land of at least 15 contiguous acres each 
with one remaining area of land of less than 15 contiguous acres to 
complete the balance,
    (ii) One or more entire permanent fields, or
    (iii) One or more entire permanent fields and one area of contiguous 
land to complete the balance.
    (3) Contiguous areas of land must have a minimum width of 3 chains 
(198 feet).
    (e) For a program involving desugaring capacity, or other measures 
of sugar production, not involving acreage diversion, the bid must 
contain the information CCC determine necessary to conduct the program.



Sec.  1435.402  Bid selection procedures.

    (a) For bids in which the processor offers to remove acreage of 
sugar beets or sugarcane from production, CCC will rank bids on the 
basis of the bid amount as a percentage of the expected sugar produced 
from the retired acreage. Bids with the lowest of such percentages will 
be selected first. In the case of identical bids, selection may be based 
on random selection or pro rata shares, as CCC deems appropriate.
    (b) CCC will reject bids for which the bid amounts exceed the 
expected sugar produced from the retired acreage.
    (c) For bids in which the processor offers to remove sugar 
production capacity from production, CCC will rank the bids on the basis 
of the capacity to be removed from production.
    (d) All acceptable bids specified in paragraphs (a) and (c) of this 
section will be further reviewed by CCC and ranked in order of the 
greatest reduction in sugar program that can be achieved at the lowest 
cost to CCC.



Sec.  1435.403  In-kind payments.

    (a) CCC will, through such methods as CCC deems appropriate, make 
payments in the form of sugar held in CCC inventory.
    (b) To the maximum extent practicable, CCC will use its inventory in 
making an in-kind payment based on the following priority:
    (1) CCC-owned sugar held in storage by the processor;
    (2) CCC-owned sugar held in storage by any other processor in the 
same region as the producer;
    (3) CCC-owned sugar held in storage by any other processor that is 
not in the same region as the producer; and
    (4) CCC-owned sugar held in storage anywhere in the United States, 
if CCC determines that such sugar is eligible to be used for in-kind 
payments.
    (c) The value of CCC-owned inventory is dependent upon the storage 
location of the sugar and the type of sugar (raw or refined). CCC will 
announce the value of its inventory before bid solicitation. 
Accordingly, the quantity of sugar CCC will provide in terms of an in-
kind payment to a processor will be determined by dividing:
    (1) The total of the processor's bid amount that CCC accepts, by
    (2) The value of CCC's inventory at the storage location at which 
title will transfer from CCC to the processor.



Sec.  1435.404  Timing of distribution of CCC-owned sugar.

    Distribution of sugar from CCC inventory will occur in such manner 
as CCC determines appropriate.

[[Page 505]]



Sec.  1435.405  Miscellaneous provisions.

    (a) CCC may permit processors to bid, in lieu of acreage, 
desugarizing capacity or other measures of sugar production as CCC 
determines.
    (b) The contract shall provide for the payment of liquidated damages 
if a processor fails to comply with the obligations specified in the CCC 
production diversion contract.
    (c) CCC will transfer title of the sugar to the processor by 
notifying the processor or assignee that the sugar is available. CCC 
will stop storage payments on this sugar on the date of transfer.



PART 1436--FARM STORAGE FACILITY LOAN PROGRAM REGULATIONS--Table of Contents




Sec.
1436.1 Applicability.
1436.2 Administration.
1436.3 Definitions.
1436.4 Availability of loans.
1436.5 Eligible borrowers.
1436.6 Eligible storage or handling equipment.
1436.7 Loan term.
1436.8 Security for loan.
1436.9 Loan amount and loan application approvals.
1436.10 Down payment.
1436.11 Disbursements and assignments.
1436.12 Interest and fees.
1436.13 Loan installments, delinquency, and acceleration of maturity 
          date.
1436.14 Taxes.
1436.15 Maintenance, liability, insurance, and inspections.
1436.16 Foreclosure, liquidation, assumptions, sale or conveyance, 
          bankruptcy.
1436.17 Environmental compliance.
1436.18 Appeals.
1436.19 Equal Opportunity and Non-discrimination requirements.

    Authority: 7 U.S.C. 7971; 15 U.S.C. 714 et seq.

    Source: 66 FR 4612, Jan. 18, 2001, unless otherwise noted.



Sec.  1436.1  Applicability.

    The regulations of this part provide the terms and conditions under 
which CCC may provide low-cost financing for producers to build or 
upgrade on-farm storage and handling facilities. Because liens and 
security interests related to this activity may be governed by state 
law, CCC may adapt certain procedures relating to those issues that may 
vary between States.



Sec.  1436.2  Administration.

    (a) The Farm Storage Facility Loan Program shall be administered 
under the general supervision of the Executive Vice President, CCC or 
designee and shall be carried out in the field by FSA State committees, 
FSA county committees and FSA employees.
    (b) FSA State committees, FSA county committees and FSA employees, 
do not have the authority to modify or waive any of the provisions of 
the regulations of this part.
    (c) The FSA State committee shall take any action required by these 
regulations that has not been taken by the county committee. The FSA 
State committee shall also:
    (1) Correct, or require the FSA county committee to correct, any 
action taken by such FSA county committee that is not in accordance with 
the regulations of this part; and
    (2) Require the FSA county committee to withhold taking any action 
that is not in accordance with the regulations of this part.
    (d) No provision or delegation herein to a State or FSA county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, or the Administrator, FSA, or a designee, from determining any 
question arising under the program or from reversing or modifying any 
determination made by the State or FSA county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and FSA county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements does not adversely affect the operation of the Farm 
Storage Facility Loan Program.
    (f) A representative of CCC may execute Farm Storage Facility Loan 
Program applications and related documents only under the terms and 
conditions determined and announced by CCC. Any such document that is 
not executed in accordance with such terms and conditions, including any 
purported execution prior to the date authorized by CCC, shall be void.

[[Page 506]]

    (g) The Deputy Administrator may suspend this program at any time 
when it appears that there is no shortage of storage that needs to be 
addressed or where some other reason shall arise for which it appears 
that the program goals can be achieved more efficiently in a manner 
different from that provided for in this rule.



Sec.  1436.3  Definitions.

    The following definitions shall be applicable to the program 
authorized by this part and will be used in all aspects of administering 
this program:
    Aggregate outstanding balance means the sum of the outstanding 
balances of all loans disbursed under this part to each borrower signing 
the note and security agreement.
    Assumption means the act or agreement by which one borrower takes 
over or assumes the debt of another borrower.
    Collateral means the storage structure, drying equipment or handling 
equipment securing the loan.
    Crop of economic significance means any insurable facility loan 
commodity that contributes 10 percent or more of the total expected 
value of all crops grown by the loan applicant except if the expected 
liability under the catastrophic level of crop insurance for a crop is 
equal to or less than the administrative fee for the crop, that crop 
shall not be economically significant.
    Facility loan commodity means wheat, rice, raw or refined sugar, 
soybeans, sunflower seed, canola, rapeseed, safflower, flaxseed, mustard 
seed, other oilseeds as determined and announced by CCC, dry peas, 
lentils, small chickpeas, harvested as whole grain and including 
peanuts, except that corn, grain sorghum, oats, wheat, or barley shall 
be included whether harvested as whole grain or other than whole grain.
    Financing statement means the appropriate document that gives legal 
notice of a security interest in personal property when properly filed 
or recorded.
    Non-movable or non-salable collateral means either collateral the 
county committee determines cannot be sold and moved to a new location 
because of the type of construction involved or because the collateral 
has deteriorated to the point that it has no sale recovery value.
    Person means any individual, group of individuals, partnership, 
corporation, estate, trust, association, cooperative, tribal venture, or 
other business enterprise, or other legal entity who is, or whose 
members are, a citizen or citizens of the United States, or a legal 
resident alien.
    Satisfactory credit history means a history of repaying debts as 
they came due unless the failure to repay or tardiness in payment was 
due to circumstance beyond the applicant's control as determined by CCC 
upon proof submitted by the applicant.
    Severance agreement means an agreement under which a party may 
consent to the security interest of another in property thereby allowing 
the severance of a fixture from the real estate.
    Storage need requirement means:
    (1) The average of the most recent 3 years available, the 
applicant's share of the acres farmed for each facility loan commodity 
requiring storage at the proposed facility multiplied by a yield 
determined reasonable by the county committee, multiplied by two, less 
existing storage capacity. If acreage data is not available, including 
prevented planted acres, or the data is not applicable to the storage 
need, a reasonable acreage projection may be made for newly acquired 
farms, changes in cropping operations, or for facility loan commodity 
crops being grown for the first time.
    (2) For sugar-related loans, a projection from the processor of the 
processing volume, available storage capacity, volume not to be marketed 
due to marketing allotments, and other factors affecting the processor's 
storage need, as appropriate. CCC shall determine if the storage need is 
reasonable using data such as past processing volume and marketing 
allotments.
    Subordination agreement means any agreement under which a party may 
subordinate a security interest in property to the interest of another 
party.
    Uniform Commercial Code means the laws generally known by that name 
covering commercial transactions such

[[Page 507]]

as sales, negotiable instruments, and secured transactions.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002]



Sec.  1436.4  Availability of loans.

    (a) An application for a loan shall be submitted to the 
administrative county office that maintains the records of the farm or 
farms to which the application applies. With State office approval, 
loans may be made or serviced by a county office other than the 
administrative county office. Upon request, the applicant shall furnish 
information and documents as the State or county committee deems 
reasonably necessary to support the application. This may include 
financial statements, receipted bills, invoices, purchase orders, 
specifications, drawings, plats, or written authorization of access.
    (b) Borrowers who authorize delivery, site preparation, or 
construction actions without an approved loan, do so at their own risk 
and without creating any liability on behalf of CCC.
    (c) For sugar-related loans, a loan application shall be submitted 
to the county FSA office that maintains the applicant's records. If no 
such records exist, loan applications shall be submitted to the county 
office serving the headquarters' location of the sugar processor.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002]



Sec.  1436.5  Eligible borrowers.

    (a) Borrower means a person who, as landowner, landlord, operator, 
producer, tenant, leaseholder, sharecropper, or processor of 
domestically produced sugarcane or sugar beets:
    (1) Has a satisfactory credit history according to the definition in 
Sec.  1436.3 and as recommended to the approving committee by a FSA 
employee with FSA loan approval authority;
    (2) Demonstrates an ability to repay the debt arising under this 
program using a financial statement acceptable to CCC prepared within 90 
days of the date of application, as recommended to the approving 
committee by a FSA employee with FSA loan approval authority;
    (3) Has no disqualifying delinquent Federal debt under the Debt 
Collection Improvement Act of 1996;
    (4) Is a producer of a facility loan commodity by CCC;
    (5) Demonstrates a need for increased storage capacity as determined 
by CCC if the applicant is applying for a loan for a storage structure;
    (6) Provides proof of crop insurance offered under the Federal Crop 
Insurance Program for insurable crops of economic significance on all 
farms operated by the borrower in the county where the storage facility 
is located;
    (7) Is in compliance with USDA provisions for highly erodible land 
and wetlands conservation provisions according to 7 CFR part 12;
    (8) Demonstrates compliance with any applicable local zoning, land 
use, and building codes for the applicable farm storage facility 
structures;
    (9) Annually provides proof of flood insurance if CCC determines 
such insurance is necessary to protect the interests of CCC, and 
annually provides proof that the structures for which the loan is made 
has all peril structural insurance;
    (10) Demonstrates compliance with the National Environmental Policy 
Act regulations at 40 CFR parts 1500-1508; and
    (11) Has not been convicted under Federal or State law of a 
disqualifying controlled substance violation under 7 CFR part 718.
    (b) For sugar related facility loans:
    (1) Paragraphs (a)(4), (6), and (7) of this section do not apply.
    (2) Sugar processors must be approved by CCC to store sugar owned by 
CCC or pledged as security to CCC for non-recourse loans.

[66 FR 4612, Jan. 18, 2001; 66 FR 17073, Mar. 29, 2001, as amended at 67 
FR 54938, Aug. 26, 2002]



Sec.  1436.6  Eligible storage or handling equipment.

    (a) Loans may be made only for the purchase and installation of 
eligible storage facilities and permanently affixed drying and handling 
equipment, for the remodeling of existing storage facilities, or for 
permanently affixed drying and handling equipment as provided in this 
section. Eligible storage

[[Page 508]]

and handling facilities shall include the following:
    (1) New conventional-type cribs or bins designed and engineered for 
whole grain storage and having a useful life of at least 10 years;
    (2) New oxygen-limiting storage structures or remanufactured oxygen-
limiting storage structures built to the original manufacturer's design 
specifications using original manufacturer's rebuild kits, and other 
upright silo-type structures designed for whole grain storage or other 
than whole grain storage and having a useful life of at least 10 years; 
and
    (3) New flat-type storage structures including a permanent concrete 
floor, designed for and primarily used to store facility loan 
commodities for the term of the loan and having a useful life of at 
least 10 years; and
    (4) New structures that are bunker-type, horizontal, or open silo 
structures designed for whole grain storage or other than whole grain 
storage and having a useful life of at least 10 years.
    (b) The calculation of the loan amount may include costs associated 
with building, improving, or renovating an eligible storage or handling 
facility, including:
    (1) Permanently affixed grain handling equipment and grain drying 
equipment, including perforated floors determined by the approving 
committee to be needed and essential to the proper functioning of the 
grain storage system;
    (2) Safety equipment as required by CCC and meeting OSHA 
requirements such as lighting, and inside and outside ladders;
    (3) Equipment to improve, maintain, or monitor the quality of stored 
grain, such as cleaners, moisture testers, and heat detectors;
    (4) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of the grain storage and handling equipment; and
    (5) Concrete foundations, aprons, pits, and pads (including site 
preparation, labor and materials) essential to the proper operation of 
the grain storage and handling equipment.
    (c) Storage and handling equipment with respect to which no loans 
for installation or related costs shall be disbursed under this part 
include:
    (1) Portable grain drying equipment, portable handling equipment and 
portable augers;
    (2) Structures of a temporary nature that require the weight or bulk 
of the stored commodity to maintain its shape (such as fences or bags);
    (3) Used structures or handling equipment;
    (4) Structures that are not suitable for storing the facility loan 
commodities for which a need is determined;
    (5) Storage structures to be used for commercial purposes. 
Commercial purpose is defined as the storage and handling of grain, 
whether paid or unpaid, for persons other than the loan applicant, 
except for family members as defined in 7 CFR Part 718, and tenants or 
landlords sharing in the crop requiring storage. Any facility that is in 
working proximity to any commercial storage operation shall be 
considered to be part of a commercial storage operation; and
    (6) Portable or permanent weigh scales.
    (d) Loans may be approved for financing additions to or 
modifications of an existing storage facility with an expected useful 
life of at least 10 years if the county committee determines there is a 
need for the capacity of the structure, but not for the sole replacement 
of worn out items such as motors, fans, or wiring.
    (e) Loans may be approved for new storage and handling components of 
a pre-owned structure provided the completed facility has a useful life 
of at least 10 years. The pre-owned structure must be purchased and 
moved to a new storage location. Eligible items for such a loan include 
costs such as new bin rings or roof panels needed to make a purchased 
pre-owned structure useable, new aeration systems, site preparation, 
construction off-farm paid labor cost, foundation material and off-farm 
paid labor. Ineligible items for such a loan include the cost of 
purchasing and moving the used structure.
    (f)(1) Paragraphs (a) and (b) of this section shall not apply to 
sugar-related loans made under this part.

[[Page 509]]

    (2) For sugar-related loans, the loan amount may include costs 
associated with the purchase, installation, building, improving, 
remodeling or renovating an eligible storage or handling facility. 
Eligible facilities include the following:
    (i) New conventional-type bins or silos designed for and used to 
store raw or refined sugar, having a useful life of at least 15 years;
    (ii) New flat-type storage structures including a permanent concrete 
floor, designed for and used to store raw or refined sugar, having a 
useful life of at least 15 years;
    (iii) New storage structures designed for and used to store in-
process sugar, having a useful life of at least 15 years.
    (iv) Permanently affixed sugar handling equipment determined by the 
CCC to be needed and essential to the proper functioning of the sugar 
storage system;
    (v) Safety equipment CCC requires such as lighting, and inside and 
outside ladders;
    (vi) Equipment to improve, maintain, or monitor the quality of 
stored sugar, such as moisture testers, and heat detectors;
    (vii) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of the sugar storage and handling equipment; and
    (viii) Concrete foundations, aprons, pits, and pads (including site 
preparation, labor and materials) essential to the proper operation of 
the sugar storage and handling equipment.
    (3) For sugar-related loans, storage and handling equipment that is 
not eligible for loans, includes:
    (i) Portable handling equipment and portable augers;
    (ii) Structures of a temporary natures that require the weight or 
bulk of the stored commodity to maintain its shape (such as fences or 
bags);
    (iii) Used or pre-owned structures or handling equipment;
    (iv) Structures that are not suitable for storing raw or refined 
sugar;
    (v) Weigh scales.
    (4) For sugar-related loans, loans may be approved for financing 
additions to or modifications of an existing storage facility with an 
expected useful life of at least 15 years if CCC determines there is a 
need for the capacity of the structure.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002]



Sec.  1436.7  Loan term.

    The maximum term of the loan shall be 7 years from the date a 
promissory note and security agreement are executed, except in the case 
of a sugar-related loan in which case CCC, at its discretion, may 
authorize a loan of 15 years. The minimum term of a sugar-related loan 
is 7 years. No extensions of the loan term will be granted. The loan 
balance and all related costs are due 7 years from the date of the 
execution of the promissory note and security agreement, except in the 
cast of a sugar-related loan, in which case such balance and costs are 
due 15 years from the date of the promissory note and security agreement 
are executed.

[67 FR 54939, Aug. 26, 2002]



Sec.  1436.8  Security for loan.

    (a) Except as agreed to by CCC, all loans shall be secured by a 
promissory note and security agreement covering the farm storage 
facility. The promissory note and security agreement shall grant CCC a 
security interest in the collateral and shall be perfected in the manner 
specified in the laws of the state where the collateral is located. 
CCC's security interest in the collateral shall constitute the sole 
security interest in such collateral except for prior liens on the 
underlying realty that by operation of law attach to the collateral if 
it is or will become a fixture. If any such prior lien on the realty 
will attach to the collateral, a severance agreement must be obtained in 
writing from each holder of such a lien, including all government or 
USDA agencies. No additional liens or encumbrances may be placed on the 
storage facility after the loan is approved unless CCC approves 
otherwise in writing.
    (b) For loan amounts exceeding $50,000, or where the aggregate 
outstanding loan balance will exceed $50,000 or for loans where the 
approving

[[Page 510]]

committee determines as a result of financial analysis that additional 
security is required, a lien on the real estate parcel on which the farm 
storage facility is located will be required in the form of a real 
estate mortgage, deed of trust, or other security instrument approved by 
the United States Department of Agriculture's Office of General Counsel. 
CCC's interest in the real estate shall be superior to all other liens 
and is the first lien that secures the amount of the loan. A loan will 
be considered to be adequately secured when the real estate security for 
the loan is at least equal to the loan amount. If the real estate is 
covered by a prior lien, a lien waiver may be obtained by means of a 
subordination agreement approved for use in the State by USDA's Office 
of General Counsel. CCC will not require such an agreement from any 
agency of the Department of Agriculture. Loans may be secured by a 
junior lien on real estate when the loan is adequately secured and a 
severance agreement is obtained from prior lien holders.
    (c) Title insurance or a title opinion is required for loans secured 
by real estate.
    (d) Real estate liens may cover land separate from the collateral if 
a lien on the underlying real estate is not feasible and if:
    (1) The borrower owns the separate acreage; and
    (2) the acreage has sufficient value based on the fair market value 
of the acreage at the time of the application as determined by the 
county committee, to insure repayment of the loan.
    (e) Notwithstanding the preceding subsections of this section, a 
borrower, in lieu of such liens as are otherwise required by those 
subsections, may provide a letter of credit, bond, or other form of 
security, as approved by CCC.
    (f) If an existing structure is remodeled and an addition becomes an 
attached, integral part of the existing storage structure, CCC's 
security interest shall include the existing storage structure.
    (g) The cost of loan closings by attorneys, title opinions, title 
insurance, title searches, filing and recording all real estate liens, 
fixture filings and later subordinations will be paid by the borrower. 
CCC shall pay such costs relating to credit reports, collateral lien 
searches, and filing and recording financing statements for the 
collateral.
    (h) For sugar-related facility loans, in addition to the above 
requirements, additional security, including real estate, chattels, 
crops in storage, and other assets owned by the applicant, is required 
if necessary to adequately secure the loan. A sugar-related loan will be 
considered to be adequately secured when the CCC determined value of 
security for the loan is at least equal to 125 percent of the loan 
amount.
    (i) For sugar-related facility loans, paragraph (g) is not 
applicable. The borrower shall pay all loan making fees and closing 
costs. This includes, but is not limited to, attorney fees for loan 
closings, environmental assessments and studies, chattel and real estate 
appraisals, title opinions, title insurance, title searches, filing and 
recording all real estate liens, fixture filings, subordinations, credit 
reports, collateral lien searches, and filing and recording financing 
statements for the collateral.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002]



Sec.  1436.9  Loan amount and loan application approvals.

    (a) The cost on which the loan shall be based is the net cost of the 
eligible facility, accessories, and services to the applicant after 
discounts and rebates, not to exceed a maximum per-bushel cost 
established by the FSA State committee.
    (b) The net cost for storage facilities and handling equipment may 
include the following: all real estate lien related fees paid by the 
borrower, including attorney fees, except for filing fees, environmental 
and historic review fees including archaeological study fees, the 
facility purchase price, sales tax, shipping, delivery charges, site 
preparation costs, installation cost, material and labor for concrete 
pads and foundations, material and labor for electrical wiring, 
electrical motors, off-farm paid labor, on farm site preparation and 
construction equipment costs not to exceed commercial rates approved by 
the county committee, and new on-

[[Page 511]]

farm material approved by the county committee. The net cost shall not 
include secondhand material or any other item that is determined by the 
approving authority to be ineligible for loan.
    (c) The maximum principal amount of any farm storage facility loan 
shall be 85 percent of the net cost of the applicant's needed storage or 
handling equipment not to exceed $100,000 for each borrower signing the 
note and security agreement. Unless otherwise approved by CCC, borrowers 
shall be considered to be separate persons or borrowers for purposes of 
applying the preceding sentence only to the extent that they would 
normally be considered a separate person under the rules set out in 7 
CFR part 1400.
    (d) The aggregate outstanding balance of all facility loans for any 
one borrower signing the note and security agreement may not exceed 
$100,000.
    (e) When a storage structure has a larger capacity than the 
applicant's needed capacity, as determined by CCC, the net cost eligible 
for a loan shall be prorated. Only costs associated with the applicant's 
needed storage capacity will be considered eligible for loan under this 
part.
    (f) When a flat storage structure has space that is not used 
primarily for facility loan commodity storage, such as office space, the 
loan amount shall be adjusted for the ineligible space as determined by 
CCC.
    (g) The FSA county committee may approve applications, if loan funds 
are available, up to the maximum approval amount unless the FSA State 
committee establishes a lower limit for county committee approval 
authority.
    (h) Farm storage facility loan approvals will expire in 4 months 
after the date of approval unless extended in writing for an additional 
4 months by the FSA State Committee. Sugar storage facility loan 
approvals will expire in 8 months after the date of approval unless 
extended in writing for an additional 4 months by the FSA State 
Committee.
    (i) CCC may at any time refuse to make new loans.
    (j) For sugar-related facility loans, paragraphs (c) and (d) and (g) 
do not apply.
    (k) For sugar-related facility loans, the Agency approval officials 
may only approve loans, subject to available funds.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002]



Sec.  1436.10  Down payment.

    (a) A minimum down payment representing the difference between the 
net cost of the storage facility and the amount of the loan determined 
in accordance with Sec.  1436.9 shall be made by the loan applicant to 
the supplier or contractor before the loan is disbursed.
    (b) The down payment shall be in cash unless some other form of 
payment is approved by CCC. The down payment may be obtained by the 
borrower from another lending source.
    (c) The down payment may not include any trade-in, discount, rebate, 
credit, deferred payment, post-dated check, or promissory note to the 
supplier or contractor.



Sec.  1436.11  Disbursement and assignments.

    (a) Disbursement of the loan by CCC will be made after the farm 
storage facility has been delivered, erected, constructed, assembled, or 
installed and a CCC representative has inspected and approved such 
facility.
    (b) Disbursement will be made only if the borrower furnishes 
satisfactory evidence of the total cost of the facility and payment of 
all debts on the facility in excess of the amount of the loan.
    (c) Disbursement may be made jointly to the borrower and the 
contractor or supplier, except disbursement may be made to the borrower 
only if CCC determines the borrower has paid the contractor or supplier 
all amounts that are due and owing with respect to the facility and that 
all applicable liens, security interests, or other encumbrances have 
been released.
    (d) A release of liability will be required from contractors and 
suppliers providing goods and services to the loan applicant.
    (e) Loan proceeds cannot be assigned.



Sec.  1436.12  Interest and fees.

    (a) Loans shall bear interest at the rate equivalent, as determined 
by CCC, to the rate of interest charged on

[[Page 512]]

Treasury securities of comparable maturity on the date the loan is 
approved.
    (b) The interest rate for each loan will remain in effect for the 
term of the loan.
    (c) The loan applicant shall pay a non-refundable application fee in 
such amount determined appropriate by CCC, which fee may not in any case 
be less then $45.
    (d) For sugar-related facility loans, paragraph (c) does not apply.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002]



Sec.  1436.13  Loan installments, delinquency, and acceleration of maturity date.

    (a) Equal installments of principal plus interest will be amortized 
over the loan term for purposes of setting a payment schedule. 
Installments are due and payable not later than the last day of each 12-
month period of the loan, until the principal plus interest has been 
paid in full.
    (b) Each installment may be paid in cash, money order, wire 
transfer, or by personal, certified, or cashier's check. Repayment shall 
be applied first to accrued interest and then to principal.
    (c) The following actions will be taken when installments are not 
paid on the due date: A demand for payment shall be mailed to the debtor 
after the due date has passed. If the installment is not paid within 30 
days of the due date or if a new due date acceptable to CCC has not been 
established based on a financial plan submitted by the debtor, the 
initial demand may be followed by two subsequent written demands at 
approximately 30-day intervals unless other action is needed to protect 
the interests of CCC. If the debtor files an appeal according to Sec.  
1436.18 of this part, collection action shall cease until the appeal 
process is complete, however, any payments due the debtor may be 
withheld and, depending on the outcome of the appeal, may later be 
offset and applied to reduce the indebtedness. In lieu of a foreclosure 
on the collateral in the case of a delinquency, CCC may permit a 
rescheduling of the debt or other measures consistent with the 
collection of other debts under the provisions of Part 1403. 
Alternately, CCC may implement such other collection procedures as it 
deems appropriate.
    (d) A claim shall be established against a borrower for any amounts 
remaining due after liquidation of the loan.
    (e) CCC may declare the entire indebtedness immediately due and 
payable if the borrower violates any of the terms and conditions of this 
part, fails to pay any installment on time, or breaches any of the terms 
and conditions of any of the instruments executed in connection with the 
loan, or if , during the life of the loan, the collateral is used in 
connection with or by any unauthorized commercial operation including, 
but not limited to, elevators, warehouses, dryers or processing plants.
    (f) 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 
that the borrower participates in, either directly or indirectly, as 
determined by CCC.
    (2) Against related persons or entities, irrespective of the debtors 
share, when CCC determines that the debtor has established an entity, or 
reorganized, transferred ownership of, or changed in some other manner, 
their operation, for the purpose of avoiding the payment of the debt.
    (g) The loan may be paid in full or in part without penalty at any 
time before maturity.
    (h) Upon payment of a loan, CCC shall release CCC's security 
interest in the collateral.



Sec.  1436.14  Taxes.

    The borrower must pay, when due, all real and personal property 
taxes that may affect CCC's security interest in all collateral securing 
the note evidencing the loan. To protect its interests, CCC may pay any 
unpaid taxes with respect to the collateral securing a loan made in 
accordance with this part, and if CCC does so, the borrower shall 
reimburse CCC for such payment, and if unpaid by the borrower, such debt 
shall become due immediately.

[[Page 513]]



Sec.  1436.15  Maintenance, liability, insurance, and inspections.

    (a) The borrower must maintain the loan collateral in a condition 
suitable for the storage of one or more of the facility loan 
commodities. For purpose of this section the term ``loan collateral'' 
shall mean any property of any kind that was built or improved, or 
acquired using a loan made under this part.
    (b) Until the loan has been repaid, the borrower shall be liable for 
all damages to or destruction of the loan collateral. CCC shall not 
assume any loss of the loan collateral.
    (c) CCC may conduct annual collateral inspections to insure 
compliance with this part. The borrower must consent to such inspection 
as a term of the loan and failure to supply such access shall put the 
borrower into default.
    (d) Structures must be insured against all perils in all cases and 
must also be insured against flooding if the structure is located in a 
flood plain, as determined by CCC. Proof of flood insurance, if 
required, and proof of all peril structural insurance, must be provided 
to CCC annually. CCC must be listed as a loss payee on all peril and 
flood insurance policies.
    (e) CCC shall have rights of ingress and egress where the facility 
is located. Failure of the borrower to secure such access will render a 
borrower ineligible for the loan and, if a loan has already been made 
shall constitute a loan default for which the remaining balance of the 
loan shall become immediately due and payable.
    (f) For sugar-related loans, in addition to the requirements of 
paragraph (d) of this section, sugar processors shall also insure the 
contents of storage structures used as collateral for a sugar-related 
facility loan against all perils.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002]



Sec.  1436.16  Foreclosure, liquidation, assumptions, sale or conveyance, 
bankruptcy.

    (a) The collateral or land securing a loan may be sold by CCC 
whenever CCC has declared the entire indebtedness immediately due and 
payable under this part as follows:
    (1) If a demand for payment is not received by the due date 
acceptable to CCC, CCC may call the loan and initiate foreclosure 
proceedings by issuing a liquidation letter to the borrower.
    (2) The debtor may voluntarily agree to allow removal of the 
collateral to facilitate sale by signing an agreement for sale. If the 
debtor objects to removal of collateral, the law of the state where the 
collateral exists will be used to foreclose on the property.
    (3) For loans with movable collateral and no real estate lien, CCC 
may sell the collateral for the best price obtainable. Sales proceeds 
shall be distributed in the following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral.
    (ii) Payment to junior lien holders if approved by USDA's Office of 
the General Counsel and then to the borrower or other persons as 
determined appropriate by that office.
    (4) For loans with nonmovable collateral, as determined by CCC, and 
no real estate lien, CCC may establish a claim according to 7 CFR part 
1403.
    (5) For loans secured with a real estate lien, CCC may obtain an 
appraisal of the property. Sales proceeds shall be distributed in the 
following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral and the appraisal.
    (ii) To junior lien holders if approved by USDA's Office of the 
General Counsel; or
    (iii) To the borrower or other persons as determined appropriate by 
that office.
    (b) Assumption by another borrower of a farm storage facility loan 
is permitted subject to county committee approval and the subsequent 
borrower's ability to show a satisfactory credit history. An assumption 
of the loan may be approved when the collateral is sold by CCC to an 
otherwise eligible borrower, the current borrower will convey the 
collateral or property securing the loan to another eligible borrower, 
or the borrower is dead, incompetent, or missing and an eligible 
borrower wants to assume the loan.

[[Page 514]]

    (1) Requests for approval of assumptions shall be made to the county 
committee by the borrower, the borrower's successors, or representatives 
of the borrower. If approval is granted, the borrower's successors or 
representatives shall execute a new farm storage facility note and 
security agreement for the balance of the term of the loan.
    (2) The principal amount of the loan shall include the unpaid amount 
of the loan, interest computed to the date of assumption, all past due 
installments, and any other charges that may be required.
    (c) The borrower may voluntarily convey the collateral to CCC before 
repaying the loan. Before a borrower sells or conveys the facilities or 
other property securing a loan without repaying the loan in full, the 
borrower shall obtain approval for the sale or conveyance from the FSA 
county committee with the understanding that sale proceeds shall be paid 
to satisfy the borrowers indebtedness to CCC.
    (d) Remedies provided for in this section shall, unless CCC 
determines otherwise, be subject to the administrative appeals provided 
for elsewhere in this part, including those that are found at Sec.  
1436.13.



Sec.  1436.17  Environmental compliance.

    (a) Except as otherwise specified in this section, prior to approval 
of any farm storage facility loan, an environmental evaluation will be 
completed to determine if the proposed action will have any adverse 
impacts on the environment and cultural resources.
    (b) If it is determined that a proposed action or group of proposed 
actions will not result in any adverse impact, the action will be 
considered as being categorically excluded for the purpose of compliance 
with the National Environmental Policy Act (NEPA), 40 CFR parts 1500-
1508.
    (c)(1) If adverse environmental impacts (either direct or indirect) 
are identified, an environmental assessment will be completed in 
accordance with the Council on Environmental Quality's Regulations for 
Implementing the Procedural Provisions of NEPA.
    (2) The environmental assessment will be used to develop an action 
that results in no significant environmental impact on the human 
environment or cultural resources.
    (3) No action will be approved that has been determined to have 
significant impacts on the human environment or cultural resources.
    (d)(1) In order to minimize the exposure to environmental 
liabilities from the presence of contamination on real estate 
collateral, an evaluation will be made of the economic and environmental 
risks to the real estate collateral posed by the presence of hazardous 
substances and petroleum products.
    (2) If the evaluation made under paragraph (d)(1) of this section 
reveals that the collateral is or may be contaminated, then the 
applicant will be notified and given an option of offering as collateral 
other real estate that is free from contamination or remediating the 
contamination on the original site offered as collateral.



Sec.  1436.18  Appeals.

    The appeal, reconsideration, or review of all determinations made 
under this part, except for provisions for which there are no appeal 
rights because they are determined rules of general applicability, must 
be in accordance with parts 11 and 780 of this title.



Sec.  1436.19  Equal Opportunity and Non-discrimination requirements.

    (a) No recipient of a Storage Facility loan shall directly, or 
through contractual or other arrangement, subject any person or cause 
any person to be subjected to discrimination on the basis of race, 
religion, color, national origin, gender, or other prohibited basis. 
Borrowers must comply with all applicable Federal laws and regulations 
regarding equal opportunity in hiring, procurement, and related matters.
    (b) With respect to any aspect of a credit transaction, CCC 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 CCC 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

[[Page 515]]

any rights under the Consumer Protection Act.

[67 FR 54939, Aug. 26, 2002. Redesignated at 67 FR 65690, Oct. 28, 2002]



PART 1437--NONINSURED CROP DISASTER ASSISTANCE PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1437.1 Applicability.
1437.2 Administration.
1437.3 Definitions.
1437.4 Eligibility.
1437.5 Coverage period.
1437.6 Application for coverage and service fee.
1437.7 Records.
1437.8 Unit division.
1437.9 Causes of loss.
1437.10 Notice of loss and application for payment.
1437.11 Average market price and payment factors.
1437.12 Crop definition.
1437.13 Multiple benefits.
1437.14 Payment and income limitations.
1437.15 Miscellaneous provisions.

  Subpart B--Determining Yield Coverage Using Actual Production History

1437.101 Actual production history.
1437.102 Yield determinations.
1437.103 Determining payments for low yield.
1437.104 Honey.
1437.105 Maple sap.
1437.106-1437.200 [Reserved]

      Subpart C--Determining Coverage for Prevented Planted Acreage

1437.201 Prevented planting acreage.
1437.202 Determining payments for prevented planting.
1437.203-1437.300 [Reserved]

               Subpart D--Determining Coverage Using Value

1437.301 Value loss.
1437.302 Determining payments.
1437.303 Aquaculture, including ornamental fish.
1437.304 Floriculture.
1437.305 Ornamental nursery.
1437.306 Christmas tree crops.
1437.307 Mushrooms.
1437.308 Ginseng.
1437.309 Turfgrass sod.
1437.310 Sea grass and sea oats.
1437.311-1437.400 [Reserved]

     Subpart E--Determining Coverage of Forage Intended for Animal 
                               Consumption

1437.401 Forage.
1437.402 Carrying capacity.
1437.403 Determining payments.
1437.404 Information collection requirements under the Paperwork 
          Reduction Act; OMB control number.

    Authority: 15 U.S.C. 714 et seq.; and 7 U.S.C. 7333.

    Source: 67 FR 12448, Mar. 19, 2002, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1437.1  Applicability.

    (a) The Noninsured Crop Disaster Assistance Program (NAP) is 
intended to provide eligible producers of eligible crops coverage 
equivalent to the catastrophic risk protection level of crop insurance. 
NAP is designed to help reduce production risks faced by producers of 
commercial crops or other agricultural commodities. NAP will reduce 
financial losses that occur when natural disasters cause a catastrophic 
loss of production or where producers are prevented from planting an 
eligible crop.
    (b) The provisions contained in this part are applicable to eligible 
producers and eligible crops for which catastrophic coverage under 
section 508(b) the Federal Crop Insurance Act (7 U.S.C. 1508(b)), as 
amended, or its successors, is not available.
    (c) The regulations of this part are applicable to the 2001 and 
subsequent crop years.



Sec.  1437.2  Administration.

    (a) NAP is administered under the general supervision of the 
Executive Vice-President, CCC (who also serves as Administrator, Farm 
Service Agency), and shall be carried out by State and county FSA 
committees (State and county committees).
    (b) State and county committees, and representatives and their 
employees, do not have authority to modify or waive any of the 
provisions of the regulations of this part.
    (c) The State committee shall take any action required by the 
regulations of this part that the county committee

[[Page 516]]

has not taken. The State committee shall also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No provision or delegation to a State or county committee shall 
preclude the Executive Vice-President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines (except statutory deadlines) in 
cases where lateness to file does not adversely affect operation of the 
program.



Sec.  1437.3  Definitions.

    The definitions and program parameters set out in this section shall 
be applicable for all purposes of administering the Noninsured Crop 
Disaster Assistance Program provided for in this part. Although the 
terms defined in part 718 of this title and part 1400 of this chapter 
shall also be applicable, the definitions set forth in this section 
shall govern for all purposes of administering the Program.
    Actual Production History (APH) means the farm's operative 
production history established in accordance with subpart B of this 
part.
    Administrative county office means the county FSA office designated 
to make determinations, handle official records, and issue payments for 
the producer in accordance with 7 CFR part 718.
    Animal Unit Days (AUD) means an expression of expected or actual 
stocking rate for pasture or forage.
    Application Closing Date means the last date, as determined by CCC, 
producers can submit an application for coverage for noninsured crops 
for the specified crop year.
    Catastrophic coverage means a catastrophic risk protection (CAT) 
level of crop insurance available in accordance with section 508(b) of 
the Federal Crop Insurance Act, as amended.
    Catastrophic loss means--
    (1) Loss, as the result of an eligible cause of loss, that entails 
as determined by CCC:
    (i) Prevented planting of greater than 35 percent of the intended 
crop acreage; a yield loss of greater than 50 percent of the approved 
yield; or value loss of greater than 50 percent of the pre-disaster 
value; or
    (ii) AUD loss of greater than 50 percent of the expected AUD.
    (2)The quantity will not be reduced for any quality consideration 
unless a zero value is established.
    Controlled environment means, with respect to those crops for which 
a controlled environment is expected to be provided, including but not 
limited to ornamental nursery, aquaculture (including ornamental fish), 
and floriculture, an environment in which everything that can 
practicably be controlled with structures, facilities, growing media 
(including but not limited to water, soil, or nutrients) by the 
producer, is in fact controlled by the producer.
    Crop year means the calendar year in which the crop is normally 
harvested or in which the majority of the crop would have been 
harvested. For value loss and other specific commodities, see the 
applicable subpart and section of this part. For crops for which 
catastrophic coverage is available, the crop year will be as defined by 
such coverage.
    Fiber means a slender and greatly elongated natural plant filament, 
e.g. cotton, flax, etc. used in manufacturing, as determined by CCC.
    Final planting date means the date which marks the end of the 
planting period for the crop and in particular the last day, as 
determined by CCC, the crop can be planted to reasonably expect to 
achieve 100 percent of the expected yield in the intended harvest year 
or planting period.
    Food means a material consisting essentially of protein, 
carbohydrates, and fat used in the body to sustain growth, repair, and 
vital processes including the crops used for the preparation of food, as 
determined by CCC.

[[Page 517]]

    Good farming practices means the cultural practices generally used 
for the crop to make normal progress toward maturity and produce at 
least the individual unit approved yield. These practices are normally 
those recognized by Cooperative State Research, Education, and Extension 
Service as compatible with agronomic and weather conditions.
    Harvested means the producer has removed the crop from the field by 
hand, mechanically, or by grazing of livestock. The crop is considered 
harvested once it is removed from the field and placed in a truck or 
other conveyance or is consumed through the act of grazing. Crops 
normally placed in a truck or other conveyance and taken off the crop 
acreage, such as hay are considered harvested when in the bale, whether 
removed from the field or not.
    Industrial crop means a commercial crop, or other agricultural 
commodity utilized in manufacturing. Industrial crops include caster 
beans, chia, crambe, crotalaria, cuphea, guar, guayule, hesperaloe, 
kenaf, lesquerella, meadowfoam, milkweed, plantago, ovato, sesame and 
other crops specifically designated by CCC.
    Intended Use means for a crop or a commodity, the end use for which 
it is grown and produced.
    Multiple planted means the same crop is planted and harvested during 
two or more distinct planting periods in the same crop year, as 
determined by CCC.
    Normal harvest date means the date harvest of the crop is normally 
completed in the administrative county, as determined by CCC.
    Seed crop means propagation stock commercially produced for sale as 
seed stock for eligible crops.
    Seeded forage means forage on acreage mechanically seeded with 
forage vegetation at regular intervals, at least every 7 years, in 
accordance with good farming practices.
    T-Yield means the yield which is based on the county expected yield 
of the crop for the crop year and is used on an adjusted or unadjusted 
basis to calculate the approved yield for crops covered under the NAP 
when less than four years of actual, assigned, or appraised yields are 
available in the APH data base.
    Transitional yield means an estimated yield of that name provided in 
the Federal Crop Insurance Corporation (FCIC) actuarial table which is 
used to calculate an average/approved APH yield for crops insured under 
the Federal Crop Insurance Act when less than four years of actual, 
temporary, and/or assigned yields are available on a crop by county 
basis.



Sec.  1437.4  Eligibility.

    (a) Noninsured crop disaster assistance for low yield or prevented 
planting is available to producers of eligible commercial crops or other 
agricultural commodities, as determined by CCC, for which:
    (1) Catastrophic coverage is not available; or
    (2) Catastrophic coverage is available in the administrative county, 
however, the eligible commercial crop or other agricultural commodity is 
affected by an eligible cause of loss, as determined by CCC, that is not 
covered by the catastrophic coverage.
    (b) Noninsured crop disaster assistance for low yields or prevented 
planting is available only when loss of the crop occurs as a result of 
an eligible cause of loss, as determined by CCC.
    (c) When other conditions are met, NAP may be available for an 
eligible loss of:
    (1) Any commercial crop grown for food, excluding livestock and 
their by-products;
    (2) Any commercial crop planted and grown for livestock consumption, 
including but not limited to grain and forage crops; except for the 2001 
and preceding crop years assistance for forage produced on Federal- and 
State-owned lands is available only for seeded forage.
    (3) Any commercial crop grown for fiber, excluding trees grown for 
wood, paper, or pulp products; and
    (4) Any commercial production of:
    (i) Aquacultural species (including ornamental fish);
    (ii) Floricultural crops;
    (iii) Ornamental nursery plants;
    (iv) Christmas tree crops;
    (v) Turfgrass sod;
    (vi) Industrial crops;
    (vii) Seed crops; and

[[Page 518]]

    (viii) Sea grass and sea oats.

[67 FR 12448, Mar. 19, 2002, as amended at 67 FR 62324, Oct. 7, 2002]



Sec.  1437.5  Coverage period.

    (a) The coverage period is the time during which coverage is 
available against loss of production of the eligible crop as a result of 
natural disaster.
    (b) The coverage period for annual crops, including annual forage 
crops, begins the later of 30 calendar days after the date the 
application for coverage is filed; or the date the crop is planted, not 
to exceed the final planting date; and ends on the earlier of the date 
harvest is complete; the normal harvest date of the crop in the area; 
the date the crop is abandoned; or the date the crop is destroyed.
    (c) Except as otherwise specified in this part, the coverage period 
for biennial and perennial crops begins 30 calendar days after the 
application closing date; and ends as determined by CCC.
    (d) Except as otherwise specified in this part, the coverage period 
for value loss crops, including ornamental nursery, aquaculture, 
Christmas tree crops, ginseng, and turfgrass sod; and other eligible 
crops, including floriculture and mushrooms begins 30 calendar days 
after the application closing date; and ends the last day of the crop 
year, as determined by CCC.
    (e) The coverage period for honey begins 30 calendar days after the 
application closing date and ends the last day of the crop year, as 
determined by CCC.
    (f) The coverage period for maple sap begins 30 calendar days after 
the application closing date and ends on the earlier of the date harvest 
is complete; or the normal harvest date.
    (g) For biennial and perennial forage crops the coverage period 
begins the later of 30 calendar days after the application closing date; 
for first year seedings, the date the crop was planted; or the date 
following the normal harvest date. The coverage ends on the normal 
harvest date of the subsequent year.



Sec.  1437.6  Application for coverage and service fee.

    (a) With respect to each crop, commodity or acreage, producers must 
file an application for coverage under this part no later than the 
application closing date.
    (b) The service fee must be paid at the time of the application. The 
service fee is $100 per crop per administrative county, up to $300 per 
producer per administrative county, but not to exceed $900 per producer.
    (c) The service fee will be applied per administrative county by 
crop definition and planting period, as determined by CCC.
    (d) Limited resource farmers may request that the service fee be 
waived and must request such a waiver prior to, or at the same time the 
application for coverage is filed. For this purpose, a ``limited 
resource farmer'' shall be given the meaning assigned by 7 CFR 457.8.
    (e) For 2001 and 2002 crops for which the application closing date 
would normally have been established prior to March 19, 2002, or 
established within 60 calendar days after March 19, 2002, producers must 
within 30 calendar days after March 19, 2002:
    (1) Submit a 2001 or 2002 crop application for coverage, as 
applicable, and pay the applicable service fee; and
    (2) Certify the 2000 and 2001 crop year production for the crop, if 
applicable.
    (f) For 2001 and 2002 crops which have suffered damage or loss, 
producers must, in addition to paragraph (e)(1) of this section, have 
complied with all requirements of this part prior to its revision on 
March 19, 2002, (and contained in the 7 CFR, parts 1200 to 1599, edition 
revised as of January 1, 2002) including having filed a timely:
    (1) Report of acreage;
    (2) Notice of loss; and
    (3) Application for payment.



Sec.  1437.7  Records.

    (a) Producers must maintain records of crop acreage, acreage yields, 
and production for the crop for which an application for coverage is 
filed in accordance with Sec.  1437.5. For those crops or commodities 
for which it is impractical, as determined by CCC, to maintain crop 
acreage, yields or production, producers must maintain records, in 
addition to the available records required by this section, as may be 
required in subparts C, D and E, of this

[[Page 519]]

part. Producers must retain records of the production and acreage yield 
for a minimum of 3 years for each crop for which an application for 
coverage is filed in accordance with Sec.  1437.6. Producers may be 
selected on a random or targeted basis and be required to provide 
records acceptable to CCC to support the certification provided. For 
each crop for which producers file an application for payment in 
accordance with Sec.  1437.10 that is harvested, producers must provide 
documentary evidence of production, acceptable to CCC, and the date 
harvest was completed. Such documentary evidence must be filed not later 
than the application closing date for the crop in the subsequent crop 
year. Records of a previous crop year's production for inclusion in the 
actual production history database used to calculate an approved yield 
for the current crop year must be certified by the producer no later 
than the application closing date for the crop in the current crop year. 
Production data provided after the application closing date in the 
current crop year for the crop may be included in the actual production 
history data base for the calculation of subsequent approved yield 
calculations if accompanied by acceptable records of production as 
determined by CCC. Records of production acceptable to CCC may include:
    (1) Commercial receipts, settlement sheets, warehouse ledger sheets, 
or load summaries if the eligible crop was sold or otherwise disposed of 
through commercial channels provided the records are reliable or 
verifiable as determined by CCC; and
    (2) Such documentary evidence such as contemporaneous measurements, 
truck scale tickets, and contemporaneous diaries, as is necessary in 
order to verify the information provided if the eligible crop has been 
fed to livestock, or otherwise disposed of other than through commercial 
channels, provided the records are reliable or verifiable as determined 
by CCC. If the crop will be disposed of through retail sales, such as: 
roadside stands, u-pick, etc. and the producer will not be able to 
certify acceptable records of production, the producer must request an 
appraisal of the unit acreage prior to harvest of the crop acreage.
    (b) Producers must provide verifiable evidence, as determined by 
CCC, of:
    (1) An interest in the commodity produced or control of the crop 
acreage on which the commodity was grown at the time of disaster; and
    (2) The authority of the applicable individual to execute program 
documents.
    (c) Reports of acreage planted or intended but prevented from being 
planted must be provided to CCC at the administrative FSA office for the 
acreage no later than the date specified by CCC for each crop and 
location. Reports of acreage filed beyond the date specified by CCC for 
the crop and location may, however, be considered timely filed if all 
the provisions of 7 CFR 718.103 are met. In the case of a crop-share 
arrangement, all producers will be bound by the acreage report filed by 
the landowner or operator unless the producer files a separate acreage 
report prior to the date specified by CCC for the crop and location. 
Reports of acreage planted or intended and prevented from being planted 
must include all of the following information:
    (1) Number of acres of the eligible crop in the administrative 
county (for each planting in the event of multiple planting) in which 
the producer has a share;
    (2) Zero acres planted when the producer's crop for which an 
application for coverage was filed, is not planted;
    (3) The producer's share of the eligible crop at the time an 
application for coverage was filed;
    (4) The FSA farm serial number;
    (5) The identity of the crop, practices, intended uses, and for 
forage crops, the predominant species or type and variety of the 
vegetation;
    (6) The identity of all producers sharing in the crop;
    (7) The date the crop was planted or planting was completed, 
including the age of the perennial crops; and
    (8) The acreage intended but prevented from being planted.
    (d) Producers receiving a guaranteed payment for planted acreage, as 
opposed to receiving a payment only upon delivery of the production must 
provide documentation of any written or verbal contract or arrangement 
with the buyer to CCC. Net production, as

[[Page 520]]

determined by CCC, may be adjusted upward by the amount of production 
corresponding to the amount of the contract payment received.
    (e) Producers must provide documentation of any salvage value 
received by or made available for the quantity of the crop or commodity 
that cannot be marketed or sold in any market, as determined by CCC and 
any value received by or made available for a secondary use of the crop 
or commodity.
    (f) Producers requesting payment under this part must maintain 
records which substantiate gross revenue for the tax year preceding the 
crop year for which coverage is requested.
    (g) Producers requesting a waiver of service fees as a limited 
resource producer must maintain records which substantiate annual gross 
income for the two tax years preceding the crop year for which coverage 
is requested.



Sec.  1437.8  Unit division.

    Except as determined by CCC, a unit shall be all acreage of the 
eligible crop in the administrative county operated by the same 
producer(s). In cases where the owners of land are also producers, units 
shall be further divided based on ownership interest of the land.



Sec.  1437.9  Causes of loss.

    (a) To be eligible for benefits under this part, crops must be 
damaged or prevented from being planted by drought, flood or other 
natural disasters and conditions related thereto. Not all named perils 
are eligible causes of loss for all crops. Eligible causes of loss 
include:
    (1) Damaging weather occurring prior to or during harvest, including 
but not limited to drought, hail, excessive moisture, freeze, tornado, 
hurricane, excessive wind, or any combination thereof;
    (2) Adverse natural occurrence occurring prior to or during harvest, 
such as earthquake, flood, or volcanic eruption; and
    (3) A related condition, including but not limited to heat, insect 
infestation, or disease, which occurs as a result of an adverse natural 
occurrence or damaging weather occurring prior to or during harvest, 
that directly causes, accelerates, or exacerbates the destruction or 
deterioration of an eligible crop, as determined by the Secretary.
    (b) Ineligible causes of loss include but are not limited to:
    (1) Factors or circumstances that are not the result of an eligible 
cause of loss affecting specific crop or commodity;
    (2) The negligence or malfeasance of the producer;
    (3) The failure of the producer to reseed to the same crop in those 
areas and under such circumstances where it is customary to reseed;
    (4) Failure of the producer to follow good farming practices, as 
determined by CCC;
    (5) Water contained or released by any governmental, public, or 
private dam or reservoir project, if an easement exists on the acreage 
affected for the containment or release of the water;
    (6) Failure or breakdown of irrigation equipment or facilities; or
    (7) Except for tree crops and perennials, inadequate irrigation 
resources at the beginning of the crop year;
    (8) A loss of inventory (or yield as applicable) of aquiculture 
(including ornamental fish), floriculture or ornamental nursery stemming 
from drought or any failure to provide water, soil, or growing media to 
such crop for any reason;
    (9) Any failure to provide a controlled environment or exercise good 
nursery practices where such controlled environment or practices are a 
condition of eligibility under this part.



Sec.  1437.10  Notice of loss and application for payment.

    (a) At least one producer having a share in the unit must provide a 
notice of loss to CCC in the administrative FSA office for the unit, 
within:
    (1) For prevented planting claims, 15 calendar days after the final 
planting date,
    (2) For low yield claims and allowable value loss, the earlier of:
    (i) 15 calendar days after the damaging weather or adverse natural 
occurrence, or date loss of the crop or commodity becomes apparent for 
low yield claims; and

[[Page 521]]

    (ii) 15 calendar days after the normal harvest date.
    (b) For each crop for which a notice of loss is filed, producers 
must provide the following information:
    (1) Crop by type or variety, as applicable;
    (2) The cause of the crop damage;
    (3) Date the loss occurred, as applicable;
    (4) Date the damage or loss became apparent;
    (5) The existence of a guaranteed payment through a contract or 
agreement for planted acreage as opposed to delivery of production, if 
one exists;
    (6) Type of crop loss occurred, e.g. prevented planting or low 
yield;
    (7) Practices employed to grow the crop, e.g. irrigated or non-
irrigated;
    (8) For prevented planting:
    (i) Total acreage intended to be planted to the crop in the 
administrative county;
    (ii) Total acreage planted by the producer to the crop in the 
administrative county;
    (iii) Whether a purchase, delivery, or arrangement for purchase or 
delivery was made for seed, chemicals, fertilizer, etc; and
    (iv) What and when land preparation measures, e.g. cultivation, etc. 
were completed and indicate what has been done or will be done with the 
acreage, e.g. abandoned, replanted, etc.
    (9) For low yield:
    (i) Total acreage planted by the producer to the crop in the 
administrative county;
    (ii) Total acreage of the crop in the administrative county 
affected;
    (iii) What and when land preparation measures and practices, e.g. 
cultivation, planting, irrigated, etc. were completed before and after 
the loss; and
    (iv) What will be done with the affected crop acreage, e.g. 
harvested, destroyed and replanted to a different crop, abandoned, etc.
    (10) Any such other information requested by CCC to establish the 
loss.
    (c) A notice of loss provided beyond the time specified in paragraph 
(a) of this section may be considered timely filed if, at the discretion 
of CCC, provided at such time to permit an authorized CCC representative 
the opportunity to:
    (1) Verify the information on the notice of loss by inspection of 
the specific acreage or crop involved; and
    (2) Determine, based on information obtained by inspection of the 
specific acreage or crop involved, that an eligible cause of loss, as 
opposed to other circumstance, caused the claimed damage or loss.
    (d) Crop acreage that will not be harvested, i.e. acreage that is to 
be abandoned or destroyed or in the case of forage acreage intended to 
be mechanically harvested but grazed, must be left intact and producers 
must request, in the administrative FSA office for the acreage, a crop 
appraisal and release of crop acreage by a FCIC- or CCC-approved loss 
adjustor:
    (1) Prior to destruction or abandonment of the crop acreage; or
    (2) No later than the normal harvest date, as determined by CCC.
    (e) Producers must apply for payments prior to the earlier of the:
    (1) Date an application for coverage is filed for the crop for the 
subsequent crop year; or
    (2) Application closing date for the crop for the subsequent crop 
year.



Sec.  1437.11  Average market price and payment factors.

    (a) An average market price will be used to calculate assistance 
under this part and will be:
    (1) A dollar value per the applicable unit of measure of the 
eligible crop;
    (2) Determined on a harvested basis without the inclusion of 
transportation, storage, processing, marketing, or other post-harvest 
expenses, as determined by CCC;
    (3) Comparable with established FCIC prices; and
    (4) Determined, as practicable, for each intended use of a crop 
within a State for a crop year.
    (b) For these purposes, where needed, an Animal-unit-days (AUD) 
value will be based on the national average price of corn and the daily 
requirement of 13.6 megacalories of net energy for maintenance of 1 
animal unit.
    (c) Payment factors will be used to calculate assistance for crops 
produced with significant and variable harvesting expenses that are not 
incurred because the crop acreage was prevented

[[Page 522]]

planted or planted but not harvested, as determined by CCC.
    (d) An adjusted market price will be calculated based on the 
provisions in this section and others as may apply. A final payment 
price will be determined by multiplying, as appropriate, the average 
market price by the applicable payment factor (i.e. harvested, 
unharvested, or prevented planting) by 55 percent or, by multiplying the 
applicable AUD (as adjusted, if adjusted) by 55 percent.



Sec.  1437.12  Crop definition.

    (a) For the purpose of providing benefits under this part, CCC will, 
at its discretion, define crops as specified in this section.
    (b) CCC may separate or combine types and varieties as a crop when 
specific credible information as determined by CCC is provided showing 
the crop of a specific type or variety has a significantly different or 
similar value when compared to other types or varieties, as determined 
by CCC.
    (c) CCC may recognize two or more different crops planted on the 
same acreage intended for harvest during the same crop year as two or 
more separate crops. The crop acreage may include a crop intended for 
harvest before planting of a succeeding crop or a succeeding crop 
interseeded with the preceding crop prior to intended harvest of the 
preceding crop. The acreage must be in an area where the practice is 
recognized as a good farming practice, as determined by CCC, and all 
crops are recognized by CCC as able to achieve the expected yield, as 
determined by CCC.
    (d) CCC may consider crop acreage that is harvested more than once 
during the same crop year from the same plant as a single crop. The 
acreage must be in an area where the practice is recognized as a good 
farming practice, as determined by CCC.
    (e) CCC may consider each planting period of multiple planted 
acreage as a separate crop. The acreage must be in an area where the 
practice is recognized as a good farming practice, as determined by CCC.
    (f) CCC may define forage as separate crops according to the 
intended method of harvest, either mechanical harvest or grazed.
    (g) Forage acreage intended to be grazed may be further defined as 
warm and cool season forage crops.
    (h) Forage acreage intended to be mechanically harvested may be 
defined as a separate crop from grazed forage and may be separated based 
upon the commodity used as forage, to the extent such separation is 
allowed under paragraph (b) of this section.
    (i) Crop acreage intended for the production of seed may be 
considered a separate crop from other intended uses, as determined by 
CCC, if all the following criteria apply:
    (1) The specific crop acreage is seeded, or intended to be seeded, 
with an intent of producing commercial seed as its primary intended use;
    (2) There is no possibility of other commercial uses of production 
from the same crop without regard to market conditions; and
    (3) The growing period of the specific crop acreage is uniquely 
conducive to the production of commercial seed and not conducive to the 
production of any other intended use of the crop, (e.g. vernalization in 
a biennial crop such as carrots and onions) and that accommodation 
renders the possibility of production for any other intended use of the 
crop improbable.



Sec.  1437.13  Multiple benefits.

    (a) If a producer is eligible to receive payments under this part 
and benefits under any other program administered by the Secretary for 
the same crop loss, the producer must choose whether to receive the 
other program benefits or payments under this part, but shall not be 
eligible for both. The limitation on multiple benefits prohibits a 
producer from being compensated more than once for the same loss.
    (b) The limitation on multiple benefits in paragraph (a) of this 
section shall not apply in any respect to Emergency Loans under subtitle 
C of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et 
seq).
    (c) The restriction on multiple benefits does not relieve the 
producer from the requirements of making a production and acreage 
report.

[[Page 523]]

    (d) If the other USDA program benefits are not available until after 
an application for benefits has been filed under this part, the producer 
may, to avoid this restriction on such other benefits, refund the total 
amount of the payment to the administrative FSA office from which the 
payment was received.



Sec.  1437.14  Payment and income limitations.

    (a) NAP payments shall not be made in excess of $100,000 per person 
per crop year under this part.
    (b) NAP payments shall not be made to a person who has qualifying 
gross revenues in excess of $2 million for the most recent tax year 
preceding the year for which assistance is requested. Qualifying gross 
revenue means:
    (1) With respect to a person who receives more than 50 percent of 
such person's gross income from farming, ranching, and forestry 
operations, the annual gross income for the taxable year from such 
operations; and
    (2) With respect to a person who receives 50 percent or less of such 
person's gross income from farming, ranching, and forestry operations, 
the person's total gross income for the taxable year from all sources.
    (c) CCC will pay, for up to one year, simple interest on payments to 
producers which are delayed. Interest will be paid on the net amount 
ultimately found to be due, and will begin accruing on the 31st day 
after the date the producer signs, dates, and submits a properly 
completed application for payment on the designated form, or the 31st 
day after a disputed application is adjudicated. Interest will be paid 
unless the reason for failure to timely pay is due to the producer's 
failure to provide information or other material necessary for the 
computation of payment, or there was a genuine dispute concerning 
eligibility for payment.
    (d) Rules set out in 7 CFR part 1400 shall apply in implementing the 
restrictions of this section.



Sec.  1437.15  Miscellaneous provisions.

    (a) To be eligible for benefits under this part, producers must be 
in compliance with the highly erodible land and wetlands provisions of 
part 12 of this title.
    (b) The provisions of Sec.  718.11 of this title, providing for 
ineligibility for benefits for offenses involving controlled substances, 
shall apply.
    (c) A person shall be ineligible to receive assistance under this 
part for the crop year plus two subsequent crop years if it is 
determined by the State or county committee or an official of FSA that 
such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.
    (d) All amounts paid by CCC to any such producer, applicable to the 
crop year in which a violation of this part occurs, must be refunded to 
CCC together with interest and other amounts as determined appropriate 
to the circumstances by CCC.
    (e) All persons with a financial interest in the operation receiving 
benefits under this part shall be jointly and severally liable for any 
refund, including related charges, which is determined to be due CCC for 
any reason under this part.
    (f) In the event that any request for assistance or payments under 
this part was established as result of erroneous information or a 
miscalculation, the assistance or payment shall be recalculated and any 
excess refunded with applicable interest.
    (g) The liability of any person for any penalty under this part or 
for any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to: 18 U.S.C. 286, 287, 371, 641, 651, 1001 and 1014; 15 
U.S.C. 714m; and 31 U. S. C. 3729.
    (h) The appeal regulations at parts 11 and 780 of this title apply 
to decisions made according to this part.
    (i) Any payment or portion thereof to any person shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the crop, or proceeds thereof.

[[Page 524]]

    (j) For the purposes of 28 U.S.C. 3201(e), the Secretary hereby 
waives the restriction on receipt of funds or benefits under this 
program but only as to beneficiaries who as a condition of such waiver 
agree to apply the benefits to reduce the amount of the judgement lien.
    (k) The provisions of parts 1400, 1403 and 1404 of this chapter 
apply to NAP.
    (l) In the case of death, incompetence or disappearance of any 
person who is eligible to receive payments under this part, such 
payments will be disbursed in accordance with part 707 of this title.



  Subpart B--Determining Yield Coverage Using Actual Production History



Sec.  1437.101  Actual production history.

    Actual production history will be used, except as otherwise 
indicated in this part, as the basis for providing noninsured crop 
disaster assistance.



Sec.  1437.102  Yield determinations.

    (a) Payments based on yields shall be made on ``approved yields'', 
which shall be calculated based on the producer's APH for that period up 
to ten years for which, of the first time such a yield is calculated, 
there are consecutive years, beginning with the most recent completed 
year, of actual production history for the producer. If there are not 
four such consecutive years of history (excluding years when the crop 
was out of rotation), then such first ``approved yield'' shall be 
constructed by creating a four year history as provided for in this 
part. After the first such approved yield is constructed, years will be 
added to that history in the manner provided for in this section, 
dropping, as needed, previous years from the history to the extent that 
the current history would be a history or base of ten years. For the 
first approved yield, as needed to construct a four-year history, 
history will be supplied using T-yields, as set out in paragraph (b) of 
this section.
    (b) The county expected yield:
    (1) Is the ``T-yield'' for the crop, and is the Olympic average 
(disregarding the high and low yields) of yields in the county the 5 
consecutive crop years immediately preceding the previous crop year. 
(Example: For the 2001 crop year, the base period would be 1995 through 
1999).
    (2) Will be the same as the FCIC transitional yield if crop 
insurance is available for the crop, (but not necessarily for the cause 
of loss if excluded by policy provisions), in the administrative county.
    (3) Will be calculated so as to be comparable to the FCIC 
transitional yield most reasonable to the area if crop insurance was 
available for the crop (but not necessarily for the cause of loss) in 
contiguous counties, but not in the immediate county.
    (c) Available historical information will be used to establish the 
county expected yields. Historical information is available from sources 
including, but is not limited to, National Agricultural Statistics 
Service data, Cooperative State Research, Education, and Extension 
Service records, Federal Crop Insurance Data, credible non-government 
studies, yields in similar areas, and reported actual yield data. Such 
yields will be based on the acreage intended for harvest.
    (d) County expected yields may be adjusted for:
    (1) Yield variations due to different farming practices in the 
administrative county such as: irrigated, nonirrigated, and organic 
practices; and
    (2) Cultural practices, including the age of the planting when such 
practices are different from those used on acreage to establish the 
yield.
    (e) A T-yield will be used in the actual production history database 
when less than four consecutive crop years of actual, assigned, or zero 
yields, as applicable, are available. For those producers who have land 
physically located in multiple counties and administered out of one 
county office, the T-yield for all land for the producer will be based 
on the administrative county's expected yield for that crop. Where a 
four-year base must be constructed for the producer's first approved 
yield because the producer does not have at least four consecutive years 
of actual history starting with the most recent year, then:
    (1) If an approved yield had not previously been calculated for the 
crop

[[Page 525]]

and there are no production records available for the most recent crop 
year, or if there is no formula provided for the producer under 
paragraphs (e)(2) through (4) of this section, then the approved yield 
for the current crop year will be calculated on the simple average of 65 
percent of the applicable T-yield for each of the four years of the 
constructed base;
    (2) If certified acceptable production records are available for 
only the most recent crop year and there are no zero (credited) or 
assigned yields in the producer's history, the approved yield for the 
current crop year will be calculated on the simple average of the one 
actual yield plus 80 percent of the applicable T-Yield for the missing 
crop years.
    (3) If certified acceptable production records are available for 
only the two most recent crop years and there are no zero (credited) or 
assigned yields in the APH database, the approved yield for the current 
crop year will be calculated on the simple average of the two actual 
yields plus 90 percent of the applicable T-yield for the missing years.
    (4) If certified acceptable production records are available for 
only the three most recent crop years and there are no zero (credited) 
or assigned yields in the APH database, the approved yield will be 
calculated on the simple average of the three actual yields plus 100 
percent of the applicable T-Yield for the missing year.
    (f) CCC will reduce unadjusted T-yields placed in the actual 
production history database when, as determined by CCC, an unadjusted T-
yield does not accurately reflect the productive capability of specific 
crop acreage.
    (g) An actual yield includes the total amount of harvested and 
appraised production on a per acre, or other basis, as applicable.
    (h) Once an approved yield has been calculated for any year, then 
thereafter an assigned yield will be used to update or extend the 
producer's actual production history (or base) database when producers 
fail to certify a report of production after the approved yield was 
calculated and the following standards shall apply:
    (1) The assigned one-year yield will be equal to 75 percent of the 
approved yield calculated for the most recent crop year for which 
producers do not certify a report of production.
    (2) Producers may have only one assigned yield in the actual 
production history database.
    (3) Producers may replace an assigned yield with an actual yield by 
providing a certification of production and production records for the 
applicable crop year in accordance with Sec.  1437.7.
    (4) If the acreage of a crop in the administrative county in which 
the unit is located for the crop year increases by more than 100 percent 
over any year in the preceding seven crop years, or significantly from 
the previous crop years, as determined by CCC, producers may not receive 
an assigned yield and will receive a zero credited yield, unless 
producers provide:
    (i) Detailed documentation of production costs, acres planted, and 
yield for the crop year for which the producer is requesting assistance, 
or
    (ii) If CCC determines those records are inadequate, proof that the 
eligible crop, had it been harvested, could have been marketed at a 
reasonable price.
    (5) Notwithstanding paragraph (h)(4) of this section an assigned 
yield may be used if:
    (i) The planted acreage for the crop has been inspected by a third 
party acceptable to CCC, or
    (ii) The FSA county executive director, with the concurrence of the 
FSA state executive director, makes a recommendation for an exemption 
from the requirements and such recommendation is approved by CCC.
    (6) A zero credited yield will be used to the extent provided for in 
paragraph (i) of this section.
    (i) A zero credited yield will be placed in the actual production 
history database for each crop year, following the crop year containing 
an assigned yield, for which producers do not certify a report of 
production. A zero credited yield may be replaced with an actual yield 
by providing a certification of production and production records for 
the applicable crop year in accordance with Sec.  1437.7.
    (j) An approved yield is calculated as the simple average of a 
minimum of four, not to exceed a maximum of 10

[[Page 526]]

consecutive crop year yields for the crops, or as determined by CCC and 
as provided in this section.
    (1) If, for one or more actual production history crop years used to 
establish the approved yield, the actual or appraised yield is less than 
65 percent of the current crop year T-yield due to losses incurred in a 
disaster year, as determined by CCC, producers may request CCC replace 
the applicable yield with a yield equal to 65 percent of the current 
crop year T-yield.
    (2) If approved yields were calculated for any of the 1995 through 
2000 crop years, and subsequently in that period production was not 
certified, producers may request CCC replace the missing yields for such 
years with yields equal to the higher of 65 percent of the current crop 
year T-yield or the missing crop years actual yield.
    (3) If producers add land in the farming operation and do not have 
available production records for the added land CCC will calculate an 
approved yield for the new unit by utilizing the actual production 
history yields for the existing unit. In the event the crop suffers a 
loss greater than 50 percent of the initial approved yield for the crop 
year and unit acreage has increased by more than 75 percent of the 
historical average acreage, CCC may adjust the approved yield, as 
determined by CCC.
    (k) If a producer is a new producer, the approved yield may be based 
on unadjusted T-Yields or a combination of actual yields and unadjusted 
T-Yields. A new producer is a person who has not been actively engaged 
in farming for a share of the production of the eligible crop in the 
administrative county for more than two APH crop years. Formation or 
dissolution of an entity which includes individuals with more than two 
APH crop years of production history during the base period does not 
qualify the new entity as a new producer for APH determination purposes.
    (l) If producers qualify as a new producer and have produced the 
crop for 1 or 2 crop years, producers must provide to CCC at the 
administrative FSA office serving the area in which the crop is located, 
a certification and records of production for those crop years.
    (m) Further adjustments may be made as necessary to accomplish the 
purposes of this program.



Sec.  1437.103  Determining payments for low yield.

    (a) Except to the extent that the loss calculation provisions of 
other subparts apply, and subject to limitations set out elsewhere in 
this part and in this title and to the availability of funds, payments 
under this part shall be made on eligible crops with eligible losses by:
    (1) Multiplying the total eligible acreage planted to the eligible 
crop by the producers share, and subject to provisions for specific 
crops provided elsewhere in this part;
    (2) Multiplying the product of paragraph (a)(1) of this section by 
50 percent of the approved yield per acre for the commodity for the 
producer.
    (3) Subtracting net production of the total eligible acreage from 
the product of paragraph (a)(2) of this section;
    (4) Multiplying the difference calculated under paragraph (a)(3) of 
this section by the final payment price calculated under Sec.  1437.11, 
and then
    (5) Subtracting the value of salvage and secondary use.
    (b) Further adjustments may be made as needed to accomplish the 
purposes and goals of the program.



Sec.  1437.104  Honey.

    (a) Honey production eligible for benefits under this part includes 
table and non-table honey produced commercially.
    (b) All of a producer's honey will be considered a single crop, 
regardless of type or variety of floral source or intended use.
    (c) The crop year for honey production is the calendar year, January 
1 through December 31.
    (d) In addition to filing a report of acreage in accordance with 
Sec.  1437.7, honey producers must provide a record of colonies to CCC. 
The report of colonies must be filed before the crop year for which 
producers seek to maintain coverage. The report of colonies shall 
include:
    (1) The address of the producer's headquarters and FSA farm serial 
number, if available;

[[Page 527]]

    (2) Names and shares of each person sharing in the honey produced 
from the unit;
    (3) The number of all colonies of bees belonging to the unit;
    (4) The names of counties in which colonies of bees are located as 
of the date of the report; and
    (5) A certification of the number of colonies reported including all 
colonies from which production is expected.
    (e) The honey unit shall consist of all the producer's bee colonies, 
regardless of location.
    (f) Producers must designate a FSA office as the control office for 
the honey operation. Producers must complete the following actions only 
in the control office:
    (1) File an application for coverage;
    (2) File a report of colonies;
    (3) Report total unit production; and
    (4) Request to change a unit's control office.
    (g) Actions that may be taken in any Administrative FSA office 
includes:
    (1) Designating or selecting another control office; or
    (2) Filing a notice of loss in accordance with Sec.  1437.10.
    (h) Producers must notify the control office designated in 
accordance with paragraph (f) of this section within 30 calendar days of 
the date of:
    (1) Any changes in the total number of colonies; and
    (2) The movement of any colonies into any additional counties.
    (i) Payments will be based on the amount of losses for this 
community in excess of a 50 percent loss level at a rate determined in 
accord with this part and the authorizing legislation.



Sec.  1437.105  Maple sap.

    (a) NAP assistance for maple sap is limited to maple sap produced on 
private property for sale as sap or syrup. Eligible maple sap must be 
produced from trees that:
    (1) Are located on land the producer controls by ownership or lease;
    (2) Are managed for production of maple sap;
    (3) Are at least 30 years old and 12 inches in diameter; and
    (4) Have a maximum of 4 taps per tree according to the tree's 
diameter.
    (b) The crop year for maple sap production is the calendar year, 
January 1 through December 31.
    (c) If producers file an application for coverage in accordance with 
Sec.  1437.6, tree acreage containing trees from which maple sap is 
produced or is to be produced must be reported to CCC no later than the 
beginning of the crop year.
    (d) In addition to the applicable records required under Sec.  
1437.7, producers must report the:
    (1) Total number of eligible trees on the unit;
    (2) Average size and age of producing trees; and
    (3) Total number of taps placed or anticipated for the tapping 
season.
    (e) A maximum county-expected-yield for maple sap shall be 10 
gallons of sap per tap per crop year unless acceptable documentary 
evidence, as determined by CCC, is available to CCC to support a higher 
county-expected-yield.
    (f) The average market price for maple sap must be established for 
the value of the sap before processing into syrup. If price data is 
available only for maple syrup, this data must be converted to a maple 
sap basis. The wholesale price for a gallon of maple syrup shall be 
multiplied by 0.00936 to arrive at the average market price of a gallon 
of maple sap.
    (g) The actual production history for maple sap shall be recorded on 
the basis of gallons of sap per tap.
    (h) The unit's expected production is determined by:
    (1) Multiplying the number of taps placed in eligible trees; by
    (2) The approved per tap yield as determined in accordance with 
Sec.  1437.102.
    (i) Payments will be based on the amount of losses for this 
community in excess of a 50 percent loss level at a rate determined in 
accord with this part and the authorizing legislation.

[[Page 528]]



Sec. Sec.  1437.106-1437.200  [Reserved]



      Subpart C--Determining Coverage for Prevented Planted Acreage



Sec.  1437.201  Prevented planting acreage.

    (a) Prevented planting is the inability to plant an eligible crop 
with proper equipment during the planting period as a result of an 
eligible cause of loss, as determined by CCC.
    (b) The eligible cause of loss that prevented planting must have:
    (1) Occurred after a previous planting period for the crop and
    (2) Before the final planting date for the crop in the applicable 
crop year or in the case of multiple plantings, the harvest date of the 
first planting in the applicable planting period, and
    (3) Generally affected other producers in the area, as determined by 
CCC.
    (c) Producers must be prevented from planting more than 35 percent 
of the total eligible acreage intended for planting to the eligible crop 
and in the case of multiple planting, more than 35 percent of the total 
eligible acres intended to be planted within the applicable planting 
period.
    (d) Eligible prevented planting acreage will be determined on the 
basis of the producer's intent to plant the crop acreage, and possession 
of, or access to, resources to plant, grow, and harvest the crop, as 
applicable.
    (e) Acreage ineligible for prevented planting coverage includes, but 
is not limited to:
    (1) Acreage which planting history or conservation plans indicate 
would remain fallow for crop rotation purposes; and
    (2) Acreage used for conservation purposes or intended to be or 
considered to have been left unplanted under any program administered by 
USDA, including the Conservation Reserve and Wetland Reserve Programs.



Sec.  1437.202  Determining payments for prevented planting.

    (a) Subject to limitations, availability of funds, and specific 
provisions dealing with specific crops, a payment for prevented planting 
will be determined by:
    (1) Multiplying the producer's total eligible acreage intended for 
planting to the eligible crop by the producer's share;
    (2) Multiplying the product of paragraph (a)(1) of this section by 
65 percent;
    (3) Subtracting the total acres planted from the product of 
paragraph (a)(2) of this section;
    (4) Multiplying the product of paragraph (a)(3) of this section by 
50 percent of the producer's approved yield;
    (5) Multiplying the product of paragraph (a)(4) of this section by 
the final payment price for the producer's crop as calculated by the 
agency under Sec.  1437.11.
    (b) Yields for purposes of paragraph (a) of this section shall be 
calculated in the same manner as for low-yield claims.



Sec. Sec.  1437.203-1437.300  [Reserved]



               Subpart D--Determining Coverage Using Value



Sec.  1437.301  Value loss.

    (a) Special provisions are required to assess losses and calculate 
assistance for a few crops and commodities which do not lend themselves 
to yield loss situations. Assistance for these commodities is calculated 
based on the loss of value at the time of disaster. The agency shall 
determine which crops shall be treated as value-loss crops, but unless 
otherwise announced, such crops shall be limited to those identified in 
Sec. Sec.  1437.303 through 1437.309 as value loss crops. Lost 
productions of value loss crops shall be compensable only under this 
subpart.
    (b) The crop year for all value loss crops is October 1 through 
September 30.
    (c) Producers must file an application for coverage in accordance 
with Sec.  1437.6, and must:
    (1) Provide a report of the crop, commodity, and facility to CCC for 
the acreage or facility, in a form prescribed by CCC, no later than the 
beginning of the crop year.
    (2) Maintain a verifiable inventory of the eligible crop throughout 
the crop year; and

[[Page 529]]

    (3) Provide an accurate accounting of the inventory, as required by 
CCC.



Sec.  1437.302  Determining payments.

    Subject to all restrictions and the availability of funds, value 
loss payments for qualifying losses will be determined by:
    (a) Multiplying the field market value of the crop before the 
disaster by 50 percent;
    (b) Subtracting the sum of the field market value after the disaster 
and value of ineligible causes of loss from the result from paragraph 
(a)(1) of this section;
    (c) Multiplying the result from paragraph (a)(2) of this section by 
the producer's share;
    (d) Multiplying the result from paragraph (a)(3) of this section by 
55 percent plus whatever factor deemed appropriate to reflect savings 
from non-harvesting of the damaged crop or other factors as appropriate;
    (e) Multiplying the salvage value by the producer's share;
    (f) Subtracting the result from paragraph (a)(5) of this section 
from the result from paragraph (a)(4) of this section.



Sec.  1437.303  Aquaculture, including ornamental fish.

    (a) Aquaculture is a value loss crop and is compensable only in 
accord with restrictions set in this section. Eligible aquacultural 
species shall only include:
    (1) Any species of aquatic organisms grown as food for human 
consumption as determined by CCC.
    (2) Fish raised as feed for other fish that are consumed by humans; 
and
    (3) Ornamental fish propagated and reared in an aquatic medium.
    (b) The aquacultural facility must be:
    (1) A commercial enterprise on private property;
    (2) Owned or leased by the producer, with readily identifiable 
boundaries; and
    (3) Managed and maintained using good aquacultural growing 
practices.
    (c) Producers must:
    (1) Ensure adequate and proper flood prevention, growing medium, 
fertilization or feeding, irrigation and water quality, predator 
control, and disease control; and
    (2) Have control of the waterbed.
    (d) Eligible aquacultural species must be:
    (1) Placed in the facility and not be indigenous to the facility; 
and
    (2) Kept in a controlled environment; and
    (3) Planted or seeded in containers, wire baskets, net pens, or 
similar device designed for the protection and containment of the seeded 
aquacultural species.
    (e) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence that the 
aquacultural species are produced in a facility in accordance with 
paragraphs (b), (c) and (d) of this section.



Sec.  1437.304  Floriculture.

    (a) Floriculture, except for seed crops as specified in paragraph 
(d) of this section, is a value loss crop and is compensable only in 
accord with restrictions set in this section. Eligible floriculture 
shall be limited to commercial production of:
    (1) Field-grown flowers, including flowers grown in containers or 
other growing medium maintained in a field setting according to industry 
standards, as determined by CCC; and
    (2) Tubers and bulbs, for use as propagation stock of eligible 
floriculture plants; and
    (3) Seed for propagation of eligible floriculture plants.
    (b) Floriculture does not include flowering plants indigenous to the 
location of the floriculture facility or acreage.
    (c) Eligible floriculture must be grown in a region or controlled 
environment conducive to the successful production of flowers, tubers, 
and bulbs, as determined by CCC.
    (d) Claims on losses on the production of flower seed for 
propagation of eligible floriculture plants will not be treated under 
``value loss'' rules, but under the rules for normal production low 
yield crops under subpart B of this part.
    (e) The facility or acreage for eligible floriculture must be 
managed and maintained using good floriculture growing practices. At a 
minimum, producers are responsible for providing a

[[Page 530]]

controlled environment and must ensure adequate and proper 
fertilization, irrigation, weed control, insect and disease control, and 
rodent and wildlife control.
    (f) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence the 
floriculture is produced in accordance with paragraph (e) of this 
section.
    (g) Flowers having any dollar value shall be counted as having full 
value for loss calculations. Damaged plants that are determined able to 
rejuvenate or determined to be merely stunted shall be counted as worth 
full value.



Sec.  1437.305  Ornamental nursery.

    (a) Eligible ornamental nursery stock is a value loss crop and is 
compensable only in accord with restrictions set out in this section. 
Eligible ornamental nursery stock is limited to field-grown and 
containerized decorative plants grown in a controlled environment for 
commercial sale.
    (b) The property upon which the nursery stock is located must be 
owned or leased by the producer.
    (c) The eligible nursery stock must be placed in the ornamental 
nursery facility and not be indigenous to the facility.
    (d) The facility must be managed and cared for using good nursery 
growing practices for the geographical region. At a minimum producers 
must provide a controlled environment and ensure adequate and proper 
flood prevention, growing medium, fertilization, irrigation, insect and 
disease control, weed control, rodent and wildlife control, and over-
winterization storage facilities.
    (e) An ornamental plant having any value as an ornamental plant, or 
a damaged ornamental plant that may rejuvenate and re-establish value as 
a ornamental plant, shall be considered as worth full value based on the 
age or size of the plant at the time of disaster.
    (f) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence the 
ornamental nursery is maintained in accordance with this section.



Sec.  1437.306  Christmas tree crops.

    (a) A Christmas tree is a value loss crop and may generate a claim 
for benefits under this part only if the tree was grown exclusively for 
commercial use as a Christmas tree, and only if other requirements of 
this section are met.
    (b) The unit of measure for all Christmas tree crops is a plant.
    (c) A Christmas tree having any value as a Christmas tree, or a 
damaged Christmas tree that may rejuvenate and re-establish value as a 
Christmas tree, shall be considered as worth full value based on the age 
of the tree at the time of disaster.



Sec.  1437.307  Mushrooms.

    (a) Eligible mushrooms is a value loss crop and is only compensable 
in accord with the restrictions of this section. To be eligible, the 
mushrooms must be grown as a commercial crop in a facility with a 
controlled environment utilizing good mushroom growing practices. The 
facility must be located on private property either owned or leased by 
the producer.
    (b) The controlled environment for eligible mushrooms must include 
primary and backup systems for:
    (1) Temperature and humidity controls;
    (2) Proper and adequate lighting; and
    (3) Positive air pressurization and filtration.
    (c) The growing medium must consist of a substrate (a habitat and 
nutrient base) sterilized by heat treatment.
    (d) Good mushroom growing practices must be used, and they consist 
of proper and adequate insect and disease control and the maintenance of 
a sterile environment. Maintaining a sterile environment includes at a 
minimum:
    (1) Adequate hygiene;
    (2) Overall cleanliness;
    (3) Isolation or minimum contact procedures;
    (4) Use of footpaths; and
    (5) Availability and frequent utilization of wash-down facilities.
    (e) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence the 
mushrooms are maintained in accordance with this section.

[[Page 531]]



Sec.  1437.308  Ginseng.

    (a) Ginseng is a value loss crop and is compensable only as allowed 
in this section. Ginseng is eligible only if:
    (1) The ginseng includes stratified seeds for use as propagation 
stock in a commercial ginseng operation or rootlet for commercial sale 
that are grown in a controlled, cultivatable environment on private 
property either owned or leased by the producer; and
    (2) The ginseng is grown using good ginseng growing practices with 
all plant needs supplied and under control of the producer;
    (b) Ginseng will not be eligible to generate benefits under this 
part if it:
    (1) Is indigenous to the facility;
    (2) Is grown solely for medicinal purposes; and
    (3) Includes wild ginseng rootlet that is harvested and transplanted 
from woodland grown ginseng.
    (c) Good ginseng growing practices must be followed, and include, 
but are not limited to:
    (1) Adequate drainage;
    (2) Proper and adequate shade;
    (3) Accurate pH level;
    (4) Adequate and timely fertilization, including an adequate supply 
to ensure nutrient reserves to the ginseng plants and customary 
application equipment;
    (5) Adequate pest control, including but not limited to, weed, 
rodent, and wildlife control; and
    (6) Disease control.
    (d) Ginseng producers must:
    (1) Provide a report of inventory of all ginseng, as determined by 
CCC;
    (2) Provide production and sales records necessary to determine the 
value of eligible ginseng;
    (3) Allow a CCC-certified loss adjustor to verify loss, including 
physically removing representative samples;
    (4) Maintain and provide, as determined by CCC, adequate records of 
fertilization, and pest and disease controls used or put into place 
during the crop year; and
    (5) Possess a valid food processing licence issued by the applicable 
State Department of Agriculture or equivalent and subject to food 
regulations administered by the Food and Drug Administration.
    (e) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence the 
ginseng was produced in accordance with this section.



Sec.  1437.309  Turfgrass sod.

    (a) Turfgrass sod is a value loss crop and is the upper stratum of 
soil bound by mature grass and plant roots into a thick mat produced in 
commercial quantities for sale.
    (b) Specific species, types or varieties of grass intended for 
turfgrass sod will be considered a separate crop without regard to other 
intended uses.
    (c) The unit of measure for all turfgrass sod shall be a square 
yard.
    (d) Turfgrass sod having any value shall be considered as worth full 
value.
    (e) In addition to the records required in Sec.  1437.7, producers 
seeking payment must provide information to CCC regarding the average 
number of square yards per acre and all unharvested areas.



Sec.  1437.310  Sea grass and sea oats.

    (a) Sea grass and sea oats are value loss crops and eligibility will 
be limited to ornamental plants grown for commercial sale and seeds and 
transplants produced for commercial sale as propagation stock.
    (b) An eligible commodity under this section intended for sale on a 
commercial basis as:
    (1) An ornamental plant can produce a claim in the event of a loss 
due to a qualifying condition only in the same manner and subject to the 
same conditions as ornamental nursery stock under Sec.  1437.305 and 
such claims shall not, as such, be subject to the provisions of 
paragraphs (c) through (h) of this section, except to the extent that 
similar provisions apply to claims under Sec.  1437.305.
    (2) Propagation stock (seed or transplant) can produce a claim under 
this part but only in accord with the provisions that follow in this 
section and subject to other conditions on payment as may be imposed 
elsewhere in this part.
    (c) For purposes of a loss calculation arising under paragraph 
(b)(2) of this section, the value of:
    (1) Seed will be determined on a yield basis made in accordance with 
subpart

[[Page 532]]

B of this part and average market price established in accordance with 
Sec.  1437.11.
    (2) Transplant losses will be determined based on inventory that 
existed immediately before and after the disaster and average market 
price established in accordance with Sec.  1437.11.
    (d) Transplant producers must have up-to-date inventory and sales 
records and other documents, sufficient to document actual losses, as 
determined by CCC.
    (e) The land, waterbed, or facility in which the eligible commodity 
was located at the time of loss must:
    (1) Be owned or leased by the producer;
    (2) Have readily identifiable boundaries; and
    (3) Be managed and maintained using acceptable growing practices for 
the geographical region, as determined by CCC.
    (f) The producer must have control of the land, waterbed, or 
facility and must ensure adequate and proper:
    (1) Flood prevention;
    (2) Growing medium;
    (3) Fertilization or feeding;
    (4) Irrigation and water quality;
    (5) Weed control;
    (6) Pest and disease control;
    (7) Rodent and wildlife control; and
    (8) Over-winterization facilities, as applicable.
    (g) The eligible commodity must be:
    (1) Grown in a region or controlled environment conducive to 
successful production, as determined by CCC; and
    (2) Placed in the waterbed or facility in which the loss occurs and 
not be indigenous to the waterbed or facility.
    (h) Eligible commodities having any dollar value after the disaster 
shall be considered as having full value when making loss calculations. 
Also, damaged plants that do not have any value after the disaster but 
that can be rejuvenated or may, if not fully rejuvenated, reacquire 
value, shall be counted as worth full value as well.
    (i) In the crop year in which a notice of loss is filed, producers 
may be required, at the discretion of CCC, to provide evidence that the 
eligible commodity was produced in accordance with paragraphs (e), (f), 
and (g) of this section and other provisions of this part.

[67 FR 62324, Oct. 7, 2002]



Sec. Sec.  1437.311-1437.400  [Reserved]



     Subpart E--Determining Coverage of Forage Intended for Animal 
                               Consumption



Sec.  1437.401  Forage.

    (a) Forage eligible to generate benefits under this part is limited 
to vegetation produced for animal consumption in a commercial operation 
using acceptable farming, pasture and range management practices for the 
location necessary to sustain sufficient quality and quantity of the 
vegetation so as to be suitable for grazing livestock or mechanical 
harvest. Forage to be mechanically harvested shall be treated under the 
rules for low-yield crops as calculated under Sec.  1437.103. Claims on 
forage for grazing benefits will, contrariwise, be determined under this 
subpart. However, the provisions in this subpart shall govern for all 
claims including forage for mechanical harvest.
    (b) Producers of forage must, in addition to the records required in 
Sec.  1437.7, specify the intended method of harvest of all acreage 
intended as forage for livestock consumption as either mechanically or 
grazed.
    (c) Producers must, in the administrative FSA office for the unit, 
request an appraisal prior to the onset of grazing of any intended 
mechanically harvested forage acreage that will be both mechanically 
harvested and grazed.
    (d) Forage acreage reported to FSA as intended to be mechanically 
harvested which is subsequently completely grazed will be considered for 
crop definition purposes as mechanically harvested. Expected production 
of the specific acreage will be calculated on the basis of carrying 
capacity.
    (e) Small grain forage is the specific acreage of wheat, barley, 
oats, triticale, or rye intended for use as forage. Small grain forage 
shall be considered separate crops and distinct from any other forage 
commodities and other intended uses of the small grain

[[Page 533]]

commodity. In addition to the records required in Sec.  1437.7 producers 
must specify whether the intended forage crop is intended for fall/
winter, spring, or total season forage. In addition to other eligibility 
requirements, CCC will consider other factors, such as, water sources 
and available fencing, and adequate fertilization to determine small 
grain forage eligibility, yields, and production.
    (f) CCC will establish forage losses of acreage intended to be 
grazed on the basis of:
    (1) For improved pasture, as determined by CCC, a similar percentage 
of loss of mechanically harvested forage acreage on the farm, or similar 
farms in the area; or
    (2) For native pasture, as determined by CCC, the percentage of loss 
as determined by two independent assessments of pasture conditions.



Sec.  1437.402  Carrying capacity.

    (a) CCC will establish a carrying capacity for all grazed forage 
present in the county for purposes of administering this program and to 
that end:
    (1) Multiple carrying capacities may be determined for a specific 
vegetation if factors, such as soil type, elevation, and topography, 
result in a significant difference of carrying capacity within the 
county.
    (2) CCC may establish separate carrying capacities for irrigated and 
non-irrigated forage acreage when acreage of traditionally irrigated 
forage (forage actually irrigated 3 of the last 5 crop years) is present 
in the county.
    (b) Producers may provide evidence that unit forage management and 
maintenance practices are improvements over those practices generally 
associated with the established carrying capacity. Based on this 
evidence, CCC may adjust the expected AUD for the specific forage 
acreage upward for the crop year NAP assistance is requested by:
    (1) Three percent when at least 1 practice was completed at least 1 
time in the previous 5 crop years and such practice can be expected to 
have a positive impact on the forage's carrying capacity in the crop 
year NAP assistance is requested;
    (2) Five percent when 2 or more practices were completed at least 1 
time in the previous 5 crop years and such practices can be expected to 
have a positive impact on the forage's carrying capacity in the crop 
year NAP assistance is requested; and
    (3) Greater than 5 percent when producers provide acceptable 
records, as determined by CCC, of higher forage production or an 
increase in animal units supported on the specific forage acreage in 3 
of the 5 crop years immediately before the crop year NAP assistance is 
requested.



Sec.  1437.403  Determining payments.

    Subject to payment limits, availability of funds, and other limits 
as may apply, payments for losses of forage reported to FSA as intended 
to be grazed will be determined by:
    (a) Multiplying the eligible acreage by the producer's share;
    (b) Dividing the result from paragraph (a) of this section by the 
carrying capacity or adjusted per day carrying capacity established for 
the specific acreage, as determined by CCC;
    (c) Multiplying the result from paragraph (b) of this section by the 
number of days established as the grazing period;
    (d) Adding adjustments of AUD for practices and production to the 
product of paragraph (c) of this section;
    (e) Multiplying the result from paragraph (d) of this section by the 
applicable percentage of loss established by CCC;
    (f) Multiplying the amount of AUD lost to other causes, as 
determined by CCC, by the producer's share;
    (g) Subtracting the result from paragraph (f) of this section from 
the result from paragraph (e) of this section;
    (h) Multiplying the result from paragraph (d) of this section by 
0.50;
    (i) Subtracting the result from paragraph (h) of this section from 
the result from paragraph (g) of this section; and
    (j) Multiplying the result from paragraph (i) of this section by the 
AUD value established in accordance with Sec.  1437.11, and then by 55 
percent.

[[Page 534]]



Sec.  1437.404  Information collection requirements under the Paperwork 
Reduction Act; OMB control number.

    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control number for the 
regulation in this part is 0560-0175.



PART 1439--EMERGENCY LIVESTOCK ASSISTANCE--Table of Contents




                      Subpart A--General Provisions

Sec.
1439.1 Applicability and general statement.
1439.2 Administration.
1439.3 Definitions.
1439.4 Liens and claims of creditors.
1439.5 Assignments of payments.
1439.6 Appeals.
1439.7 Misrepresentation, scheme or device.
1439.8 Refunds to CCC; joint and several liability.
1439.9 Cumulative liability.
1439.10 Benefits limitation.
1439.11 Gross revenue limitation.
1439.12 Maintenance of books and records.

                 Subpart B--Livestock Assistance Program

1439.100 Administration.
1439.101 Applicability.
1439.102 Definitions.
1439.103 Application process.
1439.104 County committee determinations of general applicability.
1439.105 Loss criteria.
1439.106 Livestock producer eligibility.
1439.107 Calculation of assistance.
1439.108 Availability of funds.
1439.109 Financial considerations.
1439.110 Appeals.
1439.111 Refunds to CCC; joint and several liability.
1439.112 Miscellaneous.

Subpart C [Reserved]

                   Subpart D--Pasture Recovery Program

1439.301 Administration.
1439.302 Definitions.
1439.303 General description.
1439.304 Eligible persons.
1439.305 Eligible land.
1439.306 Duration of contracts.
1439.307 Gross revenue limitation.
1439.308-1439.319 [Reserved]
1439.320 Obligations of participant.
1439.321 Obligations of the Commodity Credit Corporation.
1439.322 Eligible practices.
1439.323-1439.329 [Reserved]
1439.330 Enrollment.
1439.331 Termination of PRP contracts.
1439.332 Contract modifications.
1439.333-1439.339 [Reserved]
1439.340 Payments.
1439.341 Levels and rates for payments.
1439.342-1439.349 [Reserved]
1439.350 Payments to participants.
1439.351 Violations.
1439.352 Executed PRP contract not in conformity with regulations.
1439.353 Performance based upon advice or action of representative of 
          the Secretary of Agriculture.
1439.354 Access to land under contract.
1439.355 Appeals.
1439.356 Refunds to CCC; joint and several liability.
1439.357 Miscellaneous.

Subpart E [Reserved]

               Subpart F--2000 Flood Compensation Program

1439.501 Applicability.
1439.502 Administration.
1439.503 Definitions.
1439.504 Application process.
1439.505 County committee determinations of general applicability.
1439.506 Eligible land and loss criteria.
1439.507 Producer eligibility.
1439.508 Calculation of assistance.
1439.509 Availability of funds.

Subparts G-I [Reserved]



    Authority: 7 U.S.C. 1427a; 15 U.S.C. 714 et seq.; Sec. 1103 Pub. L. 
105-277, 112 Stat. 2681-42-44; Pub. L. 106-31, 113 Stat. 57; Pub. L. 
106-78, 113 Stat. 1135; Pub. L. 106-113, 113 Stat. 1501; Sec. 257 Pub. 
L. 106-224, 114 Stat. 358; Secs. 802, 806, & 813; Pub. L. 106-387, 114 
Stat. 1549; Pub. L. 108-7, 117 Stat. 11.

    Source: 65 FR 36567, June 8, 2000, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1439.1  Applicability and general statement.

    (a) The regulations in this part set forth the terms and conditions 
applicable to programs that may be made available to livestock producers 
under various statutory provisions. Unless otherwise specified, the 
regulations in this subpart shall apply to all programs operated under 
this part.
    (b) The regulations in this part 1439 in effect prior to March 17, 
1999, (See 7

[[Page 535]]

CFR Parts 1200 to 1599, revised as of January 1, 1999) are applicable 
with respect to any emergency livestock assistance program that existed 
prior to March 17, 1999. The part 1439 regulations in effect on January 
1, 2000 (See 7 CFR Parts 1200 to 1599, revised as of January 1, 2000) 
for the Flood Compensation Program shall continue to apply to all 
pending or new matters under that program.
    (c) Nothing in this subpart shall be read as to require any 
expenditure of funds for a program in an overall amount greater than 
that determined to be appropriate by CCC.



Sec.  1439.2  Administration.

    (a) This part shall be administered by CCC through, and as delegated 
to the Deputy Administrator for Farm Programs under the general 
direction and supervision of the Executive Vice President, CCC. The 
program shall be carried out in the field by State and county committees 
of the Farm Service Agency of the U.S. Department of Agriculture.
    (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 
that 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 that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation in this section to a State or county committee 
shall preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee. The 
Deputy Administrator may waive or modify deadlines or other program 
requirements of this part to the extent that such a waiver or 
modification is otherwise permitted by law and is determined to be 
appropriate, serves the goals of the program, and does not adversely 
affect the operation of the program.



Sec.  1439.3  Definitions.

    The definitions set forth in this section shall be applicable to all 
subparts contained in this part unless otherwise noted, or unless the 
definitions conflict with the definitions in subparts other than this 
subpart A, in which case they shall not apply.
    Carrying capacity means the number of acres of pasture required to 
provide 15.7 pounds of feed grain equivalent per day for one animal unit 
during the period the pasture is normally grazed.
    CCC means the Commodity Credit Corporation.
    Deputy Administrator or DAFP means the Deputy Administrator for Farm 
Programs, Farm Service Agency (FSA), or a designee.
    Equine animals used for food or in the production of food means 
horses, mules, and donkeys that are:
    (1) Used commercially for human food;
    (2) Maintained for commercial sale to processors of food for human 
consumption; or
    (3) Used in the production of food and fiber on the owner's farm, 
such as draft horses, or cow ponies.
    Executive Vice President means the Executive Vice President, CCC, or 
a designee of the Executive Vice President.
    FSA means the Farm Service Agency.
    Livestock producer means a person who is determined to receive 10 
percent or more of the person's gross income, as determined by the 
Secretary, from the production of livestock and is:
    (1) A citizen of, or legal resident alien in the United States; or
    (2) A farm cooperative, private domestic corporation, partnership, 
or joint operation in which a majority interest is held by members, 
stockholders, or partners who are citizens of, or legal resident aliens 
in the United States; any Indian tribe under the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450 et seq.); any 
Indian organization or entity chartered under the Indian Reorganization 
Act (25 U.S.C. 461 et seq.) or entity chartered under the Indian 
Reorganization

[[Page 536]]

Act; any tribal organization under the Indian Self-Determination and 
Education Assistance Act; and any economic enterprise under the Indian 
Financing Act of 1974 (25 U.S.C. 1451 et seq.).
    Natural disaster means a generalized disease, insect infestation, 
flood, drought, fire, hurricane, earthquake, storm, hot weather, or 
other natural disaster.
    Person means an individual or entity, including any organization, of 
any kind, provided that for per-person payment limitations the rules in 
part 1400 of this chapter shall be determinative in defining who is 
considered to be a separate person for such purposes.
    Poultry means domesticated chickens, including egg-producing 
poultry, ducks, geese and turkeys.
    Secretary means the Secretary of Agriculture or a designee of the 
Secretary.
    Seeded small grain forage crops means wheat, barley, oats, rye, and 
triticale.
    State committee, State office, county committee, or county office, 
means the respective FSA committee or office.
    United States means all fifty states of United States, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and the District 
of Columbia.



Sec.  1439.4  Liens and claims of creditors.

    Any payment or benefit or portion thereof due any person under this 
part shall be allowed without regard to questions of title under State 
law, and without regard to any claim or lien in favor of any person 
except agencies of the U.S. Government.



Sec.  1439.5  Assignments of payments.

    Payments that are earned by a person under this part may be assigned 
in accordance with the provisions of part 1404 of this chapter and the 
applicable FSA or CCC forms for assignments.



Sec.  1439.6  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 parts 780 and 11 of this title.



Sec.  1439.7  Misrepresentation, scheme or device.

    A person shall be ineligible to receive assistance under any program 
under this part, and be subject to such other remedies as may be allowed 
by law, if, with respect to such program, it is determined by the State 
committee or the county committee or an official of FSA that such person 
has:
    (a) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (b) Made any fraudulent representation with respect to such program; 
or
    (c) Misrepresented any fact affecting a program determination.



Sec.  1439.8  Refunds to CCC; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment or assistance arising under this 
part, and if any refund of a payment to CCC shall otherwise become due 
in connection with this part, all payments made in regard to such matter 
shall be refunded to CCC, together with interest as determined in 
accordance with paragraph (b) of this section and late-payment charges 
as provided for in part 1403 of this chapter.
    (b) All persons with a financial interest in the operation or in an 
application for payment shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due CCC for 
any reason under this part.
    (c) Interest shall be applicable to refunds required of the 
livestock owner or other party receiving assistance or a payment if CCC 
determines that payments or other assistance were provided to the owner 
and the owner was not eligible for such assistance. Such interest shall 
be charged at the rate of interest that the United States Treasury 
charges CCC for funds, as of the date CCC made such benefits. Such 
interest that is determined to be due CCC shall accrue from the date 
such benefits were made available by CCC to the date of repayment or the 
date interest increases in accordance with part 1403 of this chapter. 
CCC may waive the accrual of interest if CCC determines

[[Page 537]]

that the cause of the erroneous determination was not due to any action 
of the livestock owner or other individual or entity receiving benefits.
    (d) Interest otherwise determined due in accordance with paragraph 
(c) of this section may be waived with respect to refunds required of 
the owner or other program recipient because of unintentional misaction 
on the part of the owner or other individual or entity, as determined by 
CCC.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in part 1403 of this chapter.
    (f) Individuals or entities who are a party to any program operated 
under this part must refund to CCC any excess payments made by CCC with 
respect to such program.
    (g) In the event that any request for assistance or payment under 
this part was established as a result of erroneous information or a 
miscalculation, the assistance or payment shall be recomputed and any 
excess refunded with applicable interest.



Sec.  1439.9  Cumulative liability.

    The liability of any person for any penalty under this part or for 
any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to, 18 U.S.C. 286, 287, 371, 641, 651, 1001 and 1014; 15 
U.S.C. 714m; and 31 U.S.C. 3729.



Sec.  1439.10  Benefits limitation.

    The total amount of benefits that a person, as determined in 
accordance with part 1400 of this chapter, shall be entitled to receive 
under any subpart may not exceed $40,000 for any one loss or year. Also, 
the Deputy Administrator may take such action as needed, whether or not 
specifically provided for, to avoid a duplication of benefits under the 
several programs provided for in this part and may impose such cross-
program payment limitations as may be consistent with the intent of this 
section and this part.



Sec.  1439.11  Gross revenue limitation.

    A person, as defined in part 1400 of this chapter, who has annual 
gross revenue in excess of $2.5 million shall not be eligible to receive 
assistance under this part. For the purpose of this determination, 
annual gross revenue means:
    (a) With respect to a person who receives more than 50 percent of 
such person's gross income from farming and ranching, the total gross 
revenue received from such operations; and
    (b) With respect to a person who receives 50 percent or less of such 
person's gross income from farming and ranching, the total gross revenue 
from all sources.



Sec.  1439.12  Maintenance of books and records.

    Livestock producers or any other individual or entity seeking or 
receiving assistance under this part shall maintain and retain financial 
books and records that will permit verification of all transactions with 
respect to the provisions of this part for at least 3 years following 
the end of the calendar year in which assistance was provided, or for 
such additional period as CCC may request. Destruction of records after 
that date shall be at the risk of the producer or other person receiving 
assistance. An examination of such books and records by a duly 
authorized representative of the United States Government shall be 
permitted at any time during business hours.



              Subpart B--2000 Livestock Assistance Program

    Source: 68 FR 37940, June 26, 2003, unless otherwise noted.



Sec.  1439.100  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), and the Deputy Administrator, for 
Farm Programs, Farm Service Agency (FSA). In the field, the regulations 
in this part will be administered by the FSA State and county 
committees.
    (b) State executive directors, county executive directors, and State 
and

[[Page 538]]

county committees do not have the authority to modify or waive any of 
the provisions in this part unless specifically authorized by the Deputy 
Administrator.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee that has not been taken 
by such committee, such as:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Executive Vice President, CCC, or a designee, or the Deputy 
Administrator from determining any question arising under this part or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) Data furnished by the applicants will be used to determine 
eligibility for program benefits. Although participation in the 2002 
Livestock Assistance Program (2002 LAP) is voluntary, program benefits 
will not be provided unless the participant furnishes all requested 
data.



Sec.  1439.101  Applicability.

    (a) This subpart sets forth the terms and conditions applicable to 
the 2002 LAP authorized by Public Law 108-7. Program regulations for 
prior livestock assistance programs can be found at 7 CFR part 1439 as 
it was published in 7 CFR chapet XIV revised as of January 1, 2001. 
Benefits will be provided to eligible livestock producers in the United 
States under this subpart in declared disaster counties that were 
subsequently approved for relief under this part by the Deputy 
Administrator.
    (b) During the 2001 or 2002 calendar years, for 2002 LAP, a producer 
must be in a disaster county that was also approved and determined by 
the Deputy Administrator as having suffered losses during calendar year 
2001 or 2002. Contiguous counties that were not designated as a disaster 
county in their own right will not be eligible for participation in 2002 
LAP under this subpart. Grazing losses must have occurred on native and 
improved pasture with permanent vegetative cover and other crops planted 
specifically for the sole purpose of providing grazing for livestock, 
but such losses do not include losses on, or with respect to, seeded 
small grain forage crops.
    (c) To be eligible for assistance under this subpart, a livestock 
producer's pastures must have suffered at least a 40-percent loss of 
normal carrying capacity for a minimum of 3 consecutive months during 
the relevant calendar year. The percent of loss eligible for 
compensation shall not exceed the maximum percentage of grazing loss for 
the county as determined by the county committee. In addition, the 
producer will not be compensated for that part of any loss that would 
represent payment of a loss greater than 80 percent.



Sec.  1439.102  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering this subpart. The definitions in Sec.  
1439.3 shall also be applicable, except where those definitions conflict 
with the definitions set forth in this subpart, in which case the 
definitions in this section will apply.
    Application means the Livestock Assistance Program Application. The 
Application is available at county FSA offices.
    Disaster county means a county included in the geographic area 
covered by a qualifying natural disaster declaration for calendar year 
2001 or calendar year 2002 for which the request for such declaration 
was submitted during the period beginning on January 1, 2001, and ending 
February 20, 2003, and subsequently approved. The term disaster county 
means the county where the disaster occurred and does not include a 
contiguous county.
    Qualifying natural disaster declaration means:
    (1) A natural disaster declared by the Secretary under section 
321(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 
1961(a)); or
    (2) A major disaster or emergency designated by the President under 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5121 et seq.).

[[Page 539]]

    Livestock means beef and dairy cattle, buffalo and beefalo (when 
maintained on the same basis as beef cattle), sheep, goats, swine, and 
equine animals where such equine animals are used commercially for human 
food or kept for the production of food or fiber on the owner's farm.



Sec.  1439.103  Application process.

    (a) Livestock producers must submit a completed application prior to 
the close of business on the date established and announced by the 
Deputy Administrator. The application and any other supporting 
documentation shall be submitted to the county FSA office with 
administrative authority over a producer's eligible grazing land or to 
the county FSA office that maintains the farm records for the livestock 
producer.
    (b) Livestock producers shall certify as to the accuracy of all the 
information contained in the application, and provide any other 
information that CCC determines to be necessary to determine the 
livestock producer's eligibility.



Sec.  1439.104  County committee determinations of general applicability.

    (a) County committees shall determine whether due to natural 
disasters their county has suffered a 40-percent loss affecting pasture 
and normal grazing crops for at least 3 consecutive months during 
calendar year 2001 for 2001 eligibility and during calendar year 2002 
for 2002 eligibility. In making this determination, county committees, 
using the best information available from sources including but not 
limited to: the Extension Service, the Natural Resources Conservation 
Service; the Drought Monitor; the Palmer Drought Index; and general 
knowledge of local rainfall data, pasture losses, grazing livestock 
movement out of county, abnormal supplemental feeding practices for 
livestock on pasture and liquidation of grazing livestock, shall 
determine the percentage of grazing losses for pastures on a county-wide 
basis. The county committee shall submit rainfall data, percentage of 
grazing losses for each general type of pasture, and the weighted 
average percentage of grazing loss for the county, with State committee 
concurrence, to the Deputy Administrator. The maximum grazing losses the 
county committees shall submit is 80 percent. These determinations shall 
be subject to review and approval of the Deputy Administrator. For 
purposes of this subpart, such counties are called ``eligible 
counties.''
    (b) In each eligible county, the county committee shall determine an 
LAP crop year. The LAP crop year shall be that period of time in a 
calendar year that begins with the date grazing of new growth pasture 
normally begins and ends on the date grazing without supplemental 
feeding normally ends in the county.
    (c) In and for each eligible county, the county committee shall 
determine normal carrying capacities for each type of grazing or pasture 
during the LAP crop year. The normal carrying capacity for the LAP crop 
year shall be the normal carrying capacity the county committee 
determines could be expected from pasture and normal grazing crops for 
livestock for the LAP crop year if a natural disaster had not diminished 
the production of these grazing crops.
    (d) In each eligible county, the county committee shall determine 
the payment period for the county. The payment period for the county 
shall be the period of time during the county's LAP crop year where for 
3 consecutive months during 2001 or 2002, the carrying capacity for 
grazing land or pasture was reduced by 40 percent or more from the 
normal carrying capacity.



Sec.  1439.105  Loss criteria.

    (a) Grazing land for which a livestock producer requests benefits 
must be within the physical boundary of a disaster county. Livestock 
producers in unapproved counties contiguous to an eligible county will 
not receive benefits under this subpart.
    (b) To be eligible for benefits under this subpart, a livestock 
producer in an eligible county must have suffered a loss of grazing 
production equivalent to at least a 40-percent loss of normal carrying 
capacity for a minimum of 3 consecutive months.
    (c) A producer shall specify each type of pasture and percentage of 
loss suffered by each type on the application.

[[Page 540]]

In establishing the percentage of grazing loss, producers shall consider 
the amount of available grazing production during the LAP crop year, 
whether more than the normal acreage of grazing land was required to 
support livestock during the LAP crop year, and whether supplemental 
feeding of livestock began earlier or later than normal.
    (d) The county committee shall determine the producer's grazing loss 
and shall consider the amount of available grazing production during the 
LAP crop year, whether more than the normal acreage of grazing land was 
required to support livestock during the LAP crop year, and whether 
supplemental feeding of livestock began earlier or later than normal. 
The county committee shall request the producer to provide proof of loss 
of grazing production if the county committee determines the producer's 
certified loss exceeds other similarly situated livestock producers.
    (e) The percentage of loss claimed by a livestock producer shall not 
exceed the maximum allowable percentage of grazing loss for the county 
as determined by the county committee in accordance with Sec.  
1439.104(a). Livestock producers will not receive benefits under this 
subpart for any portion of their loss that exceeds 80 percent of normal 
carrying capacity.
    (f) Conservation Reserve Program acres released for haying or 
grazing and seeded small grain forage crops shall not be used to 
calculate losses under this subpart.



Sec.  1439.106  Livestock producer eligibility.

    (a) Only one livestock producer will be eligible for benefits under 
this subpart with respect to an individual animal.
    (b) Only owners, cash lessees, or share lessees of livestock who 
themselves provide the pasture or grazing land, including cash leased 
pasture or grazing land, for the livestock may be considered as 
livestock producers eligible to apply for benefits under this subpart.
    (c) An owner, or cash or share lessee of livestock who uses another 
person to provide pasture or grazing land on a rate-of-gain basis is not 
considered to be the livestock producer eligible to apply for benefits 
under this subpart.
    (d) An owner who pledges livestock as security for a loan shall be 
considered as the person eligible to apply for benefits under this 
subpart if all other requirements of this part are met. Livestock leased 
or being purchased under a contractual agreement that has been in effect 
at least 3 months and establishes an interest for the lessee in such 
livestock shall be considered as being owned by the lessee.
    (e) Livestock must have been owned or leased for at least 3 months 
before becoming eligible for payment.
    (f) The following entities are not eligible for benefits under this 
subpart:
    (1) State or local governments or subdivisions thereof; or
    (2) Any individual or entity who is a foreign person as determined 
in accordance with the provisions of Sec. Sec.  1400.501 and 1400.502 of 
this chapter.



Sec.  1439.107  Calculation of assistance.

    (a) The value of LAP assistance determined with respect to a 
livestock producer for each type and weight class of livestock owned or 
leased by such producer shall be the lesser of the amount calculated 
under paragraph (b) of this section (the total value of lost feed needs 
for eligible livestock) or calculated under paragraph (c) of this 
section (the total value of lost eligible pasture).
    (b) The total value of lost feed needs shall be the amount obtained 
by multiplying:
    (1) The number of days in the payment period the livestock are owned 
or, in the case of purchased livestock, meet the 3-month ownership 
requirement; by
    (2) The number of pounds of corn-equivalent per day, as established 
by CCC, that is determined necessary to provide the energy requirements 
established for the weight class and type of livestock; by
    (3) The 5-year national average market price for corn, as determined 
($1.92 bushel or $0.0342857 per pound); by
    (4) The number of eligible animals of each type and weight range of 
livestock owned or leased by the person; by

[[Page 541]]

    (5) The percent of the producer's grazing loss during the relevant 
period as certified by the producer and approved by the county committee 
in accordance with Sec.  1439.105.
    (c) The total value of lost eligible pasture shall be the amounts 
for each type of pasture calculated by:
    (1) Dividing the number of acres of each pasture type by the 
carrying capacity established for the pasture, and multiplying the 
result by:
    (2) The 5-year national average market price for corn, as determined 
($1.92 bushel or $0.0342857 per pound); by
    (3) The daily feed grain equivalent per animal (15.7 pounds of corn 
necessary for a beef cow, factored for the weight class and type of 
livestock, as determined by CCC), by
    (4) The applicable number of days in the LAP payment period; by
    (5) The percent of the producer's grazing loss during the relevant 
period as certified by the producer and approved by the county committee 
in accordance with Sec.  1439.105.
    (d) The final payment shall be the smaller of paragraph (b) or (c) 
of this section and from the final payment amount shall be subtracted 
the sum of the amounts received by the producer under the Livestock 
Compensation Program, as published in the Federal Register on October 
10, 2002 (67 FR 63070), and the 2002 Cattle Feed Program, as published 
on September 3, 2002 (67 FR 56260). The final payment shall not exceed 
50 percent of the smaller of paragraph (b) or (c) of this section 
determined prior to subtracting the amounts received by the producer 
under the Livestock Compensation Program, as published in the Federal 
Register on October 10, 2002 (67 FR 63070), the 2002 Cattle Feed 
Program, as published on September 3, 2002 (67 FR 56260), and the 
Livestock Compensation Program II, as published on May 5, 2003 (68 FR 
23688).
    (e) The final payment calculated in paragraph (d) of this section 
shall be multiplied by the national factor if required under Sec.  
1439.108.
    (f) Seeded small grain forage crops shall not be counted as grazing 
land under paragraph (c) of this section with respect to supporting 
eligible livestock.
    (g) The number of equine animals that are used to calculate benefits 
under this subpart and in paragraph (a) of this section are limited to 
the number actually needed to produce food and fiber on the producer's 
farm or to breed horses and mules to be used to produce food and fiber 
on the owner's farm, and shall not include animals that are used for 
recreational purposes or are running wild or uncontrolled on land owned 
or leased by the owner.



Sec.  1439.108  Availability of funds.

    In the event that the total amount of claims submitted under this 
subpart exceed $250 million, each payment shall be reduced by a uniform 
national percentage. Such payment reductions shall be made after the 
imposition of applicable payment limitation provisions.



Sec.  1439.109  Financial considerations.

    The provisions of Sec. Sec.  1439.10 and 1439.11 apply to 2002 LAP.



Sec.  1439.110  Appeals.

    Determinations made under this subpart are subject to 
reconsideration or appeal in accordance with parts 780 and 11 of this 
title.



Sec.  1439.111  Refunds to CCC; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment or assistance arising under this 
part, and if any refund of a payment to CCC shall otherwise become due 
in connection with this part, all payments made in regard to such matter 
shall be refunded to CCC, together with interest as determined in 
accordance with paragraph (b) of this section and late-payment charges 
as provided for in part 1403 of this chapter.
    (b) All persons with a financial interest in the operation or in an 
application for payment shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due CCC for 
any reason under this part.
    (c) Interest shall be applicable to refunds required of the 
livestock owner or other party receiving assistance or a

[[Page 542]]

payment if CCC determines that payments or other assistance were 
provided to the owner and the owner was not eligible for such 
assistance. Such interest shall be charged at the rate of interest that 
the United States Treasury charges CCC for funds, as of the date CCC 
made such benefits. Such interest that is determined to be due CCC shall 
accrue from the date such benefits were made available by CCC to the 
date of repayment or the date interest increases in accordance with part 
1403 of this chapter. CCC may waive the accrual of interest if CCC 
determines that the cause of the erroneous determination was not due to 
any action of the livestock owner or other individual or entity 
receiving benefits.
    (d) Interest otherwise determined due in accordance with paragraph 
(c) of this section may be waived with respect to refunds required of 
the owner or other program recipient because of unintentional misaction 
on the part of the owner or other individual or entity, as determined by 
CCC.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in part 1403 of this chapter.
    (f) Individuals or entities who are a party to any program operated 
under this part must refund to CCC any excess payments made by CCC with 
respect to such program.
    (g) In the event that any request for assistance or payment under 
this part was established as a result of erroneous information or a 
miscalculation, the assistance or payment shall be recomputed and any 
excess refunded with applicable interest.



Sec.  1439.112  Miscellaneous.

    (a) Any remedies permitted CCC under this part shall be in addition 
to any other remedy, including, but not limited to criminal remedies, or 
actions for damages in favor of CCC, or the United States, as may be 
permitted by law.
    (b) Absent a scheme or device to defeat the purpose of the program, 
CCC may waive the demand that could otherwise be made for refunds.
    (c) Payments under this subpart are subject to provisions contained 
in subpart A of this part including, but not limited to, provisions 
concerning misrepresentations, payment limitations, and refunds to CCC, 
liens, assignment of payments, and appeals, and maintenance of books and 
records. In addition, other parts of this chapter and of chapter VII of 
this Title relating to payments in event of death, the handling of 
claims, and other matters may apply, as may other provisions of law and 
regulation.
    (d) Any payments not earned that have been paid must be returned 
with interest subject to such other remedies as may be allowed by law.
    (e) No interest will be paid or accrue on benefits under this 
subpart that are delayed or otherwise not timely issued unless otherwise 
mandated by law.
    (f) Nothing in this subpart shall require a commitment of funds to 
this subpart in excess of that determined to be appropriate by the 
Deputy Administrator and/or CCC.
    (g) In no instance may the amount expended under this subpart exceed 
$250 million.
    (h) Payments under this subpart shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the livestock, or proceeds thereof, in favor of the owner 
or any other creditor except agencies of the U.S. Government.
    (i) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.
    (j) In those instances in which, prior to the issuance of this 
regulation, a producer has signed a power of attorney for a person or 
entity indicating that such power shall extend to ``all above 
programs'', without limitation, such power will be considered to extend 
to this program unless by July 10, 2003 the person granting the power 
notifies the local FSA office for the control county that the grantee of 
the power is not authorized to handle transactions for this program for 
the grantor.
    (k) Livestock producers or any other individual or entity seeking or 
receiving assistance under this part shall maintain and retain records 
that will permit verification of livestock and

[[Page 543]]

grazing for at least 3 years following the end of the calendar year in 
which payment was made, or for such additional period as CCC may 
request. An examination of such records by a duly authorized 
representative of the United States Government shall be permitted at any 
time during business hours.
    (l) A person shall be ineligible to receive assistance under 2002 
LAP and be subject to such other remedies as may be allowed by law, if, 
with respect to the 2002 LAP, it is determined by the State committee or 
the county committee or an official of FSA that such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.

Subpart C [Reserved]



                   Subpart D--Pasture Recovery Program

    Source: 66 FR 15544, Mar. 19, 2001, unless otherwise noted.



Sec.  1439.301  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Executive Vice President, 
Commodity Credit Corporation (CCC), and the Deputy Administrator, for 
Farm Programs, Farm Service Agency (FSA). In the field, the regulations 
in this part will be administered by the FSA State and county committees 
(``State committees'' and ``county committees'', respectively).
    (b) State executive directors, county executive directors, and State 
and county committees do not have the authority to modify or waive any 
of the provisions in this part unless specifically authorized by the 
Deputy Administrator.
    (c) The State committee may take any action authorized or required 
by this part to be taken by the county committee that has not been taken 
by such committee, such as:
    (1) Correct or require a county committee to correct any action 
taken by such county committee that is not in accordance with this part; 
or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Executive Vice President, CCC, or a designee, or the Deputy 
Administrator from determining any question arising under this part or 
from reversing or modifying any determination made by a State or county 
committee.
    (e) Data furnished by the applicants will be used to determine 
eligibility for program benefits. Although participation in the Pasture 
Recovery Program (PRP) is voluntary, program benefits will not be 
provided unless the participant furnishes the appropriate data.



Sec.  1439.302  Definitions.

    The following definitions shall be applicable to this subpart:
    Applicant means, unless the context indicates otherwise, the owner 
or operator.
    Contract period means the period of time the PRP contract is in 
effect.
    Equine animals means horses, mules, and donkeys.
    Federally-owned land means land owned by the Federal Government or 
any department, bureau, or agency thereof, or any corporation whose 
stock is wholly owned by the Federal Government.
    Forage crop means a perennial stand of grasses or legumes that are 
intended for use by livestock for grazing and are customarily used for 
that purpose by local producers.
    FSA means the Farm Service Agency.
    Hayland means land that was or has been routinely used to produce 
hay.
    Livestock means beef and dairy cattle, buffalo and beefalo (when 
maintained on the same basis as beef cattle), sheep, goats, swine, and 
equine animals used commercially for human food or kept for the 
production of food or fiber.
    Local FSA office means the FSA office in the local USDA service 
center in which the FSA records are maintained for the farm or ranch 
that includes the pasture land that the applicant is seeking to enroll 
in the PRP.

[[Page 544]]

    Operator means a person who is in general control of the farming 
operation on the farm, as determined by FSA for CCC.
    Owner means a person or entity who is determined by FSA to have 
sufficient legal ownership of the land, including a person who is buying 
the acreage under a purchase agreement; each spouse in a community 
property State; each spouse when spouses own property jointly; and a 
person who has life-estate in the property.
    Participant means an owner or operator or tenant who has entered 
into a PRP contract.
    Pasture land means generally enclosed land devoted to a perennial 
forage crop used and suitable for grazing of livestock.
    Payment means, unless the context indicates otherwise, the payment 
specified in the PRP contract that, subject to the availability of 
funds, is made to a participant to compensate such participant for 
reestablishing an approved forage crop on eligible pasture land in the 
PRP.
    Practice means with respect to practices to be approved for relief 
under this subpart, an approved measure to cost-effectively reseed 
pasture, and, in conjunction with seeding, as necessary, fertilize to 
reestablish a forage crop on eligible pasture land damaged or destroyed 
by natural disaster, as determined by CCC.
    Rangeland means land having indigenous, unimproved vegetation that 
may be used or suitable for open roaming and grazing of livestock.
    Secretary means the Secretary of Agriculture or a designee of the 
Secretary.
    State committee, State office, county committee, or county office, 
means the respective FSA committee or office.
    State Technical Committee means that committee established pursuant 
to 16 U.S.C. 3861.
    State-owned land means land owned by a State Government or any 
department, bureau, or agency thereof, including political subdivisions 
of a State, as determined by CCC.
    Technical assistance means the assistance provided in connection 
with the PRP to owners or operators by FSA or other authorized designee 
of the Secretary in determining the eligibility of land and implementing 
and certifying eligible practices.
    United States means all fifty states of United States, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and the District 
of Columbia.



Sec.  1439.303  General description.

    Under the PRP, the CCC will enter into contracts with eligible 
producers to provide payments to assist producers to reestablish the 
damaged or destroyed pasture land to an approved forage crop upon a 
promise and obligation to maintain the new crop for 3 full years after 
the calendar year of installation.



Sec.  1439.304  Eligible persons.

    In order to be eligible to enter into a PRP contract in accordance 
with this part, a person must be an owner or operator of eligible 
pasture land that was damaged or destroyed by natural disaster during 
calendar year 2000 and:
    (a) Must normally graze livestock on such pasture land; and
    (b) If an operator of eligible land that the operator does not own, 
must provide satisfactory evidence that such operator will be in control 
of such eligible pasture land for the full term of the PRP contract 
period.



Sec.  1439.305  Eligible land.

    (a) Except as otherwise provided in this section, land in the PRP 
must be pastureland that:
    (1) As determined by CCC, is located within a county that was 
approved for assistance under the Emergency Conservation Program 
provided for in 7 CFR part 701 because of a 2000 natural disaster, or 
was later approved for such participation based upon an application 
filed by such date as is determined and announced by the Deputy 
Administrator and based upon natural disaster damage suffered in 2000.
    (2) Has been established pasture land on which livestock is normally 
grazed or on which the forage crop was so damaged or destroyed by 
natural disaster in calendar year 2000 that the forage crop will not 
return in the 2001 grazing year, and seeding is required to reestablish 
the forage crop, as determined by CCC.

[[Page 545]]

    (b) Notwithstanding paragraph (a) of this section, land, as 
determined by CCC, shall be ineligible for enrollment if the pasture 
land is:
    (1) Federal-operated land;
    (2) State-operated land;
    (3) Hayland; or
    (4) Rangeland, as determined by the CCC.



Sec.  1439.306  Duration of contracts.

    Contracts under this subpart and their forage crop maintenance 
requirements shall be for three years. The installation of the practice 
must be completed no later than the date specified in the PRP contract.



Sec.  1439.307  Gross revenue limitation.

    A person, as determined in accordance with part 1400 of this 
chapter, who has annual gross revenue in excess of $2.5 million shall 
not be eligible to receive assistance under this part. For the purpose 
of this determination, annual gross revenue means:
    (a) With respect to a person who receives more than 50 percent of 
such person's gross income from farming and ranching, the total gross 
revenue received from such operations; and
    (b) With respect to a person who receives 50 percent or less of such 
person's gross income from farming and ranching, the total gross revenue 
from all sources.



Sec. Sec.  1439.308-1439.319  [Reserved]



Sec.  1439.320  Obligations of participant.

    All participants subject to a PRP contract must agree to:
    (a) Carry out the terms and conditions of the PRP contract including 
carrying out all approved practices and meeting the schedule of dates 
for seeding and for maintenance measures provided for in the contract to 
establish and maintain the approved forage crop;
    (b) Comply with all requirements of part 12 of this title;
    (c) Comply with noxious weed laws of the applicable State or local 
jurisdiction on such land;
    (d) Control, subject to the contract, all weeds, insects, pests and 
other undesirable species to the extent necessary to ensure that the 
establishment and maintenance of the approved forage crop is adequately 
protected, as determined by CCC;
    (e) Not harvest the re-seeded cover crop at any time during the 
contract period; and
    (f) Be jointly and severally responsible with other persons 
qualifying for payments under this program on the same land for 
compliance with such contract and the provisions of this part and for 
any refunds, payment adjustments, or liquidated damages that may be 
required for violations of any of the terms and conditions of the PRP 
contract.



Sec.  1439.321  Obligations of the Commodity Credit Corporation.

    CCC shall:
    (a) Upon establishment of the required forage crop, and provided all 
other eligibility criteria have been met, make PRP payments to 
participants in accordance with the provisions of this part; and
    (b) Provide such technical assistance as it determines necessary to 
assist the participant in carrying out the PRP contract.



Sec.  1439.322  Eligible practices.

    Eligible practices are those practices specified in the contract 
that meet all quantity and quality standards needed to cost-effectively 
reestablish the approved forage crop, as determined by CCC, on acreage 
subject to the contract, including reseeding.



Sec. Sec.  1439.323-1439.329  [Reserved]



Sec.  1439.330  Enrollment.

    Only applications for contracts submitted by a participant at the 
FSA office responsible for administering CCC programs in the county 
where the participant's farm is located during designated signup 
periods, as announced by CCC, will be approved.



Sec.  1439.331  Termination of PRP contracts.

    (a) As determined by CCC, PRP contracts may be terminated before the 
expiration date when:
    (1) The owner loses control of, or transfers, all or part of the 
acreage under contract and the new owner does not wish to continue the 
contract;

[[Page 546]]

    (2) The participant voluntarily requests in writing to terminate the 
contract and obtains the approval of CCC subject to such conditions on 
approval as may be determined by CCC;
    (3) The participant is not in compliance with the terms and 
conditions of the contract;
    (4) The same acreage is later enrolled in another State, Federal, or 
local conservation program;
    (5) The PRP practice fails and CCC determines the cost of restoring 
the cover outweighs the benefits received from the restoration; or
    (6) The PRP contract was approved based on erroneous eligibility 
determinations.
    (b) When a PRP contract is terminated, the participant must, except 
as agreed to by CCC, refund all or part of the payments made with 
respect to such contract plus interest thereon, as determined by CCC, 
and shall pay liquidated damages as provided for in such contract.



Sec.  1439.332  Contract modifications.

    By mutual agreement between CCC and the participant, a PRP contract 
may be modified in order to:
    (a) Decrease acreage in the PRP;
    (b) Facilitate the practical administration of the PRP; or
    (c) Accomplish the goals and objectives of the PRP, as determined by 
CCC.



Sec. Sec.  1439.333-1439.339  [Reserved]



Sec.  1439.340  Payments.

    (a) Payments shall be made available upon a determination by CCC 
that an eligible practice, or an identifiable unit thereof, has been 
established in compliance with the appropriate standards and 
specifications. Payments will be prorated if requests for assistance 
exceed available funding.
    (b) Except as otherwise provided for in this part, payments may be 
made under the PRP only for the cost-effective establishment or 
installation of an eligible practice.
    (c) Payments shall be made in such amount and in accordance with a 
schedule specified in the PRP contract.
    (d) Payment shall be made on a per-acre basis.
    (e) The payment shall be divided among the participants on a single 
contract in the manner agreed upon in such contract.
    (f) The maximum amount of all payments that a person may receive 
under the PRP shall not exceed $2,500. The regulations set forth at part 
1400 of this chapter shall be applicable in making certain eligibility 
and ``person'' determinations as they apply to payment limitations under 
this part.
    (g) Payments shall be limited as needed or appropriate to account 
for mandatory or discretionary limits on payments.



Sec.  1439.341  Levels and rates for payments.

    (a) CCC shall pay not more than 65 percent of the average cost of 
reestablishing the approved forage crop, including reseeding, on 
eligible land.
    (b) The average cost of performing a practice may be determined by 
CCC based on recommendations from the State Technical Committee or on 
such other basis as it deemed appropriate.
    (c) Notwithstanding paragraph (a) or (b) of this section, no payment 
shall exceed $100 per acre without approval of the Deputy Administrator. 
In no case shall a payment exceed $125 per acre.



Sec. Sec.  1439.342-1439.349  [Reserved]



Sec.  1439.350  Payments to participants.

    Payments shall be made to the participants responsible for the 
establishment of the practice.



Sec.  1439.351  Violations.

    (a) If a participant fails to carry out the terms and conditions of 
a PRP contract, CCC may terminate the PRP contract.
    (b) If the PRP contract is terminated by CCC:
    (1) The participant shall forfeit all rights to payments under such 
contract and refund all payments previously received together with 
interest; and
    (2) Pay liquidated damages to CCC in such amount as specified in the 
contract.
    (c) If the Deputy Administrator determines such failure does not 
warrant

[[Page 547]]

termination of such contract, the Deputy Administrator may authorize 
relief as the Deputy Administrator deems appropriate.



Sec.  1439.352  Executed PRP contract not in conformity with regulations.

    If, after a PRP contract is approved by CCC, CCC discovers that the 
PRP contract is not in conformity with the provisions of this part, the 
provisions of the regulations in this part shall prevail and the 
contract may be terminated.



Sec.  1439.353  Performance based upon advice or action of representative 
of the Secretary of Agriculture.

    The provisions of Sec.  718.8 of this title relating to performance 
based upon the action or advice of a representative of the Secretary of 
Agriculture shall be applicable to this part.



Sec.  1439.354  Access to land under contract.

    (a) The applicant or participant shall, as requested, provide all 
representatives or designees of CCC with access to all land that is:
    (1) The subject of an application for a contract under this part; or
    (2) Under contract or otherwise subject to this part.
    (b) With respect to such land identified in paragraph (a) of this 
section, the participant or applicant shall provide such representatives 
with access to examine records with respect to such land for the purpose 
of determining compliance with the terms and conditions of the PRP.



Sec.  1439.355  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 parts 780 and 11 of this title.



Sec.  1439.356  Refunds to CCC; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment or assistance arising under this 
part, and if any refund of a payment to CCC shall otherwise become due 
in connection with this part, all payments made in regard to such matter 
shall be refunded to CCC, together with interest as determined in 
accordance with paragraph (b) of this section and late-payment charges 
as provided for in part 1403 of this chapter.
    (b) All persons with a financial interest in the operation or in an 
application for payment shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due CCC for 
any reason under this part.
    (c) Interest shall be applicable to refunds required of the 
livestock owner or other party receiving assistance or a payment if CCC 
determines that payments or other assistance were provided to the owner 
and the owner was not eligible for such assistance. Such interest shall 
be charged at the rate of interest that the United States Treasury 
charges CCC for funds, as of the date CCC made such benefits. Such 
interest that is determined to be due CCC shall accrue from the date 
such benefits were made available by CCC to the date of repayment or the 
date interest increases in accordance with part 1403 of this chapter. 
CCC may waive the accrual of interest if CCC determines that the cause 
of the erroneous determination was not due to any action of the 
livestock owner or other individual or entity receiving benefits.
    (d) Interest otherwise determined due in accordance with paragraph 
(c) of this section may be waived with respect to refunds required of 
the owner or other program recipient because of unintentional misaction 
on the part of the owner or other individual or entity, as determined by 
CCC.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in part 1403 of this chapter.
    (f) Individuals or entities who are a party to any program operated 
under this part must refund to CCC any excess payments made by CCC with 
respect to such program.
    (g) In the event that any request for assistance or payment under 
this part was established as a result of erroneous information or a 
miscalculation, the

[[Page 548]]

assistance or payment shall be recomputed and any excess refunded with 
applicable interest.



Sec.  1439.357  Miscellaneous.

    (a) Any remedies permitted CCC under this part shall be in addition 
to any other remedy, including, but not limited to criminal remedies, or 
actions for damages in favor of CCC, or the United States, as may be 
permitted by law.
    (b) Absent a scheme or device to defeat the purpose of the program, 
when an owner loses control of PRP acreage due to foreclosure, CCC may 
waive the demand that could otherwise be made for refunds.
    (c) Payments under this subpart are subject to provisions contained 
in Subpart A of this part including, but not limited to provisions 
concerning misrepresentations, payment limitations, limitations on 
eligibility tied to the person's gross income, and refunds to CCC, 
liens, assignment of payments, and appeals, and maintenance of books and 
records. In addition, other parts of this chapter and of chapter VII of 
this title relating to payments in event of death, the handling of 
claims, and other matters may apply, as may other provisions of law and 
regulation.
    (d) Any payments not earned that have been paid must be returned 
with interest subject to such other remedies as may be allowed by law.
    (e) No interest will be paid or accrue on benefits under this 
subpart that are delayed or otherwise not timely issued unless otherwise 
mandated by law.
    (f) Nothing in this subpart shall require a commitment of funds to 
this subpart in excess of that determined to be appropriate by the 
Deputy Administrator and/or CCC.
    (g) Any payment otherwise due under this subpart will be reduced to 
the extent that it is determined that such payment produces a duplicate 
benefit under another program operated by the Department of Agriculture 
and that to make such duplicate payment would be contrary to the 
purposes of the program.
    (h) In no instance may the amount expended under this subpart exceed 
$39.912 million.
    (i) Payments under this subpart shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
shall be applicable to PRP contract payments.
    (j) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.
    (k) In those instances in which, prior to the March 14, 2001 
effective date of this subpart, a producer has signed a power of 
attorney on an approved FSA-211 for a person or entity indicating that 
such power shall extend to ``all above programs'', without limitation, 
such power will be considered to extend to this program unless by April 
2, 2001 the person granting the power notifies the local FSA office for 
the control county that the grantee of the power is not authorized to 
handle transactions for this program for the grantor.
    (l) Livestock producers or any other individual or entity seeking or 
receiving assistance under this part shall maintain and retain records 
that will permit verification of PRP practice completion for at least 3 
years following the end of the calendar year in which payment was made, 
or for such additional period as CCC may request. An examination of such 
records by a duly authorized representative of the United States 
Government shall be permitted at any time during business hours.
    (m) A person shall be ineligible to receive assistance under PRP and 
be subject to such other remedies as may be allowed by law, if, with 
respect to the PRP, it is determined by the State committee or the 
county committee or an official of FSA that such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.

[[Page 549]]

Subpart E [Reserved]



                 Subpart F--2000 Flood Compensation Act

    Source: 65 FR 65716, Nov. 2, 2000, unless otherwise noted.



Sec.  1439.501  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
2000 Flood Compensation Program (FCP). Benefits will be provided to 
eligible producers in the United States but only in counties approved 
under the 1998 FCP (provided for in regulations of this part contained 
in the 7 CFR, parts 1200 to 1599, edition revised as of January 1, 
2000), where long-term flooding occurred, and that were subsequently 
approved by the Deputy Administrator for Farm Programs as eligible 
counties.



Sec.  1439.502  Administration.

    This subpart shall be administered as set forth in Sec.  1439.2, 
except as provided for in this subpart.



Sec.  1439.503  Definitions.

    Except as otherwise indicated, terms in this part shall have the 
same meanings as those defined in 7 CFR 1439.3 and 718.2. To the extent 
that the definitions in this section differ from the definitions in 7 
CFR 1439.3 and 718.2, the definitions in this section apply rather than 
the definitions in 7 CFR 1439.3 and 718.2
    Application means the Form CCC-454, Flood Compensation Program 
Application. The CCC-454 is available at county FSA offices.
    Covered land means:
    (1) Land that:
    (i) Was unusable for agricultural production during 2000 crop year 
as the result of flooding;
    (ii) Was used for agricultural production during at least 1 of the 
1992 through 1999 crop years;
    (iii) Is a contiguous parcel of land of at least 1 acre;
    (iv) Is located in a county in which producers were eligible for 
assistance under the 1998 Flood Compensation Program;
    (v) Was not planted during FY 2000; and
    (vi) Meets all other conditions of eligibility.
    (2) The term ``covered land'' excludes any land with respect to 
which a producer is insured, enrolled, or assisted during the 2000 crop 
year under:
    (i) A policy or plan of insurance authorized under the Federal Crop 
Insurance Act (7 U.S.C. 1501 et seq.);
    (ii) The noninsured crop assistance program operated under section 
196 of the Agricultural Market Transition Act (7 U.S.C. 7333);
    (iii) Any crop disaster program established for the 2000 crop year;
    (iv) The conservation reserve program established under subchapter B 
of chapter 1 of subtitle D of the Food Security Act of 1985 (16 U.S.C. 
3831 et seq.);
    (v) The wetlands reserve program established under subchapter C of 
chapter 1 of subtitle D of the Food Security Act of 1985 (16 U.S.C. 3837 
et seq.);
    (vi) Any emergency watershed protection program or Federal easement 
program that prohibits crop production or grazing; or
    (vii) Any other Federal or State water storage program, as 
determined by the Secretary.
    FCP means the Flood Compensation Program provided for in this part.
    FY 2000 means the period from October 1, 1999 through September 30, 
2000.
    NASS means The National Agricultural Statistics Service.



Sec.  1439.504  Application process.

    (a) Producers must submit a completed application prior to the close 
of business on December 15, 2000, or other such later date as 
established and announced by the Deputy Administrator. The application 
and any supporting documentation shall be submitted to the FSA county 
office with administrative authority over a producer's eligible flooded 
land or to the FSA county office that maintains the farm records for the 
producer.
    (b) Producers shall certify as to the accuracy of all the 
information contained in the application, and provide any other 
information to CCC that the FSA county office or FSA Committee deems 
necessary to determine the producer's eligibility.

[[Page 550]]



Sec.  1439.505  County committee determinations of general applicability.

    (a) FSA county committees shall determine whether that county was 
determined eligible under the 1998 FCP, and whether the land has been 
unusable from October 1, 1999 through September 30, 2000 due to 
continuing flooding. In making this determination, the FSA county 
committee shall use what it considers to be the best information 
available including but not limited to: Cooperative State Research, 
Education, and Extension Service; Natural Resources Conservation 
Service; aerial photography; rainfall data; and general knowledge of 
losses due to flooding.
    (b) With respect to each eligible county, the FSA county committee 
for that county shall establish a separate payment rate for crop-land 
and pasture-land. These rates shall be reviewed by the FSA state 
committee and shall be equal to the average rental rate for the years 
1996 through 2000 for all such land of each type in the county. Where 
these rates cannot be set in the manner provided for in paragraph (c) of 
this section, the FSA state committee may take into account rates 
established for the Conservation Reserve Program operated under 7 CFR 
part 1410 and ensure, subject to paragraph (c) of this section, that the 
rates are comparable. The Deputy Administrator shall review and may 
adjust the rates for reasonableness and consistency.
    (c) Except as provided by the Deputy Administrator, rental rates 
shall be equal to the applicable county average for the kind of land 
involved using established NASS data in all locations where NASS has 
established rental rates on a county-by-county basis for 2000.



Sec.  1439.506  Eligible land and loss criteria.

    (a) The flooded land for which a producer requests benefits must be 
within the physical boundary of an eligible county. Producers in 
unapproved counties contiguous to an eligible county will not receive 
benefits under this subpart.
    (b) To be eligible for benefits under this subpart, a producer in an 
eligible county must have land in a county which is eligible for 
payment. Such land, to be eligible for payment must meet all of the 
following criteria:
    (1) The land is cropland or pasture land used for the production of 
feed for livestock (haying, grazing, or feed grain production) or other 
agricultural use in one or more years during the period beginning 
October 1, 1991, through September 30, 1999;
    (2) The land is inaccessible or unable to be used for crop 
production, grazing, or haying because of flooding or excess moisture 
during all of the period beginning October 1, 1999, through September 
30, 2000 unless some other period is established as the 2000-crop year 
for the commodity by the Deputy Administrator;
    (3) The land was not used for planting during October 1, 1999, 
through September 30, 2000;
    (4) The land has been owned, leased or under a binding cash lease by 
the producer continuously since October 1, 1999;
    (5) The land is a contiguous parcel of land with an area equal to 
one acre or more;
    (6) The land was not, except as determined by the Deputy 
Administrator, the subject of, nor will be the subject of, any other 
federal payment for activities or lack of activity during the period 
October 1, 1999, through September 30, 2000, whether or not disaster-
related, with the exception of the production flexibility contract (PFC) 
program payments received under 7 CFR part 1412. This prohibition 
includes but is not limited to other payments under this part, or 
payments under the Conservation Reserve Program (7 CFR part 1410), the 
Wetlands Reserve Program (7 CFR part 1467), any Emergency Watershed 
Protection Program, or Federal Easement Program.
    (c) On Form CCC-454 producers shall be required to certify by tract 
on each farm the number of flooded cropland and non-cropland acres for 
the farm in 2000 and the number of flooded cropland and non-cropland 
acres in 1992. To establish the acreage eligible for payment, flooded 
land certified for 1992 for each type shall be subtracted from the 
flooded land certified for 2000 for the applicable type. The difference 
will be the acreages of cropland and non-cropland subject to flooding 
and eligible for

[[Page 551]]

FCP payment, except that the difference may be adjusted as needed to 
ensure, to the extent practicable, an accurate estimate of the net 
increased flooding on the farm after October 1, 1993.
    (d) All determinations as to the amount of land eligible for 
enrollment and compensation under this subpart are subject to approval 
by the county committee.
    (e) The FSA county committee may use any available documentation to 
make the determinations under paragraphs (b) and (c) of this section, 
including but not limited to: maps, acreage reports, slides, 
precipitation data, water table levels and disaster reports.



Sec.  1439.507  Producer eligibility.

    (a) Payments under this subpart shall be subject to the provisions 
of Sec.  1439.1 through Sec.  1439.12, except as otherwise provided in 
this subpart.
    (b) No person (as defined and determined under 7 CFR part 1400) may 
receive more than $40,000 under this subpart.
    (c) No person (as defined and determined under 7 CFR part 1400) will 
be eligible for payment under this subpart if that person's annual gross 
receipts for calendar year 1999 were in excess of $2.5 million. That 
determination shall be made in the manner provided for in Sec.  1439.11.
    (d) The following entities are not eligible for benefits under this 
subpart:
    (1) State or local governments or subdivisions thereof; or
    (2) Any individual or entity who is a foreign person as determined 
in accordance with the provisions of 7 CFR 1400.501 and 1400.502.



Sec.  1439.508  Calculation of assistance.

    (a) The unadjusted value of FCP assistance determined with respect 
to the flooded land in an eligible county for each producer shall not 
exceed the amount obtained by adding the amounts in paragraphs (b) and 
(c) of this section.
    (b) For each eligible producer with respect to the applicable 
qualifying cropland which is determined, consistent with this subpart, 
to be eligible land for the payment purposes, the established local 
payment rate for cropland will be multiplied by the number of acres 
determined to be qualifying acres, as determined by the County Committee 
in accordance with instructions of the Deputy Administrator.
    (c) For each eligible producer with respect to the applicable 
qualifying non-cropland acres consistent with this subpart, as 
determined by the county committee in accordance with instructions of 
the Deputy Administrator, the acres will be multiplied by the 
established payment rate for non-cropland acres.
    (d) Payments will be adjusted as determined necessary to comply with 
other provisions of this subpart such as those set in Sec.  1439.509.



Sec.  1439.509  Availability of funds.

    In the event that the total amount of claims submitted under this 
subpart exceeds the $24 million authorized for FCP by Public Law 106-
224, each payment to a producer shall be reduced by a uniform national 
percentage. Such payment reductions shall be after the imposition of 
applicable payment limitation provisions.

Subparts G-I [Reserved]



PART 1446--PEANUTS--Table of Contents




                      Subpart A--General Provisions

Sec.
1446.101 General statement.
1446.102 Administration.
1446.103 Definitions.
1446.104 Performance based upon action or advice of a representative of 
          the Secretary.
1446.105 Handling payments and collections not exceeding $9.99.

                   Subpart B--Basic Handler Operations

1446.201 General handler provisions.
1446.202 Peanut buyer card and buying point card.
1446.203 Marketing card entries and collection of assessments, penalties 
          and debts.
1446.204 Transmittal of collections of penalties and claims.

                   Subpart C--Warehouse Storage Loans

1446.301 Eligibility of peanuts for price support at the quota loan 
          rate.
1446.302 Eligibility of peanuts for price support at the additional loan 
          rate.

[[Page 552]]

1446.303 Delivery of peanuts for price support advance.
1446.304 Price support loans involving estates, trusts or minors.
1446.305 Additional peanuts ineligible for price support.
1446.306 Commingling of peanuts.
1446.307 Disaster transfer of Segregation 2 or Segregation 3 peanuts 
          from additional loan to quota loan.
1446.308 Loan pools.
1446.309 Immediate buyback and sale of loan peanuts to the storing 
          handler.
1446.310 Additional peanut support levels.
1446.311 Minimum CCC sales price for certain peanuts.

   Subpart D--Handling Contract Additional Peanuts--General Provisions

1446.401 Contracts for additional peanuts for crushing or export.
1446.402 Approval as handler of contract additional peanuts.
1446.403 Letter of credit.
1446.404 Transfer of contracts prior to delivery.
1446.405 Inspection of contract additional peanuts.
1446.406 Commingled storage of contract additional peanuts.
1446.407 Handler transfer of contract additional peanuts or transfer of 
          disposition credit.
1446.408 Decreasing or drawing upon a letter of credit.
1446.409 Access to facilities.
1446.410 Disposition date.
1446.411 Export provisions.
1446.412 Evidence of export.
1446.413 Disposal of meal contaminated by aflatoxin.
1446.414 Processing additional peanuts into products.
1446.415 Prohibition on importation or reentry of contract additional 
          peanuts.
1446.416 Suspension of restrictions on imported peanuts.
1446.417 Loss of peanuts.

  Subpart E--Handling Contract Additional Peanuts--Physical Supervision

1446.501 Accounting for contract additional peanuts acquired under 
          physical supervision.
1446.502 Physical supervision of contract additional peanuts.
1446.503 Disposition requirements under physical supervision.
1446.504 Substitution of quota and additional peanuts.

Subpart F--Handling Contract Additional Peanuts--Nonphysical Supervision

1446.601 Disposition requirements under nonphysical supervision.
1446.602 Disposition credit for peanuts under nonphysical supervision.
1446.603 Disposition credit for peanuts in exported products made from 
          quota peanuts.

               Subpart G--Penalties and Liquidated Damages

1446.701 Excess marketing of quota peanuts.
1446.702 Peanuts ineligible for quota loan.
1446.703 Assessment of penalties against handlers.
1446.704 Reductions of penalties.
1446.705 Appeals.
1446.706 Statutory liens against peanuts.
1446.707 Schemes and devices.

       Subpart H--Recordkeeping, Reporting and Paperwork Reduction

1446.801 Recordkeeping and reporting requirements.
1446.802 Examination of records and reports.
1446.803 Retention of records.
1446.804 Information confidential.
1446.805 Penalty for failure to keep records and make reports.
1446.806 Fraud by handler.
1446.807 Paperwork Reduction Act assigned numbers.

    Authority: 7 U.S.C. 7271; 15 U.S.C. 714b and 714c.

    Source: 56 FR 16230, Apr. 19, 1991, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 1446 appear at 65 FR 
8247, Feb. 18, 2000.



                      Subpart A--General Provisions



Sec.  1446.101  General statement.

    This part sets out provisions relating to the 1996 through 2002 
crops of peanuts as authorized and in accordance with the applicable 
provisions of Public Law 104-127. The peanut marketing, storage, 
handling and disposition requirements for peanuts for the 1991 through 
1995 crops shall continue to be governed by the regulations codified in 
this part 1446 as of January 1, 1996. Program announcements will be 
issued to specify national average support rates,

[[Page 553]]

and other provisions that may be required in order to implement these 
regulations.

[56 FR 16230, Apr. 19, 1991, as amended at 61 FR 37623, July 18, 1996]



Sec.  1446.102  Administration.

    (a) Responsibility. The Tobacco and Peanuts Division (TPD), Farm 
Service Agency (FSA), will administer this part under the general 
direction and supervision of the Administrator, FSA, or the Executive 
Vice President, Commodity Credit Corporation (CCC), as applicable. In 
the field, these regulations shall be carried out by State and county 
Farm Service Agency (FSA) committees and marketing associations that 
have contracted with CCC for such purposes.
    (b) Limitation of authority. A State or county committee or its 
employees or representatives, or any marketing association or its 
employees or representatives, may not modify or waive any of the 
provisions of this part or any amendment or supplement thereto.
    (c) Supervisory authority. Delegation of authority contained in this 
part shall not preclude the Administrator, FSA, the Executive Vice 
President, CCC, or a designee of such person from determining any 
questions arising under the regulations or from reversing or modifying 
any determinations made pursuant to such delegation. Further, the 
Director of TPD, FSA, may authorize the waiver or modification of 
deadlines and other requirements, except statutory deadlines or 
requirements, in cases where lateness or the failure to meet such other 
requirements does not adversely affect operation of the program.

[56 FR 16230, Apr. 19, 1991, as amended at 66 FR 1810, Jan. 10, 2001]



Sec.  1446.103  Definitions.

    For purposes of this part, the definitions and provisions of parts 
718, 719, 729, 780, 790, 791, 793, 1400, 1402, 1403, 1407, 1421, and 
1422 of this title are incorporated and shall apply except where the 
context or subject matter or provisions of the regulations in this part 
otherwise requires or provides. References contained in this subpart to 
other parts of this chapter or title include any subsequent amendments 
to those referenced parts. Unless the context indicates otherwise, any 
reference to the Executive Vice President of CCC shall also be read to 
mean to any persons designated by the Executive Vice President. Unless 
the context or subject matter otherwise requires, the following words 
and phrases as used in this part and in all related instructions and 
documents shall have the following meanings:
    Additional loan rate. The price support loan rate that is applicable 
to a lot of additional peanuts.
    Additional peanuts. Any peanuts which are marketed from a farm other 
than peanuts marketed or considered marketed as quota peanuts.
    Adequate assets. Assets less liabilities determined by the marketing 
association, acting pursuant to instructions of CCC, to be sufficient to 
assure the export or crushing of contract additional peanuts in 
compliance with the provisions of this part. Assets may include, but are 
not limited to, accounts receivable, value of inventory, equipment, 
plant, property, and investments. Liabilities may include accounts 
payable, mortgages, loans, letters of credit and other obligations.
    Adequate facilities. Weighing, grading, shelling and/or milling 
equipment, storage facilities, and other physical plant and equipment 
owned, leased or subleased by a handler, as determined by the marketing 
association to be sufficient to receive, store, process, and ship all 
the contract additional peanuts to be handled in, by, through, or in 
connection with such facilities into the export or domestic market.
    All other (AO) kernels. The peanut kernels remaining in the total 
kernel content of a lot of peanuts after excluding sound mature kernels 
and sound split kernels. AO kernels consists of damaged kernels, other 
kernels, and loose shelled kernels, as identified and determined by the 
Federal-State Inspection Service.
    FSA. The Farm Service Agency of the United States Department of 
Agriculture.
    Bright hull Valencia peanuts. Valencia type peanut produced in the 
Southwest for which not more than 25 percent of the shells are damaged 
by:

[[Page 554]]

    (1) Discoloration;
    (2) Cracks or broken ends; or
    (3) Both discoloration and cracks or broken ends.
    Buyback. A term used to describe a marketing transaction in which a 
producer places additional peanuts under loan at the additional loan 
rate and a handler simultaneously purchases such peanuts from the 
marketing association for seed or other domestic edible uses.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the United States Department of Agriculture.
    Commercial quantity. For purposes of determining penalties that may 
be due if additional peanuts that were exported are subsequently 
reentered into the United States, commercial quantity means any quantity 
of such peanuts that were reentered by any person during any marketing 
year if the total quantity reentered by such person or a related person 
exceeds 200 pounds of farmers stock peanuts or 150 pounds of shelled 
peanuts.
    Concealed rancidity, mold or decay (RMD). Peanut kernels affected by 
rancidity, mold or decay which is not apparent by external examination.
    Contract additional peanuts. Additional peanuts for crushing or 
exportation, or both, for which a contract has been entered into between 
a handler and producer in accordance with this part.
    Crushing. The processing of peanuts to extract oil for food uses and 
meal for uses as allowed by the provisions of this part or the 
processing of peanuts by crushing or otherwise when authorized by the 
Secretary.
    Current marketing year. The marketing year that begins on August 1 
during the calendar year in which the applicable crop of peanuts was 
planted.
    DAFP. The Deputy Administrator for Farm Programs, FSA.
    Damaged kernels (DK). Defective whole kernels which ride the screen 
officially designated for the peanut type, and the defective splits 
found in farmers stock which, as determined upon an official inspection 
by an inspector:
    (1) Are rancid, decayed or moldy;
    (2) Have sprouts more than \1/8\ inch long;
    (3) Are affected by insects, worm cuts, web or frass;
    (4) Are dirty, with appearance materially affected;
    (5) Are affected by flesh discoloration or skin discolorations 
affecting more than 25% of the surface; or
    (6) Are affected by freezing, or have any characteristic of freeze 
damage.
    Dark hull Valencia peanuts. Valencia type peanuts that are produced 
in the Southwest and that do not meet the requirements for bright hull 
Valencia peanuts.
    Director. The Director, or Acting Director, Tobacco and Peanuts 
Division, Farm Service Agency, U.S. Department of Agriculture.
    Dollar value. An amount determined as follows:
    (1) For inspected peanuts, the total of the amounts determined from 
each applicable form FSA-1007, Inspection Certificate and Sales 
Memorandum, by multiplying the applicable quantity by the quota loan 
rate that would apply to peanuts of the type and quality recorded on 
such form FSA-1007 without regard to whether such peanuts were found to 
contain visible Aspergillus flavus mold.
    (2) For noninspected peanuts, the amount determined by multiplying 
the quantity involved by the national average price support rate for 
quota peanuts.
    Domestic edible use. Domestic edible use means:
    (1) Use of peanuts for milling to produce domestic food peanuts 
(including the processing of peanuts into flakes);
    (2) Use of peanuts for seed, excluding unique strains which meet 
both of the following requirements:
    (i) They are not commercially available, and
    (ii) They are used exclusively for the production of green peanuts; 
and
    (3) Use of peanuts on a farm.
    Edible export standard for contract additional peanuts. The 
standards for raw shelled or in-shell peanuts of any crop exported for 
human consumption constituting U.S. Standards grade requirements, or 
modifications thereof, and requirements as to wholesomeness, as are 
specified in the outgoing quality regulations for such crop as set forth 
in

[[Page 555]]

the Marketing Agreement No. 146, Regulating the Quality of Domestically 
Produced Peanuts (the Peanut Marketing Agreement No. 146), except that 
peanuts shown by the applicable form FV-184-9, Federal-State Inspection 
Certificate (Peanuts), to deviate from these requirements shall be 
considered as meeting such requirements if the handler certifies to the 
marketing association that such deviations are:
    (1) Acceptable to the export buyer; and
    (2) Fall within the range of deviations allowable under the Peanut 
Marketing Agreement No. 146.
    Eligible country. With respect to credit for exportation of 
additional peanuts, any destination outside the United States for which 
an export license may be acquired, except that with respect to the 1991 
crop, neither Canada nor Mexico shall be considered an eligible country 
for the purpose of exporting peanut products other than treated seed 
peanuts.
    Eligible peanuts. Eligible peanuts are farmers stock peanuts that:
    (1) Were produced in the United States by an eligible producer;
    (2) Were planted during the year in which the current marketing year 
begins;
    (3) Are free and clear of any liens and encumbrances, except a 
statutory lien that has resulted from failure to pay a peanut poundage 
quota penalty, unless acceptable waivers are obtained;
    (4) Unless otherwise approved by the Executive Vice President, CCC, 
were produced in the area served by the marketing association through 
which the price support loan is being requested;
    (5) Were not produced on land owned by the Federal Government if 
such land is occupied without a lease permit or other right of 
possession;
    (6) Have been inspected and have an official grade determined by a 
Federal or Federal-State inspector; and
    (7) Must, if delivered to the association in bags in the 
Southwestern area, be in new or thoroughly cleaned used bags which:
    (i) Are made of material other than mesh or net, weighing not less 
than 7\1/2\ ounces nor more than 10 ounces per square yard and 
containing no sisal fibers;
    (ii) Are free from holes;
    (iii) Are finished at the top with either the selvage edge of the 
material, a binding, or a hem; and
    (iv) Are uniform in size with approximately a 2 bushel capacity.
    Eligible producer. An eligible producer for purposes of price 
support under this part shall be a person who meets all of the 
following:
    (1) As a landowner, landlord, tenant, or sharecropper, the person 
produced the peanuts that are being pledged as collateral for a price 
support loan or is a bona fide successor to such person.
    (2) The person has beneficial interest in the peanuts that are being 
pledged as collateral for a price support loan and had such beneficial 
interest before such peanuts were harvested.
    (3) The person is in compliance with the provisions of:
    (i) Part 12 of this title relating to persons producing agriculture 
commodities on wetlands or highly erodible land.
    (ii) Part 796 of this title relating to growing a controlled 
substance.
    (iii) Part 1400 of this title relating to the eligibility of foreign 
persons for loans or benefits.
    (iv) Part 400 of this title relating to crop insurance requirements.
    (4) The person has not marketed 100 percent of a quota peanut crop 
that meets the quality requirements for domestic edible use, through a 
marketing association for the 2 marketing years immediately preceding 
the current marketing year, if handlers have provided the producer with 
written offers, upon delivery, for the purchase of all the quota 
peanuts, at a price equal to or in excess of the quota support price. If 
a producer is rendered ineligible for quota price support under this or 
any other provision, the producer may appeal the ineligibility 
determination utilizing procedures provided in part 780 of this title.
    (5) That is not ineligible for a price support loan under any other 
provision of law or regulation.
    Export and exportation. A shipment of peanuts or peanut products 
from the United States that is directed to a country outside the United 
States for

[[Page 556]]

which a statement, which is signed by the handler and specifies the name 
and address of the consignee, is made available to the marketing 
association or CCC, or, upon request by the marketing association or 
CCC, for which a consignee receipt is made available to the marketing 
association or CCC.
    Farmers stock peanuts. Picked or threshed peanuts produced in the 
United States which have not been changed (except for removal of foreign 
material, LSK's, and excess moisture) from the condition in which picked 
or threshed peanuts are customarily marketed by producers, plus any 
LSK's that are removed from farmers stock peanuts before such farmers 
stock peanuts are marketed.
    Foreign material (FM). Anything other than peanuts, which is found 
in farmers stock peanuts.
    Fragmented peanuts. Peanuts meeting the qualifications for 
fragmented peanuts as defined in the outgoing quality regulations of the 
Peanut Marketing Agreement (No. 146) applicable to the crop year in 
which the peanuts were produced.
    Handler. Any person that acquires peanuts for resale, domestic 
consumption, processing, exportation, or crushing through a business 
involved in buying and selling peanuts or peanut products.
    In-shell peanuts. Cleaned peanuts in the shell which are mature, dry 
and free from:
    (1) LSK's,
    (2) Dirt or other foreign material,
    (3) Pops,
    (4) Paper ends, and
    (5) Damage caused by cracked or broken shells.
    Inspector. A Federal or Federal-State inspector authorized or 
licensed by the Administrator, Agricultural Marketing Service, United 
States Department of Agriculture (USDA), to grade peanuts.
    Liquidated damages. An amount due, but not as a penalty, as an 
amount estimated to be the probable damage to the peanut price support 
program when a producer or handler has taken an action that is contrary 
to the regulations in this part and a determination is made in 
accordance with such regulations that such action may damage the 
administration or efficiency of the price support program.
    Loan rate. The applicable national average support rate announced by 
the Secretary for quota or additional peanuts for the current year, as 
adjusted for differences in grade, type, quality, location and other 
factors.
    Loan value. For eligible farmers stock peanuts, the amount 
determined by multiplying the applicable loan rate, as determined for 
the applicable marketing category, by the net weight of such peanuts 
that are pledged as collateral for a price support loan.
    Loose shelled kernel (LSK). Peanut kernels or portions of kernels 
determined by official inspection to be free of their hulls and 
scattered in farmers stock peanuts.
    Lot--(1) Farmers stock peanuts. That quantity of farmers stock 
peanuts for which one form FSA-1007 or other inspection certificate is 
issued. For farmers stock peanuts delivered to the marketing association 
for a price support loan advance, a lot shall consist of the contents of 
one vehicle, except that a lot may consist of the contents of two or 
more vehicles if the contents of such vehicles do not exceed a total of 
approximately 24,000 pounds of peanuts.
    (2) Milled peanuts. That quantity of milled or shelled peanuts for 
which one form FV-184-9 or substitute approved for general use by the 
Executive Vice President, CCC, is issued. The lot size of such peanuts 
in bulk or bags shall not exceed 200,000 pounds.
    Marketing association. An area marketing association selected and 
approved by the Secretary which is operated primarily for the purpose of 
conducting loan activities as provided for in this part. The approved 
area marketing associations and the areas served by such associations 
are as follows:
    (1) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves the 
Southeastern area consisting of Puerto Rico, the U.S. Virgin Islands, 
and the States of Alabama, Florida, Georgia, Mississippi and that part 
of South Carolina south and west of the Santee-Congaree-Broad Rivers;
    (2) Peanut Growers' Cooperative Marketing Association of Franklin, 
Virginia (PGCMA). PGCMA serves the Virginia-

[[Page 557]]

Carolina area consisting of the District of Columbia, and the States of 
Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maine, 
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, 
Tennessee, Vermont, Virginia, West Virginia, Wisconsin and that part of 
South Carolina north and east of the Santee-Congaree-Broad Rivers; and
    (3) Southwestern Peanut Growers Association of Gorman, Texas 
(SWPGA). SWPGA serves the Southwestern area consisting of the States of 
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, 
Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming, and 
all other territories of the United States not listed in paragraphs (1) 
or (2).
    Marketing card. Form FSA-1002, Peanut Marketing Card, that has been 
issued in accordance with part 729 of this title for use, at the time of 
each initial marketing of peanuts from a farm, to identify the farm on 
which such peanuts were produced and to provide other pertinent 
information that may be required when such peanuts are marketed.
    Marketing penalties--(1) Producer. For producers, the penalties 
prescribed in part 729 of this title.
    (2) Handler. For handlers, the penalties which are prescribed, 
computed, assessed and collected in accordance with this part and are 
effective for the applicable crop.
    Marketing year. The 12-month period beginning on August 1 of a year 
in which the peanuts are planted and ending on July 31 of the following 
year.
    Net weight. Unless otherwise specified in this part, the gross 
weight of a lot of farmers stock peanuts, as recorded on the form FSA-
1007, less:
    (1) The weight of any foreign material in such lot; and
    (2) The amount determined by subtracting 7 percentage points from 
any percentage of moisture in excess of 7 percent and multiplying the 
result by the gross weight of such lot excluding foreign material.
    Nonphysical supervision. Supervision of the disposition of 
additional peanuts whereby representatives of the marketing association 
or other representatives of the Secretary can determine, in accordance 
with this part, whether additional peanuts purchased for crushing or 
export have been disposed of in accordance with the provisions of this 
part without the ``physical'' presence of such representatives to verify 
the actual handling and disposition of such peanuts. Such supervision 
shall be conducted in accordance with this part and shall consist of the 
review and analysis of records which handlers are required to make 
available to representatives of the Secretary for the verification of 
proper disposition of additional peanuts under this supervision option.
    Other kernels (OK). The kernels in farmers stock peanuts which pass 
through screens to separate them from the sound mature kernels, but 
excluding sound split kernels, damaged kernels, and broken pieces less 
than \1/4\ of a whole kernel.
    Participating warehouse. A storage facility whose owner or operator 
has entered into a peanut receiving and warehouse contract agreeing to 
the provisions of such contracts for the care, storage and delivery of 
peanuts pledged to CCC as collateral for price support loans.
    Peanut meal. Any meal, cake, pellets, or other forms of residue 
remaining after extraction or expulsion of oil from peanut kernels, but 
not including pressed peanuts.
    Peanut product. Any product, other than peanut oil or peanut meal, 
that is manufactured or derived from peanuts including, but not limited 
to, peanut candy, peanut butter, treated seed peanuts, roasted peanuts 
(either shelled or in-shell), pressed peanuts, and peanut granules.
    Peanut receiving and warehouse contract. Form CCC-1028, Peanut 
Receiving and Warehouse Contract (Identity Preserved Storage), or form 
CCC-1028-A, Peanut Receiving and Warehouse Contract (Commingled 
Storage), or any other form approved for general use by CCC for the 
purpose of receiving and warehousing loan collateral peanuts.

[[Page 558]]

    Physical supervision. The supervision, in accordance with this part, 
by representatives of the marketing association or other representatives 
of the Secretary of the handling and disposition of contract additional 
or CCC stocks of additional peanuts which have been sold for crushing or 
export. Such supervision requires, as provided for in this part, the 
``physical'' presence of such representatives to observe the actual 
handling, loading, shelling, transportation, processing, and exportation 
of peanuts which have been purchased or otherwise designated as 
additional peanuts.
    Pools. Accounting pools established by the marketing association in 
accordance with this part for peanuts that have been pledged as 
collateral for price support loans.
    Quota loan rate. The price support loan rate that is applicable to a 
lot of quota peanuts.
    Quota peanuts. Peanuts which are:
    (1) Eligible for domestic edible uses; and
    (2) Marketed or considered marketed from a farm as quota peanuts 
pursuant to the provisions of part 729 of this title and are not in 
excess of the effective farm poundage quota established for the farm on 
which such peanuts were produced.
    Raw peanuts. In-shell peanuts, shelled peanuts, blanched peanuts, or 
any other classification of peanuts as designated by CCC which have not 
passed through any other processing operations.
    Segregations. For purposes of the peanut price support program, 
farmers stock peanuts shall be identified by 1 of 3 segregations, as 
identified and determined by the Federal-State Inspection Service, as 
follows:
    (1) Segregation 1. Segregation 1 peanuts are farmers stock peanuts 
which are free from visible Aspergillus flavus mold and which:
    (i) Have at least 99 percent peanuts of one type;
    (ii) Have not more than:
    (A) 2.49 percent damaged kernels (rounded to nearest whole number);
    (B) 1.00 percent concealed damage caused by rancidity, mold or 
decay;
    (C) 0.50 percent freeze damage;
    (D) 14.49 percent LSK's; and
    (iii) Are free from any offensive odor.
    (2) Segregation 2. Segregation 2 peanuts are farmers stock peanuts 
which are free from visible Aspergillus flavus mold and which either:
    (i) Have less than 99 percent peanuts of one type; or
    (ii) Have more than:
    (A) 2.49 percent damaged kernels (rounded to the nearest whole 
number); or
    (B) 1.00 percent concealed damage caused by rancidity, mold, or 
decay;
    (C) 0.50 percent freeze damage; or
    (D) 14.49 percent LSK's; or
    (iii) Have an offensive odor.
    (3) Segregation 3. Segregation 3 peanuts are farmers stock peanuts 
which, upon visible inspection, are found to contain Aspergillus flavus 
mold: Provided further, however, That, in accordance with such written 
instructions as the Director may issue, the Director shall permit 
producers at approved buying points as specified by the Director to have 
the Segregation 3 lot reconditioned, one time only, and then reinspected 
visually. If the buying point where the peanuts were initially delivered 
does not have adequate cleaning facilities, CCC may approve an 
alternative buying point for cleaning and reinspection. The visual 
reinspection may not occur more than 72 hours from the initial 
inspection except as permitted by the Director and the second grade 
shall be considered the final grade for the farmers stock peanuts.
    Sound mature kernel (SMK). A whole kernel which rides the screen 
officially designated for the peanut type and as identified and 
determined by the Federal-State Inspection Service to be SMK's.
    Sound split (SS) kernel. A peanut kernel which is a split or broken 
kernel as identified and determined by the Federal-State Inspection 
Service to be a SS kernel.
    Support rate--(1) National average. The national average price 
support rate for quota peanuts, for each of the 1996 through 2002 crops, 
shall be $610.00 per ton. The national average price support rate for 
additional peanuts, for each of the 1996 through 2002 crops, shall be 
the rate announced by the Secretary as set out in Sec.  1446.310.

[[Page 559]]

    (2) By types. With respect to each of the types of peanuts, the 
price support rate by type shall be the rate so announced on an annual 
basis by the Secretary for the particular type of peanuts on the basis 
of the differences between the types and the anticipated weighted 
average on a national basis of the quality factors and other factors 
affecting value for the respective types.
    Total kernel content (TKC). The TKC of a lot of peanuts is the total 
of SMK's, SS kernels, and AO kernels in such lot.
    TPD. The Tobacco and Peanuts Division of FSA.
    Treated seed peanuts. Shelled peanuts that have been modified from 
their original shelled state by a treatment to make them suitable for 
seed purposes.
    Type. The generally known genetic varieties or types of peanuts 
(i.e., Runner, Spanish, Valencia, and Virginia), as identified and 
determined by the Federal-State Inspection Service.
    United States. The 50 States of the United States, Puerto Rico, the 
territories of the United States, and the District of Columbia.
    United States government agency. Any department, bureau, 
administration, or other agency of the Federal Government or corporation 
wholly owned by the Federal Government.
    Valencia type peanuts produced in the Southwest that are suitable 
for cleaning and roasting. Peanuts that are identified, determined and 
classified by the Federal-State Inspection Service as bright hull 
Valencia peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38328, Aug. 13, 1991; 
60 FR 35835, July 12, 1995; 61 FR 37623, July 18, 1996; 62 FR 62692, 
Nov. 25, 1997; 63 FR 41713, Aug. 5, 1998; 65 FR 8247, Feb. 18, 2000; 66 
FR 1810, Jan. 10, 2001]



Sec.  1446.104  Performance based upon action or advice of a representative 
of the Secretary.

    The provisions of part 791 of this chapter with respect to 
performance based upon action or advice of any authorized representative 
of the Secretary shall be applicable to this part.



Sec.  1446.105  Handling payments and collections not exceeding $9.99.

    In order to avoid administrative costs of making small payments and 
handling small accounts, amounts of $9.99 or less which are due the 
handler will be paid only upon the handler's request. Deficiencies of 
$9.99 or less, including interest, may be disregarded unless demand for 
payment is made by CCC.



                   Subpart B--Basic Handler Operations



Sec.  1446.201  General handler provisions.

    (a) Handler registration and approval. To avoid marketing penalties 
otherwise provided in this part for failure to register as a handler, 
each person who plans to acquire peanuts for processing or resale must 
register as a handler and be approved as a handler in accordance with 
this paragraph.
    (1) Registration. Registration must be made on the form FSA-1008, 
Application for Handler Card, and must be filed:
    (i) For each marketing year in which such person expects to acquire 
peanuts for processing or resale.
    (ii) With each marketing association that serves the marketing area 
in which such person plans to acquire peanuts during the applicable 
marketing year.
    (iii) Prior to the time such person acquires peanuts, during the 
respective marketing year, within the marketing area served by such 
marketing association.
    (2) Approval. The determination of whether a handler will be 
approved shall be made by the applicable marketing association in which 
the registration was filed and, in the case of approval, such approval 
shall be evidenced by a handler registration number that is issued by 
such marketing association.
    (b) Handler of loan peanuts. To handle loan peanuts, either quota or 
additional, a person must be approved as a handler and must contract 
with the marketing association on form CCC-1028 or form CCC-1028-A to 
handle such peanuts. To contract to handle loan

[[Page 560]]

peanuts, the handler must meet all requirements of the applicable 
warehousing contract with respect to receiving, handling and storing 
loan peanuts.
    (c) Handler of contract additional peanuts. To handle contract 
additional peanuts in a marketing area, a person must be approved as a 
handler for that area in accordance with this part.
    (d) Marketing assessments and marketing penalties. A handler shall 
collect and pay marketing assessments and marketing penalties in 
accordance with the provisions in part 729 of this title.
    (e) Penalties and other remedies. Any handler that fails to register 
in accordance with this section shall be subject to all penalties that 
may apply to handlers under this part and all other remedies that apply 
against handlers. Further, such handler shall be subject to penalties 
for non-registration as may apply.



Sec.  1446.202  Peanut buyer card and buying point card.

    (a) Peanut buyer card. The marketing association which approves a 
handler will assign a registration number to such handler and CCC will 
issue an embossed peanut buyer card which will show the handler's 
registration number, name and address. The handler will use the buyer 
card for identification when buying or selling peanuts.
    (b) Buying point card. CCC will issue a buying point card to the 
Federal-State Inspection Service for delivery to each handler who 
operates a buying point at which peanuts are inspected. The buying point 
card will show a buying point number that will be used to identify the 
physical location of such buying point.



Sec.  1446.203  Marketing card entries and collection of assessments, 
penalties and debts.

    The handler shall make marketing card entries and shall collect 
assessments, penalties and debts in accordance with the provisions in 
this part and in part 729 of this title.
    (a) Indebtedness to the United States due to peanut marketing 
penalties. As provided in part 729 of this title, if a producer is 
indebted to the United States for a peanut marketing penalty, such 
penalty shall result in a lien in favor of the United States on any 
peanuts in which such producer has an interest and any person who 
acquires peanuts from such producer shall be considered to have notice 
of such lien at the time such lien becomes attached. Except with respect 
to any lien that was perfected before the peanut poundage quota lien 
became attached in those cases not involving peanuts placed in the price 
support loan inventory, any person who acquires peanuts from such 
producer shall deduct the lien amount plus any applicable interest from 
the proceeds otherwise due to such producer as a result of the 
acquisition of the peanuts. Any deducted amount shall be paid to CCC in 
accordance with instructions issued by the Deputy Administrator. In the 
event a required deduction is not made from the proceeds for such 
peanuts, the person who acquires such peanuts shall be liable to CCC for 
the amount of the lien, to the extent of the market value of such 
peanuts or proceeds of the peanuts whichever is higher.
    (b) Farmers Home Administration or Farm Service Agency lien. If a 
Farmers Home Administration or Farm Service Agency lien has been 
recorded on the marketing card that was issued for the use of a producer 
when marketing peanuts, the purchaser of such peanuts shall make the 
check, for the proceeds from such peanuts, payable jointly to the 
producer and the Farm Service Agency. However, if a peanut poundage 
quota lien was also recorded on the marketing card against such 
producer, the check shall be made payable jointly to the producer, CCC 
and the Farm Service Agency.

[56 FR 16230, Apr. 19, 1991, as amended at 61 FR 37623, July 18, 1996]



Sec.  1446.204  Transmittal of collections of penalties and claims.

    (a) Commercial purchases. A handler shall use form FSA-1012, Buyer's 
Transmittal of Claims and/or Marketing Penalty, to transmit to FSA any 
marketing penalty or peanut poundage quota lien that is collected 
directly or indirectly from a producer at the time such producer 
marketed

[[Page 561]]

peanuts as quota commercial or contract additional peanuts. Such 
collections shall be made in accordance with the requirements of part 
729 of this title. A collection is considered to have been made at the 
time of marketing the peanuts. Each collection shall be sent to the 
county FSA office which issued the marketing card and, unless otherwise 
approved by the Executive Vice President, CCC, shall be sent within 15 
days after the collection is made.
    (b) Loan peanuts. Withholdings from the loan value due a producer 
which represent collections of marketing penalties, peanut poundage 
quota liens or U.S. claims shall be transmitted or handled in accordance 
with instructions issued by the marketing association or CCC.



                   Subpart C--Warehouse Storage Loans



Sec.  1446.301  Eligibility of peanuts for price support at the quota 
loan rate.

    For peanuts to be eligible for a price support loan at the quota 
loan rate such peanuts:
    (a) Must be eligible peanuts that were produced by an eligible 
producer;
    (b) Must be Segregation 1 peanuts;
    (c) If mechanically dried, must contain at least 6 percent moisture;
    (d) Must not contain more than:
    (1) 10.49 percent moisture;
    (2) 10 percent foreign material; or
    (3) 14.49 percent LSK's;
    (e) When added to prior marketing of quota peanuts from the farm, 
must not exceed the effective quota established for the farm on which 
such peanuts were produced.



Sec.  1446.302  Eligibility of peanuts for price support at the additional 
loan rate.

    (a) General. For peanuts to be eligible for a price support loan at 
the additional loan rate, such peanuts:
    (1) Must be eligible peanuts that were produced by an eligible 
producer;
    (2) must not contain more than:
    (i) 10.49 percent moisture;
    (ii) 10 percent foreign material; or
    (iii) 14.49 percent LSK's.
    (b) Exception to general requirements. Notwithstanding the 
provisions in paragraph (a) of this section:
    (1) Seed peanuts. Peanuts that were produced for seed under the 
auspices of a State agency that controls the production of seed peanuts 
may receive a price support loan at the additional loan rate if:
    (i) Such peanuts are eligible peanuts that were produced by an 
eligible producer; and
    (ii) In accordance with this part, the handler purchases the peanuts 
from the loan inventory for domestic seed use in accordance with this 
part.
    (2) Peanuts with excess moisture, foreign material, or LSK's. 
Peanuts that contain excessive moisture, foreign material, and/or LSK's 
may receive a price support loan at the additional loan rate if the 
marketing association determines:
    (i) That the moisture level is acceptable for storage until such 
peanuts may be crushed; and
    (ii) That the producer made a bona fide effort to clean such peanuts 
prior to offering such peanuts as collateral for a price support loan.



Sec.  1446.303  Delivery of peanuts for price support advance.

    (a) Warehouse storage loans. Any warehouse operator who has entered 
into a contract with the marketing association to receive and store 
peanuts shall inform producers that price support advances are available 
and shall make such advances on eligible peanuts tendered for price 
support as provided in such contract.
    (b) Where available. Unless otherwise approved by the marketing 
association or by CCC, producers must deliver farmers stock peanuts to 
any participating warehouse that is located in the same marketing area 
in which the peanuts were produced. The names and locations of 
participating warehouses may be obtained from the office of the 
appropriate marketing association or from State or county FSA offices.
    (c) Contract requirements. Any contract for receiving and storing 
peanuts pledged as collateral for a price support loan shall require the 
warehouse operator to:

[[Page 562]]

    (1) Examine the producer's marketing card to determine price support 
eligibility;
    (2) Make entries on the marketing card as required by Sec.  729.304 
of this title and by this part; and
    (3) Execute a form FSA-1007 in accordance with this part for each 
lot of peanuts on which a price support advance is made.
    (d) Time. Price support advances to eligible producers on peanuts of 
any crop will be available from the beginning of the marketing year 
through the following January 31 or such later date as may be 
established by the Executive Vice President, CCC.
    (e) Inspection. An inspector shall determine the type and quality of 
each lot of farmers stock peanuts that is delivered to a participating 
warehouse for a price support advance from the marketing association.
    (f) Producer agreement. To obtain a price support advance, the 
producer shall provide written authorization to the marketing 
association, and in the form prescribed by the applicable marketing 
association, to pledge the producer's peanuts to CCC as collateral for a 
warehouse storage loan and in so doing, the producer shall relinquish 
any right to redeem or obtain possession of such peanuts.
    (g) Advance to the producer. For each lot of peanuts delivered by a 
producer to a participating warehouse for a price support advance, the 
warehouse operator, acting in behalf of the marketing association:
    (1) Shall inquire of each producer as to whether any liens, other 
than a statutory peanut poundage quota lien, exist on peanuts offered 
for loan and shall note the response on form CCC- 1041, Warehouse 
Receipt and Draft (A failure to make such an inquiry shall render the 
warehouseman liable for the amount of the lien to the extent of any loss 
to CCC);
    (2) Shall advance to the producer the applicable loan value of such 
peanuts. However, if a lien exists, the loan advance draft, form CCC-
1041, shall be made payable jointly to the producer and each known 
lienholder except in those cases in which a peanut poundage quota lien 
was attached, as provided in part 729 of this title before any other 
lien was recorded. In such case the peanut poundage quota lien shall be 
deducted from the proceeds and a draft may be issued for any remaining 
balance;
    (3) Shall deduct from such advances any:
    (i) Marketing penalty;
    (ii) Marketing assessment as provided in part 729 of this title;
    (iii) Peanut poundage quota lien;
    (iv) Assessment or excise tax imposed by State law;
    (v) U.S. claim;
    (vi) Farm storage facility loan installment payment that is 
currently due to CCC; and
    (vii) Any other debt that is owed by such producer to a United 
States government agency.
    (4) As applicable, shall transmit, in accordance with applicable 
instructions, such deducted amounts to the:
    (i) County FSA office;
    (ii) Applicable State agency; or
    (iii) CCC; and
    (5) If such peanuts were produced in the Southwestern area, and upon 
the prior agreement of the producer, may deduct from such advance an 
amount approved by CCC, but not to exceed $2.00 per net weight ton of 
peanuts, to be used in financing the marketing association's peanut 
related activities outside the price support program.

[56 FR 16230, Apr. 19, 1991, as amended at 58 FR 41626, Aug. 5, 1993]



Sec.  1446.304  Price support loans involving estates, trusts or minors.

    (a) Estates and trusts. A receiver or trustee of an insolvent or 
bankrupt debtor's estate, an executor or administrator of a deceased 
person's estate, a guardian of an estate or of a ward or incompetent 
person, and trustees of a trust estate may be considered to represent 
the insolvent debtor, the deceased person, the ward or incompetent, and 
the beneficiaries of a trust, respectively, and the peanut production of 
the receiver, executor, administrator, guardian, or trustees 
attributable to the person represented shall be considered to be the 
production of the person represented. Loan documents executed by any 
such person shall be accepted by CCC only if they are valid, as 
determined by CCC, and

[[Page 563]]

such person has the authority to sign the applicable documents.
    (b) Eligibility of minors. A minor who is otherwise an eligible 
producer shall be eligible for price support only if such minor meets 
one of the following requirements:
    (1) The right of majority has been conferred on such minor by court 
proceedings or by statute; or
    (2) A guardian has been appointed to manage such minor's property 
and the applicable price support documents are signed by the guardian; 
or
    (3) An acceptable bond is furnished under which a surety acceptable 
to CCC guarantees to protect CCC from any loss for which the minor would 
be liable had such minor been an adult.



Sec.  1446.305  Additional peanuts ineligible for price support.

    (a) Marketing penalty. A marketing penalty is due if additional 
peanuts are marketed or considered marketed in any manner other than:
    (1) Through a price support loan at the additional loan rate; or
    (2) Through purchase for crushing or export by a handler who, in 
accordance with this part, has an approved contract with the producer to 
purchase peanuts for such purpose.
    (b) Delivery to avoid penalty. Notwithstanding the provisions in 
paragraph (a) of this section, a person who has produced additional 
peanuts may avoid a marketing penalty on such peanuts through forfeiting 
such peanuts by delivering such peanuts to the marketing association for 
the area where the peanuts were produced and in accordance with 
instructions issued by the marketing association if:
    (1) Such person is not an eligible producer; and
    (2) Such person does not have a contract with a handler to purchase 
such peanuts for crushing or exportation.
    (c) Interest due. A producer who pledges peanuts as collateral for a 
price support loan at the additional loan rate shall refund the loan 
advance on such peanuts with interest if, subsequent to the time the 
peanuts are pledged for the loan, it is brought to the attention of the 
marketing association that such person is not an eligible producer. 
Interest shall be due:
    (1) At the same interest rate that was applicable on funds borrowed 
from CCC by the marketing association on the date the loan was 
disbursed.
    (2) From the date the loan was disbursed to the date of repayment.



Sec.  1446.306  Commingling of peanuts.

    To facilitate handling and marketing, unless prohibited by a 
handler's storage contract with the marketing association, a handler may 
store farmers stock loan peanuts on a commingled basis with peanuts 
owned by such handler if such peanuts are of like crop, type, area, and 
segregation.
    (a) Accounting for commingled peanuts. Except for peanuts purchased 
from CCC for domestic edible use on an in-grade and in-weight basis, 
commingled peanuts shall be exchanged on a dollar value basis. 
Accordingly, when loan peanuts are removed from the warehouse they must 
be inspected as farmers stock peanuts by an inspector and accounted for 
on a dollar value, based on the quota loan rate, less a one-time 
adjustment for shrinkage for each crop.
    (b) Dollar value shrinkage adjustment. For peanuts that are graded 
out and accounted for:
    (1) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (i) 3.5 percent for Virginia-type peanuts; and
    (ii) 3.0 percent for all other peanuts.
    (2) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (i) 4.0 percent for Virginia-type peanuts; and
    (ii) 3.5 percent for all other peanuts.
    (c) Maintaining copies of the FSA-1007's. The handler shall maintain 
a copy of each form FSA-1007 that was issued for any peanuts that are 
placed in commingled storage and that is issued for any peanuts removed 
from storage.
    (d) Good commercial practice. The handler shall receive, store and 
deliver all such peanuts in accordance with good commercial practice and 
any instructions provided by CCC.

[[Page 564]]



Sec.  1446.307  Disaster transfer of Segregation 2 or Segregation 3 
peanuts from additional loan to quota loan.

    (a) Transfer of Segregation 2 and Segregation 3 peanuts. Except as 
otherwise provided in this section, after a producer has completed 
marketing all peanuts produced on the farm, such producer may transfer a 
loan on Segregation 2 or Segregation 3 additional peanuts to a quota 
loan.
    (b) Limitation of amount eligible for transfer. A transfer made in 
accordance with this section shall not exceed the smaller of:
    (1) The difference between:
    (i) The total quantity of Segregation 1 peanuts marketed from the 
farm, plus the amount of peanuts retained on the farm for seed or other 
use, and
    (ii) The effective farm poundage quota, excluding quota pounds 
transferred to the farm in the fall; or
    (2) Twenty-five percent of the effective farm poundage quota, 
excluding quota pounds transferred to the farm in the fall.
    (c) Offset of CCC losses. As provided in this part, if a producer 
transfers an additional loan to a quota loan in accordance with the 
provisions of this section, any pool proceeds otherwise due such 
producer from peanuts in another pool shall be reduced by the amount of 
any losses to CCC on the peanuts so transferred.
    (d) Loan value for transferred peanuts--(1) Segregation 2 peanuts. 
The quota loan value for any lot of Segregation 2 peanuts transferred 
from an additional loan to a quota loan shall be determined by 
multiplying 70 percent of the quota loan rate that otherwise would have 
been applicable for such lot of peanuts as quota peanuts, exclusive of 
any discount for damaged kernels, by the net weight of peanuts being 
transferred and deducting from the result the amount of any special 
discount that may apply for Segregation 2 peanuts transferred in 
accordance with this section.
    (2) Segregation 3 peanuts. The quota loan value for any lot of 
Segregation 3 peanuts transferred from an additional loan to a quota 
loan shall be determined by multiplying 70 percent of the quota loan 
rate that otherwise would have been applicable for such lot of peanuts 
as quota peanuts, exclusive of any discount for damaged kernels, by the 
net weight of peanuts being transferred and deducting from the result 
the amount of any special discount that may apply for Segregation 3 
peanuts transferred in accordance with this section.
    (e) Transfer provisions--(1) Where to apply. Producers who are 
eligible to transfer additional loan peanuts to the quota loan pool in 
accordance with the provisions of this section may apply for such 
transfers with the county FSA office.
    (2) Determination of the amount eligible for transfer. The county 
office shall determine, in accordance with paragraph (b) of this 
section, the quantity of additional peanuts which are eligible for 
transfer.
    (3) Designation of peanuts to be transferred. The producer must 
indicate to the county office the net weight and applicable form FSA-
1007 serial numbers for the peanuts to be transferred.
    (4) Applicability of marketings. Any peanuts that are transferred 
from an additional loan to a quota loan shall be considered as 
marketings of quota peanuts and the applicable records shall be 
appropriately adjusted.
    (f) Supplemental loan payment. The difference between the additional 
and quota loan rates for such peanuts, less the appropriate adjustment 
for the marketing assessment, shall be advanced by the marketing 
association to the applicable producer.

[56 FR 16230, Apr. 19, 1991, as amended at 57 FR 49633, Nov. 3, 1992; 61 
FR 37624, July 18, 1996; 66 FR 1810, Jan. 10, 2001; 66 FR 10353, Feb. 
15, 2001]



Sec.  1446.308  Loan pools.

    (a) Establishment of pools. (1) Each marketing association shall 
establish six separate loan pools; one for each of the three 
segregations of additional peanuts and one for each of the three 
segregations for quota peanuts. These pools shall be formed without 
regard to the type of peanuts (Runner, Virginia, Spanish, or Valencia) 
involved. However, the SWPGA shall also establish 12 separate loan pools 
for Valencia peanuts produced in New Mexico, namely, for bright hull 
peanuts and for dark hull peanuts separately, to include for

[[Page 565]]

each of them separate, by segregation, additional peanuts and quota 
peanuts pools. Each marketing association shall maintain separate, 
complete and accurate records for each loan pool that is established by 
the marketing association.
    (2) Eligibility to participate in New Mexico Pools--(i) In general. 
Except as provided in clause (a)(2)(ii) of this section, in the case of 
the 1996 and subsequent crops, Valencia peanuts not physically produced 
in the State of New Mexico shall not be eligible to participate in the 
pools of the State even if the farm on which the peanuts are produced is 
constituted for administrative purposes within the State of New Mexico.
    (ii) Exception. A producer of Valencia peanuts may enter Valencia 
peanuts that are physically produced in Texas into the pools for New 
Mexico in a quantity not greater than the average annual quantity of the 
peanuts that the producer entered into the New Mexico pools for the 1990 
through 1995 crops; however, to qualify, the peanuts must be produced on 
the same farm on which the peanuts were produced during the base years 
of 1990 through 1995.
    (b) Net gains for quota pools. Net gains from peanuts in each quota 
pool shall consist of the amount by which the proceeds from the sale of 
the peanuts in such pool are in excess of the indebtedness on the 
peanuts in such pool.
    (c) Net gains for additional pool. Net gains for peanuts in each 
additional pool shall consist of:
    (1) The net gains which are in excess of the indebtedness on the 
peanuts placed in such pool; less
    (2) Any amount as provided in paragraph (d) of this section that is 
allocated to offset any loss on the pools for Segregation 1 quota 
peanuts, and any other amount properly offset.
    (d) Recovery of losses in quota area loan pools. (1) If the loan 
indebtedness on the peanuts in a quota area pool exceeds the proceeds 
from the sale of the peanuts in such pool, such excess shall be 
recovered using the following sources in the following order of 
priority:
    (i) Proceeds due any individual producer from any pool, as a result 
of the transfer of peanuts for pricing purposes from an additional loan 
pool to a quota loan pool, pursuant to the provisions in Sec.  1446.307.
    (ii) Gains of any producer in the same pool, by the amount of pool 
gains attributed to the same producer from the sale of additional 
peanuts for domestic and export edible use.
    (iii) Gains or profits resulting from the sale of additional 
peanuts, other than Valencia peanuts produced in New Mexico in separate 
type pools established under paragraph (a) of this section, in the same 
marketing area for domestic edible use, that are owned or controlled by 
CCC. This paragraph shall not apply to gains or profits from the sale of 
peanuts that were produced on farms with 1 acre or less of peanut 
production.
    (iv) Marketing assessments, collected from producers under Sec.  
729.316 of this title, that the Secretary determines are necessary to 
cover losses in area quota pools.
    (v) Gains or profits from quota pools in other marketing areas, 
other than separate type pools established under paragraph (a) of this 
section for Valencia peanuts produced in New Mexico.
    (vi) Gains or profits resulting from the sale of additional peanuts 
in other marketing areas, other than Valencia peanuts produced in New 
Mexico in separate type pools established under paragraph (a) of this 
section, for domestic edible use, that are owned or controlled by CCC. 
This paragraph shall not apply to gains or profits from the sale of 
peanuts that were produced on farms with 1 acre or less of peanut 
production.
    (vii) Marketing assessments, collected from handlers under Sec.  
729.316 of this title, that the Secretary determines are necessary to 
cover losses in area quota pools.
    (viii) Increased marketing assessments on quota peanuts in the 
production area covered by the pool, which shall be assessed as needed 
and collected from producers under Sec.  729.317 of this title.
    (2) The exceptions provided for Valencia peanuts in paragraph (d)(1) 
of this section shall only apply as to prevent offsets between pools for 
each of the Valencia types (bright-hull and

[[Page 566]]

dark-hull) for New Mexico and other peanuts.
    (e) Pool distribution. (1) Net gains as determined in accordance 
with this section on peanuts in each area pool shall be distributed to 
each producer who placed peanuts in that pool in proportion to the 
dollar value of peanuts placed in such pool by that producer, except 
that the proceeds available for the amount of distribution shall be 
subject to any other conditions and offsets set forth in this section; 
and
    (2) Distributions shall not be assigned to any other party.
    (f) Loan indebtedness. With respect to determining the gains and 
losses in accordance with this section for loan pools for quota and 
additional peanuts, the term ``indebtedness'' with respect to a pool 
shall include, but is not limited to, the following expenses associated 
with such peanuts:
    (1) Loan advance to producers.
    (2) Inspection fees.
    (3) Storage and handling charges.
    (4) Shelling costs.
    (5) Transportation and related charges.
    (6) Administrative and supervision expenses.
    (7) Interest applicable to any repayable amount.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991; 
61 FR 37624, July 18, 1996]



Sec.  1446.309  Immediate buyback and sale of loan peanuts to the storing 
handler.

    (a) ``Immediate buyback'' purchase of additional peanuts--(1) 
Producer consent. Except as provided in this section, if the producer of 
a lot of additional peanuts has consented to an ``immediate buyback'' of 
such peanuts by a handler, as indicated by a designation recorded on the 
form FSA-1002, the handler that acts for the marketing association in 
advancing funds to the producer for a price support loan at the 
additional loan rate on such peanuts may purchase such peanuts from the 
marketing association for domestic edible use in accordance with 
instructions from the marketing association and at a price equal to 100 
percent of the quota loan value of such peanuts plus a handling charge, 
as determined by the marketing association and approved by CCC, to cover 
all costs incurred with respect to such peanuts for inspection, 
warehousing, shrinkage, and other expenses.
    (2) Time for buyback purchase. An ``immediate buyback'' purchase may 
be made only in connection with the marketing association involved in 
the price support loan and only on the date on which the peanuts were 
delivered by the producer as collateral for a price support loan. Such 
sales are for the account of CCC.
    (3) Handler requirements. For each ``immediate buyback,'' the 
handler shall:
    (i) Act for the marketing association by making a price support 
advance to the producer at the additional loan rate and in the same 
manner that would be applicable if an ``immediate buyback'' were not 
involved;
    (ii) If applicable, use such handler's funds to pay to the producer 
any premiums that the parties had agreed upon in order to effect the 
delivery of such peanuts;
    (iii) Pay for the peanuts by a check made payable to CCC. Such check 
must be from the handler's funds and in an amount equal to the quota 
loan value of the peanuts plus any handling charges; and
    (iv) Transmit the handler's check and the applicable form FSA-1007 
to the marketing association by midnight of the third workday (excluding 
Saturdays, Sundays, and Federal holidays) following the day the peanuts 
were inspected.
    (4) Domestic edible use. The handler's check and the applicable form 
FSA-1007 will identify the peanuts as additional peanuts that may be 
used for domestic edible use.
    (5) Loan pool credit. Irrespective of the segregation of such 
peanuts, the receipts from the ``immediate buyback'' sale will be 
credited to the additional loan pool for Segregation 1 peanuts and the 
peanuts will be treated as Segregation 1 peanuts for pool accounting 
purposes.
    (6) Loan pool participation. If Segregation 2 or Segregation 3 
peanuts are purchased by a handler under the ``immediate buyback'' 
provisions, the producer of such peanuts shall participate

[[Page 567]]

in the Segregation 1 additional loan pool in the same manner as would 
apply if such peanuts had been Segregation 1 peanuts.
    (7) Additional restrictions on ``immediate buyback'' sales. (i) 
Additional peanuts of the type or Segregation contracted for export or 
crushing from a farm may not be purchased from such farm under the 
``immediate buyback'' provisions of this section until all of the 
producer's contracts for additional peanuts for the relevant crop year 
have been satisfied for the type or Segregation to be used for the 
buyback, as evidenced by a contract balance of zero for that type or 
Segregation of peanuts on the farm's marketing card;
    (ii) An immediate buyback that otherwise is prohibited by paragraph 
(a)(7)(i) of this section may be permitted by CCC in the case of any 
producer on a farm who does not share in the additional peanuts for 
which there is a contract.
    (iii) An agreement between the handler and producer to void a 
contract that was approved in accordance with this part shall not reduce 
the balance shown on the producer's marketing card for contract 
additional peanuts and until such contract is renewed and satisfied the 
producer's additional peanuts of the same type or Segregation as were 
covered by that contract shall not be eligible for that crop year for 
purchase under an ``immediate buyback.''
    (b) Purchase of quota or additional loan peanuts. Quota loan 
peanuts, or additional loan peanuts that were not purchased by the 
handler under the ``immediate buyback'' provisions, may be bought for 
domestic edible use in accordance with this paragraph on an in-grade and 
in-weight basis.
    (1) In-grade and in-weight purchases. A handler may purchase loan 
peanuts, either quota or additional, on an in-grade and in-weight basis 
for domestic edible use:
    (i) Under terms and conditions established by the marketing 
association and CCC;
    (ii) If such peanuts are eligible for domestic edible use; and
    (iii) If such peanuts are stored in a warehouse that is operated by 
such handler.
    (2) Pricing. Except with respect to ``immediate buybacks,'' as 
provided for in this section, the price for peanuts purchased on an in-
grade and in-weight basis shall be determined by the marketing 
association or CCC, as applicable, for the account of CCC, but shall not 
be less than the applicable carrying charges plus, with respect to each 
lot of peanuts purchased:
    (i) 105 percent of the quota loan value that was or would be 
applicable to the quantity of loan peanuts in such lot, if paid for not 
later than December 31 of the marketing year; or
    (ii) 107 percent of the quota loan value that was or would be 
applicable to the quantity of loan peanuts in such lot, if paid for 
after December 31 of the marketing year.

[56 FR 16230, Apr. 19, 1991, as amended at 57 FR 27145, June 18, 1992; 
65 FR 8247, Feb. 18, 2000]



Sec.  1446.310  Additional peanut support levels.

    (a) The national support rate for additional peanuts for the 1996 
crop is $132 per short ton.
    (b) The national support rate for additional peanuts for the 1997 
crop is $132 per short ton.
    (c) The national support rate for additional peanuts for the 1998 
crop is $175 per short ton.

[62 FR 62693, Nov. 25, 1997, as amended at 64 FR 48942, Sept. 9, 1999]



Sec.  1446.311  Minimum CCC sales price for certain peanuts.

    (a) The minimum CCC sales price for additional peanuts to be sold 
from the price support loan inventory for export edible use from the 
1996 crop is $400 per short ton.
    (b) The minimum CCC sales price for additional peanuts to be sold 
from the price support loan inventory for export edible use from the 
1997 crop is $400 per short ton.
    (c) The minimum CCC sales price for additional peanuts to be sold 
from the price support loan inventory for export edible use from the 
1998 and subsequent crops is $400 per short ton.

[62 FR 62693, Nov. 25, 1997, as amended at 64 FR 48942, Sept. 9, 1999]

[[Page 568]]



   Subpart D--Handling Contract Additional Peanuts--General Provisions



Sec.  1446.401  Contracts for additional peanuts for crushing or export.

    An approved handler may contract with a producer to deliver 
additional peanuts for exporting or for crushing. In order to be valid, 
the contract must meet the eligibility requirements in this section and 
must be approved by the county committee that serves the county in which 
the producing farm is located for administrative purposes.
    (a) Contract form and addendum--(1) Contract form. In order to be 
approved by the county committee, the contract must be completed on Form 
CCC-1005, Handler Contract With Producers for Purchase of Additional 
Peanuts for Crushing or Export, or on a form approved by the Executive 
Vice President, CCC, or designee, which follows the organization of the 
CCC-1005 and contains as a minimum all of the requirements provided for 
in paragraph (c)(2) of this section.
    (2) Availability of CCC-1005. The marketing association shall make 
available a form CCC-1005 to each approved handler and to any producer 
upon request.
    (3) Addenda. The handler may use an addendum to a contract form if 
such addendum neither negates nor conflicts with any provision in this 
part. Any existing addendum to the contract which relates to the 
marketing of additional peanuts must accompany the contract at the time 
the contract is filed with the county committee.
    (b) Submitting contracts for approval--(1) Eligible handlers. Only a 
handler who has been approved by the marketing association to handle 
contract additional peanuts may contract with producers to buy 
additional peanuts for crushing or exportation, or both.
    (2) Producer-handlers. A person who has been approved as a producer-
handler under part 1421 of this title may not contract with himself/
herself to purchase contract additional peanuts that he/she may produce.
    (3) Place and time for submitting. In order to be considered for 
approval, any contract between a handler and producer for the purchase 
of additional peanuts shall be completed and submitted:
    (i) Place. To the county FSA office of the county in which the farm 
is administratively located.
    (ii) Time. On or before September 15 of the year in which the crop 
is produced; except that:
    (A) Should September 15 fall on a Saturday or Sunday, or other non-
workday the contract must be submitted for approval no later than the 
last workday immediately preceding the final contracting date.
    (B) If the Executive Vice President, CCC, determines that damaging 
weather such as drought, hail, excessive moisture, freeze, tornado, 
hurricane or excessive wind, or related condition such as insect 
infestations, plant diseases, or other deterioration of the peanut crop, 
including aflatoxin, is expected to have significant national impact on 
peanut production, the Executive Vice President may extend nationally, 
by up to 15 days, the final date for submitting contracts for approval. 
Such announcement shall be made no later than September 5 of the year in 
which the crop is produced.
    (c) Contract approval. (1) A contract between a handler and a 
producer for additional peanuts for crushing or export shall not be 
approved by the county committee, if otherwise eligible, unless the 
county committee has been notified by the State Executive Director that 
the handler has been approved to contract additional peanuts and that 
such handler has submitted the letter of credit that is required in 
accordance with the provisions in this part.
    (2) In order to be approved, the following information must appear 
on the contract:
    (i) The name and address of the operator;
    (ii) The name and address of each producer sharing in the proceeds 
of the contract additional peanuts;
    (iii) The State and County code, and farm number of the farm on 
which the additional peanuts are to be produced;
    (iv) The name, address, and registration number of the handler;
    (v) The pounds of Segregation 1, Segregation 2, and/or Segregation 3 
peanuts that are contracted;

[[Page 569]]

    (vi) The final contract price to be paid by the handler and shown as 
a set percentage of the loan rate for quota peanuts of the type 
indicated on the contract; except that such final contract price shall 
not be less than the additional loan rate for the type of peanut 
indicated on the contract. A contract or an addendum to a contract that 
provides for a conditional supplemental payment to the producer will not 
be considered to negate the final contract price only if the 
supplemental payment to be made is expressed in a manner that a third 
party may determine the amount of the supplemental payment without a 
need for additional negotiations;
    (vii) A disclosure by the producer of any liens or encumbrances on 
the peanuts;
    (viii) The signature of the farm operator;
    (ix) The signature of each person having an interest as a producer 
in the contract additional peanuts that are produced on the farm;
    (x) The signature of the handler or the authorized agent of the 
handler; and
    (xi) A prohibition against changing the price.
    (3) The county committee, or a person designated in writing by the 
county committee, shall approve each form CCC-1005 that conforms with 
the provisions in this section.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991; 
61 FR 37624, July 18, 1996]



Sec.  1446.402  Approval as handler of contract additional peanuts.

    (a) General. By June 15 preceding the beginning of the marketing 
year in which such additional peanuts will be acquired, any handler who 
plans to acquire contract additional peanuts in accordance with this 
part for crushing or for exporting must:
    (1) Application. File an application with each marketing association 
that serves the area in which such handler plans to acquire contract 
additional peanuts. Such application:
    (i) Form. Must be on a form or in a format provided by the marketing 
association.
    (ii) Method of supervision. Must indicate the method of supervision, 
physical or nonphysical, selected by the handler for purposes of 
accounting for the disposition of any contract additional peanuts 
acquired by such handler.
    (2) Evidence of adequate assets and adequate facilities. Provide 
evidence that is acceptable to the marketing association and CCC that 
such handler has:
    (i) Assets. Adequate assets to assure compliance with the provisions 
in this part with respect to such handler's obligation to crush or 
export contract additional peanuts acquired by such handler; and
    (ii) Facilities. Adequate facilities to handle the acquisition and 
disposition of any contract additional peanuts acquired by such handler.
    (3) Letter of credit for prior crop years. Establish an irrevocable 
letter of credit, or increase any existing letter of credit applicable 
for a previous crop year, in an amount necessary to cover any 
outstanding marketing penalties on peanuts produced in such crop year 
which are still under administrative appeal or are unpaid. This 
requirement is in addition to any letter of credit requirement for the 
current year.
    (b) Approval. The marketing association, acting on behalf of CCC, 
shall approve, in accordance with this part, each application that is 
timely filed in accordance with this section, or is filed by such 
extended time as may be approved by the Executive Vice President, CCC, 
provided that in either case, the applicant:
    (1) Has selected a method of supervision;
    (2) Has a U.S. address;
    (3) Has provided evidence of adequate assets and adequate facilities 
to assure compliance with the provisions in this part with respect to 
the disposition of contract additional peanuts; and
    (4) Has complied with the requirements of paragraph (a)(3) of this 
section.
    (c) Rescission of approval. Unless the Executive Vice President, 
CCC, shall otherwise agree in writing, a handler's previous approval to 
contract for the purchase of additional peanuts for exporting or 
crushing and to receive and

[[Page 570]]

handle such peanuts shall be considered to be rescinded upon such 
handler's use of facilities, other than those on which the approval was 
based, to receive, store, process, or ship contract additional peanuts. 
However, a rescission will not apply if substituted facilities are 
approved by the association, in accordance with instructions issued by 
CCC, when the handler can show, as determined by the association subject 
to review by the Executive Vice President, that the original facilities 
are no longer available for use due to circumstances beyond the 
handler's control such as, but not limited to, fire, flood, wind damage, 
or mechanical failure. In the event of rescission of a handler's 
approval, any purchases of peanuts from producers by such handler 
subsequent to the rescission will be considered as purchases of quota 
peanuts and will subject the handlers and producers to penalties, as 
prescribed by this part and in 7 CFR part 729 for marketing excess quota 
peanuts unless such peanuts are recorded on the producer's marketing 
card as a marketing of quota peanuts.
    (d) Cost of supervision. The handler shall bear the cost of 
supervision irrespective of the method of supervision such handler has 
chosen.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991]



Sec.  1446.403  Letter of credit.

    (a) Certification and financial guarantee (letter of credit)--(1) 
Certification. In order to establish a letter of credit, each handler 
must certify to the applicable marketing association the quantity of 
additional peanuts the handler expects to contract for delivery by 
producers that are served by such marketing association. The certified 
poundage will be the basis for establishing the letter of credit for the 
applicable crop. If the certified poundage is less than the actual 
contracted poundage, the letter of credit required of the handler for 
the next marketing year shall be subject to increase, as provided in 
this section.
    (2) Letter of credit. The handler must present an irrevocable letter 
of credit to each marketing association that serves the area in which a 
handler plans to contract or otherwise acquire contract additional 
peanuts. Such letter of credit shall be issued in a form and by a bank 
which is acceptable to CCC and except as provided in paragraph (d) of 
this section shall be submitted to the appropriate marketing association 
not later than July 31 and before marketing cards will be issued to 
producers for contract additional peanuts. Unless the provisions of 
paragraphs (b) and (c) of this section are applicable, the amount of the 
letter of credit for each area shall be equal to the amount determined 
by multiplying 140 percent of the national average quota price support 
rate by, for a handler selecting nonphysical supervision, 8 percent, or, 
for a handler selecting physical supervision, 5 percent, of the larger 
of:
    (i) Ninety percent of the handler's contracted pounds as recorded on 
contracts approved by the county committee for the preceding marketing 
year and in the marketing area; or
    (ii) The amount of additional peanuts the handler estimates will be 
contracted with producers, as certified to the marketing association, 
for delivery during the current marketing year and in that marketing 
area.
    (b) Increase in letter of credit. (1) The amount of the letter of 
credit required under paragraph (a) of this section shall be increased 
for any handler:
    (i) Who has a poor performance record, as evidenced by previous 
penalty assessments for violations of the provisions of this part; or
    (ii) Who, for purposes of handling peanuts is, as determined by CCC, 
a partnership, merger, joint venture, or other similar business 
relationship having officials who were officials of an organization 
having such a record or is composed in whole or in part by merger, 
succession, consolidation, association or assimilation, of entities with 
such a record; or
    (iii) Whose total acquisition of farmers stock peanuts during the 
preceding marketing year from purchases of contract additional peanuts 
exceeded, by more than 3.0 percent, the pounds on which the letter of 
credit for the preceding marketing year was based. Nothing in this part 
shall prohibit CCC from demanding an increase in the letter of credit 
for the current year in the

[[Page 571]]

event the handler has significantly underestimated the handler's 
purchases for the current year.
    (2) The increase in the letter of credit shall be determined in 
accordance with the guidelines set forth in paragraph (c) of this 
section.
    (c) Guidelines for increasing letters of credit--(1) Increased 
letter of credit due to history of program violation. If the handler 
and/or related entity was assessed penalties for program violations for 
any of the previous three crop years, the percentage of the pounds of 
contracted peanuts to which the increase specified in paragraph (b) of 
this section shall be applied, shall be increased by 6 percent for each 
year of the three-year period in which such a penalty was assessed, 
except that:
    (i) Such increase for a particular crop year shall be 3 percent 
rather than 6 percent if, for all violations for that crop year:
    (A) The penalties were reduced by the Executive Vice President, CCC, 
and paid; or
    (B) Less than 120 days, or such further period as established by the 
Executive Vice President, have passed since the penalty assessment was 
made by the CCC Contracting Officer.
    (ii) Previous penalty assessments, other than assessments for 
violations that involve the importation of additional peanuts, or the 
failure to properly dispose of additional peanuts, which have been paid 
shall not be considered as part of the violation history for any crop 
year if the total violations for such crop year by the handler, and 
related individuals or entities, involved less than 100,000 pounds of 
peanuts.
    (2) Waiver of increase. Notwithstanding (c)(1) of this section, at 
the discretion of the Executive Vice President, CCC, the increase 
required under this section may be waived upon the presentment of 
adequate security as determined acceptable by the Executive Vice 
President, CCC.
    (3) Inaccurate certification of additional peanuts acquired. In 
addition to the increase required by paragraph (c)(1) of this section, 
if the actual purchase of contract additional peanuts for the previous 
marketing year exceeds, by more than 3.0 percent, the poundage on which 
the previous marketing year's letter of credit was based, the pounds 
determined in accordance with paragraphs (a)(2) (i) and (ii) of this 
section shall be increased by an amount equal to 3 times the amount of 
such excess.
    (4) Basis for determining letter of credit amount. Any letter of 
credit determination under this section shall be based upon the facts as 
they exist on June 1 of the calendar year in which the letter of credit 
is to be supplied.
    (5) Unpaid interest. References to unpaid penalties in this section 
shall include associated unpaid interest and unpaid late payment 
charges.
    (d) Extension of time for filing letter of credit. Notwithstanding 
any other provision of this section, upon a request from a handler, the 
Executive Vice President, CCC, may extend the time for filing of a 
required letter of credit if such an extension is considered necessary 
in order for the handler to have sufficient time to acquire necessary 
financing.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.404  Transfer of contracts prior to delivery.

    An approved contract, by which a handler is to purchase additional 
peanuts from a producer, may not be sold, traded, or assigned except as 
provided in this section.
    (a) Contract transfer and delivery of contracted peanuts to other 
handlers. (1) If a handler is otherwise unable to perform under any 
contract with a producer for the purchase of additional peanuts due to 
conditions beyond the handler's control, the handler and the producer 
may agree to the delivery of the peanuts to another handler under the 
terms of the original contract or under modified terms except that, the 
price, quantity, type, segregation or farm number as shown on the 
original contract may not be changed. Conditions considered beyond the 
handler's control may include, but are not limited to, insolvency, 
bankruptcy, death, or destruction of warehouse facilities.
    (2) A contract for additional peanuts shall not be transferred to 
another handler without the prior written approval of the Deputy 
Administrator. Such transfer shall be approved by the

[[Page 572]]

Deputy Administrator only if the Deputy Administrator determines that 
such transfer will not impair the effective operation of the peanut 
program.
    (3) If the receiving handler:
    (i) Has an existing letter of credit, such handler may increase the 
existing letter of credit to cover the total amount of farmers stock 
peanuts that is to be transferred. However, any increase must be made 
within 14 days after the transfer is approved, otherwise any increased 
letter of credit will not be considered for purposes of determining 
whether an increase will be required in the next year's letter of credit 
because of a deficiency in the letter of credit.
    (ii) Does not have an existing letter of credit, the transfer shall 
not be approved unless such handler secures an acceptable letter of 
credit to cover the amount of farmers stock peanuts that is to be 
transferred.
    (b) Contract transfer and transfer of delivery obligations to other 
producers. If a producer is unable to fully perform the terms of a 
contract with a handler for the purchase of additional peanuts due to 
conditions beyond the producer's control or other conditions as may be 
prescribed by CCC, the handler and the producer or the producer's 
successor-in-interest may agree to a modification of the contract or to 
the substitution of another producer either under the original terms of 
the contract or under modified terms that do not change the original 
contract price and quantity. Conditions considered to be beyond the 
producer's control may include, but are not limited to, farm 
reconstitution in some cases (combinations and divisions), insolvency, 
bankruptcy, or death but do not include failure to produce the 
contracted amount from the planted acreage of peanuts due to natural 
disaster or related conditions or failure to plant sufficient acreage to 
produce the contracted quantity. Such modifications or transfers of 
contract obligations shall not be valid without the prior written 
approval of the Deputy Administrator. A transfer shall be approved only 
if the Deputy Administrator determines that such modifications or such 
transfer will not impair the effective operation of the peanut program.
    (c) County committee approval. Contract modifications other than 
changes in producer, owner or operator, or changes permitted by this 
section, may not be approved by the county committee.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.405  Inspection of contract additional peanuts.

    The type and quality of each lot of contract additional peanuts 
delivered under contract shall be determined by the Federal-State 
Inspection Service when such peanuts are delivered by a producer. To be 
valid, the inspection results shall be recorded on form FSA-1007 and 
signed by the inspector.



Sec.  1446.406  Commingled storage of contract additional peanuts.

    (a) Commingled storage. A handler may commingle quota loan, quota 
commercial, additional loan, and contract additional peanuts during 
storage. In such case the peanuts must be inspected on a farmers stock 
basis before such peanuts are placed in storage.
    (b) Accounting for commingled peanuts. Contract additional peanuts 
in commingled storage shall be accounted for on a:
    (1) Dollar value basis under physical supervision.
    (2) TKC basis under nonphysical supervision.



Sec.  1446.407  Handler transfer of contract additional peanuts or 
transfer of disposition credit.

    (a) Liability and credit for export or crushing. Except as permitted 
by this section, a handler shall not:
    (1) Sell, assign or otherwise transfer liability for exporting or 
crushing contract additional peanuts to other handlers, or
    (2) Sell, assign, or otherwise transfer credits for exporting or 
crushing contract additional peanuts to other handlers.
    (b) Transfer of farmers stock contract additional peanuts. (1) A 
one-time transfer of farmers stock contract additional peanuts may be 
made between the entity shown as applicant 1 and the entity shown as 
applicant 2 on the form FSA-1007 for the peanuts.

[[Page 573]]

    (2) Such transfers shall be made within the same marketing area 
unless approved otherwise by the marketing association or the Deputy 
Administrator, and in accordance with instructions issued by CCC.
    (3) Before the transfer may be approved, the receiving handler's 
letter of credit shall be amended by an amount that will cover the 
amount of peanuts transferred and the transferring handler must submit 
to the marketing association for approval, a form CCC-1006, covering any 
proposed transfer of farmers stock peanuts.
    (4) Such approval must be obtained before any physical movement of 
the peanuts from the buying point.
    (5) The transfer of peanuts as farmers stock peanuts after sale by 
the producer shall not be permitted unless approved in writing by CCC or 
the marketing association.
    (c) Transfer of peanuts for processing into products. (1) Handlers 
may transfer contract additional peanuts and the liability for the 
export of contract additional peanuts to a processor of peanut products 
either as:
    (i) Milled peanuts; or
    (ii) Farmers stock peanuts under the provisions of paragraph (b) of 
this section.
    (2) Such transfer shall be made in accordance with the provisions of 
this part.
    (d) Transfer of export credit for peanuts which have been exported. 
Credit for peanuts that have been exported under the provisions of this 
part will be given to the applicant shown on the form FV-184-9 for the 
lot of peanuts that has been exported. However, if a disclaimer to the 
credit for export is submitted with the applicable form FV-184-9, the 
export credit will be transferred to the person to whom the credit was 
assigned.
    (e) Transfer of credit for crushing. Disposition credit earned for 
peanuts crushed in accordance with the provisions of this part and under 
the supervision of the marketing association may be assigned to another 
person if a disclaimer to the credit for crushing is submitted with the 
applicable form FV-184-9.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.408  Decreasing or drawing upon a letter of credit.

    (a) Decreasing the letter of credit to reflect TKC obligation. Any 
existing irrevocable letter of credit that has been presented by a 
handler may be decreased after January 31 of the calendar year following 
the year in which the peanuts were produced, or such earlier date as may 
be authorized by the Deputy Administrator, State and County Operations, 
if the final TKC obligation determined for such handler, when converted 
to a farmers stock peanuts basis by dividing the TKC pounds by 0.795 for 
runner peanuts; 0.75 for Spanish peanuts; 0.735 for Virginia peanuts; or 
0.77 for Valencia peanuts, is less than the amount that would be 
applicable for such handler and for such amount of farmers stock peanuts 
as determined in accordance with Sec.  1446.403 of this part. The letter 
of credit may be decreased to the amount so determined.
    (b) Adjusting the letter of credit for acceptable proof of 
disposition. The handler shall deliver to the marketing association 
satisfactory evidence as described in this part, to verify that contract 
additional peanuts have been exported or otherwise disposed of in 
accordance with the provisions of this part. On January 31, of the 
calendar year following the year in which the peanuts were produced, and 
monthly thereafter of such following year, the marketing association 
shall permit a reduction of the letter of credit if the existing letter 
of credit exceeds 140 percent of the national average quota price 
support rate for the applicable crop times the farmers stock equivalent 
of the remaining TKC obligation as determined in the same manner as 
provided in paragraph (a) of this section.
    (c) Drawing against the letter of credit. (1) If less than 16 days 
remain before the expiration of a handler's letter of credit, and upon 
authorization by CCC, the marketing association may draw against the 
letter of credit and apply the amount toward any penalty due for failure 
to properly dispose of, or account for, contract additional peanuts in 
accordance with this part if:
    (i) By the final disposition date required in this part, a 
deficiency remained in the handler's obligation to

[[Page 574]]

crush or export contract additional peanuts;
    (ii) By the date required in this part, the handler did not provide 
satisfactory documentary evidence of the full export of peanuts or 
peanut products; or
    (iii) The handler has committed another violation of this part with 
respect to such peanuts.
    (2) Any draw down against a letter of credit shall not compromise 
any penalty due CCC if the letter of credit is insufficient to cover the 
full amount of the penalty or prevent any re-determination of whether 
there has been a proper disposition of and/or accounting for peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.409  Access to facilities.

    A handler, by entering into contracts to receive contract additional 
peanuts, or any person or firm otherwise receiving contract additional 
peanuts, shall be considered to have agreed that any authorized 
representative of CCC or the marketing association:
    (a) May enter and remain upon any of the premises of the handler 
when such peanuts are being received, shelled, cleaned, bagged, sealed, 
weighed, graded, stored, milled, blanched, crushed, packaged, shipped, 
sized, processed into products, or otherwise handled;
    (b) May inspect such peanuts and the oil, meal, and other products 
thereof; and
    (c) May inspect the premises, facilities, operations, books, and 
records of the handler to the extent necessary to determine that such 
peanuts have been handled in accordance with this part.



Sec.  1446.410  Disposition date.

    (a) Final disposition date. To avoid a penalty as provided in this 
part, a handler shall dispose of all contract additional peanuts, in 
accordance with the provisions in this part, by the final disposition 
date. Except as provided in paragraph (b) of this section, the final 
disposition date shall be October 15 of the year following the calendar 
year in which the crop was grown.
    (b) Extension of final disposition date. The final disposition date 
for an individual handler may be extended by the marketing association 
to November 30 of the year following the calendar year in which the crop 
was grown if, by the final disposition date identified in paragraph (a) 
of this section, the handler files a written request with the marketing 
association that specifies the number of pounds for which an extension 
is requested.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991; 
57 FR 27145, June 18, 1992; 61 FR 37625, July 18, 1996]



Sec.  1446.411  Export provisions.

    (a) Export to a U.S. Government agency. Except for the exportation 
of raw peanuts to the military exchange services of the United States 
for processing outside the United States, the export of peanuts in any 
form by or to a United States Government agency shall not be considered 
as export to an eligible country, but shall instead be considered a 
domestic edible use of such peanuts. However, sales to a foreign 
government which are financed with funds made available by a United 
States agency, such as the Agency for International Development or CCC, 
will not be considered sales to a United States Government agency if the 
peanuts are not purchased by the foreign buyer for transfer to an agency 
of the United States.
    (b) Export to an eligible country. All contract additional peanuts 
which are not crushed domestically (including approved processing into 
flakes) and which are eligible for export shall be exported in 
accordance with the provisions of this part to an eligible country as 
peanuts or peanut products.



Sec.  1446.412  Evidence of export.

    To receive credit toward an obligation to dispose of contract 
additional peanuts in accordance with this part, the handler must:
    (a) Certified statement. Provide a statement signed by the handler 
specifying the name and address of the consignee and certifying that the 
peanuts have been exported.
    (b) Documentation. Not later than 45 days after the final 
disposition date provided in this part, or a later date established by 
the Director, TPD, for cases where the Director finds that the handler 
has made a good faith effort to

[[Page 575]]

furnish documentation in a timely manner and that the failure to do so 
was due to conditions beyond the control of the handler, furnish to the 
marketing association or CCC the following documentary evidence of the 
export of peanuts or peanut products:
    (1) Export by water. For peanuts or peanut products and peanut 
products that were exported by water, a nonnegotiable original or 
original duplicate copy (not a machine made copy) of an on-board ocean 
bill of lading. Such bill of lading must have been signed on behalf of 
the carrier and must include:
    (i) The date and place of loading such peanuts on-board the vessel;
    (ii) The weight of the peanuts, peanut meal, or products exported;
    (iii) The name of vessel;
    (iv) The name and address of the U.S. exporter;
    (v) The name and address for the foreign buyer;
    (vi) The country of destination; and
    (vii) For peanut meal which is unsuitable for use as feed because of 
contamination by aflatoxin, the statement required on the bill of lading 
in accordance with this part.
    (2) Export by rail or truck. For peanuts and peanut products that 
were exported by rail or truck:
    (i) A copy of the bill of lading that must include the weight of the 
peanuts or peanut meal or products exported, and for peanut meal that is 
unsuitable for feed use because of contamination by aflatoxin, the 
statement required on the bill of lading in accordance with this part; 
and
    (ii) A copy of the Shipper's Export Declaration or, in the 
alternative, a U.S., Canadian or Mexican Customs' document which shows 
entry into the country; or
    (iii) Other documentation that is acceptable to the marketing 
association.
    (3) Export by air. For peanuts and peanut products that were 
exported by air:
    (i) A copy of the airway bill that must include:
    (A) The weight of the peanuts, peanut meal, or peanut products 
exported;
    (B) The consignee and shipper; and
    (C) For peanut meal that is unsuitable for feed use because of 
contamination by aflatoxin, the statement required on the airway bill in 
accordance with this part: or
    (ii) Other documentation that is acceptable to the marketing 
association.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.413  Disposal of meal contaminated by aflatoxin.

    All meal produced from peanuts which are crushed domestically and 
found to be unsuitable for use as feed because of contamination by 
aflatoxin shall be disposed of for non-feed purposes only. If the meal 
is exported, the export bill of lading shall reflect the analysis of the 
lot by inclusion and appropriate completion thereon the following 
statement showing the range and average aflatoxin content (where ``----
--'' represents the determined values for such lot) as parts per billion 
(PPB):

    ``This shipment consists of lots of meal which contain aflatoxin 
ranging from ``------'' to ``------'' PPB and averaging ``------'' 
PPB.''



Sec.  1446.414  Processing additional peanuts into products.

    (a) Type of supervision. A person, who plans to acquire additional 
peanuts from other handlers for processing into products for export, 
must register as a handler and choose a method of supervision in 
accordance with this section.
    (b) Physical supervision. For purposes of this section, if physical 
supervision is chosen:
    (1) Such supervision shall be conducted in accordance with 
provisions of this part; and
    (2) The processor must provide a letter of credit to the marketing 
association as prescribed by this part which shall, to the extent 
practicable, be the same amount as the letter of credit that would be 
required in accordance with this part for an equal quantity of peanuts 
acquired by a handler who has entered into contracts for the purchase of 
additional peanuts and has chosen physical supervision.
    (c) Nonphysical supervision. For purposes of this section, if 
nonphysical supervision is chosen:
    (1) The processor shall:
    (i) Provide a written agreement that is signed by a duly authorized 
person,

[[Page 576]]

in which the processor agrees to export additional peanuts to an 
eligible country in such quantities and in accordance with such 
procedures as are specified by this part;
    (ii) Provide a letter of credit to the marketing association which 
shall, to the extent practicable, be the same amount as the letter of 
credit that would be required in accordance with this part for an equal 
quantity of peanuts acquired by a handler who has entered into contracts 
for the purchase of additional peanuts and has chosen nonphysical 
supervision; and
    (iii) Provide to the marketing association a description of the type 
of product that will be processed, the type of containers, size of 
containers, and the standard peanut processing yield for the product.
    (2) The processor shall submit proof of export to the marketing 
association of like kind, as determined by the marketing association, as 
that required by this part for exports of peanuts under nonphysical 
supervision.
    (3) Upon verification of product yield by the marketing association, 
approval of the form CCC-1006, and approval of the letter of credit, a 
product export obligation will be established on marketing association 
ledgers and the processor will be notified of the quantity of product 
export obligation.
    (4) Upon receipt of proof of export that is acceptable to the 
marketing association, the processor, with the concurrence of the 
marketing association, may reduce the letter of credit to the extent 
that such letter of credit exceeds the amount determined by the 
marketing association, in accordance with instructions issued by FSA, to 
be necessary to assure compliance by the processor with the provisions 
in this part.
    (d) Applicability of regulations. By registering as a handler and 
selecting a method of supervision in accordance with this section, a 
processor of peanuts shall be considered to have agreed:
    (1) To perform in accordance with the provisions of this part;
    (2) That the provisions of this part such as access to facilities, 
fraud, liens against peanuts on which penalty is due, and any other 
provisions that apply to a handler of additional peanuts, shall apply to 
the processor; and
    (3) That the processor shall be considered as a handler for purposes 
of applying the penalty provisions of this part.
    (e) Records. A peanut processor shall maintain records that will 
enable the marketing association or other representative of the 
Secretary to determine compliance with the provisions of this section.



Sec.  1446.415  Prohibition on importation or reentry of contract 
additional peanuts.

    Neither exported contract additional peanuts nor peanut products 
made from additional peanuts shall be imported or reentered in 
commercial quantities by anyone into the United States in any form. If 
contract additional peanuts or peanut products made from such peanuts 
are imported or reentered into the United States, the handler importing 
such peanuts or peanut products shall be liable for a penalty assessed 
in accordance with this part, for reentering contract additional 
peanuts.



Sec.  1446.416  Suspension of restrictions on imported peanuts.

    Notwithstanding any other provision of this part, if the President 
issues a proclamation under Section 404(b) of the Uruguay Round 
Agreements Act (19 USCS Sec.  3601(b)) expanding the quantity of peanuts 
subject to the in-quota rate of duty under a tariff-rate quota, or under 
section 22 of the Agricultural Adjustments Act (7 U.S.C. 624), reenacted 
with amendments by the Agricultural Marketing Agreement Act of 1937 
temporarily suspending restrictions on the importation of peanuts, a 
handler, with the written consent of the producer and CCC, may purchase 
additional peanuts from any producer who, in accordance with this part, 
contracted with the handler to deliver additional peanuts to such 
handler and may use such peanuts for sale for domestic edible use 
without incurring any marketing penalty for failure to crush or export 
such peanuts. However, the maximum quantity of peanuts that may be 
purchased by such handler in accordance with this provision of this

[[Page 577]]

section is the quantity of contract additional peanuts that remains 
undelivered by such producer under the contract. For purposes of 
application of this section, a proclamation temporarily increasing the 
import quota shall not be considered the same as a temporary suspension 
of restrictions on the importation of peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 65 FR 64595, Oct. 30, 2000]



Sec.  1446.417  Loss of peanuts.

    Should a handler suffer a loss of peanuts as a result of fire, flood 
or any other condition beyond the control of the handler, the portion of 
such loss that may be attributed to contract additional peanuts, as 
determined by the marketing association shall not be greater than an 
amount determined by dividing the total of the contract additional 
peanuts acquired by the handler during the year by such handler's total 
peanut purchases for the year and multiplying the result by the quantity 
for which acceptable proof of loss has been furnished to the marketing 
association. Such attribution shall take into account any dispositions 
of peanuts that occurred prior to the loss of the peanuts for which the 
attribution is made.



  Subpart E--Handling Contract Additional Peanuts-Physical Supervision



Sec.  1446.501  Accounting for contract additional peanuts acquired 
under physical supervision.

    (a) Commingled storage--(1) General. For a handler operating under 
physical supervision, contract additional peanuts placed in commingled 
storage must be accounted for on a dollar value basis less a one time 
adjustment for shrinkage for each crop.
    (2) Shrinkage. For peanuts that are graded out and accounted for:
    (i) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 3.5 percent for Virginia-type peanuts; and
    (B) 3.0 percent for all other peanuts.
    (ii) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 4.0 percent for Virginia-type peanuts; and
    (B) 3.5 percent for all other peanuts.
    (3) Records. The handler shall maintain a copy of each form FSA-1007 
that was issued for any peanuts that are placed in commingled storage 
and that is issued for any peanuts removed from storage.
    (b) Supervised identity preserved storage. For a handler operating 
under physical supervision, contract additional peanuts may be stored 
identity preserved and may be accounted for by disposing of the entire 
contents of the peanuts in each identity preserved warehouse in 
accordance with this part and under the supervision of a representative 
of the marketing association. In such case:
    (1) All peanuts that are loaded into each warehouse must be 
inspected as farmers stock peanuts and must be loaded under the 
supervision of the marketing association.
    (2) At the end of each day in which peanuts are placed in or removed 
from the warehouse, the warehouse must be sealed by a representative of 
the marketing association.
    (3) Each warehouse seal may be removed only by a representative of 
the marketing association.
    (4) The marketing association shall be reimbursed by the handler for 
all expenses of providing a representative to supervise the loading and 
unloading of each warehouse.
    (c) Nonsupervised identity preserved storage--(1) Conditions. For a 
handler operating under physical supervision, contract additional 
peanuts may be stored identity preserved without supervision at the time 
of loading the peanuts into each warehouse, but only if:
    (i) All peanuts that are loaded into a warehouse are inspected prior 
to loading into such warehouse and a form FSA-1007 prepared for each lot 
that is inspected;
    (ii) The entire contents of each warehouse will be removed and 
disposed of in accordance with this part and under supervision of a 
representative of the marketing association; and

[[Page 578]]

    (iii) The peanuts are accounted for on a dollar value basis except 
that shrinkage, in the amounts provided for in paragraph (c)(2) of this 
section, will be allowed if the dollar value of the peanuts that are 
loaded out of each warehouse is less than the dollar value of the 
peanuts that were loaded into such warehouse.
    (2) Shrinkage. For peanuts that are graded out and accounted for:
    (i) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 3.5 percent for Virginia-type peanuts; and
    (B) 3.0 percent for all other peanuts.
    (ii) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 4.0 percent for Virginia-type peanuts; and
    (B) 3.5 percent for all other peanuts.
    (3) Records. The handler shall maintain a copy of each form FSA-1007 
that is issued for any peanuts that are placed in nonsupervised identity 
preserved storage and that is issued for any peanuts that are removed 
from such storage.



Sec.  1446.502  Physical supervision of contract additional peanuts.

    (a) Supervision. A handler who has chosen to operate under physical 
supervision shall make arrangements that are satisfactory to the 
marketing association for representatives of the marketing association 
to conduct onsite supervision of domestic handling of contract 
additional peanuts including storing, shelling, crushing, cleaning, 
milling, blanching, weighing, and shipping.
    (b) Final dates for scheduling supervision. Contract additional 
farmers stock peanuts shall be scheduled for supervision by the 
marketing association during the normal marketing period but not later 
than August 15 of the calendar year following the year in which the crop 
was grown, unless prior approval of a later date has been made by the 
marketing association.
    (c) Notifying the marketing association. Before moving or processing 
any contract additional peanuts, the handler or an agent of the handler 
shall notify the marketing association of the time such operation will 
begin and the approximate period of time required to complete the 
operation. When a plant is not currently under supervision, the handler 
shall give at least five working days of advance notice to the marketing 
association so that supervision can be arranged.
    (d) Processing. The identical peanuts identified at time of load-out 
as contract additional peanuts shall be shelled or otherwise milled, 
crushed, or shelled and crushed under supervision of the marketing 
association as a continuous operation separate from other peanuts. 
Shelled peanuts shall be identified with positive lot identity tags 
before being stored and moved for crushing, exportation, or processing 
into peanut products to be exported. Except as otherwise authorized by 
the marketing association, such peanuts will be considered as having 
been crushed or exported only if positive lot identity has been 
maintained in the following manner:
    (1) Transportation. The peanuts shall be transported from storage 
locations in a covered vehicle such as a truck or railroad car. The 
vehicle shall be sealed unless the marketing association determines that 
identity of the peanuts can be maintained without sealing.
    (2) Storage. Farmers stock peanuts shall be stored in a separate 
building(s) or bin(s) which can be sealed or which the marketing 
association otherwise determines will satisfactorily maintain lot 
identity. Milled peanuts shall be stored in such a manner that the 
marketing association, under procedures issued by CCC, may make periodic 
inventory verification of the contract additional lots that are shown on 
marketing association records as being in the storage facility. The 
handler shall furnish to the marketing association the name and location 
of the storage facilities in which the contract additional peanuts are 
located.



Sec.  1446.503  Disposition requirements under physical supervision.

    (a) Methods of disposition. Except under the provisions of Sec.  
1446.504 of this part applicable to substitution, the identical contract 
additional farmers stock peanuts and milled peanuts that

[[Page 579]]

are shelled under supervision of the marketing association and formed 
into lots shall be disposed of, in accordance with the provisions of 
this part that are applicable to contract additional peanuts and to 
physical supervision, by domestic crushing or by export to an eligible 
country as follows:
    (1) All kernels may be crushed domestically under supervision of the 
marketing association representative; or
    (2) All kernels may be exported for crushing, if fragmented; or
    (3) All kernels that meet the standards established for the domestic 
market under the Marketing Agreement No.146 may be exported and the 
remaining kernels crushed domestically under supervision of the 
marketing association representative; or
    (4) All of the peanuts may be exported as farmers stock peanuts, 
provided that such peanuts meet the standards established for the 
domestic market under the Marketing Agreement No. 146 and are positive 
lot identified; or
    (5) The peanuts may be exported to an eligible country as peanut 
products if such products are produced domestically; or
    (6) The peanuts may be exported as milled or in-shell peanuts if 
they meet the edible export standards established for the domestic 
market under the Marketing Agreement No. 146; or
    (7) The peanuts may be considered exported or crushed if it is 
determined by CCC that such peanuts have been destroyed or otherwise 
made unsuitable for any commercial purpose.
    (b) Peanuts diverted. Contract additional peanuts, or peanut 
products made from contract additional peanuts, that are diverted to any 
country other than an eligible country shall not be credited in the 
handler's favor against the handler's obligation to crush or export such 
peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.504  Substitution of quota and additional peanuts.

    (a) Substitution of quota peanuts which have been exported--(1) 
Farmers stock peanuts. With prior notification to and approval of the 
marketing association, farmers stock quota peanuts that have been 
exported from the same crop, type, quality, and area may be substituted 
for additional peanuts that otherwise would have to be exported in 
accordance with this part to avoid a penalty.
    (2) Milled peanuts. With prior notification to and approval by the 
marketing association, peanuts that are milled under supervision of the 
marketing association may be used to replace, in domestic edible use, 
quota peanuts that have been exported to an eligible country from the 
same crop, type, area, and of the same grade as recognized by the Peanut 
Administrative Committee (PAC) for edible quality grades. Such grades 
shall be established at the time the peanuts are milled and the lot is 
formed unless CCC directs otherwise in writing. The quota peanuts that 
are exported, for which substitution is requested, must have been 
positive lot identified and otherwise handled as additional peanuts 
under the supervision of the marketing association.
    (b) Use of additional peanuts for domestic edible uses prior to 
substitution--(1) General requirements. Additional peanuts may be used 
for domestic edible use with prior notification and approval of the 
marketing association and upon presentation to the marketing association 
of an irrevocable letter of credit in an amount that is determined in 
the same manner as such handler's initial letter of credit for the 
quantity of peanuts that will be substituted. Such letter of credit is 
in addition to the letter of credit required in accordance this part as 
a condition for approval of contracts for additional peanuts. Such 
additional letter of credit for substitution shall be issued in a form 
and by a bank which is acceptable to CCC.
    (2) Submitting evidence of export. The handler subsequently shall 
dispose of a like amount of quota peanuts in the manner prescribed in 
this part for contract additional peanuts. If the quota peanuts are 
exported, the handler shall subsequently deliver to the marketing 
association satisfactory evidence that a like amount of quota peanuts of 
the same type and of a similar grade has

[[Page 580]]

been exported. Such evidence must be submitted no later than the earlier 
of:
    (i) 30 days after the final date for export as established in 
accordance with this part; or
    (ii) 15 days prior to the expiration of the letter of credit.
    (3) Failure to timely submit evidence of export. If satisfactory 
evidence is not presented by such date determined in (b)(2) of this 
section, CCC may authorize the marketing association to draw against the 
letter of credit for the full amount of the penalty which would 
otherwise be due for failure to dispose of contract additional peanuts 
in accordance with this part.



Subpart F--Handling Contract Additional Peanuts--Nonphysical Supervision



Sec.  1446.601  Disposition requirements under nonphysical supervision.

    (a) Disposition requirement. With respect to any marketing year, a 
handler who has selected nonphysical supervision shall account for the 
disposition of any contract additional peanuts acquired by such handler 
by providing evidence that is satisfactory to the marketing association 
of the quantity of peanuts by peanut type that are crushed or exported 
by such handler in each of the following kernel categories:
    (1) SS kernels;
    (2) SMK's; and
    (3) AO kernels.
    (b) SS kernels. (1) For each lot of contract additional peanuts 
acquired by such handler for which a deduction would have been 
applicable for SS kernels under the applicable price support loan 
schedule, deduct, from the percentage of SS kernels in such lot of 
peanuts, a number of percentage points equal to the maximum percentage 
of SS kernels that a lot of peanuts could contain without having a 
deduction for SS kernels under the applicable price support loan 
schedule and multiply the result by the total weight of the TKC content 
of the lot, excluding the weight of the LSK's in such lot.
    (2) Determine separately, for each type of peanuts acquired by such 
handler, the total of the results obtained in paragraph (b)(1) of this 
section for all lots of contract additional peanuts acquired by such 
handler.
    (3) For each type of peanuts acquired by such handler, multiply the 
result determined in paragraph (b)(2) of this section by 0.955 in order 
to provide an allowance for shrinkage. The result is the minimum 
quantity of SS kernels of peanuts of the respective type that shall be 
crushed or exported by such handler.
    (c) SMK and SS kernels. (1) Determine, by type, the total of the 
quantity of SMK and SS kernels in the lots of contract additional 
peanuts acquired during the marketing year by such handler.
    (2) From the total determined in paragraph (c)(1) of this section, 
deduct the amount determined in paragraph (b)(2) of this section.
    (3) For each type of peanuts acquired by such handler, multiply the 
results obtained in (c)(2) of this section by 0.955. The result is the 
minimum combined quantity of SMK's and SS kernels (excluding the 
quantity of SS kernels required to be crushed or exported as determined 
in paragraph (b)(3) of this section) of the respective type that shall 
be exported or crushed by such handler.
    (d) AO kernels. (1) Determine, by type, the total quantity of TKC in 
the lots of contract additional peanuts acquired during the marketing 
year by such handler.
    (2) From the total determined in paragraph (d)(1) of this section, 
deduct:
    (i) The amount of SS kernels determining in paragraph (b)(2) of this 
section; and
    (ii) The combined SMK's and SS kernels determined in paragraph 
(c)(2) of this section.
    (3) Multiply the result determined in paragraph (d)(2) of this 
section by 0.955. The result is the total of the AO kernels of the 
respective type that shall be exported or crushed by such handler.
    (e) Substitution prohibited. Disposition credit shall not be 
granted:
    (1) To the obligation to export or crush SS kernels and SMK for any 
amount of AO kernels that may have been exported or crushed in excess of 
the quantity required in accordance with paragraph (d)(3) of this 
section.

[[Page 581]]

    (2) To the obligation to export or crush AO kernels for any amount 
of SS kernels and SMK's that may have been exported or crushed in excess 
of the quantity required in accordance with paragraph (c)(3) of this 
section.
    (3) To the obligation to export or crush peanuts of a type, for a 
surplus amount of contract additional peanuts exported or crushed from 
another type.
    (f) Peanuts diverted. Contract additional peanuts or peanut products 
made from contract additional peanuts diverted to any country other than 
eligible country shall not be credited in the handler's favor against 
the handler's obligation to crush or export such peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.602  Disposition credit for peanuts under nonphysical supervision.

    (a) Disposition credits. Contract additional peanuts of the same 
crop year and of like type shall be disposed of in accordance with the 
provisions of this part. Disposition shall be by domestic crushing or by 
export to an eligible country. Disposition credit shall, subject to the 
provisions of this part, be granted for:
    (1) Kernels that are crushed domestically under physical supervision 
of the marketing association representative; or
    (2) Kernels that are exported for crushing, if fragmented before 
being exported; or
    (3) Exported kernels that meet PAC outgoing quality standards for 
domestic edible use; or
    (4) Peanuts that are exported as farmers stock peanuts, provided 
that such peanuts meet PAC incoming quality standards for Segregation 1 
peanuts and are positive lot identified; or
    (5) Peanuts that are exported to an eligible country as peanut 
products if such products are produced domestically in accordance with 
provisions of this part; or
    (6) Peanuts that are exported as milled or in-shell peanuts if they 
meet PAC outgoing quality standards for domestic edible peanuts; or
    (7) Peanuts that are exported as blanched peanuts; or
    (8) Peanuts that are determined by the marketing association as 
having been destroyed or otherwise made unsuitable for any commercial 
purpose. In such case the peanuts shall be considered as crushed.
    (b) Requesting physical supervision of crushing for disposition 
credit. Prior to the disposition date for contract additional peanuts, 
as provided in this part, a handler operating under the provisions of 
this part with respect to nonphysical supervision may request and 
arrange for the marketing association to supervise the crushing of SMK, 
SS and AO peanuts for disposition credit for the applicable kernel type 
by obtaining physical supervision of the peanuts under the following 
conditions:
    (1) Milled peanuts. A request to change to physical supervision for 
crushing milled peanuts for SMK, SS or AO credit may be made at any time 
prior to the final disposition date for additional peanuts for the 
relevant crop year. Physical supervision of milled peanuts shall be 
provided under the provisions of this part applicable to physical 
supervision of milled peanuts. The marketing association may require 
that positive identified lots be regraded before crushing.
    (2) Farmers stock peanuts. A request to change to physical 
supervision for crushing farmers stock peanuts must be made and approved 
prior to the peanuts being graded out of commingled storage. In order to 
determine the categories, by peanut type, for the kernels that are 
crushed, namely SS, SMK and AO kernels, physical supervision must begin 
at the gradeout from commingled storage and continue through the 
crushing of the peanuts as required in accordance with this part for a 
handler who chooses physical supervision for disposition of contract 
additional farmers stock peanuts.
    (c) Determining disposition credit. Disposition credit for SMK, SS 
and AO kernels crushed under physical supervision shall be determined 
for farmers stock peanuts from the applicable form FSA-1007, and for 
milled peanuts from the applicable form FV-184-9.
    (d) Application of crushing credits to disposition obligation--(1) 
Milled peanuts. Milled peanuts that are crushed under

[[Page 582]]

physical supervision for disposition credit may receive credit as 
follows:
    (i) If such peanuts meet PAC outgoing quality standards for domestic 
edible peanuts, disposition credit may apply pound-for-pound toward 
meeting the respective SMK, SS, or AO kernel obligations for the 
respective like peanut type and for like kernel type.
    (ii) If such peanuts fail to meet PAC outgoing quality standards for 
domestic edible use due to aflatoxin contamination, disposition credit 
may apply to the SMK, SS or AO kernel obligations for the respective 
like peanut type and for like kernel type; except that, the percentage 
of such peanuts to which such credit will be allowed for each peanut 
type and kernel type shall not exceed the percentage of the total 
quantity of the respective type of peanuts that was purchased by the 
handler for the marketing year as contract additional peanuts.
    (iii) If such peanuts fail to meet PAC outgoing quality standards 
for reasons other than aflatoxin contamination, disposition credit must 
be applied exclusively as AO kernels.
    (2) Farmers stock peanuts. Farmers stock peanuts that are crushed 
under physical supervision for disposition credit may receive credit as 
follows:
    (i) If such peanuts meet PAC incoming quality standards for 
Segregation 1 peanuts, disposition credit may apply pound-for-pound 
toward meeting the respective SMK, SS, or AO kernel obligations for the 
respective like peanut type and for like kernel type.
    (ii) If such peanuts fail to meet PAC incoming quality standards for 
Segregation 1 peanuts, disposition credit may apply to the SMK, SS or AO 
kernel obligations for the respective like peanut type and for like 
kernel type; except that, the percentage of such peanuts to which such 
credit will be allowed for each peanut type and kernel type shall not 
exceed the percentage of the total quantity of the respective type of 
peanuts that was purchased by the handler for the marketing year as 
contract additional peanuts.
    (iii) If such peanuts do not meet PAC incoming quality standards for 
Segregation 1 peanuts for any reason other than the presence of A. 
flavus mold, disposition credit must be applied exclusively as AO 
kernels.
    (3) Adjusting export credit for average dollar value of farmers 
stock peanuts. If CCC determines that the average dollar value of edible 
farmers stock peanuts graded out of commingled storage and crushed for 
export credit under the provisions of this section is less than the 
average dollar value of all like type peanuts purchased by the handler 
as contract additional peanuts, the amount of export credit for each 
kernel type determined under paragraph (b)(2) of this section shall be 
adjusted by multiplying each quantity for each kernel type by a factor 
to be determined by dividing:
    (i) The average dollar value per ton of peanuts graded out of the 
handler's commingled storage, accounted for as set forth in this part, 
and crushed for export credit under the provisions of this section; by
    (ii) The average dollar value per ton of all peanuts purchased by 
the handler as contract additional peanuts.
    (e) Blanching exception. Notwithstanding any other provision of this 
part, a handler may receive credit for the pre-blanching weight of SS 
and SMK peanuts that are blanched for export if both the blanching and 
the crushing of the residue are conducted under supervision of agents of 
CCC or the marketing association. The maximum credit that may be 
received shall be:
    (1) The quantity of SMK and SS kernels as shown on the FV-184-9 that 
is submitted for proof of export for such blanched peanuts;
    (2) The quantity of the residue that is crushed under physical 
supervision; and
    (3) The pre-blanched or ``redskin'' weight less the quantities in 
paragraphs (e)(1) and (2) of this section, to the extent of such amount 
that the marketing association determines is reasonable and comparable 
with standard industry practices.
    (f) Export credits. In order to receive export credit toward meeting 
a handler's obligation to crush or export additional peanuts such 
exported peanuts must meet the outgoing quality standard established for 
the domestic market under the Marketing Agreement

[[Page 583]]

No. 146. Export credit will be granted in accordance with this paragraph 
for any exported peanuts that meet such quality standards.
    (1) Credit for exporting SMK peanuts. Credit for exporting SMK's of 
the same crop year, of like type, may be earned for:
    (i) The total pounds in a lot of exported peanuts which meet or 
exceed U.S. Standard grade for U.S. No. 1; or
    (ii) The total pounds, excluding splits as determined in paragraph 
(f)(2)(ii) of this section, in a lot of peanuts which meet PAC standards 
for:
    (A) Whole kernel peanuts with splits, or
    (B) No. 2 Virginia peanuts; or
    (iii) The total pounds determined to be SMK's in a lot of exported 
in-shell peanuts which meet U.S. Standard grade for cleaned Virginia 
type peanuts in the shell.
    (2) Credit for exporting SS kernels. Credits for SS kernels of the 
same crop year, of like type, may be earned for:
    (i) The total pounds in a lot of exported peanuts which meet the 
U.S. Standard grade for splits; or
    (ii) The total pounds, excluding SMK's as determined in paragraph 
(f)(1)(ii) of this section, in a lot of peanuts which meets PAC 
standards for:
    (A) Whole kernel with splits, or
    (B) No. 2 Virginia; or
    (iii) The total pounds determined to be SS kernels in a lot of 
exported in-shell peanuts which meet U.S. Standard grade for cleaned 
Virginia type peanuts in the shell.
    (3) Export credits for contract additional peanuts processed into 
products for export. To receive disposition credit for contract 
additional peanuts used in products for export, the shelled peanuts must 
be identified with positive lot identity tags before being moved for 
processing in accordance with provisions of this part. The peanuts shall 
be processed under supervision of the marketing association unless the 
processing handler selects to process such peanuts under nonphysical 
supervision.
    (4) Export credits for in-shell peanuts. With respect to peanuts 
exported in-shell, in accordance with instructions issued by CCC, 
credits may be earned for SMK, SS or AO kernels on the respective 
portions of the TKC of the lot that are SMK, SS or AO kernels.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec.  1446.603  Disposition credit for peanuts in exported products 
made from quota peanuts.

    A handler who has selected nonphysical supervision and who 
manufacturers peanut products from quota peanuts may export such 
products to an eligible country and receive disposition credit to apply 
to such handler's obligation to dispose of contract additional peanuts 
by crushing or by exporting.
    (a) Eligible peanuts. In order to receive such credit, the quota 
peanuts used in such products shall be:
    (1) Of the same crop year as the crop year of the contract 
additional peanuts for which the obligation, to crush or export, was 
established.
    (2) Of the same type as the contract additional peanuts to which 
such credit shall be applied.
    (b) Handler requirements (1) The handler, with respect to each 
marketing year and each area in which such handler will apply for export 
credit for manufactured products, shall submit a certification to the 
applicable marketing association:
    (i) With respect to any marketing year in which such handler intends 
to request disposition credit for exported products made from quota 
peanuts, prior to requesting such disposition credit;
    (ii) On a product-by-product basis; and
    (iii) Of the peanut product content of peanut products manufactured 
by such handler for which disposition credit will be requested.
    (2) Such certification of peanut product content, as required in 
accordance with paragraph (b)(1) of this section, must indicate by type 
of peanuts, with respect to each individual product, the respective 
portion of such peanut kernels that are:
    (i) SS kernels;
    (ii) SMK's;
    (iii) AO kernels.
    (3) If any change is made in any peanut product formula, as 
certified in accordance with this section, the handler

[[Page 584]]

shall notify the applicable area marketing association of such change 
within 90 days after such change is implemented.
    (c) Disposition credit. (1) To the extent that a handler provides 
satisfactory proof, to the applicable marketing association, of the 
export of peanut products made from quota peanuts, such handler who has 
complied with the provisions of paragraph (b) of this section may 
receive disposition credit for eligible peanuts in peanut products 
exported to an eligible country.
    (2) Disposition credit received in accordance with paragraph (c)(1) 
of this section shall be prorated by type to SS kernels, SMK's and AO 
kernels in the same proportion as the handler certified with respect to 
the peanut product content in accordance with paragraph (b)(2) of this 
section.
    (d) Records. Any handler who receives disposition credit under 
paragraph (c) of this section shall maintain records, as required in 
this part, to support:
    (1) The accuracy of such handler's certification made in accordance 
with this section; and
    (2) Any disposition credit that is requested by such handler in 
accordance with this section.
    (e) Annual review. The marketing association or employees of TPD 
shall conduct an annual review of the certifications made by handlers in 
accordance with this section.
    (f) Inaccurate certification. In the case of an inaccurate 
certification, the disposition credit shall be adjusted accordingly. 
Such action shall be in addition to any other remedy, including, but not 
limited to, any civil or criminal remedy for fraud, as may apply.



               Subpart G--Penalties and Liquidated Damages



Sec.  1446.701  Excess marketing of quota peanuts.

    A handler will be subject to a penalty for noncompliance with this 
part, if, as determined under this part, from any crop of peanuts, such 
handler markets, for domestic edible use, a larger quantity, or higher 
grade or quality of peanuts, than could reasonably be produced from the 
quantity of peanuts having the grade, kernel content, and quality of 
farmers stock peanuts purchased by the handler during the applicable 
marketing year as quota peanuts, including those peanuts purchased in 
accordance with the ``immediate buyback'' provisions of this part. In 
such case, the penalty will be an amount equal to 140 percent of the 
national average quota support rate for the applicable crop, times that 
quantity of farmers stock peanuts which are determined by CCC to be 
necessary to produce the excess quantity or grade or quality of peanuts 
marketed.



Sec.  1446.702  Peanuts ineligible for quota loan.

    Any person who causes or permits peanuts that are not eligible 
peanuts to be pledged as collateral for a loan at the quota loan rate 
shall be considered to have agreed that:
    (a) CCC may incur serious and substantial damage to its program to 
support the price of quota peanuts because such peanuts were pledged as 
collateral for a quota loan;
    (b) The amount of such damages will be difficult, if not impossible, 
to ascertain exactly; and
    (c) Such person shall, with respect to any ineligible peanuts placed 
under quota loan, pay to CCC, as liquidated damages and in addition to 
any penalty that is due, the difference between the quota loan rate for 
such peanuts and the additional loan rate that would apply to peanuts of 
the same type and quality, times the amount of such peanuts that were 
placed under loan. It is agreed that such liquidated damages are a 
reasonable estimate of the probable actual damages which CCC would 
suffer. Such person shall pay the damages to CCC promptly upon demand in 
addition to penalties as may be due or assessed. Liquidated damages 
under this section may be reduced by CCC based upon consideration of the 
following factors:
    (1) Whether the person causing or permitting ineligible peanuts to 
be placed in the loan program made a good faith effort to ensure that 
ineligible peanuts were not pledged as loan collateral;
    (2) The degree of damage or potential damage to the price support 
program caused by the violation;

[[Page 585]]

    (3) The nature and circumstances of the violation;
    (4) The extent of the violation; and
    (5) Any other pertinent information.



Sec.  1446.703  Assessment of penalties against handlers.

    (a) Penalty liability. A handler shall be subject to the penalty for 
a violation of any provision of this part including, but not limited to, 
any or all of the following violations:
    (1) Failure to register as a handler of peanuts;
    (2) Failure to examine and make entries on marketing card;
    (3) Failure to keep or make available records as required by this 
part;
    (4) Marketing excess quota peanuts, as set forth in this part, 
including any marketing of reentered contract additional peanuts or 
peanut products made from contract additional peanuts or any marketing 
of imported peanut products made from additional peanuts purchased from 
the inventory of CCC loan collateral peanuts;
    (5) Failure to store and account for contract additional peanuts in 
accordance with the requirements of this part;
    (6) Failure to export or dispose of contract additional peanuts in 
accordance with the requirements of this part or failure to export or 
crush such peanuts by the final disposition date as established in this 
part;
    (7) Failure to obtain supervision of, or to handle properly, 
contract additional peanuts in the manner required by this part;
    (8) Reentering or importing contract additional peanuts or products 
made from such peanuts as prohibited by this part; or
    (9) Failure to comply with any other provision of this part.
    (b) Amount of penalty. Except when reduced in accordance with this 
part, the penalty amount for any violation of this part shall be equal 
to 140 percent of the national average quota support rate for the 
applicable crop year times the quantity of peanuts:
    (1) Handled by an unregistered handler;
    (2) Not properly entered on the marketing card;
    (3) For which records have not been properly kept or made available;
    (4) Marketed as excess quota peanuts;
    (5) Not properly stored;
    (6) Not properly disposed of;
    (7) Not properly supervised or handled in accordance with the 
regulations of this part;
    (8) Imported as contract additional peanuts;
    (9) Determined by CCC to have been necessary to produce the quantity 
of peanut products which have been determined to have been made from 
contract additional peanuts, and imported and sold in the United States; 
or
    (10) Otherwise involved in such other violation of this part as may 
occur.
    (c) Notice of assessment. A handler shall be notified in writing of 
the assessment of a penalty by a CCC contracting officer. Such notice 
shall state the basis for the assessment of the penalty, and shall 
advise the handler of the handler's appeal rights under this part.
    (d) Interest liability. The person liable for payment or collection 
of any penalty provided for in these regulations shall be liable also 
for interest thereon at a rate per annum equal to the rate of interest 
which was charged CCC by the Treasury of the United States on the date 
such penalty became due. The date on which the penalty became due shall 
be the date on which the penalty was first assessed.
    (e) Applicability. The provisions of this section are in addition to 
other remedies provided for by this part or other provisions of law.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38331, Aug. 13, 1991; 
57 FR 27145, June 18, 1992]



Sec.  1446.704  Reductions of penalties.

    (a) Request for reconsideration. A handler who is dissatisfied with 
a penalty that has been assessed against such handler by the CCC 
Contracting Officer pursuant to this part may file a written request for 
reconsideration or reduction of the penalty that has been assessed. Such 
request must be made within 15 days after the date of the notice of 
assessment.
    (b) Reduction of penalties.
    (1) By CCC Contracting Officer. To the extent permitted bythe 
provisions of

[[Page 586]]

paragraph (d) of this section, the CCC Contracting Officer may reduce 
the amount of penalty that is otherwise determined or assessed in 
accordance with this part. Such reduction may be made before the penalty 
is assessed or may be made during the course of an appeal.
    (2) By the Executive Vice President, CCC. To the extent permitted by 
the provisions of paragraph (d) of this section, the Executive Vice 
President, CCC, or the Executive Vice President's designee, may reduce 
the amount of penalty that has been assessed in accordance with this 
part.
    (c) Reduction criteria. A penalty that is determined or assessed in 
accordance with this part may be reduced by the CCC Contracting Officer 
or the Executive Vice President, CCC, or the Executive Vice President's 
designee, if such person determines that:
    (1) The violation for which the penalty was assessed was minor or 
inadvertent;
    (2) A reduction in the amount of the penalty would not impair the 
effective operation of the peanut program; and
    (3) The assessment of penalty was not made for failure to export 
contract additional peanuts.
    (d) Reduction limits.
    (1) If the reduction criteria in paragraph (c) of this section has 
been met, the CCC Contracting Officer or the Executive Vice President, 
CCC, or the Executive Vice President's designee, as applicable, may 
reduce the penalty by such amount as such person considers appropriate 
(including a full reduction of the entire penalty) after taking into 
account the severity of the violation and the violation history of the 
handler.
    (2) If one of the criteria in paragraphs (c) (1) and (2) of this 
section has not been satisfied and the remaining criteria has been 
satisfied, the penalty shall not be reduced to less than an amount which 
is equal to 40 percent of the national average quota support rate for 
the applicable crop year times the quantity of peanuts involved in the 
violation.
    (3) There shall not be a limit on the amount by which an assessment 
of liquidated damages may be reduced by the CCC Contracting Officer or 
the Executive Vice President, CCC, or the Executive Vice President's 
designee.

[65 FR 64595, Oct. 30, 2000]



Sec.  1446.705  Appeals.

    A handler may obtain reconsideration and review of any adverse 
determination made under this part in accordance with the appeal 
regulations found at 7 CFR parts 11 and 780 of this title.

[65 FR 64596, Oct. 30, 2000]



Sec.  1446.706  Statutory liens against peanuts.

    (a) Lien on peanuts. Until the amount of any penalty which is 
imposed upon a handler or other person in accordance with this part is 
paid, a lien shall exist in favor of the United States for the amount of 
the penalty. Such lien shall apply on the peanuts with respect to which 
such penalty is incurred and on any other peanuts purchased or otherwise 
acquired in the same or subsequent marketing year in which the person 
liable for payment of such penalty has an interest.
    (b) Debt record. The lien specified in paragraph (a) of this section 
shall be considered to attach at the time the penalty is entered on the 
debt records which shall be maintained for this purpose by the marketing 
associations, unless an earlier time is prescribed by law.
    (c) List of peanut marketing penalty debts. Each marketing 
association shall maintain a debt record for all handlers indicating the 
amounts due from each handler. This list will be available for 
examination upon written request to the marketing association by any 
interested party.

[56 FR 16230, Apr. 19, 1991. Redesignated at 65 FR 64596, Oct. 30, 2000]



Sec.  1446.707  Schemes and devices.

    If CCC or the marketing association, with approval of the CCC, 
determines that a handler has knowingly adopted any scheme or device 
which tends to defeat the purpose of the regulations of this part or has 
made any fraudulent representation, or has misrepresented any fact 
affecting a program determination, such handler will be subject to a 
penalty which shall be assessed in

[[Page 587]]

such manner as is determined will correct for such scheme, device, 
fraud, or misrepresentation.

[56 FR 16230, Apr. 19, 1991. Redesignated at 65 FR 64596, Oct. 30, 2000]



       Subpart H--Recordkeeping, Reporting and Paperwork Reduction



Sec.  1446.801  Recordkeeping and reporting requirements.

    (a) Persons required to keep records. Any person involved in the 
peanut industry in any of the following capacities shall keep records 
for each such business:
    (1) A person who dries farmers stock peanuts by artificial means for 
a producer;
    (2) A handler;
    (3) A warehouse operator;
    (4) A common carrier of peanuts;
    (5) A broker or dealer in peanuts;
    (6) A processor of peanuts;
    (7) A farmer engaged in the production of peanuts;
    (8) An agent marketing peanuts for a producer or acquiring peanuts 
for a handler or marketing association; or
    (9) A person engaged in the business of cleaning, shelling, 
crushing, or salting peanuts or manufacturing peanuts products.
    (b) Handler records and reports of peanuts acquired. As required by 
this section and in accordance with instructions issued by CCC, each 
handler shall keep records and make reports, with respect to each lot of 
farmers stock peanuts such handler acquires, as follows:
    (1) Inspected peanuts. (i) If the Federal-State Inspection Service 
inspects a lot of peanuts, the handler shall complete a form FSA-1007 or 
such other form approved by CCC or FSA and on which the following 
information must be entered:
    (A) The name and address of the farm operator, and the State and 
county codes and farm number of the farm on which the peanuts were 
produced, if the peanuts are marketed by the producer;
    (B) The handler number if the peanuts are marketed by a handler;
    (C) The buying point number assigned to identify the physical 
location of the buying point where the peanuts were marketed;
    (D) Either the name, address and handler number of the handler, or 
if the peanuts are accepted for loan through the marketing association, 
the marketing association name, number and address;
    (E) The net weight of the peanuts;
    (F) The quantity of peanuts marketed as either loan quota, loan 
additional, commercial quota, or contract additional;
    (G) The date of purchase; and
    (H) The amount of any penalty, assessment or claim collected.
    (ii) Handlers described in paragraph (c) of this section shall cause 
electronic records of the data recorded on form FSA-1007 to be generated 
and transmitted to FSA. The data shall be transmitted in the manner and 
by the time prescribed by the Director, TPD.
    (2) Noninspected peanuts. A handler who acquires farmers stock 
peanuts which have not been inspected by the Federal-State Inspection 
Service shall complete a form FSA-1030 or such other form approved by 
CCC or FSA for general use, for each lot of farmers stock peanuts 
acquired. The handler shall use FSA-1030-P, Handler's Report of 
Purchases of Noninspected Peanuts, or such other form approved by CCC or 
FSA for general use, to transmit the form FSA-1030 or other approved 
form to the State FSA committee in the State in which the handler's 
business is located or such other location or entity approved by CCC or 
FSA. The handler shall complete the form FSA-1030 or other approved form 
to show the following:
    (i) Name and address of the seller;
    (ii) Name and address of the farm operator and the State and county 
codes and farm number of the farm on which the peanuts were produced, if 
the peanuts are marketed by the producer;
    (iii) The handler's name, address and registration number when the 
peanuts are purchased from another handler;
    (iv) Type of peanuts purchased;
    (v) Date of purchase;
    (vi) Quantity purchased;
    (vii) Method of determining the weight; and

[[Page 588]]

    (viii) Signature of the seller and the date the seller signed the 
form FSA-1030 or other approved form.
    (c) Handler certification of computer software. Each handler who is 
required to coordinate records with USDA electronic records system for 
peanuts shall prepare and use computer software that will generate 
records, files, reports or other electronic information as required in 
accordance with paragraph (b)(1) of this section, and will transmit such 
records, files, reports or other electronic information in the form or 
format and in a timely manner as may be required by FSA or CCC. Such 
handler shall certify by the final date prescribed by the Director, TPD, 
that the handler's software meets the requirements prescribed for such 
software.
    (d) Handler records of resales of farmers stock peanuts. Each 
handler who resells farmers stock peanuts shall keep records of:
    (1) Name and address of the buyer, and if the peanuts are sold to a 
handler, the buyer's handler number;
    (2) Date of the sale;
    (3) Type of peanuts sold; and
    (4) Pounds (net weight) of peanuts sold.
    (e) Handler records of peanuts shelled or milled for a producer. The 
handler shall maintain records of peanuts shelled for a producer 
including the following information:
    (1) Date of shelling or milling;
    (2) Name and address of the producer;
    (3) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (4) Quantity of peanuts (farmers stock basis) shelled or milled;
    (5) Quantity of shelled or milled peanuts retained by the sheller; 
and
    (6) Quantity returned to the producer.
    (f) Handler records of peanuts dried for a producer. The handler 
shall maintain records of peanuts dried for a producer including the 
following information:
    (1) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (2) Name and address of the producer; and
    (3) Quantity dried as determined by the farmers stock basis weight 
after drying, and the date the drying was completed.
    (g) Handler records of peanuts from which LSK's or pods are removed 
for a producer. The handler shall maintain records of the peanuts from 
which the LSK's or pods were removed for a producer if such LSK's or 
pods are removed in commercial quantities or, when removed with foreign 
material, are recoverable in commercial quantities. The records must 
contain the:
    (1) Date of removal;
    (2) Name and address of the producer;
    (3) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (4) Gross weight of:
    (i) Peanuts prior to removal of LSK's or pods;
    (ii) Peanuts removed as LSK's;
    (iii) Peanuts removed as pods;
    (iv) Foreign material removed; and
    (v) Peanuts remaining after removal of foreign material and LSK's or 
pods;
    (5) Quantity of peanuts which the person performing the service 
retains in the form of pods and LSK's; and
    (6) Quantity of peanuts returned to the producer as:
    (i) Pods;
    (ii) LSK's; and
    (iii) LSK's and pods.
    (h) Handler records of sales and disposal of peanuts. Each handler 
shall maintain records of all sales or other disposal of peanuts. Such 
records shall show:
    (1) The date of sale or disposal of such peanuts;
    (2) The quantity of peanuts sold;
    (3) The type of peanuts sold;
    (4) The name of the purchaser;
    (5) That the peanuts were sold either as:
    (i) Farmers stock peanuts; or
    (ii) Milled peanuts;
    (6) That the peanuts were sold either as:
    (i) Edible peanuts; or
    (ii) Peanuts for crushing; and
    (7) Any other information which may be required by this part.
    (i) Method of keeping records. Each handler shall maintain the 
records required by this part in a manner which will enable the 
marketing association, CCC, FSA, and other representative of the 
Secretary to readily reconcile the

[[Page 589]]

quantities, grades and qualities of all peanuts acquired and disposed of 
by such a handler. Records concerning the acquisition and disposal of 
contract additional peanuts must also be kept in a manner that allows 
the marketing association, CCC, FSA, or any other representative of the 
Secretary to readily determine whether there has been compliance with 
the provisions of this part.

[56 FR 16230, Apr. 19, 1991, as amended at 65 FR 8247, Feb. 18, 2000]



Sec.  1446.802  Examination of records and reports.

    The Executive Vice President, CCC, the Deputy Administrator, FSA, 
the Director, TPD, the State Executive Director and any person 
authorized by any one of such persons, and any auditor or agent of the 
Office of Inspector General is authorized to examine any records that 
such person has reason to believe are relevant to any matter pertinent 
to the peanut poundage quota program operated pursuant to the provisions 
of part 729 of this title and provisions of this part. Upon request, any 
person required by this part to keep records shall make available for 
examination such books, papers, records, accounts, correspondence, 
contracts, documents, and memoranda as are under such person's control.



Sec.  1446.803  Retention of records.

    Persons required to maintain records under this part shall maintain 
all records for a period of three years following the end of the 
marketing year in which the peanuts were produced. Notwithstanding the 
preceding sentence, records relating to contract additional peanuts for 
which penalties or liquidated damages have been assessed, shall be 
retained for 6 years following the date the assessment was made or until 
the conclusion of the assessment action, whichever is later and records 
shall be kept for such longer periods of time as may be requested in 
writing by CCC.



Sec.  1446.804  Information confidential.

    All data requested and obtained by the Secretary in accordance with 
the provisions of this part shall be kept confidential by all employees 
of USDA and of the marketing association. Such data shall be released 
only at the discretion of the Executive Vice President, CCC, and then 
only to the extent that such release is not prohibited by law.



Sec.  1446.805  Penalty for failure to keep records and make reports.

    Any person, who fails to make any report or keep any record as 
required under this part or who falsifies any information on any such 
report or record shall be subject to a penalty in accordance with Sec.  
1446.703 of this part.



Sec.  1446.806  Fraud by handler.

    Any misrepresentation made or effectively made by a handler within 
or without the records or reports maintained in connection with this 
part shall be subject to a penalty under this part and such penalty 
shall be in addition to any other remedies available by law for such 
misrepresentation (including, but not limited to, criminal prosecution). 
In addition, the handler and any individual or other person involved 
with such misrepresentation, including employees of the handler, shall 
be liable to CCC for all costs which CCC incurs as a result of such 
misrepresentation, together with interest at the per annum rate which 
the Treasurer of the United States charged CCC on the date the 
misrepresentation was made.



Sec.  1446.807  Paperwork Reduction Act assigned numbers.

    The information collection requirements contained in these 
regulations (7 CFR part 1446) have been approved by the Office of 
Management and Budget (OMB) in accordance with 44 U.S.C. Chapter 35 and 
have been assigned OMB control numbers 0560-0006, 0560-0014 and 0560-
0133.

[56 FR 38331, Aug. 13, 1991]



PART 1464--TOBACCO--Table of Contents




                     Subpart A--Tobacco Loan Program

Sec.
1464.1 Administration.
1464.2 Availability of price support.
1464.3 Level of price support.
1464.4 Deductions from advances.
1464.5 Interest rate and general provisions.
1464.6 Maturity date.
1464.7 Eligible producer.

[[Page 590]]

1464.8 Eligible tobacco.
1464.9 Refund of price support advance.
1464.10 No net cost tobacco fund or account.
1464.11 Nonrefundable marketing assessment.
1464.12 Flue-cured (types 11-14) tobacco.
1464.13 Fire-cured (type 21) tobacco.
1464.14 Fire-cured (types 22-23) tobacco.
1464.15 Dark air-cured (types 35-36) tobacco.
1464.16 Virginia sun-cured (type 37) tobacco.
1464.17 Cigar-filler and binder (types 42-44 and 53-55) tobacco.
1464.18 Cigar-filler (type 46) tobacco.
1464.19 Burley (type 31) tobacco.
1464.20-1464.23 [Reserved]
1464.24 OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.

                     Subpart B--Importer Assessments

1464.101 Definitions.
1464.102 Budget deficit marketing assessment.
1464.103 Importer no-net-cost assessments.
1464.104 Remittance of importer assessments.
1464.105 Refund of assessments.
1464.106 Marketing penalties.
1464.107 Recordkeeping.
1464.108 Reconsideration and appeal.

Subparts C-F [Reserved]

                   Subpart G--Tobacco Payment Program

1464.601 Applicability and basic terms for payments.
1464.602 Administration.
1464.603 Eligibility.
1464.604 Definitions.
1464.605 Sign up.
1464.606 [Reserved]
1464.607 Payment benefits.
1464.608 Offsets and assignments.
1464.609 Misrepresentation and scheme or device.
1464.610 Cumulative liability.
1464.611 Estates, trusts, and minors.
1464.612 Death, incompetence, or disappearance.
1464.613 Appeals.

Appendix A to Part 1464--Importer Entry and Assessment Worksheet

    Authority: 7 U.S.C. 1421, 1423, 1441, 1445, 1445-1, 1445-2; 15 
U.S.C. 714b, 714c; Pub. L. 106-78, 113 Stat. 1135; Pub. L. 106-113, 113 
Stat. 1501; Pub. L. 108-7, 117 Stat. 11.



                     Subpart A--Tobacco Loan Program

    Source: 45 FR 9253, Feb. 12, 1980, unless otherwise noted.



Sec.  1464.1  Administration.

    (a) This program will be administered by the Tobacco Division, FSA, 
under the general direction and supervision of the Executive Vice 
President, CCC. The program will be carried out by cooperative marketing 
associations (hereinafter referred to as ``associations'') acting on 
behalf of their producer members. To obtain a price support loan, an 
association must enter into a loan agreement with CCC. The loan 
agreement will set forth terms and conditions for making price support 
available to producers. To the extent provided in the loan agreement, an 
association shall meet the eligibility requirements for price support 
prescribed in the Cooperative Marketing Associations Eligibility 
Requirements for Price Support (part 1425 of this chapter), as amended. 
CCC reserves the right to restrict the number of associations with which 
it will contract. In so doing, CCC will select such associations as it 
deems necessary or desirable to effectuate the purposes of the program 
with a maximum of efficiency and economy of operations. The names of 
such associations may be obtained from the Tobacco Division, FSA, U.S. 
Department of Agriculture, P.O. Box 2415, Washington, DC 20013.
    (b) Each year CCC will make loans to associations. The associations 
in turn will make price support advances available to eligible producers 
either directly or through auction warehouses. The tobacco on which 
producers receive price support advances will serve as security for the 
loans. Loans made to associations will include not only the initial loan 
value of the tobacco, but also amounts to cover costs of receiving, 
processing, storing, and selling the loan tobacco, including that part 
of overhead costs not borne by the association pursuant to Sec.  1464.4. 
Associations will be authorized to enter into contracts for these 
services through the usual trade channels. Loans also may include 
amounts to cover any Federal and State income taxes which the 
associations are required by the Internal Revenue Service or State 
governmental body to pay on

[[Page 591]]

income received from the sale of loan tobacco.

[45 FR 9253, Feb. 12, 1980, as amended at 47 FR 51555, Nov. 16, 1982; 48 
FR 21110, May 11, 1983; 68 FR 65385, Nov. 20, 2003]



Sec.  1464.2  Availability of price support.

    (a) Kind of tobacco. Price support will be available to eligible 
producers on the following kinds of eligible tobacco subject to 
conditions listed in Sec. Sec.  1464.7 and 1464.8 respectively.

Flue-cured tobacco, types 11, 12, 13, and 14.
Kentucky-Tennessee Fire-cured tobacco, types 22 and 23.
Virginia Fire-cured tobacco, type 21.
Virginia Sun-cured tobacco, type 37.
Dark Air-Cured tobacco, types 35 and 36.
Burley tobacco, type 31.
Cigar filler and binder tobacco, types 42, 43, 44, 53, 54, and 55.

    (b) Method of providing price support--(1) Through auction 
warehouses. (i) Price support will be available for each lot of eligible 
tobacco offered for sale at auction warehouses which have contracted 
with an association, on a form of agreement approved by CCC, to make 
price support advances to producers on behalf of the association. 
Producers will deliver their tobacco to auction warehouses which will 
display the tobacco and offer it for sale at auction. Each contract 
between an association and an auction warehouse will require the auction 
warehouse to see that producers are informed that price support advances 
are available for each lot of eligible tobacco offered for sale at 
auction when the final bid is less than the price support rate available 
for the grade of eligible tobacco comprising such lot. For Flue-cured 
and Burley tobacco, the associations' contracts with auction warehouses 
will also require the auction warehouses to mark any tobacco sale bill 
``No Price Support'' if the marketing of the pounds of tobacco covered 
by such bill will result in the producer marketing in excess of 103 
percent of the producer's effective farm marketing quota. Producers will 
receive price support advances from the warehouse operator for any 
tobacco to be consigned by the warehouse operator to the association. 
Price support advances will be paid to the producer at the time the 
warehouse operator settles with the producer for the entire quantity of 
the producer's tobacco that has been displayed for inspection and 
offered for sale on any one day's auction market. The warehouse operator 
will be reimbursed by the association with funds borrowed from CCC.
    (ii) Price support will be available only at warehouses where 
tobacco inspection service is provided by the Agricultural Marketing 
Service, USDA. Inspection and price support services may be extended to 
new markets or to additional sales on established markets in accordance 
with this part and Subpart A of part 29 of this title which provides for 
formal public hearings prior to extending of additional services.
    (iii) CCC reserves the right to direct the association to withhold a 
contract under the price support program from any auction warehouse for 
one or more years if, based on previous performance of similar 
contracts, or other evidence, there is substantial reason to believe 
that such warehouse will not fulfill its contract obligations.
    (2) Special requirements for flue-cured and burley tobacco. Price 
support will be available only on flue-cured and burley tobacco that has 
been designated for sale at specific warehouses by the producer under 
the following conditions:
    (i) Definition. Producer as used in this paragraph means the person 
who was issued the tobacco marketing card pursuant to part 723 of this 
title.
    (ii) Producer designation of warehouses. Producers will be required, 
as a condition of price support, to designate the warehouses at which 
they will market their tobacco.
    (A) For flue-cured tobacco such designations may be at any warehouse 
or warehouses in any market within a radius of 100 miles from the county 
seat of the county in which the farm is located, or if such farm is 
physically within two counties, then from the county seat of the county 
in which the county FSA office administering that farm is located. To 
the extent there are less than eight markets within such radius, any 
warehouse or warehouses in any of the eight markets nearest to the 
county seat may be designated. A producer may obtain price support only 
in a warehouse which the producer has designated, and at each such 
warehouse

[[Page 592]]

only with respect to the quantity of tobacco designated for sale at such 
warehouse.
    (B) For burley tobacco such designations may be at any warehouse or 
warehouses in any burley market.
    (iii) When producer designations shall be made. Producers must 
designate the warehouse(s) at which they will market their tobacco 
during a period that shall be announced beforehand by the local FSA 
county office. Unless extended by the Deputy Administrator, the period 
for making designations shall be before May 31 each year for flue-cured 
tobacco and August 31 each year for burley tobacco. Producers who lease 
quota or whose farm is reconstituted (the combining or dividing of a 
farm due to a change in operation) after such period may designate the 
warehouse(s) at which their tobacco will be marketed according to 
procedures to be established by the Deputy Administrator, Farm Programs, 
FSA. Producers who have designated warehouses that cease to operate or 
cease to have tobacco inspection or price support available may change 
their designations at any time after such occurrences. Producers who 
have designated warehouses whose inspection services have been 
temporarily suspended for any reason for the equivalent of at least one 
sales day may change their designation at any time after such 
occurrences. Redesignation (changes in warehouse(s) designated or in 
pounds designated to a warehouse) or designations for farms that have 
not previously designated tobacco may be made by producers during the 
five business days ending on the first Friday of each month during the 
flue-cured or burley, as applicable, tobacco marketing season. Such 
redesignation or initial designation shall be made on any one day of 
each redesignation period. Such redesignation or initial designation 
shall be effective on the second Monday following the Friday on which 
the redesignation period ends.
    (iv) Form and content of designations. For flue-cured tobacco a 
designation shall be made for each warehouse at which a producer desires 
to market tobacco by executing a form provided by the FSA county office. 
The producer will be required to indicate on such form the name of the 
warehouse or warehouses designated by the producer and the pounds of 
flue-cured tobacco the producer desires to sell at such warehouse as 
well as any other information required to be stated on such form. For 
burley tobacco a designation shall be made for each warehouse, receiving 
station or dealer at which a producer desires to market tobacco by 
executing a form provided by the FSA county office. The producer will be 
required to indicate on such form the name of the warehouse(s), 
receiving station(s) or dealer(s) designated by the producer and the 
pounds of burley tobacco the producer desires to sell at such warehouse, 
receiving station or dealer as well as any other information required to 
be stated on such form.
    (v) Entering designation information. For flue-cured tobacco, the 
warehouse code number of the warehouse the producer has designated will 
be indicated on the farm marketing card. For burley tobacco, the 
warehouse, receiving station, or dealer code number of the warehouse, 
receiving station or dealer the producer has designated will be 
indicated on the farm marketing card. If an effective date is determined 
in accordance with paragraph (b)(2)(iii) of this section, such effective 
date will be shown on the farm marketing card. For flue-cured tobacco, 
if the producer has not designated a warehouse, a warehouse code will 
not be shown on the marketing card. Changes in designation by the 
producer shall be accomplished by the producer returning the marketing 
card to the FSA county office and requesting the transfer of any 
unmarketed pounds of flue-cured or burley tobacco shown on any marketing 
card to another eligible warehouse, receiving station or dealer, if 
applicable.
    (vi) Use of warehouse designation information. (A) A separate sale 
bill marked ``no price support'' shall be prepared for that quantity of 
tobacco weighted in that is in excess of the balance of the pounds 
designated as shown on the marketing card:
    (B) The warehouse shall mark ``no price support'' on a sale bill for 
any tobacco which is presented for sale and which is accompanied by a 
marketing card which does not show a warehouse

[[Page 593]]

code, which shows a code of another warehouse, or which shows an 
effective date which is later than the date on which the tobacco is 
presented for sale.
    (vii) Availability of designation information. Each FSA county 
office shall send designations received to the Flue-Cured Tobacco 
Cooperative Stabilization Corporation, Raleigh, North Carolina for flue-
cured tobacco, Burley Tobacco Growers Cooperative Association, 
Lexington, Kentucky and Burley Stabilization Corporation, Knoxville, 
Tennessee for burley tobacco, following each designation period and each 
period for changing designations. That association(s) shall inform the 
Flue-Cured Tobacco Advisory Committee or the Burley Tobacco Advisory 
Committee, as applicable, of the pounds designated to each warehouse and 
the pounds of any undesignated or non-auction tobacco that, for the 
purpose of recommending opening dates and selling schedules in 
accordance with part 29 of this title, is available for apportioning for 
sale at each warehouse. That association also shall furnish each 
warehouse the name and address of the producers who designated the 
warehouse, the pounds each designated and the pounds that represent 103 
percent of the marketing quota of each such producer. The Director, 
Tobacco and Peanuts Division, shall furnish each receiving station the 
name and address of the producers who designated the receiving station, 
the pounds each designated and the pounds that represent 103 percent of 
the marketing quota of each such producer.
    (viii) Failure to comply with opening date and selling schedule by 
warehouses. Warehousemen shall comply with opening date and selling 
schedule requirements as provided in 7 CFR 29.9406.
    (3) Upon direct delivery to the Association. Eligible producers in 
nonauction market areas may deliver eligible tobacco to central 
receiving points designated by the appropriate association.
    (4) Period of price support. Price support will be available to 
eligible producers on eligible tobacco only during each year's normal 
marketing season for each kind of tobacco for which support is provided.
    (5) Beginning with the 1981 crop, eligible producers may obtain 
price support on untied burley tobacco packed in bales subject to the 
following conditions:
    (i) The quality and condition of the tobacco contained in each bale 
delivered for price support as a single lot will be representative of 
the quality and condition of the tobacco contained in all other such 
bales of the same lot.
    (ii) The tobacco in each bale will be stalk-cured.
    (iii) The bales will not contain foreign matter or conceal inferior 
tobacco.
    (iv) Specification of bales:
    (A) Bales must be approximately 1x2x3 feet in size.
    (B) The leaves in bales must be untied and oriented.
    (C) The basket ticket shall show the number of bales in the lot. 
Each bale in the lot shall be identified by a uniform identification tag 
1\5/8\ inches wide by 3\1/4\ inches long which shall be attached 
securely to the bale and shall show at least the following information: 
(1) Warehouse registration number, (2) basket ticket identification 
number, and (3) bale number.

[45 FR 9253, Feb. 12, 1980; 45 FR 26687, Apr. 21, 1980, as amended at 45 
FR 68914, Oct. 17 1980; 46 FR 48901, Oct. 5, 1981; 47 FR 28607, July 1, 
1982; 47 FR 44542, Oct. 8, 1982; 48 FR 28425, June 22, 1983; 51 FR 
32426, Sept. 12, 1986; 56 FR 21259, May 8, 1991; 62 FR 3198, Jan. 22, 
1997; 67 FR 483, Jan. 4, 2002; 68 FR 65385, Nov. 20, 2003]



Sec.  1464.3  Level of price support.

    (a) The level of price support for eligible tobacco shall be 
determined in accordance with section 106 of the Agricultural Act of 
1949, as amended.
    (b) Flue-Cured tobacco of varieties Coker 139, Coker 140, Coker 316, 
Reams 64, Reams 266, and Dixie Bright 244, or a mixture or strain of 
such seed varieties or any breeding line of Flue-Cured tobacco seed 
varieties, including, but not limited to, 187 Golden Wilt (also 
designated by such names as No-Name, XYZ), having the quality and 
chemical characteristics of the seed varieties designated as Coker 139, 
Coker 140, Coker 316, Reams 64, Reams 266, or Dixie Bright 244 will be 
supported at one-half the support rate, plus 50 cents per hundred 
pounds, for comparable grades of acceptable varieties.

[51 FR 32426, Sept. 12, 1986]

[[Page 594]]



Sec.  1464.4  Deductions from advances.

    (a) There may be deducted from price support advances paid to 
tobacco producers amounts to help defray administrative overhead costs 
incurred by producers associations through which price support is made 
available to tobacco producers.
    (b) If any producer on a farm is indebted to the United States and 
such indebtedness is listed on the Claim Control Record, the Government 
will effect collection of the amount of the indebtedness by setoff from 
the amount of price support advance due the producer in the following 
manner: Any marketing card covering tobacco eligible for price support 
issued for such farm in accordance with the applicable regulations 
issued by the Secretary of Agriculture with respect to marketing quotas 
(parts 723 of this title) will bear a notation showing the indebtedness, 
the name of the debtor and the amount of the indebtedness. The 
acceptance and use of a marketing card bearing a notation of 
indebtedness to the United States by a producer named as debtor on such 
card will constitute an authorization by such producer to any tobacco 
warehouse operator or association to pay the United States the price 
support advance due the producer to the extent of their indebtedness set 
forth on such card but not to exceed that portion of the price support 
advance remaining after deduction of usual warehouse and authorized 
price support charges and amounts due prior lienholders. The acceptance 
and use of a marketing card bearing a notation and information of 
indebtedness to the United States will not constitute a waiver of any 
right of the producer to contest the validity of such indebtedness by 
appropriate administrative appeal or legal action.

[45 FR 9253, Feb. 12, 1980, as amended at 47 FR 28608, July 1, 1982; 56 
FR 21259, May 8, 1991; 68 FR 65386, Nov. 20, 2003]



Sec.  1464.5  Interest rate and general provisions.

    The loans made to the associations will bear interest at the rate 
announced by CCC and will be nonrecourse both as to principal and 
interest except in the case of misrepresentation, fraud or failure to 
carry out the loan agreement. Tobacco loses its identity as to original 
ownership through commingling in the packing process, and individual 
producers may not redeem their tobacco once it has been pledged as 
security for the loan. Associations will sell the loan tobacco as 
provided in the loan agreements for each crop, and the net proceeds of 
sales of the loan collateral of each crop will be applied to the loan 
account for such crop until the loan is repaid in full. With respect to 
the 1981 and prior crops, if the proceeds from the sale of loan 
collateral of the 1981 or any prior crop exceed (a) the amount of the 
loan plus all fees, handling charges, operating costs and interest; and 
(b) any amount due CCC under a barter transfer agreement entered into 
between CCC and the association, such excess shall constitute ``net 
gains'' and shall be distributed in cash by the association to the 
producers who placed the tobacco under loan unless other disposition is 
approved by CCC.

[45 FR 9253, Feb. 12, 1980, as amended at 50 FR 7574, Feb. 25, 1985; 51 
FR 32426, Sept. 12, 1986; 56 FR 21259, May 8, 1991]



Sec.  1464.6  Maturity date.

    Loans made under the program will mature on demand.



Sec.  1464.7  Eligible producer.

    To qualify as an eligible producer for purposes of receiving price 
support during the current marketing year a person must have eligible 
tobacco, as provided in Sec.  1464.8, for marketing and such person:
    (a) Must have agreed to make contributions to a No Net Cost Fund or 
pay assessments to a No Net Cost Account, as applicable, in accordance 
with Sec.  1464.10.
    (b) Must not have been found, after notice and opportunity for an 
administrative hearing in accordance with part 780 of this title, to 
have:
    (1) Knowingly delivered nested tobacco for the purpose of receiving 
price support.
    (2) Filed a false report with respect to the use of pesticides on 
tobacco produced for marketing during the current marketing year.

[[Page 595]]

    (3) Erroneously represented any fact affecting a tobacco program 
determination.
    (4) Adopted any scheme or device which tends to defeat the purpose 
of the tobacco program.
    (5) Made any fraudulent representations with respect to the tobacco 
program.
    (c) Must be in compliance with the provisions of part 12 of this 
title.
    (d) In addition to meeting all other requirements that apply 
elsewhere, including (but not limited to) the warehouse designation 
provisions of Sec.  1464.2, must not be ineligible, in accordance with 
part 1400 of this title, to receive price support payments, loans and 
benefits.
    (e) With respect to any tobacco which is presented for price 
support, must have retained beneficial interest in the tobacco prior to 
presenting the tobacco for such loan.
    (1) For purposes of this section, the producer will be considered to 
have retained beneficial interest in the tobacco only if such producer 
has complete control of and title to such tobacco, including the right 
to tender such tobacco to CCC for a price support loan on the date such 
tobacco is tendered to CCC for a price support loan, and has maintained 
this right and that interest in the tobacco at all times prior to 
presenting the tobacco for the loan.
    (2) If a producer receives a monetary advance or other consideration 
in connection with or for such tobacco, the producer will be deemed for 
purposes of this section to have lost beneficial interest in such 
tobacco unless the producer has a written agreement with the person who 
provides the advance payment or consideration and such agreement 
accurately and fully:
    (i) Sets forth the amount, nature and date of the advance or 
consideration;
    (ii) Sets forth the poundage on which the advance or consideration 
was made;
    (iii) Provides that the tobacco will be sold at a producer auction 
through an auction warehouse at which price support is provided, or will 
be presented for a price support loan;
    (iv) Provides that as a full and final settlement on the tobacco, 
the full sales price at the producer auction or the full loan proceeds 
will be paid to the producer minus only the following:
    (A) Any advance set out in the agreement; and
    (B) Standard published assessments or charges for services rendered 
at standard published rates that apply to all tobacco of all producers, 
including tobacco for which no advance has been paid;
    (v) Sets forth the date of final settlement to be made on the 
tobacco which date can be no later than the date applicable to tobacco 
on which no advance has been made.
    (vi) States that the full profit and beneficial interest in the 
tobacco, and full control of the tobacco, remains with the producer and 
provides that the full profit and beneficial interest will remain with 
the producer at all times prior to any disposition of the tobacco as 
producer tobacco, or at a producer auction, or presenting for a price 
support loan.
    (3) A producer will be considered to have lost beneficial interest 
in tobacco and thereby not be an ``eligible producer'' for such tobacco 
as of the date any advance or other preauction arrangement was made if 
CCC determines for that tobacco that:
    (i) The advance per pound equalled or exceeded the producer's final 
net proceeds per pound on all tobacco marketed from the farm for that 
marketing year at producer auctions, including any tobacco on which an 
advance is made or the pledging of tobacco for price support loans;
    (ii) A written agreement was required by paragraph (e)(2) of this 
section, but none has been executed; or
    (iii) A written agreement was executed but did not meet the 
requirements of paragraph (e)(2) of this section.
    (4) If tobacco is pledged for a price support loan and the producer 
is not then or thereafter deemed to be or to have been an eligible 
producer for that tobacco for purposes of placing the tobacco under such 
loan, then the tobacco shall be considered to have a loan value of zero. 
The producer and the person that took possession of the tobacco from the 
producer, or paid an advance, or marketed the tobacco, or

[[Page 596]]

disposed of the tobacco as producer tobacco, shall be jointly and 
severally liable with the producer for returning any loan proceeds 
previously paid in the name of, or for the account of, the producer. 
Further, the disposition of any tobacco as producer tobacco where the 
producer is not then or thereafter considered to have been an eligible 
producer with respect to such tobacco may be the subject of penalties on 
the grounds of false identification, excess marketings, or otherwise as 
provided in part 723 of this title. These remedies are in addition to 
any others as may apply.

[51 FR 32426, Sept. 12, 1986, as amended at 53 FR 43675, Oct. 28, 1988; 
56 FR 21259, May 8, 1991; 57 FR 43583, Sept. 21, 1992; 60 FR 21037, May 
1, 1995; 67 FR 484, Jan. 4, 2002; 68 FR 65386, Nov. 20, 2003]



Sec.  1464.8  Eligible tobacco.

    Eligible tobacco for the purpose of pledging such tobacco as 
collateral for a price support loan is any tobacco of a kind for which 
price support is available, as provided in Sec.  1464.2, that is in 
sound and merchantable condition, is not nested as defined in 7 CFR part 
29, and:
    (a) Is not a kind of tobacco for which marketing quotas are not in 
effect for the marketing year because marketing quotas have been 
disapproved in a referendum of producers;
    (b) Is offered for marketing by the person who was the producer of 
the tobacco, or in the case of a deceased producer, by the duly 
authorized successor(s) in interest;
    (c) Is offered for marketing in accordance with Sec.  1464.2(b);
    (d) If marketing quotas are in effect for the kind of tobacco:
    (1) The farm operator has filed a report of the acreage planted to 
tobacco on the farm in the applicable year in accordance with part 718 
of this title.
    (2) The tobacco was produced on a farm on which neither the reported 
nor determined acreage of the kind of tobacco exceeds any acreage 
allotment established for the farm in accordance with the applicable 
part 723 of this title for the kind of tobacco for the applicable year.
    (3) Is identified when delivered to the association either directly 
or through an auction warehouse with a single marketing card for each 
lot of tobacco.
    (e) If marketing quotas are in effect for the kind of tobacco or if 
marketing quotas are not in effect but would have been in effect for the 
kind of tobacco had such marketing quotas not been terminated by the 
Secretary, the operator of the farm on which the tobacco was produced:
    (1) Has certified that all tobacco delivered from such farm for 
price support will not have not been nested as defined in part 29 of 
this title.
    (2) Has certified to the FSA county committee on a form approved by 
the Deputy Administrator that all pesticides (including plant 
regulators, defoliants, and desiccants), as defined in 40 CFR 162.3, 
which were used in connection with the production of the tobacco have 
been approved by the Environmental Protection Agency for use on tobacco 
and any such pesticides that were used were applied in accordance with 
label directions.
    (3) Has not refused to permit the sampling of such tobacco, either 
on the farm or where stored, for chemical analysis for the purpose of 
verifying the accuracy of any pesticide certification.
    (f) With respect to burley and flue-cured tobacco only, is a 
quantity of tobacco which when added to the pounds of the respective 
kind of tobacco previously marketed from the farm during the marketing 
year does not exceed 103 percent of the effective farm marketing quota 
established for the respective kind of tobacco for that year.
    (g) With respect to flue-cured tobacco only, is a quantity of 
tobacco which was delivered to the association through an auction 
warehouse and is a quantity which when added to the pounds of flue-cured 
tobacco previously marketed from the farm at that warehouse does not 
exceed the quantity of flue-cured tobacco designated by the farm 
operator for marketing at that warehouse.
    (h) Any tobacco with respect to which the producer is not an 
eligible producer under the provisions of Sec.  1464.7 shall not be 
eligible for a price support loan and in any case in which the producer 
is deemed to have ceased to have

[[Page 597]]

retained the status of an eligible producer due to an advance or other 
preauction arrangement, the producer's marketing card shall not be used 
to market such tobacco except to reflect a nonauction marketing to the 
person who paid an advance to the producer or took possession of the 
tobacco from the producer.

[51 FR 32426, Sept. 12, 1986, as amended at 56 FR 21259, May 8, 1991; 57 
FR 43584, Sept. 21, 1992; 61 FR 33304, June 27, 1996; 62 FR 3198, Jan. 
22, 1997; 66 FR 53509, Oct. 23, 2001; 68 FR 65385, Nov. 20, 2003]



Sec.  1464.9  Refund of price support advance.

    In any case in which a producer has received price support on a lot 
of tobacco such producer shall refund to CCC any price support advance 
received with respect to such lot of tobacco if it is determined, after 
notice and opportunity for an administrative hearing in accordance with 
part 780 of this title, that such producer:
    (a) Received a price support advance on tobacco that was nested, as 
defined in part 29 of this title or otherwise not eligible for price 
support. The county committee, with concurrence of a State Committee 
Representative, may reduce the refund with respect to tobacco otherwise 
required in this part, in accordance with guidelines issued by the 
Deputy Administrator.
    (b) Filed a false report with respect to the use of pesticides on 
tobacco produced on the farm from which such lot of tobacco was 
identified, at the time of marketing, as having been produced.
    (c) Misrepresented any fact affecting a tobacco program 
determination, adopted any scheme or device which tends to defeat the 
purpose of the tobacco program, or made any fraudulent representation 
which tends to defeat the purpose of the tobacco program. The refund of 
CCC price support advance shall apply to all payments on all farms 
received by such producer.

[51 FR 32427, Sept. 12, 1986, as amended at 56 FR 21259, May 8, 1991; 61 
FR 33304, June 27, 1996]



Sec.  1464.10  No net cost tobacco fund or account.

    (a) Definitions. As used in this part and in all instructions, 
forms, and documents in connection therewith, the following terms shall 
have the meanings herein assigned to them.
    (1) Account means an account established within the CCC for an 
association, which account shall be known as the ``No Net Cost Tobacco 
Account.''
    (2) Area when used in connection with an association, means the 
general geographical area in which farms of the producer-members of such 
association are located, as determined by the Secretary.
    (3) Association means a producer-owned cooperative marketing 
association which has entered into a loan agreement with CCC to make 
price support available to producers of tobacco.
    (4) CCC means the Commodity Credit Corporation.
    (5) Fund means the capital account to be established within each 
association, which account shall be known as the ``No Net Cost Tobacco 
Fund''.
    (6) Net gains means the amount by which total proceeds obtained from 
the sale by an association of a crop of quota tobacco pledged to CCC for 
a price support loan exceeds the principal amount of the price support 
loan made by CCC to the association on such crop, plus interest and 
charges.
    (7) Quota tobacco means any kind of tobacco for which marketing 
quotas are in effect or for which marketing quotas are not disapproved 
by producers.
    (8) To market means to dispose of quota tobacco by voluntary or 
involuntary sale, barter, exchange, gift between living persons, or 
consigning the tobacco to an association for a price support advance.
    (9) Purchaser means any person who purchases in the United States, 
either directly or indirectly for the account of such person or another 
person, burley or flue-cured tobacco from the producer, or, with respect 
to the 1986 and subsequent crops of such tobacco, from an association.
    (b) Establishing a No Net Cost Tobacco Fund. Except as provided in 
paragraph (c) of this section, each association shall establish and 
maintain a Fund in accordance with the requirements of section 106A of 
the Agricultural Act of 1949, as amended.

[[Page 598]]

    (c) Establishing a No Net Cost Tobacco Account. Upon request of any 
association, an Account shall be establish and maintained for such 
association in lieu of a Fund. Also, after consultation with an 
association, the Secretary may established and maintain an Account for 
such association in lieu of a Fund if the Secretary determines that the 
accumulation of the Fund for such association is, and is likely to 
remain, inadequate to reimburse CCC for net losses which CCC may sustain 
under its loan agreement with such association. The requirements of 
section 106B of the Agricultural Act of 1949, as amended, shall be 
applicable with respect to an Account.
    (d) Producer contributions or assessments. As a condition of 
eligibility for price support during the applicable marketing year a 
producer of quota tobacco shall agree to make contributions to the Fund 
established for the association serving the area for the kind of tobacco 
to be marketed by such producer during such marketing year, or, if a 
Fund has not been established for such association, pay assessments to 
the Account established for such association. The amount of any 
contribution or assessment shall be determined in accordance with 
sections 106A and 106B of the Agricultural Act of 1949, as amended.
    (e) Filing of agreement. Any agreement to make contributions to a 
Fund or pay assessments to an Account shall be on a form approved by the 
Deputy Administrator and shall be filed with the local FSA county 
committee prior to the issuance of a marketing card for use in 
identifying tobacco to be marketed from the farm of the kind of tobacco 
for which such agreement is applicable.
    (f) Responsibility of farm operator. The farm operator shall 
determine whether all producers on the farm agree to make contributions 
to the Fund or pay assessments to the Account, as applicable, that has 
been established for the association serving the area and may sign on 
their behalf an agreement which acknowledges that such persons will make 
such contibutions or pay such assessments.
    (g) [Reserved]
    (h) Purchaser assessments. Each purchaser of burley and flue-cured 
quota tobacco shall pay an assessment with respect to purchases of all 
such kind of tobacco marketed by a producer from a farm, including 
purchases from the association of such tobacco from the 1986 and 
subsequent crops. Such assessment shall be determined in accordance with 
section 106A or 106B, as applicable, of the Agricultural Act of 1949, as 
amended, and shall be paid into the applicable association's Fund or 
Account.
    (i) Collection and remission of contributions or assessments. (1) 
Any producer contribution or assessment due under this section shall be 
collected at the time of marketing:
    (i) From any dealer, receiving station official or warehouse 
operator who acquired the tobacco involved from the producer; or
    (ii) If the tobacco involved is marketed by a producer directly to 
any person outside the United States, from the producer; or
    (iii) If the tobacco involved is delivered directly to an 
association, by such association.
    (2) A dealer, receiving station official or warehouse operator may 
deduct the amount of any producer contribution or assessment from the 
price paid to the producer for such tobacco.
    (3) Any purchaser assessment due under this section shall be 
collected at the time of marketing:
    (i) From the dealer, receiving station official or warehouse 
operator who acquired the tobacco involved from the producer; or
    (ii) If the tobacco involved is marketed by a producer directly to 
any person outside the United States, from the producer who may add an 
amount equal to the purchaser assessment to the price paid by the 
purchaser for such tobacco.
    (4) If tobacco involved is marketed at a warehouse auction, the 
warehouse operator may add an amount equal to the purchaser assessment 
to the price paid by the purchaser of such tobacco.
    (5) All persons who are responsible for collecting any contribution 
or assessment required by this section shall remit such collections to 
the applicable association within 15 days of the

[[Page 599]]

date on which the tobacco was marketed except as provided in paragraphs 
(i)(5) (i) and (ii).
    (i) Warehouse operators who are responsible for collecting any 
contribution or assessment required by this section shall remit such 
collections to the applicable association in accordance with the 
provisions of the loan contact between the association and the warehouse 
operator.
    (ii) Dealers who are responsible for collecting any contribution or 
assessment as required by this section shall remit such collections to 
the State FSA office in accordance with part 723 of this title.
    (6) Any person who fails to collect and timely remit any collections 
required by this section shall be subject to a late payment charge. Such 
late payment shall be calculated and assessed in accordance with part 
1403 of this title.
    (j) Penalty for failure to collect and remit contributions or 
assessments. (1) If any person fails to collect and remit any 
contributions or assessments according to the provisions of this section 
such person shall be liable, in addition to any amount of contributions 
or assessments and any late payment charges, to a marketing penalty at a 
rate equal to 75 percent of the average market price (calculated to the 
nearest whole cent) for the kind of tobacco for the immediately 
preceding year on the quantity of tobacco as to which failure occurs. 
Such a penalty only shall be assessed after the person has been notified 
of the pending assessment of the penalty and the person has been 
afforded an opportunity for a hearing with respect to the assessment of 
the penalty. However, such marketing penalty shall not be assessed if 
such contributions or assessment are collected and remitted not later 
than 15 days after the date required by this part.
    (2) If a warehouse operator fails to collect and remit any 
contribution or assessment to an association within 15 days after the 
date provided in the loan contract between the warehouse operator and 
such association, the association shall provide to the FSA State 
committee for the state in which the warehouse operator's business is 
located a statement of the reason for the failure of the person to 
timely remit such collection, including the name and address of the 
warehouse involved, the pounds of tobacco purchased, the date of 
purchase, and the date the collection was required to be remitted. The 
association shall submit such facts within 25 days after the applicable 
due date regardless of whether such assessment or contribution has been 
remitted to the association.
    (3) The FSA State committee shall be responsible for assessing any 
marketing penalty determined in accordance with paragraph (j)(1) of this 
section.
    (4) The Deputy Administrator or the Deputy Administrator's designee 
may reduce the amount of any marketing penalty for which a person 
otherwise would be liable in accordance with the provisions of this 
section.
    (5) The marketing penalty provided in this section is in addition 
to, and not exclusive of, any other remedies that may be available with 
respect to collection and remission of any contributions or assessments 
made in accordance with this section.

[47 FR 51556, Nov. 16, 1982, and 48 FR 21110, May 11, 1983, as amended 
at 49 FR 24374, June 13, 1984; 51 FR 32427, Sept. 12, 1986; 53 FR 43675, 
Oct. 28, 1988; 56 FR 21259, May 8, 1991; 57 FR 43584, Sept. 21, 1992; 67 
FR 484, Jan. 4, 2002; 68 FR 65385, Nov. 20, 2003]



Sec.  1464.11  Nonrefundable marketing assessment.

    Effective only for each of the 1991 through 1998 crops of tobacco 
for which price support is made available according to Sec.  1464.2 of 
this part, both the producer and purchaser of such tobacco shall each 
remit to the CCC a nonrefundable marketing assessment in an amount equal 
to .5 percent of the national price support level for each such kind and 
crop on each pound of tobacco marketed. The nonrefundable marketing 
assessment will be:
    (a) Determined and announced by CCC at the time of announcing the 
national price support level for applicable kinds of tobacco or as soon 
thereafter as possible.
    (b) Collected and remitted to CCC in accordance with Sec.  
1464.10(i) of this part from producers and purchasers at the time of 
marketing.

[[Page 600]]

    (c) Collected by loan associations and remitted to CCC on all such 
tobacco pledged as loan collateral at the time such 1991 through 1998 
crops of tobacco are sold from loan inventories.
    (d) Subject to the same penalty for failure to be collected and 
remitted as provided for in Sec.  1464.10(j) of this part.
    (e) Enforceable in the courts of the United States by the Secretary.

[56 FR 21259, May 8, 1991, as amended at 60 FR 19667, Apr. 20, 1995; 62 
FR 3198, Jan. 22, 1997]



Sec.  1464.12  Flue-cured (types 11-14) tobacco.

    (a) The 1993-crop national price support level is 157.7 cents per 
pound.
    (b) The 1994-crop national price support level is 158.3 cents per 
pound.
    (c) The 1995-crop national price support level is 159.7 cents per 
pound.
    (d) The 1996-crop national price support level is 160.1 cents per 
pound.
    (e) The 1997-crop national price support level is 162.1 cents per 
pound.
    (f) The 1998-crop national price support level is 162.8 cents per 
pound.
    (g) The 1999 crop national price support level is 163.2 cents per 
pound.
    (h) The 2000 crop national price support level is 164.0 cents per 
pound.
    (i) The 2001 crop national price support level is 166.0 cents per 
pound.
    (j) The 2002 crop national price support level is 165.4 cents per 
pound.

[58 FR 11962, Mar. 2, 1993, as amended at 59 FR 6867, Feb. 14, 1994; 60 
FR 22460, May 8, 1995; 61 FR 37673, July 19, 1996; 62 FR 24800, May 7, 
1997; 63 FR 55938, Oct. 20, 1998; 64 FR 66718, Nov. 30, 1999; 68 FR 
34779, June 11, 2003]



Sec.  1464.13  Fire-cured (type 21) tobacco.

    (a) The 1993-crop national price support level is 139.5 cents per 
pound.
    (b) The 1994-crop national price support level is 140.7 cents per 
pound.
    (c) The 1995-crop national price support level is 143.0 cents per 
pound.
    (d) The 1996-crop national price support level is 145.5 cents per 
pound.
    (e) The 1997-crop national price support level is 149.8 cents per 
pound.
    (f) The 1998-crop national price support level is 153.6 cents per 
pound.
    (g) The 1999-crop national price support level is 155.9 cents per 
pound.
    (h) The 2000-crop national price support level is 155.9 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec.  1464.14  Fire-cured (types 22-23) tobacco.

    (a) The 1993-crop national price support level is 146.4 cents per 
pound.
    (b) The 1994-crop national price support level is 148.3 cents per 
pound.
    (c) The 1995-crop national price support level is 151.8 cents per 
pound.
    (d) The 1996-crop national price support level is 155.7 cents per 
pound.
    (e) The 1997-crop national price support level is 162.3 cents per 
pound.
    (f) The 1998-crop national price support level is 168.1 cents per 
pound.
    (g) The 1999-crop national price support level is 171.6 cents per 
pound.
    (h) The 2000-crop national price support level is 171.6 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997; 64 FR 15296, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec.  1464.15  Dark air-cured (types 35-36) tobacco.

    (a) The 1993-crop national price support level is 125.5 cents per 
pound.
    (b) The 1994-crop national price support level is 127.3 cents per 
pound.
    (c) The 1995-crop national price support level is 130.4 cents per 
pound.
    (d) The 1996-crop national price support level is 133.9 cents per 
pound.
    (e) The 1997-crop national price support level is 139.8 cents per 
pound.
    (f) The 1998-crop national price support level is 145.0 cents per 
pound.
    (g) The 1999-crop national price support level is 148.1 cents per 
pound.
    (h) The 2000-crop national price support level is 148.1 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997; 64 FR 15296, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]

[[Page 601]]



Sec.  1464.16  Virginia sun-cured (type 37) tobacco.

    (a) The 1993-crop national price support level is 123.3 cents per 
pound.
    (b) The 1994-crop national price support is 124.5 cents per pound.
    (c) The 1995-crop national price support is 126.5 cents per pound.
    (d) The 1996-crop national price support is 128.8 cents per pound.
    (e) The 1997-crop national price support level is 132.6 cents per 
pound.
    (f) The 1998-crop national price support level is 136.0 cents per 
pound.
    (g) The 1999-crop national price support level is 138.0 cents per 
pound.
    (h) The 2000-crop national price support level is 138.0 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997; 64 FR 15296, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec.  1464.17  Cigar-filler and binder (types 42-44 and 53-55) tobacco.

    (a) The 1993-crop national price support level is 107.4 cents per 
pound.
    (b) The 1994-crop national price support level is 108.4 cents per 
pound.
    (c) The 1995-crop national price support level is 110.1 cents per 
pound.
    (d) The 1996-crop national price support level is 112.0 cents per 
pound.
    (e) The 1997-crop national price support level is 116.9 cents per 
pound.
    (f) The 1998-crop national price support level is 121.2 cents per 
pound.
    (g) The 1999-crop national price support level is 123.8 cents per 
pound.
    (h) The 2000-crop national price support level is 123.8 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997; 64 FR 15296, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec.  1464.18  Cigar-filler (type 46) tobacco.

    (a) The 1993-crop national price support level is 83.4 cents per 
pound.
    (b) The 1994-crop national price support level is 84.4 cents per 
pound.
    (c) The 1995-crop national price support level is 86.1 cents per 
pound.
    (d) Price support shall not be made available for the 1996 and 
subsequent crops of this type (46).

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996]



Sec.  1464.19  Burley (type 31) tobacco.

    (a) The 1993-crop national price support level is 168.3 cents per 
pound.
    (b) The 1994-crop national price support level is 171.4 cents per 
pound.
    (c) The 1995-crop national price support level is 172.5 cents per 
pound.
    (d) The 1996-crop national price support level is 173.7 cents per 
pound.
    (e) The 1997-crop national price support level is 176.0 cents per 
pound.
    (f) The 1998-crop national price support level is 177.8 cents per 
pound.
    (g) [Reserved]
    (h) The 2000 crop national price support level is 180.5 cents per 
pound.

[58 FR 36859, July 9, 1993, as amended at 59 FR 22725, May 3, 1994; 60 
FR 27868, May 26, 1995; 61 FR 50425, Sept. 26, 1996; 62 FR 30230, June 
3, 1997; 63 FR 55940, Oct. 20, 1998; 65 FR 78407, 65 FR Dec. 15, 2000]



Sec. Sec.  1464.20-1464.23  [Reserved]



Sec.  1464.24  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) under the 
provisions of 44 U.S.C. chapter 35 and have been assigned OMB control 
numbers 0560-0058 and 0560-0182.

[68 FR 65386, Nov. 20, 2003]



                     Subpart B--Importer Assessments

    Source: 59 FR 10944, Mar. 9, 1994, unless otherwise noted.



Sec.  1464.101  Definitions.

    (a) Applicability. The definitions set forth in this section shall 
be applicable for purposes of administering the provisions of this 
subpart.
    (b) Terms. For purposes of this subpart, the following terms shall 
have the following meanings unless otherwise indicated.

[[Page 602]]

    Customs Service. The United States Customs Service of the United 
States Department of the Treasury.
    De minimis special entries. Imports of unmanufactured tobacco when 
the total importation at any time or on any date is 100 kilograms or 
less and such tobacco is imported segregated from other tobacco for use 
as samples, for research, or other use approved by the Director.
    Director. The Director, or Acting Director, Tobacco Division, Farm 
Service Agency, U.S. Department of Agriculture.
    Entered. Tobacco shall be considered to have entered the United 
States when the tobacco has been released by the Customs Service for 
entry (direct entry or bonded warehouse withdrawal) for consumption into 
the commerce of the United States, unless the tobacco is brought into 
the country outside the control of the Customs Service, in which case 
the tobacco will be considered to have entered the United States when 
such tobacco physically enters the territory of the United States.
    Entry date. The date on which the tobacco was released by Customs 
Service for consumption into the commerce of the United States, unless 
the tobacco enters commerce in the United States without such a release, 
in which case the entry date shall be the date such tobacco physically 
entered the territory of the United States.
    Imported tobacco. Effective January 1, 1994, any unmanufactured 
tobacco, including Oriental and Turkish tobacco, that was not produced 
in the United States but has entered the United States.
    Importer. A person who owns or controls such tobacco at the time at 
which the tobacco entered the United States.
    Person. An individual, partnership, association, corporation, 
cooperative, estate, trust, joint venture, joint operation, or other 
business enterprise or other legal entity, and, when applicable, a 
State, a political subdivision of a State, or any agency thereof.
    United States. The 50 States of the United States, the District of 
Columbia, Puerto Rico, or any Territory or Possession of the United 
States.
    Unmanufactured tobacco. Any tobacco that is not processed and 
packaged as a consumer tobacco product, including, but not limited to, 
any tobacco classifiable under the Harmonized Tariff Schedule of the 
United States (HTS) in existence as of January 1, 1994, under Chapter 
2401 of the HTS or under classifications 2403912000, 2403914050, 
2403914070, 2403990050, 2403990065, and 2403990070 of Chapter 2403 of 
the HTS.

[59 FR 10944, Mar. 9, 1994, as amended at 64 FR 2803, Jan. 19, 1999; 68 
FR 65385, Nov. 20, 2003]



Sec.  1464.102  Budget deficit marketing assessment.

    (a) General. Subject to the limits set out below, a budget deficit 
marketing assessment (BDMA) shall be remitted by all importers of 
tobacco for tobacco entered into the commerce of the United States.
    (b) Period of coverage. Except as provided for in (h), this section 
shall only apply to tobacco imported after September 13, 1995, and 
through the 1998 calendar year.
    (c) Tobacco covered. Except as provided in (g) and (h), this section 
shall only apply to unmanufactured tobacco entered for consumption into 
the commerce of the United States that is, as determined by the 
Director, the same kind or a like kind of tobacco for which a domestic 
price support program is in effect; provided further that, except as 
provided in (g) and (h), this section shall not apply to cigar kinds of 
tobacco.
    (d) Rate. Except as provided in (h) and subject to provisions in 
this section dealing with mixed lots, the BDMA rate shall be the rate 
for the corresponding domestic tobacco for the marketing year for the 
domestic tobacco which is in progress when the imported tobacco becomes 
subject to the assessment. The BDMA rate shall be applied on a per 
kilogram basis to all quantities of such tobacco imported for 
consumption, except for de minimis special entries approved by the 
Director.
    (e) Mixed entries. For entries of mixed kinds of tobacco, the 
importer shall certify the composition of the mixed lot and remit the 
amount of assessment due for the respective quantity of each applicable 
kind of tobacco in the mixture. If the importer is unable or

[[Page 603]]

unwilling to determine and certify the composition of the mixed lot, the 
entire lot shall be subject to the BDMA rate for the kind of tobacco 
with the highest rate.
    (f) Remittance of BDMA. The BDMA amount due shall be remitted in 
accordance with Sec.  1464.104 of this part. Failure to remit or timely 
remit BDMAs shall subject the importer to a marketing penalty on the 
quantity for which such failure occurred. The penalty will be assessed 
in accordance with Sec.  1464.106 of this part.
    (g) Records and disputes. It shall be the responsibility of all 
importers of tobacco to establish that their tobacco is not subject to 
any BDMA or is not subject to a higher BDMA than that claimed to be due 
by such importer. All importers of tobacco must, accordingly, maintain 
sufficient records to demonstrate that they are not liable for a higher 
BDMA amount. Disputes involving the application of the BDMA shall be 
resolved by the Director.
    (h) Tobacco entered prior to September 13, 1995. Notwithstanding 
other provisions of this section, all imported tobacco which was entered 
for consumption into the United States from January 1, 1994, through 
September 13, 1995, shall be subject to a BDMA to the extent provided 
for under those rules which were in effect under this part during that 
period. BDMA's payable for that period shall be paid by the importer and 
shall be at the rate specified in those rules and subject to the terms 
of those rules.

[62 FR 3198, Jan. 22, 1997]



Sec.  1464.103  Importer no-net-cost assessments.

    (a) General. The importer of any unmanufactured imported burley or 
flue-cured tobacco shall pay a no-net-cost assessment on each kilogram 
of such tobacco that is imported after December 31, 1993, regardless of 
the form in which it is imported and regardless of whether it is mixed 
or blended with other tobacco, except for de minimis special entries.
    (b) Amount of assessment. The amount of the no-net-cost assessment 
which shall apply under this section shall be the amount determined by 
multiplying:
    (1) For imported burley tobacco, the number of kilograms of such 
tobacco by the sum, converted to per kilogram basis, of the no-net-cost 
producer and purchaser contributions or assessments as implemented 
pursuant to subpart A for domestic burley tobacco that is marketed 
during the domestic marketing year during which the tobacco was 
imported.
    (2) For imported flue-cured tobacco, the number of kilograms of such 
tobacco by the sum, converted to a per kilogram basis, of the no-net-
cost producer and purchaser contribution or assessments as implemented 
pursuant to subpart A for domestic flue-cured tobacco that is marketed 
during the domestic marketing year during which the tobacco was 
imported.



Sec.  1464.104  Remittance of importer assessments.

    (a) Where to remit. A person making a remittance shall follow 
instructions on the reverse side of form CCC-100.
    (b) When to remit. Importer assessments shall be remitted within 10 
business days after the date on which the imported tobacco is entered. 
For remittances that are mailed, the date of the remittance will be 
considered the date on which the official U.S. Postal Service postmark 
was affixed.
    (c) Instructions. Remittances must be made in accordance with 
instructions on form CCC-100.
    (d) Documentation. Unless the Director shall direct otherwise, in 
writing, each remittance of an importer assessment shall be accompanied 
by form CCC-100, Importer Entry and Assessment Worksheet, and as 
applicable, Customs Service Form CF7501 or CF7505, or other Customs 
Service documentation that, based on the documentation and codes 
normally required or used by the Customs Service, includes the following 
with respect to each entry of imported tobacco:
    (1) Entry filer code/entry number,
    (2) Importer of record number,
    (3) Importer of record name and address,
    (4) Ultimate consignee number,
    (5) Entry date,
    (6) District/port of entry,
    (7) Harmonized Tariff Schedule Number,

[[Page 604]]

    (8) Quantity entered (net weight in kilograms),
    (9) Entry type (formal or informal), and
    (10) Amount remitted.
    (e) Late payment charge. Any importer who fails to timely remit any 
assessment required by this subpart shall be subject to a late payment 
charge. Such late payment charge shall be calculated and assessed in 
accordance with part 1403 of this chapter, or successor regulations, and 
shall be in addition to any penalty due or other charge due.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3198, Jan. 22, 1997]



Sec.  1464.105  Refund of assessments.

    Assessments paid on imported tobacco may be refunded if the person 
importing such tobacco establishes, to the satisfaction of the Director, 
that the tobacco on which the assessment was paid has been reexported as 
unmanufactured tobacco or destroyed in an unmanufactured state. 
Assessment refunds will be based on entry weight as identified on 
Customs Service Form CF7501 or CF7505, or other documentation or data as 
required by the Director or found by the Director to be appropriate. 
Additional refund documentation, including proof of export, will be 
required consistent with the ``duty drawback'' provisions administered 
by the Customs Service pursuant to section 313(a) of the Tariff Act of 
1930, as amended. Persons seeking a refund shall submit their request 
and documentation to the Director, Tobacco Division, Farm Service Agency 
(FSA), United States Department of Agriculture (USDA), P.O. Box 2415, 
Washington, DC 20013-2415. Where deemed appropriate, the Director may, 
in writing, allow the use of substitute documentation and permit 
payments to successors in interest where the reexporter and importer are 
not the same. Where exporter and importer are not the same, refunds 
shall be to the importer unless the importer, in writing, notifies the 
Director that the payment should be made to the exporter.

[59 FR 10944, Mar. 9, 1994, as amended at 68 FR 65385, Nov. 20, 2003]



Sec.  1464.106  Marketing penalties.

    (a) Failure to remit assessments. An importer who fails to timely 
remit an assessment in accordance with this subpart shall be subject to 
a marketing penalty.
    (1) Budget deficit marketing assessment. With respect to the 
assessment referred to in Sec.  1464.102, if an importer fails to pay or 
to timely remit the BDMA, such importer shall be subject to a marketing 
penalty at a per kilogram rate equal to 75 percent of the average market 
price (calculated to the nearest whole cent) for the respective like 
kind domestic tobacco being imported for the domestic marketing year 
which immediately preceded the domestic marketing year in which the 
imported tobacco became subject to the BDMA. Such marketing penalty rate 
shall apply to the quantity of tobacco on which the failure occurred. 
Amounts due for the penalty shall be in addition to any other amount as 
may be due, including, but not limited to, the amount due for the BDMA 
itself, or any applicable late fees, charges, or interest.
    (2) Importer no-net-cost assessment. With respect to assessments 
referred to in Sec.  1464.103, if an importer of burley or flue-cured 
tobacco fails to timely remit a no-net-cost assessment in accordance 
with the provisions in this subpart, such importer shall be liable, in 
addition to any no-net-cost assessment or other sum due and any late 
payment charges, to a marketing penalty at a per kilogram rate equal to 
75 percent of the average market price (calculated to the nearest whole 
cent) for the respective kind of domestic tobacco (burley or flue-cured) 
for the respective domestic tobacco marketing year in which such 
imported tobacco was imported, on the quantity of tobacco as to which 
the failure occurs.
    (b) Exception to marketing penalty. A marketing penalty otherwise 
required by this paragraph may be forgiven if the assessment for which 
nonpayment of the penalty could be assessed is remitted not later than 
15 calendar days after the date otherwise required for the remittance by 
this subpart.
    (c) Notification of marketing penalty. Before a marketing penalty is 
assessed, the importer shall be notified of the

[[Page 605]]

pending assessment and shall be afforded an opportunity for a hearing 
with respect to the assessment of the penalty. Such notification will be 
by, and such hearing will be before, the Director or designee.
    (d) Marketing penalty reduction. The Executive Vice President, CCC, 
or designee, may reduce the amount of any marketing penalty for which a 
person otherwise would be liable under the provisions of this section 
upon finding that failure to comply was unintentional or without 
knowledge on the part of such person and that such reduction would not 
damage the tobacco program or the administration of this part.
    (e) Prohibition of use, processing or marketing of tobacco for which 
the assessments have not been paid; other remedies. The knowing use, 
processing, or marketing of tobacco in the commerce of the United States 
of any tobacco for which an assessment or related charge required or 
provided for by this subpart is past due, is prohibited. The penalties 
and other remedies provided in this section shall be in addition to, and 
not exclusive of, other remedies that may be available.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3198, Jan. 22, 1997]



Sec.  1464.107  Recordkeeping.

    (a) Retention of records. Each importer of tobacco shall maintain 
all records that are relevant to any imported tobacco that is subject to 
an assessment in accordance with this subpart. Such records shall be 
retained for a period of three years following the date of entry of such 
tobacco. The burden of establishing compliance with this part shall be 
on the importer of the tobacco.
    (b) Examination of records and reports. The Executive Vice 
President, CCC, the Director, or any person authorized by one of such 
persons, or any auditor or agent of the Office of the Inspector General, 
is authorized to examine any records that such person has reason to 
believe are relevant to any matter pertinent to the payment of importer 
assessments under this subpart. Upon request of an authorized person, 
each importer shall make available for examination such records as are 
under such importer's control that may be relevant to imported tobacco 
that is subject to an assessment in accordance with this subpart or 
otherwise relevant to the administration of this subpart. Upon a failure 
to provide access or records, the Director may presume that such an 
inquiry would have produced information unfavorable to the party to the 
inquiry and shall make further determinations in the matter accordingly.



Sec.  1464.108  Reconsideration and appeal.

    An importer may request the Director to reconsider any determination 
of the amount of any assessment due, any marketing penalty assessed, or 
other adverse determination rendered in accordance with this subpart. 
Any request for reconsideration shall be made within 30 calendar days of 
the date of the notification of such assessment, marketing penalty, or 
adverse determination. If the importer is dissatisfied with a 
determination rendered by the Director with respect to a request for 
reconsideration, such importer may appeal the determination to the 
Director, National Appeals Division, USDA. Any such appeal shall be 
handled in accordance with the provisions of 7 CFR part 780.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3199, Jan. 22, 1997; 68 
FR 65385, Nov. 20, 2003]

Subparts C-F [Reserved]



                   Subpart G--Tobacco Payment Program

    Source: 68 FR 18834, Apr. 17, 2003, unless otherwise noted.



Sec.  1464.601  Applicability and basic terms for payments.

    This subpart sets forth the terms and conditions of the Tobacco 
Payment Program (TOPP). Under this program CCC will make direct payments 
on a farm relating to basic tobacco quotas or allotments established for 
the 2002 crop year under part I of subtitle B of title III of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) for eligible 
tobaccos. Payments are subject to the availability of funds and payment 
formulas set out in this part.

[[Page 606]]



Sec.  1464.602  Administration.

    This subpart shall be administered by the Executive Vice President, 
CCC or his designee, under the general supervision of the Farm Service 
Agency (FSA), Deputy Administrator for Farm Programs (Deputy 
Administrator). The program shall be carried out in the field by State 
and county FSA committees and FSA employees in accordance with this 
subpart.



Sec.  1464.603  Eligibility.

    For a person to be considered an eligible person for purposes of 
this part, such person must own or control (in some cases only) a farm 
for which on the status date a basic 2002 crop quota or allotment for 
eligible tobacco was established under part I of subtitle B of title III 
of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.). 
Also, growers of that tobacco are eligible for payments to the extent 
provided for in this part.



Sec.  1464.604  Definitions.

    The definitions set forth in this section shall apply to the 
administration of TOPP under this subpart. The definitions in Sec. Sec.  
718.2 and 723.104 of this title also apply to TOPP. The definitions in 
this section apply rather than the definitions in Sec. Sec.  718.2 and 
723.104 of this title to the extent that the definitions in those 
sections differ. The following terms shall have the following meanings:
    Controller means that person or entity who, as determined by the 
Deputy Administrator, controls the land used to produce eligible tobacco 
and share in the risk of production.
    Eligible person means an owner, or (as applicable) controller of a 
farm for which a basic quota or allotment was established for the 2002 
crop year under part I of subtitle B of title III of the Agricultural 
Adjustment Act of 1938 to the extent otherwise provided in these rules. 
Growers of that tobacco, as specified in this part, can also be eligible 
for payment. For this TOPP, an eligible person's status, as owner or 
controller or grower, will be determined as of July 1, 2002.
    Eligible tobacco means each of the following kinds of tobacco: Flue-
cured tobacco (types 11, 12, 13 and 14), burley tobacco (type 31), 
Virginia sun-cured tobacco (type 37), fire-cured tobacco (types 21-23), 
dark air-cured tobacco (types 35-36), and cigar filler/binder tobacco 
(types 42 through 44, 54 and 55).
    Grower means for flue-cured tobacco and cigar binder tobacco, a 
``producer,'' as defined below, for all other eligible tobaccos, as 
``grower/tenant,'' as defined below.
    Grower/tenant means a person or entity who provides labor to produce 
tobacco and share in the risk of production.
    Owner means with respect to a quota or allotment farm the person or 
entity who owns the land for which the tobacco quota or allotment was 
established for the 2002 crop as of the operative status date of July 1, 
2002 provided for in this part.
    Payment pounds means the pounds of tobacco for which a person is 
eligible to be paid under this subpart.
    Producer means a person or entity actively engaged in planting, 
growing, harvesting, and/or marketing of tobacco, or who shares in the 
risk of producing the crop.
    Share in the risk of production means having a direct financial 
stake in the success of the crop through a direct share in the actual 
proceeds from the actual marketing of the crop which share is 
conditional upon the success of that marketing. Farm owners who cash-
lease their farmland to a tobacco producer for the right to grow tobacco 
on that land and receive payment for such right regardless of whether or 
not a tobacco crop is marketed are not considered to share in the risk 
of production. Farm laborers who provide service in exchange for a wage 
and whose payment is not subject to the marketing or the tobacco crop 
are not considered to shared in the risk of production.
    TOPP means the Tobacco Payment Program.



Sec.  1464.605  Sign up.

    (a) To apply for TOPP funds, persons must submit an application to 
the county FSA office by the date established by the Deputy 
Administrator. Late applications may be accepted if approved by the 
Deputy Administrator,

[[Page 607]]

if the lateness was the result of documented hardship.
    (b) 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 provided.



Sec.  1464.606  [Reserved]



Sec.  1464.607  Payment benefits.

    (a) Payment will only be made subject to the availability of funds 
and only for eligible tobacco and for eligible persons who meet all 
conditions of eligibility for whom monies are provided by the terms of 
this section.
    (b) The total national payment amount made available for each kind 
of eligible tobacco for all claimants for that kind of tobacco, will be 
computed by multiplying the 2002 crop national poundage amount for that 
kind by 5.55 cents per pound.
    (c) The national poundage amount of a kind shall be, for those 
tobaccos for which poundage quotas were established for individual 
farms, the national basic quota, in total, for all farms. For all other 
tobaccos, the 2002 crop national poundage amount shall be determined by 
multiplying the national basic acreage allotment for that kind of 
tobacco by the following per acre conversion factors:
    (1) For fire-cured tobacco (type 21) 1,746 pounds;
    (2) For fire-cured tobacco (types 22-23) 2,676 pounds;
    (3) For dark air-cured tobacco (types 35-36) 2,475 pounds; and
    (4) For Virginia sun-cured tobacco (type 37) 1,502 pounds.
    (d) Once the national payment amount is determined for the eligible 
tobacco kind, it will for flue-cured tobacco (types 11-14) and for cigar 
filler tobacco (types 42-44 and 54-55) be divided into two equal parts, 
one for eligible owners and the other for eligible growers. Shares in 
the sub-accounts will be determined using basic poundage quota amounts 
for flue-cured tobacco and basic allotments for the cigar filler types. 
For cigar filler type allotments, a conversion to pounds will be made 
using the same conversion factor provided in paragraph (b) of this 
section.
    (e) For those eligible tobaccos not covered in paragraph (d) of this 
section, the national payment amount fund as determined under paragraph 
(b) of this section will be divided into three equal parts. Those parts 
shall be: one for eligible owners; one for eligible controllers; and one 
for eligible growers. Shares in each sub-account will be determined for 
burley tobacco using:
    (1) Basic poundage quota amounts for owners; and
    (2) Effective quota amounts for controllers and growers.
    (f) For all other tobaccos covered by paragraph (e) of this section, 
shares in each sub-account will be determined using:
    (1) Basic allotments for owners; and
    (2) Effective allotment amounts for controllers and growers. 
Allotments will be converted to pounds using the conversion factors in 
paragraph (c) of this section. ``Effective quotas'' and ``effective 
allotments'' means the amount of quota or allotment before any transfer 
which, as determined by the Deputy Administrator, occurred after a 
disaster.
    (g) Growers who otherwise meet the terms of this part, will qualify 
based on the full amount of the basic quota or effective quota or 
allotment, as the case may be, for the kind involved, even though they 
did not fully produce the operative pounds. Such growers must meet the 
labor, active engagement in farming, and risk of production elements of 
the ``grower'' definition of Sec.  1464.604, as applicable to their kind 
of tobacco. The Deputy Administrator may provide other elements of 
eligibility as necessary to accomplish the provisions of this part in 
accord with the operative legislation.
    (h) Payments will be made as soon as practicable.
    (i) The amount of TOPP funds allocated to the eligible persons in 
Georgia will be disbursed only if the State of Georgia agrees to use an 
equal amount of funds (not to exceed $13,000,000) to make payments in 
the same manner as provided for in this section.
    (j) All payments under this part are subject to the eligibility of 
funds. In the case where a payment to a farm is disputed the Deputy 
Administrator may require that all interested parties

[[Page 608]]

agree to the resolution of the dispute before any payment is made and 
may delay payments to the farm until any such disputes are resolved. 
Also, as determined appropriate to accomplish the goal that program 
payments be made expeditiously in a manner that is administratively 
efficient, the Deputy Administrator may properly exclude payments to a 
person who does not file a timely claim and all payments may be made to 
those parties whose claim to the payment is not challenged. Nothing in 
this section shall, however, be construed to prevent the agency from 
denying any payment to any person based upon a failure of that person to 
meet any eligibility criteria set forth in this part.



Sec.  1464.608  Offsets and assignments.

    (a) TOPP payments, or a portion thereof, shall be made without 
regard to questions of title under State law and without regard to any 
claim or lien against the crop, or proceeds thereof, in favor of the 
owner or any other creditor. However, offsets and withholdings of TOPP 
payments maybe taken in accordance with part 1403 of this chapter.
    (b) TOPP payments may be assigned as provided in part 1404 of this 
chapter.



Sec.  1464.609  Misrepresentation and scheme or device.

    (a) A person who is determined to have misrepresented any fact with 
the intention of affecting a TOPP program determination or received 
payments as a result of such misrepresentation shall not be entitled to 
payments and must refund all payments, plus interest in accordance with 
7 CFR part 1403.
    (b) A person determined to have knowingly adopted a scheme or device 
that tends to defeat the purpose of the program, or made any fraudulent 
representation shall refund all payments, plus interest determined in 
accordance with 7 CFR part 1403 and shall not receive any payment not 
yet made.
    (c) Persons who are party to the TOPP application must refund any 
excess or unearned TOPP payments to CCC, plus interest, made under such 
application.



Sec.  1464.610  Cumulative liability.

    The liability of any person for any penalty under this part or for 
any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to, 18 U.S.C. 286, 287, 371, 641, 1001; 15 U.S.C. 714m; 
and 31 U.S.C. 3729.



Sec.  1464.611  Estates, trusts, and minors.

    (a) Program documents executed by persons legally authorized to 
represent estates or trusts will be accepted only if such persons 
furnish evidence of the authority to execute such documents.
    (b) A minor who is a producer shall be eligible for assistance under 
this subpart only if such person meets one of the following 
requirements:
    (1) The right of majority has been conferred on the minor by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage the minor's property and 
has executed the applicable program documents; 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.  1464.612  Death, incompetence, or disappearance.

    In the case of death, incompetence, or disappearance of any person 
who is eligible to receive assistance in accordance with this part, such 
person or persons as specified in part 707 of this title may receive 
such assistance.



Sec.  1464.613  Appeals.

    Determinations made under this part may be appealed as provided in 
parts 11 and 780 of this title.

[[Page 609]]

    Appendix A to Part 1464--Importer Entry and Assessment Worksheet
[GRAPHIC] [TIFF OMITTED] TC04SE91.001


    Editorial Note: At 68 FR 65386, November 20, 2003, Appendix A to 
Part 1464 was amended by removing the phrase ``Agricultural 
Stabilization and Conservation Service'' and adding in its place ``Farm 
Service Agency''. However, this amendment could not be incorporated 
because the appendix is an illustration.

[[Page 610]]



PART 1465--AGRICULTURAL MANAGEMENT ASSISTANCE--Table of Contents




                      Subpart A--General Provisions

Sec.
1465.1 Purposes and applicability.
1465.2 Administration.
1465.3 Definitions.
1465.4 Program requirements.
1465.5 Conservation practices.

                          Subpart B--Contracts

1465.20 Applications for participation and selecting applications for 
          contracting.
1465.21 Contract requirements.
1465.22 Conservation practice operation and maintenance.
1465.23 Cost-share payments.
1465.24 Contract modification, extension, and transfer of land.
1465.25 Contract violations and termination.

                    Subpart C--General Administration

1465.30 Appeals.
1465.31 Compliance with regulatory measures.
1465.32 Access to operating unit.
1465.33 Performance based upon advice or action of representatives of 
          NRCS.
1465.34 Offsets and assignments.
1466.35 Misrepresentation and scheme or device.

    Authority: 7 U.S.C. 1524(b), 16 U.S.C. 3801.

    Source: 68 FR 17273, Apr. 9, 2003, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1465.1  Purposes and applicability.

    Through the Agricultural Management Assistance (AMA) program, the 
NRCS provides financial assistance funds annually to producers in 15 
statutorily designated states to construct or improve water management 
structures or irrigation structures; to plant trees to form windbreaks 
or to improve water quality; and to mitigate risk through production 
diversification or resource conservation practices, including soil 
erosion control, integrated pest management, or transition to organic 
farming. The AMA Program is applicable in Connecticut, Delaware, 
Maryland, Massachusetts, Maine, Nevada, New Hampshire, New Jersey, New 
York, Pennsylvania, Rhode Island, Utah, Vermont, West Virginia, and 
Wyoming.



Sec.  1465.2  Administration.

    (a) Administration and implementation of the conservation provisions 
of AMA Program for the CCC is assigned to the Natural Resources 
Conservation Service (NRCS). The Farm Service Agency (FSA) is 
responsible for `person' determinations under Sec.  1465.23(c) and 
making cost-share payments.
    (b) NRCS will:
    (1) Provide overall management and implementation leadership for the 
AMA Program;
    (2) Establish policies, procedures, priorities, and guidance for 
implementation;
    (3) Establish cost-share payment limits;
    (4) Determine eligible practices;
    (5) Develop and approve conservation plans and contracts with 
selected participants;
    (6) Provide technical leadership for implementation, quality 
assurance, and evaluation of performance; and
    (7) Make funding decisions and determine allocations of AMA funds.
    (c) FSA will:
    (1) Determine `person' and producer eligibility; and
    (2) Make cost-share payments for practices completed.



Sec.  1465.3  Definitions.

    The following definitions apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Applicant means an agricultural producer who has requested in 
writing to participate in the AMA Program. Producers who are members of 
a joint operation shall be considered one applicant.
    Chief means the Chief of NRCS, or designee.
    Conservation district means a political subdivision of a State, 
Indian tribe, or territory, organized pursuant to the State or 
territorial soil conservation district law, or tribal law. The 
subdivision may be a conservation district, soil conservation district, 
soil and water conservation district, resource conservation district, 
natural resource district, land conservation committee, or similar 
legally constituted body.

[[Page 611]]

    Conservation plan means a record of the participant's decisions, and 
supporting information, for treatment of a unit of land or water, and 
includes the schedule of operations, activities, and estimated 
expenditures needed to solve identified natural resource concerns.
    Conservation practice means a specified treatment, such as a 
structural or vegetative practice or a land management practice, which 
is planned and applied according to NRCS standards and specifications.
    Contract means a legal document that specifies the rights and 
obligations of any person who has been accepted for participation in the 
AMA Program.
    Cost-share payment means the financial assistance from NRCS to the 
participant to share the cost of installing eligible practices.
    Designated conservationist means an NRCS employee whom the State 
conservationist has designated as responsible for administration of the 
AMA Program.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community which is recognized as eligible for the 
special assistance and services provided by the United States to Indians 
because of their status as Indians.
    Indian trust lands means real property in which the United States 
holds title as trustee for an Indian or tribal beneficiary, or a Indian 
or tribal beneficiary holds title and the United States maintains a 
trust relationship.
    Life-span means the minimum time period in which the conservation 
practices are to be maintained and used for their intended purpose.
    Liquidated damages means a sum of money stipulated in the contract 
that the participant agrees to pay if the participant breaches the 
contract. The sum represents an estimate of the anticipated or actual 
harm caused by the breach, and reflects the difficulties of proof of 
loss and the inconvenience or non-feasibility of otherwise obtaining an 
adequate remedy.
    Operation and maintenance means work that is to be performed by the 
participant to keep the applied conservation practice functioning for 
the intended purpose during its life span. Operation includes the 
administration, management, and performance of non-maintenance actions 
needed to keep the completed practice safe and functioning as intended. 
Maintenance includes work to prevent deterioration of the practice, 
repairing damage, or replacement of the practice to its original 
condition if one or more components fail.
    Participant means a producer who is a party to an AMA contract.
    Producer means a person who is engaged in agricultural production.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Basin Area.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Technical assistance means the personnel and support resources 
needed to conduct conservation practice survey, layout, design, 
installation, and certification; training and providing quality 
assurance for professional conservationists; and evaluation and 
assessment of the AMA Program.
    Unit of concern means a parcel of agricultural land that has natural 
resource conditions that are of concern to the participant.



Sec.  1465.4  Program requirements.

    (a) Participation in the AMA Program is voluntary. The participant, 
in cooperation with the local conservation district, applies for 
practice installation for the farm or ranching unit of concern. The NRCS 
provides cost-share payments through contracts to apply needed 
conservation practices within a time schedule specified in the contract.
    (b) The Chief determines the funds available for financial 
assistance according to the purpose and projected cost for which the 
financial assistance is provided in a fiscal year. The Chief allocates 
the funds available to carry out the AMA Program.
    (c) To be eligible to participate in the AMA Program, an applicant 
must:
    (1) Be an agricultural producer;

[[Page 612]]

    (2) Have control of the land for the life of the proposed contract 
period, except that:
    (i) An exception may be made by the Chief in the case of land 
allotted by the Bureau of Indian Affairs (BIA), tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control; or
    (ii) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall provide NRCS with the 
written concurrence of the landowner in order to apply an eligible 
practice(s);
    (3) Submit an application form CCC-1200;
    (4) Supply information as required by NRCS to determine eligibility 
for the AMA Program; and
    (5) States, political subdivisions, and entities thereof will not be 
persons eligible for payment. Any cooperative association of producers 
that markets commodities for producers shall not be considered to be a 
person eligible for payment.
    (d) Land may only be considered for enrollment in the AMA program if 
NRCS determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is under private control for the contract period and is 
included in the participant's operating unit;
    (ii) Conservation practices will contribute to an improvement in the 
identified natural resource concern; and
    (iii) The participant has provided NRCS with written authorization 
from the government landowner to apply the conservation practices; or
    (3) The land is federally recognized Tribal, BIA allotted, or Indian 
trust land.



Sec.  1465.5  Conservation practices.

    (a) The State Conservationist, with advice from the State Technical 
Committee, will determine the conservation practices eligible for AMA 
Program payments. To be considered eligible conservation practices, the 
practices must meet the purposes of the AMA as set out in Sec.  1465.1.
    (b) The conservation plan includes the schedule of operations, 
activities, and estimated expenditures of the practices needed to solve 
identified natural resource concerns.



                          Subpart B--Contracts



Sec.  1465.20  Applications for participation and selecting applications 
for contracting.

    (a) Any producer who has eligible land may submit an application for 
participation in the AMA Program at a USDA service center. Producers who 
are members of a joint operation shall file a single application for the 
joint operation.
    (b) NRCS will accept applications throughout the year. The State 
Conservationist will distribute information on the availability of 
assistance and the state-specific goals. Information will be provided 
that explains the process to request assistance.
    (c) The State Conservationist, with advice from the State Technical 
Committee, will develop ranking criteria and a ranking process to select 
applications, taking into account local and state priorities.
    (d) The State Conservationist or designated conservationist with 
advice from the State Technical Committee and using a locally led 
process will rank and select applications for contracting based on the 
state-developed ranking criteria and ranking process.
    (e) The State Conservationist or designated conservationist will 
work with the applicant to collect the information necessary to evaluate 
the application using the ranking criteria.



Sec.  1465.21  Contract requirements.

    (a) In order for a participant to receive cost-share payments, the 
participant shall enter into a contract agreeing to implement eligible 
conservation practices.
    (b) An AMA contract will:
    (1) Incorporate by reference all portions of a unit applicable to 
the AMA Program;
    (2) Be for a duration of 3 to 10 years;
    (3) Incorporate all provisions as required by law or statute, 
including participant requirements to:
    (i) Not conduct any practices on the farm or ranch unit of concern 
that would tend to defeat the purposes of the contract according to 
Sec.  1465.25;

[[Page 613]]

    (ii) Refund any AMA Program payments received with interest, and 
forfeit any future payments under the AMA Program, on the violation of a 
term or condition of the contract, consistent with the provisions of 
Sec.  1465.25;
    (iii) Refund all AMA Program payments received on the transfer of 
the right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, consistent with the provisions of Sec.  
1465.24; and
    (iv) Supply information as required by NRCS to determine compliance 
with the contract and requirements of the AMA Program.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec.  1465.22; and
    (5) Any other provision determined necessary or appropriate by NRCS.
    (c) The participant must apply the practice(s) according to the 
schedule set out in the contract or conservation plan.



Sec.  1465.22  Conservation practice operation and maintenance.

    The contract will incorporate the operation and maintenance of the 
conservation practice(s) applied under the contract. The participant 
must operate and maintain the conservation practice(s) for its intended 
purpose for the life span of the conservation practice, as identified in 
the contract or conservation plan, as determined by NRCS. NRCS may 
periodically inspect the conservation practices during the life span of 
the practices as specified in the contract to ensure that operation and 
maintenance is occurring.



Sec.  1465.23  Cost-share payments.

    (a)(1) The Federal share of cost-share payments to a participant 
will be 75 percent of the actual cost of an eligible practice. In no 
instance shall the total financial contributions for an eligible 
practice from all public and private entity sources exceed 100 percent 
of the actual cost of the practice.
    (2) Participants may contribute their portion of the costs of 
practices through in-kind contributions, including labor and materials, 
providing the materials contributed meet the NRCS standards and 
specifications for the practice being installed.
    (3) Cost-share payments will not be made to a participant who has 
applied or initiated the application of a conservation practice prior to 
approval of the contract.
    (b) The total amount of cost-share payments paid to a person under 
this part may not exceed $50,000 for any fiscal year.
    (c) For purposes of applying the payment limitations provided for in 
this section, NRCS will use the provisions in 7 CFR part 1400 related to 
the definition of a ``person''and the limitation of payments, except 
that:
    (i) The provisions in part 1400, subpart C for determining whether 
persons are actively engaged in farming, subpart E for limiting payments 
to certain cash rent tenants, and subpart F as the provisions apply to 
determining whether foreign persons are eligible for payment, will not 
apply.
    (ii) With respect to land under an AMA Program contract which is 
inherited during the contract period, the $50,000 fiscal year limitation 
will not apply to the extent that the payments from any contracts on the 
inherited land cause an heir, who was party to an AMA Program contract 
on other lands prior to the inheritance, to exceed the annual limit.
    (iii) With regard to contracts on tribal land, Indian trust land, or 
BIA allotted land, payments exceeding one limitation may be made to the 
tribal venture if an official of the BIA or tribal official certifies in 
writing that no one person directly or indirectly will receive more than 
the limitation.
    (iv) The status of an individual or entity on the date of the 
application shall be the basis on which the determination of the number 
of persons involved in the farming operation is made.
    (d) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before NRCS will 
approve the payment of any cost-share payment.

[[Page 614]]



Sec.  1465.24  Contract modification, extension, and transfer of land.

    (a) The participant and NRCS may modify a contract if the 
participant and NRCS agree to the contract modification.
    (b) Contracts that run less than ten years may be extended for up to 
the 10-year limit in order for the participant to complete the practices 
scheduled in the contract, if such extension is requested by the 
participant before the contract expires.
    (c) The parties may mutually agree to transfer a contract to a new 
participant. The transferee must be determined by NRCS to be eligible to 
participate in the AMA Program and shall assume full responsibility 
under the contract, including operation and maintenance of those 
conservation practices already installed and to be installed as a 
condition of the contract.
    (d) NRCS may require a participant to refund all or a portion of any 
assistance earned under the AMA Program if the participant sells or 
loses control of the land under an AMA Program contract and the new 
owner or controller is not eligible to participate in the AMA Program or 
refuses to assume responsibility under the contract.



Sec.  1465.25  Contract violations and termination.

    (a)(1) If NRCS determines that a participant is in violation of the 
terms of a contract or documents incorporated by reference into the 
contract, NRCS will give the participant a reasonable time, as 
determined by the State Conservationist, to correct the violation and 
comply with the terms of the contract and attachments thereto. If a 
participant continues in violation, the State Conservationist may 
terminate the AMA Program contract.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a contract termination shall be effective immediately upon a 
determination by the State Conservationist that the participant has 
submitted false information or filed a false claim, or engaged in any 
act for which a finding of ineligibility for payments is permitted under 
the provisions of Sec.  1465.35, or in a case in which the actions of 
the party involved are deemed to be sufficiently purposeful or negligent 
to warrant a termination without delay.
    (b)(1) If NRCS terminates a contract, the participant shall forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received, plus interest determined in accordance 
with part 1403 of this chapter. The State Conservationist has the option 
of requiring only partial refund of the payments received if the State 
Conservationist determines that a previously installed conservation 
practice can function independently, is not affected by the violation or 
other conservation practices that would have been installed under the 
contract, and the participant agrees to operate and maintain the 
installed conservation practice for the life span of the practice.
    (2) If NRCS terminates a contract due to breach of contract or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant shall forfeit all rights for 
further payments under the contract and shall pay such liquidated 
damages as are prescribed in the contract. The State Conservationist 
will have the option to waive the liquidated damages depending upon the 
circumstances of the case.
    (3) When making all contract termination decisions, NRCS may reduce 
the amount of money owed by the participant by a proportion which 
reflects the good faith effort of the participant to comply with the 
contract, or the hardships beyond the participant's control that have 
prevented compliance with the contract.
    (4) The participant may voluntarily terminate a contract if NRCS 
agrees based on NRCS's determination that termination is in the public 
interest.
    (5) In carrying out NRCS's role in this section, NRCS may consult 
with the local conservation district.



                    Subpart C--General Administration



Sec.  1465.30  Appeals.

    (a) A participant may obtain administrative review of an adverse 
decision under the AMA Program in accordance

[[Page 615]]

with parts 11 and 614 of this title, except as provided in paragraph (b) 
of this section.
    (b) The following decisions are not appealable:
    (1) Payment rates, payment limits, and cost-share percentages;
    (2) Funding allocations;
    (3) Eligible conservation practices; and
    (4) Other matters of general applicability, including:
    (i) Technical standards and formulas;
    (ii) Denial of assistance due to lack of funds or authority; or
    (iii) Science-based formulas and criteria.



Sec.  1465.31  Compliance with regulatory measures.

    Participants who carry out conservation practices will be 
responsible for obtaining the authorities, rights, easements, or other 
approvals necessary for the implementation, operation, and maintenance 
of the conservation practices in keeping with applicable laws and 
regulations. Participants will be responsible for compliance with all 
laws and for all effects or actions resulting from the participant's 
performance under the contract.



Sec.  1465.32  Access to operating unit.

    Any authorized NRCS representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical 
assistance, inspect any work undertaken under the contract and collect 
information necessary to evaluate the performance of conservation 
practices in the contract. The NRCS representative will make a 
reasonable effort to contact the participant prior to the exercise of 
this provision.



Sec.  1465.33  Performance based upon advice or action of representatives 
of NRCS.

    If a participant relied upon the advice or action of any authorized 
representative of NRCS, and did not know or have reason to know that the 
action or advice was improper or erroneous, the State Conservationist 
may accept the advice or action as meeting the requirements of the AMA 
Program and may grant relief, to the extent it is deemed desirable by 
NRCS, to provide a fair and equitable treatment because of the good-
faith reliance on the part of the participant.



Sec.  1465.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the United States Government. The 
regulations governing offsets and withholdings found in part 1403 of 
this chapter shall be applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.



Sec.  1465.35  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented any 
fact affecting an AMA Program determination made in accordance with this 
part shall not be entitled to contract payments and must refund to NRCS 
all payments, plus interest determined in accordance with part 1403 of 
this chapter.
    (b) A producer's interest in all contracts shall be terminated, and 
the producer shall refund to NRCS all payments, plus interest determined 
in accordance with part 1403 of this chapter, received by such producer 
with respect to all contracts if it is determined that the producer 
knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the AMA Program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting an AMA Program determination.

[[Page 616]]



PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1466.1 Applicability.
1466.2 Administration.
1466.3 Definitions.
1466.4 National priorities.
1466.5 National allocation and management.
1466.6 State allocation and management.
1466.7 Outreach activities.
1466.8 Program requirements.
1466.9 EQIP plan of operations.
1466.10 Conservation practices.
1466.11 Technical and other assistance provided by qualified personnel 
          not affiliated with USDA.

                    Subpart B--Contracts and Payments

1466.20 Application for contracts and selecting offers from producers.
1466.21 Contract requirements.
1466.22 Conservation practice operation and maintenance.
1466.23 Cost-share rates and incentive payment levels.
1466.24 EQIP payments.
1466.25 Contract modifications and transfers of land.
1466.26 Contract violations and termination.
1466.27 Conservation innovation grants. [Reserved]

                    Subpart C--General Administration

1466.30 Appeals.
1466.31 Compliance with regulatory measures.
1466.32 Access to operating unit.
1466.33 Performance based upon advice or action of representatives of 
          NRCS.
1466.34 Offsets and assignments.
1466.35 Misrepresentation and scheme or device.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839aa-3839-8

    Source: 68 FR 32348, May 30, 2003, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1466.1  Applicability.

    Through the Environmental Quality Incentives Program (EQIP), the 
Natural Resources Conservation Service (NRCS) provides assistance to 
eligible farmers and ranchers to address soil, water, air, and related 
natural resources concerns, and to encourage enhancements on their lands 
in an environmentally beneficial and cost-effective manner and to assist 
producers in complying with environmental regulations. The purposes of 
the program are achieved by implementing structural and land management 
conservation practices on eligible land.



Sec.  1466.2  Administration.

    (a) The funds, facilities, and authorities of the Commodity Credit 
Corporation (CCC) are available to NRCS for carrying out EQIP. 
Accordingly, where NRCS is mentioned in this part, it also refers to the 
CCC's funds, facilities, and authorities where applicable.
    (b) NRCS and the Farm Service Agency (FSA) will consult, at the 
National level, in establishing policies, priorities, and guidelines 
related to the implementation of this part. FSA may continue to 
participate in EQIP through participation on State Technical Committees 
and Local Work Groups.
    (c) NRCS supports ``locally-led conservation'' by using State 
Technical Committees at the state level and Local Work Groups at the 
county/parish level to advise NRCS on technical issues relating to the 
implementation of EQIP such as:
    (1) Identification of priority natural resource concerns;
    (2) Identification of which conservation practices should be 
eligible for financial assistance; and
    (3) Establishment of cost-share rates and incentive payment levels.
    (d) No delegation in this part to lower organizational levels shall 
preclude the Chief of NRCS from determining any issues arising under 
this Part or from reversing or modifying any determination made under 
this Part.
    (e) NRCS may enter into agreements with other Federal or State 
agencies, Indian Tribes, conservation districts, units of local 
government, public or private organizations and individuals to assist 
NRCS with implementation of the program in this part.



Sec.  1466.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this Part, unless specified otherwise:

[[Page 617]]

    Agricultural land means cropland, rangeland, pasture, private non-
industrial forest land, and other land on which crops or livestock are 
produced.
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, constituting a cohesive management unit for 
agricultural purposes. An agricultural operation shall be regarded as 
located in the county in which the principle dwelling is situated, or if 
there is no dwelling thereon, it shall be regarded to be in the county 
in which the major portion of the land is located.
    Animal waste management facility means a structural conservation 
practice used for storing or treating animal waste.
    Applicant means an individual, entity or joint operation who has an 
interest in a farming operation, as defined in 7 CFR 1400.3, who has 
requested in writing to participate in EQIP.
    At-risk species means any plant or animal species as determined by 
the State Technical Committee to need direct intervention to halt its 
population decline.
    Beginning Farmer or Rancher means an individual or entity who:
    (1) Has not operated a farm or ranch, or who has operated a farm or 
ranch for not more than 10 consecutive years. This requirement applies 
to all members of an entity, and
    (2) Will materially and substantially participate in the operation 
of the farm or ranch.
    (i) In the case of a contract with 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 contract with an entity or joint operation, 
all members must materially and substantially participate in the 
operation of the farm or ranch. Material and substantial participation 
requires that each of the members provide some amount of the management, 
or labor and management necessary for day-to-day activities, such that 
if each of the members did not provide these inputs, operation of the 
farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, USDA, or designee.
    Comprehensive Nutrient Management Plan (CNMP) means a conservation 
system that is unique to an animal feeding operation (AFO). A CNMP is a 
grouping of conservation practices and management activities which, when 
implemented as part of a conservation system, will help to ensure that 
both production and natural resource protection goals are achieved. A 
CNMP incorporates practices to use animal manure and organic by-products 
as a beneficial resource. A CNMP addresses natural resource concerns 
dealing with soil erosion, manure, and organic by-products and their 
potential impacts on all natural resources including water and air 
quality, which may derive from an AFO. A CNMP is developed to assist an 
AFO owner/operator in meeting all applicable local, Tribal, State, and 
Federal water quality goals or regulations. For nutrient impaired stream 
segments or water bodies, additional management activities or 
conservation practices may be required by local, Tribal, State, or 
Federal water quality goals or regulations.
    Conservation district means any district or unit of State, tribal, 
or local government formed under State, tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land conservation committee,'' or similar 
name.
    Conservation Innovation Grants means competitive grants made under 
EQIP to individuals, governmental and non-governmental organizations to 
stimulate innovative methods to leverage Federal funds to implement EQIP 
to enhance and protect the environment in conjunction with agricultural 
production.
    Conservation practice means a specified treatment, such as a 
structural or land management practice, that is planned and applied 
according to NRCS standards and specifications.

[[Page 618]]

    Contract means a legal document that specifies the rights and 
obligations of any individual or entity who has been accepted to 
participate in the program. An EQIP contract is a binding agreement for 
the transfer of assistance from USDA to the participant to share in the 
costs of applying conservation practices as opposed to procurement 
contract.
    Cost-share payment means the financial assistance from NRCS to the 
participant to share the cost of installing a structural conservation 
practice.
    Cost-effectiveness refers to the least-cost practices or system that 
achieves the stated conservation objectives.
    Designated Conservationist means a NRCS employee whom the State 
Conservationist has designated as responsible for administration of EQIP 
in a specific area.
    Entity means those organizations as defined in 7 CFR 1400.3.
    EQIP plan of operations means the identification, location and 
timing of conservation practices, both structural and land management, 
that the producer proposes to implement on eligible land in order to 
address the priority natural resource concerns and optimize 
environmental benefits.
    Field office technical guide means the official local NRCS source of 
resource information and interpretations of guidelines, criteria, and 
standards for planning and applying conservation treatments and 
conservation management systems. It contains detailed information on the 
conservation of soil, water, air, plant, and animal resources applicable 
to the local area for which it is prepared.
    Incentive payment means the financial assistance from NRCS to the 
participant in an amount and at a rate determined appropriate to 
encourage the participant to perform a land management practice that 
would not otherwise be initiated without program assistance.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) that is 
Federally recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Indian land is an inclusive term describing all lands held in trust 
by the United States for individual Indians or tribes, or all lands, 
titles to which are held by individual Indians or tribes, subject to 
Federal restrictions against alienation or encumbrance, or all lands 
which are subject to the rights of use, occupancy and/or benefit of 
certain tribes. For purposes of this part, the term Indian land also 
includes land for which the title is held in fee status by Indian 
tribes, and the U.S. Government-owned land under Bureau of Indian 
Affairs jurisdiction.
    Joint operation means a general partnership, joint venture, or other 
similar business arrangement as defined in 7 CFR 1400.3.
    Land management practice means conservation practices that primarily 
use site-specific management techniques and methods to conserve, protect 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner. Land management practices 
include, but are not limited to, nutrient management, manure management, 
integrated pest management, integrated crop management, irrigation water 
management, tillage or residue management, stripcropping, contour 
farming, grazing management, and wildlife habitat management.
    Lifespan means the period of time during which a conservation 
practice is to be maintained and used for the intended purpose.
    Limited Resource Farmer or Rancher means:
    (1) A person with direct or indirect gross farm sales not more than 
$100,000 in each of the previous two years (to be increased starting in 
FY 2004 to adjust for inflation using Prices Paid by Farmer Index as 
compiled by National Agricultural Statistical Service (NASS), and
    (2) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous two years (to be determined 
annually using Commerce Department Data).

[[Page 619]]

    Liquidated damages means a sum of money stipulated in the EQIP 
contract which the participant agrees to pay NRCS if the participant 
fails to adequately complete the contract. The sum represents an 
estimate of the anticipated or actual harm caused by the failure, and 
reflects the difficulties of proof of loss and the inconvenience or non-
feasibility of otherwise obtaining an adequate remedy.
    Livestock means animals produced for food or fiber such as dairy 
cattle, beef cattle, buffalo, poultry, turkeys, swine, sheep, horses, 
goats, fish or other animals raised by aquaculture, or animals the State 
Conservationist identifies with the advice of the State Technical 
Committee.
    Livestock production means farm or ranch operations involving the 
production, growing, raising, or reproduction of livestock or livestock 
products.
    Local Work Group means representatives of local offices of FSA, the 
Cooperative State Research, Education, and Extension Service, the 
conservation district, and other Federal, State, and local government 
agencies, including Tribes, with expertise in natural resources who 
advise NRCS on decisions related to EQIP implementation.
    National measures mean measurable criteria identified by the Chief 
of NRCS, with the advice of other Federal agencies and State 
Conservationists, to help EQIP achieve the National Priorities and 
statutory requirements.
    National priorities means resource issues identified by the Chief of 
NRCS, with advice from other Federal agencies and State 
Conservationists, which will be used to determine the distribution of 
EQIP funds and guide local implementation of EQIP.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during its life span. Operation includes the administration, 
management, and performance of non-maintenance actions needed to keep 
the completed practice safe and functioning as intended. Maintenance 
includes work to prevent deterioration of the practice, repairing 
damage, or replacement of the practice to its original condition if one 
or more components fail.
    Participant means a producer who is a party to an EQIP contract.
    Person has the same meaning as set out in 7 CFR 1400.3.
    Priority natural resource concern(s) means an existing or pending 
degradation of natural resource condition(s) as identified locally by 
the State Conservationist or Designee with advice from the State 
Technical Committee and Local Work Groups.
    Producer means an individual or entity who is engaged in livestock 
or agricultural production.
    Regional Conservationist means the NRCS employee authorized to 
direct and supervise NRCS activities in a NRCS region.
    Related natural resources means natural resources that are 
associated with soil and water, including air, plants, and animals and 
the land or water on which they may occur, including grazing land, 
wetland, forest land, and wildlife habitat.
    Secretary means the Secretary of the U. S. Department of 
Agriculture.
    State Conservationist means the NRCS employee authorized to 
implement EQIP and direct and supervise NRCS activities in a State, the 
Caribbean Area, or the Pacific Basin Area.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Structural practice means a conservation practice, including 
vegetative practices, that involves establishing, constructing, or 
installing a site-specific measure to conserve, protect from 
degradation, or improve soil, water, air, or related natural resources 
in the most cost-effective manner. Examples include, but are not limited 
to, animal waste management facilities, terraces, grassed waterways, 
tailwater pits, livestock water developments, contour grass strips, 
filterstrips, critical area plantings, tree planting, wildlife habitat, 
and capping of abandoned wells.
    Technical assistance means the personnel and support resources 
needed to: (1) Conduct conservation planning; conservation practice 
survey, layout, design, installation, and certification; (2) training, 
certification, and quality assurance of professional conservationists; 
and (3) evaluation and assessment

[[Page 620]]

of the producer's operation and maintenance needs.
    Technical Service Provider means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical services 
to program participants or to NRCS.
    Wildlife means birds, fishes, reptiles, amphibians, invertebrates, 
and mammals along with all other non-domesticated animals.



Sec.  1466.4  National Priorities.

    (a) The following National priorities will be used in the 
implementation of EQIP:
    (1) Reductions of nonpoint source pollution, such as nutrients, 
sediment, pesticides, or excess salinity in impaired watersheds 
consistent with TMDLs where available as well as the reduction of 
groundwater contamination and the conservation of ground and surface 
water resources;
    (2) Reduction of emissions, such as particulate matter, nitrogen 
oxides (NOX), volatile organic compounds, and ozone 
precursors and depleters that contribute to air quality impairment 
violations of National Ambient Air Quality Standards;
    (3) Reduction in soil erosion and sedimentation from unacceptable 
levels on agricultural land; and
    (4) Promotion of at-risk species habitat conservation.
    (b) With the advice of other Federal agencies, NRCS will undertake 
periodic reviews of the National priorities and the effects of program 
delivery at the state and local level. The Chief intends to annually 
review the National priorities to adapt the program to address emerging 
resource issues. NRCS will:
    (1) Use the National priorities to guide the allocation of EQIP 
funds to the State NRCS offices,
    (2) Use the National priorities in conjunction with state and local 
priorities to assist with prioritization and selection of EQIP 
applications, and
    (3) Periodically review and update the National priorities utilizing 
input from the public and affected stakeholders to ensure that the 
program continues to address national resource needs.



Sec.  1466.5  National Allocation and Management.

    The Chief allocates EQIP funds to the State Conservationists to 
implement EQIP at the state and local level. In order to optimize the 
overall environmental benefits over the duration of the program, the 
Chief of NRCS will:
    (a) Use an EQIP fund allocation formula that reflects National 
priorities and measures and that uses available natural resource and 
resource concerns data to distribute funds to the state level. This 
procedure will be updated periodically to reflect adjustments to 
National priorities and information about resource concerns and program 
performance. The data used in the allocation formula will be updated as 
it becomes available.
    (b) Provide a performance incentive to NRCS in States that 
demonstrate a high level of program performance in implementing EQIP. 
Performance incentives shall consider factors such as strategically 
planning EQIP implementation, effectively addressing National priorities 
and measures and state and local resource concerns, the effectiveness of 
program delivery, the use of Technical Service Providers, and the number 
of contracts with Limited Resource Producers and Beginning Farmers. 
These funds will be made available annually from a reserve established 
at the National level when funds become available.
    (c) Use NRCS's accountability system to establish state level EQIP 
performance goals and treatment objectives.
    (d) Ensure that National, state and local level information 
regarding program implementation such as resource priorities, eligible 
practices, ranking processes, allocation of base and reserve funds, and 
program achievements is made available to the public.
    (e) Consult with State Conservationists and other Federal agencies 
with the appropriate expertise and information when evaluating the 
considerations described in this section.
    (f) Authorize the State Conservationist, with advice from the State 
Technical Committee and Local Work Groups, to determine how funds will 
be

[[Page 621]]

used and how the program will be administered to achieve National 
priorities and measures in each state.
    (g) Move towards assessment, evaluation and accountability based on 
actual natural resource and environmental outcomes and results.



Sec.  1466.6  State Allocation and Management.

    The State Conservationist will:
    (a) Identify State priority natural resource concerns with the 
advice of the State Technical Committee that directly contribute towards 
meeting National priorities and measures and will use NRCS's 
accountability system to establish local level EQIP performance goals 
and treatment objectives;
    (b) Identify, as appropriate and necessary, Designated 
Conservationists who are NRCS employees that are assigned the 
responsibility to administer EQIP in specific areas, and
    (c) Use the following to determine how to manage the EQIP program 
and how to allocate funds within a state:
    (1) The nature and extent of priority natural resource concerns at 
the state and local level;
    (2) The availability of human resources, incentive programs, 
education programs, and on-farm research programs from Federal, State, 
Indian Tribe, and local levels, both public and private, to assist with 
the activities related to the priority natural resource concerns;
    (3) The existence of multi-county and/or multi-state collaborative 
efforts to address regional priority natural resource concerns;
    (4) Ways and means to measure performance and success; and
    (5) The degree of difficulty that producers face in complying with 
environmental laws.



Sec.  1466.7  Outreach Activities.

    NRCS will establish program outreach activities at the National, 
State, and local levels in order to ensure that producers whose land has 
environmental problems and priority natural resource concerns are aware, 
informed, and know that they may be eligible to apply for program 
assistance. Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to 
limited resource producers, small-scale producers, Indian Tribes, Alaska 
Natives, and Pacific Islanders.



Sec.  1466.8  Program requirements.

    (a) Program participation is voluntary. The applicant develops an 
EQIP plan of perations for the agricultural land to be treated that 
serves as the basis for the EQIP contract. NRCS provides participants 
with technical assistance, cost-share and/or incentive payments to apply 
needed conservation practices and land-use adjustments.
    (b) To be eligible to participate in EQIP, an applicant must:
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found at 7 CFR part 12.
    (2) Have an interest in the farming operation as defined in 7 CFR 
1400.3.
    (3) Have control of the land for the life of the proposed contract 
period.
    (i) An exception may be made by the Chief of NRCS in the case of 
land allotted by the Bureau of Indian Affairs (BIA), Tribal land, or 
other instances in which the Chief determines that there is sufficient 
assurance of control;
    (ii) If the applicant is a tenant of the land involved in 
agricultural production, the applicant shall provide the Chief of NRCS 
with the written concurrence of the landowner in order to apply a 
structural conservation practice.
    (4) Submit an EQIP plan of operations that is acceptable to NRCS as 
being in compliance with the terms and conditions of the program; and
    (5) Supply information, as required by NRCS, to determine 
eligibility for the program; including but not limited to information to 
verify the applicant's status as a limited resource farmer or rancher or 
beginning farmer or rancher and eligibility as per Adjusted Gross 
Income, 7 CFR 1400 subpart G.
    (c) Land used as cropland, rangeland, pasture, private non-
industrial forest land, and other land on which crops or livestock are 
produced, including agricultural land that NRCS determines poses a 
threat to soil, water, air, or related natural resources, may be 
eligible for enrollment in EQIP. However, land may be considered for 
enrollment

[[Page 622]]

in EQIP only if NRCS determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is under private control for the contract period and is 
included in the participant's operating unit; and
    (ii) The conservation practices will contribute to an improvement in 
the identified natural resource concern; or
    (3) Tribal, allotted, or Indian trust land.
    (d) Sixty percent of available EQIP financial assistance will be 
targeted to conservation practices related to livestock production, 
including practices on grazing lands and other lands directly 
attributable to livestock production, as measured at the National level.



Sec.  1466.9  EQIP plan of operations.

    (a) All conservation practices in the EQIP plan of operations must 
be carried out in accordance with the applicable NRCS field office 
technical guide.
    (b) The EQIP plan of operations must include:
    (1) A description of the participant's specific conservation and 
environmental objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative goals 
for achieving the participant's conservation and environmental 
objectives;
    (3) A description of one or more conservation practices in the 
conservation management system to be implemented to achieve the 
conservation and environmental objectives;
    (4) A description of the schedule for implementing the conservation 
practices, including timing and sequence; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan in achieving the environmental objectives.
    (c) If an EQIP plan of operations includes an animal waste storage 
or treatment facility, the participant must provide for the development 
and implementation of a comprehensive nutrient management plan.
    (d) Participants are responsible for implementing the EQIP plan of 
operations.
    (e) A participant may receive assistance to implement an EQIP plan 
of operations for water conservation with funds authorized by section 
1240I of the 1985 Act, 16 U.S.C. 3839aa-9, only if the assistance will 
facilitate a net savings in ground or surface water resources in the 
agricultural operation of the producer.



Sec.  1466.10  Conservation practices.

    (a) NRCS will determine which structural and land management 
practices are eligible for program payments. A list of eligible 
practices will be available to the public.
    (b) Cost-share and incentive payments will not be made to a 
participant for a conservation practice that the applicant has applied 
prior to application for the program.
    (c) Cost-share and incentive payments will not be made to a 
participant who has implemented or initiated the implementation of a 
conservation practice prior to approval of the contract unless a waiver 
was granted by the State Conservationist or Designated Conservationist 
prior to the installation of the practice.
    (d) A participant will be eligible for cost-share or incentive 
payments for irrigation related structural and land management practices 
only on land that has been irrigated for two of the last five years 
prior to application for assistance.
    (e) Where new technologies or conservation practices that provide a 
high potential for optimizing environmental benefits have been 
developed, NRCS may approve interim conservation practice standards and 
financial assistance for pilot work to evaluate and assess the 
performance, efficacy, and effectiveness of the technology or 
conservation practices.



Sec.  1466.11  Technical and other assistance provided by qualified 
personnel not affiliated with USDA.

    (a) NRCS may use the services of qualified Technical Service 
Providers in performing its responsibilities for technical assistance.
    (b) Participants may use technical and other assistance from 
qualified personnel of other Federal, State, and local agencies, Indian 
Tribes, or individuals who are certified as Technical Service Providers 
by NRCS.

[[Page 623]]

    (c) Technical and other assistance provided by qualified personnel 
not affiliated with USDA may include, but is not limited to; 
conservation planning; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and training, certification, and quality assurance for 
professional conservationists. Payments to certified Technical Service 
Providers will be made only for an application that has been approved 
for payments.
    (d) NRCS retains approval authority over certification of work done 
by non-NRCS personnel for the purpose of approving EQIP payments.



                    Subpart B--Contracts and Payments



Sec.  1466.20  Application for contracts and selecting offers from 
producers.

    (a) Any producer who has eligible land may submit an application for 
participation in the EQIP. Applications are accepted throughout the 
year. Producers who are members of a joint operation may file a single 
application for the joint operation.
    (b) The State Conservationist or Designated Conservationist with 
advice from the State Technical Committee or Local Work Groups will 
develop a ranking process to prioritize applications for funding which 
address priority natural resource concerns. The State Conservationist or 
Designated Conservationist will periodically select for funding the 
highest ranked applications based on applicant eligibility and the NRCS 
ranking process. The State Conservationist or Designated Conservationist 
will rank all applications according to the following factors:
    (1) The degree of cost-effectiveness of the proposed conservation 
practices,
    (2) The magnitude of the environmental benefits resulting from the 
treatment of National priorities and the priority natural resource 
concerns reflecting the level of performance of a conservation practice,
    (3) Treatment of multiple resource concerns,
    (4) Use of conservation practices that provide environmental 
enhancements for a longer period of time,
    (5) Compliance with Federal, state, local or tribal regulatory 
requirements concerning soil, water and air quality; wildlife habitat; 
and ground and surface water conservation, and
    (6) Other locally defined pertinent factors, such as the location of 
the conservation practice, the extent of natural resource degradation, 
and the degree of cooperation by local producers to achieve 
environmental improvements.
    (c) If the State Conservationist determines that the environmental 
values of two or more applications for cost-share payments or incentive 
payments are comparable, the State Conservationist will not assign a 
higher priority to the application solely because it would present the 
least cost to the program.
    (d) The ranking will not give preferential treatment to applications 
based on size of the operation.
    (e) The ranking will determine which applications will be awarded 
contracts. The approving authority for EQIP contracts will be the State 
Conservationist or designee except the approving authority for any EQIP 
contract greater than $100,000 is the NRCS Regional Conservationist.
    (f) The State Conservationist will make all information regarding 
priority resources concerns, how the EQIP program is implemented in the 
state, and the cost-list of eligible practices available to the public.



Sec.  1466.21  Contract requirements.

    (a) In order for a participant to receive cost-share or incentive 
payments, the participant must enter into a contract agreeing to 
implement one or more conservation practices. Cost-share payments and 
incentive payments as well as reimbursement for Technical Service 
Provider technical assistance may be included in a contract.
    (b) An EQIP contract will:
    (1) Identify all conservation practices to be implemented, the 
timing of practice installation, the operation and maintenance 
requirements for the practices, and applicable cost-shares and incentive 
payments allocated to the practices under the contract;

[[Page 624]]

    (2) Be for a minimum duration of one year after completion of the 
last practice, but not more than 10 years;
    (3) Incorporate all provisions as required by law or statute, 
including requirements that the participant will:
    (i) Not implement any practices on the farm or ranch unit under the 
contract, or agricultural operation of the producer for ground and 
surface water conservation contracts, that would tend to defeat the 
purposes of the program;
    (ii) Refund any program payments received with interest, and forfeit 
any future payments under the program, on the violation of a term or 
condition of the contract, consistent with the provisions of Sec.  
1466.26;
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, consistent with the provisions of Sec.  
1466.25;
    (iv) Implement a comprehensive nutrient management plan when the 
EQIP contract includes a waste storage or waste treatment facility; and
    (v) Supply information as may be required by NRCS to determine 
compliance with the contract and requirements of the program.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec.  1466.22; and
    (5) Specify any other provision determined necessary or appropriate 
by NRCS.
    (c) The participant must start at least one financially assisted 
practice within the first 12 months of signing a contract. If a 
participant, for reasons beyond their control, is unable to start a 
practice within the first year of the contract, they can request a 
waiver from the State Conservationist.
    (d) Each contract will be limited to no more than $450,000.



Sec.  1466.22  Conservation practice operation and maintenance.

    The contract will incorporate the operation and maintenance of 
conservation practices applied under the contract. The participant must 
operate and maintain each conservation practice installed under the 
contract for its intended purpose for the life span of the conservation 
practice as determined by NRCS. Conservation practices installed before 
the execution of a contract, but needed in the contract to obtain the 
environmental benefits agreed upon must be operated and maintained as 
specified in the contract. NRCS may periodically inspect a conservation 
practice during the lifespan of the practice as specified in the 
contract to ensure that operation and maintenance are occurring. When 
NRCS finds that a participant is not operating and maintaining practices 
in an appropriate manner, NRCS will request a refund of cost-share or 
incentive payments made for that practice under the contract.



Sec.  1466.23  Cost-share rates and incentive payment levels.

    (a) Determining Cost-share payment rates.
    (1) The maximum cost-share payments made to a participant under the 
program will not be more than 75 percent of the actual cost of a 
structural practice, as determined by the State Conservationist or 
Designated Conservationist, except that for a Limited Resource Farmer or 
Rancher or Beginning Farmer and Rancher cost-share payments may be up to 
90 percent, as determined by the State Conservationist or Designated 
Conservationist.
    (2) The cost-share payments to a participant under the program will 
be reduced proportionately below the rate established by the State 
Conservationist or Designated Conservationist, or the cost-share limit 
as set in paragraph (c) of this section, to the extent that total 
financial contributions for a structural practice from all public and 
private sources exceed 100 percent of the actual cost of the practice.
    (b) Determining Incentive Payment levels. NRCS may provide incentive 
payments to participants for performing a land management practice or to 
develop a comprehensive nutrient management plan in an amount and at a 
rate necessary to encourage a participant to perform the practice that

[[Page 625]]

would not otherwise be initiated without government assistance. The 
State Conservationist or Designated Conservationist, with the advice of 
the State Technical Committee or Local Work Groups, may consider 
establishing limits on the extent of land management practices that may 
be included in a contract.
    (c) Cost-share rates and incentive payment levels for conservation 
practices will be established by the State Conservationist or Designated 
Conservationist with advice from the State Technical Committee and Local 
Work Groups. The State Conservationist or Designated Conservationist 
will develop a list of eligible conservation practices with varied cost-
share rates and incentive payment levels that considers:
    (1) The conservation practice cost-effectiveness and innovation,
    (2) The degree of treatment of priority natural resource concerns,
    (3) The number of resource concerns the practice will address,
    (4) The longevity of the practice's environmental benefits, and
    (5) Other pertinent local considerations.
    (d) Practice cost lists that include any structural practice with 
greater than 50 percent cost share rate are to be approved by the State 
Conservationist with concurrence of the Regional Conservationist.



Sec.  1466.24  EQIP payments.

    (a) Except as provided in paragraph (b) of this section, the total 
amount of cost-share and incentive payments paid to an individual or 
entity under this part may not exceed an aggregate of $450,000, directly 
or indirectly, for all contracts entered into during FYs 2002 through 
2007.
    (b) To determine eligibility for payments, NRCS will use the 
following criteria:
    (1) The provisions in 7 CFR part 1400, Payment Limitation and 
Payment Eligibility, subparts A and G.
    (2) States, political subdivisions, and entities thereof will not be 
considered to be individuals or entities eligible for payment.
    (3) To be eligible to participate in EQIP, all individuals applying, 
either alone or as part of a joint operation, must provide a social 
security number. Where applicable; American Indians, Alaska Natives, and 
Pacific Islanders may use another unique identification number for each 
individual eligible for payment.
    (4) To be eligible to participate in EQIP, any entity, as identified 
in 7 CFR part 1400, must provide a list of all members of the entity and 
embedded entities along with the members' social security numbers and 
percentage interest in the entity.
    (5) With regard to contracts on Indian Land, payments exceeding the 
payment limitation may be made to the Tribal venture if an official of 
BIA or a Tribal official certifies in writing that no one individual 
directly or indirectly will receive more than the limitation. The Tribal 
entity must also provide, annually, listing of individuals and payments 
made, by social security number or other unique identification number, 
during the previous year for calculation of overall payment limitations. 
The Tribal entity must also produce, at the request of NRCS, proof of 
payments made to the individuals that incurred the costs for 
installation of the practices.
    (6) Any cooperative association of producers that markets 
commodities for producers will not be considered to be a person eligible 
for payment.
    (7) Eligibility for payments in accordance with 7 CFR part 1400, 
subpart G, average adjusted gross income limitation, will be determined 
at the time of contract approval.
    (8) Eligibility for higher cost-share payments in accordance with 
paragraph (a) of this section will be determined at the time of approval 
of the contract.
    (9) Any participant that utilizes a unique identification number as 
an alternative to a social security number will utilize only that 
identifier for any and all other EQIP contracts that the participant is 
party to. Violators will be considered to have provided fraudulent 
representation and be subject to full penalties of section 1466.35.
    (10) A participant will not be eligible for cost-share or incentive 
payments for conservation practices on eligible land if the participant 
receives cost-

[[Page 626]]

share payments or other benefits for the same practice on same land 
under any other conservation program administered by USDA.
    (11) Before NRCS will approve and issue any cost-share or incentive 
payment, the participant must certify that the conservation practice has 
been completed in accordance with the contract, and NRCS or other 
approved Technical Service Provider certifies that the practice has been 
carried out in accordance with the conservation practice standards of 
the applicable NRCS field office technical guide.
    (12) The provisions of 7 CFR 1412.505 except that refunds will be 
determined by the State Conservationist.



Sec.  1466.25  Contract modifications and transfers of land.

    (a) The participant and NRCS may modify a contract if the 
participant and NRCS agree to the contract modification and the EQIP 
plan of operations is revised in accordance with NRCS requirements and 
is approved by the Designated Conservationist.
    (b) The participant and NRCS may agree to transfer a contract to 
another producer. The transferee must be determined by NRCS to be 
eligible to participate in EQIP and must assume full responsibility 
under the contract, including operation and maintenance of those 
conservation practices already installed and to be installed as a 
condition of the contract.
    (c) NRCS may require a participant to refund all or a portion of any 
financial assistance earned under EQIP if the participant sells or loses 
control of the land under an EQIP contract and the new owner or 
controller is not eligible to participate in the program or refuses to 
assume responsibility under the contract.



Sec.  1466.26  Contract violations and termination.

    (a)(1) If NRCS determines that a participant is in violation of the 
terms of a contract or documents incorporated by reference into the 
contract, NRCS shall give the participant a reasonable time, as 
determined by NRCS, to correct the violation and comply with the terms 
of the contract and attachments thereto. If a participant continues in 
violation, NRCS may terminate the EQIP contract.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a contract termination shall be effective immediately upon a 
determination by NRCS that the participant has submitted false 
information or filed a false claim, or engaged in any act, scheme, or 
device for which a finding of ineligibility for payments is permitted 
under the provisions of Sec.  1466.35, or in a case in which the actions 
of the party involved are deemed to be sufficiently purposeful or 
negligent to warrant a termination without delay.
    (b)(1) If NRCS terminates a contract, the participant will forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received, plus interest determined in accordance 
with 7 CFR part 1403. NRCS may exercise the option of requiring only 
partial refund of the payments received if a previously installed 
conservation practice can function independently, is not adversely 
affected by the violation or the absence of other conservation practices 
that would have been installed under the contract, and the participant 
agrees to operate and maintain the installed conservation practice for 
the lifespan of the practice.
    (2) If NRCS terminates a contract due to breach of contract or the 
participant voluntarily terminates the contract, the participant will 
forfeit all rights for further payments under the contract and shall pay 
such liquidated damages as are prescribed in the contract. NRCS will 
have the option to waive the liquidated damages, depending upon the 
circumstances of the case.
    (3) When making contract termination decisions, NRCS may reduce the 
amount of money owed by the participant by a proportion that reflects 
the good faith effort of the participant to comply with the contract or 
the hardships beyond the participant's control that have prevented 
compliance with the contract.
    (4) The participant may voluntarily terminate a contract if NRCS 
determines that termination is in the public interest.

[[Page 627]]

    (5) In carrying out its role in this section, NRCS may consult with 
the local conservation district.



Sec.  1466.27  Conservation Innovation Grants. [Reserved]



                    Subpart C--General Administration



Sec.  1466.30  Appeals.

    A participant may obtain administrative review of an adverse 
decision under EQIP in accordance with 7 CFR parts 11 and 614. 
Determination in matters of general applicability, such as payment 
rates, payment limits, and cost-share percentages, the designation of 
identified priority natural resource concerns, and eligible conservation 
practices are not subject to appeal.



Sec.  1466.31  Compliance with regulatory measures.

    Participants who carry out conservation practices shall be 
responsible for obtaining the authorities, rights, easements, or other 
approvals necessary for the implementation, operation, and maintenance 
of the conservation practices in keeping with applicable laws and 
regulations. Participants shall be responsible for compliance with all 
laws and for all effects or actions resulting from the participant's 
performance under the contract.



Sec.  1466.32  Access to operating unit.

    Any authorized NRCS representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical 
assistance, inspect any work undertaken under the contract, and collect 
information necessary to evaluate the performance of conservation 
practices in the contract. The NRCS representative shall make a 
reasonable effort to contact the participant prior to the exercise of 
this provision.



Sec.  1466.33  Performance based upon advice or action of representatives 
of NRCS.

    If a participant relied upon the advice or action of any authorized 
representative of NRCS and did not know, or have reason to know, that 
the action or advice was improper or erroneous, NRCS may accept the 
advice or action as meeting the requirements of the program and may 
grant relief, to the extent it is deemed desirable by NRCS, to provide a 
fair and equitable treatment because of the good-faith reliance on the 
part of the participant. The financial or technical liability for any 
action by a participant that was taken based on the advice of a NRCS 
certified non-USDA Technical Service Provider will remain with the 
certified Technical Service Provider and will not be assumed by NRCS 
when NRCS authorizes payment.



Sec.  1466.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at 7 CFR part 1403 shall be 
applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 7 
CFR part 1404.



Sec.  1466.35  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented any 
fact affecting a program determination made in accordance with this part 
shall not be entitled to contract payments and must refund to NRCS all 
payments, plus interest determined in accordance with 7 CFR part 1403.
    (b) A producer who is determined to have knowingly:

[[Page 628]]

    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination, shall 
refund to NRCS all payments, plus interest determined in accordance with 
7 CFR part 1403, received by such producer with respect to all 
contracts. The producer's interest in all contracts shall be terminated.



PART 1467--WETLANDS RESERVE PROGRAM--Table of Contents




Sec.
1467.1 Applicability.
1467.2 Administration.
1467.3 Definitions.
1467.4 Program requirements.
1467.5 Application procedures.
1467.6 Establishing priority for enrollment of properties in WRP.
1467.7 Enrollment of easements.
1467.8 Compensation for easements.
1467.9 Cost-share payments.
1467.10 Easement participation requirements.
1467.11 The WRPO development.
1467.12 Modifications.
1467.13 Transfer of land.
1467.14 Violations and remedies.
1467.15 Payments not subject to claims.
1467.16 Assignments.
1467.17 Appeals.
1467.18 Scheme and device.

    Authority: 16 U.S.C. 3837 et seq.

    Source: 60 FR 28514, June 1, 1995, unless otherwise noted. 
Redesignated at 61 FR 42141, Aug. 14, 1996.



Sec.  1467.1  Applicability.

    (a) The regulations in this part set forth the policies, procedures, 
and requirements for the Wetlands Reserve Program (WRP) as administered 
by the Natural Resources Conservation Service (Department) for program 
implementation and processing outstanding and new applications for 
enrollment during calendar year 1995 and thereafter.
    (b) The Chief, Department, may implement WRP in any of the 50 
States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, 
the Virgin Islands of the United States, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and the Trust Territories 
of the Pacific Islands.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



Sec.  1467.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief.
    (b) The Chief is authorized to modify or waive a provision of this 
part if the Chief deems the application of that provision to a 
particular limited situation to be inappropriate and inconsistent with 
the environmental and cost-efficiency goals of the WRP. This authority 
cannot be further delegated. The Chief may not modify or waive any 
provision of this part which is required by applicable law.
    (c) As determined by the Chief and the Administrator of the Farm 
Service Agency, the Department and the Farm Service Agency will seek 
agreement in establishing policies, priorities, and guidelines related 
to the implementation of this part.
    (d) The State Conservationist will consult with the State Technical 
Committee on the development of the rates of compensation for an 
easement, a priority ranking process, and related policy matters.
    (e) The Department may delegate at any time easement management, 
monitoring, and enforcement responsibilities to other Federal or State 
agencies.
    (f) The Department may enter into cooperative agreements with 
Federal or State agencies, conservation districts, and private 
conservation organizations to assist the Department with educational 
efforts, easement management and monitoring, outreach efforts, and 
program implementation assistance.
    (g) The Department shall consult with the U.S. Fish and Wildlife 
Service in the implementation of the program and in establishing program 
policies. The Department may consult with the Forest Service, other 
Federal or State agencies, conservation districts or other organizations 
in program administration. No determination by the U.S. Fish and 
Wildlife Service, the Forest

[[Page 629]]

Service, Federal or State agency, conservation district, or other 
organization shall compel the Department to take any action with the 
Department determines will not serve the purposes of the program 
established by this part.
    (h) The Chief may allocate funds for such purposes related to: 
special pilot programs for wetland management and monitoring; 
acquisition of wetland easements with emergency funding; cooperative 
agreements with other Federal or State agencies for program 
implementation; coordination of easement enrollment across State 
boundaries; coordination of the development of conservation plans; or, 
for other goals of the WRP found in this part. The Department may 
designate areas as conservation priority areas where environmental 
concerns are especially pronounced and to assist landowners in meeting 
nonpoint source pollution requirements and other conservation needs.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
Aug. 14, 1996]



Sec.  1467.3  Definitions.

    The following definitions shall be applicable to this part:
    Agricultural commodity means any crop planted and produced by annual 
tilling of the soil or on an annual basis by one trip planters, or 
alfalfa and other multi-year grasses and legumes in rotation as approved 
by the Secretary. Land shall be considered planted to an agricultural 
commodity during a crop year if, as determined by the Department, an 
action of the Secretary prevented land from being planted to the 
commodity during the crop year.
    Chief means the Chief of the Natural Resources Conservation Service 
or the person delegated authority to act for the Chief.
    Commenced conversion wetland means a wetland or converted wetland 
for which the Farm Service Agency has determined that the wetland 
manipulation was contracted for, started, or for which financial 
obligation was incurred before December 23, 1985.
    Conservation District is a subdivision of a State government 
organized pursuant to applicable State law to promote and undertake 
actions for the conservation of soil, water, and other natural 
resources.
    Conservation Reserve Program (CRP) means the program administered by 
the Commodity Credit Corporation pursuant to 16 U.S.C. 3831-3836.
    Contract means the document that specifies the obligations and 
rights of any person who has been accepted for participation in the 
program.
    Converted wetland means a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including the removal of 
woody vegetation, or any activity that results in impairing or reducing 
the flow, circulation, or reach of water) for the purpose, or that has 
the effect, of making the production of an agricultural commodity 
possible if such production would not have been possible but for such 
action.
    Cost-share payment means the payment made by the Department to 
achieve the restoration of the wetland functions and values of the 
easement area in accordance with the WRPO.
    Department means the United States Department of Agriculture (USDA) 
and includes the Commodity Credit Corporation or any USDA agency or 
instrumentality delegated program responsibility by the Secretary of 
Agriculture.
    Easement means a reserved interest easement which is an interest in 
land defined and delineated in a deed whereby the landowner conveys all 
rights, title, and interests in a property to the grantee, but the 
landowner retains those rights, title, and interests in the property 
which are specifically reserved to the landowner in the easement deed.
    Easement area means the land encumbered by an easement.
    Easement payment means the consideration paid to a landowner for an 
easement conveyed to the United States under the WRP.
    Farm Service Agency (FSA) is an agency of the United States 
Department of Agriculture.
    Forest Service is an agency of the United States Department of 
Agriculture.

[[Page 630]]

    Landowner means a person or persons having legal ownership of 
farmland, including those who may be buying farmland under a purchase 
agreement. Landowner may include all forms of collective ownership 
including joint tenants, tenants in common, and life tenants and 
remaindermen in a farm property.
    Lands substantially altered by flooding means areas where flooding 
has created wetland hydrologic conditions which, with a high degree of 
certainty, will develop wetland soil and vegetation characteristics over 
time.
    Natural Resources Conservation Service (Department) is an agency of 
the United States Department of Agriculture, formerly called the Soil 
Conservation Service.
    Permanent easement means an easement that lasts in perpetuity.
    Person means an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable, a State, a political subdivision of a State, or any 
agency thereof.
    Practice means a restoration measure necessary or desirable to 
accomplish the desired program objectives.
    Riparian areas means areas of land that occur along streams, 
channels, rivers, and other water bodies. These areas are normally 
distinctly different from the surrounding lands because of unique soil 
and vegetation characteristics, may be identified by distinctive 
vegatative communities which are reflective of soil conditions normally 
wetter than adjacent soils, and generally provide a corridor for the 
movement of wildlife.
    State Technical Committee means a committee established by the 
Secretary of the U.S. Department of Agriculture in a State pursuant to 
16 U.S.C. 3861. For the purposes of the WRP, the State Conservationist 
will be the chairperson of the State Technical Committee.
    U.S. Fish and Wildlife Service is an agency of the United States 
Department of the Interior.
    Wetland means land that:
    (1) Has a predominance of hydric soils;
    (2) Is inundated or saturated by surface or groundwater at a 
frequency and duration sufficient to support a prevalence of hydrophytic 
vegetation typically adapted for life in saturated soil conditions; and
    (3) Does support a prevalence of such vegetation under normal 
circumstances. For purposes of WRP, wetland shall also refer to adjacent 
lands that contribute to wetland functions and values.
    Wetland functions and values means the hydrological and biological 
characteristics of wetlands and the socioeconomic value placed upon 
these characteristics, including:
    (1) Habitat for migratory birds and other wildlife, in particular at 
risk species;
    (2) Protection and improvement of water quality;
    (3) Attenuation of water flows due to flood;
    (4) The recharge of ground water;
    (5) Protection and enhancement of open space and aesthetic quality;
    (6) Protection of flora and fauna which contributes to the Nation's 
natural heritage; and
    (7) Contribution to educational and scientific scholarship.
    Wetland restoration means the rehabilitation of degraded or lost 
habitat in a manner such that:
    (1) The original vegetation community and hydrology are, to the 
extent practical, re-established; or
    (2) A community different from what likely existed prior to 
degradation of the site is established. The hydrology and native self-
sustaining vegetation being established will substantially replace 
original habitat functions and values but does not involve more than 30 
percent of the wetland restoration area.
    WRP means the Wetlands Reserve Program.
    WRPO means the Wetlands Reserve Plan of Operations.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, Aug. 14, 1996]



Sec.  1467.4  Program requirements.

    (a) General. Under the WRP, the Department may purchase conservation

[[Page 631]]

easements from, or enter into restoration cost-share agreements with, 
eligible landowners who voluntarily cooperate in the restoration and 
protection of wetlands and associated lands. To participate in WRP, a 
landowner will agree to the implementation of a Wetlands Reserve Plan of 
Operations (WRPO), the effect of which is to restore, protect, enhance, 
maintain, and manage the hydrologic conditions of inundation or 
saturation of the soil, native vegetation, and natural topography of 
eligible lands. The Department may provide cost-share assistance for the 
activities that promote the restoration, protection, enhancement, 
maintenance, and management of wetland functions and values. Specific 
restoration, protection, enhancement, maintenance, and management 
actions may be undertaken by the landowner or other Department designee.
    (b) Acreage limitations. (1) Except for areas devoted to windbreaks 
or shelterbelts after November 28, 1990, no more than 25 percent of the 
total cropland in any county, as determined by the Farm Service Agency, 
may be enrolled in the CRP and the WRP, and no more than 10 percent of 
the total cropland in the county may be subject to an easement acquired 
under the CRP and the WRP.
    (2) The Department and the Farm Service Agency shall concur before a 
waiver of either the 25 percent limit or the 10 percent limit of this 
subsection can be approved for an easement proposed for enrollment in 
the WRP. Such a waiver will only be approved if it will not adversely 
affect the local economy, and operators in the county are having 
difficulties complying with the conservation plans implemented under 16 
U.S.C. 3812.
    (c) Landowner eligibility. The Department may determine that a 
person is not eligible to participate in the WRP or receive any WRP 
payment because the person did not comply with the provisions of 7 CFR 
part 12. To be eligible to enroll an easement in the WRP, a person must:
    (1) Be the landowner of eligible land for which enrollment is 
sought;
    (2) Have been the landowner of such land for the 12 months prior to 
the time the intention to participate is declared unless it is 
determined by the State Conservationist that the land was acquired by 
will or success as a result of the death of the previous landowner, the 
ownership change occurred due to foreclosure on the land and the owner 
of the land immediately before the foreclosure exercises a right of 
redemption from the mortgage holder in accordance with State law, or 
that adequate assurances have been presented to the State 
Conservationist that the new landowner of such land did not acquire such 
land for the purpose of placing it in the WRP; and
    (3) Agree to provide such information to the Department as the 
agency deems necessary or desirable to assist in its determination of 
eligibility for program benefits and for other program implementation 
purposes.
    (d) Eligible land. (1) The Department shall determine whether land 
is eligible for enrollment and whether, once found eligible, the lands 
may be included in the program based on the likelihood of successful 
restoration of wetland functions and values when considering the cost of 
acquiring the easement and restoration, protection, enhancement, 
maintenance, and management costs.
    (2) Land shall only be considered eligible for enrollment in the WRP 
if the Department determines, in consultation with the U.S. Fish and 
Wildlife Service, that:
    (i) Such land maximizes wildlife benefits and wetland values and 
functions;
    (ii) The likelihood of the successful restoration of such land and 
the resultant wetland values merit inclusion of such land in the 
program, taking into consideration the cost of such restoration; and
    (iii) Such land meets the criteria of paragraph (d)(3) of this 
section.
    (3) The following land may be eligible for enrollment in the WRP, 
which land may be identified by the Department pursuant to regulations 
and implementing policies pertaining to wetland conservation found at 7 
CFR part 12, as:

[[Page 632]]

    (i) Wetlands farmed under natural conditions, farmed wetlands, prior 
converted cropland, commenced conversion wetlands, farmed wetland 
pastures, and lands substantially altered by flooding so as to develop 
wetland functions and values;
    (ii) Former or degraded wetlands that occur on lands that have been 
used or are currently being used for the production of food and fiber, 
including rangeland and forest production lands, where the hydrology has 
been significantly degraded or modified and will be substantially 
restored;
    (iii) Riparian areas along streams or other waterways that link or, 
after restoring the riparian area, will link wetlands which are 
protected by an easement or other device or circumstance that achieves 
the same objectives as an easement:
    (iv) Land adjacent to the restored wetland which would contribute 
significantly to wetland functions and values including buffer areas, 
wetland creations, and non-cropped natural wetlands, but not more than 
the State Conservationist, in consultation with the State Technical 
Committee, determines is necessary for such contribution;
    (v) Other wetlands that would not otherwise be eligible but would 
significantly add to the wetland functions and values; and
    (vi) Wetlands that have been restored under a private, State, or 
Federal restoration program with an easement or deed restriction with a 
duration of less than 30 years.
    (4) To be enrolled in the program, eligible land must be configured 
in a size and with boundaries that allow for the efficient management of 
the area for easement purposes and otherwise promote and enhance program 
objectives.
    (e) Ineligible land. The following land is not eligible for 
enrollment in the WRP:
    (1) Converted wetlands if the conversion was commended after 
December 23, 1985;
    (2) Land that contains timber stands established under a CRP 
contract or pasture land established to trees under a CRP contract.
    (3) Lands owned by an agency of the United States;
    (4) Land subject to an easement or deed restriction with a duration 
of 30 years or more prohibiting the production of agricultural 
commodities; and,
    (5) Lands where implementation of restoration practices would be 
futile due to on-site or off-site conditions.
    (f) Enrollment of CRP lands. Land subject to an existing CRP 
contract may be enrolled into the WRP only if the land and landowner 
meet the requirements of this part, and the enrollment is requested by 
the landowner and agreed to by the Department. To enroll in WRP, the CRP 
contract for the property shall be terminated or otherwise modified 
subject to such terms and conditions as are mutually agreed upon by the 
Farm Service Agency and the landowner.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, Aug. 14, 1996; 67 FR 39255, June 7, 2002]



Sec.  1467.5  Application procedures.

    (a) Application for participation. To apply for enrollment, a 
landowner must submit an Application for Participation in the WRP. The 
application must be submitted during an announced period for such 
submissions.
    (b) Preliminary agency actions. By filing an Application for 
Participation, the landowner consents to a Department representative 
entering upon the land for purposes of assessing the wetland functions 
and values, and for other activities such as the development of the 
preliminary WRPO that are necessary or desirable for the Department to 
make offers of enrollment. The landowner is entitled to accompany a 
Department representative on any site visits.
    (c) Voluntary reduction in compensation. In order to enhance the 
probability of enrollment in WRP, a landowner may voluntarily offer to 
accept a lesser payment than is being offered by the Department.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



Sec.  1467.6  Establishing priority for enrollment of properties in WRP.

    (a) The Department shall place priority on the enrollment of those 
lands that will maximize wildlife values (especially related to 
enhancing habitat

[[Page 633]]

for migratory birds and other wildlife); have the least likelihood of 
re-conversion and loss of these wildlife values at the end of the WRP 
enrollment period; and that involve State, local, or other partnership 
matching funds and participation.
    (b) Ranking considerations. Based on applications for participation, 
the State Conservationist, in consultation with the U.S. Fish and 
Wildlife Service and the State Technical Committee, will rank properties 
based on: estimated costs of restoration and easement acquisition, 
availability of matching funds, significance of wetland functions and 
values, estimated success of restoration measures, and the duration of a 
proposed easement with permanent easements being given priority over 
non-permanent easements.
    (c) The Department may place higher priority on certain geographic 
regions of the State where restoration of wetlands may better achieve 
Department State and regional goals and objectives.
    (d) Notwithstanding any limitation of this part, the State 
Conservationist may enroll eligible lands at any time in order to 
encompass total wetland areas subject to multiple ownership or otherwise 
to achieve program objectives. Similarly, the State Conservationist may, 
at any time, exclude otherwise eligible lands if the participation of 
the adjacent landowners is essential to the successful restoration of 
the wetlands and those adjacent landowners are unwilling to participate.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.7  Enrollment of easements.

    (a) Offers of enrollment. Based on the priority ranking, the 
Department will notify an affected landowner of tentative acceptance 
into the program for which the landowner has 15 calendar days to sign a 
letter of intent to continue. Department will select lands to maximize 
environmental benefits per expenditure of Federal funds.
    (b) Effect of letter of intent to continue (enrollment). An offer of 
tentative acceptance into the program does not bind the Department or 
the United States to acquire an easement, nor does it bind the landowner 
to convey an easement or agree to WRPO activities. However, receipt of 
an executed letter of intent to continue will authorize the Department 
to proceed.
    (c) Acceptance of offer of enrollment. A contract will be presented 
by the Department to the landowner, which will describe the easement 
area; the easement terms and conditions; and other terms and conditions 
for participation that may be required by the Department. A landowner 
accepts enrollment in the WRP by signing contract.
    (d) Effect of the acceptance of the offer. After the contract is 
executed by Department and the landowner, the Department will proceed 
with various easement acquisition activities, which may include 
conducting a survey of the easement area, securing necessary 
subordination agreements, procuring title insurance, and conducting 
other activities necessary to record the easement or implement the WRPO.
    (e) Withdrawal of offers. Prior to execution by the United States 
and the landowner of the contract, the Department may withdraw its offer 
anytime due to availability of funds, inability to clear title, or other 
reasons. The offer to the landowner shall be void if not executed by the 
landowner within the time specified. The date of the offer shall be the 
date of notification to the landowner of tentative acceptance.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.8  Compensation for easements.

    (a) Establishment of rates. (1) The State Conservationist, in 
consultation with the State Technical Committee, shall determine 
easement payment rates to be applied to specific geographic areas within 
the State or to individual easement areas.
    (2) In order to provide for better uniformity among States, the 
Regional Conservationist and Chief may review and adjust, as 
appropriate, State or other geographically based easement payment rates.
    (b) Determination of easement payment rates. (1) Easement payment 
rates will be based upon analyses of the values of the lands when used 
for agricultural purposes. The landowner will receive the lesser of the 
following:

[[Page 634]]

    (i) the geographic area rate;
    (ii) the value based on a market appraisal analysis/assessment; or
    (iii) the landowner offer.
    (2) Each State Conservationist will determine the easement payment 
rates using the best information which is readily available in that 
State for assessing the values of land for agricultural purposes. Such 
information may include: soil types, type(s) of crops capable of being 
grown, production history, location, real estate market values, 
appraisals and market analyses, and tax rates and assessments. The State 
Conservationist may consult with other Federal agencies, real estate 
market experts, appraisers, local tax authorities, and other entities or 
persons which may provide information on productivity and market 
conditions.
    (3) Easement payments for non-permanent easements will be less than 
those for permanent easements because the quality and duration of the 
ecological benefits derived from a non-permanent easement are 
significantly less than those derived from a permanent easement on the 
same land. Additionally, the economic value of the easement interests 
being acquired is less for a non-permanent easement than that associated 
with a permanent easement. An easement payment for the short-term 30-
year easement shall not be less than 50 percent nor more than 75 percent 
of that which would have been paid for a permanent easement.
    (c) Maximum payments. In order to ensure that limited program funds 
are expended to maximize program benefits, the State Conservationist, in 
consultation with the State Technical Committee, may establish a maximum 
easement payment for any one easement within a State or for geographic 
areas within a State.
    (d) Preliminary estimates of easement payments. Upon request of the 
landowner prior to filing an application for enrollment, a landowner may 
be appraised of the maximum easement payment rates.
    (e) Acceptance of offered easement compensation. (1) The Department 
will not acquire any easement unless the landowner accepts the amount of 
the easement payment which is offered by the Department. The easement 
payment may or may not equal the fair market value of the interests and 
rights to be conveyed by the landowner under the easement. By 
voluntarily participating in the program, a landowner waives any claim 
to additional compensation based on fair market value.
    (2) Annual easement payments may be made in no less than 5 annual 
payments and no more than 30 annual payments of equal or unequal size.
    (f) Reimbursement of a landowner's expenses. For completed easement 
conveyances, the Department will reimburse landowners for their fair and 
reasonable expenses, if any, incurred for surveying and related costs, 
as determined by the Department. The State Conservationist, in 
consultation with the State Technical Committee, may establish maximum 
payments to reimburse landowners for reasonable expenses.
    (g) Tax implications of easement conveyances. Subject to applicable 
regulations of the Internal Revenue Service, a landowner may be eligible 
for a bargain sale tax deduction which is the difference between the 
fair market value of the easement conveyed to the United States and the 
easement payment made to the landowner. The Department disclaims any 
representations concerning the tax implications of any easement or cost-
share transaction.
    (h) Payment limitation on non-permanent easements. With respect to 
non-permanent easements, the annual amount of easement payments to any 
person may not exceed $50,000 except for:
    (1) Payments made pursuant to projects involving partnership funding 
or participation; or
    (2) Payment received by a State, political subdivision, or agency 
thereof in connection with agreements entered into under a special 
wetland and environmental enhancement program carried out by that entity 
that has been approved by Department.
    (i) If easement payments are calculated on a per acre basis, 
adjustment to stated easement payment will be made based on final 
determination of acreage.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]

[[Page 635]]



Sec.  1467.9  Cost-share payments.

    (a) The Department may share the cost with landowners of restoring 
the enrolled land as provided in the WRPO. The amount and terms and 
conditions of the cost-share assistance shall be subject to the 
following restrictions on the costs of establishing or installing 
practices specified in the WRPO:
    (1) On enrolled land subject to a permanent easement, the Department 
shall offer to pay not less than 75 percent nor more than 100 percent of 
such costs; and
    (2) On enrolled land subject to a non-permanent easement or 
restoration cost-share agreement, the Department shall offer to pay not 
less than 50 percent nor more than 75 percent of such costs. Restoration 
cost-share payments offered by Department for the short-term, 30-year 
easements shall be 50 to 75 percent.
    (b) Cost-share payments may be made only upon a determination by the 
Department that an eligible practice or an identifiable unit of the 
practice has been established in compliance with appropriate standards 
and specifications. Identified practices may be implemented by the 
landowner or other designee.
    (c) Cost-share payments may be made for the establishment and 
installation of additional eligible practices, or the maintenance or 
replacement of an eligible practice, but only if Department determines 
the practice is needed to meet the objectives of the easement, and the 
failure of the original practices was due to reasons beyond the control 
of the landowner.
    (d) A landowner may seek additional cost-share assistance from other 
public or private organizations as long as the activities funded are in 
compliance with this part. In no event shall the landowner receive an 
amount which exceeds 100 percent of the total actual cost of the 
restoration.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.10  Easement participation requirements.

    (a) To enroll land in WRP, a landowner shall grant an easement to 
the United States. The easement shall require that the easement area be 
maintained in accordance with WRP goals and objectives for the duration 
of the term of the easement, including the restoration, protection, 
enhancement, maintenance, and management of wetland and other land 
functions and values.
    (b) For the duration of its term, the easement shall require, at a 
minimum, that the landowner, and the landowner's heirs, successors and 
assigns, shall cooperate in the restoration, protection, enhancement, 
maintenance, and management of the land in accordance with the easement 
and with the terms of the WRPO. In addition, the easement shall grant to 
the United States, through the Department:
    (1) A right of access to the easement area;
    (2) The right to permit compatible uses of the easement area, 
including such activities as hunting and fishing, managed timber 
harvest, or periodic haying or grazing, if such use is consistent with 
the long-term protection and enhancement of the wetland resources for 
which the easement was established;
    (3) All rights, title and interest in the easement area subject to 
compatible uses reserved to the landowner; and,
    (4) The right to perform restoration, protection, enhancement, 
maintenance, and management activities on the easement area.
    (c) The landowner shall convey title to the easement which is 
acceptable to the Department. The landowner shall warrant that the 
easement granted to the United States is superior to the rights of all 
others, except for exceptions to the title which are deemed acceptable 
by the Department.
    (d) The landowner shall:
    (1) Comply with the terms of the easement;
    (2) Comply with all terms and conditions of any associated contract;
    (3) Agree to the permanent retirement of any existing cropland base 
and allotment history for the easement area under any program 
administered by the Secretary, as determined by the Farm Service Agency;

[[Page 636]]

    (4) Agree to the long-term restoration, protection, enhancement, 
maintenance, and management of the easement in accordance with the terms 
of the easement and related agreements;
    (5) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any landowner 
responsibilities on the easement area;
    (6) Agree that each person who is subject to the easement shall be 
jointly and severally responsible for compliance with the easement and 
the provisions of this part and for any refunds or payment adjustment 
which may be required for violation of any terms or conditions of the 
easement or the provisions of this part.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.11  The WRPO development.

    (a) The development of the WRPO shall be made through the local 
Department representative, in consultation with the State Technical 
Committee, and with consideration of site specific technical input from 
the U.S. Fish and Wildlife Service and the Conservation District.
    (b) The WRPO shall specify the manner in which the enrolled land 
shall be restored, protected, enhanced, maintained, and managed to 
accomplish the goals of the program. The WRPO shall be developed to 
ensure that cost-effective restoration and maximization of wildlife 
benefits and wetland functions and values will result.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.12  Modifications.

    (a) Easements. (1) After an easement has been recorded, no 
modification will be made in the easement except by mutual agreement 
with the Chief and the landowner. The Chief will consult with the U.S. 
Fish and Wildlife Service and the Conservation District prior to making 
any modifications to easements.
    (2) Approved modifications will be made only in an amended easement 
which is duly prepared and recorded in conformity with standard real 
estate practices, including requirements for title approval, 
subordination of liens, and recordation.
    (3) The Chief may approve modifications to facilitate the practical 
administration and management of the easement area or the program so 
long as the modification will not adversely affect the wetland functions 
and values for which the easement was acquired.
    (4) Modifications must result in equal or greater environmental and 
economic values to the United States.
    (b) WRPO. Insofar as is consistent with the easement and applicable 
law, the State Conservationist may approve modifications to the WRPO 
that do not affect provisions of the easement in consultation with the 
landowner and the State Technical Committee and following consideration 
of site specific technical input from the U.S. Fish and Wildlife Service 
and the Conservation District. Any WRPO modification must meet WRP 
program objectives, and must result in equal or greater wildlife 
benefits, wetland functions and values, ecological and economic values 
to the United States. Modifications to the WRPO which are substantial 
and affect provisions of the easement will require agreement from the 
landowner and require execution of an amended easement.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, 42142, Aug. 14, 1996]



Sec.  1467.13  Transfer of land.

    (a) Offers voided. Any transfer of the property prior to the 
landowner acceptance into the program shall void the offer of 
enrollment. At the option of the State Conservationist, an offer can be 
extended to the new landowner if the new landowner agrees to the same or 
more restrictive easement and contract terms and conditions.
    (b) Payments to landowners. (1) For easements with multiple annual 
payments, any remaining easement payments will be made to the original 
landowner unless the Department receives an assignment of proceeds.
    (2) The new landowner or purchaser shall be held responsible for 
assuring completion of all measures and practices required by the 
contract. Eligible cost-share payments shall be made to the new 
landowner upon presentation

[[Page 637]]

of an assignment of rights or other evidence that title had passed.
    (c) Claims to payments. With respect to any and all payments owed to 
landowners, the United States shall bear no responsibility for any full 
payments or partial distributions of funds between the original 
landowner and the landowner's successor. In the event of a dispute or 
claim on the distribution of cost-share payments, the Department may 
withhold payments without the accrual of interest pending an agreement 
or adjudication on the rights to the funds.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec.  1467.14  Violations and remedies.

    (a) In the event of a violation of the easement or any contract 
directly involving the landowner, the landowner shall be given 
reasonable notice and an opportunity to voluntarily correct the 
violation within 30 days of the date of the notice, or such additional 
time as the State Conservationist may allow.
    (b) Notwithstanding paragraph (a) of this section, the Department 
reserves the right to enter upon the easement area at any time to remedy 
deficiencies or easement violations. Such entry may be made at the 
discretion of the Department when such actions are deemed necessary to 
protect important wetland functions and values or others rights of the 
United States under the easement. The landowner shall be liable for any 
costs incurred by the United States as a result of the landowner's 
negligence or failure to comply with easement or contractual 
obligations.
    (c) In addition to any and all legal and equitable remedies as may 
be available to the United States under applicable law, the Department 
may withhold any easement and cost-share payments owing to landowners at 
any time there is a material breach of the easement covenants or any 
contract. Such withheld funds may be used to offset costs incurred by 
the United States in any remedial actions or retained as damages 
pursuant to court order or settlement agreement.
    (d) The United States shall be entitled to recover any and all 
administrative and legal costs, including attorney's fees or expenses, 
associated with any enforcement or remedial action.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, 42143, Aug. 14, 1996]



Sec.  1467.15  Payments not subject to claims.

    Any cost-share or easement payment or portion thereof due any person 
under this part shall be allowed without regard to any claim or lien in 
favor of any creditor, except agencies of the United States Government.



Sec.  1467.16  Assignments.

    Any person entitled to any cash payment under this program may 
assign the right to receive such cash payments, in whole or in part.



Sec.  1467.17  Appeals.

    (a) A person participating in the WRP may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in 7 CFR part 
614.
    (b) Before a person may seek judicial review of any action taken 
under this part, the person must exhaust all administrative appeal 
procedures set forth in paragraph (a) of this section, and for purposes 
of judicial review, no decision shall be a final agency action except a 
decision of the Chief of Department under these procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by the Department in determining property value are 
considered confidential information, and shall only be disclosed as 
determined at the sole discretion of the Department in accordance with 
applicable law.

[60 FR 28514, June 1, 1995, as amended at 60 FR 67316, Dec. 29, 1995. 
Redesignated and amended at 61 FR 42141, 42143, Aug. 14, 1996]



Sec.  1467.18  Scheme and device.

    (a) If it is determined by the Department that a landowner has 
employed a scheme or device to defeat the purposes of this part, any 
part of any program payment otherwise due or paid such landowner during 
the applicable period may be withheld or be required to be

[[Page 638]]

refunded with interest thereon, as determined appropriate by the 
Department.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices or easements for the purpose of obtaining a payment 
to which a person would otherwise not be entitled.
    (c) A landowner who succeeds to the responsibilities under this part 
shall report in writing to the Department any interest of any kind in 
enrolled land that is held by a predecessor or any lender. A failure of 
full disclosure will be considered a scheme or device under this 
section.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



PART 1468--CONSERVATION FARM OPTION--Table of Contents




                      Subpart A--General Provisions

Sec.
1468.1 Purpose.
1468.2 Administration.
1468.3 Definitions.
1468.4 Establishing Conservation Farm Option (CFO) pilot project areas.
1468.5 General provisions.
1468.6 Practice eligibility provisions.
1468.7 Participant eligibility provisions.
1468.8 Land eligibility provisions
1468.9 Conservation farm plan.

                          Subpart B--Contracts

1468.20 Application for CFO program participation.
1468.21 Contract requirements.
1468.22 Conservation practice operation and maintenance.
1468.23 Annual payments.
1468.24 Contract modifications and transfers of land.
1468.25 Contract violations and termination.

                    Subpart C--General Administration

1468.30 Appeals.
1468.31 Compliance with regulatory measures.
1468.32 Access to operating unit.
1468.33 Performance based upon advice or action of representatives of 
          CCC.
1468.34 Offsets and assignments.
1468.35 Misrepresentation and scheme or device.

    Authority: 16 U.S.C. 3839bb.

    Source: 63 FR 51786, Sept. 29, 1998, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1468.1  Purpose.

    (a) Through the Conservation Farm Option (CFO), the Commodity Credit 
Corporation (CCC) provides financial assistance to eligible farmers and 
ranchers to address soil, water, and related natural resource concerns, 
water quality protection or improvement; wetland restoration and 
protection; wildlife habitat development and protection; and other 
similar conservation purposes on their lands in an environmentally 
beneficial and cost-effective manner. The Natural Resources Conservation 
Service (NRCS) may provide technical assistance, upon request by the 
producer or landowner.
    (b) The CCC provides a single contract and annual payments for 
implementation of innovative and environmentally-sound methods for 
addressing natural resource concerns for producers of wheat, feed 
grains, cotton, and rice, resulting in consolidation of payments that 
would have been available under the Conservation Reserve Program (CRP), 
the Wetlands Reserve Program cost-share agreements (WRP), and the 
Environmental Quality Incentives Program (EQIP). CFO participation is 
determined through two step process: first, the Chief, with FSA 
concurrence, selects CFO pilot project areas based on proposals 
submitted by the public; then CCC accepts applications from eligible 
producers or owners within the selected pilot project area.



Sec.  1468.2  Administration.

    (a) CFO is carried out using Commodity Credit Corporation funds and 
will be administered on behalf of CCC by the Natural Resources 
Conservation Service (NRCS) and the Farm Service Agency (FSA) as set 
forth below.
    (b) NRCS will:
    (1) Provide overall program management and implementation for CFO;
    (2) Establish policies, procedures, priorities, and guidance for 
program implementation, including determination of pilot project areas;

[[Page 639]]

    (3) Establish annual payment rates consistent with EQIP, CRP, and 
WRP payment rates;
    (4) Make funding decisions and determine allocations of program 
funds, with FSA concurrence;
    (5) Determine eligibility of practices;
    (6) Provide technical leadership for conservation planning and 
implementation, quality assurance, and evaluation of program 
performance.
    (c) FSA will:
    (1) Be responsible for the administrative processes and procedures 
including applications, contracting, and financial matters, such as 
payments to participants, assistance in determining participant 
eligibility, and program accounting; and
    (2) Provide leadership for establishing, implementing, and 
overseeing administrative processes for applications, contracts, payment 
processes, and administrative and financial performance reporting.
    (d) NRCS and FSA will cooperate in establishing program policies, 
priorities, and guidelines related to the implementation of this part.
    (e) No delegation herein to lower organizational levels shall 
preclude the Chief of NRCS, or the Administrator of FSA, or a designee, 
from determining any question arising under this part or from reversing 
or modifying any determination made under this part that is the 
responsibility of their respective agencies.



Sec.  1468.3  Definitions.

    The following definitions apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Applicant means a producer or owner in an approved pilot project 
area who has requested in writing to participate in CFO.
    Chief means the Chief of NRCS, or designee.
    Conservation district means a political subdivision of a State, 
Indian tribe, or territory, organized pursuant to the State or 
territorial soil conservation district law, or tribal law. The 
subdivision may be a conservation district, soil conservation district, 
soil and water conservation district, resource conservation district, 
natural resource district, land conservation committee, or similar 
legally constituted body.
    Conservation farm plan means a record of a participant's decisions, 
and supporting information for treatment of a unit of land or water as a 
result of the planning process, that meets the local NRCS Field Office 
Technical Guide (FOTG) criteria for each natural resource and takes into 
account economic and social considerations. The plan describes the 
schedule of operations and activities needed to solve identified natural 
resource problems, and take advantage of opportunities, at a 
conservation management system level. In the conservation farm plan, the 
needs of the client, the resources, and Federal, state, Tribal, and 
local requirements will be met.
    Conservation practice means a specified treatment, such as 
structural, vegetative, or a land management practice, which is planned 
and applied according to NRCS standards and specifications.
    Contract means a legal document that specifies the rights and 
obligations of any person who has been accepted for participation in the 
program.
    County executive director means the FSA employee responsible for 
directing and managing program and administrative operations in one or 
more FSA county offices.
    Farm Service Agency county committee means a committee elected by 
the agricultural producers in the county or area, in accordance with 
Sec. 8(b) of the Soil Conservation and Domestic Allotment Act, as 
amended, or designee.
    Field office technical guide means the official NRCS guidelines, 
criteria, and standards for planning and applying conservation 
treatments and conservation management systems. The guide contains 
detailed information on the conservation of soil, water, air, plant, and 
animal resources applicable to the local area for which it is prepared. 
A copy of the guide for that area is available at the appropriate NRCS 
field office.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims

[[Page 640]]

Settlement Act (43 U.S.C. 1601 et seq.) which is recognized as eligible 
for the special programs and services provided by the United States to 
Indians because of their status as Indians.
    Innovative technology means the use of new management techniques, 
specific treatments, or procedures such as structural or vegetative 
measures used in field trials or as interim conservation practice 
standards that have the purpose of solving or reducing the severity of 
natural resource use problems or that take advantage of resource 
opportunities. Innovative technologies used by program participants must 
be able to achieve the required level of resource protection.
    Land management practice means conservation practices that primarily 
require site-specific management techniques and methods to conserve, 
protect from degradation, or improve soil, water, or related natural 
resources in the most cost-effective manner. Land management practices 
include, but are not limited to nutrient management, manure management, 
integrated pest management, integrated crop management, irrigation water 
management, tillage or residue management, stripcropping, contour 
farming, grazing management, wildlife management, resource conserving 
crop rotations, cover crop management, and organic matter and carbon 
sink management.
    Liquidated damages means a sum of money stipulated in the contract 
which the participant agrees to pay, in addition to refunds and other 
charges, if the participant breaches the contract, and represents an 
estimate of the anticipated or actual harm caused by the breach, and 
reflects the difficulties of proof of loss and the inconvenience or 
nonfeasibility of otherwise obtaining an adequate remedy.
    Local work group means representatives of FSA, the Cooperative State 
Research, Education, and Extension Service (CSREES), the conservation 
district, and other Federal, State, and local government agencies, 
including Tribes and Resource Conservation and Development councils, 
with expertise in natural resources who consult with NRCS on decisions 
related to CFO implementation.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during its life span. Operation includes the administration, 
management, and performance of non-maintenance actions needed to keep 
the completed practice safe and functioning as intended. Maintenance 
includes work to prevent deterioration of the practice, repairing 
damage, or replacement of the practice to its original condition if one 
or more components fail.
    Participant means an applicant who is a party to a CFO contract.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Basin Area.
    State technical committee means a committee established by the 
Secretary in a state pursuant to 16 U.S.C. 3861.
    Technical assistance means the personnel and support resources 
needed to conduct conservation planning; conservation practice survey, 
layout, design, installation, and certification; training, 
certification, and quality assurance for professional conservationists; 
and evaluation and assessment of the program.
    Unit of concern means a parcel of agricultural land that has natural 
resource conditions that are of concern to the participant.



Sec.  1468.4  Establishing Conservation Farm Option (CFO) pilot project areas.

    (a) CCC may periodically solicit proposals from the public to 
establish pilot project areas in the Federal Register.
    (b) Pilot projects may involve one or more participants. Each owner 
or producer within an approved pilot project area must submit an 
application in order to be considered for enrollment in the CFO. This 
pilot project area may be a watershed, a subwatershed, an area, or an 
individual farm that can be

[[Page 641]]

geographically described and has specific environmental sensitivities or 
significant soil, water, and related natural resource concerns. The 
pilot project area must have acreage enrolled in a production 
flexibility contract, which is authorized by the Agricultural Marketing 
and Transition Act of 1996. After these pilot project area proposals are 
received, the Chief, with FSA concurrence, will select proposals for 
funding.
    (c) CCC will select pilot project areas based on the extent the 
individual proposal:
    (1) Demonstrates innovative approaches to conservation program 
delivery and administration;
    (2) Proposes innovative conservation technologies and system;
    (3) Provides assurances that the greatest amount of environmental 
benefits will be delivered in a cost effective manner;
    (4) Ensures effective monitoring and evaluation of the pilot effort;
    (5) Considers multiple stakeholder participation (partnerships) 
within the pilot area;
    (6) Provides additional non-Federal funding; and
    (7) Addresses the following:
    (i) Conservation of soil, water, and related natural resources,
    (ii) Water quality protection or improvement,
    (iii) Wetland restoration and protection, and
    (iv) Wildlife habitat development and protection,
    (v) Or other similar conservation purposes.



Sec.  1468.5  General provisions.

    (a) Program participation is voluntary.
    (b) Participation in the CFO is limited to producers of wheat, feed 
grains, cotton, or rice who have a production flexibility contract, in 
accordance with part 1412 of this chapter, on the farm enrolling in CFO 
and who are eligible for either CRP (7 CFR part 1410), EQIP (7 CFR part 
1466), or WRP (7 CFR part 1467).
    (c) The participant is responsible for the development of a 
conservation farm plan for the farm or ranch and may request assistance 
from NRCS or a third party in writing both the conservation farm plan 
and installing the practices outlined within the plan. Conservation 
practices in the conservation farm plan that would have been eligible 
for payment under CRP, EQIP, or cost-share agreements under WRP are 
eligible for CFO payment. The provisions for determining eligibility for 
payment and the calculation of payment under CFO will be similar to 
those specified for the eligible conservation practices under CRP, EQIP, 
or cost-share agreements under WRP. For land retirement payments, the 
CRP payment schedule in effect for the applicable soils at the time the 
CFO contract is signed will be utilized. CCC will provide annual 
payments to a participant for such conservation practices as specified 
in the time schedule set forth in the conservation farm plan.



Sec.  1468.6  Practice eligibility provisions.

    (a) Practices may be eligible for payment under CFO if the 
conservation practice specified in the conservation farm plan is 
determined to be an eligible practice, as determined by the Chief, in 
accordance with:
    (1) 7 CFR part 1410 for land retirement rental payments and 
practices that are eligible under CRP;
    (2) 7 CFR part 1467 for wetland restoration or protection practices 
that are eligible under WRP; or
    (3) 7 CFR part 1466 for conservation practices that are eligible 
under EQIP.
    (b) For practices that are installed on retired land, the CRP cost-
share rate for practices must be utilized.



Sec.  1468.7  Participant eligibility provisions.

    Participants in the CFO must at the time of enrollment:
    (a) Have a production flexibility contract in accordance with part 
1412 of this chapter on the farm enrolling in CFO.
    (b) Agree to forgo earning future payments under the Conservation 
Reserve Program authorized by part 1410 of this chapter, the Wetlands 
Reserve Program cost-share payments authorized by part 1467 of this 
chapter, and Environmental Quality Incentives Program authorized by part 
1466 of this chapter,

[[Page 642]]

on the farm enrolled in the CFO for the term of the CFO contract.
    (c) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (d) Have control of the land for the term of the proposed contract 
period;
    (1) An exception may be made by the Chief in the case of land 
allotted by the Bureau of Indian Affairs (BIA), tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control.
    (2) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall provide CCC with the written 
authorization by the landowner to apply the structural or vegetative 
practice.
    (3) If the applicant is a landowner, the landowner is presumed to 
have control.
    (e) Submit a proposed conservation farm plan to CCC that is in 
compliance with the terms and conditions of the program. To receive 
payment under the CFO, the participant must also meet the eligibility 
requirements, as determined by the Chief, in:
    (1) 7 CFR part 1410 if the land retirement rental payment and 
practice determined eligible in accordance with Sec.  1468.6(a);
    (2) 7 CFR part 1467 if the wetland restoration or protection 
practice was determined eligible in accordance with Sec.  1468.6(b), or
    (3) 7 CFR part 1466, if the conservation practice was determined 
eligible in accordance with Sec.  1468.6(c).
    (4) Comply with the provisions at Sec.  1412.304 of this chapter for 
protecting the interests of tenants and sharecroppers, including 
provisions for sharing, on a fair and equitable basis, payments made 
available under this part, as may be applicable.
    (5) Supply information as required by CCC to determine eligibility 
for the program.
    (6) Comply with all the provisions of the CFO contract which 
includes the conservation farm plan approved by the local conservation 
district.



Sec.  1468.8  Land eligibility provisions.

    Land may be eligible for enrollment in CFO, if CCC determines that 
the farm or ranch is enrolled in a production flexibility contract, 
authorized by the Agricultural Marketing Transition Act of 1996 and if 
the land upon which the CFO conservation practice, will be applied is 
determined to be eligible land as determined by the Chief, in accordance 
with:
    (a) 7 CFR part 1410, if the practice was determined an eligible land 
retirement rental payment and cost-share practice similar to CRP in 
accordance with Sec.  1468.6(a);
    (b) 7 CFR part 1467, if the practice was determined an eligible 
wetland restoration or protection practice similar to WRP in accordance 
with Sec.  1468.6(b); or
    (c) 7 CFR part 1466, if the practice was determined an eligible 
conservation practice similar to EQIP in accordance with Sec.  
1468.6(c).



Sec.  1468.9  Conservation farm plan.

    (a) The conservation farm plan forms the basis of the CFO contract. 
Prior to contract approval, a conservation farm plan must be written and 
approved. In deciding whether to approve a conservation farm plan, CCC 
may consider whether:
    (1) The participant will use conservation practices to solve the 
natural resource concerns that will maximize environmental benefits per 
dollar expended, and
    (2) The conservation practice would have been eligible for 
enrollment in the CRP, EQIP, or under the WRP cost-share agreements.
    (b) The conservation farm plan for the farm or ranch unit of concern 
shall:
    (1) Describe any resource conserving crop rotation, and all other 
conservation practices, to be implemented and maintained on the acreage 
that is subject to contract during the contact period;
    (2) Address the resource concerns identified in the CFO pilot 
project area proposal;
    (3) Contain a schedule for the implementation and maintenance of the 
practices described in the conservation farm plan;
    (4) Ensure that net environmental benefits under a CRP contract are 
maintained or exceeded for the whole

[[Page 643]]

farm, as constituted by FSA, when terminating a CRP contract and 
enrolling in a CFO contract; and
    (5) Meet the objectives of the pilot project area.
    (c) The conservation farm plan is part of the CFO contract.
    (d) The conservation farm plan must allow the participant to achieve 
a cost-effective resource management system, or some appropriate portion 
of that system, identified in the applicable NRCS field office technical 
guide or as approved by the State Conservationist.
    (e) Participants are responsible for implementing the conservation 
farm plan in compliance with this part.
    (f) Upon a participant's request, the NRCS may provide technical 
assistance to a participant.
    (1) Participants may, at their own cost, use qualified 
professionals, other than NRCS personnel, to provide technical 
assistance. NRCS retains approval authority over the technical adequacy 
of work done by non-NRCS personnel for the purpose of determining CFO 
contract compliance.
    (2) Technical and other assistance provided by qualified personnel 
not affiliated with NRCS may include, but not limited to: conservation 
planning; conservation practice survey, layout, design, and 
installation; information, education, and training for producers; and 
training and quality assurance for professional conservationists.
    (g) All conservation practices scheduled in the conservation farm 
plan are to be carried out in accordance with the applicable NRCS Field 
Office Technical Guide. The State Conservationist may approve use of 
innovative conservation measures that are not contained in the NRCS 
Field Office Technical Guide.
    (h)(1) To simplify the conservation planning process for the 
participant, the conservation farm plan may be developed, at the request 
of the participant, as a single plan that incorporates, other Federal, 
state, Tribal, or local government program or regulatory requirements. 
CCC development or approval of a conservation farm plan shall not 
constitute compliance with program, statutory and regulatory 
requirements administered or enforced by a non-USDA agency, except as 
agreed to by the participant and the relevant Federal, state, local or 
tribal entities.
    (2) CCC may accept an existing conservation plan developed and 
required for participation in any other CCC or USDA program if the 
conservation plan otherwise meets the requirements of this part. When a 
participant develops a single conservation farm plan for more than one 
program, the participant shall clearly identify the portions of the plan 
that are applicable to the CFO contract. It is the responsibility of the 
participant to ascertain and comply with all applicable statutory and 
regulatory requirements.



                          Subpart B--Contracts



Sec.  1468.20  Application for CFO program participation.

    (a) Any eligible owner or producer within an approved pilot project 
area may submit an application for participation in the CFO to a service 
center or other USDA county or field office(s) of FSA or NRCS, where the 
pilot project area is located.
    (b) CCC will accept applications throughout the fiscal year. CCC 
will rank and select the offers of applicants periodically, as 
determined appropriate by the State Conservationist. The application 
period will begin after a pilot project area has been approved.
    (c) The designated conservationist, in consultation with the local 
work group, will develop ranking criteria to prioritize applications 
within a pilot project area which consists of more than one owner or 
producer. NRCS will prioritize applications from the same pilot project 
area using the criteria specific to the area. The FSA county committee, 
with the assistance of the designated conservationist and designated FSA 
official, will approve for funding the application in a pilot project 
area based on eligibility factors of the applicant and the NRCS ranking.
    (d) The designated conservationist will work with the applicant to 
collect the information necessary to evaluate the application using the 
ranking criteria. An applicant has the option of offering and accepting 
less than the maximum program payments allowed, offering to apply more 
conservation

[[Page 644]]

practices to the land in order to increase the likelihood of being 
enrolled. In evaluating the applications, the designated conservationist 
will take into consideration the following factors:
    (1) Soil erosion;
    (2) Water quality;
    (3) Wildlife benefits;
    (4) Soil productivity;
    (5) Conservation compliance considerations;
    (6) Likelihood to remain in conserving uses beyond the contract 
period, including tree planting and permanent wildlife habitat;
    (7) State water quality priority areas;
    (8) The environmental benefits per dollar expended; and
    (9) The degree to which application is consistent with the pilot 
project proposal.
    (e) If two or more applications have an equal rank, the application 
that will result in the least cost to the program will be given greater 
consideration.



Sec.  1468.21  Contract requirements.

    (a) In order for an applicant to receive annual payments, the 
applicant must enter into a contract agreeing to implement a 
conservation farm plan. The FSA county committee, with NRCS concurrence, 
will use the NRCS ranking consistent with the provisions of Sec.  
1468.20 and grant final approval of the contract.
    (b) A CFO contract will:
    (1) Incorporate by reference all portions of a conservation farm 
plan applicable to CFO;
    (2) Be for a duration of 10 years, and may be renewed, subject to 
the availability of funds, for a period not to exceed 5 years upon 
mutual agreement of CCC and the participant;
    (3) Provide that the participant will:
    (i) Not conduct any practices on the farm or ranch unit of concern 
consistent with the goals of the contract that would tend to defeat the 
purposes of the contract, or reduce net environmental and societal 
benefits;
    (ii) Refund with interest any program payments received and forfeit 
any future payments under the program, on the violation of a term or 
condition of the contract, in accordance with the provisions of Sec.  
1468.25 of this part;
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, in accordance with the provisions of Sec.  
1468.24 of this part;
    (iv) Agree to forego participation in CRP, EQIP, and the cost-share 
agreements under WRP, along with future payments associated with these 
programs, with regard to the land under the CFO contract;
    (v) Supply information as required by CCC to determine compliance 
with the contract and requirements of the program;
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices in accordance with the 
provisions of Sec.  1468.22 of this part, and
    (5) Include any other provision determined necessary or appropriate 
by CCC.
    (c) There is a limit of one CFO contract at any one time for each 
farm, as constituted by FSA.
    (d) The contract will incorporate the operation and maintenance of 
conservation practices applied under the contract, including those 
practices transferred from terminated CRP and EQIP contracts and WRP 
cost-share agreements. For persons wishing to transfer from CRP, EQIP, 
or WRP to CFO, practices included in CRP or EQIP contracts or WRP cost-
share agreements must be included in a CFO contract if an owner or 
producer wishes to participate, unless otherwise stated in the 
conservation farm plan.
    (e) Acreage that is subject to a WRP easement will not be included 
in the CFO contract.
    (f) Upon completion, the participant must certify that a 
conservation practice is completed in accordance with the conservation 
farm plan to establish compliance with the contract.



Sec.  1468.22  Conservation practice operation and maintenance.

    (a) The participant will operate and maintain the conservation 
practice for its intended purpose for the life span of the conservation 
practice, as identified

[[Page 645]]

in the conservation farm plan. Conservation practices installed before 
the execution of a CFO contract, but needed in the contract to obtain 
the environmental benefits agreed upon, are to be operated and 
maintained as specified in the contract. NRCS may periodically inspect 
the conservation practice during the lifespan of the practice as 
specified in the contract to ensure that the operation and maintenance 
is occurring.
    (b) For those persons who are signatories to existing CRP or EQIP 
contracts, or WRP cost-share agreements, practices will be transferred 
from EQIP and CRP contracts or WRP cost-share agreements, as agreed upon 
in the CFO conservation farm plan and CFO contract. Remaining rights and 
obligations under CRP, EQIP, or WRP will be incorporated into the new 
CFO contract. Practices included in CRP, EQIP, or WRP will be 
incorporated into the new CFO contract. Practices included in CRP or 
EQIP contracts or WRP cost-share agreements must be included in a CFO 
contract if an owner or producer wishes to participate. Participants in 
CFO with CRP, EQIP, or WRP practices incorporated into CFO contracts are 
responsible for operating and maintaining these practices for the 
balance of the period specified in the original program contract, unless 
otherwise stated in the conservation farm plan and CFO contract.



Sec.  1468.23  Annual payments.

    (a) CCC will determine annual payments, subject to the availability 
of funds, based on the value of the expected payments that would have 
been paid to the participant for that practice as specified in:
    (1) Part 1410 of this chapter, if the practice is a land retirement 
rental payment or cost-share practice which would have qualified for 
payment under CRP in accordance with Sec.  1468.6(a);
    (2) Part 1467 of this chapter, if the practice is a wetland 
restoration or protection practice which would have qualified for 
payment under WRP which was determined eligible in accordance with Sec.  
1468.6(b);
    (3) Part 1466 of this chapter, if the practice was a conservation 
practice which would have qualified for payment under EQIP which was 
determined eligible in accordance with Sec.  1468.6(c);
    (b) The maximum amount of annual payments which a person may receive 
under the CFO for any fiscal year shall not exceed the total of the 
amounts calculated in accordance with paragraph (a) of this section 
after being limited as follows:
    (1) The payment calculated in accordance with paragraph (a)(1) of 
this section is limited in accordance with CRP payment limitation 
provisions set forth in part 1410 of this chapter.
    (2) The payment calculated in accordance with Sec.  1467.9(a)(2) of 
this chapter is not limited.
    (3) The payment calculated in accordance with Sec.  1466.23(a)(3) of 
this chapter is limited in accordance with EQIP payment limitation 
provisions in Sec.  1466.23(b) of this chapter.
    (c) The regulations set forth at part 1400 of this chapter will be 
applicable in making payment eligibility determinations for CFO and in 
making person determination as they apply to the limitation of payments 
determined in accordance with paragraph (b) of this section.
    (d) The CCC cost-share payments to a participant shall be reduced so 
that total financial contributions for a structural or vegetative 
practice from all public and private entity sources do not exceed the 
cost of the practice.
    (e) A landowner or producer that enrolls in CFO and terminates a CRP 
or EQIP contract or WRP cost-share agreement will be eligible to receive 
payments for practices which have been determined, established, or 
completed by the technical agency under those contracts or agreements. 
Once the CFO contract is effective, all payments for practices, 
including any practice transferred from the terminated contract 
agreement will be made under the CFO contract, except for payments 
already earned under prior contracts or cost-share agreements.
    (f) Payments will not be made to a participant who has applied or 
initiated the application of a conservation practice for the purposes of 
CFO prior to approval of the CFO contract.

[[Page 646]]

    (g) When requested by the State Conservationist on a case-by-case 
basis, the Chief may approve, based upon availability of funding, cost 
share on the reapplication of a practice to replace or repair practice 
destroyed by unusual circumstances beyond the control of the landowner.
    (h) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the conservation farm plan to 
establish compliance with the contract before the CCC will approve the 
payment of any cost-share, incentive, or land retirement payment.



Sec.  1468.24  Contract modifications and transfers of land.

    (a) The participant and CCC may modify a contract if the participant 
and CCC agree to the contract modification and the conservation farm 
plan is revised in accordance with CCC requirements and is approved by 
the conservation district.
    (b) The participant may agree to transfer a contract to another 
eligible owner or operator with the agreement of CCC. The transferee 
shall assume full responsibility under the contract, including operation 
and maintenance of those conservation practices already installed and to 
be installed as a condition of the contract. By agreeing to participate 
in CFO, CCC may require operation and maintenance of those conservation 
practices installed under CRP, EQIP, or WRP.
    (c) CCC may require a participant to refund all or a portion of any 
assistance earned under a CRP or EQIP contract, or WRP cost-share 
agreement that was terminated as a condition of participation in CFO, if 
the participant sells or loses control of the land under a CFO contract 
and the new owner or controller does not assume responsibility under the 
contract.



Sec.  1468.25  Contract violations and termination.

    (a)(1) If it is determined that a participant is in violation of the 
provisions of this part, or the terms of the contract including portions 
of the contract that incorporate transferred obligations from CRP or 
EQIP contracts, or WRP cost-share agreements, CCC will give the 
participant written notice of a reasonable time to correct the violation 
and comply with the terms of the contract and attachments thereto, as 
determined by the FSA county committee, in consultation with NRCS. If a 
participant continues in violation after the time to comply has elapsed, 
the FSA county committee may, in consultation with NRCS, terminate the 
CFO contract.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a contract termination shall be effective immediately upon a 
determination by the FSA county committee, in consultation with NRCS, 
that the participant has submitted false information, filed a false 
claim, or engaged in any act for which a finding of ineligibility for 
payments is permitted under the provisions of Sec.  1468.35 of this 
part, or in a case in which the actions of the party involved are deemed 
to be sufficiently purposeful or negligent to warrant a termination 
without delay.
    (b)(1) If CCC terminates a contract, the participant shall forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received, plus interest, determined in 
accordance with part 1403 of this chapter. CCC has the option of 
requiring only partial refund of the payments received if a previously 
installed conservation practice can function independently, is not 
affected by the violation or other conservation practices that would 
have been installed under the contract, and the participant agrees to 
operate and maintain the installed conservation practice for the life 
span of the practice.
    (2) If CCC terminates a contract for any reason stated above, before 
any contractual payments have been made, the participant shall forfeit 
all rights for further payments under the contract and shall pay such 
liquidated damages as are prescribed in the contract.
    (3) When making all contract termination decisions, CCC may reduce 
the amount of money owed by the participant by a proportion which 
reflects the good-faith effort of the participant to comply with the 
contract, or the hardships beyond the participant's control

[[Page 647]]

that have prevented compliance with the contract.
    (4) The participant may voluntarily terminate a contract without 
penalty, if CCC determines that such termination would be in the public 
interest.



                    Subpart C--General Administration



Sec.  1468.30  Appeals.

    (a) An applicant or participant may obtain administrative review of 
an adverse decision made with respect to this part and the CFO contract 
in accordance with parts 11 and 614 of this title, except as provided in 
paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) CCC funding allocations;
    (2) Eligible conservation practices;
    (3) Payment rates, and cost-share percentages;
    (4) Science-based formulas and factor values;
    (5) Soils mapping and information; and
    (6) Other matters of general applicability.



Sec.  1468.31  Compliance with regulatory measures.

    Participants who carry out conservation practices shall be 
responsible for obtaining the authorities, rights, easements, permits, 
or other approvals necessary for the implementation, operation, and 
maintenance of the conservation practices in keeping with applicable 
laws and regulations. Participants shall be responsible for compliance 
with all laws and for all effects or actions resulting from the 
participant's performance under the contract.



Sec.  1468.32  Access to operating unit.

    Any authorized CCC representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, or as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical assistance 
and inspect any work undertaken under the contract. The CCC 
representative shall make a reasonable effort to contact the participant 
prior to the exercise of this right to access.



Sec.  1468.33  Performance based upon advice or action of representatives 
of CCC.

    If a participant relied upon the advice or action of any authorized 
representative of CCC, and did not know or have reason to know that the 
action or advice was improper or erroneous, the FSA county committee, in 
consultation with NRCS, may accept the advice or action as meeting the 
requirements of the program and may grant relief, to the extent it is 
deemed desirable, to provide a fair and equitable treatment because of 
the good-faith reliance on the part of the participant.



Sec.  1468.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any participant shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the United States. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
shall apply to contract payments.
    (b) Any participant entitled to any payment may assign any payments 
in accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.



Sec.  1468.35  Misrepresentation and scheme or device.

    (a) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part shall not be entitled to contract payments and must refund to CCC 
all payments, plus interest determined in accordance with part 1403 of 
this chapter.
    (b) An applicant or participant who is determined to have knowingly 
adopted any scheme or device that tends to defeat the purpose of the 
program; made any fraudulent representation; or misrepresented any fact 
affecting a program determination, shall refund to

[[Page 648]]

CCC all payments, plus interest determined in accordance with part 1403 
of this chapter, received by such applicant or participant with respect 
to CFO contracts.



PART 1470--APPLE MARKET LOSS ASSISTANCE PAYMENT PROGRAM--Table of Contents




              Subpart A--Apple Market Loss Payment Program

Sec.
1470.1 Applicability.
1470.2 Administration.
1470.3 Definitions.
1470.4 Time and method of application.
1470.5 Eligibility.
1470.6 Proof of production.
1470.7 Availability of funds.
1470.8 Applicant payment quantity.
1470.9 Payment rate and apple operation payment.
1470.10 Offsets.
1470.11 Appeals.
1470.12 Misrepresentation and scheme or device.
1470.13 Estates, trusts, and minors.
1470.14 Death, incompetency, or disappearance.
1470.15 Maintaining records.
1470.16 Refunds; joint and several liability.

       Subpart B--Apple Market Loss Assistance Payment Program II

1470.101 Applicability.
1470.102 Administration.
1470.103 Definitions.
1470.104 Time and method of application.
1470.105 Eligibility.
1470.106 Proof of production.
1470.107 Availability of funds.
1470.108 Applicant payment quantity.
1470.109 Payment rate and apple operation payment.
1470.110 Offsets and withholdings.
1470.111 Assignments.
1470.112 Appeals.
1470.113 Misrepresentation and scheme or device.
1470.114 Estates, trusts, and minors.
1470.115 Death, incompetency, or disappearance.
1470.116 Maintenance and inspection of records.
1470.117 Refunds; joint and several liability.

            Subpart C--Apple Market Loss Payment Program III

1470.201 Applicability.
1470.202 Administration.
1470.203 Definitions.
1470.204 Time and method of application.
1470.205 Eligibility.
1470.206 Proof of production.
1470.207 Availability of funds.
1470.208 Applicant payment quantity.
1470.209 Payment rate and apple operation payment.
1470.210 Offsets and withholdings.
1470.211 Assignments.
1470.212 Appeals.
1470.213 Misrepresentation and scheme or device.
1470.214 Estates, trusts, and minors.
1470.215 Death, incompetency, or disappearance.
1470.216 Maintenance and inspection of records.
1470.217 Refunds; joint and several liability.
1470.218 Violations of highly erodible land and wetland conservation 
          provisions.

    Authority: Sec. 811, Pub. L. 106-387, 114 Stat. 1549; Sec. 741, Pub. 
L. 107-76, 115 Stat. 704; Sec. 102, Pub. L. 107-117, 115 Stat. 2230; 
Sec. 10105, Pub. L. 107-171, 116 Stat. 489.

    Source: 66 FR 13843, Mar. 8, 2001, unless otherwise noted.



              Subpart A--Apple Market Loss Payment Program



Sec.  1470.1  Applicability.

    (a) The regulations in this subpart are applicable to producers of 
1998 and 1999 crop of apple production. These regulations set forth the 
terms and conditions under which the Commodity Credit Corporation (CCC) 
shall provide payments to apple producers who have applied to 
participate in the Apple Market Loss Assistance Payment Program in 
accordance with section 811 of Public Law 106-387. Additional terms and 
conditions may be set forth in the payment application that must be 
executed by participants to receive a market loss payment for apples.
    (b) Payments shall be available only for apples produced and 
harvested in the United States.



Sec.  1470.2  Administration

    (a) The Apple Market Loss Payment Program shall be administered 
under the general supervision of the Executive Vice President, CCC, or a 
designee, and shall be carried out in the field by State and county Farm 
Service Agency committees (State and county committees) and FSA 
employees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or

[[Page 649]]

waive any of the provisions of the regulations of this subpart.
    (c) The State committee shall take any action required by the 
regulations of this subpart that has not been taken by the county 
committee. The State committee shall also:
    (1) Correct, or require the county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this subpart; and
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this subpart.
    (d) No provision or delegation of this subpart to a State or county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements do not affect adversely the operation of the Apple 
Market Loss Assistance Payment program and does not violate statutory 
limitations on the program.
    (f) Payment applications and related documents not executed in 
accordance with the terms and conditions determined and announced by 
CCC, including any purported execution outside of the dates authorized 
by CCC, shall be null and void unless the Executive Vice President, CCC, 
shall otherwise allow.



Sec.  1470.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Apple Market Loss Assistance Payment 
program established by this subpart.
    Apple Operation means any person or group of persons who as a single 
unit as determined by CCC, produce and market apples in the United 
States and which has elected to participate in the program authorized by 
the part.
    Application means Form CCC-891, the Apple Market Loss Assistance 
Payment Application.
    Application period means March 5, 2001 through April 13, 2001.
    Commodity Credit Corporation or CCC means the Commodity Credit 
Corporation.
    County committee means the FSA county committee.
    County office means the local FSA office.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), Farm Service Agency or a designee.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Eligible production means apples that had been produced in the 
United States anytime during the 1998 and or 1999 crop year, subject to 
a maximum of 1,600,000 pounds per apple operation.
    Higher production year means the crop year, either 1998 or 1999, as 
selected by the apple operation, during which apples were produced.
    Payment pounds means the pounds of apples for which an operation is 
eligible to be paid under this subpart.
    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 
of, or legal resident alien or aliens in the United States.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.
    Verifiable production records means evidence that is used to 
substantiate the amount of production reported and that can be verified 
by CCC through an independent source.



Sec.  1470.4  Time and method of application.

    (a) Apple producers may obtain an application, Form CCC-891 (Apple 
Market Loss Assistance 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 CCC-891 at http://
www.sc.egov.usda.gov.

[[Page 650]]

    (b) A request for benefits under this subpart must be submitted on a 
completed Form CCC-891. The Form CCC-891 should be submitted to the 
county FSA office serving the county where the apple operation is 
located but, in any case, must be received by the county FSA office by 
the close of business on April 13, 2001. Applications not received by 
the close of business on April 13, 2001, will be disapproved as not 
having been timely filed and the apple operation will not be eligible 
for benefits under this program.
    (c) All persons who share in an apple operation's total production 
must certify on the same CCC-891 in order to obtain the maximum eligible 
quantity of the higher crop year of 1998 and 1999 of the apple operation 
before the application is complete.
    (d) The apple operation requesting benefits under this subpart 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 CCC. Refusal to allow CCC 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.  1470.5  Eligibility.

    (a) To be eligible to receive cash payment under this subpart, an 
apple operation must:
    (1) Have produced apples in the United States anytime during the 
1998 and/or 1999 crop year;
    (2) Not have been compensated for the same market loss by any other 
Federal programs, except an indemnity provided under a policy or plan or 
insurance offered under the Federal Crop Insurance Act (7 U.S.C. 1501).
    (3) Apply for payments during the application period.
    (b) Payments may be made for losses suffered by an eligible producer 
who is now deceased or is a dissolved entity if a representative who 
currently has authority to enter into a contract for the producer signs 
the application for payment. Proof of authority to sign for the deceased 
producer or dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint venture, all members of the 
general partnership or joint venture at the time of dissolution or their 
duly authorized representatives must sign the application for payment.
    (c) An apple operation must submit a timely application and comply 
with all other terms and conditions of this subpart and instructions 
issued by CCC, as well as comply with those instructions that are 
otherwise contained in the application to be eligible for benefits under 
this subpart.



Sec.  1470.6  Proof of production.

    (a) Apple operations selected for spot-checks by CCC must, in 
accordance with instructions issued by the Deputy Administrator, provide 
adequate proof of the apples produced during the 1998 and/or 1999 crop 
year to verify the higher year of production. The documentary evidence 
of apple production claimed for payment shall be reported to CCC 
together with any supporting documentation under paragraph (b) of this 
section. The pounds of 1998 or 1999 crop year production must be 
documented using actual records developed at the time of production.
    (b) All persons involved in an apple operation producing apples 
during the 1998 or 1999 crop year shall provide any available supporting 
documents to assist the county FSA office in verifying the operation's 
apple production indicated on Form CCC-891. Examples of supporting 
documentation include, but are not limited to: picking, packout, and 
payroll records, RMA records, sales documents, copies of receipts, 
ledgers of income, or any other documents available to confirm the 
production and production history of the apple operation. In the event 
that supporting documentation is not presented to the county FSA office 
requesting the information, the apple operation will be determined 
ineligible for benefits.

[[Page 651]]



Sec.  1470.7  Availability of funds.

    The total available program funds shall be $99.78 million as 
provided by Section 811 of Public Law 106-387 and amended by Section 
1403 of Public Law 106-554.



Sec.  1470.8  Applicant payment quantity.

    (a) The applicant's payment quantity of apples will be determined by 
the CCC, based on the higher production of 1998 or 1999 crop of apples 
that was produced by each operation, as selected by the apple operation.
    (b) The maximum quantity of the 1998 or 1999 crop of apples for 
which producers are eligible for a payment for an operation under this 
subpart shall be 1,600,000 pounds.



Sec.  1470.9  Payment rate and apple operation payment.

    (a) Payments under this subpart may be made to apple operations only 
up to 1,600,000 pounds of apples produced in the United States during 
the higher production year of 1998 or 1999. A payment rate will be 
determined after the conclusion of the application period, and shall be 
calculated by:
    (1) Totaling the higher production of the eligible quantity (not to 
exceed 1,600,000 pounds) of apples produced from the 1998 or 1999 crop 
year from all approved applications; and
    (2) Dividing the amount available for the Apple Market Loss 
Assistance Payment program by the total pounds of eligible production 
submitted and approved for payment (the quantity determined under 
paragraph (a)(1) of this section).
    (b) Each apple operation payment will be calculated by multiplying 
the payment rate determined in paragraph (a) of this section by the 
apple operation's eligible production.
    (c) In the event that approval of all eligible applications would 
result in expenditures in excess of the amount available, CCC shall 
reduce the payment rate in such manner as CCC, in its sole discretion, 
finds fair and reasonable.



Sec.  1470.10  Offsets.

    (a) 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 against an operation, an 
operation's apple production, or proceeds thereof, in favor of the 
producer or any other creditors, including agencies of the U.S. 
Government.
    (b) Payments received by an apple operation under this part are not 
subject to administrative offsets or withholdings, including 
administrative offset under chapter 37 of title 31, United States Code, 
as provided by Public Law 106-387.
    (c) The regulations governing offsets and withholdings found at 7 
CFR Part 1403 shall not be applicable to this part.



Sec.  1470.11  Appeals.

    Any producer who 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 7 
CFR parts 11 and 780.



Sec.  1470.12  Misrepresentation and scheme or device.

    (a) An apple operation shall be ineligible to receive assistance 
under this program if it is determined by the State committee or the 
county committee to have knowingly:
    (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 determination under this 
program. CCC will notify the appropriate investigating agencies of the 
United States and take steps deemed necessary to protect the interests 
of the government.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded to CCC, with interest together with such other sums as may 
become due. Any apple operation or person engaged in acts prohibited by 
this section and any apple 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

[[Page 652]]

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.  1470.13  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:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show that 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.  1470.14  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 title may 
receive such benefits, as determined appropriate by CCC.



Sec.  1470.15  Maintaining records.

    Apple 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, as may be requested 
by CCC. Such records and accounts must be retained for 3 years after the 
date of payment to the apple operation under this program. Such records 
shall be available at all reasonable times for an audit or inspection by 
authorized representatives of CCC, United States Department of 
Agriculture, or the Comptroller General of the United States. Failure to 
keep, or make available, such records may result in refund to CCC of all 
payments received plus interest thereon, as determined by CCC. Nothing 
in this section, shall, however, authorize the destruction of any 
records where there is an on-going dispute or where the party involved 
has reason to know that such records remain material to the operation of 
the program. Destruction of the records after such date shall be at the 
risk of the party undertaking the destruction.



Sec.  1470.16  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 CCC shall otherwise become 
due in connection with the application, or this part, all payments made 
under this part to any apple operation shall be refunded to CCC 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 an apple operation's application for payment 
as having an interest in the operation shall be jointly and severally 
liable for any refund, including related charges, that 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 CCC 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 that the United States 
Treasury charges the CCC for funds, from the date CCC made such benefits 
available to the date of repayment or the date interest increases as 
determined in accordance with applicable regulations. CCC may waive the 
accrual of interest if CCC determines that the cause of the erroneous 
determination was not due to any action of the person.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived at the discretion of CCC alone for refunds 
resulting from those violations determined by CCC to have been beyond 
the control of the person committing the violation.
    (e) Late payment interest shall be assessed on all refunds in 
accordance

[[Page 653]]

with the provisions of, and subject to the rates prescribed in, 7 CFR 
part 1403.
    (f) Any excess payments made by CCC 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.



       Subpart B--Apple Market Loss Assistance Payment Program II

    Source: 67 FR 57720, Sept. 12, 2002, unless otherwise noted.



Sec.  1470.101  Applicability.

    (a) The regulations in this subpart are applicable to producers of 
the 2000 crop of apples. These regulations set forth the terms and 
conditions under which the Commodity Credit Corporation (CCC) shall 
provide payments to apple producers who have applied to participate in 
the Apple Market Loss Assistance Payment Program II in accordance with 
section 741 of Public Law 107-76, as amended by Public Law 107-117. 
Additional terms and conditions may be set forth in the payment 
application that must be executed by participants to receive a market 
loss payment for apples.
    (b) Payments shall be available only for apples produced and 
harvested in the United States.



Sec.  1470.102  Administration.

    (a) The Apple Market Loss Assistance Payment Program II shall be 
administered under the general supervision of the Executive Vice 
President, CCC (Administrator, FSA), or a designee, and shall be carried 
out in the field by FSA State and county committees (State and county 
committees) and FSA employees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this subpart.
    (c) The State committee shall take any action required by the 
regulations of this subpart that has not been taken by the county 
committee. The State committee shall also:
    (1) Correct, or require the county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this subpart; and
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this subpart.
    (d) No provision or delegation of this subpart to a State or county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements do not adversely affect the operation of the Apple 
Market Loss Assistance Payment Program II and does not violate statutory 
limitations on the program.
    (f) Payment applications and related documents not executed in 
accordance with the terms and conditions determined and announced by 
CCC, including any purported execution outside of the dates authorized 
by CCC, shall be null and void unless the Executive Vice President, CCC, 
shall otherwise allow.



Sec.  1470.103  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Apple Market Loss Assistance Payment 
Program II established by this subpart.
    Administrator means the FSA Administrator.
    Apple operation means any person or group of persons who, as a 
single unit as determined by CCC, produces and market apples in the 
United States.
    Application means Form CCC-891, the Apple Market Loss Assistance 
Payment Application.
    Application period means the date established by the Deputy 
Administrator for producers to apply for program benefits.
    CCC means the Commodity Credit Corporation.

[[Page 654]]

    County committee means the FSA county committee.
    County office means the local FSA office.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), Farm Service Agency (FSA) or a designee.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Eligible production means apples that were produced and harvested in 
the United States anytime during the 2000 crop year, up to a maximum of 
5,000,000 pounds per apple operation.
    Payment pounds means the pounds of apples for which an operation is 
eligible to be paid under this subpart.
    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 
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.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.
    Verifiable production records means evidence that is used to 
substantiate the amount of production reported and that can be verified 
by CCC through an independent source.



Sec.  1470.104  Time and method of application.

    (a) Apple producers may obtain an application, in person, by mail, 
by telephone, or by facsimile from any county FSA office. In addition, 
applicants may download a copy of the application at http://
www.sc.egov.usda.gov.
    (b) A request for benefits under this subpart must be submitted on a 
completed application as defined in Sec.  1470.103. Applications should 
be submitted to the FSA county office serving the county where the apple 
operation is located but, in any case, must be received by the FSA 
county office by the close of business on the date established by the 
Deputy Administrator. Applications not received by the close of business 
on such date will be disapproved as not having been timely filed and the 
apple operation will not be eligible for benefits under this program.
    (c) All persons who share in the risk of an apple operation's total 
production must certify to the information on the application before the 
application will be considered complete.
    (d) The apple operation requesting benefits under this subpart must 
certify to the accuracy and truthfulness of the information provided in 
their application. All information provided is subject to verification 
by CCC. Refusal to allow CCC or any other agency of the Department of 
Agriculture to verify any information provided will result in a denial 
of eligibility. Furnishing the information 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.  1470.105  Eligibility.

    (a) To be eligible to receive a payment under this subpart, an apple 
operation must:
    (1) Have produced and harvested apples in the United States at some 
time during the 2000 crop year;
    (2) Not have been compensated for the same market loss by any other 
Federal programs, except an indemnity provided under a policy or plan of 
insurance offered under the Federal Crop Insurance Act (7 U.S.C. 1501).
    (3) Apply for payments during the application period.
    (b) Payments may be made for losses suffered by an eligible producer 
who is now deceased or is a dissolved entity if a representative who 
currently has authority to enter into a contract for the producer signs 
the application for payment. Proof of authority to sign for the deceased 
producer or dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint

[[Page 655]]

venture, all members of the general partnership or joint venture at the 
time of dissolution, or their duly authorized representatives must sign 
the application for payment.
    (c) An apple operation must submit a timely application and comply 
with all other terms and conditions of this subpart and instructions 
issued by CCC, as well as comply with those instructions that are 
otherwise contained in the application to be eligible for benefits under 
this subpart.
    (d) All payments under this part are subject to the availability of 
funds.



Sec.  1470.106  Proof of production.

    (a) Apple operations selected for spot checks by CCC must, in 
accordance with instructions issued by the Deputy Administrator, provide 
adequate proof of the apples produced and harvested during the 2000 crop 
year to verify production. The documentary evidence of apple production 
claimed for payment shall be reported to CCC together with any 
supporting documentation under paragraph (b) of this section. The 2000 
crop year production must be documented using actual records.
    (b) All persons involved in such apple operation producing apples 
during the 2000 crop year shall provide any available supporting 
documents to assist the county FSA office in verifying the operation's 
apple production indicated on the application. Examples of supporting 
documentation include, but are not limited to: picking, packout, and 
payroll records, RMA records, sales documents, copies of receipts, 
ledgers of income, or any other documents available to confirm the 
production and production history of the apple operation. In the event 
that supporting documentation is not presented to the county FSA office 
requesting the information, apple operations will be determined 
ineligible for benefits.



Sec.  1470.107  Availability of funds.

    The total available program funds shall be $75 million as provided 
by section 741 of Public Law 107-76 except as determined appropriate by 
the Executive Vice President of CCC and authorized by law. Any 
discretion in such matters shall be the discretion of the Executive Vice 
President alone.



Sec.  1470.108  Applicant payment quantity.

    (a) The applicant's payment quantity of apples will be determined by 
CCC, based on the production of the 2000 crop of apples that was 
produced and harvested by each operation.
    (b) The maximum quantity of apples for which producers are eligible 
for a payment under this subpart shall be 5,000,000 pounds per 
operation. The Deputy Administrator shall determine what may be 
considered a distinct operation and that decision shall be final.



Sec.  1470.109  Payment rate and apple operation payment.

    (a) A national per-pound payment rate will be determined after the 
conclusion of the application period, and shall be calculated, to the 
extent practicable, by dividing the $75 million available for the Apple 
Market Loss Assistance Payment Program II by the total pounds of 
eligible production approved for payment.
    (b) Each eligible apple operation's payment will be calculated by 
multiplying the payment rate determined in paragraph (a) of this section 
by the apple operation's eligible production.
    (c) In the event that approval of all eligible applications would 
result in expenditures in excess of the amount available, CCC shall 
reduce the payment rate in such manner as CCC, in its sole discretion, 
finds fair and reasonable.
    (d) A reserve may be created to handle claims but claims shall not 
be payable once the available funding is expended.



Sec.  1470.110  Offsets and withholdings.

    CCC may offset or withhold any amount due CCC under this subpart in 
accordance with the provisions of 7 CFR part 1403.



Sec.  1470.111  Assignments.

    Any person who may be entitled to a payment may assign his rights to 
such payment in accordance with 7 CFR part 1404 or successor regulations 
as designated by the Department.



Sec.  1470.112  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this

[[Page 656]]

subpart may make a request for reconsideration or appeal of such 
determination in accordance with the appeal regulations set forth at 7 
CFR parts 11 and 780.



Sec.  1470.113  Misrepresentation and scheme or device.

    (a) An apple operation shall be ineligible to receive assistance 
under this program if it is determined by the State committee or county 
committee to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a determination under this 
program. CCC will notify the appropriate investigating agencies of the 
United States and take steps deemed necessary to protect the interests 
of the government.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded to CCC in accordance with Sec.  1470.117(a). The remedies 
provided in this subpart shall be in addition to other civil, criminal, 
or administrative remedies which may apply.



Sec.  1470.114  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:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show that 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.  1470.115  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 
subpart, such person or persons specified in part 707 of this chapter 
may receive such benefits, as determined appropriate by FSA.



Sec.  1470.116  Maintenance and inspection of records.

    (a) 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, as may be requested by 
CCC. Such records and accounts must be retained for 3 years after the 
date of payment to the apple operation under this program. Destruction 
of the records 3 years after the date of payment shall be the risk of 
the party undertaking the destruction.
    (b) At all times during regular business hours, authorized 
representatives of CCC, the United States Department of Agriculture, or 
the Comptroller General of the United States shall have access to the 
premises of the apple operation in order to inspect, examine, and make 
copies of the books, records, and accounts, and other written data as 
specified in paragraph (a) of this section.
    (c) Any funds disbursed pursuant to this subpart to any person or 
operation who does not comply with the provisions of paragraphs (a) or 
(b) of this section, or who otherwise receives a payment for which they 
are not eligible, shall be refunded with interest.



Sec.  1470.117  Refunds; joint and several liability.

    (a) In the event of an error on an application, a failure to comply 
with any term, requirement, or condition for payment arising under the 
application, or this subpart, all improper payments shall be refunded to 
CCC together with interest and late payment charges as provided in part 
1403 of this chapter.
    (b) All persons signing an apple operation's application for payment 
as having an interest in the operation shall be jointly and severally 
liable for any refund, including related charges, that

[[Page 657]]

is determined to be due for any reason under the terms and conditions of 
the application or this part with respect to such operation.



       Subpart C--Apple Market Loss Assistance Payment Program III

    Source: 67 FR 63243, Oct. 11, 2002, unless otherwise noted.



Sec.  1470.201  Applicability.

    (a) The regulations in this subpart are applicable to producers of 
the 2000 crop of apples. These regulations set forth the terms and 
conditions under which the Commodity Credit Corporation (CCC) shall 
provide payments to apple producers who have applied to participate in 
the Apple Market Loss Assistance Payment Program III in accordance with 
section 10105 of Public Law 107-171. Additional terms and conditions may 
be set forth in the payment application that must be executed by 
participants to receive a market loss payment for apples.
    (b) Payments shall be available only for apples produced and 
harvested in the United States.



Sec.  1470.202  Administration.

    (a) The Apple Market Loss Assistance Payment Program III shall be 
administered under the general supervision of the Executive Vice 
President, CCC, or a designee, and shall be carried out in the field by 
FSA State and county committees (State and county committees) and FSA 
employees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of the regulations of this subpart.
    (c) The State committee shall take any action required by the 
regulations of this subpart that has not been taken by the county 
committee. The State committee shall also:
    (1) Correct, or require the county committee to correct, any action 
taken by such county committee that is not in accordance with the 
regulations of this subpart; and
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this subpart.
    (d) No provision or delegation of this subpart to a State or county 
committee shall preclude the Executive Vice President, CCC, or a 
designee, from determining any question arising under the program or 
from reversing or modifying any determination made by the State or 
county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other requirements do not adversely affect the operation of the Apple 
Market Loss Assistance Payment Program III and do not violate statutory 
limitations on the program.
    (f) Payment applications and related documents not executed in 
accordance with the terms and conditions determined and announced by 
CCC, including any purported execution outside of the dates authorized 
by CCC, shall be null and void unless the Executive Vice President, CCC, 
shall otherwise allow.



Sec.  1470.203  Definitions.

    The definitions set forth in this section shall apply to the Apple 
Market Loss Assistance Payment Program III as follows:
    Administrator means the Administrator, Farm Service Agency.
    Apple operation means any person or group of persons who, as a 
single unit as determined by CCC, produces and markets apples in the 
United States.
    Application means the Apple Market Loss Assistance Payment 
Application.
    Application period means the period beginning September 30, 2002, 
and ending on November 8, 2002, for producers to apply for program 
benefits.
    CCC means the Commodity Credit Corporation.
    County committee means the FSA county committee.
    County office means the local FSA office.
    Department or USDA means the United States Department of 
Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency, or a designee.
    Eligible production means apples that were produced and harvested in 
the

[[Page 658]]

United States anytime during the 2000 crop year, up to a maximum of 5 
million pounds per apple operation.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Payment pounds means the pounds of apples for which an operation is 
eligible to be paid under this subpart.
    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 
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 subpart.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.
    Verifiable production records means evidence that is used to 
substantiate the amount of harvested production reported and that can be 
verified by CCC through an independent source.



Sec.  1470.204  Time and method of application.

    (a) Apple producers may obtain an application, in person, by mail, 
by telephone, or by facsimile from any county FSA office. In addition, 
applicants may download a copy of the application at http://
www.sc.egov.usda.gov.
    (b) A request for benefits under this subpart must be submitted on a 
completed application as defined in Sec.  1470.203. Applications should 
be submitted to the FSA county office serving the county where the apple 
operation is located but, in any case, must be received by the FSA 
county office by the close of business on November 8, 2002. Applications 
not received by the close of business on such date will be disapproved 
as not having been timely filed and the apple operation will not be 
eligible for benefits under this program.
    (c) All persons who share in the risk of an apple operation's total 
production must certify to the information on the application before the 
application will be considered complete.
    (d) The apple operation requesting benefits under this subpart must 
certify to the accuracy and truthfulness of the information provided in 
their application. All information provided is subject to verification 
by CCC. Refusal to allow CCC or any other agency of the Department of 
Agriculture to verify any information provided will result in a denial 
of eligibility. Furnishing the information 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.  1470.205  Eligibility.

    (a) To be eligible to receive a payment under this subpart, an apple 
operation must:
    (1) Have produced and harvested apples in the United States at some 
time during the 2000 crop year;
    (2) Apply for payments during the application period according to 
Sec.  1470.204.
    (b) Payments may be made for losses suffered by an eligible producer 
who is now deceased or is a dissolved entity if a representative who 
currently has authority to enter into a contract for the producer signs 
the application for payment. Proof of authority to sign for the deceased 
producer or dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint venture, all members of the 
general partnership or joint venture at the time of dissolution, or 
their duly authorized representatives, must sign the application for 
payment.
    (c) An apple operation must submit a timely application and comply 
with all other terms and conditions of this subpart and instructions 
issued by CCC, as well as comply with those instructions that are 
otherwise contained in the application to be eligible for benefits under 
this subpart.
    (d) All payments under this subpart are subject to the availability 
of funds.



Sec.  1470.206  Proof of production.

    (a) Apple operations selected for spot checks by CCC must, in 
accordance with instructions issued by the Deputy

[[Page 659]]

Administrator, provide adequate proof of the apples produced and 
harvested during the 2000 crop year to verify production. The 
documentary evidence of apple production claimed for payment shall be 
reported to CCC together with any supporting documentation under 
paragraph (b) of this section. The 2000 crop year production must be 
documented using actual records.
    (b) All persons involved in such apple operation producing apples 
during the 2000 crop year must provide any available supporting 
documents to assist the county FSA office in verifying the operation's 
apple production indicated on the Application. Examples of supporting 
documentation include, but are not limited to: picking, packout, and 
payroll records, RMA records, sales documents, copies of receipts, 
ledgers of income, or any other documents available to confirm the 
production and production history of the apple operation. In the event 
that supporting documentation is not presented to the county FSA office 
requesting the information, apple operations will be determined 
ineligible for benefits.



Sec.  1470.207  Availability of funds.

    The total available program funds shall be $94 million as provided 
by Sec.  10105 of Public Law 107-171 except as determined appropriate by 
the Executive Vice President of CCC and authorized by law. Any 
discretion in such matters shall be the discretion of the Executive Vice 
President alone.



Sec.  1470.208  Applicant payment quantity.

    (a) The applicants payment quantity of apples will be determined by 
CCC, based on the production of the 2000 crop of apples that was 
produced and harvested by each operation.
    (b) The maximum quantity of apples for which producers are eligible 
for a payment under this subpart shall be 5 million pounds per 
operation. The Deputy Administrator shall determine what may be 
considered a distinct operation and that decision shall be final.



Sec.  1470.209  Payment rate and apple operation payment.

    (a) A national per-pound payment rate will be determined after the 
conclusion of the application period, and shall be calculated, to the 
extent practicable, by dividing the $94 million available for the Apple 
Market Loss Assistance Payment Program III by, for all applicants taken 
together, the total pounds of eligible production approved for payment.
    (b) Each eligible apple operation's payment will be calculated by 
multiplying the payment rate determined in paragraph (a) of this section 
by the apple operation's eligible production.
    (c) In the event that approval of all eligible applications would 
result in expenditures in excess of the amount available, CCC shall 
reduce the payment rate in such manner as CCC, in its sole discretion, 
finds fair and reasonable.
    (d) A reserve may be created to handle claims but claims shall not 
be payable once the available funding is otherwise expended.



Sec.  1470.210  Offsets and withholdings.

    CCC may offset or withhold any amount due CCC under this subpart in 
accordance with the provisions of part 1403 of this chapter.



Sec.  1470.211  Assignments.

    Any person who may be entitled to a payment may assign his rights to 
such payment in accordance with part 1404 of this chapter or successor 
regulations as designated by the Department.



Sec.  1470.212  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart 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.  1470.213  Misrepresentation and scheme or device.

    (a) An apple operation shall be ineligible to receive assistance 
under this program if it is determined by the State committee or county 
committee to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation; or

[[Page 660]]

    (3) Misrepresented any fact affecting a determination under this 
program. CCC will notify the appropriate investigating agencies of the 
United States and take steps deemed necessary to protect the interests 
of the government.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded to CCC in accordance with Sec.  1470.217(a). The remedies 
provided in this subpart shall be in addition to other civil, criminal, 
or administrative remedies which may apply.



Sec.  1470.214  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:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show that 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.  1470.215  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.  1470.216  Maintenance and inspection of records.

    (a) 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, as may be requested by 
CCC. Such records and accounts must be retained for 3 years after the 
date of payment to the apple operation under this program. Destruction 
of the records 3 years after the date of payment shall be at the risk of 
the party undertaking the destruction.
    (b) At all times during regular business hours, authorized 
representatives of CCC, the United States Department of Agriculture, or 
the Comptroller General of the United States shall have access to the 
premises of the apple operation in order to inspect, examine, and make 
copies of the books, records, and accounts, and other written data as 
specified in paragraph (a) of this section.
    (c) Any funds disbursed pursuant to this part to any person or 
operation who does not comply with the provisions of paragraphs (a) or 
(b) of this section, or who otherwise receives a payment for which they 
are not eligible, shall be refunded with interest.



Sec.  1470.217  Refunds; joint and several liability.

    (a) In the event of an error on an application, a failure to comply 
with any term, requirement, or condition for payment arising under the 
application, or this subpart, all improper payments shall be refunded to 
CCC together with interest and late payment charges as provided in part 
1403 of this title.
    (b) All persons signing an apple operation's application for payment 
as having an interest in the operation shall be jointly and severally 
liable for any refund, including related charges, that is determined to 
be due for any reason under the terms and conditions of the application 
or this part with respect to such operation.



Sec.  1470.218  Violations of highly erodible land and wetland 
conservation provisions.

    The provisions of part 12 of this title apply to this subpart.



PART 1480--2001 AND 2002-CROP DISASTER PROGRAM--Table of Contents




Sec.
1480.1 Applicability.
1480.2 Administration.
1480.3 Definitions.
1480.4 Producer eligibility.
1480.5 Time for filing application.
1480.6 Limitations on payments and other benefits.

[[Page 661]]

1480.7 Requirement to purchase crop insurance and non-insurable 
          coverage.
1480.8 Miscellaneous provisions.
1480.9 Matters of general applicability.
1480.10 Eligible disaster conditions.
1480.11 Qualifying 2001 or 2002-crop losses.
1480.12 Rates and yields; calculating payments.
1480.13 Production losses, producer responsibility.
1480.14 Determination of production.
1480.15 Calculation of acreage for crop losses other than prevented 
          planted.
1480.16 Calculation of prevented planted acreage.
1480.17 Quantity adjustments for diminished quality for certain crops.
1480.18 Value loss crops.
1480.19 Other provisions for specialty crops.
1480.20 Misrepresentation and scheme or device.
1480.21 Offsets, assignments, and debt settlement.
1480.22 Compliance with highly erodible land and wetland conservation 
          provisions.

    Authority: Pub. L. 106-387, 114 Stat: 1549, Pub. L. 108-7 117 Stat. 
11 (15 U.S.C. 714 et seq.).

    Source: 68 FR 37943, June 26, 2003, unless otherwise noted.



Sec.  1480.1  Applicability.

    This part sets forth the terms and conditions of the 2001 and 2002-
Crop Disaster Program (CDP). The CDP makes disaster payments to 
producers who have incurred losses in quantity or quality to eligible 
2001 or 2002 crops due to disasters as determined by the Commodity 
Credit Corporation (CCC) under the Agricultural Assistance Act of 2003 
(Pub. L. 108-007).



Sec.  1480.2  Administration.

    (a) The program will be administered under the general supervision 
of the executive Vice President, CCC, and shall be carried out in the 
field by Farm Service Agency (FSA) State and county committees.
    (b) State and county committees and representatives do not have the 
authority to modify or waive any of the provisions of this part.
    (c) The State committee shall take any action required by this part 
that has not been taken by an county committee. The State committee 
shall also:
    (1) Correct or require an county committee to correct any action 
taken by such FSA county committee that is not in accordance with this 
part; and
    (2) Require an county committee to withhold taking or reverse any 
action that is not in accordance with this part.
    (d) No delegation in this part to an State or county committee shall 
prevent the Deputy Administrator from determining any question arising 
under the program or from reversing or modifying any determination made 
by an State or county committee.
    (e) The Deputy Administrator may authorize State and county 
committees to waive or modify non-statutory deadlines or other program 
requirements in cases where lateness or failure to meet such other 
requirements does not adversely affect the operation of the program.



Sec.  1480.3  Definitions.

    The definitions in this section apply to all determinations made 
under this part. The terms defined in part 718 of this title and 1400 
and 1437 of this chapter shall also be applicable, except where those 
definitions conflict with the definitions set forth in this section. The 
definitions follow:
    Actual production means the total quantity of the crop appraised, 
harvested or that could have been harvested as determined by the FSA 
State or county committee in accordance with instructions issued by the 
Deputy Administrator.
    Additional coverage means a plan of crop insurance coverage 
providing a level of coverage greater than the level available under 
catastrophic risk protection.
    Administrative fee means an amount the producer must pay for NAP for 
non-insurable crops.
    Appraised production means production determined by FSA, or a 
company reinsured by the Federal Crop Insurance Corporation (FCIC), that 
was unharvested but which was determined to reflect the crop's yield 
potential at the time of appraisal.
    Approved yield means the amount of production per acre, computed in 
accordance with FCIC's Actual Production History Program (7 CFR part 
400, subpart G) or for crops not included under 7 CFR part 400, subpart 
G, the

[[Page 662]]

yield used to determine the guarantee. For crops covered under the 
Noninsured Crop Disaster Assistance program, the approved yield is 
established according to part 1437 of this chapter. Only the approved 
yields based on production evidence submitted to FSA prior to the 2003 
Act will be used for purposes of the 2001 or 2002 CDP. Other yields may 
be assigned when an eligible approved yield is not available.
    Aquaculture means the reproduction and rearing of aquatic species in 
controlled or selected environments, including, but not limited to, 
ocean ranching (except private ocean ranching of Pacific salmon for 
profit in those States where such ranching is prohibited by law).
    Aquaculture facility means any land or structure including, but not 
limited to, a laboratory, hatchery, rearing pond, raceway, pen, 
incubator, or other equipment used in aquaculture.
    Aquacultural species means any aquacultural species as defined in 
part 1437 of this chapter.
    Average market price means the price or dollar equivalent on an 
appropriate basis for an eligible crop established by CCC for 
determining payment amounts. Such price will be based on the harvest 
basis without the inclusion of transportation, storage, processing, 
packing, marketing, or other post-harvesting expenses and will be based 
on historical data.
    Catastrophic risk protection means the minimum level of coverage 
offered by FCIC.
    CCC means the Commodity Credit Corporation.
    Control county means for a producer with farming interests in only 
one county, the county FSA office in which the producer's farm(s) is 
administratively located; or for a producer with farming interests that 
are administratively located in more than one county FSA office, the 
county FSA office designated by FSA to control the payments received by 
the producer.
    County committee means the county FSA committee.
    Crop insurance means an insurance policy reinsured by the Federal 
Crop Insurance Corporation under the provisions of the Federal Crop 
Insurance Act, as amended.
    Crop year means: for insured and uninsured crops, the crop year as 
defined according to the applicable crop insurance policy; and for non-
insurable crops, the year harvest normally begins for the crop, except 
the crop year for all aquacultural species and nursery crops shall mean 
the period from October 1 through the following September 30, and the 
crop year for purposes of calculating honey losses shall be the period 
running from January 1 through the following December 31.
    Disaster means damaging weather, including drought, excessive 
moisture, hail, freeze, tornado, hurricane, typhoon, excessive wind, 
excessive heat, weather-related saltwater intrusion, weather-related 
irrigation water rationing, and earthquake and volcanic eruptions, or 
any combination thereof. Disaster includes a related condition that 
occurs as a result of the damaging weather and exacerbates the condition 
of the crop, such as disease and insect infestation.
    Eligible crop means a crop insured by FCIC as defined in part 400 of 
this title, or included under the non-insured crop disaster assistance 
program (NAP) as defined under part 1437 of this chapter. Tobacco, sugar 
cane, and sugar beets are not eligible under this part. Losses of 
livestock and livestock related losses are not compensable under this 
part but may, depending on the circumstances, be compensable under part 
1439 of this chapter.
    End use means the purpose for which the harvested crop is used, such 
as grain, hay or seed.
    Expected market price (price election) means the price per unit of 
production (or other basis as determined by FCIC) anticipated during the 
period the insured crop normally is marketed by producers. This price 
will be set by FCIC before the sales closing date for the crop. The 
expected market price may be less than the actual price paid by buyers 
if such price typically includes remuneration for significant amounts of 
post-production expenses such as conditioning, culling, sorting, 
packing, etc.
    Expected production means, for an agricultural unit, the historic 
yield multiplied by the number of planted or prevented acres of the crop 
for the unit.

[[Page 663]]

    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government Corporation within USDA.
    Final planting date means the date established by RMA for insured 
and uninsured crops by which the crop must be initially planted in order 
to be insured for the full production guarantee or amount of insurance 
per acre. For non-insurable crops, the final planting date is the end of 
the planting period for the crop as determined by CCC.
    Flood prevention means with respect to aquacultural species, placing 
the aquacultural facility in an area not prone to flood; in the case of 
raceways, providing devices or structures designed for the control of 
water level; and for nursery crops, placing containerized stock in a 
raised area above expected flood level and providing draining 
facilities, such as drainage ditches or tile, gravel, cinder or sand 
base.
    FSA means the Farm Service Agency.
    Good nursery growing practices means utilizing flood prevention, 
growing media, fertilization to obtain expected production results, 
irrigation, insect and disease control, weed, rodent and wildlife 
control, and over winterization storage facilities.
    Growing media means for aquacultural species, media that provides 
nutrients necessary for the production of the aquacultural species and 
protects the aquacultural species from harmful species or chemicals; and 
for nursery crops, media designed to prevent root rot and other media-
related problems through a well-drained media with a minimum 20 percent 
air pore space and pH adjustment for the type of plant produced
    Harvested means:
    (1) For insured and uninsured crops, harvested as defined according 
to the applicable crop insurance policy;
    (2) For non-insurable single harvest crops, that a crop has been 
removed from the field, either by hand or mechanically, or by grazing of 
livestock;
    (3) For non-insurable crops with potential multiple harvests in 1 
year or harvested over multiple years, that the producer has, by hand or 
mechanically, removed at least one mature crop from the field during the 
crop year:
    (4) For mechanically harvested non-insurable crops, that the crop 
has been removed from the field and placed in a truck or other 
conveyance, except hay is considered harvested when in the bale, whether 
removed from the field or not. Grazed land will not be considered 
harvested for the purpose of determining an unharvested or prevented 
planting payment factor.
    Historic yield means, for a unit, the higher of the county average 
yield or the producer's approved yield. The COC may adjust the yield if 
the producer, practice, crop type or area is not capable of producing a 
crop at that level during the normal year. The yield may also be 
adjusted, or production assigned for ineligible causes of loss. The 
historic yield for:
    (1) An insured participant shall be the higher of the county average 
yield listed on the crop table or the approved federal crop insurance 
APH, for the disaster year.
    (2) NAP participants shall be the higher of the county average yield 
as listed on the crop table or approved NAP APH for the disaster year.
    (3) Participants without federal crop insurance or NAP coverage for 
the disaster year shall be assigned the county average listed on the 
crop table.
    Insurance is available means when crop information is contained in 
RMA's county actuarial documents for a particular crop and a policy can 
be obtained through the RMA system, except if the Group Risk Plan or 
Adjusted Gross Revenue Plan of crop insurance was the only plan of 
insurance available for the crop in the county in the applicable crop 
year, insurance is considered not available for that crop.
    Insured crops means those crops covered by crop insurance pursuant 
to 7 CFR chapter IV and for which the producer purchased either the 
catastrophic or buy-up level of crop insurance so available.
    Limited coverage means plans of crop insurance offering coverage 
that is equal to or greater than 50 percent of the approved yield 
indemnified at 100 percent of the expected market price, or a comparable 
coverage as established by FCIC, but less than 65 percent of the 
approved yield indemnified at 100 percent of the expected market price, 
or a comparable coverage as established by FCIC.

[[Page 664]]

    Maximum loss level means the maximum level of crop loss to be 
applied to a producer without acceptable production records. Loss levels 
are expressed in either a percent of loss or yield per acre, and should 
reflect the amount of production that a producer should have made 
considering the eligible disaster conditions in the area or county, as 
determined by the county committee in accordance with instructions 
issued by the Deputy Administrator.
    Multi-use crop means a crop intended for more than one end use 
during the calendar year such as grass harvested for seed, hay, and/or 
grazing.
    Multiple cropping means the planting of two or more different crops 
on the same acreage for harvest within the same crop year.
    Multiple planting means the planting for harvest of the same crop in 
more than one planting period in a crop year on different acreage.
    NASS means the National Agricultural Statistics Service.
    Net Crop Insurance Indemnity means the indemnity minus the producer 
paid premium.
    Non-insurable crops means those crops for which crop insurance was 
not available.
    Normal mortality means the percentage of dead aquacultural species 
that would normally occur during the crop year.
    Pass-through funds means revenue that goes through, but does not 
remain in, a person's account, such as money collected by an auction 
house or consignment business that is subsequently paid to the sellers 
or consignors, less a commission withheld by the auction house.
    Person means person as defined in part 1400 of this chapter, and all 
rules with respect to the determination of a person found in that part 
shall be applicable to this part. However, the determinations made in 
this part in accordance with 7 CFR part 1400, subpart B, Person 
Determinations, shall also take into account any affiliation with any 
entity in which an individual or entity has an interest, irrespective of 
whether or not such entities are considered to be engaged in farming.
    Planted acreage means land in which seed, plants, or trees have been 
placed, appropriate for the crop and planting method, at a correct 
depth, into a seed bed that has been properly prepared for the planting 
method and production practice normal to the area as determined by the 
county committee.
    Prevented planting means the inability to plant an eligible crop 
with proper equipment during the planting period as a result of an 
eligible cause of loss, as determined by CCC. The eligible cause of loss 
must have:
    (1) Occurred after a previous planting period for the crop, and
    (2) Occurred before the final planting date for the crop in the 
applicable crop year or in the case of multiple plantings, the harvest 
date of the first planting in the applicable planting period, and
    (3) Generally affected other producers in the area, as determined by 
CCC.
    Production means quantity of the crop or commodity produced 
expressed in a specific unit of measure such as bushels, pounds, etc.
    Rate means price per unit of the crop or commodity.
    Related condition means with respect to disaster, a condition that 
causes deterioration of a crop such as insect infestation, plant 
disease, or aflatoxin that is accelerated or exacerbated as a result of 
damaging weather as determined in accordance with instructions issued by 
the Deputy Administrator.
    Reliable production records means evidence provided by the producer 
that is used to substantiate the amount of production reported when 
verifiable records are not available, including copies of receipts, 
ledgers of income, income statements of deposit slips, register tapes, 
invoices for custom harvesting, and records to verify production costs, 
contemporaneous measurements, truck scale tickets, and contemporaneous 
diaries that are determined acceptable by the county committee.
    Repeat crop means with respect to a producer's production, a 
commodity that is planted or prevented from being planted in more than 
one planting period on the same acreage in the same crop year.
    RMA means the Risk Management Agency.

[[Page 665]]

    Salvage value means the dollar amount or equivalent for the quantity 
of the commodity that cannot be marketed or sold in any recognized 
market for the crop.
    Secondary use means the harvesting of a crop for a use other than 
the intended use, except for crops with intended use of grain, but 
harvested as silage, ensilage, cobbage, hay, cracked, rolled, or 
crimped.
    Secondary use value means the value determined by multiplying the 
quantity of secondary use times the CCC-established price for this use.
    State committee means the FSA State committee.
    Uninsured crops means those crops for which Federal crop insurance 
was available, but the producer did not purchase insurance.
    Unit means, unless otherwise determined by the Deputy Administrator, 
basic unit as described in part 457 of this title that, for ornamental 
nursery production, shall include all eligible plant species and sizes.
    Unit of measure means:
    (1) For all insured and uninsured crops, the FCIC-established unit 
of measure;
    (2) For all non-insurable crops, if available, the established unit 
of measure used for the 2002 Noninsured Crop Assistance Program price 
and yield;
    (3) For aquacultural species, a standard unit of measure such as 
gallons, pounds, inches or pieces, established by the State committee 
for all aquacultural species or varieties;
    (4) For turfgrass sod, a square yard;
    (5) For maple sap, a gallon; and
    (6) For all other crops, the smallest unit of measure that lends 
itself to the greatest level of accuracy with minimal use of fractions, 
as determined by the State committee.
    United States means all 50 States of the United States, the 
Commonwealth of Puerto Rico, the Virgin Islands of the United States, 
and to the extent the Deputy Administrator determines it to be feasible 
and appropriate Guam, American Samoa, the Commonwealth of the Northern 
Mariana Islands and the former Trust Territory of the Pacific Islands, 
which include Palau, Federated States of Micronesia and the Marshall 
Islands.
    USDA means United States Department of Agriculture.
    Value loss crop will have the meaning assigned in part 1437 of this 
chapter.
    Verifiable production records means evidence that is used to 
substantiate the amount of production reported and that can be verified 
by CCC through an independent source.
    Yield means unit of production, measured in bushels, pounds, etc., 
per area of consideration, usually measured in acres.



Sec.  1480.4  Producer eligibility.

    (a) Producers in the United States will be eligible to receive 
disaster benefits under this part only if they have suffered losses of 
eligible crops in 2001 or 2002 as a result of a disaster or related 
condition, or as further specified in this part. Producers may not 
receive benefits with respect to volunteer stands of crops.
    (b) Payments may be made for losses suffered by an eligible producer 
who is now deceased or is a dissolved entity if a representative who 
currently has authority to enter into a contract for the producer signs 
the application for payment. Proof of authority to sign for the deceased 
producer or dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint venture, all members of the 
general partnership or joint venture at the time of dissolution or their 
duly authorized representatives must sign the application for payment.
    (c) As a condition to receive benefits under this part, a producer 
must have been in compliance with the Highly Erodible Land Conservation 
and Wetland Conservation provisions of 7 CFR part 12, for the 2001 or 
2002 crop year, as applicable, and must not otherwise be barred from 
receiving benefits under 7 CFR part 12 or any other law.



Sec.  1480.5  Time for filing application.

    Applications for benefits under the 2001 or 2002-Crop Disaster 
Program must be filed in the county FSA office serving the county where 
the producer's farm is located for administrative purposes before the 
close of business on August 25, 2003, or such other later date that may 
be announced by the Deputy Administrator.

[[Page 666]]



Sec.  1480.6  Limitations on payments and other benefits.

    (a) A producer may receive disaster benefits on either 2001 or 2002 
crop losses as specified under this part.
    (b) Payments will not be made under this part for grazing losses.
    (c) CCC may divide and classify crops based on loss susceptibility, 
yield, and other factors.
    (d) No person shall receive more than a total of $80,000 in disaster 
benefits under this part, unless otherwise specified.
    (e) No person shall receive disaster benefits under this part in an 
amount that exceeds 95 percent of the value of the expected production 
for the relevant period as determined by CCC. The sum of the value of 
the crop not lost if any; the disaster payment; and the net crop 
insurance indemnity, cannot exceed 95 percent of what the crop's value 
would have been if there had been no loss.
    (f) A person whose gross revenue is in excess of $2.5 million for 
the preceding tax year shall not be eligible to receive disaster 
benefits under this part. Gross revenue includes the total income and 
total gross receipts of the person, before any reductions. Gross revenue 
shall not be adjusted, amended, discounted, netted or modified for any 
reason. No deductions for costs, expenses, or pass through funds will be 
deducted from any calculation of gross revenue. For purposes of making 
this determination, gross revenue means the total gross receipts 
received from farming, ranching and forestry operations if the person 
receives more than 50 percent of such person's gross income from farming 
or ranching; or the total gross receipts received from all sources if 
the person receives 50 percent or less of such person's gross receipts 
from farming, ranching and forestry.



Sec.  1480.7  Requirement to purchase crop insurance and non-insurable 
coverage.

    (a) Except as provided further in this section, any producer who 
elected not to purchase crop insurance on an insurable 2001 or 2002 crop 
for which the producer receives crop loss assistance or for non-
insurable crops, elected not to participate in NAP for the year for 
which benefits are received must:
    (1) Purchase crop insurance with additional coverage on that crop 
for the 2003 and 2004 crop years for the insurable crops.
    (2) NAP coverage by paying the administrative fee by the applicable 
State filing deadline and complete all required program requirements 
including yearly acreage reports, for the non-insurable crop for both 
2003 and 2004 crop years
    (b) If, at the time the producer applies for the 2001 or 2002 CDP 
the sales closing date for 2003 insurable crops, or for 2003 non-
insurable crops for which the producer sought benefits under the 2001 or 
2002 CDP has passed, the producer must purchase crop insurance policy or 
obtain NAP coverage, as applicable, for the next available 2 crops 
years.
    (c) If any producer fails to purchase crop insurance and/or NAP, as 
required in paragraph (a) or (b) of this section, the producer shall 
reimburse CCC for the full amount of the assistance, plus interest, 
provided to the producer under this part.



Sec.  1480.8  Miscellaneous provisions.

    (a) A person shall be ineligible to receive disaster assistance 
under this part if it is determined by the State or county committee or 
an official of FSA that such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.
    (b) All persons with a financial interest in the operation receiving 
benefits under this part shall be jointly and severally liable for any 
refund, including related charges, which is determined to be due CCC for 
any reason under this part.
    (c) In the event that any request for assistance or payment under 
this part was established as result of erroneous information or a 
miscalculation, the assistance or payment shall be recalculated and any 
excess refunded with applicable interest.

[[Page 667]]

    (d) The liability of any person for any penalty under this part or 
for any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to: 18 U.S.C. 286, 287, 371, 641, 651, 1001 and 1014; 15 
U.S.C. 714m; and 31 U.S.C. 3729.
    (e) 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 regulations set forth in parts 
11 and 780 of this title.
    (f) Any payment or portion thereof to any person shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the crop, or proceeds thereof.
    (g) For the purposes of 28 U.S.C. 3201(e), CCC waives the 
restriction on receipt of funds or benefits under this program but only 
as to beneficiaries who as a condition of such waiver agree to apply the 
2001 or 2002 CDP benefits to reduce the amount of the judgment lien.



Sec.  1480.9  Matters of general applicability.

    (a) For calculations of loss made with respect to insured crops, the 
producer's existing unit structure will be used as the basis for the 
calculation and may include optional units established in accordance 
with part 457 of this title. Insured crops may have basic units 
established if the existing unit structure is based on enterprise units 
or whole county units or written agreements. For uninsured and non-
insurable crops, basic units will be established for these purposes.
    (b) County average yield for loss calculations will be the average 
of the 1996 through 2000 official county yields established by CCC, 
excluding the years with the highest and lowest yields, respectively.
    (c) County committees will assign production when the county 
committee determines:
    (1) An acceptable appraisal or record of harvested production does 
not exist;
    (2) The loss is due to an ineligible cause of loss or practices, 
soil type, climate, or other environmental factors, that cause lower 
yields than those upon which the historic yield is based;
    (3) The producer has a contract providing a guaranteed payment for 
all or a portion of the crop; or
    (4) The crop is planted beyond the normal planting period for the 
crop.
    (d) The county committee shall establish a maximum loss level that 
should reflect the amount of production producers should have produced 
considering the eligible disaster conditions in the area or county for 
the same crop. The maximum loss level for the county shall be expressed 
as either a percent of loss or yield per acre. The maximum loss level 
will apply when:
    (1) Unharvested acreage has not been appraised by FSA, or a company 
reinsured by FCIC; or
    (2) Acceptable production records for harvested acres are not 
available from any source.
    (e) Assigned production or reduced yield for practices that result 
in lower yields than those for which the historic yield is based shall 
be established based on the acres found to have been subjected to those 
practices.
    (f) Assigned production for crops planted beyond the normal planting 
period for the crop shall be calculated according to the lateness of 
planting the crop. With the exception of replanted crops, if the crop is 
planted after the final planting date by:
    (1) Through 10 calendar days, the assigned production reduction will 
be based on one percent of the payment yield for each day involved;
    (2) Eleven (11) through 24 calendar days, the assigned production 
reduction will be based on 10 percent of the payment yield plus an 
additional two percent reduction of the payment yield for each day of 
days 11 through 24 that are involved; and
    (3) Twenty-five (25) or more calendar days or a date from which the 
crop would not reasonably be expected to mature by harvest, the assigned 
production reduction will be based on 50 percent of the payment yield or 
such greater amount determined by the county committee to be 
appropriate.

[[Page 668]]

    (4) CCC may adjust items 1 through 3 to make a comparable assignment 
for short rotation crops such as vegetables which may have a 30-day 
growing period.
    (g) Assigned production for producers with contracts to receive a 
guaranteed payment for production of an eligible crop will be 
established by the county committee by:
    (1) Determining the total amount of guaranteed payment for the unit;
    (2) Converting the guaranteed payment to guaranteed production by 
dividing the total amount of guaranteed payment by the approved county 
price for the crop or variety or such other factor deemed appropriate if 
otherwise the production would appear to be too high; and
    (3) Establishing the production for the unit as the greater of the 
actual net production for the unit or the guaranteed payment, or 
combination thereof if greater.



Sec.  1480.10  Eligible disaster conditions.

    (a) Except as provided in paragraph (b) of this section, this part 
applies to losses where the crop could not be planted or crop 
production, both in quantity and quality, was adversely affected by 
disasters as defined in 1480.3 or:
    (1) Insect infestation as a related condition to damaging weather if 
documented by COC with published data;
    (2) Disease as a related condition to damaging weather;
    (3) Plum pox virus;
    (4) Pierce's disease;
    (5) Watermelon sudden wilt;
    (6) Salt water intrusion of an irrigation supply;
    (7) Mexican fruit fly quarantine in San Diego and San Bernardino 
counties in California;
    (8) Irrigation water rationing if proof is provided that water was 
rationed by a Government entity or water district (unless the producer 
was compensated by the Government entity or water district);
    (9) Grasshoppers;
    (10) Lack of water supply due to drought conditions for irrigated 
crops;
    (11) Mormon crickets; or
    (12) Other causes or factors as determined by the Deputy 
Administrator.
    (b) Disaster benefits will not be available under this part if the 
crop could not be planted or crop production, both in quantity and 
quality, was adversely affected by:
    (1) Poor farming practices;
    (2) Poor management decisions; or
    (3) Drifting herbicides.



Sec.  1480.11  Qualifying 2001 or 2002-crop losses.

    (a) To receive disaster benefits under this part, the county 
committee must determine that because of a disaster, the producer with 
respect to the 2001 or 2002 crop year:
    (1) Was prevented from planting a crop;
    (2) Sustained a loss in excess of 35 percent of the expected 
production of a crop; or
    (3) Sustained a loss in excess of 35 percent of the value for value 
loss crops.
    (b) Calculation of benefits under this part shall not include 
losses:
    (1) That are the result of poor management decisions or poor farming 
practices as determined by the county committee on a case-by-case basis;
    (2) That are the result of the failure of the producer to re-seed or 
replant to the same crop in the county where it is customary to re-seed 
or replant after a loss;
    (3) That are not as a result of a natural disaster, unless otherwise 
specified in Sec.  1480.10;
    (4) To crops not intended for harvest in crop year 2002;
    (5) To losses of by-products resulting from processing or harvesting 
a crop, such as cotton seed, peanut shells, wheat or oat straw;
    (6) To home gardens;
    (7) That are a result of water contained or released by any 
governmental, public, or private dam or reservoir project if an easement 
exists on the acreage affected for the containment or release of the 
water; or
    (8) If losses could be attributed to conditions occurring outside of 
the applicable crop year growing season.
    (c) Calculation of benefits under this part for ornamental nursery 
stock shall not include losses:
    (1) Caused by a failure of power supply or brownouts;

[[Page 669]]

    (2) Caused by the inability to market nursery stock as a result of 
quarantine, boycott, or refusal of a buyer to accept production;
    (3) Caused by fire;
    (4) Affecting crops where weeds and other forms of undergrowth in 
the vicinity of the nursery stock that have not been controlled; or
    (5) Caused by the collapse or failure of buildings or structures.
    (d) Calculation of benefits under this part for honey where the 
honey production by colonies or bees was diminished, shall not include 
losses:
    (1) Where the inability to extract was due to the unavailability of 
equipment; the collapse or failure of equipment or apparatus used in the 
honey operation;
    (2) Resulting from improper storage of honey;
    (3) To honey production because of bee feeding;
    (4) Caused by the application of chemicals;
    (5) Caused by theft, fire, or vandalism;
    (6) Caused by the movement of bees by the producer or any other 
person;
    (7) Due to disease or pest infestation of the colonies; or
    (8) Loss calculations shall take into account other conditions and 
adjustments provided for in this part.



Sec.  1480.12  Rates and yields; calculating payments.

    (a)(1) Payments made under this part to a producer for a loss on a 
unit with respect to yield based crops are determined by multiplying the 
payment rate established for the crop by CCC, times the loss of 
production which exceeds 35 percent of the expected production, as 
determined by CCC, of the unit.
    (2) Payments made under this part to a producer for a loss on a unit 
with respect to value based crops are determined by multiplying: the 
payment rate established for the crop by CCC, times the loss of value 
which exceeds 35 percent of the expected production value, as determined 
by CCC, of the unit.
    (3) Payments made under this part may be adjusted by CCC to reflect 
losses due to quality factors adversely affected by a disaster. For FSA 
loan commodities, production to count may be reduced using the schedule 
of premiums and discounts for FSA commodity loans. Additional quality 
loss adjustments may be made for single market crops, using a 20 percent 
quality loss threshold. The quality loss threshold may be determined by 
multiplying: 65 percent of the affected quantity, times 65 percent of 
the result of subtracting: the value of the crop due to the effects of 
the disaster, as determined by CCC, from the value of the crop if it had 
not been affected by the disaster, as determined by CCC. Quality 
adjustments for multiple market crops sold to a lower priced market as a 
result of poor quality will be determined by using the difference 
between the average market price for the intended use and the average 
market price for the actual use, as determined by CCC.
    (b) Payment rates for 2001 or 2002 year crop losses shall be:
    (1) 50 percent of the maximum established RMA price for insured 
crops;
    (2) 50 percent of the State average price for non-insurable crops; 
and
    (3) 45 percent of the maximum established RMA price for uninsured 
crops.
    (c) Except as provided elsewhere in this part, disaster benefits 
under this part for losses to crops shall be paid in an amount 
determined by multiplying the loss of production in excess of 35 percent 
of the expected production by the applicable payment rate established 
according to paragraph (a) of this section.
    (d) Up to three separate payment rates and yields for the same crop 
may be established by the county committee as authorized by the Deputy 
Administrator, when there is supporting data from NASS or other sources 
approved by CCC that show there is a significant difference in yield or 
value based on a distinct and separate end use of the crop. In spite of 
differences in yield or values, separate rates or yields shall not be 
established for crops with different cultural practices, such as 
organically or hydroponically grown.
    (e) Production from all end uses of a multi-use crop or all 
secondary uses for

[[Page 670]]

multiple market crops will be calculated separately and summarized 
together.
    (f) Each eligible producer's share of a disaster payment shall be 
based on the producer's share of the crop or crop proceeds, or, if no 
crop was produced, the share the producer would have received if the 
crop had been produced.
    (g) When calculating a payment for a unit loss:
    (1) An unharvested payment factor shall be applied to crop acreage 
planted but not harvested;
    (2) A prevented planting factor shall be applied to any prevented 
planted acreage eligible for payment; and
    (3) Unharvested payment factors may be adjusted if costs normally 
associated with growing the crop are not incurred.



Sec.  1480.13  Production losses, producer responsibility.

    (a) Where available and determined accurate, RMA loss records will 
be used for insured crops.
    (b) If RMA loss records are not available, or if the FSA county 
committee determines the RMA loss records are inaccurate or incomplete, 
or if the FSA county committee makes inquiry, producers are responsible 
for:
    (1) Retaining or providing, when required, the best verifiable or 
reliable production records available for the crop;
    (2) Summarizing all the production evidence;
    (3) Accounting for the total amount of unit production for the crop, 
whether or not records reflect this production;
    (4) Providing the information in a manner that can be easily 
understood by the county committee; and
    (5) Providing supporting documentation if the county committee has 
reason to question the disaster event or that all production has been 
accounted for.
    (c) In determining production under this section the producer must 
supply verifiable or reliable production records to substantiate 
production to the county committee. If the eligible crop was sold or 
otherwise disposed of through commercial channels, production records 
include: commercial receipts; settlement sheets; warehouse ledger 
sheets; or load summaries; appraisal information from a loss adjuster 
acceptable to CCC. If the eligible crop was farm-stored, sold, fed to 
livestock, or disposed of in means other than commercial channels, 
production records for these purposes include: truck scale tickets; 
appraisal information from a loss adjuster acceptable to CCC; 
contemporaneous diaries; or other documentary evidence, such as 
contemporaneous measurements.
    (d) Producers must provide all records for any production of a crop 
that is grown with an arrangement, agreement, or contract for guaranteed 
payment.



Sec.  1480.14  Determination of production.

    (a) Production under this part shall include all harvested 
production, unharvested appraised production and assigned production for 
the total planted acreage of the crop on the unit.
    (b) The harvested production of eligible crop acreage harvested more 
than once in a crop year shall include the total harvested production 
from all these harvests.
    (c) If a crop is appraised and subsequently harvested as the 
intended use, the actual harvested production shall be used to determine 
benefits.
    (d) For all crops eligible for loan deficiency payments or marketing 
assistance loans with an intended use of grain but harvested as silage, 
ensilage, cobbage, hay, cracked, rolled, or crimped, production will be 
adjusted based on a whole grain equivalent as established by CCC.
    (e) For crops with an established yield and market price for 
multiple intended uses, a value will be calculated for each use with:
    (1) The intended use or uses for disaster purposes based on 
historical production and acreage evidence provided by the producer; and
    (2) The eligible acres for each use and the calculation of the 
disaster payment will be determined by the county committee according to 
instructions issued by the Deputy Administrator.
    (f) For crops sold in a market that is not a recognized market for 
the crop with no established county average yield and market price, 45 
percent of

[[Page 671]]

the salvage value received will be deducted from the disaster payment.
    (g) If a producer does not receive compensation based upon the 
quantity of the commodity delivered to a purchaser, but has an agreement 
or contract for guaranteed payment for production, for purposes of 
determination the production shall be the greater of the actual 
production or the guaranteed payment converted to production as 
determined by CCC.
    (h) Production that is commingled between units before it was a 
matter or combination of record and cannot be separated by using records 
or other means acceptable to CCC shall be prorated to each respective 
unit by CCC. Commingled production may be attributed to the applicable 
unit, if the producer made the unit production of a commodity a matter 
of record before commingling and does any of the following, as 
applicable:
    (1) Provides copies of verifiable documents showing that production 
of the commodity was purchased, acquired, or otherwise obtained from 
beyond the unit;
    (2) Had the production measured in a manner acceptable to the county 
committee; or
    (3) Had the current year's production appraised in a manner 
acceptable to the county committee.
    (i) The county committee shall assign production for the unit when 
the county committee determines that:
    (1) The producer has failed to provide adequate and acceptable 
production records;
    (2) The loss to the crop is because of a disaster condition not 
covered by this part, or circumstances other than natural disaster, and 
there has not otherwise been an accounting of this ineligible cause of 
loss;
    (3) The producer carries out a practice, such as multiple cropping, 
that generally results in lower yields than the established historic 
yields;
    (4) The producer has a contract to receive a guaranteed payment for 
all or a portion of the crop.
    (5) A crop is late-planted;
    (6) Unharvested acreage was not timely appraised; or
    (7) Other appropriate causes exist for such assignment as determined 
by the Deputy Administrator.
    (j) For peanuts, the actual production shall be all peanuts 
harvested for nuts regardless of their disposition or use as adjusted 
for low quality.



Sec.  1480.15  Calculation of acreage for crop losses other than prevented 
planted.

    (a) Acreage shall be calculated using the number of acres shown to 
have been planted to a crop.
    (b) In cases where there is a repeat crop or a multiple planted crop 
in more than one planting period, or if there is multiple cropped 
acreage meeting criteria established in paragraph (c) or (d) of this 
section, each of these crops may be considered separate crops for 2001 
or 2002 CDP if the county committee determines that all of the following 
conditions are met:
    (1) Both the initial and subsequent planted crops were planted with 
an intent to harvest;
    (2) Both the initial and subsequent planted crops were planted 
within the normal planting period for that crop;
    (3) Both the initial and subsequent planted crops meet all other 
eligibility provisions of this part including good farming practices; 
and
    (4) Each planting could reach maturity if each planting was 
harvested or would have been harvested.
    (c) In cases where there is multiple cropped acreage, each crop may 
be eligible for disaster assistance separately if both of the following 
conditions are met:
    (1) The specific crops are approved by the State Committee as 
eligible multiple-cropping practices in accordance with procedures 
approved by the Deputy Administrator; and
    (2) The farm containing the multiple cropped acreage has a history 
of multiple cropping based on timely filed crop acreage reports.
    (d) Producers with multiple cropped acreage not meeting the criteria 
in paragraph (c) of this section may be eligible for disaster assistance 
on more than one crop if the producer has verifiable records 
establishing a history of carrying out a successful multiple cropping 
practice on the specific

[[Page 672]]

crops for which assistance is requested. All required records acceptable 
to CCC as determined by the Deputy Administrator must be provided before 
payments are issued.
    (e) Producers with multiple cropped acreage not meeting the criteria 
in paragraphs (c) or (d) of this section must select the crop for which 
assistance will be requested. If more than one producer has an interest 
in the multiple cropped acreage, all producers must agree to the crop 
designated for payment by the end of the application period or no 
payment will be approved for any crop on the multiple cropped acreage.
    (f) Benefits under this part shall apply to irrigated crops where 
the acreage was affected by a lack of water or contamination by 
saltwater intrusion of an irrigation supply resulting from drought 
conditions.



Sec.  1480.16  Calculation of prevented planted acreage.

    (a) When determining losses under this part, prevented-planted 
acreage will be considered separately from planted acreage of the same 
crop.
    (b) Except as provided in paragraph (c) of this section, for insured 
crops, disaster payments under this part for prevented-planted acreage 
shall not be made unless RMA documentation indicates that the eligible 
producer received a prevented planting payment under the RMA-
administered program.
    (c) For insured crops, disaster payments under this part for 
prevented-planted acreage will be made available for the following crops 
for which prevented planting coverage was not available and for which 
the county committee will make an eligibility determination according to 
paragraph (d) of this section: peppers; sweet corn (fresh market); 
tomatoes (fresh market); tomatoes (processing).
    (d) The producer must prove, to the satisfaction of the county 
committee, an intent to plant the crop and that such crop could not be 
planted because of an eligible disaster. The county committee must be 
able to determine the producer was prevented from planting the crop by 
an eligible disaster that:
    (1) Prevented other producers from planting on acreage with similar 
characteristics in the surrounding area; and
    (2) Occurred after the previous planting period for the crop.
    (3) Unless otherwise approved by the Deputy Administrator, began no 
earlier than the planting season for that crop.
    (e) Prevented planted disaster benefits under this part shall not 
apply to:
    (1) Aquaculture, including ornamental fish; perennial forage crops 
grown for hay, seed, or grazing; honey; maple sap; millet; mint; nursery 
crops; cultivated wild rice; fresh market beans; cabbage, pumpkins, 
sweet potatoes; winter squash, turfgrass sod, and vine crops;
    (2) Uninsured crop acreage that is unclassified for insurance 
purposes;
    (3) Acreage that is used for conservation purposes or intended to be 
left unplanted under any CCC or USDA program;
    (4) Any acreage on which a crop other than a cover crop was 
harvested, hayed, or grazed during the crop year;
    (5) Any acreage for which a cash lease payment is received for the 
use of the acreage the same crop year unless the county committee 
determines the lease was for haying and grazing rights only and was not 
a lease for use of the land;
    (6) Acreage for which planting history or conservation plans 
indicate that the acreage would have remained fallow for crop rotation 
purposes;
    (7) Acreage for which the producer or any other person received a 
prevented planted payment for any crop for the same acreage, excluding 
share arrangements;
    (8) Acreage for which the producer cannot provide proof to the 
county committee that inputs such as seed, chemicals, and fertilizer 
were available to plant and produce a crop with the expectation of at 
least producing a normal yield; and
    (9) Any other acreage for which, for whatever reason, there is cause 
to question whether the crop could have been planted for a successful 
and timely harvest, or for which prevented planting credit is not 
allowed under the provisions of this part.

[[Page 673]]

    (f) Prevented planting payments are not provided on acreage that had 
either a previous or subsequent crop planted on the acreage, unless the 
county committee determines that all of the following conditions are 
met:
    (1) There is an established practice of planting two or more crops 
for harvest on the same acreage in the same crop year;
    (2) Both crops could have reached maturity if each planting was 
harvested or would have been harvested;
    (3) Both the initial and subsequent planted crops were planted or 
prevented-planting within the normal planting period for that crop;
    (4) Both the initial and subsequent planted crops meet all other 
eligibility provisions of this part including good farming practices; 
and
    (5) The specific crops meet the eligibility criteria for a separate 
crop designation as a repeat or approved multiple cropping practice set 
out in Sec.  1480.15.
    (g)(1) Disaster benefits under this part shall not apply to crops 
where the prevented-planted acreage was affected by a disaster that was 
caused by drought unless on the final planting date or the late planting 
period for non-irrigated acreage, the area that is prevented from being 
planted has insufficient soil moisture for germination of seed and 
progress toward crop maturity because of a prolonged period of dry 
weather;
    (2) Prolonged precipitation deficiencies must be at the D2 level or 
higher as determined by using the U.S. Drought Monitor; and
    (3) Verifiable information collected by sources whose business or 
purpose to record weather conditions, including but not limited to the 
local weather reporting stations of the U.S. National Weather Service.
    (h) Prevented planting benefits under this part shall apply to 
irrigated crops where the acreage was prevented from being planted due 
to a lack of water resulting from drought conditions or contamination by 
saltwater intrusion of an irrigation supply resulting from drought 
conditions.
    (i) For uninsured or non-insurable crops and the insured crops 
listed in paragraph (c) of this section, for prevented planting 
purposes:
    (1) The maximum prevented-planted acreage for all crops cannot 
exceed the number of acres of cropland in the unit for the crop year and 
will be reduced by the number of acres planted in the unit;
    (2) The maximum prevented planted acreage for a crop cannot exceed 
the number of acres planted by the producer, or that was prevented from 
being planted, to the crop in any 1 of the 4 crop years previous to the 
disaster year as determined by the county committee;
    (3) For crops grown under a contract specifying the number of acres 
contracted, the prevented-planted acreage is limited to the result of 
the number of acres specified in the contract minus planted acreage;
    (4) For each crop type or variety for which separate prices or 
yields are sought for prevented-planted acreage, the producer must 
provide evidence that the claimed prevented-planted acres were 
successfully planted in at least 1 of the most recent 4 crop years; and
    (5) The prevented planted acreage must be at least 20 acres or 20 
percent of the intended planted acreage in the unit, whichever is less.
    (j) Notwithstanding the provisions of part 718 of this chapter, 
late-filed crop acreage reports for previous years shall not be accepted 
for CDP purposes.



Sec.  1480.17  Quantity adjustments for diminished quality for certain crops.

    (a) For the crops identified in paragraph (b) of this section, 
subject to this part, the quantity of production of crops of the 
producer shall be adjusted to reflect diminished quality resulting from 
the disaster.
    (b) Crops eligible for quality adjustments to production are limited 
to:
    (1) Barley; canola; corn; cotton; crambe, flaxseed; grain sorghum; 
mustard seed; oats; peanuts; rapeseed; rice; safflower; soybeans; 
sunflower-oil; sunflower-seed; wheat; and
    (2) Crops with multiple market uses such as fresh, processed or 
juice, as supported by NASS data or other data as CCC determines 
acceptable.

[[Page 674]]

    (3) Single market crops if the COC determines there is sufficient 
data to establish 5 quality loss levels.
    (c) The producer must submit documentation for determining the grade 
and other discount factors that were applied to the crop.
    (d) Quality adjustments will be applied to crops experiencing at 
least a 20 percent loss after production has been adjusted to standard 
moisture, when applicable.
    (e) For all crops listed in paragraph (b)(1) of this section, except 
for cotton, if a quality adjustment has been made for multi-peril crop 
insurance purposes, an additional adjustment will not be made.
    (f) Quality adjustments for crops, other than cotton and peanuts 
listed in paragraph (b)(1) of this section may be made by applying an 
adjustment factor based on dividing the CCC marketing assistance loan 
rate applicable to the crop and producer determined according to part 
1421 of this chapter by the unadjusted county marketing assistance loan 
rate for the crop. For crops that receive a grade of ``sample'' and are 
marketed through normal channels, production will be adjusted as 
determined by CCC. County committees may, with state committee 
concurrence, establish county average quality adjustment factors.
    (g) Quality adjustments for cotton shall be based on the difference 
between:
    (1) The loan rate applicable to the crop and producer determined 
according to part 1427 of this chapter; and
    (2) The adjusted county loan rate. The adjusted county rate is the 
county loan rate adjusted for the 5-year county average historical 
quality premium or discount, as determined by CCC.
    (h) For 2001 quota and non-quota peanuts and 2002 peanuts, quality 
adjustments shall be based on the difference between the actual sales 
price, or other proceeds, received and the National average support 
price by type of peanut for the applicable crop year.
    (i) Quality adjustments for crops with multiple market uses such as 
fresh, processed and juice, shall be applied based on the difference 
between the producer's historical marketing percentage of each market 
use compared to the actual percentage for the 2001 or 2002 crop year. 
These quality adjustments are built into the production loss 
determination. Production determinations from Federal crop insurance 
will not be used.
    (j) Except as determined by the Deputy Administrator, quality 
adjustments for aflatoxin shall be based on the aflatoxin level. The 
producer must provide the county committee with proof of a price 
reduction because of aflatoxin. The aflatoxin level must be 20 parts per 
billion or more before a quality adjustment will be made. The quality 
adjustment factor applied to affected production is .50 if the 
production is marketable. If the production is unmarketable due to 
aflatoxin levels of at least 20 parts per billion, production will be 
adjusted to zero. Any value received will be considered salvage.
    (k) Any quantity of the crop determined to be salvage will not be 
considered production. Salvage values shall be factored by 0.45 times 
the producer's share. This amount will be deducted from the disaster 
payment.
    (l) Quantity adjustments for diminished quality under this section 
will not be applied to crops that are, under Sec.  1480.18, value loss 
crops.
    (m) Quantity adjustments for diminished quality shall also not apply 
under this section to: honey, maple sap, turfgrass sod, crops marketed 
for a use other than an intended use for which there is not an 
established county price or yield, or any other crop that the Deputy 
Administrator deems it appropriate to exclude.

[68 FR 37943, June 26, 2003; 69 FR 250, Jan. 5, 2004]



Sec.  1480.18  Value loss crops.

    (a) Irrespective of any inconsistent provisions in other sections, 
this section shall apply to the following crops, which are considered 
``value loss crops'': ornamental nursery; Christmas trees; vegetable and 
root stock including ginseng root; aquaculture, including ornamental 
fish, and such other crops as may be determined appropriate for 
treatment as ``value loss crops''.
    (b) For crops specified in paragraph (a) of this section, disaster 
benefits under this part are calculated based on

[[Page 675]]

the loss of value at the time of disaster, as determined by CCC.
    (c) For aquaculture, disaster benefits under this part for 
aquacultural species are limited to those aquacultural species that were 
placed in the aquacultural facility by the producer. CDP benefits shall 
not be available for aquacultural species that are growing naturally in 
the aquaculture facility. Benefits under this part are limited to 
aquacultural species that were planted or seeded on property owned or 
leased by the producer where that land has readily identifiable 
boundaries, and over which the producer has total control of the 
waterbed and the ground under the waterbed. Producers who only have 
control of the waterbed or the ground under the waterbed but not both 
will not be eligible for disaster benefits under this part.
    (d) For ornamental nursery crops, disaster benefits under this part 
are limited to ornamental nursery crops that were grown in a container 
or controlled environment for commercial sale on property owned or 
leased by the producer, and cared for and managed using good nursery 
growing practices. Indigenous crops are not eligible for benefits under 
this part. Producers who participated in the previous Florida Nursery 
Program are eligible for either of the following:
    (1) 2001 losses that occurred between January 1, 2001 and September 
30, 2001.
    (2) 2002 losses that occurred between October 1, 2001 and September 
30, 2002.
    (e) For vegetable and root stock, disaster benefits under this part 
are limited to plants grown in a container or controlled environment for 
use as transplants or root stock by the producer for commercial sale on 
property owned or leased by the producer and managed using good 
rootstock or fruit and vegetable plant growing practices.
    (f) For ginseng, only ginseng that meets all the requirements of 
cultivated ginseng shall be considered as eligible for benefits under 
this part. Ginseng is defined as cultivated ginseng roots and seeds that 
meet the following requirements:
    (1) Grown in raised beds above and away from wet and low areas 
protected from flood;
    (2) Grown under man-made canopies that provide 75 to 80 percent 
shade coverage;
    (3) Grown in well drained media with a pH adjustment of at least 5.5 
and which protects plants from disease; and
    (4) Grown with sufficient fertility and weed control to obtain 
expected production results of ginseng root and seed.
    (g) Evidence of the above ginseng practice requirements must be 
provided by the producer if requested by the county committee. Any 
ginseng that is grown under cultivated practices or simulated wild or 
woodland conditions that do not meet these requirements are not eligible 
for disaster assistance under this part.
    (h) Because ginseng is a perennial crop, the producer must provide 
annual crop history to establish when the loss occurred and the extent 
of such loss. If the producer does not or is unable to provide annual 
records to establish the beginning inventory, before the loss, and 
ending inventory, after the loss, production shall be assigned by the 
county committee.
    (i) Aside from differences provided for in this section, all other 
conditions for eligibility contained in this part shall be applied to 
value loss crops.



Sec.  1480.19  Other provisions for specialty crops.

    (a) For turfgrass sod, disaster benefits under this part are limited 
to turfgrass sod that would have matured and been harvested during 2001 
or 2002, when a disaster caused in excess of 35 percent of the expected 
production to die.
    (b) For honey, disaster benefits under this part are limited to 
table and non-table honey produced commercially for human consumption. 
For calculating benefits, all honey is considered a single crop, 
regardless of type or variety of floral source or intended use.
    (c) For maple sap, disaster benefits under this part are limited to 
maple sap produced on private property in a controlled environment by a 
commercial operator for sale as sap or syrup. The maple sap must be 
produced from trees that are: located on land the producer controls by 
ownership or lease; managed for production of maple sap;

[[Page 676]]

and are at least 30 years old and 12 inches in diameter.



Sec.  1480.20  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented any 
fact affecting a program determination made in accordance with this part 
shall not be entitled to disaster payments and must refund all such 
payments received, plus interest as determined in accordance with part 
1403 of this chapter.
    (b) A producer shall refund to CCC all disaster payments, plus 
interest as determined in accordance with part 1403 of this chapter, 
received by such producer with respect to all contracts if the producer 
is determined to have knowingly done any of the following.
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.



Sec.  1480.21  Offsets, assignments and debt settlement.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the crop, or proceeds thereof, in favor of the owner or any 
other creditor except agencies of the U.S. Government. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
apply to payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing the assignment of payments found 
at part 1404 of this chapter.
    (c) A debt or claim may be settled according to part 1403 of this 
chapter.



Sec.  1480.22  Compliance with highly erodible land and wetland conservation 
provisions.

    Part 12 of this title applies to this part.



PART 1481--SUGAR BEET DISASTER PROGRAM--Table of Contents




Sec.
1481.1 Applicability.
1481.2 Administration.
1481.3 Definitions.
1481.4 Producer eligibility.
1481.5 Sign-up period.
1481.6 Proof of loss.
1481.7 Indemnity benefits.
1481.8 Availability of funds.
1481.9 Limitations on payments.
1481.10 Crop insurance linkage.
1481.11 Miscellaneous provisions.

    Authority: Pub. L. 106-387, 114 Stat. 1549; Pub. L. 108-7, 117 Stat. 
11; 15 U.S.C. 714 et seq.

    Source:  68 FR 49330, Aug. 18, 2003, unless otherwise noted.



Sec.  1481.1  Applicability.

    (a) This part sets forth the terms and conditions applicable to the 
Sugar Beet Disaster Program.
    (b) Producers who were prevented from planted sugar beets, or who 
suffered either quantity or quality losses in excess of 35 percent to 
sugar beets while in the field in 2001 or 2002 due to adverse weather 
will be considered eligible for benefits for either of those years, but 
not both.



Sec.  1481.2  Administration.

    Where circumstances preclude compliance with Sec.  1481.4 due to 
circumstances beyond the applicant's control, the FSA county or State 
committee may request that relief be granted by the Deputy Administrator 
under this section. In such cases, except for statutory deadlines and 
other statutory requirements, the Deputy Administrator may, in order to 
more equitably accomplish the goals of this part, waive or modify 
deadlines and other program requirements if the failure to meet such 
deadlines or other requirements does not adversely affect operation of 
the program and are not prohibited by statute.



Sec.  1481.3  Definitions.

    The definitions in this section shall apply to this part.
    Application means the Sugar Beet Disaster Program Application, as 
provided by and available in any FSA office.

[[Page 677]]

    CCC means the Commodity Credit Corporation.
    CDP means the Crop Disaster Program authorized in 7 CFR part 1480.
    Deputy Administrator means the Deputy Administrator of Farm 
Programs, Farm Service Agency, U.S. Department of Agriculture or a 
designee.
    Eligible losses are any sugar beet losses in excess of 35 percent to 
either quantity or quality, that occur while the beets are still in the 
field and are due to adverse weather conditions.
    FSA means Farm Service Agency.
    NAP means the Noninsured Crop Disaster Assistance Program.
    RMA means the Risk Management Agency.



Sec.  1481.4  Producer eligibility.

    (a) Producers will be eligible under this part if they have suffered 
losses of more than 35 percent of sugar beets in 2001 or 2002 as a 
result of a weather related condition, or as further specified in this 
part.
    (b) Payments may be made for losses suffered by an eligible producer 
who is now deceased or is a dissolved entity if a representative who 
currently has authority to enter into a contract for the producer signs 
the application for payment. Proof of authority to sign for the deceased 
producer or dissolved entity must be provided. If a producer is now a 
dissolved general partnership or joint venture, all members of the 
general partnership or joint venture at the time of dissolution or their 
duly authorized representatives must sign the application for payment.
    (c) As a condition to receive benefits under this part, a producer 
must have been in compliance with the Highly Erodible Land Conservation 
and Wetland Conservation provisions of 7 CFR part 12, for the 2001 or 
2002 crop year, as applicable, and must not otherwise be barred from 
receiving benefits under 7 CFR part 12 or any other law.



Sec.  1481.5  Sign-up period.

    A request for benefits under this part must be submitted to CCC at 
the FSA county office which serves the farm on which the affected sugar 
beets were planted or prevented from being planted. All applications 
must be filed in the FSA county office between September 15, 2003 and no 
later than the close of business on October 31, 2003, or another date 
determined and announced by the Deputy Administrator.



Sec.  1481.6  Proof of loss.

    (a) Where available and determined accurate, RMA loss records will 
be used for insured sugar beets.
    (b) For producers without crop insurance, the producer must provide 
documentation including the number of acres, yield, production, and 
sugar percent by unit for 2001 or 2002.
    (c) Certifications by third parties or the owner and other such 
documentation will not be accepted.
    (d) Producers shall certify to the accuracy of the information 
provided. All information provided is subject to verification and spot 
checks by CCC. Failure to provide information requested by the FSA 
county committee or by any agency official is cause for denial of any 
application filed under this part.



Sec.  1481.7  Indemnity benefits.

    (a) Eligible producers with losses in excess of 35 percent in both 
2001 and 2002 will have a choice of receiving payments of either 2001 or 
2002 crop year, but not both.
    (b) Eligible producers with losses in excess of 35 percent in one of 
either 2001 or 2002 may receive benefits for that year.
    (c) Eligible producers will receive payments based on the higher of 
the following:
    (1) For producers with crop insurance, 60 percent of their crop 
insurance indemnity.
    (2) For any producer, with or without crop insurance, 65 percent of 
the higher of the producer's Actual Production History (APH) or the 
county average yield, minus actual yield, times 55 percent of the 
following Multi-Peril Crop Insurance (MPCI) price elections:
    (i) For 2001 crop $36 per ton.
    (ii) For 2002 crop $33 per ton.
    (3) For any producer, with or without crop insurance, 100 percent of 
the higher of the producer's APH or the county average yield, minus the 
actual yield times $12.50 per ton.

[[Page 678]]



Sec.  1481.8  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
under this part exceeds $60 million, then each payment shall be reduced 
by a uniform national percentage or other means of proration.
    (b) Such payment reductions shall be applied after the imposition of 
applicable per-person payment limitation provisions.



Sec.  1481.9  Limitations on payments.

    (a) The total amount of benefits that a person, as determined in 
accordance with part 1400 of this chapter, shall be entitled to receive 
under this part may not exceed $80,000.
    (b) A person, as defined in part 1400 of this chapter, who has 
annual gross revenue in excess of $2.5 million shall not be eligible to 
receive assistance under this part. For the purpose of this 
determination, annual gross revenue means:
    (1) With respect to a person who receives more than 50 percent of 
such person's gross income from farming and ranching, the total gross 
revenue received from such operations; and
    (2) With respect to a person who receives 50 percent or less of such 
person's gross income from farming and ranching, the total gross revenue 
from all sources.
    (c) Payments earned under other programs contained in this chapter 
shall not reduce the amount payable under this part.
    (d) No person shall receive disaster benefits under this part in an 
amount that exceeds 100 percent of the value of the expected production 
for the relevant period as determined by CCC. Accordingly, as determined 
by CCC, the sum of the value of the crop not lost, if any, plus disaster 
payments, plus the net crop insurance indemnity, cannot exceed 100 
percent of what the crop's value would have been if there had been no 
loss.
    (e) All payments are subject to offsets as provided in 7 CFR part 
1403.



Sec.  1481.10  Crop insurance linkage.

    (a) Except as provided further in this section, any producer who 
elected not to purchase crop insurance or NAP coverage as applicable on 
2001 or 2002 sugar beet crops for which the producer receives crop loss 
assistance must:
    (1) Purchase crop insurance with additional coverage on that crop 
for the 2003 and 2004 crop years for sugar beets.
    (2) Or, when such insurance cannot be obtained because it is not 
available, purchase NAP coverage by paying the administrative fee by the 
applicable State filing deadline and complete all required program 
requirements including yearly acreage reports, for the otherwise non-
insurable sugar beet crop for both 2003 and 2004 crop years.
    (b) If, at the time the producer applies for the 2001 or 2002 CDP 
the sales closing date for 2003 insurable crops, or for 2003 non-
insurable crops for which the producer sought benefits under the 2001 or 
2002 CDP has passed, the producer must instead to meet the requirement 
of this section, purchase crop insurance policy or obtain NAP sugar beet 
coverage, as applicable, for the next available 2 crop years.
    (c) If any producer fails to purchase crop insurance or NAP, as 
required in paragraphs (a) or (b) of this section, the producer shall 
reimburse CCC for the full amount of the assistance, plus interest, 
provided to the producer under this part.



Sec.  1481.11  Miscellaneous provisions.

    (a) A person shall be ineligible to receive disaster assistance 
under this part if it is determined by the State or county committee or 
an official of FSA that such person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of a program operated under this part;
    (2) Made any fraudulent representation with respect to such program; 
or
    (3) Misrepresented any fact affecting a program determination.
    (b) All persons with a financial interest in the operation receiving 
benefits under this part shall be jointly and severally liable for any 
refund, including related charges, which is determined to be due CCC for 
any reason under this part.
    (c) In the event that any request for assistance or payment under 
this part was established as result of erroneous information or a 
miscalculation, the

[[Page 679]]

assistance or payment shall be recalculated and any excess refunded with 
applicable interest.
    (d) The liability of any person for any penalty under this part or 
for any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to: 18 U.S.C. 286, 287, 371, 641, 651, 1001 and 1014; 15 
U.S.C. 714m; and 31 U.S.C. 3729.
    (e) 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 regulations set forth in parts 
11 and 780 of this title.
    (f) Any payment or portion thereof to any person shall be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the crop, or proceeds thereof.
    (g) For the purposes of 28 U.S.C. 3201(e), CCC waives the 
restriction on receipt of funds or benefits under this program but only 
as to beneficiaries who as a condition of such waiver agree to apply the 
2001 or 2002 sugar beet payments to reduce the amount of the judgment 
lien.



PART 1482--VALUE-ADDED WHEAT GLUTEN AND WHEAT STARCH PRODUCT MARKET 
DEVELOPMENT PROGRAM--Table of Contents




Sec.
1482.1 Applicability.
1482.2 Administration.
1482.3 Definitions.
1482.4 Eligibility.
1482.5 Application.
1482.6 Costs.
1482.7 Reports.
1482.8 Payment.
1482.9 Debarment and suspension.
1482.10 Misrepresentation and scheme or device.
1482.11 Appeals.
1482.12 Expiration.

    Authority: 15 USC 714c.

    Source: 66 FR 30802, June 8, 2001, unless otherwise noted.



Sec.  1482.1  Applicability.

    (a) This program is applicable until June 5, 2003. This program sets 
forth the terms and conditions under which the Commodity Credit 
Corporation (CCC) shall provide payments to U.S. producers participating 
in the Value-Added Wheat Gluten and Wheat Starch Product Market 
Development Program for the costs of conducting specific market 
development activities incurred in the United States with respect to 
U.S. production of wheat gluten.
    (b) Payments shall be made only for wheat gluten and wheat starch 
products produced or advanced in value in the United States.



Sec.  1482.2  Administration.

    (a) The Value-Added Wheat Gluten and Wheat Starch Product Market 
Development Program shall be administered under the general supervision 
of the Executive Vice President, CCC, and shall be carried out by the 
Deputy Administrator, Commodity Operations, Farm Service Agency (FSA).
    (b) The Executive Vice-President, CCC, or the Deputy Administrator, 
FSA, or a designee, may waive or modify deadlines and other program 
requirements in cases where lateness or failure to meet other 
requirements does not adversely affect the operation of the Value-Added 
Wheat Gluten and Wheat Starch Product Market Development Program.



Sec.  1482.3  Definitions.

    The definitions set forth in this section shall be applicable for 
purposes of administering the Value-Added Wheat Gluten and Wheat Starch 
Product Market Development Program.
    (a) Adjustment Plan means a defined program of activities aimed at 
improving the economic viability of producers of value-added wheat 
gluten or wheat starch products.
    (b) Agency means the Farm Service Agency (FSA).
    (c) Agreement means the Value-Added Wheat Gluten and Wheat Starch 
Product Market Development Program Application and Contract.
    (d) Modified wheat gluten or modified wheat starch means any 
processed product derived from vital wheat gluten or

[[Page 680]]

wheat starch that has been obtained through refining or processing that 
adds value to the basic product.
    (e) Value-Added means changes in vital wheat gluten or wheat starch 
that result in a further processed product having a higher market value 
than the vital wheat gluten or wheat starch.
    (f) Wheat gluten producer means agricultural processors, including 
producer-owned corporations, that produce vital wheat gluten.



Sec.  1482.4  Eligibility.

    (a) To be eligible to receive payments, a wheat gluten producer 
must:
    (1) Have produced in the United States not less than 1,000,000 
pounds of vital wheat gluten from July 1, 1998 through June 30, 2000.
    (2) Have been engaged in the business of producing and marketing 
vital wheat gluten or modified wheat gluten from July 1, 1998 through 
June 30, 2000.
    (3) Have reported specific adjustment efforts as part of the 1998 
adjustment plan submitted by the Wheat Gluten Industry Council to the 
International Trade Commission in Investigation Number TA-201-67.
    (4) Submit a timely application and comply with the terms and 
conditions of the program and instructions issued by CCC and FSA.
    (b) [Reserved]



Sec.  1482.5  Application.

    (a) To receive payments, eligible producers must submit an 
application within the application period announced by CCC. The 
application must include the following:
    (1) Name of the applicant and name of firm, if applicable;
    (2) Address of the applicant and firm;
    (3) Name of agent for service of process;
    (4) Telephone and fax numbers for the applicant and firm;
    (5) Internal Revenue Service tax identification number under which 
the applicant is conducting business;
    (6) Bank account number for electronic submission of funds 
(optional)
    (7) Quantity of vital wheat gluten produced from July 1, 1998 
through June 30, 2000;
    (8) Submission of information in paragraph (b) of this section.
    (9) Information as to the applicant's eligibility under Sec.  1482.4
    (b) Eligible producers must submit a proposal for a Value-Added 
Wheat Gluten and Wheat Starch Product Market Development Program 
Agreement. The proposal must include the following information:
    (1) Nature of the adjustment plan through production development and 
market activities;
    (2) Specific listing of activities and estimated costs;
    (3) Goals for completion during the two-year program.



Sec.  1482.6  Costs.

    (a) Costs of market development activities set forth in an 
applicant's Agreement for which CCC funds may be used to pay include, 
but are not limited to, the following:
    (1) The cost of producing and distributing advertising material;
    (2) The cost of product reformulation and testing;
    (3) The cost of developing and expanding uses for existing value-
added products;
    (4) The cost of product demonstrations;
    (5) Participation fees for retail and trade exhibitions and shows;
    (6) The cost of educational training;
    (7) The cost of food service promotions;
    (8) Salaries associated with contractors and employees engaged in 
the above activities; and
    (9) Capital costs relating to expanding production of modified wheat 
gluten or modified wheat starch for value-added products.
    (b) Costs that may not be paid using CCC funds are:
    (1) Fees paid for helping to prepare the application for program 
benefits;
    (2) Political fund raising activities; and
    (3) Costs that CCC determines are not consistent with the intent of 
the program.



Sec.  1482.7  Reports.

    (a) A producer submitting an application must maintain accurate 
records and accounts that will document that all eligibility 
requirements under this Part and other requirements as may be

[[Page 681]]

determined by CCC are met. Such records and accounts must be retained 
for three years after the date of payment to the wheat gluten or wheat 
starch producer under this program. Such records shall be available at 
all reasonable times for an audit or inspection by authorized 
representatives of CCC, U.S. Department of Agriculture, or the 
Comptroller General of the United States. Failure to keep, or make 
available, such records may result in refund to CCC of all payments 
received plus interest thereon, as determined by CCC.
    (b) Producers participating in the Value-Added Wheat Gluten and 
Wheat Starch Product Market Development Program must submit a quarterly 
report listing completion of activities and costs incurred under the 
program.
    (c) Participating producers must also submit a project performance 
report 60 days after the end of the first year of the program and 60 
days after the end of the second year of the program. The report should 
explain the activities undertaken to adjust to import competition that 
were included in the Agreement. CCC will review the report following the 
first program year. If a participating producer has not made significant 
progress in completing the stated activities in the first program year 
as determined by CCC, CCC may cancel the producer's eligibility for the 
second program year, and CCC may require the producer to refund with 
interest all or some of the funds received from CCC. If a participating 
producer has not made significant progress in completing the stated 
activities in the second program year as determined by CCC, CCC may 
require the producer to refund with interest some or all of the funds 
received from CCC in the second year of the program.



Sec.  1482.8  Payment.

    (a) The total amount of CCC funds available to eligible producers 
for the first year of this program is $27 million and the total amount 
available for the second (final) year of this program is $13 million.
    (b) The maximum payment rate to an applicant will be based on an 
applicant's average annual production of vital wheat gluten from July 1, 
1998 through June 30, 2000 relative to the total average annual U.S. 
production of vital wheat gluten of all eligible applicants.
    (c) After receipt and approval of an eligible producer's application 
and proposal, CCC will issue payment for the first program year to the 
applicant. Upon satisfactory completion of the activities included in 
the producer's Agreement for the first program year, as determined by 
CCC after receipt of the report required in Sec.  1482.7 (c), CCC will 
issue payment for the second program year to the producer.



Sec.  1482.9  Debarment and suspension.

    The Government-wide debarment and suspension (Nonprocurement) 
regulations and Government Requirements for Drug-Free Workplace 
(Grants), 7 CFR part 3017, Subparts A through E, apply to this Part.



Sec.  1482.10  Misrepresentation and scheme or device.

    (a) A producer shall be ineligible to receive payments under this 
program if CCC determines the producer:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of the program in this Part;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this Part to a producer engaged 
in a misrepresentation, scheme, or device, or to any other person as a 
result of the producer's actions, shall be refunded with interest 
together with such other sums as may become due, plus damages as may be 
determined by CCC.
    (c) Interest charged under this part shall accrue at the rate of 
interest which the United States Treasury charges CCC for funds. Such 
interest shall accrue from the date CCC made such funds available to the 
date of repayment or the date interest increases as determined in 
accordance with applicable regulations.
    (d) CCC may waive the accrual of interest and/or damages if CCC 
determines that the cause of the erroneous determination was not due to 
any action of the producer.

[[Page 682]]

    (e) Any producer or person engaged in an act prohibited by this Part 
and any producer or person receiving payment under this Part, in part 
because of such act, shall be jointly and individually liable for any 
refund due under this Part and for related charges.
    (f) The remedies provided in this Part shall be in addition to other 
civil, criminal, or administrative remedies which may apply.
    (g) Other limitations may apply.



Sec.  1482.11  Appeals.

    (a) Any producer who is subject to an adverse determination made 
under this Part shall have a right to appeal the determination by filing 
a written request with the Deputy Administrator of the Farm Service 
Agency at the following address: Deputy Administrator, Commodity 
Operations, Farm Service Agency, United States Department of 
Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, DC 
20250-0550.
    (b) Any producer who believes that it has been adversely affected by 
a determination under this Part must seek review with the Deputy 
Administrator within thirty days of such determination, unless provided 
with notice by CCC which provides a different time for appealing.
    (c) Any producer who believes that it has been adversely affected by 
a determination by the Agency must seek review with the Deputy 
Administrator before any other review may be requested by a court of 
competent jurisdiction.



Sec.  1482.12  Expiration.

    This program will expire June 5, 2003. The program shall not be 
extended.

[[Page 683]]



                      SUBCHAPTER C--EXPORT PROGRAMS





PART 1484--PROGRAMS TO HELP DEVELOP FOREIGN MARKETS FOR AGRICULTURAL 
COMMODITIES--Table of Contents




                     Subpart A--General Information

Sec.
1484.10 What is the effective date of this part?
1484.11 Has the Office of Management and Budget reviewed the paperwork 
          and record keeping requirements contained in this part?
1484.12 What is the Cooperator program?
1484.13 What special definitions apply to the Cooperator program?
1484.14 Is my organization eligible to participate in the Cooperator 
          program?

               Subpart B--Application and Fund Allocation

1484.20 How can my organization apply to the Cooperator program?
1484.21 How does FAS determine which Cooperator program applications are 
          approved?
1484.22 How are Cooperator program funds allocated?

                      Subpart C--Program Operations

1484.30 How does FAS formalize its working relationship with approved 
          Cooperators?
1484.31 Who acts on behalf of each Cooperator?
1484.32 Must Cooperators follow specific employment practices?
1484.33 Must Cooperators follow certain financial management guidelines?
1484.34 Must Cooperators adhere to specific standards of ethical 
          conduct?
1484.35 Must Cooperators follow specific contracting procedures?
1484.36 How do Cooperators dispose of disposable property?
1484.37 Must Cooperators adhere to Federal Travel Regulations?
1484.38 Can a Cooperator keep proceeds generated from an activity?

               Subpart D--Contributions and Reimbursements

1484.50 What cost share contributions are eligible?
1484.51 What are ineligible contributions?
1484.52 What are the guidelines for computing the value of non-cash 
          contributions?
1484.53 What are the requirements for documenting and reporting 
          contributions?
1484.54 What expenditures may FAS reimburse under the Cooperator 
          program?
1484.55 What expenditures may not be reimbursed under the Cooperator 
          program?
1484.56 How are Cooperators reimbursed?
1484.57 Will FAS make advance payments to a Cooperator?

            Subpart E--Reporting, Evaluation, and Compliance

1484.70 Must Cooperators report to FAS?
1484.71 Are Cooperator documents subject to the provisions of the 
          Freedom of Information Act?
1484.72 How is program effectiveness measured?
1484.73 Are Cooperators penalized for failing to make required 
          contributions?
1484.74 How is Cooperator program compliance monitored?
1484.75 How does a Cooperator respond to a compliance report?
1484.76 Can a Cooperator appeal the determinations of the Deputy 
          Administrator?

    Authority: 15 U.S.C. 714c(f).

    Source: 64 FR 52630, Sept. 30, 1999, unless otherwise noted. 
Redesignated at 65 FR 9995, Feb. 25, 2000.



                     Subpart A--General Information



Sec.  1484.10  What is the effective date of this part?

    This part applies to activities that are conducted in accordance 
with the Cooperators' FY 2000 and subsequent marketing plan years. The 
Cooperator Program is administered by personnel of the Foreign 
Agricultural Service.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
Feb. 25, 2000]



Sec.  1484.11  Has the Office of Management and Budget reviewed the 
paperwork and record keeping requirements contained in this part?

    The paperwork and record keeping requirements imposed by this part 
have been submitted to the Office of Management and Budget (OMB) for 
emergency review and reinstatement under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.). OMB has previously assigned control 
number 0551-0026 for this information collection.

[[Page 684]]



Sec.  1484.12  What is the Cooperator program?

    (a) Under the Foreign Market Development Cooperator (Cooperator) 
Program, FAS enters into project agreements with eligible nonprofit U.S. 
trade organizations to share the costs of certain overseas marketing and 
promotion activities that are intended to create, expand, or maintain 
foreign markets for U.S. agricultural commodities and products. FAS does 
not provide brand promotion assistance to Cooperators under this 
program.
    (b) FAS enters into project agreements with those eligible nonprofit 
U.S. trade organizations that have the broadest possible producer 
representation of the commodity being promoted and gives priority to 
those organizations that are nationwide in membership and scope. Project 
agreements involve the promotion of agricultural commodities on a 
generic basis. Project agreements do not involve activities targeted 
directly toward consumers purchasing as individuals. Activities must 
contribute to the maintenance or growth of demand for the agricultural 
commodities and generally address long-term foreign import constraints 
and export growth opportunities by focusing on matters such as reducing 
infra-structural or historical market impediments; improving processing 
capabilities; modifying codes and standards; and identifying new markets 
or new applications or uses for the agricultural commodity or product in 
the foreign market.
    (c) The Cooperator program generally operates on a reimbursement 
basis.
    (d) FAS policy is to ensure that benefits generated by Cooperator 
agreements are broadly available throughout the relevant agricultural 
sector and no one entity gains an undue advantage or sole benefit from 
program activities.



Sec.  1484.13  What special definitions apply to the Cooperator program?

    For purposes of this part the following definitions apply:
    Activity--a specific market development effort undertaken by a 
Cooperator to address a constraint or opportunity.
    Administrator--the Vice President, CCC, who also serves as 
Administrator, FAS, USDA, or designee.
    Agricultural commodity--an agricultural commodity, food, feed, 
fiber, wood, livestock or insect, and any product thereof; and fish 
harvested from a U.S. aquaculture farm, or harvested by a vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    Attache/Counselor--the FAS employee representing USDA interests in 
the foreign country in which promotional activities are conducted.
    Commodity Division--the office within the Foreign Agricultural 
Service responsible for the commodity covered by the project agreement.
    Compliance Review Staff--the office within the Foreign Agricultural 
Service responsible for performing periodic reviews of Cooperators to 
ensure compliance with this part.
    Constraint--a condition in a particular country or region which 
needs to be addressed in order to develop, expand, or maintain exports 
of a specific U.S. agricultural commodity.
    Consumer promotion--activities that are designed to directly 
influence consumers by changing attitudes or purchasing behaviors 
towards U.S. agricultural products.
    Contribution--the cost-share expenditure made by a Cooperator or the 
U.S. industry in support of an activity; e.g., money, personnel, 
materials, services, facilities, or supplies.
    Cooperator or U.S. Cooperator--a nonprofit U.S. agricultural trade 
organization which has entered into a foreign market development 
agreement with FAS.
    Cooperator Program--the Foreign Market Development Cooperator 
Program.
    Deputy Administrator--the Deputy Administrator, Commodity and 
Marketing Programs, FAS, USDA, or designee.
    Division Director--the director of a commodity division, Commodity 
and Marketing Programs, FAS, USDA.
    Eligible commodity--an agricultural commodity that is comprised of 
at least 50 percent U.S. origin content by weight, exclusive of added 
water.

[[Page 685]]

    Eligible trade organization--a United States trade organization that 
promotes the exports of one or more United States agricultural 
commodities or products and does not have a business interest in or 
receive remuneration from specific sales of agricultural commodities or 
products.
    Expenditure--transfer of funds.
    FAS--Foreign Agricultural Service, USDA.
    Foreign third party--a foreign entity that assists, in accordance 
with this part, in promoting the export of a U.S. agricultural 
commodity.
    Generic promotion--a promotion that does not involve the exclusive 
or predominant use of a single company name or logo(s) or brand name(s) 
of a single company.
    Market--a country or region in which an activity is conducted.
    Marketing plan year--the program year beginning on October 1 and 
ending on September 30, during which Cooperators can undertake 
activities, consistent with this part and their agreements with FAS, and 
seek reimbursement. For example, marketing plan year 2000 begins on 
October 1, 1999, and ends on September 30, 2000.
    Project agreement--a contract between FAS and a Cooperator in which 
the basic working relationship is described including the program and 
financial obligations of each.
    Project funds--the funds made available to a Cooperator under a 
project agreement, and authorized for expenditure in accordance with 
this part.
    Property--furniture or equipment having a useful life of over one 
year and an acquisition cost of $500 or more.
    STRE--sales and trade relations expenditures.
    Trade team--a group of individuals engaged in an activity intended 
to promote the interests of an entire agricultural sector rather than to 
result in specific sales by any of its members.
    USDA--the United States Department of Agriculture.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
Feb. 25, 2000]



Sec.  1484.14  Is my organization eligible to participate in the 
Cooperator program?

    (a) To participate in the Cooperator program, an entity must be a 
nonprofit U.S. agricultural trade organization and contribute at least 
50 percent of the value of resources provided by FAS for activities 
conducted under the project agreement.
    (b) FAS may require that a project agreement include a contribution 
level greater than that specified in paragraph (a) of this section. In 
requiring a higher contribution level, FAS will take into account such 
factors as past Cooperator contributions, previous Cooperator program 
funding levels, the length of time an entity participates in the 
program, and the entity's ability to increase its contribution.
    (c) FAS will enter into Cooperator agreements only for the promotion 
of eligible commodities.



               Subpart B--Application and Fund Allocation



Sec.  1484.20  How can my organization apply to the Cooperator program?

    FAS will publish a Notice in the Federal Register that it is 
accepting applications for participation in the Cooperator program for a 
specified marketing plan year. Applications shall be submitted in 
accordance with the terms and requirements specified in the Notice. An 
application shall contain basic information about the applicant and the 
proposed program, a strategic plan, and performance measures. FAS may 
request any additional information which it deems necessary to evaluate 
a Cooperator program application.
    (a) Basic applicant and program information. All Cooperator program 
applications shall contain:
    (1) The name and address of the applicant;
    (2) The name of the Chief Executive Officer (or designee);
    (3) The name and telephone number of the applicant's primary contact 
person;
    (4) A description of management and administrative capability;

[[Page 686]]

    (5) The name(s) of the person(s) responsible for managing the 
program;
    (6) A description of prior export promotion experience;
    (7) A description of the organization, its membership, and 
membership criteria;
    (8) A list of affiliated organizations;
    (9) The applicant's Federal Tax Identification Number;
    (10) The dollar amount of FAS resources requested under the 
Cooperator program;
    (11) The value of the applicant's contribution, stated in dollars or 
as a percentage of paragraph (a)(10) of this section;
    (12) The value of contributions from other sources, stated in 
dollars or as a percentage of paragraph (a)(10) of this section;
    (13) A description of the eligible commodity(s); the associated 
commodity aggregate code(s), obtained from FAS; and the percentage of 
U.S. origin content by weight, exclusive of added water; and
    (14) A certification statement, and, if requested by the Deputy 
Administrator, a written explanation supporting the certification, that 
any funds received will supplement, but not supplant, any private or 
industry funds or other contributions to program activities. The written 
explanation, if necessary, shall indicate why the Cooperator is unlikely 
to carry out the activities without Federal financial assistance. The 
certification shall also state that information contained in the 
application is true and accurate and that all records supporting the 
claim that project funds do not supplant other funds will be made 
available to authorized officials of the U.S. Government.
    (b) Strategic plan and performance measures. All Cooperator program 
applications shall also contain:
    (1) A description of the U.S. and world market situation for the 
eligible commodity;
    (2) Data summarizing historical and projected U.S. production, U.S. 
exports to the world, world trade, and U.S. market share;
    (3) A summary of proposed activity budgets by country or region;
    (4) A summary of proposed administrative budgets by country or 
region;
    (5) A list of all countries that define any designated region;
    (6) For each country or region for which activities are proposed:
    (i) A market assessment, including the constraint(s) impeding U.S. 
exports, the export growth opportunities, the performance of competing 
suppliers, expected changes in demand, etc.;
    (ii) The long-term strategy that will be used to counteract the 
constraints and achieve additional U.S. exports;
    (iii) Previous activities, performance, and evaluation results;
    (iv) Projected export goals and U.S. market share; and
    (v) Performance indicators against which future success in 
addressing the constraint(s) or opportunities may be measured;
    (7) A description of all proposed activities, including the 
requested FAS resources and the specific goals and benchmarks to be used 
to measure the effectiveness of each activity;
    (8) A justification for any new overseas office, including a list of 
job titles, corresponding position descriptions, salary ranges, and any 
request for approval of salaries above the Foreign Service National 
(FSN) salary plan. To request approval of a salary above the FSN salary 
plan, the Cooperator shall include a detailed description of both the 
duties and responsibilities of the position, and of the qualifications 
and background of the individual concerned. The Cooperator shall also 
justify, based on a verifiable local salary survey or other documented 
local salary information, why the highest FSN salary level is 
inappropriate.



Sec.  1484.21  How does FAS determine which Cooperator program 
applications are approved?

    (a) General. FAS allocates funds in a manner that effectively 
supports the strategic decision-making initiatives of the Government 
Performance and Results Act (GPRA) of 1993. In deciding whether a 
proposed project will contribute to the effective creation, expansion, 
or maintenance of foreign markets, FAS seeks to identify those projects 
that would demonstrate a

[[Page 687]]

clear, long-term agricultural trade strategy by market or product and a 
program effectiveness time line against which results can be measured at 
specific intervals using quantifiable product or country or region 
goals. These performance indicators are part of FAS' resource allocation 
strategy to fund applicants which can demonstrate performance based on a 
long-term strategic plan and address the performance measurement 
objectives of the GPRA.
    (b) Approval criteria. FAS will consider a number of factors when 
reviewing proposed projects, including:
    (1) The ability of the organization to provide an experienced U.S.-
based staff with technical and international trade expertise to ensure 
adequate development, supervision, and execution of the proposed 
project;
    (2) The organization's willingness to contribute resources, 
including cash and goods and services of the U.S. industry and foreign 
third parties;
    (3) The conditions or constraints affecting the level of U.S. 
exports and market share for the agricultural commodities and products;
    (4) The degree to which the proposed project is likely to contribute 
to the creation, expansion, or maintenance of foreign markets;
    (5) The degree to which the strategic plan is coordinated with other 
private or U.S. government-funded market development projects;
    (6) Past program results and evaluations, if applicable; and
    (7) Previous Cooperator program funding.



Sec.  1484.22  How are Cooperator program funds allocated?

    After determining which applications to recommend for approval, the 
Commodity Divisions recommend funding levels for the approved applicants 
within their respective divisions. Applications then compete for funds 
on the basis of the following allocation criteria (the number in 
parentheses represents a percentage weight factor). Data used in the 
calculations for contribution levels, past export performance and past 
demand expansion performance will cover not more than a 6-year period, 
to the extent such data is available. The method for applying the 
following criteria will be described in the Cooperator program 
announcement in the Federal Register:
    (a) Contribution Level (40%).
    (b) Past Export Performance (20%).
    (c) Past Demand Expansion Performance (20%).
    (d) Future Demand Expansion Goals (10%).
    (e) Accuracy of Past Demand Expansion Projections (10%).



                      Subpart C--Program Operations



Sec.  1484.30  How does FAS formalize its working relationship with 
approved Cooperators?

    FAS will notify each applicant in writing of the final disposition 
of its application. FAS will send a program agreement, allocation 
approval letter, and a signature card to each approved applicant. The 
allocation approval letter will specify any special terms and conditions 
applicable to a Cooperator's program, including the required level of 
Cooperator contribution. An applicant that accepts the terms and 
conditions contained in the program agreement and allocation approval 
letter should so indicate by having its Chief Executive Officer sign the 
program agreement and submit the signed agreement to the Director, 
Marketing Operations Staff, FAS, USDA. Final agreement shall occur when 
the Administrator signs the agreement on behalf of FAS. The application, 
the program agreement, the allocation approval letter, and this part 
shall establish the terms and conditions of a Cooperator agreement 
between FAS and the approved applicant.



Sec.  1484.31  Who acts on behalf of each Cooperator?

    The Cooperator shall designate at least two individuals in its 
organization to sign program agreements, reimbursement claims, and 
requests. The Cooperator shall submit the signature card signed by those 
designated individuals and by the Cooperator's Chief Executive Officer 
to the Director, Marketing Operations Staff, FAS, USDA, prior to the 
start of the marketing plan year. The Cooperator shall immediately 
notify the Director of any changes in signatories (e.g., removal or

[[Page 688]]

addition of individuals, name changes, etc.), and shall submit a revised 
signature card accordingly.



Sec.  1484.32  Must Cooperators follow specific employment practices?

    (a) A Cooperator shall enter into written contracts with all 
overseas employees and shall ensure that all terms, conditions, and 
related formalities of such contracts conform to governing local law.
    (b) A Cooperator shall, in its overseas offices, conform its office 
hours, work week, and holidays to local law and to the custom generally 
observed by U.S. commercial entities in the local business community.
    (c) A Cooperator may pay salaries or fees in any currency (U.S. or 
foreign) in conformance with contract specifications. Cooperators are 
cautioned to consult local laws regarding currency restrictions.



Sec.  1484.33  Must Cooperators follow certain financial management 
guidelines?

    (a) A Cooperator shall implement and maintain a financial management 
system that conforms to generally accepted accounting principles.
    (b) A Cooperator shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these provisions. Each Cooperator shall 
maintain all original records and documents relating to program 
activities for 5 calendar years following the end of the applicable 
marketing plan year and shall make such records and documents available 
upon request to authorized officials of the U.S. Government. A 
Cooperator shall also maintain all documents related to employment, such 
as employment applications, contracts, position descriptions, leave 
records, and salary changes; and all records pertaining to contractors. 
A Cooperator shall also maintain adequate documentation related to the 
proper disposition of all property purchased by the Cooperator and for 
which the Cooperator is reimbursed with program funds.
    (c) A Cooperator shall maintain its records of expenditures and 
contributions in a manner that allows it to provide information by 
marketing plan year, country or region, activity number, and cost 
category. Such records shall include:
    (1) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (2) Original receipts for any other program related expenditure in 
excess of $25.00;
    (3) The exchange rate used to calculate the dollar equivalent of 
each expenditure made in a foreign currency and the basis for such 
calculation;
    (4) Copies of reimbursement claims;
    (5) An itemized list of claims charged to the Cooperator's FMD 
account;
    (6) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions, such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, and travel 
vouchers; and
    (7) Documentation supporting contributions including: the date(s), 
purpose, and location(s) of each activity for which cash, goods, or 
services were claimed as a contribution; who conducted the activity; the 
participating groups or individuals; and the method of computing the 
claimed contributions. Cooperators must retain, and make available for 
audit, documentation related to claimed contributions.
    (d) Upon request, a Cooperator shall provide to FAS the original 
documents which support the Cooperator's reimbursement claims. FAS may 
deny a claim for reimbursement if the claim is not supported by adequate 
documentation.



Sec.  1484.34  Must Cooperators adhere to specific standards of ethical 
conduct?

    (a) A Cooperator shall conduct its business in accordance with the 
laws and regulations of the country(s) in which each activity is carried 
out.
    (b) Neither a Cooperator nor its affiliates shall make export sales 
of agricultural commodities covered under the terms of a project 
agreement. Neither a Cooperator nor its affiliates

[[Page 689]]

shall charge a fee for facilitating an export sale. For the purposes of 
this paragraph, ``affiliate'' means any partnership, association, 
company, corporation, trust, or any other such party in which the 
Cooperator has an investment, other than a mutual fund. A Cooperator may 
collect check-off funds and membership fees that are required for 
membership in the Cooperator's organization.
    (c) The Cooperator shall not use program activities or program funds 
to promote private self interests or conduct private business, except as 
members of sales teams.
    (d) A Cooperator shall select U.S. agricultural industry 
representatives to participate in activities such as trade teams or 
trade fairs based on criteria that ensure participation on an equitable 
basis by a broad cross section of the U.S. industry. If requested, a 
Cooperator shall submit such selection criteria to FAS for approval.
    (e) All Cooperators should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of a project agreement.
    (f) The Cooperator must report any actions or circumstances that 
have a bearing on the propriety of program activities to the Attache/
Counselor and the Cooperator's U.S. office shall report such actions in 
writing to the appropriate Division Director.



Sec.  1484.35  Must Cooperators follow specific contracting procedures?

    (a) Cooperators have full and sole responsibility for the legal 
sufficiency of all contracts and assume financial liability for any 
costs or claims resulting from suits, challenges, or other disputes 
based on contracts entered into by the Cooperator. Neither FAS nor any 
other agency of the United States Government or any official or employee 
of FAS or the United States Government has any obligation or 
responsibility with respect to Cooperator contracts with third parties.
    (b) Cooperators are responsible for ensuring to the extent possible 
that the terms, conditions, and costs of contracts constitute the most 
economical and effective use of project funds.
    (c) All fees for professional and consulting services paid in any 
part with project funds must be covered by written contracts.
    (d) A Cooperator shall:
    (1) Ensure that all expenditures for goods and services in excess of 
$25.00, which are reimbursed with project funds, are documented by a 
purchase order, invoice, or contract;
    (2) Ensure that no employee or officer participates in the selection 
or award of a contract in which such employee or officer, or the 
employee's or officer's family or partners has a financial interest;
    (3) Conduct all contracting in an open manner. Individuals who 
develop or draft specifications, requirements, statements of work, 
invitations for bids, or requests for proposals for procurement of any 
goods or services shall be excluded from competition for such 
procurement;
    (4) Base each solicitation for professional or consulting services 
on a clear and accurate description of the requirements for the services 
to be procured;
    (5) Perform some form of price or cost analysis, such as a 
comparison of price quotations to market prices or other price indicia, 
to determine the reasonableness of the offered prices; and
    (6) Document the decision-making process.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
Feb. 25, 2000]



Sec.  1484.36  How do Cooperators dispose of disposable property?

    (a) Property purchased by the Cooperator, and for which the 
Cooperator is reimbursed with project funds, that is unusable, 
unserviceable, or no longer needed for project purposes shall be 
disposed of in one of the following ways. The Cooperator may:
    (1) Exchange or sell the property, provided that it applies any 
exchange allowance, insurance proceeds, or sales proceeds toward the 
purchase of other property needed in the project;
    (2) With FAS approval, transfer the goods to other Cooperators for 
their activities, or to a foreign third party; or
    (3) Upon Attache/Counselor approval, donate the goods to a local 
charity, or

[[Page 690]]

convey the goods to the Attache/Counselor, along with an itemized 
inventory list and any documents of title.
    (b) A Cooperator shall maintain an inventory of all property valued 
at $500 or more which was acquired in furtherance of program activities. 
The inventory shall list and number each item and include the date of 
purchase or acquisition, cost of purchase, replacement value, serial 
number, make, model, and electrical requirements.
    (c) The Cooperator shall insure all property which was acquired with 
program funds and safeguard such property against theft, damage, and 
unauthorized use. The Cooperator shall promptly report any loss, theft, 
or damage of such property to the insurance company.
    (d) The Cooperator is responsible for reimbursing FAS for the value 
of any uninsured property at the time of the loss or theft of the 
property.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
9996, Feb. 25, 2000]



Sec.  1484.37  Must Cooperators adhere to Federal Travel Regulations?

    Travel shall conform to the U.S. Federal Travel Regulation (41 CFR 
Chapters 300 through 304) and air travel shall conform to the 
requirements of the ``Fly America Act'' (49 U.S.C. 1517). The Cooperator 
shall notify the Attache/Counselor in the destination countries in 
writing in advance of any proposed travel. The timing of such notice 
should be far enough in advance to enable the Attache/Counselor to 
schedule appointments, make preparations, or otherwise provide any 
assistance being requested. Failure to provide advance notification of 
travel may result in disallowance of the expenses related to the travel.



Sec.  1484.38  Can a Cooperator keep proceeds generated from an activity?

    Any income or refunds generated from an activity, i.e., 
participation fees, proceeds of sales, refunds of value added taxes 
(VAT), the expenditures for which have been wholly or partially 
reimbursed, shall be repaid by submitting a check payable to Commodity 
Credit Corporation or by offsetting the Cooperator's next reimbursement 
claim.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
9996, Feb. 25, 2000]



               Subpart D--Contributions and Reimbursements



Sec.  1484.50  What cost share contributions are eligible?

    (a) The Cooperator shall pay all costs necessary for the operation 
of the Cooperator's U.S. office.
    (b) In calculating the amount of contributions that it will make, 
and the contributions it will receive from a U.S. industry or a State 
agency, a Cooperator program applicant may include the costs (or such 
prorated costs) listed under paragraph (c) of this section if:
    (1) Expenditures will be made in furtherance of the Cooperator's 
overall foreign market development program;
    (2) The contributor has not been or will not be reimbursed by any 
other source for such costs; and
    (3) The contribution is made during the period covered by the 
project agreement.
    (c) Subject to paragraph (b) of this section, eligible contributions 
are:
    (1) Cash;
    (2) Compensation paid to personnel;
    (3) The cost of acquiring materials, supplies, or services;
    (4) The cost of office space;
    (5) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (6) Payments for indemnity and fidelity bond expenses;
    (7) The cost of business cards;
    (8) The cost of seasonal greeting cards;
    (9) Fees for office parking;
    (10) The cost of subscriptions to publications;
    (11) The cost of activities conducted overseas;
    (12) Credit card fees;
    (13) The cost of any independent evaluation or audit that is not 
required by FAS to ensure compliance with program requirements;
    (14) The cost of giveaways, awards, prizes and gifts;
    (15) The cost of product samples;

[[Page 691]]

    (16) Fees for participating in U.S. government activities;
    (17) The cost of air and local travel in the United States related 
to a foreign market development effort;
    (18) Transportation and shipping costs;
    (19) The cost of displays and promotional materials;
    (20) Advertising costs;
    (21) Reasonable travel costs and expenses related to undertaking a 
foreign market development activity;
    (22) Payment of employee's or contractor's share of personal taxes;
    (23) The cost associated with trade shows, seminars, entertainment 
and STRE conducted in the United States;
    (24) Product research that is undertaken to benefit an industry and 
has a specific export application; and
    (25) Consumer promotions.



Sec.  1484.51  What are ineligible contributions?

    (a) The following are not eligible contributions:
    (1) Any portion of salary or compensation of an individual who is 
the target of a promotional activity;
    (2) Any land costs other than allowable costs for office space;
    (3) Depreciation;
    (4) The cost of refreshments and related equipment provided to 
office staff;
    (5) The cost of insuring articles owned by private individuals;
    (6) The cost of any arrangement which has the effect of reducing the 
selling price of an agricultural commodity;
    (7) The cost of product development or product modifications;
    (8) Slotting fees or similar sales expenditures;
    (9) Funds, services, or personnel provided by any U.S. government 
agency;
    (10) Capital investments made by a third party, such as permanent 
structures, real estate, and the purchase of office equipment and 
furniture;
    (11) The value of any services generated by a Cooperator or third 
party which involve no expenditure by the Cooperator or third party, 
e.g., free publicity;
    (12) Membership fees in clubs and social organizations; and
    (13) costs included as contributions for any other federally-
assisted project or program.
    (b) The Deputy Administrator shall determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section may be included by the Cooperator as an eligible 
contribution.



Sec.  1484.52  What are the guidelines for computing the value of 
non-cash contributions?

    (a) Computing the value of an individual's time. If an individual's 
salary is known, allocate the individual's salary on the basis of time 
spent on foreign market development activities. If the individual's 
salary is unknown, claim up to the equivalent of a step 10, GS-15 for 
professional personnel and up to the current estimated industry rate at 
the person's level of employment for nonprofessional personnel.
    (b) Computing the value of indirect expenditures. Allocate value on 
the basis of sound management and accounting procedures when considering 
indirect expenditures, such as overhead and facilities, which are 
furnished by the industry.



Sec.  1484.53  What are the requirements for documenting and reporting 
contributions?

    (a) Each claimed contribution must be documented by the Cooperator, 
showing the method of computing non-cash contributions, salaries, and 
travel expenses.
    (b) Each Cooperator must keep records of the methods used to compute 
the value of non-cash contributions, and
    (1) Copies of invoices or receipts for expenses paid by the U.S. 
industry and not reimbursed by the Cooperator for the joint activity; or
    (2) If invoices are not available, an itemized statement from the 
U.S. industry as to what costs it incurred pursuant to the joint 
activity; or
    (3) If neither of the foregoing is available, a statement from the 
U.S. industry as to what goods and services it provided; or
    (4) If none of the foregoing are available, a memo to the files of 
the U.S.

[[Page 692]]

Cooperator's estimate of what contributions were made by the U.S. 
industry, item by item, and the method used to assign a value to each.
    (c) Each Cooperator must report its contributions as described in 
Sec.  1550.70 (a).



Sec.  1484.54  What expenditures may FAS reimburse under the Cooperator 
program?

    (a) A Cooperator may seek reimbursement for an expenditure if:
    (1) The expenditure is reasonable and has been made in furtherance 
of a market development activity; and
    (2) The Cooperator has not been or will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section, FAS will reimburse, in 
whole or in part, the cost of:
    (1) Production and placement of advertising in print or electronic 
media or on billboards or posters;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and similar point of sale materials;
    (3) Direct mail advertising;
    (4) Food service promotions, product demonstrations to the trade, 
and distribution of promotional samples;
    (5) Temporary displays and rental of space for temporary displays;
    (6) Fees for participation in retail and trade exhibits and shows, 
and booth construction and transportation of related materials to such 
exhibits and shows;
    (7) Trade seminars, including space rental, equipment rental, and 
duplication of seminar materials;
    (8) Production and distribution of publications;
    (9) Part-time contractors, such as interpreters, translators, and 
receptionists, to help with the implementation of promotional 
activities, such as trade shows, food service promotions, and trade 
seminars;
    (10) Giveaways, awards, prizes, gifts, and other similar promotional 
materials, subject to the limitation that FAS will not reimburse more 
than $1.00 per item;
    (11) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to U.S. citizen employees or U.S. 
citizen contractors stationed overseas, subject to the limitation that 
FAS shall not reimburse that portion of:
    (i) The total of compensation and allowances that exceed 125 percent 
of the level of a GS-15, Step 10 salary for U.S. Government employees, 
and
    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel;
    (12) Foreign transfer, temporary lodging, and post hardship 
differential allowances for U.S. citizen employees;
    (13) Approved salaries or compensation for non-U.S. citizens and 
non-U.S. contractors. Generally, FAS will not reimburse any portion of a 
non-U.S. citizen employee's compensation that exceeds the compensation 
prescribed for the most comparable position in the Foreign Service 
National (FSN) salary plan applicable to the country in which the 
employee works. However, if the local FSN salary plan is inappropriate, 
a Cooperator may request a higher level of reimbursement for a non-U.S. 
citizen in accordance with Sec.  1550.20 (b)(8);
    (14) A retroactive salary adjustment that conforms to a change in 
FSN salary plans, effective as of the date of such change;
    (15) Accrued annual leave at such time when employment is terminated 
or when required by local law;
    (16) Overtime paid to clerical staff;
    (17) Fees for professional and consultant services;
    (18) Air travel, plus passports, visas, and inoculations, subject to 
the limitation that FAS will not reimburse any portion of air travel in 
excess of the full fare economy rate or when the Cooperator fails to 
notify the Attach[eacute]/Counselor in the destination country in 
advance of the travel, unless the Deputy Administrator determines it was 
impractical to provide such notification;
    (19) Per diem, subject to the limitation that FAS will not reimburse 
per diem in excess of the rates allowed under the U.S. Federal Travel 
Regulation (41 CFR Chapters 300 through 304);
    (20) Automobile mileage at the local U.S. Embassy rate, or rental 
cars while in travel status;
    (21) Other allowable expenditures while in travel status as 
authorized by

[[Page 693]]

the U.S. Federal Travel Regulation (41 CFR Chapters 300 through 304);
    (22) An overseas office, including rent, utilities, communications 
originating overseas, office supplies, accident liability insurance 
premiums, and legal and accounting services;
    (23) The purchase, lease, or repair of, or insurance premiums for, 
property that has an expected useful life of at least one year, such as 
furniture, equipment, machinery, removable fixtures, floor coverings, 
and computer hardware and software;
    (24) Office decor, such as draperies or blinds;
    (25) Premiums for health or accident insurance or other benefits for 
foreign national employees that the employer is required by law to pay;
    (26) Accident liability insurance premiums for facilities used 
jointly with third party participants for Cooperator program activities, 
or such insurance premiums for travel of non-Cooperator personnel;
    (27) Market research;
    (28) Evaluations, if not required by FAS to ensure compliance with 
program requirements;
    (29) Legal fees to obtain advice on the host country's labor laws;
    (30) Employment agency fees;
    (31) STRE, including breakfast, lunch, dinner, receptions, and 
refreshments at activities; miscellaneous courtesies such as checkroom 
fees, taxi fares, and tips; and decorations for a special promotional 
occasion;
    (32) Educational travel of dependent children, visitation travel, 
rest and recuperation travel, home leave travel, and emergency 
visitation travel for U.S. overseas employees as allowed under the 
Foreign Affairs Manual;
    (33) Evacuation payments (safe haven), and shipment and storage of 
household goods and motor vehicles;
    (34) Demonstration projects;
    (35) Purchase of trade and business periodicals containing material 
related to market development activities for use by overseas staffs;
    (36) Training expenses in the U.S. for FSNs;
    (37) Language training for U.S. citizen employees at the foreign 
post of assignment;
    (38) Forward year financial obligations required by local law or 
custom; such as severance pay, attributable to employment of foreign 
nationals; or forfeiture of rent or deposits, attributable to the 
closure of an office;
    (39) Fees for storage of necessary program materials;
    (40) Shipment of samples or other program materials from the U.S. to 
foreign countries; and
    (41) That portion of airtime for wireless phones that is devoted to 
program activities and monthly service fees prorated at the proportion 
of program-related airtime to total airtime.



Sec.  1484.55  What expenditures may not be reimbursed under the Cooperator 
program?

    (a) FAS will not reimburse expenditures made prior to approval of a 
Cooperator's program, unreasonable expenditures, or any cost of:
    (1) Expenses, fines, settlements, or claims resulting from suits, 
challenges, or disputes emanating from employment terms, conditions, 
contract provisions, or related formalities;
    (2) Product development, product modification, or product research;
    (3) Product samples;
    (4) Slotting fees or similar sales expenditures;
    (5) The purchase, construction, or lease of space for permanent 
displays, i.e., displays lasting beyond one marketing plan year;
    (6) Office parking fees;
    (7) Coupon redemption or price discounts;
    (8) Refundable deposits or advances;
    (9) Giveaways, awards, prizes, gifts, and other similar promotional 
materials in excess of $1.00 per item;
    (10) Alcoholic beverages that are not an integral part of a 
promotional activity;
    (11) The purchase, lease (except for use in authorized travel 
status), or repair of motor vehicles;
    (12) Travel of applicants for employment interviews;
    (13) Unused non-refundable airline tickets or associated penalty 
fees, except where travel is restricted by U.S. government action or 
advisory;

[[Page 694]]

    (14) Any arrangement which has the effect of reducing the selling 
price of an agricultural commodity;
    (15) Goods and services and salaries of third party personnel;
    (16) Membership fees in clubs and social organizations;
    (17) Indemnity and fidelity bonds;
    (18) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs, shows, and exhibits;
    (19) Business cards;
    (20) Seasonal greeting cards;
    (21) Subscriptions to non-trade related publications;
    (22) Credit card fees;
    (23) Refreshments, or related equipment, for office staff;
    (24) Insurance on household goods and personal effects, including 
privately-owned automobiles, whether overseas or stored in the U.S., 
belonging to U.S. citizen employees;
    (25) Home office domestic administrative expenses, including 
communication costs;
    (26) Payment of U.S. or foreign employee's or contractor's share of 
personal taxes, except as legally required in a foreign country;
    (27) Wireless phone equipment, equipment repair, insurance, and 
other related charges;
    (28) STRE expenses incurred in the U.S;
    (29) Entertainment, e.g., amusements, diversions, cover charges, 
personal gifts, or tickets to theatrical or sporting events;
    (30) Functions (including receptions and meals at Cooperator staff 
conferences) at which target groups, such as members of the overseas 
trade, opinion leaders, foreign government officials, and other similar 
groups, are not present; or
    (31) Promotions directed at consumers purchasing in their individual 
capacity.
    (b) The Deputy Administrator may determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section will be reimbursed.
    (c) FAS will reimburse for expenses incurred up to 30 calendar days 
beyond the conclusion of the marketing plan year.



Sec.  1484.56  How are Cooperators reimbursed?

    (a) A format for reimbursement claims is available from the 
Director, Marketing Operations Staff, FAS, USDA. Claims for 
reimbursement shall contain at least the following information:
    (1) Activity code;
    (2) Country code;
    (3) Cost category;
    (4) Amount to be reimbursed or credited;
    (5) If applicable, any reduction in the amount of reimbursement 
claimed to offset FAS demand for refund of amounts previously 
reimbursed, and reference to the relevant Compliance Report; and
    (6) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the 
Cooperator's U.S. office to the Director, Marketing Operations Staff, 
FAS, USDA.
    (c) FAS will not reimburse claims submitted later than 6 months 
after the end of a marketing plan year.
    (d) If FAS overpays a reimbursement claim, the Cooperator shall 
repay FAS within 30 days the amount of the overpayment either by 
submitting a check payable to FAS or by offsetting its next 
reimbursement claim.
    (e) If a Cooperator receives a reimbursement or offsets an advanced 
payment which is later disallowed, the Cooperator shall within 30 days 
of such disallowance repay FAS the amount owed either by submitting a 
check payable to FAS or by offsetting its next reimbursement claim.
    (f) The Cooperator shall report any actions having a bearing on the 
propriety of any claims for reimbursement to the Attache/Counselor and 
its U.S. office shall report such actions in writing to the Division 
Director(s).



Sec.  1484.57  Will FAS make advance payments to a Cooperator?

    (a) Policy. In general, FAS operates the Cooperator program on a 
reimbursable basis.
    (b) Exception. Upon request, FAS may make two types of advance 
payments to a Cooperator. The first is a revolving fund operating 
advance provided by

[[Page 695]]

FAS only to Cooperators with foreign offices supported with project 
funds. The second is a special advance payment used to pay an impending 
large cost item. FAS will provide this type of advance expense payment 
in lieu of direct payments by FAS to vendors or other third parties. All 
Cooperators, with or without project fund-supported foreign offices, are 
eligible to request special advance payments. Normally, special advance 
payments received from FAS must be liquidated by the Cooperator within 
90 days from the date of receipt. Prior to making an advance, FAS may 
require the participant to submit security in a form and amount 
acceptable to FAS to protect FAS' financial interests. FAS will not make 
any special advance payment to a Cooperator where a special advance is 
outstanding from a prior marketing plan year. Cooperators shall deposit 
and maintain advances in insured, interest-bearing accounts, unless such 
accounts are prohibited by law or custom of a host country.
    (c) Refunds due FAS. A participant shall return any unexpended 
portion of an advance, plus any interest earned, either by submitting a 
check payable to FAS or by offsetting its next reimbursement claim. All 
checks shall be mailed to the Director, Marketing Operations Staff, FAS, 
USDA.



            Subpart E--Reporting, Evaluation, and Compliance



Sec.  1484.70  Must Cooperators report to FAS?

    (a) End-of-year contribution report. Not later than January 31 of 
the year following the completion of the marketing plan year, a 
Cooperator shall submit two copies of a report which identifies 
contributions made by the Cooperator and the U.S. industry during that 
marketing plan year. A suggested format of a contribution report is 
available on the FAS home page (http://www.fas.usda.gov/mos/programs/
fnotice.html) on the Internet or from the Director, Marketing Operations 
Staff, FAS, USDA.
    (b) Trip reports. Not later than 45 days after completion of travel 
(other than local travel), a Cooperator shall submit a trip report. The 
report must include the name(s) of the traveler(s), purpose of travel, 
itinerary, names and affiliations of contacts, and a brief summary of 
findings, conclusions, recommendations, or specific accomplishments.
    (c) Research reports. Not later than 6 months after the end of its 
marketing plan year, a Cooperator shall submit a report on any research 
conducted in accordance with its application.
    (d) Submission of reports. A Cooperator shall submit the reports 
required by this section to the appropriate Division Director. Trip 
reports and research reports shall also be submitted to the appropriate 
Attache/Counselor(s). All reports shall be in English and include the 
Cooperator's agreement number, the countries and period covered, and the 
date of the report.
    (e) Additional reports. FAS may require the submission of additional 
reports.
    (f) Independent audit reports. A Cooperator shall provide to the FAS 
Compliance Review Staff, upon request, any audit reports by independent 
public accountants.



Sec.  1484.71  Are Cooperator documents subject to the provisions of the 
Freedom of Information Act?

    (a) Documents submitted to FAS by Cooperators are subject to the 
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 CFR 
part 1, Subpart A--Official Records, and, specifically, 7 CFR 1.11--
Handling Information from a Private Business.
    (b) If requested by a person located in the United States, a 
Cooperator shall provide to such person a copy of any document in its 
possession or control containing market information developed and 
produced under the terms of its agreement. The Cooperator may charge a 
fee not to exceed the costs for assembling, duplicating, and 
distributing the materials.
    (c) The results of any research conducted by a Cooperator under an 
agreement shall be the property of the U.S. Government.



Sec.  1484.72  How is program effectiveness measured?

    (a) The Government Performance and Results Act (GPRA) of 1993 (5 
U.S.C.

[[Page 696]]

306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires performance 
measurement of Federal programs, including the Cooperator program. 
Evaluation of the Cooperator program's effectiveness will depend on a 
clear statement by each Cooperator of the constraints and opportunities 
facing U.S. exports, goals to be met within a specified time, a schedule 
of measurable milestones for gauging success, a plan for achievement, 
and reports of activity results.
    (b) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan. The 
evaluation results guide the development and scope of a Cooperator's 
program, contribute to program accountability, and provide evidence of 
program effectiveness.
    (c) A Cooperator shall conduct periodic evaluations of its program 
and activities and may contract with an independent evaluator to satisfy 
this requirement. FAS reserves the right to have direct input and 
control over design, scope, and methodology of any such evaluation, 
including direct contact with and provision of guidance to the 
independent evaluator.
    (d) A Cooperator shall complete at least one program evaluation each 
year. Actual scope and timing of the program evaluation shall be 
determined by the Cooperator and the Division Director and specified in 
the Cooperator's application approval letter. A program evaluation shall 
contain:
    (1) The name of the party conducting the evaluation;
    (2) The activities covered by the evaluation;
    (3) A concise statement of the constraint(s) and opportunities and 
the goals specified in the application;
    (4) A description of the evaluation methodology;
    (5) A description of additional export sales achieved, including the 
ratio of additional export sales in relation to Cooperator program 
funding received;
    (6) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (7) Recommendations for future programs.
    (e) A Cooperator shall submit, via a cover letter to the Division 
Director, an executive summary which assesses the program evaluation's 
findings and recommendations and proposes changes in program strategy or 
design as a result of the evaluation.



Sec.  1484.73  Are Cooperators penalized for failing to make required 
contributions?

    A Cooperator's contribution requirement is specified in the 
Cooperator program allocation letter. If a Cooperator fails to 
contribute the amount specified in its allocation approval letter, the 
Cooperator shall pay to Commodity Credit Corporation in U.S. dollars the 
difference between the amount it has contributed and the amount 
specified in the allocation approval letter. A Cooperator shall remit 
such payment by December 31 following the end of the marketing plan 
year.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
9996, Feb. 25, 2000]



Sec.  1484.74  How is Cooperator program compliance monitored?

    (a) The Compliance Review Staff (CRS), FAS, performs periodic on-
site reviews of Cooperators to ensure compliance with this part.
    (b) In order to verify that federal funds received by a Cooperator 
do not supplant private or U.S. industry funds or contributions pursuant 
to Sec.  1550.20(a)(14), FAS will consider the Cooperator's overall 
marketing budget from year to year, variations in promotional strategies 
within a country or region, and new markets.
    (c) The Director, CRS, will notify a Cooperator through a compliance 
report when it appears that Commodity Credit Corporation may be entitled 
to recover funds from that Cooperator. The compliance report will state 
the basis for this action.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
9996, Feb. 25, 2000]



Sec.  1484.75  How does a Cooperator respond to a compliance report?

    (a) A Cooperator shall, within 60 days of the date of the compliance 
report, submit a written response to the Director, CRS. This response 
shall include any money owed to Commodity Credit Corporation if the 
Cooperator does not wish to contest the compliance report. The Director, 
CRS, at the Director's

[[Page 697]]

discretion, may extend the period for response up to an additional 30 
days. If the Cooperator does not respond to the compliance report within 
the required time period or, if after review of the Cooperator's 
response, the Director, CRS, determines that Commodity Credit 
Corporation may be entitled to recover funds from the Cooperator, the 
Director, CRS, will refer the compliance report to the Deputy 
Administrator.
    (b) If, after review of the compliance report and response, the 
Deputy Administrator determines that the Cooperator owes money to FAS, 
the Deputy Administrator will so inform the Cooperator. The Deputy 
Administrator may initiate action to collect such amount pursuant to 7 
CFR Part 1403, Debt Settlement Policies and Procedures. Determinations 
of the Deputy Administrator will be in writing and in sufficient detail 
to inform the Cooperator of the basis for the determination. The 
Cooperator has 30 days from the date of the Deputy Administrator's 
initial determination to submit any money owed to Commodity Credit 
Corporation or to request reconsideration.

[64 FR 52630, Sept. 30, 1999. Redesignated and amended at 65 FR 9995, 
9996, Feb. 25, 2000]



Sec.  1484.76  Can a Cooperator appeal the determinations of the Deputy 
Administrator?

    (a) The Cooperator may appeal the determinations of the Deputy 
Administrator to the Administrator. An appeal must be in writing and be 
submitted to the Office of the Administrator within 30 days following 
the date of the initial determination by the Deputy Administrator or the 
determination on reconsideration. The Cooperator may request a hearing.
    (b) If the Cooperator submits its appeal and requests a hearing, the 
Administrator, or the Administrator's designee, will set a date and 
time, generally within 60 days. The hearing will be an informal 
proceeding. A transcript will not ordinarily be prepared unless the 
Cooperator bears the cost of a transcript; however, the Administrator 
may have a transcript prepared at FAS's expense.
    (c) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after submission of the appeal, 
hearing, or receipt of any transcript, whichever is later. The 
determination of the Administrator will be the final determination of 
FAS. The Cooperator must exhaust all administrative remedies contained 
in this section before pursuing judicial review of a determination by 
the Administrator.



PART 1485--COOPERATIVE AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN MARKETS 
FOR AGRICULTURAL COMMODITIES--Table of Contents




Subpart A [Reserved]

                    Subpart B--Market Access Program

Sec.
1485.10 General purpose and scope.
1485.11 Definitions.
1485.12 Participation eligibility.
1485.13 Application process and strategic plan.
1485.14 Application approval and formation of agreements.
1485.15 Activity plan.
1485.16 Reimbursement rules.
1485.17 Reimbursement procedures.
1485.18 Advances.
1485.19 Employment practices.
1485.20 Financial management, reports, evaluations and appeals.
1485.21 Failure to make required contribution.
1485.22 Submissions.
1485.23 Miscellaneous provisions.
1485.24 Applicability date.
1485.25 Paperwork reduction requirement.

    Authority: 7 U.S.C. 5623, 5662-5664 and sec. 1302, Pub. L. 103-66, 
107 Stat. 330.

    Source: 60 FR 6363, Feb. 1, 1995, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 1485 appear at 61 FR 
58780, Nov. 19, 1996.

Subpart A [Reserved]



                    Subpart B--Market Access Program



Sec.  1485.10  General purpose and scope.

    (a) This subpart sets forth the policies underlying the Commodity 
Credit Corporation's (CCC) operation of the Market Access Program (MAP), 
and a

[[Page 698]]

subcomponent of that program, the Export Incentive Program/Market Access 
Program (EIP/MAP). It also establishes the general terms and conditions 
applicable to MAP and EIP/MAP agreements.
    (b) Under the MAP, CCC enters into agreements with nonprofit trade 
organizations to share the costs of certain overseas marketing and 
promotion activities that are intended to develop, maintain or expand 
commercial export markets for U.S. agricultural commodities and 
products. MAP participants may receive assistance for either generic or 
brand promotion activities. EIP/MAP participants are U.S. commercial 
entities that receive assistance for brand promotion activities.
    (c) The MAP and EIP/MAP generally operate on a reimbursement basis, 
and CCC may, at its option, provide such reimbursement either in cash or 
in CCC commodity certificates.
    (d) CCC's policy is to ensure that benefits generated by MAP and 
EIP/MAP agreements are broadly available throughout the relevant 
agricultural sector and no one entity gains an undue advantage. The MAP 
and EIP/MAP are administered by personnel of the Foreign Agricultural 
Service.



Sec.  1485.11  Definitions.

    For purposes of this subpart the following definitions apply:
    Activity--a specific market development effort undertaken by a 
participant.
    Activity plan--a document which details a participant's proposed 
activities and budget. (Activity plan is used in lieu of the term 
Marketing plan to avoid administrative confusion with plans submitted 
under the Cooperator Foreign Market Development Program.)
    Administrator--the Administrator, FAS, USDA, or designee.
    Agricultural commodity--an agricultural commodity, food, feed, 
fiber, wood, livestock or insect, and any product thereof; and fish 
harvested from a U.S. aquaculture farm, or harvested by a vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    APAR--activity plan amendment request.
    Attache/Counselor--the FAS employee representing USDA interests in 
the foreign country in which promotional activities are conducted.
    Brand promotion--an activity that involves the exclusive or 
predominant use of a single company name or logo(s) or brand name(s) of 
a single company.
    CCC--the Commodity Credit Corporation.
    Contribution--the cost-share expenditure made by a participant in 
support of an approved activity.
    Credit memo--a notice that a vendor has decreased an amount owed for 
promotional expenditures at the time the notice is issued.
    Demonstration projects--activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.
    Deputy Administrator--the Deputy Administrator, Commodity and 
Marketing Programs, FAS, USDA, or designee.
    Division Director--the director of a commodity division, Commodity 
and Marketing Programs, FAS, USDA.
    EIP/MAP--the Export Incentive Program/Market Access Program.
    EIP/MAP participant--a U.S. commercial entity which has entered into 
an EIP/MAP agreement with CCC.
    Eligible commodity--the agricultural commodity that is represented 
by an applicant.
    Expenditure--either the transfer of funds, or payment via a credit 
memo in lieu of a transfer of funds.
    Exported commodity--an agricultural commodity that is sold to buyers 
in, or is donated to, a foreign country.
    FAS--Foreign Agricultural Service, USDA.
    Foreign third party--a foreign entity that assists, in accordance 
with an approved activity plan, in promoting the export of a U.S. 
agricultural commodity.
    Generic promotion--a promotion that is not a brand promotion.
    Market--a country in which an activity is conducted.
    MAP--the Market Access Program.
    MAP participant--an entity which has entered into an MAP agreement 
with CCC.

[[Page 699]]

    Participant--a entity which has entered into an agreement with CCC.
    Promoted commodity--an agricultural commodity whose sale is the 
intended result of a promotion activity.
    Sales team--a group of individuals engaged in an approved activity 
intended to result in specific sales.
    Small-sized entity--a U.S. commercial entity which meets the small 
business size standards published at 13 CFR part 121, Small Business 
Size Regulations.
    SRTG--an association of State Departments of Agriculture referred to 
as State Regional Trade Group(s).
    STRE--sales and trade relations expenditures.
    Supergrade--a salary level designation that is applicable to certain 
non-U.S. employees who direct participants' overseas offices.
    Trade team--a group of individuals engaged in an approved activity 
intended to promote the interests of an entire agricultural sector 
rather than to result in specific sales by any of its members.
    Unfair trade practice--an act, policy, or practice of a foreign 
government that:
    (1) Violates, is inconsistent with, or otherwise denies benefits to 
the United States under, any trade agreement to which the United States 
is a party; or
    (2) Is unjustifiable, unreasonable, or discriminatory and burdens or 
restricts United States commerce.
    U.S. commercial entity--an agricultural cooperative, producer 
association authorized by 7 U.S.C. 291, or for-profit firm located and 
doing business in the United States, and engaged in the export or sale 
of an agricultural commodity.
    U.S. industry contribution--the expenditure made by the U.S industry 
in support of an approved activity.
    USDA--the United States Department of Agriculture.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 61 
FR 58780, Nov. 19, 1996; 63 FR 29940, June 2, 1998; 63 FR 32041, June 
11, 1998]



Sec.  1485.12  Participation eligibility.

    (a) To participate in the MAP, an entity:
    (1) Shall be:
    (i) A nonprofit U.S agricultural trade organization;
    (ii) A nonprofit state regional trade group;
    (iii) A U.S. agricultural cooperative; or
    (iv) A State agency; and
    (2) Shall contribute:
    (i) In the case of generic promotion, at least 10 percent of the 
value of resources provided by CCC for such generic promotion; or
    (ii) In the case of brand promotion, at least 50 percent of the 
total cost of such brand promotions.
    (b) To participate in the EIP/MAP, an entity:
    (1) Shall be a U.S. commercial entity that either owns the brand(s) 
of the agricultural commodity to be promoted or has the exclusive rights 
to use such brand(s);
    (2) Shall contribute at least 50 percent of the total cost of the 
brand promotion; and
    (3) That is a for-profit firm, other than a cooperative or producer 
association authorized by 7 U.S.C. 291, shall be a small sized entity.
    (c) CCC may require a contribution level greater than that specified 
in paragraphs (a) and (b) of this section. In requiring a higher 
contribution level, CCC will take into account such factors as past 
participant contributions, previous MAP funding levels, the length of 
time an entity participates in the program and the entity's ability to 
increase its contribution.
    (d) CCC may require an EIP/MAP applicant to participate through an 
MAP participant.
    (e) CCC will enter into MAP or EIP/MAP agreements only where the 
eligible agricultural commodity is comprised of at least 50 percent U.S. 
origin content by weight, exclusive of added water.
    (f) CCC will not enter into an MAP or EIP/MAP agreement for the 
promotion of tobacco or tobacco products.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 58780, Nov. 19, 1996]



Sec.  1485.13  Application process and strategic plan.

    (a) General application requirements. CCC will periodically publish 
a Notice

[[Page 700]]

in the Federal Register that it is accepting applications for 
participation in MAP and EIP/MAP. Applications shall be submitted in 
accordance with the terms and requirements specified in the Notice. An 
application shall contain basic information about the applicant and the 
proposed program, a program justification and a strategic plan.
    (1) Basic applicant and program information. (i) All MAP and EIP/MAP 
applications shall contain:
    (A) The name and address of the applicant;
    (B) The name of the Chief Executive Officer;
    (C) The name and telephone number of the applicant's primary contact 
person;
    (D) The name(s) of the person(s) responsible for managing the 
program;
    (E) Type of organization--see Sec.  1485.12(a)(1);
    (F) Tax exempt identification number, if applicable;
    (G) Activity plan year (mm/dd/yy-mm/dd/yy);
    (H) Dollar amount of CCC resources requested for generic activities;
    (I) Dollar amount of CCC resources requested for brand activities;
    (J) Percentage of CCC resources requested for brand activities that 
will be made available to small-sized entities;
    (K) Total dollar amount of CCC resources requested;
    (L) Percentage of CCC resources requested for general administrative 
costs and overhead; and
    (M) Estimated cumulative carryover--i.e., the estimated amount of 
unexpended funds allocated to the applicant in any prior year;
    (ii) Applications submitted by nonprofit entities shall also 
contain:
    (A) A description of the organization;
    (B) A description of the organization's membership and membership 
criteria;
    (C) A list of affiliated organizations;
    (D) A description of management and administrative capability;
    (E) A description of prior export promotion experience;
    (F) Value, in dollars, that the applicant will contribute;
    (G) Applicant's contribution stated as a percent of 1(i)(K) above;
    (H) Value, in dollar, of contributions from other sources;
    (2) Program justification. (i) All MAP and EIP/MAP applications 
shall contain:
    (A) A description of the eligible agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin content by weight, exclusive of added water;
    (B) A description of the exported agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin content by weight, exclusive of added water;
    (C) A description of the promoted agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin content by weight, exclusive of added water;
    (D) A description of the anticipated supply and demand situation for 
the exported agricultural commodity(s);
    (E) The volume and value of the exported agricultural commodity(s) 
for the most recent 3-year period;
    (F) If the proposal is for two or more years, an explanation why the 
proposal should be funded on a multiyear basis; and
    (G) A certification and, if requested by the Deputy Administrator, a 
written explanation supporting the certification, that any funds 
received will supplement, but not supplant, any private or third party 
funds or other contributions to program activities. The justification 
shall indicate why the participant is unlikely to carry out the 
activities without Federal financial assistance. In determining whether 
federal funds received supplemented or supplanted private or third party 
funds or contributions, CCC will consider the participant's overall 
marketing budget from year to year, variations in promotional strategies 
within a country and new markets.
    (ii) Applications submitted by a small-sized entity seeking funds 
under an EIP/MAP agreement shall contain a certification that it is a 
small business within the standards established by 13 CFR part 121. For 
purposes of determining size, a cooperative will be considered a single 
entity.

[[Page 701]]

    (iii) Applicants seeking funds for brand promotion shall contain the 
information required by Sec.  1485.16(g)(1) and (2) in order to justify 
a rate of reimbursement higher than specified therein.
    (3) Strategic plan. (i) All MAP and EIP/MAP applications shall 
contain:
    (A) A summary of proposed budgets by country and commodity aggregate 
code;
    (B) A description of the world market situation for the exported 
agricultural commodity;
    (C) A description of competition from other exporters, including 
U.S. firms, where applicable;
    (D) A statement of goals and the applicant's plans for monitoring 
and evaluating performance towards achieving these goals.
    (E) For each country, if applicable, five years of:
    (1) historical U.S. export data;
    (2) U.S. market share; and
    (3) MAP funds received;
    (F) For each country, three years of projected U.S. export data and 
U.S. market share;
    (G) Country strategy, including constraint(s) impeding U.S. exports, 
strategy to overcome constraints, previous activities in the country, 
the projected impact of the proposed program on U.S. exports;
    (H) A justification for any new overseas office;
    (I) A description of any demonstration projects, if applicable (see 
Sec.  1485.13(d)(1) through (4));
    (J) Data summarizing historical and projected exports, market share 
and MAP budgets for the world; and
    (K) A description of overall program goals for the ensuing 3-5 
years;
    (ii) MAP applications for brand promotion assistance shall also 
contain:
    (A) A description of how the brand promotion program will be 
publicized to U.S. and foreign commercial entities;
    (B) The criteria that will be used to allocate funds to U.S. and 
foreign commercial entities; and
    (C) A justification for conducting a brand promotion program with 
foreign commercial entities, if applicable.
    (b) CCC may request any additional information which it deems 
necessary to evaluate an MAP or EIP/MAP application. In particular, CCC 
may require additional performance measurement, as required by the 
Government Performance and Results Act of 1993.
    (c) Eligible contributions. (1) In calculating the amount of 
contributions that it will make, and the contributions it will receive 
from a U.S. industry, a foreign third party or a State agency, the MAP 
applicant may include the costs (or such prorated costs) listed under 
paragraph (c)(2) of this section if:
    (i) Expenditures will be made in furtherance of an approved 
activity, and
    (ii) The contributor has not been or will not be reimbursed by any 
other source for such costs.
    (2) Subject to paragraph (c)(1) of this section, eligible 
contributions are:
    (i) Cash;
    (ii) Compensation paid to personnel;
    (iii) The cost of acquiring materials, supplies or services;
    (iv) The cost of office space;
    (v) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (vi) Payments for indemnity and fidelity bond expenses;
    (vii) The cost of business cards;
    (viii) The cost of seasonal greeting cards;
    (ix) Fees for office parking;
    (x) The cost of subscriptions to publications;
    (xi) The cost of activities conducted overseas;
    (xii) Credit card fees;
    (xiii) The cost of any independent evaluation or audit that is not 
required by CCC to ensure compliance with program requirements;
    (xiv) The cost of giveaways, awards, prizes and gifts;
    (xv) The cost of product samples;
    (xvi) Fees for participating in U.S. government activities;
    (xvii) The cost of air and local travel in the United States;
    (xviii) Payment of employee's or contractor's share of personal 
taxes; and
    (xix) The cost associated with trade shows, seminars, entertainment 
and STRE conducted in the United States.
    (3) The following are not eligible contributions:

[[Page 702]]

    (i) Any portion of salary or compensation of an individual who is 
the target of an approved promotional activity;
    (ii) Any expenditure, including that portion of salary and time 
spent in promoting membership in the participant organization or in 
promoting the MAP among its members (sometimes referred to in the 
industry as ``backsell'');
    (iii) Any land costs other than allowable costs for office space;
    (iv) Depreciation;
    (v) The cost of refreshments and related equipment provided to 
office staff;
    (vi) The cost of insuring articles owned by private individuals;
    (vii) The cost of any arrangement which has the effect of reducing 
the selling price of an agricultural commodity;
    (viii) The cost of product development, product modifications, or 
product research;
    (ix) Slotting fees or similar sales expenditures;
    (x) Membership fees in clubs and social organizations; and
    (xi) Any expenditure for an activity prior to CCC's approval of that 
activity or amendment.
    (4) The Deputy Administrator shall determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section may be included by the participant as an eligible 
contribution.
    (d) Special rules governing demonstration projects funded with CCC 
resources. CCC will consider proposals for demonstration projects 
provided:
    (1) No more than one such demonstration project per constraint is 
undertaken within a market;
    (2) The constraint to be addressed in the market is a lack of 
technical knowledge or expertise;
    (3) The demonstration project is a practical and cost effective 
method of overcoming the constraint;
    (4) A third party participates in such project through a written 
agreement which provides that title to the structure, facility or 
equipment may transfer to the third party and that the MAP participant 
may use the structure, facility or equipment for a period specified in 
the agreement for the purpose of removing the constraint.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29940, June 2, 1998]



Sec.  1485.14  Application approval and formation of agreements.

    (a) General. CCC will, consistent with available resources, approve 
those applications which it considers to present the best opportunity 
for developing, maintaining or expanding export markets for U.S. 
agricultural commodities. The selection process, by its nature, involves 
the exercise of judgment. CCC's choice of participants and proposed 
promotion projects requires that it consider and weigh a number of 
factors that cannot be mathematically measured--i.e., market 
opportunity, market strategy and management capability.
    (b) Approval criteria. In assessing the applications it receives and 
determining which it will approve, CCC considers the following criteria:
    (1) The effectiveness of program management;
    (2) Soundness of accounting procedures;
    (3) The nature of the applicant organization, with greater weight 
given to those organizations with the broadest base of producer 
representation;
    (4) Prior export promotion or direct export experience;
    (5) Previous MAP funding;
    (6) Adequacy of the applicant's strategic plan in the following 
categories:
    (i) Description of market conditions;
    (ii) Description of, and plan for addressing, market constraints;
    (iii) Reasonable likelihood of plan success;
    (iv) Export volume and value and market share goals in each country;
    (v) Description of evaluation plan and suitability of the plan for 
performance measurement; and
    (vi) Past program results and evaluations, if applicable.
    (c) Allocation factors. After determining which applications to 
approve, CCC determines how it will allocate resources among 
participants based on the following factors, in addition to those in 
paragraph (b) of this section:
    (1) Size of the budget request in relation to projected value of 
exports;

[[Page 703]]

    (2) Where applicable, size of the budget request in relation to 
actual value of exports in prior years;
    (3) Where applicable, participant's past projections of exports 
compared with actual exports;
    (4) Level of participant's, State's, and industry's contributions;
    (5) Market share goals in target country(ies);
    (6) The degree to which the product to be exported consists of U.S. 
grown agricultural commodities;
    (7) The degree of value-added processing in the U.S.; and
    (8) General administrative and overhead costs compared to direct 
promotional costs.
    (9) In the case of a brand promotion program, the percentage of the 
budget that will be made available to small-sized entities as a means of 
providing priority assistance to such entities.
    (d) Approval decision. (1) CCC will approve those applications which 
it determines best satisfy the criteria and factors specified above. In 
addition, CCC will only approve applications for EIP/MAP when there is 
sufficient U.S. industry need for a brand promotion and there is no 
eligible MAP participant interested in or capable of undertaking the 
brand promotion.
    (2) CCC will not provide assistance to a single company for brand 
promotion in a single country for more than five years. This five year 
period shall not begin prior to the 1994 program or the participant's 
first activity plan year, whichever is later. In limited circumstances, 
the five year limitation may be waived if the Deputy Administrator 
determines that further assistance is necessary in order to meet the 
objectives of the program.
    (e) Formation of agreements. CCC will notify each applicant in 
writing of the final disposition of its application. CCC will send a 
program agreement, allocation approval letter and a signature card to 
each approved applicant. The allocation approval letter will specify any 
special terms and conditions applicable to a participant's program, 
including the required level of participant contribution. An applicant 
that decides to accept the terms and conditions contained in the program 
agreement and allocation approval letter should so indicate by having 
its Chief Executive Officer sign the program agreement and by submitting 
the signed agreement to the Director, Marketing Operations Staff, FAS, 
USDA. Final agreement shall occur when the Administrator signs the 
agreement on behalf of CCC. The application, the program agreement, the 
allocation approval letter and these regulations shall establish the 
terms and conditions of an MAP or EIP/MAP agreement between CCC and the 
approved applicant.
    (f) Signature cards. The participant shall designate at least two 
individuals in its organization to sign program agreements, 
reimbursement claims and advance requests. The participant shall submit 
the signature card signed by those designated individuals and by the 
participant's Chief Executive Officer to the Director, Marketing 
Operations Staff, FAS, USDA, and shall immediately notify the Director 
of any changes in signatories and shall submit a revised signature card 
accordingly.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29940, June 2, 1998]



Sec.  1485.15  Activity plan.

    (a) General. A participant shall develop a specific activity plan(s) 
based on its strategic plan and the allocation approval letter and shall 
submit an activity plan for each year in which it engages in program 
activities. An activity plan handbook, available from the Division 
Director, provides suggested formats and codes for activity plans and 
amendments.
    (b) An activity plan shall contain:
    (1) A written presentation of all proposed activities including:
    (i) A short description of the relevant constraint;
    (ii) A description of any changes in strategy from the strategic 
plan;
    (iii) A budget for each proposed activity, identifying the source of 
funds;
    (iv) Specific goals and benchmarks to be used to measure the 
effectiveness of each activity. This will assist CCC in carrying out its 
responsibilities under the Government Performance and Results Act of 
1993 that requires performance measurement of Federal programs, 
including the MAP. Evaluation of MAP's effectiveness will depend on a

[[Page 704]]

clear statement by participants of goals, method of achievement, and 
results of activities at regular intervals. The overall goal of the MAP 
and of individual participants' activities is to achieve additional 
exports of U.S. agricultural products, that is, sales that would not 
have occurred in the absence of MAP funding.
    (2) A staffing plan for any overseas office, including a listing of 
job titles, position descriptions, salary ranges and any request for 
approval of supergrade salaries; and
    (3) An itemized administrative budget for any overseas office.
    (c) Activity plans for small-sized entities operating through an 
SRTG shall contain a certification that it is a small-sized entity 
within the standards established by 13 CFR part 121.
    (d) Requests for approval of ``supergrades''. (1) Ordinarily, CCC 
will not reimburse any portion of a non-U.S. citizen employees 
compensation that exceeds the highest salary level in the Foreign 
Service National (FSN) salary plan applicable to the country in which 
the employee works. However, a participant may seek a higher level of 
reimbursement for a non-U.S. citizen who will be employed as a country 
director or regional director by requesting that CCC approve that 
employee as a ``supergrade''.
    (2) To request approval of a ``supergrade'', the participant shall 
include in its activity plan a detailed description of both the duties 
and responsibilities of the position, and of the qualifications and 
background of the employee concerned. The participant shall also justify 
why the highest FSN salary level is insufficient.
    (3) Where a non-U.S. citizen will be employed as a country director, 
the MAP participant may request approval for a ``Supergrade I'' salary 
level, equivalent to a grade increase over the existing top grade of the 
FSN salary plan. The ``supergrade'' and its step increases are 
calculated as the percentage difference between the second highest and 
the highest grade in the FSN salary plan with that percentage applied to 
each of the steps in the top grade. Where the non-U.S. citizen will be 
employed as a regional director, with responsibility for activities and/
or offices in more than one country, the MAP participant may request 
approval for a ``Supergrade II'' salary level which is calculated 
relative to a ``Supergrade I'' in the same way the latter is calculated 
relative to the highest grade in the FSN salary plan.
    (e) Submission of the activity plan. A participant shall submit 
three copies of an activity plan to the Division Director and a copy of 
the relevant country section(s) to the Attach[eacute]/Counselor(s) 
concerned.
    (f) Activity plan approval. CCC shall indicate in an activity plan 
approval letter which activities and budgets are approved or 
disapproved, and shall indicate any special terms and conditions that 
apply to the participant including any requirements with respect to 
contributions and program evaluations. A participant may undertake 
promotional activities directly or through a foreign third party; 
however, the participant shall be responsible and accountable to CCC for 
all such promotional activities and related expenditures.
    (g) Activity plan changes. (1) A participant may request changes to 
an activity plan by submitting one copy of an APAR to each of the 
Division Director and the Attach[eacute]/Counselor(s) concerned.
    (2) An APAR for a new activity shall contain the information 
required in paragraph (b) of this section. All other APAR's shall 
contain the activity description, the proposed budget and a 
justification for transfer of funds, if applicable.



Sec.  1485.16  Reimbursement rules.

    (a) A participant may seek reimbursement for an expenditure if:
    (1) The expenditure was made in furtherance of an approved activity; 
and
    (2) The participant has not been or will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section, CCC will reimburse, in 
whole or in part, the cost of:
    (1) Production and placement of advertising in print or electronic 
media or on billboards or posters;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf

[[Page 705]]

talkers and other similar point of sale materials;
    (3) Direct mail advertising;
    (4) In-store and food service promotions, product demonstrations to 
the trade and to consumers, and distribution of promotional samples;
    (5) Temporary displays and rental of space for temporary displays;
    (6) Expenditures, other than travel expenditures, associated with 
retail, trade, and consumer exhibits and shows; seminars; and 
educational training; including participation fees, booth construction, 
transportation of related materials, rental of space and equipment, and 
duplication of related printed materials;
    (7) International air travel, not to exceed the full fare economy 
rate, or other means of international transportation, and per diem, as 
allowed under the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304) for no more than two representatives of a single brand 
participant to exhibit their company's products at a foreign trade show.
    (8) Publications;
    (9) Part-time contractors such as demonstrators, interpreters, 
translators and receptionists to help with the implementation of 
promotional activities such as trade shows, in-store promotions, food 
service promotions, and trade seminars;
    (10) Giveaways, awards, prizes, gifts and other similar promotional 
materials subject to the limitation that CCC will not reimburse more 
than $1.00 per item;
    (11) The design and production of packaging, labeling or origin 
identification, to be used during the activity plan year in which the 
expenditure is made, if such packaging, labeling or origin 
identification are necessary to meet the importing requirements in a 
foreign country.
    (c) Subject to paragraph (a) of this section, but for generic 
promotion activities only, CCC will also reimburse, in whole or in part, 
the cost of:
    (1) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to a U.S. citizen employee or a U.S. 
citizen contractor stationed overseas subject to the limitation that CCC 
shall not reimburse that portion of:
    (i) The total of compensation and allowances that exceed 125 percent 
of the level of a GS-15 Step 10 salary for U.S. Government employees, 
and
    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel;
    (2) Approved ``supergrade'' salaries for non-U.S. citizens and non-
U.S. contractors;
    (3) Compensation of a non-U.S. citizen staff employee or non-U.S. 
contractor subject to the following limitations:
    (i) Where there is a local U.S. Embassy Foreign Service National 
(FSN) salary plan, CCC shall not reimburse any portion of such 
compensation that exceeds the compensation prescribed for the most 
comparable position in the FSN salary plan, or
    (ii) Where an FSN salary plan does not exist, CCC will not reimburse 
any portion of such compensation that exceeds locally prevailing levels 
which the MAP participant shall document by a salary survey or other 
means.
    (4) A retroactive salary adjustment that conforms to a change in FSN 
salary plans, effective as of the date of such change;
    (5) Accrued annual leave at such time when employment is terminated 
or when required by local law;
    (6) Overtime paid to clerical staff;
    (7) Daily contractor fees subject to the limitation that CCC will 
not reimburse any portion of such fee that exceeds the daily gross 
salary of a GS-15, Step 10 for U.S. Government employees in effect on 
the date the fee is earned;
    (8) International travel expenses plus passports, visas and 
inoculations subject to the limitation that CCC will not reimburse any 
portion of air travel in excess of the full fare economy rate or when 
the participant fails to notify the Attache/Counselor in the destination 
country in advance of the travel unless the Deputy Administrator 
determines it was impractical to provide such notification;
    (9) Per diem subject to the limitation that CCC will not reimburse 
per diem in excess of the rates allowed under the U.S. Federal Travel 
Regulations (41 CFR parts 301 through 304);

[[Page 706]]

    (10) Automobile mileage at the local U.S. Embassy rate or rental 
cars while in travel status;
    (11) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304);
    (12) An overseas office, including rent, utilities, communications 
originating overseas, office supplies, accident liability insurance 
premiums and legal and accounting services;
    (13) The purchase, lease, or repair of, or insurance premiums for, 
capital goods that have an expected useful life of at least one year 
such as furniture, equipment, machinery, removable fixtures, draperies, 
blinds, floor coverings, computer hardware and software;
    (14) Premiums for health or accident insurance or other benefits for 
foreign national employees that the employer is required by law to pay;
    (15) Accident liability insurance premiums for facilities used 
jointly with third party participants for MAP activities or for travel 
of non-MAP participant personnel;
    (16) Market research;
    (17) Evaluations, if not required by CCC to ensure compliance with 
program requirements;
    (18) Legal fees to obtain advice on the host country's labor laws;
    (19) Employment agency fees;
    (20) STRE including breakfast, lunch, dinner, receptions and 
refreshments at approved activities; miscellaneous courtesies such as 
checkroom fees, taxi fares and tips; and decorations for a special 
promotional occasion;
    (21) Educational travel of dependent children, visitation travel, 
rest and recuperation travel, home leave travel, emergency visitation 
travel for U.S. overseas employees allowed under the Foreign Affairs 
Manual, Foreign Affairs Manual, OIS/RA/PSG, Room B-264 Main State, 
Washington, D.C. 20520, Telephone: 202-736-4881, FAX: 202-736-7214.
    (22) Evacuation payments (safe haven), shipment and storage of 
household goods and motor vehicles;
    (23) Domestic administrative support expenses for the National 
Association of State Departments of Agriculture and the SRTGs;
    (24) Generic commodity promotions (see Sec.  1486.16(f));
    (25) Travel expenditures associated with trade shows, seminars, and 
educational training conducted in the United States; and
    (26) Demonstration projects.
    (d) CCC will not reimburse any cost of:
    (1) Forward year financial obligations, such as severance pay, 
attributable to employment of foreign nationals;
    (2) Expenses, fines, settlements or claims resulting from suits, 
challenges or disputes emanating from employment terms, conditions, 
contract provisions and related formalities;
    (3) The design and production of packaging, labeling or origin 
identification, except as described in paragraph (b)(11) of this 
section.
    (4) Product development, product modification or product research;
    (5) Product samples;
    (6) Slotting fees or similar sales expenditures;
    (7) The purchase, construction or lease of space for permanent 
displays, i.e., displays lasting beyond one activity plan year;
    (8) Rental, lease or purchase of warehouse space;
    (9) Coupon redemption or price discounts;
    (10) Refundable deposits or advances;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials in excess of $1.00 per item;
    (12) Alcoholic beverages that are not an integral part of an 
approved promotional activity;
    (13) The purchase, lease (except for use in authorized travel 
status) or repair of motor vehicles;
    (14) Travel of applicants for employment interviews;
    (15) Unused non-refundable airline tickets or associated penalty 
fees except where travel is restricted by U.S. government action or 
advisory;
    (16) Independent evaluation or audit, including activities of the 
subcontractor if CCC determines that such a review is needed in order to 
ensure program compliance;
    (17) Any arrangement which has the effect of reducing the selling 
price of an agricultural commodity;

[[Page 707]]

    (18) Goods and services and salaries of personnel provided by U.S. 
industry or foreign third party;
    (19) Membership fees in clubs and social organizations;
    (20) Indemnity and fidelity bonds;
    (21) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs and exhibits;
    (22) Business cards;
    (23) Seasonal greeting cards;
    (24) Office parking fees;
    (25) Subscriptions to publications;
    (26) Home office domestic administrative expenses, including 
communication costs;
    (27) [Reserved]
    (28) Payment of U.S. and foreign employees or contractors share of 
personal taxes, except as legally required in a foreign country, and;
    (29) Any expenditure made for an activity prior to CCC's approval of 
that activity or amendment.
    (e) The Deputy Administrator may determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section will be reimbursed.
    (f) For a generic promotion activity involving the use of company 
names, logos or brand names, the MAP participant must ensure that all 
companies seeking to promote U.S. agricultural commodities have an equal 
opportunity to participate in the activity.
    (g) For a brand promotion activity, CCC will reimburse at a rate 
equal to the percentage of U.S. origin content of the promoted 
agricultural commodity or at a rate of 50 percent, whichever is the 
lesser, except that CCC may reimburse for a higher rate if:
    (1) There has been an affirmative action by the U.S. Trade 
Representative under Section 301 of the Trade Act of 1974 with respect 
to the unfair trade practice cited and there has been no final 
resolution of the case; and
    (2) The participant shows, in comparison to the year such Section 
301 case was initiated, that U.S. market share of the agricultural 
commodity concerned has decreased; and
    (3) In such case, CCC shall determine the appropriate rate of 
reimbursement.
    (h) CCC will reimburse for expenditures made after the conclusion of 
participant's activity plan year provided:
    (1) The activity was approved prior to the end of the activity plan 
year;
    (2) The activity was completed within 30 calendar days following the 
end of the activity plan year; and
    (3) All expenditures were made for the activity within 6 months 
following the end of the activity plan year.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 3548, Feb. 1, 1996; 61 FR 
24206, May 14, 1996; 61 FR 32644, June 25, 1996; 63 FR 29940, June 2, 
1998; 63 FR 32041, June 11, 1998]



Sec.  1485.17  Reimbursement procedures.

    (a) A format for reimbursement claims is available from the Division 
Director. Claims for reimbursement shall contain the following 
information:
    (1) Activity type--brand or generic;
    (2) Activity number;
    (3) Commodity aggregate code;
    (4) Country code;
    (5) Cost category;
    (6) Amount to be reimbursed;
    (7) If applicable, any reduction in the amount of reimbursement 
claimed to offset CCC demand for refund of amounts previously 
reimbursed, and reference to the relevant Compliance Report; and
    (8) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the 
participant's U.S. office to the Director, Marketing Operations Staff, 
FAS, USDA.
    (c) In general, CCC will not reimburse a claim for less than $10,000 
except that CCC will reimburse a final claim for a participant's 
activity plan year for a lesser amount.
    (d) CCC will not reimburse claims submitted later than 6 months 
after the end of a participant's activity plan year.
    (e) If CCC reimburses a claim with commodity certificates, CCC will 
issue commodity certificates with a face value equivalent to the amount 
of the claim which shall be in full accord and satisfaction of such 
claim.
    (f) If CCC overpays a reimbursement claim, the participant shall 
repay CCC within 30 days the amount of the overpayment either by 
submitting a check payable to CCC or by offsetting its next 
reimbursement claim.

[[Page 708]]

    (g) If a participant receives a reimbursement or offsets an advanced 
payment which is later disallowed, the participant shall within 30 days 
of such disallowance repay CCC the amount owed either by submitting a 
check payable to CCC or by offsetting its next reimbursement claim.
    (h) The participant shall report any actions having a bearing on the 
propriety of any claims for reimbursement to the Attache/Counselor and 
its U.S. office shall report such actions in writing to the Division 
Director(s).



Sec.  1485.18  Advances.

    (a) Policy. In general, CCC operates MAP and EIP/MAP on a 
reimbursable basis. CCC will not advance funds to an EIP/MAP participant 
or to an MAP participant for brand promotion activities.
    (b) Exception. Upon request, CCC may advance payments to an MAP 
participant for generic promotion activities. Prior to making an 
advance, CCC may require the participant to submit security in a form 
and amount acceptable to CCC to protect CCC's financial interests. Total 
payments advanced shall not exceed 40 percent of a participant's 
approved annual generic activity budget. However, CCC will not make any 
advance to an MAP participant where an advance is outstanding from a 
prior activity plan year.
    (c) Refunds due CCC. A participant shall expend the advance on 
approved generic promotion activities within 90 calendar days after the 
date of disbursement by CCC. A participant shall return any unexpended 
portion of the advance, plus a prorated share of all proceeds generated 
(i.e., premiums generated from certificate sales and interest earned), 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. All checks shall be mailed to the Director, 
Marketing Operations Staff, FAS, USDA.



Sec.  1485.19  Employment practices.

    (a) An MAP participant shall enter into written contracts with all 
employees and shall ensure that all terms, conditions, and related 
formalities of such contracts conform to governing local law.
    (b) An MAP participant shall, in its overseas office, conform its 
office hours, work week and holidays to local law and to the custom 
generally observed by U.S. commercial entities in the local business 
community.
    (c) An MAP participant may pay salaries or fees in any currency 
(U.S. or foreign) if approved by the Attache/Counselor. However, 
participants are cautioned to consult local laws regarding currency 
restrictions.



1485.20  Financial management, reports, evaluations and appeals.

    (a) Financial management. (1) An MAP participant shall implement and 
maintain a financial management system that conforms to generally 
accepted accounting principles.
    (2) An MAP participant shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these provisions. Each participant shall 
maintain all original records and documents relating to program 
activities for five calendar years following the end of the applicable 
activity plan year and shall make such records and documents available 
upon request to authorized officials of the U.S. Government. An MAP 
participant shall also maintain all documents related to employment such 
as employment applications, contracts, position descriptions, leave 
records and salary changes, and all records pertaining to contractors.
    (3) A participant shall maintain its records of expenditures and 
contributions in a manner that allows it to provide information by 
activity plan, country, activity number and cost category. Such records 
shall include:
    (i) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (ii) Original receipts for any other program related expenditure in 
excess of $25.00;
    (iii) The exchange rate used to calculate the dollar equivalent of 
expenditures made in a foreign currency and the basis for such 
calculation;
    (iv) Copies of reimbursement claims;
    (v) An itemized list of claims charged to each of the participant's 
CCC resources accounts;

[[Page 709]]

    (vi) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, travel vouchers, 
and credit memos; and
    (vii) Documentation supporting contributions must include: the 
dates, purpose and location of the activity for which the cash or in-
kind items were claimed as a contribution; who conducted the activity; 
the participating groups or individuals; and, the method of computing 
the claimed contributions. MAP participants must retain and make 
available for audit documentation related to claimed contributions.
    (4) Upon request, a participant shall provide to CCC originals of 
documents supporting reimbursement claims.
    (b) Reports. (1) End-of-Year Contribution Report. Not later than 6 
months after the end of its activity plan year, a participant shall 
submit two copies of a report which identifies, by activity and cost 
category and in U.S. dollar equivalent, contributions made by the 
participant, the U.S. industry and foreign third parties during that 
activity plan year. A suggested format of a contribution report is 
available from the Division Director.
    (2) Trip reports. Not later than 45 days after completion of travel 
(other than local travel), an MAP participant shall submit a trip 
report. The report must include the name(s) of the traveler(s), purpose 
of travel, itinerary, names and affiliations of contacts, and a brief 
summary of findings, conclusions, recommendations or specific 
accomplishments.
    (3) Research reports. Not later than 6 months after the end of its 
activity plan year, an MAP participant shall submit a report on any 
research conducted in accordance with the activity plan.
    (4) A participant shall submit the reports required by this 
subsection to the appropriate Division Director. Trip reports and 
research reports shall also be submitted to the Attache/Counselor 
concerned. All reports shall be in English and include the participant's 
agreement number, the countries covered, date of the report and the 
period covered in the report.
    (5) CCC may require the submission of additional reports.
    (6) A participant shall provide to the FAS Compliance Review Staff 
upon request any audit reports by independent public accountants.
    (c) Evaluation--(1) Policy. (i) The Government Performance and 
Results Act (GPRA) of 1993 (5 U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 
3515, 9703-9704) requires performance measurement of Federal programs, 
including MAP. Evaluation of MAP's effectiveness will depend on a clear 
statement by participants of goals to be met within a specified time, 
schedule of measurable milestones for gauging success, plan for 
achievement, and results of activities at regular intervals. The overall 
goal of the MAP and of individual participants' activities is to achieve 
additional exports of U.S. agricultural products, that is, sales that 
would not have occurred in the absence of MAP funding. A participant 
that can demonstrate additional sales compared to a representative base 
period, taking into account extenuating factors beyond the participant's 
control, will have met the overall objective of the GPRA and the need 
for evaluation.
    (ii) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan and activity 
plan. The evaluation results guide the development and scope of a 
participant's program, contributing to program accountability and 
providing evidence of program effectiveness.
    (iii) An MAP participant shall conduct periodic evaluations of its 
program and activities and may contract with an independent evaluator to 
satisfy this requirement. CCC reserves the right to have direct input 
and control over design, scope and methodology of any such evaluation, 
including direct contact with and provision of guidance to the 
independent evaluator.
    (2) Types of evaluation. (i) An activity evaluation is a review of 
an activity to determine whether such activity achieved the goals 
specified in the activity plan. Unless specifically exempted in the 
activity plan, all activity

[[Page 710]]

evaluations shall be completed within 90 days following the end of the 
MAP participant's activity plan year.
    (ii) A brand promotion evaluation is a review of the U.S. and 
foreign commercial entities' export sales to determine whether the 
activity achieved the goals specified in the activity plan. These 
evaluations shall be completed within 90 days following the end of the 
participant's activity plan year.
    (iii) A program evaluation is a review of the MAP participant's 
entire program or any appropriate portion of the program to determine 
the effectiveness of the participant's strategy in meeting specified 
goals. An MAP participant shall complete at least one program evaluation 
each year. Actual scope and timing of the program evaluation shall be 
determined by the MAP participant and the Division Director and 
specified in the MAP participant's activity plan approval letter.
    (3) Contents of program evaluation. A program evaluation shall 
contain:
    (i) The name of the party conducting the evaluation;
    (ii) The activities covered by the evaluation (including the 
activity numbers);
    (iii) A concise statement of the constraint(s) and the goals 
specified in the activity plan;
    (iv) A description of the evaluation methodology;
    (v) A description of additional export sales achieved, including the 
ratio of additional export sales in relation to MAP funding received;
    (vi) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (vii) Recommendations for future programs.
    (4) An MAP participant shall submit via a cover letter to the 
Division Director, an executive summary which provides assessment of the 
program evaluation's findings and recommendations and proposed changes 
in program strategy or design as a result of the evaluation.
    (5) If as a result of an evaluation or audit of activities of a 
participant under the program, CCC determines that further review is 
needed in order to ensure compliance with the requirements of the 
program, CCC may require the participant to contract for an independent 
audit of the program activities,
    (d) Appeals. (1) The Director, Compliance Review Staff (Director, 
CRS) will notify a participant through a compliance report when it 
appears that CCC may be entitled to recover funds from that participant. 
The compliance report will state the basis for this action.
    (2) A participant may, within 60 days of the date of the compliance 
report, submit a response to the Director, CRS. The Director, CRS, at 
the Director's discretion, may extend the period for response up to an 
additional 30 days. If the participant does not respond to the 
compliance report within the required time period or, if after review of 
the participant's response, the Director, CRS, determines that CCC may 
be entitled to recover funds from the participant, the Director, CRS, 
will refer the compliance report to the Deputy Administrator.
    (3) If after review of the compliance report and response, the 
Deputy Administrator determines that the participant owes any money to 
CCC he will so inform the participant and provide the basis for the 
decision. The Deputy Administrator may initiate action to collect such 
amount pursuant to 7 C.F.R. Part 1403, Debt Settlement Policies and 
Procedures. Determinations of the Deputy Administrator will be in 
writing and in sufficient detail to inform the participant of the basis 
for the determination. The participant may request reconsideration 
within 30 days of the date of the Deputy Administrator's initial 
determination.
    (4) The Participant may appeal determinations of the Deputy 
Administrator to the Administrator. An appeal must be in writing and be 
submitted to the office of the Deputy Administrator within 30 days 
following the date of the initial determination by the Deputy 
Administrator or the determination on reconsideration. The participant 
may request a hearing.
    (5) If the participant submits its appeal and requests a hearing, 
the Administrator, or the Administrator's designee, will set a date and 
time, generally within 60 days. The hearing will be an informal 
proceeding. A transcript will not ordinarily be prepared unless

[[Page 711]]

the participant bears the cost of a transcript; however, the 
Administrator may have a transcript prepared at CCC's expense.
    (6) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after submission of the appeal, 
hearing or receipt of any transcript, whichever is later. The 
determination of the Administrator will be the final determination of 
CCC. The participant must exhaust all administrative remedies contained 
in this subsection before pursuing judicial review of a determination by 
the Administrator.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29941, June 2, 1998]



Sec.  1485.21  Failure to make required contribution.

    An MAP participant's contribution requirement will be specified in 
the MAP allocation letter and the activity plan approval letter. The 
amount specified will be the amount of contribution to be furnished by 
the applicant and other sources as indicated in the participant's 
application. The MAP participant shall pay to CCC in dollars the 
difference between the amount actually contributed and the amount 
specified in the allocation approval letter. An MAP participant shall 
remit such payment within 90 days after the end of its activity plan 
year.

[63 FR 29941, June 2, 1998; 63 FR 32041, June 11, 1998]



Sec.  1485.22  Submissions.

    The participant may make any submissions required by this regulation 
either by hand delivery to the Director, Marketing Operations Staff, 
FAS, USDA or by commercial service delivery or U.S. mail. If delivery 
occurs by commercial ``next-day'' mail service or U.S. regular mail, 
first class prepaid, the material shall be deemed submitted as of the 
date of the commercial service or U.S. registered mail receipt. For all 
other permissible methods of delivery, the material shall be deemed 
submitted as of the date received by the Director, Marketing Operations 
Staff, FAS, USDA.



Sec.  1485.23  Miscellaneous provisions.

    (a) Disclosure of program information. (1) Documents submitted to 
CCC by participants are subject to the provisions of the Freedom of 
Information Act (FOIA), 5 U.S.C. 552, 7 CFR part 1, Subpart A--Official 
Records, and specifically 7 C.F.R. 1.11, Handling Information from a 
Private Business.
    (2) If requested by a person located in the United States, a 
participant shall provide a copy of any document in its possession or 
control containing market information developed and produced under the 
terms of its agreement. The participant may charge a fee not to exceed 
the costs for assembling, duplicating and distributing the materials.
    (3) The results of any research conducted by a participant under an 
agreement, shall be the property of the U.S. Government.
    (b) Ethical conduct. (1) A participant shall conduct its business in 
accordance with the laws and regulations of the country in which an 
activity is carried out.
    (2) Neither an MAP participant nor its affiliates shall make export 
sales of agricultural commodities and products covered under the terms 
of the agreement. Neither an MAP participant nor its affiliates shall 
charge a fee for facilitating an export sale. A participant may, 
however, collect check-off funds and membership fees that are required 
for membership in the participating organization. For the purposes of 
this paragraph, ``affiliate'' means any partnership, association, 
company, corporation, trust, or any other such party in which the 
participant has an investment other than in a mutual fund.
    (3) An MAP participant shall not limit participation to members of 
its organization. The MAP participant shall publicize its program and 
make participation possible for commercial entities throughout the 
participant's industry or, in the case of SRTGs, throughout the 
corresponding region.
    (4) A participant shall select U.S. agricultural industry 
representatives to participate in activities such as trade teams, sales 
teams, and trade fairs based on criteria that ensure participation on an 
equitable basis by a broad

[[Page 712]]

cross section of the U.S. industry. If requested, a participant shall 
submit such selection criteria to CCC for approval.
    (5) All participants should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of an agreement.
    (6) The participant must report any actions or circumstances that 
have a bearing on the propriety of the program to the Attache/Counselor 
and its U.S. office shall report such actions in writing to the Division 
Director.
    (c) Contracting procedures. (1) Neither the Commodity Credit 
Corporation (CCC) nor any other agency of the United States Government 
or any official or employee of the CCC or the United States Government 
has any obligation or responsibility with respect to participant 
contracts with third parties.
    (2) A participant shall:
    (i) Ensure that all expenditures for goods and services reimbursed, 
in excess of $25.00, by CCC are documented by a purchase order, invoice, 
or contract and that such documentation demonstrates competition in 
acquiring the goods or services;
    (ii) Ensure that no employee or officer participates in the 
selection or award of a contract in which such employee or official, or 
the employee's or officer's family or partners has a financial interest;
    (iii) Conduct all contracting in an openly competitive manner. 
Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids and requests for proposals for 
procurement of any goods or services shall be excluded from competition 
for such procurement;
    (iv) Base solicitations for professional and technical services on a 
clear and accurate description of the requirements for the services to 
be procured;
    (v) Perform some form of price or cost analysis such as a comparison 
of price quotations to market prices or other price indicia, to 
determine the reasonableness of the offered prices.
    (d) Disposable capital goods. (1) Capital goods purchased by the MAP 
participant and reimbursed by CCC that are unusable, unserviceable, or 
no longer needed for project purposes shall be disposed of in one of the 
following ways:
    (i) The participant may exchange or sell the goods provided that it 
applies any exchange allowance, insurance proceeds or sales proceeds 
toward the purchase of other property needed in the project;
    (ii) The participant may, with CCC approval, transfer the goods to 
other MAP participants and activities, or to a foreign third party; or
    (iii) The participant may, upon Attach[eacute]/Counselor approval, 
donate the goods to a local charity, or convey the goods to the 
Attach[eacute]/Counselor, along with an itemized inventory list and any 
documents of title.
    (2) A participant shall maintain an inventory of all capital goods 
with a value of $100 acquired in furtherance of program activities. The 
inventory shall list and number each item and include the date of 
purchase or acquisition, cost of purchase, replacement value, serial 
number, make, model, and electrical requirements.
    (3) The participant shall insure all capital goods acquired in 
furtherance of program activities and safeguard such goods against 
theft, damage and unauthorized use. The participant shall promptly 
report any loss, theft, or damage of property to the insurance company.
    (e) Contracts between MAP participants and brand participants. Where 
CCC approves an application for brand promotion, the MAP participant 
shall enter into an agreement with each approved brand participant which 
shall:
    (1) Specify a time period for such brand promotion, and require that 
all brand promotion expenditures be made within the MAP participant's 
approved activity plan period;
    (2) Make no allowance for extension or renewal;
    (3) Limit reimbursable expenditures to those made in countries and 
for activities approved in the activity plan;
    (4) Specify the percentage of promotion expenditures that will be 
reimbursed, reimbursement procedures and documentation requirements;
    (5) Include a written certification that the brand participant 
either owns

[[Page 713]]

the brand of the product it will promote or has exclusive rights to 
promote the brand in each of the countries in which promotion activities 
will occur;
    (6) Require that all product labels, promotional material and 
advertising will identify the origin of the agricultural commodity as 
``Product of the U.S.'', ``Product of the U.S.A.'', ``Grown in the 
U.S.'', ``Grown in the U.S.A.'', ``Made in America'' or other U.S. 
regional designation if approved in advance by CCC; that such origin 
identification will be conspicuously displayed, in a manner that is 
easily observed; and that such origin identification will conform, to 
the extent possible, to the U.S. standard of 1/6 (.42 
centimeters) in height based on the lower case letter ``o''. A 
participant may request an exemption from this requirement. All such 
requests shall be in writing and include justification satisfactory to 
the Deputy Administrator that this labelling requirement would hinder a 
participant's promotional efforts. The Deputy Administrator will 
determine, on a case by case basis, whether sufficient justification 
exists to grant an exemption from the labelling requirement;
    (7) Specify documentation requirements for a U.S. brand applicant 
seeking priority consideration for assistance based on eligibility as a 
small-sized entity;
    (8) Require that the U.S. brand participant submit to the MAP 
participant a statement certifying that any Federal funds received will 
supplement, but not supplant, any private or third party funds or other 
contributions to program activities; and
    (9) The participant shall require the brand participant to maintain 
all original records and documents relating to program activities for 
five calendar years following the end of the applicable activity plan 
year and shall make such records and documents available upon request to 
authorized officials of the U.S. Government.
    (f) EIP/MAP participants shall ensure that all product labels, 
promotional material and advertising will identify the origin of the 
agricultural commodity as ``Product of the U.S.'', ``Product of the 
U.S.A.'', ``Grown in the U.S.'', ``Grown in the U.S.A.'', ``Made in 
America'' or other U.S. regional designation if approved in advance by 
CCC; such origin identification is conspicuously displayed in a manner 
that is easily observed, and that, to the fullest extent possible, the 
origin identification conforms to the U.S. standard of 1/6 
(.42 centimeters) in height based on the lower case letter ``o''. An 
EIP/ MAP participant may request an exemption from this requirement. All 
such requests shall be in writing and include justification satisfactory 
to the Deputy Administrator that this labelling requirement would hinder 
a participant's promotional efforts. The Deputy Administrator will 
determine, on a case by case basis, whether sufficient justification 
exists to grant an exemption from the labelling requirement;
    (g) Travel shall conform to U.S. Federal Travel Regulations (41 CFR 
parts 301 through 304) and air travel shall conform to the requirements 
of the ``Fly America Act (49 U.S.C. 1517).'' The MAP participant shall 
notify the Attach[eacute]/Counselor in the destination countries in 
writing in advance of any proposed travel.
    (h) Proceeds. Any income or refunds generated from an activity, 
i.e., participation fees, proceeds of sales, refunds of value added 
taxes (VAT), the expenditures for which have been wholly or partially 
reimbursed, shall be repaid by submitting a check payable to CCC or 
offsetting the participant's next reimbursement claim. However, where 
CCC reimburses a participant with CCC commodity certificates, such 
participant may retain any income generated by the sale of such 
certificates.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 3548, Feb. 1, 1996; 61 FR 
32644, June 25, 1996]



Sec.  1485.24  Applicability date.

    This Subpart applies to activities that are approved in accordance 
with the participant's 1995 program and corresponding activity plan 
year.



Sec.  1485.25  Paperwork reduction requirements.

    The paperwork and record keeping requirements imposed by this final 
rule have been submitted to the Office of

[[Page 714]]

Management and Budget (OMB) for review under the Paperwork Reduction Act 
of 1980. OMB has assigned control number 05510027 for this information 
collection.



PART 1487--TECHNICAL ASSISTANCE FOR SPECIALTY CROPS--Table of Contents




Sec.
1487.1 What special definitions apply to the TASC program?
1487.2 What is the TASC program?
1487.3 What activities are eligible?
1487.4 Are there any limits on the scope of proposals?
1487.5 What is the process for submitting proposals?
1487.6 What are the criteria for evaluating proposals?
1487.7 How are agreements formalized?
1487.8 How are payments made?

    Authority: Sec. 3205 of Pub. L. 107-171.

    Sources 67 FR 57327, Sept. 10, 2002, unless otherwise noted.



Sec.  1487.1  What special definitions apply to the TASC program?

    For purposes of this part, the following definitions apply:
    CCC--Commodity Credit Corporation.
    Eligible Organization--Any U.S. organization, including, but not 
limited to, U.S. government agencies, State government agencies, non-
profit trade associations, universities, agricultural cooperatives, and 
private companies.
    FAS--Foreign Agricultural Service, United States Department of 
Agriculture.
    Participant--An entity which has entered into a TASC agreement with 
the CCC.
    Specialty crop--all cultivated plants, or the products thereof, 
produced in the United States, except wheat, feed grains, oilseeds, 
cotton, rice, peanuts, sugar, and tobacco.
    TASC--Technical Assistance for Specialty Crops.
    United States--the fifty states, the District of Columbia, and 
Puerto Rico.

[67 FR 57327, Sept. 10, 2002, as amended at 68 FR 42564, July 18, 2003]



Sec.  1487.2  What is the TASC program?

    Under the TASC program, CCC, an agency and instrumentality of the 
United States within the Department of Agriculture, provides funds to 
eligible organizations, on a grant basis, to implement activities that 
are intended to address a sanitary, phytosanitary, or related technical 
barrier that prohibit or threaten the export of U.S. specialty crops 
that are currently available on a commercial basis. The TASC program is 
intended to benefit the represented industry rather than a specific 
company or brand. This program is administered by FAS.



Sec.  1487.3  What activities are eligible?

    (a) General. In order to be eligible for funding under the TASC 
program, activities must address sanitary, phytosanitary, or technical 
barriers to export of specialty crops. Examples of expenses that CCC may 
agree to cover under the TASC program include, but are not limited to: 
initial pre-clearance programs, export protocol and work plan support, 
seminars and workshops, study tours, field surveys, development of pest 
lists, pest and disease research, database development, reasonable 
logistical and administrative support, and travel and per diem expenses.
    (b) Location of activities. Eligible projects may take place in the 
United States or abroad.



Sec.  1487.4  Are there any limits on the scope of proposals?

    (a) Funding cap. TASC proposals which request more than $250,000 of 
CCC funding in a given year will not be considered.
    (b) Length of activities. TASC proposals to fund activities that 
exceed three years will not be considered.
    (c) Target countries. Proposals may target all export markets, 
including single countries or reasonable regional groupings of 
countries.
    (d) Multiple proposals. Applicants may submit multiple proposals, 
but no TASC participant may have more than three approved projects 
underway at any given time.



Sec.  1487.5  What is the process for submitting proposals?

    (a) General. Periodically the CCC will inform the public of the 
process by which interested eligible organizations

[[Page 715]]

may submit proposals for TASC program funding. This announcement will, 
among other things, include information on any deadlines for submitting 
proposals and the address of the office to which the proposals should be 
sent. The CCC also may announce the availability of a Quick Response 
Fund within the TASC program. Proposals submitted under any form of 
quick response process may be submitted at any time during the year but 
must meet the basic requirements of the program and any specific 
requirements of that particular process. Organizations interested in 
participating in the TASC program may submit their proposals 
electronically or in paper copy. Although no specific format is 
required, a sample format for proposals is available from the address 
provided in this rule.
    (b) Contents of proposals. TASC proposals must contain complete 
information about the proposed projects, including, at a minimum, the 
following:
    (1) Organizational information, including:
    (i) Organization's name, address, Chief Executive Officer (or 
designee), and Federal Tax Identification Number (TIN);
    (ii) Type of organization;
    (iii) Name, telephone number, fax number, and e-mail address of the 
primary contact person;
    (iv) A description of the organization and its membership; and
    (v) A description of the organization's experience in technical 
assistance projects, including activities involved and project results.
    (2) Project information, including:
    (i) A brief project title;
    (ii) The amount of funding requested and a justification for why 
federal funding is needed;
    (iii) Beginning and ending dates for the proposed project;
    (iv) A market assessment, including a brief description of the 
specific export barrier to be addressed by the project;
    (v) The goals of the project, and the expected benefits to the 
represented industry;
    (vi) A description of the activities planned to address the export 
barrier;
    (vii) An itemized list of all estimated costs associated with the 
project for which reimbursement will be sought; and
    (viii) Information indicating all financial and in-kind support to 
the proposed project, and the resources to be contributed by each entity 
that will contribute to the project's implementation. This may include 
the organization that submitted the proposal, private industry entities, 
host governments, foreign third parties, CCC, FAS, or other Federal 
agencies. Support may include cash, goods, and services. Although highly 
encouraged, financial support from the participant is not required.
    (3) Export information, including:
    (i) Performance measures for three years, beginning with the year 
that the project would begin, which will be used to measure the 
effectiveness of the project;
    (ii) A benchmark performance measure for the year prior to the year 
that the project would begin; and
    (iii) The viability of long-term sales to this market.

[67 FR 57327, Sept. 10, 2002, as amended at 68 FR 42564, July 18, 2003]



Sec.  1487.6  What are the criteria for evaluating proposals?

    (a) Evaluation criteria. FAS will use the following criteria in 
evaluating proposals:
    (1) The nature of the specific export barrier and the extent to 
which the proposal is likely to successfully remove, resolve, or 
mitigate that barrier;
    (2) The potential trade impact of the proposed project on market 
retention, market access, and market expansion, including the potential 
for expanding commercial sales in the targeted market;
    (3) The completeness and viability of the proposal;
    (4) The ability of the organization to provide an experienced staff 
with the requisite technical and trade experience to execute the 
proposal;
    (5) The extent to which the proposal is targeted to a market in 
which the United States is generally competitive;
    (6) The cost of the project and the amount of other resources 
dedicated to the project, including cash and goods

[[Page 716]]

and services of the U.S. industry and foreign third parties;
    (7) The degree to which time is essential to addressing specific 
export barriers;
    (8) In cases where the CCC receives multiple proposals from 
different applicants which address essentially the same barrier, the 
nature of the applicant organization will be taken into consideration, 
with a greater weight given to those organizations with the broadest 
base of producer representation.
    (b) Evaluation process. FAS will review proposals for eligibility 
and will evaluate each proposal against the factors described in 
paragraph (a) of this section. The purpose of this review is to identify 
meritorious proposals, recommend an appropriate funding level for each 
proposal based upon these factors, and submit the proposals and funding 
recommendations to the Deputy Administrator, Commodity and Marketing 
Programs. FAS may, when appropriate to the subject matter of the 
proposal, request the assistance of other U.S. government experts in 
evaluating the merits of a proposal.

[67 FR 57327, Sept. 10, 2002, as amended at 68 FR 42564, July 18, 2003]



Sec.  1487.7  How are agreements formalized?

    Following the approval of a proposal, the CCC will enter into a 
written agreement with the organization that submitted the proposal. 
This program agreement will incorporate the proposal as approved by the 
FAS, include a maximum dollar amount that may be reimbursed (the funding 
level), and identify terms and conditions under which the CCC will 
reimburse certain costs of the project. Program agreements also will 
outline any specific responsibilities of the participant, including, but 
not limited to, the timely and effective implementation of program 
activities and the submission of a written report(s), on no less than an 
annual basis, which evaluates the TASC project using the performance 
measures presented in the approved proposal.

[68 FR 42564, July 18, 2003]



Sec.  1487.8  How are payments made?

    (a) Reimbursement. (1) Following the implementation of a project for 
which the CCC has agreed to provide funding, a participant may submit 
claims for reimbursement of eligible expenses to the extent that the CCC 
has agreed to pay such expenses. Any changes to approved activities must 
be approved in writing by the FAS before any reimbursable expenses 
associated with the change can be incurred. A participant will be 
reimbursed after the CCC reviews the claim and determines that it is 
complete.
    (2) All claims for reimbursement must be received no later than 90 
calendar days following the expiration or termination date of the 
program agreement. For program agreements which extend beyond twelve 
months, all claims for reimbursement must be received no later than 90 
calendar days following the next anniversary of the effective date of 
the agreement.
    (3) Participants shall maintain complete records of all program 
expenditures, identified by TASC agreement number, program year, country 
or region, activity number and cost category. Such records shall be 
accompanied by original documentation which supports the expenditure and 
shall be made available to the FAS upon request.
    (4) Participants shall maintain all records and documents relating 
to TASC projects, including the original documentation which supports 
reimbursement claims, for a period of three calendar years following the 
expiration or termination date of the program agreement. Such records 
and documents will be subject to verification by the FAS Compliance 
Review Staff and shall be made available upon request to authorized 
officials of the U.S. Government. The FAS may deny a claim for 
reimbursement if the claim is not supported by acceptable documentation.
    (5) In the event that a reimbursement claim is overpaid or is 
disallowed after payment already has been made, the participant shall 
return the overpayment amount or the disallowed amount to the CCC within 
30 days after realizing the overpayment or receiving notification of the 
overpayment or disallowed amount.

[[Page 717]]

    (b) Advances. Participants may request advances of funds, not to 
exceed 85 percent of the funding approved in any given program year. All 
advanced funds must be either fully expended or the balance returned by 
check made payable to the CCC no later than the 90th calendar day 
following the date of disbursement of the advance to the participant. 
Upon the expenditure of advance funds, participants must submit 
reimbursement claims to offset the advance charged to them.
    (c) Interest. Participants shall deposit and maintain advanced funds 
in insured, interest-bearing accounts. Interest earned on outstanding 
advances must be returned by check made payable to the CCC at the time 
the advance is either fully expended or itself returned.

[68 FR 42564, July 18, 2003]



PART 1488--FINANCING OF SALES OF AGRICULTURAL COMMODITIES--Table of Contents




 Subpart A--Financing of Export Sales of Agricultural Commodities from 
      Private Stocks Under CCC Export Credit Sales Program (GSM	5)

                                 General

Sec.
1488.1 General statement.
1488.2 Definition of terms.

                         Financing Export Sales

1488.3 General.
1488.4 Submission of requests for sale registrations.
1488.5 Acceptance of sale registrations.
1488.6 Amendments to financing agreement.
1488.7 Expiration of period(s) for delivery and/or export.

                    Documents Required for Financing

1488.8 Documents required after delivery.
1488.9 Evidence of export.
1488.9a Evidence of export for commodities delivered before export.

                   Documents Required After Financing

1488.10 Evidence of entry into country of destination.

                          Delivery Requirements

1488.11 Liquidated damages.

                     Bank Obligations and Repayment

1488.12 Coverage of bank obligations.
1488.13 CCC drafts.
1488.14 Interest charges.
1488.15 Advance payment.
1488.16 Liability for payment.

                        Miscellaneous Provisions

1488.17 Assignment.
1488.18 Covenant against contingent fees.
1488.19 [Reserved]
1488.20 Officials not to benefit.
1488.21 Exporter's records and accounts.
1488.22 Communications.
1488.23 OMB Control Numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: Sec. 5(f), 62 Stat. 1072 (15 U.S.C. 714c) and sec. 4(a), 
80 Stat. 1538, as amended by sec. 101, 92 Stat. 1685 (7 U.S.C. 
1707a(a)).



 Subpart A--Financing of Export Sales of Agricultural Commodities From 
      Private Stocks Under CCC Export Credit Sales Program (GSM	5)

    Source: 42 FR 10999, Feb. 25, 1977, unless otherwise noted.

                                 General



Sec.  1488.1  General statement.

    (a) Except as otherwise provided in this paragraph (a), the 
regulations and the supplements thereto contained in this subpart A 
supersede the regulations and supplements revised April 1975, and set 
forth the terms and conditions governing the CCC Export Credit Sales 
Program (GSM-5). The maximum financing period shall be three years. The 
regulations and supplements as revised in April 1971 and April 1975, 
shall remain in effect for all transactions under financing approvals 
issued thereunder.
    (b) Subject to the terms and conditions set forth in this subpart A, 
CCC will purchase for cash, after delivery, the exporter's account 
receivable arising from the export sale.
    (c) The provisions of Pub. L. 83-664 are not applicable to shipments 
under this program.
    (d) The regulations contained in this subpart A may be supplemented 
by such additional terms and conditions, applicable to specified 
agricultural commodities, and, to the extent that they may be in 
conflict or inconsistent with any other provisions of this subpart A, 
such additional terms and conditions shall prevail.

[[Page 718]]



Sec.  1488.2  Definition of terms.

    As used in this subpart A and in the forms and documents related 
thereto, the following terms shall have the meanings assigned to them in 
this section:
    (a) Account receivable means the contractual obligation of the 
foreign importer to the exporter for the port value of the commodity 
delivered for which the exporter is extending credit to the importer. 
The account receivable shall be evidenced by documents, in form and 
substance satisfactory to CCC, establishing the contractual obligation 
between the U.S. exporter and the foreign importer. The account 
receivable shall provide for (1) payment of principal and interest in 
U.S. dollars in the United States, (2) interest in accordance with Sec.  
1488.14, and (3) acceleration of payment thereunder in accordance with 
these regulations.
    (b) Agency or branch bank means an agency or branch of a foreign 
bank, supervised by New York State banking authorities or the banking 
authorities of any other State providing similar supervision, and 
approved by the Controller, CCC.
    (c) Assistant Sales Manager means the Assistant Sales Manager, 
Commercial Export Programs, Office of the General Sales Manager.
    (d) Bank obligation means an obligation, acceptable to CCC, of a 
U.S. bank, a foreign bank, an agency or branch bank, to pay to CCC in 
U.S. dollars the amount of the account receivable, plus interest in 
accordance with Sec.  1488.14. The bank obligation shall be in the form 
of an irrevocable letter of credit issued by a U.S. bank or a branch 
bank, or confirmed or advised by a U.S. bank or any agency or branch 
bank in accordance with Sec.  1488.12. The bank obligation shall provide 
for payment under the terms and conditions of the financing agreement 
and shall be payable not later than the date of expiration of the 
financing period or of the bank obligation, whichever occurs first, if 
payment is not received from other sources.
    (e) CCC means the Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (f) Carrying charges means storage, insurance, and interest charges 
involved in the cost of storing the commodity before delivery as 
provided for in the sales contract, and other incidental costs as may be 
approved by the Assistant Sales Manager.
    (g) Commercial risk means risk of loss due to any cause other than 
specified as noncommercial risk in paragraph (u) of this section.
    (h) Date of delivery means the on-board date of the ocean bill of 
lading, or the date of an airway bill, or, if exported by rail or truck, 
the date of entry shown on an authenticated landing certificate or 
similar document issued by an official of the government of the 
importing country. If delivery is before export, the date of delivery 
means (1) the date(s) of the warehouse receipt(s), or other evidence 
acceptable to CCC, covering the commodity in a warehouse acceptable to 
CCC, or (2) the onboard carrier (truck, rail car or lash or seabee 
barge) date of a through bill of lading covering commodities in a 
container or a lash or seabee barge at a U.S. inland or coastal point.
    (i) Date of sale means the earliest date the exporter has knowledge 
that a contractual obligation exists with the foreign buyer under which 
a firm dollar and cent price has been established or a mechanism to 
establish the price has been agreed upon.
    (j) Delivery means the delivery required by the export sale contract 
to transfer to the importer full or conditional title to the 
agricultural commodity. Delivery before export may be (1) in a warehouse 
in the United States acceptable to CCC by issuance or transfer of the 
warehouse receipt to the importer, or (2) f.a.s. or f.o.b. U.S. inland 
or coastal loading point, if the commodity is loaded in a container on a 
truck or rail car, or in a lash or seabee barge for shipment to a point 
of export under a through bill of lading. Delivery at point of export 
shall be f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. 
airports, at U.S. border points of exit or, if transshipped through 
Canada, at ports on the Great Lakes or the St. Lawrence River.
    (k) Eligible commodities means agricultural commodities, including 
eligible cotton, produced in the United States and designated as 
eligible for export

[[Page 719]]

under CCC's Export Credit Sales Program in a USDA announcement. 
Commodities which have been purchased from CCC are eligible for export 
as private stocks. Exports of commodities pursuant to any CCC barter 
contract, Pub. L. 480 or AID agreement, or direct loan by the Export-
Import Bank are not eligible for financing under this program. 
Commodities delivered prior to CCC receiving the sale registration 
request in accordance with Sec.  1488.4 are not eligible for financing 
under this program unless such financing is determined by the Vice 
President, CCC, or the Assistant Sales Manager, to be in the interest of 
CCC.
    (l) Eligible cotton means Upland and Extra Long staple cotton grown 
in the United States: Provided, however, That reginned or repacked 
cotton, as defined in regulations of the U.S. Department of Agriculture 
under the U.S. Cotton Standards Act (7 CFR 28.40), by-products of cotton 
such as cotton mill waste, motes, and linters, and any cotton that 
contains any by-products of cotton are not eligible for export financing 
hereunder. CCC's determination as to the eligibility of cotton shall be 
final.
    (m) Eligible destination means the country which is named in the 
financing agreement and which meets the licensing requirements of the 
U.S. Department of Commerce.
    (n) Eligible exporter or exporter means a person (1) who is engaged 
in the business of buying or selling commodities and for this purpose 
maintains a bona fide business office in the United States, its 
territories or possessions, and has someone on whom service of judicial 
process may be had within the United States, (2) who is financially 
responsible, and (3) who is not suspended or debarred from contracting 
with or participating in any program financed by CCC on the date of 
issuance of the financing approval.
    (o) OGSM means the Office of the General Sales Manager, U.S. 
Department of Agriculture.
    (p) Financing agreement means the exporter's request for a sale 
registration as approved by the Assistant Sales Manager, including the 
terms and conditions of the regulations in effect on the date of 
approval.
    (q) Financing period means the number of months over which repayment 
is to be made. Such period shall start on the date of delivery or the 
weighted average delivery date of the commodities to be exported under 
the financing agreement, and shall expire on the expiration of the bank 
obligation or the specified period over which repayment is to be made, 
whichever occurs first.
    (r) Foreign bank means a bank which is not a U.S. bank or an agency 
or branch bank, and includes a foreign branch of a U.S. bank.
    (s) Foreign importer or importer means the foreign buyer who 
purchases the commodities to be exported under a financing agreement and 
executes the documents evidencing the account receivable assigned to 
CCC.
    (t) GSM-5 means the regulations contained in this subpart A, and 
supplements thereto, setting forth the terms and conditions governing 
the CCC Export Credit Sales Program.
    (u) Noncommercial risk means risk of loss due to (1) inability of 
the foreign bank through no fault of its own to convert foreign currency 
to dollars, or (2) non-delivery into the eligible destination of the 
commodity covered by a financing agreement through no fault of the 
foreign bank or importer or exporter because of the cancellation by the 
government of the eligible destination of previously issued valid 
authority to import such shipment into the eligible destination or 
because of the imposition of any law or of any order, decree, or 
regulation having the force of law, which prevents the import of such 
shipment into the eligible destination, or (3) inability of the foreign 
bank to make payment due to war, hostilities, civil war, rebellion, 
revolution, insurrection, civil commotion, or other like disturbance 
occurring in the eligible destination, expropriation, or confiscation, 
or other like action by the government of the eligible destination 
country, or (4) failure of the foreign bank to make payment for any 
reason if it is an instrumentality of or is wholly owned by the foreign 
government.
    (v) Port value means the net amount of the exporter's sales price of 
the commodity to be exported under the financing agreement, (1) basis 
f.a.s. or

[[Page 720]]

f.o.b. export carrier at U.S. ports, at U.S. border points of exit, at 
U.S. airports if shipped by air, or, if transshipped through Canada at 
ports on the Great Lakes, or on the St. Lawrence River, or (2) basis 
U.S. warehouse for commodities delivered to such warehouse before 
export, or (3) basis f.a.s. or f.o.b. U.S. inland or coastal loading 
point for commodities delivered before export under through bill of 
lading. The port value shall not include ocean freight for a c. & f. 
sale or ocean freight and marine and war risk insurance for a c.i.f. 
sale but may include carrying charges as provided for in the sales 
contract. The net amount of the exporter's sales price means the 
exporter's contract price for the commodities, on the basis stated 
above, less any payments made to the exporter and less any discounts, 
credits, or allowances by the exporter.
    (w) Sale means a contract to sell on credit U.S. agricultural 
commodities to be financed under GSM-5.
    (x) United States means the 50 States, the District of Columbia, and 
Puerto Rico.
    (y) U.S. bank means a bank organized under the laws of the United 
States, a State, or the District of Columbia.
    (z) USDA announcement means an announcement published monthly by the 
U.S. Department of Agriculture (USDA), and which includes the list of 
eligible commodities and interest rates under GSM-5.
    (aa) Vice President, CCC means the Vice President who is the General 
Sales Manager, Office of the General Sales Manager.

[42 FR 10999. Feb. 25, 1977, as amended at 42 FR 30833, June 17, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]

                         Financing Export Sales



Sec.  1488.3  General.

    When considering the extension of CCC credit for the purpose of 
financing agricultural commodities, CCC will take into account the 
extent to which CCC credit financing will:
    (a) Permit U.S. exporters to meet competition from other countries.
    (b) Prevent a decline in U.S. commercial export sales.
    (c) Substitute commercial dollar sales for sales made pursuant to 
Pub. L. 480 or other concessional programs.
    (d) Result in a new use of the agricultural commodity in the 
importing country.
    (e) Permit expanded consumption of agricultural commodities in the 
importing country and thereby increase total commercial sales of 
agricultural commodities to the importing country.



Sec.  1488.4  Submission of requests for sale registrations.

    (a) An eligible exporter shall submit a request for a sale 
registration for financing to the office specified in Sec.  1488.22.
    (b) Requests for sale registrations shall be in writing. If such a 
request is made by telephone, it must be confirmed by letter or wire.
    (c) The total amount requested to be registered under a sale shall 
not exceed the sale contract value, including the upward tolerance, if 
any.
    (d) Requests for sale registration shall incorporate by reference 
all terms and conditions of GSM-5. The following information shall also 
be included in the exporter's request for a sale registration:
    (1) The name, class, grade, or quality, as applicable, and quantity 
of the commodity to be exported.
    (2) The country of destination.
    (3) The port value of the commodity to be exported and the sale 
contract tolerance, if applicable.
    (4) The date of sale and exporter's sale number.
    (5) The date of delivery or the period for delivery and the month in 
which application for payment will be submitted.
    (6) The financing period.
    (7) Whether the bank obligation assuring payment of the account 
receivable will be issued by a U.S. bank, branch bank, or foreign bank. 
If it will be issued by a foreign bank, its name and address, and the 
name of the confirming U.S. bank, branch bank, or agency bank (if 
approved as provided in Sec.  1488.12b), and the percentage of 
confirmation.
    (8) The name and address of the foreign importer.

[[Page 721]]

    (9) If delivery of the commodity to be exported is before export in 
a warehouse, the name and address of the warehouse to which delivery is 
to be made.
    (10) If the commodity will be sold through an intervening purchaser, 
the name and address of the intervening purchaser, and a statement that 
the sale of the commodity is or will be conditioned on its resale by the 
intervening purchaser and that the commodity will be shipped directly to 
the foreign importer in the destination country specified in paragraph 
(d)(2) of this section pursuant to a contract in which the foreign 
importer agrees to pay the U.S. exporter the amount to be financed in 
accordance with the terms of GSM-5 financing agreement.
    (11) Any additional information as determined by CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 5, 43 FR 25992, June 
16, 1978]



Sec.  1488.5  Acceptance of sale registrations.

    (a) Upon receiving a request for a sale registration complying with 
the applicable provisions of this subpart, the Assistant Sales Manager 
may approve the registration of the sale. If approved, the exporter will 
be notified in writing of the financing agreement number which will 
constitute notice that the sale is registered and eligible for 
financing.
    (b) [Reserved]
    (c) CCC reserves the right to reject any and all requests for sale 
registration.
    (d) The registration of a sale shall create a financing agreement 
between the exporter and CCC which shall consist of the exporter's 
request for a sale registration, CCC's acceptance of the sale 
registration, the applicable terms and conditions of this subpart, 
including amendments and supplemental announcements hereunder which are 
in effect on the date of approval.
    (e) The financing agreement may contain such terms and conditions, 
not inconsistent with GSM-5, as are deemed necessary in the interest of 
CCC.
    (f) An exporter shall promptly notify the Assistant Sales Manager 
when he is unable to fulfill his obligations under any sale registered 
with CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 6, 43 FR 29933, July 
12, 1978]



Sec.  1488.6  Amendments to financing agreement.

    The financing agreement may be amended provided such amendment is in 
conformity with GSM-5 at the time of amendment and is determined to be 
in the interest of CCC. Amendments may include extension of the period 
for delivery or the period for export, and change in the interest rate. 
After the commodity has been delivered, CCC will consider requests to 
increase the amount of the sale registration value for any quantity 
within the tolerance in the sales contract and for carrying charges 
provided such requests relate to the same sale as originally registered 
with CCC.



Sec.  1488.7  Expiration of period(s) for delivery and/or export.

    (a) Unless delivery by the exporter to the importer is made within 
such period as may be provided in the financing agreement or any 
amendment thereof, or under paragraph (b) of this section, the financing 
agreement will no longer be valid.
    (b) If the Assistant Sales Manager determines that delay in delivery 
was due solely to causes without the fault or negligence of the 
exporter, the period for delivery may be extended by CCC by the period 
of such delay.
    (c) If delivery is made before export under the terms of the 
financing agreement, failure to export within the period specified 
therefor in the financing agreement shall constitute a breach of the 
financing agreement. In such case, if full payment under the bank 
obligation or account receivable has not been received, the account 
receivable and the bank obligation shall, at the option of the Assistant 
Sales Manager, become immediately due and payable, and liquidated 
damages shall be payable in accordance with Sec.  1488.11.

[[Page 722]]

                    Documents Required for Financing



Sec.  1488.8  Documents required after delivery.

    (a) CCC will purchase an exporter's account receivable only if the 
Treasurer, Commodity Credit Corporation, United States Department of 
Agriculture, Washington, DC 20250, receives the documents specified in 
paragraphs (b) through (e) of this section and any documentation and 
certifications required by any supplements to these regulations within 
forty-five days, or any extension thereof by the Treasurer or Assistant 
Treasurer, CCC, after date of delivery of commodities exported or to be 
exported under the financing agreement.
    (b) The exporter shall submit a ``Combined Application for 
Disbursement, Assignment of Account Receivable and Certification'' which 
shall include:
    (1) A written application for disbursement, showing the financing 
agreement number and the port value of the commodity delivered.
    (2) An assignment of the account receivable arising from the export 
sale, in form and substance acceptable to CCC.
    (3) The exporter's certification (i) that he has entered into a 
contract to sell an eligible commodity; (ii) of the date of sale, the 
grade, quality, quantity, agreed upon price for the commodity and 
payment terms and interest in accordance with the financing agreement; 
(iii) that he has in his files documents evidencing the export sale 
contract and the obligation of the importer to him for the financed 
portion of the export sale and will retain and furnish them to CCC on 
demand until 3 years after the end of the financing period; (iv) that 
agricultural commodities of the grade, quality, and quantity called for 
in the exporter's sale as registered with CCC have been delivered to the 
foreign importer; and (v) that he knows of no defenses to the account 
receivable assigned to CCC.
    (c) A copy of the sales invoice to the foreign importer, or, if the 
commodity has been sold through an intervening purchaser, a copy of the 
exporter's sales invoice to the intervening purchaser and of the 
intervening purchaser's sales invoice to the foreign importer.
    (d) A copy of the document evidencing export provided for in Sec.  
1488.9 and, if the consignee is other than the foreign importer named in 
the financing agreement, such additional information as CCC may request 
to show that export was made in accordance with the instructions of, or 
the export sale contract with, the foreign importer. If delivery is 
before export in a warehouse acceptable to CCC, the warehouse receipt or 
other documents acceptable to CCC evidencing delivery of the commodity 
to the importer or his agent. If delivery is before export in a 
container or a lash or seabee barge at a U.S. inland or coastal point, 
for export shipment under a through bill of lading, one copy of the 
through bill of lading with an onboard (truck, rail car, or lash or 
seabee barge) endorsement, dated and signed or initialed on behalf of 
the export carrier. The through bill of lading must be certified by the 
exporter as being a true copy and must show the quantity, the date, and 
place of loading the commodity on a truck, or rail car, or lash or 
seabee barge, the name of the originating carrier, the destination of 
the commodity, and the name of both the exporter and the importer.
    (e) A bank obligation or obligations in accordance with Sec.  
1488.7(c), Sec.  1488.10, Sec.  1488.12 and paragraph (i) of this 
section, naming CCC as beneficiary, in form and substance acceptable to 
CCC, covering the amount of the application for disbursement, citing the 
financing agreement number; and providing for the payment of interest in 
accordance with Sec.  1488.14.
    (f) On receipt of the documents described in paragraphs (b) through 
(e) of this section and any documentation and certifications required by 
any supplements to these regulations, the Treasurer, CCC will pay 
promptly to the exporter the amount of the account receivable or the 
dollar amount of sales registered in accordance with Sec.  1488.5, 
whichever is the lesser.
    (g) If an acceptable application for disbursement and the supporting 
documents described in paragraphs (b) through (e) of this section have 
not been received by CCC within 45 days

[[Page 723]]

from the date of the delivery, or any extension thereof by the Treasurer 
or Assistant Treasurer, CCC, the financing agreement shall be void.
    (h) [Reserved]
    (i) If for any reason a draft drawn under a foreign bank obligation 
is dishonored or if the issuing bank is insolvent, in bankruptcy, in 
receivership, or in liquidation, or has made an assignment for the 
benefit of creditors, or for any other reason discontinues or suspends 
payments to depositors or creditors, or otherwise ceases to operate on 
an unrestricted basis, any balance due on the account receivable assured 
by the obligation issued by such bank shall, at the option of CCC, 
become immediately due and payable. CCC may permit the substitution of 
another acceptable foreign bank obligation covering such balance due if 
confirmed in accordance with Sec.  1488.12.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]



Sec.  1488.9  Evidence of export.

    (a) If the commodity is exported by rail or truck, the exporter 
shall furnish to the Treasurer, CCC, one copy of the bill of lading 
covering the commodity exported, certified by the exporter as being a 
true copy, and an authenticated landing certificate or similar document 
issued by an official of the government of the country to which the 
commodity is exported, showing the quantity, the gross landed weight of 
the commodity, the place and date of entry, and the name and address of 
both the exporter and the importer.
    (b) If the commodity is exported by ocean carrier, the exporter 
shall furnish to the Treasurer, CCC, one non-negotiable copy or photo 
copy or other type of copy of either (1) an on-board ocean bill of 
lading or (2) an ocean bill of lading with an onboard endorsement, dated 
and signed or initialed on behalf of the carrier. The bill of lading 
must be certified by the exporter as being a true copy and must show the 
quantity, the date and place of loading the commodity, the name of the 
vessel, the destination of the commodity and the name and address of 
both the exporter and the importer.
    (c) If the commodity is exported by aircraft, the exporter shall 
furnish to the Treasurer, CCC, one non-negotiable copy of an airway 
bill, dated and signed or initialed on behalf of the carrier. The airway 
bill must be certified by the exporter as being a true copy and must 
show the date and place of loading the commodity, the name of the 
airline, the destination of the commodity, and the name and address of 
both the exporter and the importer.
    (d) If the exporter is unable to supply documentary evidence of 
export as specified in this section, he shall submit such other 
documentary evidence as may be acceptable to CCC.
    (e) For commodities transshipped through Canada via the Great Lakes 
or the St. Lawrence River, the exporter shall certify that the commodity 
transshipped was produced in the United States.



Sec.  1488.9a  Evidence of export for commodities delivered before export.

    For commodities delivered before export under a financing agreement 
for which the financial period is 12 months or less, the exporter shall 
furnish a certification to the Treasurer, CCC, within 60 days from the 
date of delivery or such extension of time as may be granted by the 
Treasurer or Assistant Treasurer, CCC, certifying that the commodities 
have been exported. The certification must include the name of the ocean 
carrier, the date the commodities were loaded aboard the ocean carrier 
and the financing agreement number.

[Amdt. 5, 43 FR 25992, June 16, 1978]

                   Documents Required After Financing



Sec.  1488.10  Evidence of entry into country of destination.

    (a) Commodities exported under a financing agreement must enter the 
destination country specified in the financing agreement.
    (b) For a financing agreement under which the financing period is in 
excess of 12 months, within 90 days, or such extension of time as may be 
granted in writing by the Assistant Sales Manager, following shipment 
from the United States of any agricultural commodity exported under the 
financing

[[Page 724]]

agreement, the exporter shall furnish to the office specified in Sec.  
1488.22, documentary evidence verifying entry of the commodity into the 
country of destination specified in the financing agreement. The 
documentary evidence must:
    (1) Identify the agricultural commodity (or permit identification 
through supplementary documents also furnished) as that exported under 
the financing agreement,
    (2) State the quantity and date of entry of the commodity into the 
destination country, and
    (3) Be signed by (i) a customs official of the destination country, 
or (ii) the importer, or (iii) a representative of an independent 
superintending or controlling firm.
    (c) When the commodity enters the country of destination in bond, a 
statement by the importer will be acceptable which:
    (1) Identifies the commodity as that exported under the financing 
agreement,
    (2) States the quantity of the commodity entered under bond and date 
of entry into the destination country, and
    (3) Certifies that the commodity will be withdrawn from bonded 
storage at a later date for consumption in the destination country.
    (d) If the evidence of entry is in other than the English language, 
the exporter shall also provide an English translation thereof.
    (e) Failure to furnish, within the time specified, evidence of entry 
of the commodity into the country of destination shall constitute prima 
facie evidence of failure to enter or to cause the entry of the 
commodity into such country as required. In such case, the financing 
agreement may be terminated by the Assistant Sales Manager, and if full 
payment under the bank obligation or account receivable has not yet been 
received, the bank obligation and the account receivable shall at the 
option of CCC, become due and payable and liquidated damages shall be 
payable in accordance with Sec.  1488.11. The remedy herein provided 
shall not be exclusive of other rights available to the Federal 
government if the commodity enters a country other than that specified 
in the financing agreement.

                          Delivery Requirements



Sec.  1488.11  Liquidated damages.

    Failure of the exporter to export or cause to be exported, within 
the period provided therefor, any agricultural commodity financed, when 
delivery is made before export under the terms of the financing 
agreement, or failure of the exporter to enter or cause the entry of, 
such commodity into the country of destination, shall constitute a 
breach of the financing agreement which will result in serious and 
substantial damage to CCC and to its program. Since it will be 
difficult, if not impossible, to prove the exact amount of such damage, 
the exporter shall pay to CCC promptly on demand, as reasonable 
compensation and not as a penalty, liquidated damages in lieu of 
probable actual damages, as follows:
    (a) For each day of delay in exportation after the final date for 
exportation, when delivery is made before export under the terms of the 
financing agreement, .15 percent of the amount financed under the 
financing agreement for the commodity not exported; (b) for failure to 
export or cause exportation, when delivery is made before export under 
the terms of the financing agreement, 5 percent of the amount financed 
under the financing agreement for the commodity not exported; (c) for 
failure, after exportation, to enter or cause the entry of the commodity 
into the country of destination, at the rate of 5 percent a year of the 
amount financed under the financing agreement for such commodity from 
the start of the financing period until payment to CCC of the amount 
financed; Provided however, That the aggregate of all amounts assessed 
under this Sec.  1488.11 with respect to the same commodity shall not 
exceed 5 percent of the amount financed for such commodity. Liquidated 
damages shall not be assessed: Under paragraph (a) of this section if 
the Assistant Sales manager determines that the delay was due to such 
causes as acts of God or government or public enemy, fires, floods, 
epidemics, quarantine restrictions, strikes, freight embargoes, or 
unusually severe weather; under paragraph (b) of this section if the 
Assistant Sales

[[Page 725]]

Manager determines that failure to export was due to loss, damage, 
destruction or deterioration of the commodity or act of God or 
government or public enemy; and under paragraph (c) of this section if 
the Assistant Sales Manager determines that failure to enter or cause 
the entry of the commodity into the country of destination was due to 
loss, damage, destruction or deterioration of the commodity or act of 
God or government or public enemy.

                     Bank Obligations and Repayment



Sec.  1488.12  Coverage of bank obligations.

    (a) U.S. banks and branch banks shall be liable without regard to 
risk (1) for payment of bank obligations issued by them or (2) for 
payment of bank obligations confirmed by them without regard to risk if 
a requirement for such confirmation is included in the financing 
agreement or (3) as provided in paragraphs (c) and (d) of this section.
    (b) An obligation issued by a foreign bank must be confirmed and 
advised, as provided in paragraphs (a), (c), (d), (e), and (f) of this 
section, by a U.S. bank or a branch bank, or may be confirmed by an 
agency bank when determined by the President or Vice President, CCC 
after consultation with the Controller, CCC, to be in the interest of 
CCC.
    (c) A U.S. bank must confirm the full amount of an obligation issued 
by its foreign branch. CCC will hold the U.S. bank liable for payment 
without regard to risks.
    (d) If a branch bank confirms an obligation issued by its home 
office, or by another branch of its home office, it must confirm the 
full amount thereof. CCC will hold the branch bank liable for payment 
without regard to risks.
    (e) If CCC accepts an agency bank confirmation of a foreign bank 
obligation, it must be for the full amount thereof without regard to 
risks and will be subject to such terms and conditions as may be 
contained in the financing agreement. CCC will not accept an agency bank 
confirmation of an obligation issued by its home office, or by a branch 
of its home office.
    (f) Except as provided in paragraphs (a), (c), and (d) of this 
section, if a U.S. bank or a branch bank confirms an obligation issued 
by a foreign bank, it must confirm at least 10 percent pro rata and must 
advise the remainder of the foreign bank obligation. The percentage of 
confirmation shall be the same for both the account receivable and the 
interest portions of the obligation. For the confirmed amount, except as 
provided in paragraph (a)(2) of this section, CCC will hold the U.S. 
bank or branch bank liable for commercial risks but not for non-
commercial risks. For the advised amount, CCC will not hold the U.S. 
bank or branch bank liable for commercial or non-commercial risks. CCC 
will hold the foreign bank liable without regard to risks for all 
amounts not recovered from the U.S. or branch bank.
    (g) Under special circumstances, on application in writing, the Vice 
President, CCC, may reduce or waive requirements for 10 percent 
confirmation by a U.S. or branch bank, but a bank will not be relieved 
of any obligation it undertakes.
    (h) Any bank obligation which provides for a bank acceptance of a 
time draft by CCC (banker's acceptance) shall not be acceptable to CCC.
    (i) CCC will consent to cancellation or reduction of a bank 
obligation to the extent of any payment it receives from other sources 
or amounts otherwise payable under such bank obligation.
    (j) Collection of accounts receivable purchased under GSM-5 will be 
effected through the issuance by CCC of sight drafts against the bank 
obligations, but this method of collection shall not be exclusive of any 
other collection procedures or rights available to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 42 
FR 30833, June 17, 1977; 43 FR 45551, Oct. 3, 1978; 44 FR 51187, Aug. 
31, 1979]



Sec.  1488.13  CCC drafts.

    CCC will draw one draft for each payment due under bank obligations. 
If any portion of a CCC draft is dishonored, the U.S. bank or branch 
bank shall return the dishonored draft together with its statement of 
the reason for nonpayment. If a draft which is drawn under a partially 
confirmed bank obligation is dishonored, CCC will replace the draft with 
separate drafts

[[Page 726]]

for the confirmed and unconfirmed portions at the request of the 
confirming bank. Such replacement shall not alter the confirming bank's 
obligation for timely payment to CCC of the confirmed portion of the 
credit. For confirmed amounts, except as provided in Sec.  1488.12(a), 
(c) and (d), a U.S. or branch bank may request refund from CCC of the 
amount paid if it certifies to CCC that it is unable to recover funds 
from the foreign bank due to a stipulated non-commercial risk which 
existed on the date payment was made to CCC under the draft. If CCC 
finds that inability to recover funds was due to such a non-commercial 
risk, the refund shall be promptly made together with interest at the 
Federal Reserve Bank of New York discount rate from and including the 
date payment was originally made to CCC but not include the date of 
refund by CCC. For unconfirmed amounts, remittance to CCC shall be 
considered final, and the U.S. bank or branch bank shall not thereafter 
have recourse to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 21, 1977; 42 
FR 30833, June 17, 1977]



Sec.  1488.14  Interest charges.

    The account receivable assigned to CCC and the related bank 
obligation(s) shall bear interest as specified in this section. Rates of 
interest applicable to financing agreements shall be published in USDA 
announcement. The interest rate applicable to that portion of an account 
receivable for which payment is assured by a bank obligation issued or 
confirmed for all risks according to Sec.  1488.12(a)(ii) or pro rata 
confirmed by a U.S. bank shall be lower than the interest rate 
applicable for the remainder of the account receivable. The interest 
rate applicable to that portion of an account receivable the payment of 
which is assured by a bank obligation issued or pro rata confirmed by a 
branch bank shall, when determined by the President or Vice President, 
CCC after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rates applicable to accounts 
receivable the payment of which is assured by an agency bank 
confirmation may, when determined by the President or Vice President, 
CCC, after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rate applicable will be the rate in 
effect on the date CCC receives the sale registration request under 
Sec.  1488.4. Interest shall accrue on the account receivable from the 
date of delivery or the weighted average delivery date of the 
agricultural commodities delivered under the financing agreement to the 
date of payment, or to the date of expiration of the financing period, 
or to the date of expiration of the bank obligation, whichever occurs 
first, and shall be payable as specified in the financing agreement. 
Thereafter, interest shall accrue on any unpaid part of both the 
principal and interest due as of such expiration date.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977]



Sec.  1488.15  Advance payment.

    If, before expiration of the financing period, the exporter or the 
U.S. bank or the agency or branch bank accepts payment from or on behalf 
of the foreign importer of any part of the account receivable, it shall 
be remitted promptly to CCC. Such prepayment shall be applied first to 
interest on the unpaid balance of the account receivable to the date CCC 
receives such prepayment and then to the principal.



Sec.  1488.16  Liability for payment.

    If delivery is made within the coverage of the bank obligation(s) 
submitted in accordance with Sec.  1488.8, CCC will look to the 
obligating bank or banks and the foreign importer, rather than to the 
exporter or intervening purchaser, for payment of all amounts due at 
maturity of the account receivable and of the bank obligation(s), but 
the exporter and the intervening purchaser shall remain liable for any 
loss arising from breach of any contractual obligation, certification or 
warranty made by them pursuant to the financing agreement, and the 
exporter shall remain liable for any amounts not covered by the bank 
obligation which are owing to CCC, and any remittance or

[[Page 727]]

refund required by Sec.  1488.15 and Sec.  1488.18, together with 
interest thereon at the rate specified in the documents evidencing the 
account receivable, as well as for any liquidated damages provided for 
in Sec.  1488.11. The liability of the bank and the importer under their 
respective obligations shall be several.

                        Miscellaneous Provisions



Sec.  1488.17  Assignment.

    The exporter shall not assign any claim or rights or any amounts 
payable under the financing agreement, in whole or in part, without 
written approval of the Vice President, CCC, or the Controller, CCC.



Sec.  1488.18  Covenant against contingent fees.

    The exporter warrants that no person or selling agency has been 
employed or retained to solicit or secure the financing agreement on an 
agreement or understanding for a commission, percentage, brokerage, or 
contingent fee, except bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business. For breach or violation of this warranty, 
CCC shall have the right, without limitation on any other rights it may 
have, to annul the financing agreement without liability to CCC. Should 
the financing agreement be annulled, CCC will promptly consent to the 
reduction or cancellation or related bank obligations except for amounts 
outstanding under a financing agreement. Such amounts shall, on demand, 
be refunded to CCC by the exporter.



Sec.  1488.19  [Reserved]



Sec.  1488.20  Officials not to benefit.

    No member of or delegate to Congress, or Resident Commissioner, 
shall be admitted to any share or part of the financing agreement or to 
any benefit that may arise therefrom, but this provision shall not be 
construed to extend to the financing agreement if made with a 
corporation for its general benefit.



Sec.  1488.21  Exporter's records and accounts.

    CCC shall have access to and the right to examine any directly 
pertinent books, documents, papers and records of the exporter involving 
transactions related to the financed export credit sale until the 
expiration of three years after the end of the financing period.



Sec.  1488.22  Communications.

    (a) Unless otherwise provided, written requests, notifications, or 
communications by the applicant pertaining to the financing agreement 
shall be addressed to the Assistant Sales Manager, Commercial Export 
Programs, Office of the General Sales Manager, U.S. Department of 
Agriculture, Washington, DC 20250.
    (b) [Reserved]



Sec.  1488.23  OMB Control Numbers assigned pursuant to the Paperwork 
Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 1488) have been approved by the Office of 
Management and Budget (OMB) in accordance with the provisions of 44 
U.S.C. Chapter 35 and have been assigned OMB Control Number 0551-0021.

[Amdt. 8, 50 FR 13967, Apr. 9, 1985]



PART 1491--FARM AND RANCH LANDS PROTECTION PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1491.1 Applicability.
1491.2 Administration.
1491.3 Definitions.
1491.4 Program requirements.
1491.5 Application procedures.
1491.6 Ranking considerations and proposal selection.
1491.7 Funding priorities.

  Subpart B--Cooperative Agreements and Conservation Easement Deeds ec.

1491.20 Cooperative agreements.
1491.21 Funding.
1491.22 Conservation easement deeds.
1491.23 Easement modifications.

                    Subpart C--General Administration

1491.30 Violations and remedies.

[[Page 728]]

1491.31 Appeals.
1491.32 Scheme or device.

    Authority: 16 U.S.C. 3838h-3838i.

    Source: 68 FR 26474, May 16, 2003, unless otherwise noted.



                      Subpart A--General Provisions



Sec.  1491.1  Applicability.

    (a) The regulations in this part set forth policies, procedures, and 
requirements for program implementation of the Farm and Ranch Lands 
Protection Program as administered by the Natural Resources Conservation 
Service (NRCS). FRPP cooperative agreements and easements signed on or 
after May 16, 2003, will be administered according to 7 CFR part 1491.
    (b) The NRCS Chief may implement FRPP in any of the 50 States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
Islands of the United States, American Samoa, and the Commonwealth of 
the Northern Mariana Islands.



Sec.  1491.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the NRCS Chief.
    (b) NRCS shall-- (1) Provide overall program management and 
implementation leadership for FRPP;
    (2) Develop, maintain, and ensure that policies, guidelines, and 
procedures are carried out to meet program goals and objectives;
    (3) Ensure that the FRPP share of the cost of an easement or other 
deed restrictions in eligible land shall not exceed 50 percent of the 
appraised fair market value of the conservation easement;
    (4) Determine land and entity eligibility;
    (5) Ensure a conservation plan is developed in accordance with 7 CFR 
part 12;
    (6) Make funding decisions and determine allocations of program 
funds;
    (7) Coordinate with the Office of the General Counsel (OGC) to 
ensure the legal sufficiency of the cooperative agreement and the 
easement deed or other legal instrument;
    (8) Sign and monitor cooperative agreements for the CCC with the 
selected entity;
    (9) Monitor and ensure conservation plan compliance with highly 
erodible land and wetland provisions in accordance with 7 CFR part 12; 
and
    (10) Provide leadership for establishing, implementing, and 
overseeing administrative processes for easements, easement payments, 
and administrative and financial performance reporting.
    (c) NRCS may enter into cooperative agreements with eligible 
entities to assist NRCS with implementation of this part.



Sec.  1491.3  Definitions.

    The following definitions may be applicable to this part:
    Agricultural uses are defined by the State's Purchase of Development 
Rights (PDR) program, or where no PDR program exists, agricultural uses 
should be defined by the State agricultural use assessment program. (If 
the Agency finds that a State definition of agriculture is so broad that 
an included use could lead to the degradation of soils, NRCS reserves 
the right to impose greater deed restrictions on the property than 
allowable under that State definition of agriculture in order to protect 
topsoil.)
    Chief means the Chief of NRCS, USDA.
    Commodity Credit Corporation (CCC) is a Government-owned and 
operated entity that was created to stabilize, support, and protect farm 
income and prices. CCC is managed by a Board of Directors, subject to 
the general supervision and direction of the Secretary of Agriculture, 
who is an ex-officio director and chairperson of the Board. CCC provides 
the funding for FRPP, and NRCS administers FRPP on its behalf.
    Conservation Easement means a voluntary, legally recorded 
restriction, in the form of a deed, on the use of property, in order to 
protect resources such as agricultural lands, historic structures, open 
space, and wildlife habitat.
    Conservation Plan is the document that--
    (1) Applies to highly erodible cropland;

[[Page 729]]

    (2) Describes the conservation system applicable to the highly 
erodible cropland and describes the decisions of the person with respect 
to location, land use, tillage systems, and conservation treatment 
measures and schedules;
    (3) Is approved by the local soil conservation district in 
consultation with the local committees established under Section 8(b)(5) 
of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 
5909h(b)(5)) and the Secretary, or by the Secretary.
    Contingent right is an interest in land held by the United States, 
which the United States may exercise under specific circumstances in 
order to enforce the terms of the conservation easement or hold title to 
the easement.
    Eligible entities means Federally recognized Indian Tribes, States, 
units of local government, and certain non-governmental organizations, 
which have a farmland protection program that purchases agricultural 
conservation easements for the purpose of protecting topsoil by limiting 
conversion to non-agricultural uses of the land.
    Additionally, to be eligible for FRPP, the entity must have pending 
offers, for acquiring conservation easements for the purpose of 
protecting agricultural land from conversion to non-agricultural uses.
    Eligible land is privately owned land on a farm or ranch that has 
prime, unique, Statewide, or locally important soil, or contains 
historical or archaeological resources, and is subject to a pending 
offer by an eligible entity. Eligible land includes cropland, rangeland, 
grassland, and pasture land, as well as forest land that is an 
incidental part of an agricultural operation. Other incidental land that 
would not otherwise be eligible, but when considered as part of a 
pending offer, may be considered eligible, if inclusion of such land 
would significantly augment protection of the associated farm or ranch 
land.
    Fair market value is ascertained through standard real property 
appraisal methods. Fair market value is the amount in cash, for which in 
all probability the property would have sold on the effective date of 
the appraisal, after a reasonable exposure of time on the open 
competitive market, from a willing and reasonably knowledgeable seller 
to a willing and reasonably knowledgeable buyer. Neither the seller nor 
the buyer act under any compulsion to buy or sell, giving due 
consideration to all available economic uses of the property at the time 
of the appraisal. In valuing conservation easements, the appraiser 
estimates both the fair market value of the whole property before the 
easement acquisition and the fair market value of the remainder property 
after the conservation easement has been imposed. The difference between 
these two values is deemed the value of the conservation easement.
    Farm or Ranch Succession Plan is a general plan to address the 
continuation of some type of agricultural business on the conserved 
land; the farm or ranch succession plan may include specific intra-
family succession agreements or strategies to address business asset 
transfer planning to create opportunities for beginning farmers and 
ranchers.
    Field Office Technical Guide (FOTG) is the official document for 
NRCS guidelines, criteria, and standards for planning and applying 
conservation treatments and conservation management systems. The FOTG 
contains detailed information on the conservation of soil, water, air, 
plant, and animal resources applicable to the local area for which it is 
prepared.
    Historical and archaeological resources must be:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.), or
    (2) Formally determined eligible for listing in the National 
Register of Historic Places (by the State Historic Preservation Officer 
(SHPO) or Tribal Historic Preservation Officer (THPO) and the Keeper of 
the National Register in accordance with section 106 of the NHPA), or
    (3) Formally listed in the State or Tribal Register of Historic 
Places of the SHPO (designated under section 101 (b)(1)(B) of the NHPA) 
or the THPO (designated under section 101(d)(1)(C) of the NHPA).
    Land Evaluation and Site Assessment System (LESA) is the land 
evaluation

[[Page 730]]

system approved by the NRCS State Conservationist used to rank land for 
farm and ranch land protection purposes, based on soil potential for 
agriculture, as well as social and economic factors, such as location, 
access to markets, and adjacent land use. (For additional information 
see the Farmland Protection Policy Act rule at 7 CFR part 658.)
    Landowner means a person, persons, estate, corporation, or other 
business or nonprofit entity having fee title ownership of farm or ranch 
land.
    Natural Resources Conservation Service is an agency of the U.S. 
Department of Agriculture.
    Non-governmental organization is defined as any organization that:
    (1) Is organized for, and at all times since the formation of the 
organization, has been operated principally for one or more of the 
conservation purposes specified in clause (i), (ii), (iii), or (iv) of 
section 170(h)(4)(A) of the Internal Revenue Code of 1986;
    (2) Is an organization described in section 501(c)(3) of that Code 
that is exempt from taxation under 501(a) of that Code;
    (3) Is described in section 509(a)(2) of that Code; or
    (4) Is described in section 509(a)(3) of that Code and is controlled 
by an organization described in section 509(a)(2) of that Code.
    Other interests in land include any right in real property 
recognized by State law, including fee title. FRPP funds will only be 
used to purchase other interests in land with prior approval from the 
Chief.
    Other productive soils are soils that are contained on farm or ranch 
land that is identified as farmland of Statewide or local importance and 
is used for the production of food, feed, fiber, forage, or oilseed 
crops. The appropriate State or local government agency determines 
Statewide or locally important farmland with concurrence from the State 
Conservationist. Generally, these farmlands produce high yields of crops 
when treated and managed according to acceptable farming methods. In 
some States and localities, farmlands of Statewide and local importance 
may include tracts of land that have been designated for agriculture by 
State law or local ordinance. 7 CFR part 657 sets forth the process for 
designating soils as Statewide or locally important.
    Pending offer is a written bid, contract, or option extended to a 
landowner by an eligible entity to acquire a conservation easement 
before the legal title to these rights has been conveyed for the purpose 
of limiting non-agricultural uses of the land.
    Prime and unique farmland are defined separately, as follows:
    (1) Prime farmland is land that has the best combination of physical 
and chemical characteristics for producing food, feed, fiber, forage, 
oilseed, and other agricultural crops with minimum inputs of fuel, 
fertilizer, pesticides, and labor, without intolerable soil erosion, as 
determined by the Secretary.
    (2) Unique farmland is land other than prime farmland that is used 
for the production of specific high-value food and fiber crops, as 
determined by the Secretary. It has the special combination of soil 
quality, location, growing season, and moisture supply needed to 
economically produce sustained high quality or high yields of specific 
crops when treated and managed according to acceptable farming methods. 
Examples of such crops include citrus, tree nuts, olives, cranberries, 
fruits, and vegetables. Additional information on the definition of 
prime, unique, or other productive soil can be found in 7 CFR part 657 
and 7 CFR part 658.
    Secretary is the Secretary of the U.S. Department of Agriculture.
    State Technical Committee means a committee established by the 
Secretary of the U.S. Department of Agriculture in a State pursuant to 
16 U.S.C. 3861 and 7 CFR part 610, subpart C.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area (Puerto 
Rico and the Virgin Islands), or the Pacific Basin Area (Guam, American 
Samoa, and the Commonwealth of the Northern Mariana Islands).



Sec.  1491.4  Program requirements.

    (a) Under the FRPP, the Secretary, on behalf of CCC, shall purchase 
conservation easements, in partnership

[[Page 731]]

with eligible entities, from landowners who voluntarily wish to protect 
their farm and ranch lands from conversion to nonagricultural uses. 
Eligible entities submit applications to NRCS State Offices to partner 
with NRCS to acquire conservation easements on farm and ranch land. NRCS 
enters into cooperative agreements with selected entities and provides 
funds for up to 50 percent of the appraised market value for the 
easement purchase. In return, the entity agrees to acquire, hold, 
manage, and enforce the easement. A Federal contingent right interest in 
the property must be included in each easement deed for the protection 
of the Federal investment.
    (b) The term of all easements will be in perpetuity unless 
prohibited by State law.
    (c) To be eligible to receive FRPP funding, an entity must meet the 
definition of ``eligible entity'' as listed in Sec.  1491.3. In 
addition, eligible entities wishing to receive FRPP funds must also 
demonstrate:
    (1) A commitment to long-term conservation of agricultural lands;
    (2) A capability to acquire, manage, and enforce easements;
    (3) Sufficient number of staff dedicated to monitoring and easement 
stewardship; and
    (4) The availability of funds.
    (d) Eligible land must meet the definition of ``eligible land'' as 
provided in Sec.  1491.3. In addition:
    (1) Entire farms or ranches may be enrolled in FRPP.
    (2) Farms must contain at least 50 percent of prime, unique, 
Statewide, or locally important soil, unless otherwise determined by the 
State Conservationist, or contain historical or archaeological 
resources.
    (3) Eligible lands are farm and ranch lands subject to a pending 
offer, as defined in Sec.  1491.3, for purchase of a conservation 
easement.
    (4) Eligible land must be privately owned. NRCS will not enroll land 
in FRPP that is owned in fee title by an agency of the United States or 
State or local government, or land that is already subject to an 
easement or deed restriction that limits the conversion of the land to 
nonagricultural use, unless otherwise determined by the Secretary.
    (5) Eligible land must be owned by landowners who certify that they 
do not exceed the adjusted gross income limitation eligibility 
requirements set forth in Section 1604 of the Farm Security and Rural 
Investment Act of 2002.
    (e) Prior to FRPP fund disbursement, the value of the conservation 
easement must be appraised. Appraisals shall be completed and signed by 
a State-certified or licensed general appraiser and shall contain a 
disclosure statement by the appraiser. The appraisal shall conform to 
either the Uniform Standards of Professional Appraisal Practices or the 
Uniform Appraisal Standards for Federal Land Acquisitions.
    (f) At the discretion of the Chief, a standard easement or 
equivalent legal form, which meets the intent of the 2002 Act, will be 
required as a condition for program participation.
    (g) The landowner shall be responsible for complying with the Highly 
Erodible Land and Wetland Conservation provisions of the Food Security 
Act of 1985, as amended, and 7 CFR part 12.



Sec.  1491.5  Application procedures.

    (a) When funds are available, NRCS publishes a Request for Proposals 
in the Federal Register or, at the discretion of the Chief, uses another 
process to solicit applications from eligible entities to cooperate in 
the acquisition of conservation easements on farms and ranches. 
Information required in the application will be set forth in the Request 
for Proposals.
    (b) To participate, an eligible entity submits a proposal to NRCS 
for the acquisition of conservation easements on eligible farm or ranch 
land, on which the entity already has pending offers. An entity's 
application contains a request to fund one or more parcels. All 
applications must be submitted to the appropriate NRCS State 
Conservationist by the specified date, as indicated in the Request for 
Proposals.



Sec.  1491.6  Ranking considerations and proposal selection.

    (a) Once the NRCS State Conservationist has assessed entity 
eligibility

[[Page 732]]

and land eligibility, the State Conservationist shall use National and 
State criteria to evaluate the land and rank parcels. Entities and 
parcels will be selected for participation based on the entities' 
responses to the Request for Proposals. Selection will be based on 
national ranking criteria set forth by the Chief in the Request for 
Proposals and State criteria as determined by the State Conservationist, 
with advice from the State Technical Committee.
    (1) Examples of national criteria may include:
    (i) Acreage of prime, unique, and important farm and ranch land to 
be protected;
    (ii) Total acres of land to be protected with the requested award;
    (iii) Acreage of prime, unique, and important farm and ranch land 
identified in the National Resources Inventory as converted to 
nonagricultural uses;
    (iv) Total acres needing protection;
    (v) Number or acreage of historical and archaeological resources to 
be protected on farm or ranch lands;
    (vi) Anticipated average FRPP cost per acre;
    (vii) Rate of land conversion (e.g., local land use conversion 
rates);
    (viii) Amount of the Federal share to be contributed to the 
acquisition of the conservation easement, as guaranteed by the eligible 
entity;
    (ix) History of eligible entity's commitment to conservation 
planning and conservation practice implementation;
    (x) History of an eligible entity's commitment to assisting 
beginning farmers and ranchers, to promoting opportunities in farming 
and ranching, and to farm and ranch succession transfer;
    (xi) Eligible entity's history of acquiring, managing, holding, and 
enforcing conservation easements. This could include annual farmland 
protection expenditures, monetary donations received, accomplishments, 
and staffing levels;
    (xii) A description of the eligible entity's farmland protection 
strategy and how the FRPP application submitted by the entity 
corresponds to the entity's strategic plan; and
    (xiii) Eligible entity's estimated acres of unfunded proposed 
conservation easements on prime, unique, and important farm and ranch 
land.
    (2) Examples of State or local criteria, as determined by the State 
Conservationist may include:
    (i) Proximity of parcel to other protected clusters;
    (ii) Proximity of parcel to other agricultural operations and 
infrastructure;
    (iii) Parcel size;
    (iv) Type of land use;
    (v) Maximum FRPP cost expended per acre;
    (vi) Amount of the Federal share to be contributed to the 
acquisition of the conservation easement, as guaranteed by the eligible 
entity;
    (vii) History of an eligible entity's commitment to assisting 
beginning farmers and ranchers, to promoting opportunities in farming 
and ranching, and to farm and ranch succession transfer;
    (viii) Existence of a parcel in an agriculturally zoned area.
    (b) State ranking criteria will be developed on a State-by-State 
basis. Prior to proposal submission, interested entities should contact 
the State Conservationist located in their State for a full listing of 
applicable National and State ranking criteria.
    (c) The NRCS State Conservationist may seek advice from the State 
Technical Committee (established pursuant to 16 U.S.C. 3861) in 
evaluating the merits of the applications.



Sec.  1491.7  Funding priorities.

    (a) NRCS will only consider funding the acquisition of eligible land 
in the Program if the agricultural viability of the land can be 
demonstrated. For example, the land must be of sufficient size and have 
boundaries that allow for efficient management of the area. The land 
must also have access to markets for its products and a support 
infrastructure appropriate for agricultural production.
    (b) NRCS may not fund the acquisition of eligible lands if NRCS 
determines that the protection provided by the FRPP would not be 
effective because of on-site or off-site conditions.
    (c) NRCS will place a higher priority on easements acquired by 
entities that

[[Page 733]]

have extensive experience in managing and enforcing easements.
    (d) During the application period, pending offers having appraisals 
completed and signed by State-certified general appraisers within the 
preceding one year shall receive higher funding priority by the NRCS 
State Conservationist. Before funding is released for easement 
acquisition, the cooperating entity must provide NRCS with a copy of the 
certified appraisal.
    (e) NRCS may place a higher priority on lands and locations that 
help create a large tract of protected area for viable agricultural 
production and that are under increasing urban development pressure(s).
    (f) NRCS may place a higher priority on lands and locations that 
link to other Federal, Tribal, or State governments or non-governmental 
organization efforts with complementary farmland protection objectives 
(e.g. open space, watershed and wildlife habitat protection).
    (g) NRCS may place a higher priority on lands that provide 
multifunctional benefits including social, economic, historical and 
archaeological, and environmental benefits.
    (h) NRCS may place a higher priority on certain geographic regions 
where the enrollment of particular lands may help achieve National, 
State, and regional goals and objectives, or enhance existing government 
or private conservation projects.
    (i) NRCS may place a higher priority on farms or ranches that have 
or will have a greater variety of natural resources protected.
    (j) NRCS may place a higher priority on farms or ranches that have a 
farm succession plan or similar plan established to encourage farm 
viability for future generations.
    (k) NRCS may place a higher priority on the national ranking 
criteria listed in Sec.  1491.6(a)(1) than State criteria, if the NRCS 
Chief deems appropriate.



    Subpart B--Cooperative Agreements and Conservation Easement Deeds



Sec.  1491.20  Cooperative agreements.

    (a) NRCS, on behalf of CCC, enters into a cooperative agreement with 
those entities selected for funding awards. Once a proposal is selected 
by the State Conservationist, the entity must work with the appropriate 
State Conservationist to finalize and sign the cooperative agreement 
incorporating all necessary FRPP requirements. The cooperative agreement 
addresses:
    (1) The interests in land to be acquired, including the form of the 
easements to be used and terms and conditions;
    (2) The management and enforcement of the rights acquired;
    (3) The role of NRCS;
    (4) The responsibilities of the easement manager on lands acquired 
with the assistance of FRPP; and
    (5) Other requirements deemed necessary by NRCS to protect the 
interests of the United States.
    (b) The cooperative agreement will also include an attachment 
listing the parcels accepted by the State Conservationist, landowners' 
names, addresses, location map(s), and other relevant information. An 
example of a cooperative agreement may be obtained from the State 
Conservationist.



Sec.  1491.21  Funding.

    (a) The State Conservationist, in coordination with the cooperating 
entity, shall determine the NRCS share of the cost of purchasing a 
conservation easement.
    (b) Under the FRPP, NRCS may provide up to 50 percent of the 
appraised fair market value of the conservation easement. Entities are 
required to supplement the NRCS share of the cost of the conservation 
easement.
    (c) Landowner donations up to 25 percent of the appraised fair 
market value of the conservation easement may be considered part of the 
entity's matching offer.
    (d) For the entity, two cost-share options are available when 
providing its matching offer.
    (1) The entity may provide in cash at least 25 percent of the 
appraised fair market value of the conservation easement, or
    (2) The entity may provide at least 50 percent of the purchase price 
in cash, of the conservation easement. This second option may be 
preferable to an entity in the case of a large bargain sale

[[Page 734]]

by the landowner. If this option is selected, the NRCS share cannot 
exceed the entity's contribution.
    (e) FRPP funds may not be used for expenditures such as appraisals, 
surveys, title insurance, legal fees, costs of easement monitoring, and 
other related administrative and transaction costs incurred by the 
entity.
    (f) If the State Conservationist determines that the purchase of two 
or more conservation easements are comparable in achieving FRPP goals, 
the State Conservationist shall not assign a higher priority to any one 
of these conservation easements based on lesser cost to FRPP.



Sec.  1491.22  Conservation easement deeds.

    (a) Under FRPP, a landowner grants an easement to an eligible entity 
with which NRCS has entered into an FRPP cooperative agreement. The 
easement shall require that the easement area be maintained in 
accordance with FRPP goals and objectives for the term of the easement.
    (b) Pending offers by an eligible entity must be for acquiring an 
easement in perpetuity, except where State law prohibits a permanent 
easement.
    (c) The conveyance document or conservation easement deed used by 
the eligible entity may be reviewed and approved by the NRCS National 
Office and Office of the General Counsel (OGC) before being recorded.
    (d) Since title to the easement is held by an entity other than the 
United States, the conveyance document must contain a ``contingent 
right'' clause that provides that all rights conveyed by the landowner 
under the document will become vested in the United States should the 
eligible entity (i.e., the grantee[s]) abandon or attempt to terminate 
the conservation easement. In addition, the contingent right also 
provides, in part, that the Secretary takes title to the easement, if 
the eligible entity fails to uphold the easement or attempts to transfer 
the easement without first securing the consent of the Secretary.
    (e) As a condition for participation, a conservation plan will be 
developed by NRCS in consultation with the landowner and implemented 
according to the NRCS Field Office Technical Guide and approved by the 
local conservation district. The conservation plan will be developed and 
managed in accordance with the Food Security Act of 1985, as amended, 7 
CFR part 12 or subsequent regulations, and other requirements as 
determined by the State Conservationist. To ensure compliance with this 
conservation plan, the easement will grant to the United States, through 
NRCS, its successors or assigns, a right of access to the easement area.
    (f) The cooperating entity shall acquire, hold, manage and enforce 
the easement. The cooperating entity may have the option to enter into 
an agreement with governmental or private organizations to carry out 
easement stewardship responsibilities if approved by NRCS.
    (g) Prior to fund disbursement, NRCS must sign the conservation 
easement, concurring with the terms of the conservation easement and 
accepting its interest in the conservation easement deed.
    (h) All conservation easement deeds acquired with FRPP funds must be 
recorded. Proof of recordation shall be provided to NRCS by the 
cooperating entity.



Sec.  1491.23  Easement modifications.

    (a) After an easement has been recorded, no amendments to the 
easement will be made without prior approval by NRCS State 
Conservationist and the USDA Office of General Counsel.
    (b) Easement modifications will be approved only when easement is 
duly prepared and recorded in conformity with standard real estate 
practices, including requirements for title approval, subordination of 
liens, and recordation, and when the amendment is consistent with the 
purposes of the conservation easement.



                    Subpart C--General Administration



Sec.  1491.30  Violations and remedies.

    (a) In the event of a violation of the terms of the easement, the 
cooperating entity shall notify the landowner. The

[[Page 735]]

landowner may be given reasonable notice and, where appropriate, an 
opportunity to voluntarily correct the violation in accordance with the 
terms of the conservation easement.
    (b) In the event that the cooperating entity fails to enforce any of 
the terms of the easement as determined in the sole discretion of the 
Secretary, the Secretary and his or her successors and assigns shall 
have the right to enforce the terms of the easement through any and all 
authorities available under Federal or State law. In the event that the 
cooperating entity attempts to terminate, transfer, or otherwise divest 
itself of any rights, title, or interests of the easement or extinguish 
the easement or without the prior consent of the Secretary and payment 
of consideration to the United States, then, at the option of the 
Secretary, all right, title, and interest in the conservation easement 
shall become vested in the United States of America.
    (c) Notwithstanding paragraph (a) of this section, NRCS, upon 
notification to the landowner, reserves the right to enter upon the 
easement area at any time to monitor conservation plan implementation or 
remedy deficiencies or easement violations, as it relates to the 
conservation plan. The entry may be made at the discretion of NRCS when 
the actions are deemed necessary to protect highly erodible soils and 
wetland resources. The landowner will be liable for any costs incurred 
by the United States as a result of the landowner's negligence or 
failure to comply with the easement requirements as it relates to 
conservation plan violations.
    (d) The United States shall be entitled to recover any and all 
administrative and legal costs, including attorney's fees or expenses, 
associated with any enforcement or remedial action as it relates to the 
enforcement of the FRPP easement.
    (e) The conservation easement shall include an indemnification 
clause requiring landowners to indemnify, defend, and hold harmless the 
United States from any liability resulting from the negligent acts of 
the landowner.
    (f) In instances where an easement is terminated or extinguished, 
NRCS will collect CCC's share of the conservation easement based on the 
appraised fair market value of the conservation easement at the time the 
easement is extinguished or terminated. CCC's share shall be in 
proportion to its percentage of original investment.



Sec.  1491.31  Appeals.

    (a) A person or cooperating entity which has submitted an FRPP 
proposal and is therefore participating in FRPP may obtain a review of 
any administrative determination concerning eligibility for 
participation utilizing the administrative appeal regulations provided 
in 7 CFR part 614.
    (b) Before a person may seek judicial review of any action taken 
under this part, the person must exhaust all administrative appeal 
procedures set forth in paragraph (a) of this section, and for the 
purposes of judicial review, no decision shall be a final agency action 
except a decision of the U. S. Department of Agriculture under these 
provisions.



Sec.  1491.32  Scheme or device.

    (a) If it is determined by the Secretary that a cooperating entity 
has employed a scheme or device to defeat the purposes of this part, any 
part of any program payment otherwise due or paid such a cooperating 
entity during the applicable period may be withheld or be required to be 
refunded with interest thereon, as determined appropriate by CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person or entity of 
payments for easements for the purpose of obtaining a payment to which a 
person would otherwise not be entitled.

                          PART 1492 [RESERVED]



PART 1493--CCC EXPORT CREDIT GUARANTEE PROGRAMS--Table of Contents




    Subpart A--Restrictions and Criteria for Export Credit Guarantee 
                                Programs

Sec.
1493.1 General statement.
1493.2 Purposes of programs.
1493.3 Restrictions on programs and cargo preference statement.

[[Page 736]]

1493.4 Criteria for country allocations.
1493.5 Criteria for agricultural commodity allocations.
1493.6 Additional required determinations for GSM-103.

    Subpart B--CCC Export Credit Guarantee Program (GSM	102) and CCC 
    Intermediate Export Credit Guarantee Program (GSM	103) Operations

1493.10 General statement.
1493.20 Definition of terms.
1493.30 Information required for program participation.
1493.40 Application for a payment guarantee.
1493.50 Certification requirements for obtaining payment guarantee.
1493.60 Payment guarantee.
1493.70 Guarantee rates and fees.
1493.80 Evidence of export.
1493.90 Certification requirements for the evidence of export.
1493.100 Proof of entry.
1493.110 Notice of default and claims for loss.
1493.120 Payment for loss.
1493.130 Recovery of losses.
1493.140 Miscellaneous provisions.

       Subpart C--CCC Facility Guarantee Program (FGP) Operations

1493.200 General statement.
1493.210 Definition of terms.
1493.220 Exporter eligibility.
1493.230 Eligible transactions.
1493.240 Initial application and letter of preliminary commitment.
1493.250 Final application and issuance of a facility payment guarantee
1493.260 Facility payment guarantee.
1493.270 Certifications.
1493.280 Evidence of export report.
1493.290 Proof of entry.
1493.300 Notice of default and claims for loss.
1493.310 Payment for loss.
1493.320 Recovery of losses.
1493.330 Miscellaneous provisions.

       Subpart D--CCC Supplier Credit Guarantee Program Operations

1493.400 General statement.
1493.410 Definition of terms.
1493.420 Information required for program participation.
1493.430 Application for a payment guarantee.
1493.440 Certification requirements for payment guarantee.
1493.450 Payment guarantee.
1493.460 Guarantee rates and fees.
1493.470 Evidence of export.
1493.480 Certification requirements for the evidence of export.
1493.490 Proof of entry.
1493.500 Notice of default and claims for loss.
1493.510 Payment for loss.
1493.520 Recovery of losses.
1493.530 Miscellaneous provisions.

    Authority: 7 U.S.C. 5602, 5622, 5661, 5662, 5663, 5664, 5676; 15 
U.S.C. 714b(d), 714c(f).

    Source: 59 FR 52876, Oct. 19, 1994, unless otherwise noted.



    Subpart A--Restrictions and Criteria for Export Credit Guarantee 
                                Programs



Sec.  1493.1  General statement.

    This subpart sets forth the restrictions which apply to the use of 
credit guarantees under the Commodity Credit Corporation (CCC) Export 
Credit Guarantee Program (GSM-102) and the Intermediate Credit Guarantee 
Program (GSM-103) and the criteria considered by CCC in determining the 
annual allocations of credit guarantees to be made available with 
respect to each participating country. This subpart also sets forth the 
criteria considered by CCC in the review and approval of proposed 
allocation levels for GSM-102 and/or GSM-103 credit guarantees which may 
be made available in connection with export sales of specific U.S. 
agricultural commodities to these countries. These restrictions and 
criteria are interrelated and will be applied and considered together in 
the process of determining which sales opportunities under GSM-102 or 
GSM-103 will best meet the purposes of the programs.



Sec.  1493.2  Purposes of programs.

    CCC may use export credit guarantees:
    (a) To increase exports of U.S. agricultural commodities;
    (b) To compete against foreign agricultural exports;
    (c) To assist countries, particularly developing countries, in 
meeting their food and fiber needs; and
    (d) For such other purposes as the Secretary of Agriculture 
determines appropriate, consistent with the provisions of Sec.  1493.6.

[[Page 737]]



Sec.  1493.3  Restrictions on programs and cargo preference statement.

    (a) Restrictions on use of credit guarantees. (1) Export credit 
guarantees authorized under these regulations shall not be used for 
foreign aid, foreign policy, or debt rescheduling purposes.
    (2) CCC shall not make credit guarantees available in connection 
with sales of agricultural commodities to any country that the Secretary 
determines cannot adequately service the debt associated with such 
sales.
    (b) Cargo preference laws. The provisions of the cargo preference 
laws shall not apply to export sales with respect to which credit is 
guaranteed under these programs.



Sec.  1493.4  Criteria for country allocations.

    The criteria considered by CCC in reviewing proposals for country 
allocations under the GSM-102 or GSM-103 programs, will include, but not 
be limited to, the following:
    (a) Potential benefits that the extension of export credit 
guarantees would provide for the development, expansion or maintenance 
of the market for particular U.S. agricultural commodities in the 
importing country;
    (b) Financial and economic ability of the importing country to 
adequately service CCC guaranteed debt;
    (c) Financial status of participating banks in the importing country 
as it would affect their ability to adequately service CCC guaranteed 
debt;
    (d) Political stability of the importing country as it would affect 
its ability to adequately service CCC guaranteed debt; and
    (e) Current status of debt either owed by the importing country to 
CCC or to lenders protected by CCC's guarantees.



Sec.  1493.5  Criteria for agricultural commodity allocations.

    The criteria considered by CCC in reviewing proposals for specific 
U.S. commodity allocations within a specific country allocation will 
include, but not be limited to, the following:
    (a) Potential benefits that the extension of export credit 
guarantees would provide for the development, expansion or maintenance 
of the market in the importing country for the particular U.S. 
agricultural commodity under consideration;
    (b) The best use to be made of the export credit guarantees in 
assisting the importing country in meeting its particular needs for food 
and fiber, as may be determined through consultations with private 
buyers and/or representatives of the government of the importing 
country;
    (c) Evaluation, in terms of program purposes, of the relative 
benefits of providing payment guarantee coverage for sales of the U.S. 
agricultural commodity under consideration compared to providing 
coverage for sales of other U.S. agricultural commodities; and
    (d) Evaluation of the near and long term potential for sales on a 
cash basis of the U.S. commodity under consideration.



Sec.  1493.6  Additional required determinations for GSM-103.

    Notwithstanding any other provision under this part, CCC shall not 
guarantee under the GSM-103 program the repayment of credit made 
available to finance an export sale unless the Secretary of Agriculture 
determines that such sale will:
    (a) Develop, expand or maintain the importing country as a foreign 
market, on a long-term basis, for the commercial sale and export of U.S. 
agricultural commodities, without displacing normal commercial sales;
    (b) Improve the capability of the importing country to purchase or 
use, on a long-term basis, U.S. agricultural commodities; or
    (c) Otherwise promote the export of U.S. agricultural commodities.



    Subpart B--CCC Export Credit Guarantee Program (GSM	102) and CCC 
    Intermediate Export Credit Guarantee Program (GSM	103) Operations



Sec.  1493.10  General statement.

    (a) Overview. (1) This subpart contains the regulations governing 
the operations of the Export Credit Guarantee Program (GSM-102) and the 
Intermediate Credit Guarantee Program (GSM-103). The GSM-102 and GSM-103 
programs of the Commodity Credit

[[Page 738]]

Corporation (CCC) were developed to expand U.S. agricultural exports by 
making available export credit guarantees to encourage U.S. private 
sector financing of foreign purchases of U.S. agricultural commodities 
on credit terms. Under GSM-102, credit guarantees are issued for terms 
of up to three years. Under GSM-103, credit guarantees are issued for 
terms of from three to ten years.
    (2) The programs operate in cases where credit is necessary to 
increase or maintain U.S. exports to a foreign market and where private 
U.S. financial institutions would be unwilling to provide financing 
without CCC's guarantee. The programs are operated in a manner intended 
not to interfere with markets for cash sales. The programs are targeted 
toward those countries where the guarantees are necessary to secure 
financing of the exports but which have sufficient financial strength so 
that foreign exchange will be available for scheduled payments. In 
providing this credit guarantee facility, CCC seeks to expand market 
opportunities for U.S. agricultural exporters and assist long-term 
market development for U.S. agricultural commodities.
    (3) The credit facility created by these programs is the CCC payment 
guarantee. The payment guarantee is an agreement by CCC to pay the 
exporter, or the U.S. financial institution that may take assignment of 
the exporter's right to proceeds, specified amounts of principal and 
interest due from, but not paid by, the foreign bank issuing an 
irrevocable letter of credit in connection with the export sale to which 
CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than governmental, financing and incurs a substantial portion of 
the risk of default by the foreign bank. CCC assumes this risk, in order 
to be able to operate the programs for the purposes specified in Sec.  
1493.2.
    (b) Credit facility mechanism. Typically, in export sales of U.S. 
agricultural commodities, payment by the importer is made under an 
irrevocable letter of credit. For the purpose of the GSM-102 and GSM-103 
programs, CCC will consider applications for payment guarantees only in 
connection with export sales of U.S. agricultural commodities where the 
payment for the agricultural commodities will be made in one of the two 
following ways:
    (1) An irrevocable foreign bank letter of credit, issued in favor of 
the exporter, specifically stating the deferred payment terms under 
which the foreign bank is obligated to make payments in U.S. dollars as 
such payments become due; or
    (2) An irrevocable foreign bank letter of credit, issued in favor of 
the exporter, that is supported by a related obligation specifically 
stating the deferred payment terms under which the foreign bank is 
obligated to make payment to the exporter, or the exporter's assignee, 
in U.S. dollars as such payments become due. The exporter may assign the 
right to proceeds under the letter of credit or related obligation to a 
U.S. bank or other financial institution so that the exporter may 
realize the proceeds of the sale prior to the deferred payment date(s) 
as set forth in the irrevocable foreign bank letter of credit or its 
related obligation. The GSM-102 and GSM-103 programs are designed to 
protect the exporter or the exporter's assignee against those losses 
specified in the payment guarantee resulting from defaults, whether for 
commercial or noncommercial reasons, by the foreign bank obligated under 
the letter of credit or related obligation.
    (c) Program administration. The GSM-102 and GSM-103 programs will be 
administered pursuant to this part and any Program Announcements and 
Notices to Participants issued by CCC pursuant to, and not inconsistent 
with, this part. These programs are under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec.  1493.20(c), 
``Contacts P/R'').

[[Page 739]]

    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a GSM-102 and/or 
GSM-103 program allocation for a specific country. The Program 
Announcement for a country allocation will designate specific 
allocations for U.S. agricultural commodities or products thereof. 
Exporters may negotiate export sales to buyers in that country for one 
of the commodities specified in the Program Announcement and seek 
payment guarantee coverage within the dollar amounts of specified 
coverage for that commodity. The Program Announcement will contain a 
requirement that the exporter's sales contract contain a shipping 
deadline within the applicable program year. The final date for a 
contractual shipping deadline will be stated in the Program 
Announcement. Program Announcements may also contain a specified 
``undesignated'' or ``unallocated'' dollar amount for the purpose that 
if dollar amounts specified for a specific commodity for a country 
become fully used, an additional allocation from the ``unallocated'' or 
``undesignated'' portion of the total country allocation may then be 
designated for a specific commodity. Program Announcements that include 
an ``allocated'' or ``undesignated'' dollar amount will contain further 
information on the ``unallocated'' or ``undesignated'' portion of the 
country allocation.



Sec.  1493.20  Definition of terms.

    Terms set forth in this part, in CCC Program Announcements and 
Notices to Participants, and in any CCC-originated documents pertaining 
to the GSM-102 and GSM-103 programs will have the following meanings:
    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
GSM-102 or GSM-103 program. The Contacts P/R also contains details about 
where to submit information required to qualify for program 
participation, to apply for payment guarantees, to request amendments of 
payment guarantees, to submit evidence of export reports, and to give 
notices of default and file claims for loss.
    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has been 
established or a mechanism to establish such price has been agreed upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter or an intervening purchaser, 
to the importer in connection with a sale of an agricultural commodity, 
above and beyond the commodity's value, stated on the appropriate FOB, 
FAS, CFR or CIF basis. Discounts and allowances include, but are not 
limited to, the provision of additional goods, services or benefits; the 
promise to provide additional goods, services or benefits in the future; 
financial rebates; the assumption of any financial or contractual 
obligations; the whole or partial release of the importer from any 
financial or contractual obligations; or settlements

[[Page 740]]

made in favor of the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-week bill auction in effect at that time.
    (h) Exported value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, the value, 
FAS or FOB basis, U.S. point of export, of the export sale, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, is 
measured by the CFR or CIF value of the agricultural commodity less the 
cost of ocean freight, as determined at the time of application and, in 
the case of CIF sales, less the cost of marine and war risk insurance, 
as determined at the time of application, reduced by the value of any 
discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the commodity is sold on a CFR or CIF basis, point of entry, the total 
value of the export sale, CFR or CIF basis, point of entry, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of Sec.  
1493.30.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) Foreign bank letter of credit. An irrevocable commercial letter 
of credit, subject to the current revision of the Uniform Customs and 
Practices for Documentary Credits (International Chamber of Commerce 
Publication No. 500, or latest revision), providing for payment in U.S. 
dollars against stipulated documents and issued in favor of the exporter 
by a CCC-approved foreign banking institution.
    (l) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (m) GSM-102. A CCC program, also referred to as the ``Export Credit 
Guarantee Program,'' under which payment guarantees are approved for a 
credit period not exceeding 3 years from the date(s) of export or from 
the date interest begins to accrue, whichever is earlier.
    (n) GSM-103. A CCC program, also referred to as the ``Intermediate 
Export Credit Guarantee Program,'' under which payment guarantees are 
approved for a credit period no less than 3 years but not exceeding 10 
years from the date(s) of export or from the date interest begins to 
accrue, whichever is earlier.
    (o) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (p) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (q) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms (current revision):
    (1) Free Alongside Ship (FAS),
    (2) Free on Board (FOB),

[[Page 741]]

    (3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF), 
and
    (4) Cost Insurance and Freight (CIF).
    (r) Intervening purchaser. A party that agrees to purchase U.S. 
agricultural commodities from an exporter and sell the same agricultural 
commodities to an importer.
    (s) Late interest. Interest, in addition to the interest due under 
the payment guarantee, which CCC agrees to pay in connection with a 
claim for loss, accruing during the period beginning on the first day 
after receipt of a claim which CCC has determined to be in good order 
and ending on the day on which payment is made on such claim for loss.
    (t) Payment guarantee. An agreement under which CCC, in 
consideration of a fee paid, and in reliance upon the statements and 
declarations of the exporter, subject to the terms set forth in the 
written guarantee, this subpart, and any applicable Program 
Announcements or Notices to Participants, agrees to pay the exporter or 
the exporter's assignee in the event of a default by a foreign bank on 
its payment obligation under the foreign bank letter of credit issued in 
connection with a guaranteed sale or under the foreign bank's related 
obligation.
    (u) Notice to participants. A notice issued by CCC by public press 
release which serves one or more of the following functions: to remind 
participants of the requirements of the program; to clarify the program 
requirements contained in these regulations in a manner which is not 
inconsistent with the regulations; to instruct exporters to provide 
additional information in applications for payment guarantees under 
specific country and/or commodity allocations; and to supplement the 
provisions of a payment guarantee, in a manner not inconsistent with 
these regulations, before the exporter's application for such payment 
guarantee is approved.
    (v) Port value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, U.S. point of 
export, the value, FAS or FOB basis, U.S. point of export, of the export 
sale, including the upward tolerance, if any, as provided by the export 
sales contract, reduced by the value of any discounts or allowances 
granted to the importer in connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, 
including the upward tolerance, if any, as provided by the export sales 
contract, is measured by the CFR or CIF value of the agricultural 
commodity less the value of ocean freight and, in the case of CIF sales, 
less the value of marine and war risk insurance, reduced by the value of 
any discounts or allowances granted to the importer in connection with 
the sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (w) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, and include other information and 
requirements.
    (x) Related obligation. A contractual commitment by the foreign bank 
issuing the letter of credit in connection with an export sale to make 
payment(s) on principal amount(s), plus any contractual interest, in 
U.S. dollars, to a financial institution in the United States on 
deferred payment terms consistent with those permitted

[[Page 742]]

under CCC's credit guarantee programs. The U.S. financial institution is 
entitled to such payments because it has financed the obligation arising 
under such letter of credit.
    (y) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (z) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (aa) USDA. United States Department of Agriculture.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec.  1493.30  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
either the GSM-102 program or the GSM-103 program, the applicant must 
qualify for participation in these programs. Based upon the information 
submitted by the applicant and other publicly available sources, CCC 
will determine whether the applicant is eligible for participation in 
the programs.
    (a) Submission of documentation. In order to qualify for 
participation in the GSM-102 and GSM-103 programs, an applicant must 
submit to CCC, at the address specified in the Contacts P/R, the 
following information:
    (1) The address of the applicant's headquarters office and the name 
and address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the applicant, e.g., sole 
proprietorship, partnership, corporation, etc.
    (3) The place of incorporation of the applicant, if the applicant is 
a corporation;
    (4) The name and U.S. address of the office(s) of the applicant, and 
statement indicating whether the applicant is a U.S. domestic 
corporation, a foreign corporation or another foreign entity. If the 
applicant has multiple offices, the address included in the information 
should be that which is pertinent to the particular GSM-102 or GSM-103 
export sale contemplated by the applicant;
    (5) A certified statement describing the applicant's participation, 
if any, during the past three years in U.S. Government programs, 
contracts or agreements; and
    (6) A certification that: ``I certify, to the best of my knowledge 
and belief, that neither [name of applicant] nor any of its principals 
has been debarred, suspended, or proposed for debarment from contracting 
with or participating in programs administered by any U.S. Government 
agency. [``Principals,'' for the purpose of this certification, means 
officers; directors; owners of five percent or more of stock; partners; 
and persons having primary management or supervisory responsibility 
within a business entity (e.g., general manager, plant manager, head of 
a subsidiary division, or business segment, and similar positions).] I 
further agree that, should any such debarment, suspension, or notice of 
proposed debarment occur in the future, [name of applicant] will 
immediately notify CCC.''
    (b) Previous qualification. Any exporter that has previously 
qualified under this section may submit applications for GSM-102 or GSM-
103 payment guarantees. Each application must include the statement 
required by Sec.  1493.40(a)(18) incorporating the certifications of 
Sec.  1493.50, including the certification in Sec.  1493.50(e) that the 
information previously provided pursuant to paragraph (a) of this 
section has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.

[[Page 743]]

    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the GSM-102 or GSM-103 programs if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or participating in any program 
administered by a U.S. Government agency; or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec.  1493.40  Application for payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country.
    (2) Name and address of the importer.
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country.
    (4) Date of sale.
    (5) Exporter's sale number.
    (6) Delivery period as agreed between the exporter and the importer.
    (7) A full description of the commodity (including packaging, if 
any).
    (8) Mean quantity, contract loading tolerance and, if necessary, a 
request for CCC to reserve coverage up to the maximum quantity permitted 
by the contract loading tolerance.
    (9) Unit sales price of the commodity, or a mechanism to establish 
the price, as agreed between the exporter and the importer. If the 
commodity was sold on the basis of CFR or CIF, the actual (if known at 
the time of application) or estimated value of freight and, in the case 
of sales made on a CIF basis, the actual (if known at the time of 
application) or estimated value of marine and war risk insurance, must 
be specified.
    (10) Description and value of discounts and allowances, if any.
    (11) Port value (includes upward loading tolerance, if any).
    (12) Guaranteed value.
    (13) Guarantee fee.
    (14) Name and location of the foreign bank issuing the letter of 
credit.
    (15) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale.
    (16) A statement indicating whether any portion of the export sale 
for which the exporter is applying for a payment guarantee is also being 
used as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable.
    (17) Other information as specified in Notices to Participants, as 
applicable.
    (18) The exporter's statement, ``All Section 1493.50 Certifications 
Are Being Made In This Application'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec.  1493.50.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec.  1493.60(b). If, based upon a price review, the unit 
sales price of the commodity does not fall

[[Page 744]]

within the prevailing commercial market level ranges, as determined by 
CCC, the application will not be approved.



Sec.  1493.50  Certification requirements for obtaining payment guarantee.

    By providing the statement in Sec.  1493.40(a)(18), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in Sec.  
1493.40(a)(18), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by Sec.  
1493.20(z).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of 
any duty, tax or fee imposed under Federal law on an imported commodity 
or product;
    (d) No person or selling agency has been employed or retained to 
solicit or secure the payment guarantee, and that there is no agreement 
or understanding for a commission, percentage, brokerage, or contingent 
fee, except in the case of bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business; and
    (e) The information provided pursuant to Sec.  1493.30 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.  1493.30, and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements. If the exporter breaches or violates these certifications 
with respect to a GSM-102 or GSM-103 payment guarantee, CCC will have 
the right, notwithstanding any other rights provided under this subpart, 
to annul guarantee coverage for any commodities not yet exported and/or 
to proceed against the exporter.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec.  1493.60  Payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the exporter or the exporter's assignee an amount not to 
exceed the guaranteed value, plus eligible interest, in the event that 
the foreign bank fails to pay under the foreign bank letter of credit or 
the related obligation. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee will apply 
to the period beginning either on the date(s) of export(s) or on the 
date when interest begins to accrue, whichever is earlier, and will 
continue during the credit term specified in the payment guarantee or 
amendments thereto. However, the payment guarantee becomes effective on 
the date(s) of export(s) of the agricultural commodities or products 
thereof specified in the exporter's application for a payment guarantee.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and/or Notices to Participants in effect at the 
time the payment guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
payment guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The exporter may apply 
for a payment guarantee and, if coverage is available, pay the guarantee 
fee, based at least on, the amount of the lower loading tolerance of the 
export sales contract; however, the exporter may

[[Page 745]]

also request that CCC reserve additional guarantee coverage to 
accommodate up to the amount of the upward loading tolerance specified 
in the export sales contract. If such additional guarantee coverage is 
available at the time of application and CCC determines to make such 
reservation, it will so indicate to the exporter. In the event that the 
exporter ships a quantity greater than the amount on which the guarantee 
fee was paid (i.e., lower loading tolerance), it may obtain the 
additional coverage from CCC, up to the amount of the upward loading 
tolerance, by filing for an amendment to the payment guarantee, and by 
paying the additional amount of fee applicable. If such amendment to the 
payment guarantee is not filed with CCC by the exporter within 30 days 
after the date of the last export against the sales contract, CCC may 
determine not to reserve the coverage originally set aside for the 
exporter.
    (f) Ineligible exports. Commodities with a date of export prior to 
the date of receipt by CCC of the exporter's telephonic or written 
application for a payment guarantee, or with a date of export made after 
the final date for export shown on the payment guarantee or any 
amendments thereof, are ineligible for GSM-102 or GSM-103 guarantee 
coverage, except where it is determined by the GSM to be in the best 
interests of CCC to provide guarantee coverage on such commodities.
    (g) Foreign agricultural component. CCC may approve payment 
guarantees under this subpart only in connection with sales of United 
States agricultural commodities as defined in Sec.  1493.20(z). CCC may 
not provide guarantee coverage under this subpart on credit extended for 
the value of any foreign agricultural component.
    (h) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the payment guarantee are binding on the 
exporter or the exporter's assignee.
    (i) Amendments. A request for an amendment of a payment guarantee 
may be submitted only by the exporter (with the concurrence of the 
assignee, if any). CCC will consider such a request only if the 
amendment sought is consistent with this subpart and any applicable 
Program Announcements and Notices to Participants. Amendments may 
include, but will not be limited to, a change in the credit period and 
an extension of time to export. Any amendment to the payment guarantee, 
particularly those that result in an increase in CCC's liability under 
the payment guarantee, may result in an increase in the guarantee fee. 
(Technical corrections or corrections of a clerical error which may be 
submitted by the exporter or the exporter's assignee are not viewed as 
amendments.)



Sec.  1493.70  Guarantee rates and fees.

    (a) Guarantee fee rates. The payment guarantee fee rates will be 
based upon the length of the payment terms provided for in the export 
sale contract, the degree of risk that CCC assumes, as determined by 
CCC, and any other factors which CCC determines appropriate for 
consideration. A current schedule of the guarantee fee rates charged by 
CCC under GSM-102 and GSM-103 will be available upon request from the 
FAS/USDA office specified in the Contacts P/R.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the guaranteed value by the guarantee fee rate.
    (c) Payment of fee. The exporter shall remit, with his written 
application, the full amount of the guarantee fee. Applications will not 
be approved until the guarantee fee has been received by CCC. The 
exporter's check for the guarantee fee shall be made payable to CCC and 
mailed or delivered by courier to the office specified in the Contacts 
P/R.
    (d) Refunds of fee. Guarantee fees paid in connection with approved 
applications will ordinarily not be refundable. CCC's approval of the 
application will be final and refund of the guarantee fee will not be 
made after approval unless the GSM determines that such refund will be 
in the best interest of CCC. If the application for a payment guarantee 
is not approved or is approved

[[Page 746]]

only for a part of the guarantee coverage requested, a full or pro rata 
refund of the fee remittance will be made.



Sec.  1493.80  Evidence of export.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment made under the payment 
guarantee. This report must include the following:
    (1) Payment guarantee number
    (2) Date of export
    (3) Exporter's sale number
    (4) Exported value
    (5) Quantity
    (6) A full description of the commodity exported
    (7) Unit sales price received for the commodity exported and the 
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export 
differs from the unit sales price indicated in the exporter's 
application for a payment guarantee, the exporter is also required to 
submit a statement explaining the reason for the difference.
    (8) Description and value of discounts and allowances, if any.
    (9) Number of the Agreement assigned by USDA under another program 
if any portion of the export sale was also approved for participation in 
the following CCC or USDA export programs: Export Enhancement Program, 
Dairy Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program.
    (10) The exporter's statement, ``All Sec.  1493.90 Certifications 
Are Being Made In This Evidence Of Export'' which, when included in the 
evidence of export by the exporter, will constitute a certification that 
it is in compliance with all the requirements set forth in Sec.  
1493.90.
    (b) Time limit for submission of evidence of export. The exporter 
must provide a written report to the office specified in the Contacts P/
R within 60 calendar days if the export was by rail or truck; or 30 
calendar days if the export was by any other carrier. The time period 
for filing a report of export will commence upon each date of export of 
the commodity covered under a payment guarantee. If the evidence of 
export report is not received by CCC within the time period for filing, 
the payment guarantee will become null and void only if and only to the 
extent that failure to make timely filing resulted, or would be likely 
to result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the 
program;
    (3) Obstruction of the fair administration of the program; or
    (4) A threat to the integrity of the program. The time limit for 
submission of an evidence of export report may be extended if such 
extension is determined by the GSM to be in the best interests of CCC.
    (c) Export sales reporting. Exporters may have a mandatory reporting 
responsibility under Section 602 of the Agricultural Trade Act of 1978 
(7 U.S.C. 5712), as amended by Section 1531 of the Food, Agriculture, 
Conservation, and Trade Act of 1990 for exports of wheat and wheat 
flour, feed grains, oilseeds, cotton, and other agricultural commodities 
and products thereof.



Sec.  1493.90  Certification requirements for the evidence of export.

    By providing the statement contained in Sec.  1493.80(a)(10), the 
exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been or will be met. The exporter will be 
required to provide further explanation or documentation with regard to 
reports that do not include this statement. If the exporter breaches or 
violates these certifications with respect to a GSM-102 or GSM-103 
payment guarantee, CCC will have the right, notwithstanding any other 
rights provided under this subpart, to annul guarantee coverage for any 
commodities not yet exported and/or to proceed against the exporter. The 
exporter, in submitting the evidence of export and providing the 
statement set forth in Sec.  1493.80(a)(10), certifies that:
    (a) The agricultural commodity or product exported under the payment 
guarantee is a U.S. agricultural commodity as defined by Sec.  
1493.20(z).
    (b) Agricultural commodities of the grade, quality and quantity 
called for in the exporter's sales contract with the importer have been 
exported to the

[[Page 747]]

country specified in the payment guarantee;
    (c) A letter of credit has been opened in favor of the exporter by 
the foreign bank shown in the payment guarantee to cover the port value 
of the commodity exported;
    (d) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law; and
    (e) The information provided pursuant to Sec.  1493.30 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.  1493.30 and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec.  1493.100  Proof of entry.

    (a) Diversion. The diversion of commodities covered by a GSM-102 or 
GSM-103 payment guarantee to a country other than that shown on the 
payment guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the agricultural commodities 
exported in connection with the GSM-102 or GSM-103 programs in the 
country that was the intended country of destination of such 
commodities. Records demonstrating proof of entry must be in English or 
be accompanied by a certified or other translation acceptable to CCC. 
Records acceptable to meet this requirement include an original 
certification of entry signed by a duly authorized customs or port 
official of the importing country, by the importer, by an agent or 
representative of the vessel or shipline which delivered the 
agricultural commodity to the importing country, or by a private 
surveyor in the importing country, or other documentation deemed 
acceptable by the GSM showing:
    (1) That the agricultural commodity entered the importing country;
    (2) The identification of the export carrier;
    (3) The quantity of the agricultural commodity;
    (4) The kind, type, grade and/or class of the agricultural 
commodity; and
    (5) The date(s) and place(s) of unloading of the agricultural 
commodity in the importing country. [Records of proof of entry need not 
be submitted with a claim for loss, except as may be provided in Sec.  
1493.110(b)(4)(ii).]



Sec.  1493.110  Notice of default and claims for loss.

    (a) Notice of default. If the foreign bank issuing the letter of 
credit fails to make payment pursuant to the terms of the foreign bank 
letter of credit or related obligation, the exporter or the exporter's 
assignee must submit a notice of default to CCC as soon as possible, but 
not later than 10 calendar days after the date that payment was due from 
the foreign bank (the due date). A notice of default must be submitted 
in writing to the Treasurer, CCC, at the address specified in the 
Contacts P/R. If the exporter or the exporter's assignee fails to 
promptly notify CCC of defaults in accordance with this paragraph, CCC 
may make the payment guarantee null and void with respect to any 
payment(s) applicable to such default. This time limit may be extended 
only under extraordinary circumstances and if such extension is 
determined by the Controller, CCC, to be in the best interests of CCC. 
The notice of default must include:
    (1) Payment guarantee number;
    (2) Name of the country;
    (3) Name of the defaulting bank;
    (4) Due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of foreign bank's refusal to pay, if applicable; and
    (7) Reason for foreign bank's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due

[[Page 748]]

date of the defaulted payment. A claim for loss must be submitted in 
writing to the Treasurer, CCC, at the address specified in the Contacts 
P/R. The claim for loss must include the following information and 
documents:
    (1) Payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue, and the interest rate on the foreign 
bank obligation applicable to the claim;
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i)(A) The foreign bank letter of credit securing the export sale; 
and
    (B) If applicable, the document(s) evidencing the related obligation 
owed by the foreign bank to the assignee financial institution which is 
related to the foreign bank's letter of credit issued in favor of the 
exporter. Such related obligation must be demonstrated in one of the 
following ways:
    (1) The related obligation, including a specific promise to pay on 
deferred payment terms, may be contained in the letter of credit as a 
special instruction from the issuing bank directly to the U.S. financial 
institution to refinance the amounts paid by the U.S. financial 
institution for obligations financed according to the tenor of the 
letter of credit; or
    (2) The related obligation may be memorialized in a separate 
document(s) specifically identified and referred to in the letter of 
credit as the agreement under which the foreign bank is obliged to repay 
the U.S. financial institution on deferred payment terms; or
    (3) The letter of credit payment obligations may be specifically 
identified in a separate document(s) setting forth the related 
obligation, or in a duly executed amendment thereto, as having been 
financed by the U.S. financial institution pursuant to, and subject to 
repayment in accordance with the terms of, such related obligation; or
    (4) The related obligation may be memorialized in the form of a 
promissory note executed by the foreign bank issuing the letter of 
credit in favor of the U.S. financial institution submitting the claim;
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the importing country;
    (iii)(A) The exporter's invoice showing, as applicable, the FAS, 
FOB, CFR or CIF values; or
    (B) If there was an intervening purchaser, both the exporter's 
invoice to the intervening purchaser and the intervening purchaser's 
invoice to the importer;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default 
under the applicable export sale. The instrument must reference the 
applicable foreign bank letter of credit and the related obligation, if 
applicable; and
    (v) A copy of the report(s) of export previously submitted by the 
exporter to CCC pursuant to Sec.  1493.80(a).
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the exporter or an exporter's assignee 
need only provide all of the required claims documents with the initial 
claim relating to a covered transaction. For subsequent claims relating 
to failure of the foreign bank to make scheduled installments on the 
same export shipment, the exporter or the exporter's assignee need only 
submit to CCC a notice of such failure containing the information stated 
in paragraph (b)(1), (2), and (3) of this section; an instrument of 
subrogation as per paragraph (b)(4)(iv) of this section, and including 
the date the original claim was filed with CCC.



Sec.  1493.120  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.  1493.110, CCC will 
determine whether or not a loss has occurred for which

[[Page 749]]

CCC is liable under the applicable payment guarantee, this subpart and 
any applicable supplemental Program Announcements and Notices to 
Participants. If CCC determines that it is liable to the exporter and/or 
the exporter's assignee, CCC will pay the exporter or the exporter's 
assignee in accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims for loss submitted with respect to any payment guarantee, not 
including any late interest payments due in accordance with paragraph 
(c) of this section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
eligible interest; or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the exported value indicated in the evidence of export, 
plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the day of reciept of a claim found 
by CCC to be in good order and continuing until and including the date 
that payment is made by CCC. Late interest will be paid on the 
guaranteed amount, as determined by paragraphs (b)(1) and (2) of this 
section, and will be calculated based on the average investment rate of 
the most recent Treasury 91-day bill auction as announced by the 
Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract, the 
foreign bank's letter of credit, or any obligation owed by the foreign 
bank to the assignee U.S. financial institution which is related to the 
foreign bank's letter of credit issued in favor of the exporter, unless 
it is determined to be in the best interests of CCC by the Controller, 
CCC. Notwithstanding the foregoing, CCC at its option may declare the 
entire amount of the unpaid balance, plus accrued interest, in default 
and make payment to the exporter or the exporter's assignee in addition 
to such other claimed amount as may be due from CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to commodities covered by a 
payment guarantee, CCC will not hold the assignee responsible or take 
any action or raise any defense against the assignee for any action, 
omission, or statement by the exporter of which the assignee has no 
knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec.  1493.80 and Sec.  1493.90, excluding post-export adjustments 
(i.e., corrections to evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec.  1493.110.



Sec.  1493.130  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the foreign bank of CCC's rights 
under the subrogation agreement to recover all moneys in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer, the foreign bank, or any other source whatsoever, such 
monies shall be immediately paid to the Treasurer, CCC. If such monies 
are not received by CCC within 15 business days from the date of 
recovery by the exporter or the exporter's assignee, the exporter or the 
exporter's assignee will owe to CCC interest from the date of recovery 
to the date of receipt by CCC. This interest will be calculated based on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and will accrue from such date to the date of 
payment by the exporter or the exporter's assignee to CCC. Such interest 
will be charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the

[[Page 750]]

payment guarantee its pro rata share immediately, provided that the 
required information necessary for determining pro rata distribution has 
been furnished. If payment is not made by CCC within 15 business days 
from the date of recovery or 15 business days from receiving the 
required information for determining pro rata distribution, whichever is 
later, CCC will pay interest calculated on the latest average investment 
rate of the most recent Treasury 91-day bill auction, as announced by 
the Department of Treasury, in effect on the date of recovery and such 
interest will accrue from such date to the date of payment by CCC. The 
interest will apply only to the portion of the recovery payable to the 
holder of the payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer or the foreign bank, and recoveries received by CCC from the 
exporter, the exporter's assignee, or any other source whatsoever, will 
be allocated by CCC to the exporter or the exporter's assignee and to 
CCC on a pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined amount of principal and interest 
in default. Once CCC has paid out a particular claim under a GSM-102 or 
GSM-103 payment guarantee, CCC prorates any collections it receives and 
shares these collections proportionately with the holder of the 
guarantee until both CCC and the holder of the guarantee have been 
reimbursed in full. Appendix A to Sec.  1493.130--Illustration of Pro 
Rata Allocation of Recoveries--provides an example of the methodology 
used by CCC in applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, the exporter may be liable to CCC for any amounts 
paid by CCC under the payment guarantee when and if it is determined by 
CCC that the exporter has engaged in fraud, or has been or is in 
material breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the payment guarantee 
or for fulfilling obligations under GSM-102 or GSM-103. Further, the 
exporter's assignee may be liable to CCC for any amounts paid by CCC 
under the payment guarantee when and if it is determined by CCC that the 
exporter's assignee has engaged in fraud or otherwise violated program 
requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec.  1493.50(b) and Sec.  1493.90(d) or the failure of an exporter 
to comply with the provisions of Sec.  1493.100 or Sec.  1493.140(e) 
will not affect the validity of any payment guarantee with respect to an 
assignee which had no knowledge of such violation or failure to comply 
at the time such exporter applied for the payment guarantee or at the 
time of assignment of the payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the foreign 
bank and/or the importer.

  Appendix A to Sec.  1493.130--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec.  1493.130(c), regarding pro rata sharing of recoveries made for 
claims filed under the GSM-102 and GSM-103 programs. A typical case 
might be as follows:
    1. The U.S. bank enters into a $300,000 three-year credit 
arrangement with the foreign bank calling for equal annual payments of 
principal and annual payments of interest at a rate of 10 percent per 
annum and a penalty interest rate of 12 percent per annum on overdue 
amounts until the overdue amount is paid.
    2. The foreign bank fails to make the final principal payment of 
$100,000 and an interest payment of $10,000, both due on January 31.
    3. On February 10, the U.S. bank files a claim in good order with 
CCC.
    4. CCC's guarantee states that CCC's maximum liability is limited to 
98 percent of the principal amount due ($98,000) and interest at a rate 
of 8 percent per annum (basis 365 days) on 98 percent of the principal 
($7,840).
    5. CCC pays the claim on February 22.
    6. The latest bond equivalent rate of the 52-week Treasury bill 
auction average which has been published by the Department of Treasury 
in effect on the date of nonpayment (January 31) is 9 percent. The 
latest investment rate of the 91-day Treasury Bill auction average which 
has been published by the Department of Treasury in effect on the date 
of nonpayment by CCC (February 11) is 7 percent.

[[Page 751]]

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the payment 
guarantee would be computed as follows:
    1. CCC's Obligation under the Payment Guarantee:

 
 
 
(a).............................  Principal coverage-- $98,000.00
                                   (98% x $100,000).
(b).............................  Interest coverage--  $7,840.00
                                   (8% x $98,000).
                                                      ------------------
                                                       $105,840.00
(c).............................  Late interest due    $223.28
                                   from CCC (7% per
                                   annum for 11 days
                                   x $105,840).
                                                      ------------------
(d).............................  Amount paid by CCC   $106,063.28
                                   on February 22.
 

    2. Foreign Bank's Obligation under the Letter of Credit or the 
Related Obligation:

 
 
 
(a).............................  Principal due        $100,000.00
                                   January 31.
                                  Interest due         $10,000.00
                                   January 31 (10% x
                                   $100,000).
                                                      ------------------
 
                                  Amount owed by       $110,000.00
                                   foreign bank as of
                                   January 31.
(b).............................  Penalty interest     $795.62
                                   due (12% per annum
                                   for 22 days x
                                   $100,000).
                                                      ------------------
(c).............................  Amount owed by       $110,795.62
                                   foreign bank as of
                                   February 22.
 

    3. Amount of Foreign Bank's Obligation Not Covered by CCC's Payment 
Guarantee: $4,668.55

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the foreign bank obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the foreign bank is 
$110,000, CCC would be entitled to 95.75 percent ($106,063.07 divided by 
$110,765.62) and the holder of the payment guarantee would be entitled 
to 4.21 percent ($4,668.55 divided by $110,795.62) of any recoveries of 
losses after settlement of the claim. Since in this example, the losses 
were recovered after the claim has been paid by CCC, Sec.  1493.130(b) 
would apply.



Sec.  1493.140  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a payment guarantee or the right to 
such proceeds only to a financial institution in the U.S. The assignment 
must cover all amounts payable under the payment guarantee not already 
paid, may not be made to more than one party, and may not, unless 
approved in advance by CCC, be:
    (i) Made to one party acting for two or more parties or
    (ii) Subject to further assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof, to the financial 
institution and to the exporter issued the payment guarantee, in lieu of 
an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC; or
    (2) Is the financial institution issuing the letter of credit or 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:

[[Page 752]]

    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a GSM-102 or GSM-103 payment guarantee, 
including those records generated and maintained by agents, intervening 
purchasers, and related companies involved in special arrangements with 
the exporter. The Secretary of Agriculture and the Comptroller General 
of the United States, through their authorized representatives, must be 
given full and complete access to the premises of the exporter or the 
exporter's assignee, as applicable, during regular business hours from 
the effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by Sec.  
1493.100(b), and must provide access to such documentation if requested 
by the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, all regulations, Program Announcements, and Notices to 
Participants relating to the GSM-102 or GSM-103 program, as applicable. 
Applicants for payment guarantees under these programs are hereby on 
notice that they will be bound by any terms contained in applicable 
Program Announcements or Notices to Participants issued prior to the 
date of approval of a payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by: wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority;

[[Page 753]]

and the name and title of the authorized person or officer. Further, the 
exporter or exporter's assignee must ensure that all information/reports 
required under these regulations are submitted within the required time 
limits. If requested in writing, CCC will acknowledge receipt of a 
submission by the exporter or the exporter's assignee. If acknowledgment 
of receipt is requested, the exporter or exporter's assignee must submit 
an extra copy of each document and a stamped self-addressed envelope for 
return by U.S. mail. If courier services are desired for the return 
receipt, the exporter or exporter's assignee must also submit a self-
addressed courier service order which includes the recipient's billing 
code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information collection requirements contained in this part (7 
CFR part 1493) have been approved by the Office of Management and Budget 
(OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 and have 
been assigned OMB Control Number 0551-0004.



       Subpart C--CCC Facility Guarantee Program (FGP) Operations

    Source: 62 FR 42656, Aug. 8, 1997, unless otherwise noted.



Sec.  1493.200  General statement.

    This subpart governs the Commodity Credit Corporation's (CCC) 
Facility Guarantee Program (FGP). CCC will issue facility payment 
guarantees for project applications meeting the terms and conditions of 
the Facility Guarantee Program (FGP) and where private sector financing 
is otherwise not available. This subpart describes the criteria and 
procedures for applying for a facility payment guarantee, and contains 
the general terms and conditions of such a guarantee. These general 
terms and conditions may be supplemented by special terms and conditions 
specified in program announcements or notices to participants published 
prior to the issuance of a facility payment guarantee and, if so, will 
be incorporated by reference on the face of the facility payment 
guarantee issued by CCC.



Sec.  1493.210  Definition of terms.

    Terms set forth in this subpart will have the following meaning:
    Assignee. A financial institution in the United States which, for 
adequate consideration given, has obtained the legal rights to receive 
payment under the facility payment guarantee.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the U.S. Department of Agriculture, 
authorized pursuant to the Commodity Credit Corporation Charter Act of 
1948, as amended, 15 U.S.C. 714 et seq., and subject to the general 
supervision and direction of the Secretary of Agriculture.
    Contacts P/R. A notice issued by Foreign Agricultural Service, U.S. 
Department of Agriculture (FAS/USDA) by public press release which 
contains specific names, addresses, and telephone and facsimile numbers 
of contacts within FAS/USDA and CCC. The Contacts P/R also contains 
details about where to submit information required to qualify for 
program participation, to apply for payment guarantees, to request 
amendments of facility payment guarantees, to submit evidence of export 
reports, and to give notices of default and file claims for loss.
    Contract value. The total negotiated dollar amount for the export 
sale of goods and services to emerging markets.
    Date of export for goods. The on-board date of an ocean bill of 
lading or an airway bill, the on-board ocean carrier date of an 
intermodal bill of lading; or, if exported by rail or truck, the date of 
entry shown on an entry certificate or similar document issued and 
signed by an official of the government of the importing country.

[[Page 754]]

    Date of export for services. The date interest begins to accrue on 
credit extended to cover payment for services, except for freight and 
marine insurance where the date of export is the same date as for the 
goods exported.
    Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of an exporter, to an importer in connection 
with a sale of goods or services, in excess of the value of such goods 
or services. Discounts or allowances include, but are not limited to, 
the provision of additional goods, services or benefits; the promise to 
provide additional goods, services or benefits in the future; financial 
rebates; the assumption of any financial or contractual obligation; or 
the whole or partial release of the importer from any financial or 
contractual obligation.
    Facility. An opportunity or project that improves the handling, 
marketing, processing, storage, or distribution of imported agricultural 
commodities or products.
    GSM. The General Sales Manager, Foreign Agricultural Service, U.S. 
Department of Agriculture, acting in his capacity as Vice President, 
CCC; or his designee.
    U.S. goods. Goods that are assembled, processed or manufactured in, 
and exported from, the United States including goods which contain 
imported raw materials or imported components.
    U.S. services. Services performed by citizens or legal residents of 
the United States, including those temporarily residing outside the 
United States.



Sec.  1493.220  Exporter eligibility.

    An exporter may apply for a facility payment guarantee if such 
exporter:
    (a) Is a citizen or legal resident of the United States or is a 
business organized under the laws of any state of the United States or 
the District of Columbia;
    (b) Has an established place of business in the United States;
    (c) Has a registered agent for service of process in the United 
States; and
    (d) Is not suspended or debarred, or owned or controlled by a person 
who is suspended or debarred, from contracting with, or participating in 
programs administered by, a U.S. Government agency.



Sec.  1493.230  Eligible transactions.

    (a) Program announcements. From time to time CCC will issue program 
announcements indicating the availability of facility payment guarantees 
in connection with sales of goods or services to emerging markets. The 
announcements will specify the emerging markets, the maximum amount, in 
U.S. dollars, of guarantee exposure that CCC will undertake, and may 
specify special terms or conditions that will be applicable.
    (b) Sale requirements. CCC will issue facility payment guarantees 
only in connection with projects that CCC determines will benefit 
primarily exports of U.S. agricultural commodities and products, and 
only where there is a firm contract for the sale of goods or services 
for the establishment or improvement of an agriculture-related facility. 
The contract may be contingent, however, on the issuance of a CCC 
facility payment guarantee.
    (c) Initial payment requirement. The contract for sale of goods or 
services between the exporter and the importer shall oblige the importer 
to make an initial payment(s) to the exporter of at least 15 percent of 
the net contract value in Sec.  1493.260(b)(1). Such initial payment(s) 
shall be in U.S. dollars or instruments having a definite value in U.S. 
dollars, and shall be made prior to the export of the goods or services.
    (d) Required method of payment. CCC will issue a facility payment 
guarantee only in connection with a sale in which payment will be made 
under either:
    (1) An irrevocable foreign bank letter of credit specifically 
stating the deferred payment terms under which the foreign bank is 
obligated to make payments in U.S. dollars as payments become due; or
    (2) An irrevocable foreign bank letter of credit supported by a 
related obligation specifically stating the deferred payment terms under 
which the foreign bank is obligated to make payment in U.S. dollars as 
such payments become due.
    (e) Form of letter of credit. The foreign bank letter of credit 
referred to in paragraph (d) of this section shall be an irrevocable 
commercial letter of credit,

[[Page 755]]

subject to the revision of the International Chamber of Commerce Uniform 
Customs and Practices for Documentary Credits[copy] in effect when the 
letter of credit is issued, providing for payment in U.S. dollars 
against stipulated documents and issued in favor of the exporter by a 
CCC-approved foreign banking institution.
    (f) Form of related obligation. The related obligation referred to 
in paragraph (d) of this section shall be in one of the following forms:
    (1) A letter of credit including a specific promise to pay on 
deferred payment terms as a special instruction from the issuing bank 
directly to the U.S. financial institution to refinance the amounts paid 
by the U.S. financial institution for obligations financed according to 
the tenor of the letter of credit;
    (2) A separate document specifically identified and referred to in 
the letter of credit as the agreement under which the foreign bank is 
obligated to repay the U.S. financial institution on deferred payment 
terms;
    (3) A separate document setting forth the related obligation, or in 
a duly executed amendment thereto, as having been financed by a U.S. 
financial institution pursuant to, and subject to, repayment in 
accordance with the terms of such related obligation; or
    (4) A promissory note executed by a foreign bank issuing the letter 
of credit in favor of the financial institution.



Sec.  1493.240  Initial application and letter of preliminary commitment.

    (a) Initial application. An exporter may apply for a facility 
payment guarantee by submitting the following information:
    (1) A cover sheet with the title: ``Application for a Facility 
Payment Guarantee--Preliminary Commitment'';
    (2) The program announcement number;
    (3) The emerging market;
    (4) The name, contact person, address, and telephone number and, if 
applicable, facsimile number and E-mail address of:
    (i) The exporter;
    (ii) The exporter's registered agent for service of process in the 
United States;
    (iii) The exporter's assignee, if applicable;
    (iv) The importer;
    (v) The end-user of the goods or services if other than the 
importer;
    (vi) The foreign bank expected to issue the letter of credit or 
related obligation; and
    (vii) The financial institution in the United States expected to 
provide financing;
    (5) A statement on letterhead from a:
    (i) Foreign bank indicating an interest in guaranteeing payment, in 
U.S. dollars, for goods or services to be exported under the facility 
payment guarantee at least equal to the net contract value listed in 
paragraph (a)(14) of this section, less the initial payment requirement 
listed in paragraph (a)(15) of this section; and
    (ii) Financial institution in the U.S. indicating an interest in 
financing the export sales of goods or services under the facility 
payment guarantee for an amount at least equal to the net contract value 
listed in paragraph (a)(14) of this section less the initial payment 
requirement listed in paragraph (a)(15) of this section. The financial 
institution must state that such financing would not otherwise be 
available without an FGP payment guarantee;
    (6) The period for which credit is being extended to finance the 
sale of goods or services covered by the facility payment guarantee;
    (7) The exporter's sales number pertinent to this application and a 
description of the status of the intended sale;
    (8) A description (e.g., a process flow diagram) of the agriculture-
related facility that will use the goods or services to be covered by 
the facility payment guarantee and an explanation of how these goods and 
services will be used to improve handling, marketing, processing, 
storage, or distribution of agricultural commodities or products;
    (9) A brief description of each good or service to be covered by the 
facility payment guarantee including, where applicable, brand name, 
model number, Standard Industrial Classification (SIC) or the North 
American Industry Classification System (NAICS) code, and contract 
specifications;

[[Page 756]]

    (10) The final date for export of goods or services. If applicable, 
include construction start date, milestones (e.g., installation), and 
contractual deadline for completion of project;
    (11) The contract value for the sale of goods or services and the 
basis of sale for goods to be exported (e.g., FOB, CFR, CIF);
    (12) The description and value of the goods or cost of services 
listed in paragraph (a)(11) of this section that are not U.S. goods or 
services;
    (13) Identification and cost of, and justification for, those 
services listed in paragraph (a)(12) of this section for which the 
exporter requests CCC to provide coverage;
    (14) The net contract value in Sec.  1493.260(b)(1) obtained by 
subtracting paragraph (a)(12) of this section from paragraph (a)(11) of 
this section, and adding paragraph (a)(13) of this section;
    (15) The amount to be paid in accordance with the initial payment 
requirement (Sec.  1493.230(c));
    (16) The description and dollar amount of discounts and allowances 
provided in connection with the sale of goods or services covered by the 
facility payment guarantee;
    (17) The facility base value in Sec.  1493.260(b)(2) obtained by 
subtracting paragraphs (a)(15) and (a)(16) of this section from 
paragraph (a)(14) of this section;
    (18) The maximum guaranteed value under the facility payment 
guarantee determined by multiplying the facility base value listed in 
paragraph (a)(17) of this section by the guarantee rate of coverage 
announced by CCC in Sec.  1493.260(b)(3);
    (19) A map or other description of the facility's location and 
distance from major population centers of neighboring countries;
    (20) For all principal agricultural commodities or products (inputs) 
to be handled, marketed, processed, stored, or distributed, by the 
proposed project after completion, provide:
    (i) A list or table identifying such principal inputs;
    (ii) The likely countries of origin for each input;
    (iii) Estimated annual quantities, in metric tons, of each input 
listed in paragraph (a)(20)(i) of this section to be used by the project 
for five years from the final date of export or until the expiration of 
the facility payment guarantee, whichever comes first; and
    (iv) An analysis, including price, cost, and other assumptions (the 
reasons why U.S. agricultural commodities or products will be more 
competitive inputs than commodities or products from other sources, and 
whether the projected use of U.S. agricultural commodities or products 
depends on the availability of U.S. export bonus or credit guarantee 
programs), of which inputs listed in paragraph (a)(20)(i) of this 
section will represent increased imports of U.S. agricultural 
commodities or products:
    (A) To a greater degree than imports of agricultural commodities or 
products from other countries;
    (B) To or at levels significantly above those expected in the 
absence of the project; and
    (C) For a period of five years from the final date of export or 
until expiration of the facility payment guarantee, whichever comes 
first.
    (21) If applicable, a list of agricultural outputs or final products 
of the proposed project and:
    (i) Projected annual quantities (for five years or until the 
expiration of the facility payment guarantee, whichever comes first), in 
metric tons, of each output to be marketed;
    (A) Within the emerging market; and
    (B) In any other country;
    (ii) Quantities, by country of origin, of products imported into the 
emerging market during the past year which would compete with such 
outputs; and
    (iii) An analysis of whether products of the project will 
significantly displace U.S. exports of similar agricultural commodities 
or products in any market;
    (22) If applicable, a description of any arrangements or 
understandings with other U.S. or foreign government agencies, or with 
financial institutions or entities, private or public, providing 
financing to the exporter in connection with this export sale, and 
copies of any documents relating to such arrangements;
    (23) A description of the exporter's experience selling goods or 
providing services similar to those for which the

[[Page 757]]

exporter seeks to obtain facility payment guarantee coverage;
    (24) A statement of how this project may encourage privatization of 
the agricultural sector, or benefit private farms or cooperatives, in 
the emerging market. Include in the statement the share of private 
sector ownership of the project;
    (25) The exporter's signature.
    (b) Application fee. The exporter shall pay the application fee 
specified in the program announcement at the time the application is 
submitted. An application will not be considered without payment of the 
specified fee. The application fee is nonrefundable.
    (c) Letter of preliminary commitment. CCC will determine whether, in 
its judgment, the project in connection with which the exporter seeks a 
facility payment guarantee is likely to increase exports of U.S. 
agricultural commodities or products to an emerging market; and whether 
the project is likely to benefit primarily U.S. agricultural commodities 
or products as opposed to commodities or products originating in other 
countries. If necessary, CCC may seek additional information from an 
applicant prior to making its determination. If CCC determines that an 
application meets these standards and appears to represent, in CCC's 
judgment, the best use of available resources, CCC will respond to the 
applicant with a letter of preliminary commitment indicating CCC's 
interest in issuing a facility payment guarantee conditioned on its 
approval of the exporter's final application.



Sec.  1493.250  Final application and issuance of a facility payment guarantee.

    (a) Final application. An exporter who has received a letter of 
preliminary commitment may, within six months of the date of such 
letter, submit a final application to CCC for a facility payment 
guarantee which shall include the following information:
    (1) A cover sheet with the title: ``Application for a Facility 
Payment Guarantee--Final Commitment.''
    (2) A letterhead statement from the importer's bank or other 
documentation confirming the importer has the financial ability to 
comply with the initial payment requirement in Sec.  1493.230(c);
    (3) Written evidence of a firm sale signed by the exporter and the 
importer, specifying at minimum, the following information: Goods or 
services to be exported, quantities of such items, delivery terms (e.g., 
FOB, CFR, CIF), delivery period(s), contract value, payment terms, and 
date of sale. A sales contract may be contingent upon obtaining a 
facility payment guarantee;
    (4) A description of any changes in the information submitted in the 
preliminary application; and
    (5) The exporter's signature;
    (b) Additional information. CCC shall have the right to request the 
exporter to furnish any other information and documentation it deems 
pertinent to the evaluation of the exporter's final application for a 
final commitment. CCC may request from the exporter an independent 
engineering study or economic feasibility study relating to the project.
    (c) Final commitment letter. After making a favorable determination 
on the exporter's submissions, CCC will issue a final commitment letter 
indicating the applicable exposure fee rate and stating that CCC is 
prepared to issue a facility payment guarantee upon receiving full 
payment of the exposure fee within an allotted time. The letter will 
also indicate the key terms and coverage of the guarantee to be issued. 
CCC will also inform exporters in writing when it denies their request 
for a facility payment guarantee.
    (d) Exposure fee. The exposure fee is calculated by multiplying the 
requested guaranteed value (up to the maximum established by CCC's final 
commitment letter) by the exposure fee rate. Once the facility payment 
guarantee is issued to the exporter, CCC will ordinarily not refund the 
exposure fee. If CCC does not issue a facility payment guarantee, or 
issues a guarantee for only part of the coverage requested, CCC will 
make a full or pro rata refund of the exposure fee, as appropriate.
    (e) Issuance of the facility payment guarantee. Upon receipt of the 
exposure

[[Page 758]]

fee, CCC will issue a facility payment guarantee.



Sec.  1493.260  Facility payment guarantee.

    (a) CCC's maximum obligation. CCC will agree to pay the exporter or 
the exporter's assignee an amount not to exceed the guaranteed value 
stipulated on the face of the facility payment guarantee, plus eligible 
interest, in the event that the foreign bank fails to pay under the 
foreign bank letter of credit or related obligation. The exact amount of 
CCC's liability in the event of default will be determined in accordance 
with Sec.  1493.310(b).
    (b) Calculation of maximum guarantee coverage. CCC will determine 
the maximum amount of its obligation under a facility payment guarantee 
by calculating a:
    (1) Net contract value equal to the contract value minus:
    (i) The value of goods that are not U.S. goods; and
    (ii) The cost of services that are not U.S. services (except those 
services the exporter requests CCC to determine are vital to the success 
of the project and approved to be included in the net contract value);
    (2) Facility base value equal to net contract value minus:
    (i) The amount to be paid in accordance with the initial payment 
requirement in Sec.  1493.230(c); and
    (ii) The amount of discounts and allowances; and
    (3) Maximum guaranteed value equal to:
    (i) A principal amount determined by multiplying the facility base 
value (as determined in Sec.  1493.260(b)(2)) by the guaranteed 
percentage specified in the program announcement; and
    (ii) Interest on such principal amount at the rate specified in the 
applicable program announcement, not to exceed the investment rate of 
the most recent Treasury 52-week bill auction in effect at that time.
    (c) Value and cost. For the purposes of this section:
    (1) Value means declared customs value of the goods; or, in the 
absence of specific information regarding declared customs value, the 
fair market wholesale value of the imported goods in the United States 
at the time they were acquired by the participant; and
    (2) Cost means actual amount paid by the exporter for the services 
in an arms-length transaction; or in the absence of an arms-length 
transaction, the fair market value of the services at the time the 
services were provided.
    (d) U.S. content test. (1) CCC will issue a guarantee only if the 
following items collectively represent less than 50 percent of the net 
contract value in Sec.  1493.260(b)(1):
    (i) The value of imported components (except for raw materials) that 
are assembled, processed, or manufactured into U.S. goods included in 
the net contract value;
    (ii) The cost of services that are not U.S. services (including 
freight on foreign flag carriers and transportation insurance registered 
with foreign agents) that, at the request of the exporter, CCC 
determines are vital to the success of the project and approves their 
inclusion in the net contract value;
    (2) For purpose of this subsection, minor or cosmetic procedures 
(e.g., affixing labels, cleaning, painting, polishing) do not qualify as 
assembling, processing or manufacturing;
    (3) For purpose of this subsection, local services which involve 
costs for hotels, meals, transportation, and other similar services 
incurred in the emerging market are not U.S. services.
    (e) Period of guarantee coverage. The payment guarantee will apply 
to the period beginning on the date(s) of export(s) and will continue 
during the credit term specified in the facility payment guarantee. For 
goods, the period of coverage will also apply from the date on which 
interest begins to accrue, if earlier than the date of export. The final 
payments of principal and interest by the foreign bank must come due 
within the period of guarantee coverage.
    (f) Terms of the CCC facility payment guarantee. The terms of CCC's 
coverage will be set forth in the facility payment guarantee and will 
include the provisions of this subpart, which may be supplemented by any 
program announcement(s) or notice(s) to participants in effect at the 
time the facility

[[Page 759]]

payment guarantee is approved by CCC.
    (g) Final date to export. The final date to export will be stated in 
the facility payment guarantee.
    (h) Ineligible exports. Goods or services with a date of export 
prior to the date CCC issues the facility payment guarantee are 
ineligible for coverage unless approved by the GSM.
    (i) Additional requirements. The facility payment guarantee may 
contain such additional terms, conditions, and limitations as are deemed 
necessary or desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the facility payment guarantee, are binding 
on the exporter or the exporter's assignee.
    (j) Amendments. Exporters must notify CCC of any amendments 
concerning contracts covered by a facility payment guarantee. CCC will 
determine if the contract amendments will require amendments to the 
facility payment guarantee. Amending the facility payment guarantee may 
result in an increase to the exposure fee. Requests made by the exporter 
to amend the facility payment guarantee so as to change the guaranteed 
value must have the concurrence of the assignee when an assignment has 
been made.
    (k) Effective date. The facility payment guarantee shall become 
effective on the date of export of the goods or services.

Appendix to Sec.  1493.260--Illustration of FGP Coverage of Imported Raw 
     Materials, Components, and Services That Are Not U.S. Services

    The following example illustrates CCC's regulations and policy 
options with regard to issuing a payment guarantee for a project which 
includes imported raw materials, imported components, and services that 
are not U.S. services:
    1. Ten grain trucks and one truck scale are to be exported from the 
U.S. to an emerging market. The trucks will provide the ability to 
purchase larger quantities of grain from the U.S. The contract value 
totals $2,025,000, cost, insurance and freight (CIF) basis.
    2. The fenders, hoods and doors of the trucks have been manufactured 
and assembled in the U.S. and contain some imported raw materials (sheet 
metal).
    3. Imported components consist of starters and alternators, with a 
U.S. customs valuation of $149,000. These items are installed into the 
trucks in the U.S.
    4. The truck scale was imported from Canada into the U.S. with a 
U.S. customs valuation of $20,000.
    5. A U.S. citizen, will travel on a foreign airline carrier to the 
emerging market (airfare is $1,000) to instruct mechanics in repair and 
maintenance of the trucks. He will be paid a salary for this service 
and, in addition, will be reimbursed separately for local costs in the 
emerging market (e.g., hotel, meals, transportation) which are estimated 
to be $5,000.
    6. The trucks are to be shipped on foreign flag vessels, and the 
marine insurance is to be placed with a foreign agent. The combined cost 
of these services that are not U.S. services for which the exporter 
seeks coverage is estimated to be $500,000.

          CCC's Approval of Services That Are Not U.S. Services

    CCC agrees to include in the net contract value the foreign flag 
freight and marine insurance ($500,000) and the airfare ($1,000) of the 
U.S. instructor (Sec.  1493.260(b)(1)).

                    Calculation of Net Contract Value

    CCC will calculate the net contract value by subtracting from the 
contract value ($2,025,000) the U.S. customs value of the truck scale 
($20,000) in accordance with Sec.  1493.260(b)(1)(I) and the local costs 
to be incurred by the U.S. instructor ($5,000) in accordance with Sec.  
1493.260(b)(1)(ii) to equal $2,000,000.

             CCC's Determination of U.S. Content Eligibility

    The imported components and services that are not U.S. services 
approved for coverage total $650,000 (i.e., $149,000 for starters and 
alternators, $1,000 for airfare, $500,000 for freight and insurance; or 
32.5 percent of the net contract value of $2,000,000 (Sec.  
1493.260(b)(1)). Since this is less than 50 percent of the net contract 
value the transaction meets the U.S. content test (Sec.  1493.260(d)).



Sec.  1493.270  Certifications.

    (a) Exporter's signature. The exporter's signature on documentation 
submitted to CCC under this subpart, is the exporter's certification 
that:
    (1) There have not been and are no arrangements for any payments in 
violation of the Foreign Corrupt Practices Act of 1977, as amended, or 
other U.S. Laws;
    (2) All information submitted to CCC is true and correct; and
    (3) The exporter is in compliance with this subpart.

[[Page 760]]

    (b) False certification. False certifications under this subpart may 
result in the termination of the facility payment guarantee, suspension 
or debarment, or civil or criminal action.



Sec.  1493.280  Evidence of export report.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment of goods or provision of 
services covered under the facility payment guarantee. Each report must 
be numbered in chronological order and contain the following information 
in the order prescribed below:
    (1) The facility payment guarantee number;
    (2) The date goods or services were exported or provided;
    (3) The exporter's sale number, bill of lading numbers, or 
identification of other documents that may be submitted to establish the 
contract value of the goods or services exported or provided;
    (4) The net contract value of the exported goods or services as 
determined in accordance with Sec.  1493.260(b)(1);
    (5) The amount paid in accordance with the initial payment 
requirement (Sec.  1493.230 (c));
    (6) A description and dollar value of discounts and allowances, if 
any;
    (7) The exported value of the shipment which is the net contract 
value of the goods or services exported in paragraph (a)(4) of this 
section minus:
    (i) The initial payment requirement listed in paragraph (a)(5) of 
this section; and
    (ii) The dollar amount of any discounts and allowances listed in 
paragraph (a)(6) of this section;
    (8) The name of the carrier and, if applicable, the name of the 
vessel;
    (9) The final payment schedule showing the payment due dates and 
amounts of principal, and payment due dates for interest accrual. If the 
payment schedule is unknown, the exporter must indicate in writing that: 
``The payment schedule will be provided in an amendment to the evidence 
of export report when the payment schedule has been determined;''
    (10) Written statements that:
    (i) The goods exported or services provided were included in the 
final application for a final commitment as approved by CCC for coverage 
under the facility payment guarantee and this subpart;
    (ii) The specifications and quantity of goods or services exported 
conform to the information contained in the exporter's application 
documents for a facility payment guarantee, or if different, that CCC 
has approved of such changes;
    (iii) A letter of credit has been opened in favor of the exporter by 
the foreign bank shown on the facility payment guarantee to cover the 
dollar amount of the sale of goods or services exported less the amount 
paid in accordance with the initial payment requirement and less 
discounts and allowances; and
    (11) The exporter's signature.
    (b) Final report of export. The final evidence of export report 
submitted under a facility payment guarantee must contain:
    (1) A written statement that exports under the facility payment 
guarantee have been completed;
    (2) The information requested in Sec.  1493.280(a) for the 
shipment(s) included in the final report; and
    (3) The combined total of all dollar amounts reported under Sec.  
1493.280 (a) and (b) for all reports.
    (c) Time limit for submission of evidence of export report. Unless 
extended by CCC for good cause, the exporter must submit to CCC an 
evidence of export report:
    (1) Within 60 days of the date goods are exported by rail or truck;
    (2) Within 30 days of the date goods are exported by any other 
carrier; or
    (3) Within 30 days of the date of export of services.
    (d) Late reports. If the evidence of export report is not received 
by CCC within the time period for filing, the facility payment guarantee 
will become null and void only if and only to the extent that failure to 
make timely filing resulted, or would likely result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the FGP;
    (3) The obstruction of the fair administration of the FGP; or

[[Page 761]]

    (4) A threat to the integrity of the FGP.



Sec.  1493.290  Proof of entry.

    (a) Diversion. The diversion of goods covered by a facility payment 
guarantee to a country other than that shown on the facility payment 
guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the goods authorized by the 
facility payment guarantee. Records demonstrating proof of entry must be 
in English or be accompanied by a certified or other translation 
acceptable to CCC. Records acceptable to meet this requirement include:
    (1) For goods: An original certificate, signed by a duly authorized 
customs or port official of the emerging market, by the importer, by an 
agent or representative of the vessel or ship line which delivered the 
goods to the emerging market, or by a private surveyor in the emerging 
market, or other documentation deemed acceptable by CCC:
    (i) Showing that the goods entered the emerging market;
    (ii) Identifying the export carrier;
    (iii) Describing the goods; and
    (iv) Indicating date and place the goods were unloaded in the 
emerging market.
    (2) [Reserved]



Sec.  1493.300  Notice of default and claims for loss.

    (a) Notice of default. If the foreign bank issuing the letter of 
credit fails to make payment pursuant to the terms of the foreign bank 
letter of credit or related obligation, the exporter or the exporter's 
assignee must submit a notice of default to CCC as soon as possible, but 
not later than ten days after the date that payment was due from the 
foreign bank (the due date). A notice of default must be submitted in 
writing to the Treasurer, CCC, at the address specified in the Contacts 
P/R. If the exporter or the exporter's assignee fails to promptly notify 
CCC of defaults in accordance with this paragraph, CCC may make the 
facility payment guarantee null and void with respect to any payment(s) 
applicable to such default. This time limit may be extended only under 
extraordinary circumstances and if approved by the Controller, CCC. The 
notice of default must include:
    (1) Facility payment guarantee number;
    (2) Name of the emerging market;
    (3) Name of the defaulting bank;
    (4) Payment due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of foreign bank's refusal to pay, if applicable; and
    (7) Reason for the foreign bank's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Facility payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue and the interest rate on the foreign 
bank obligation applicable to the claim; and
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i)(A) The foreign bank's letter of credit securing the export sale, 
and;
    (B) If applicable, the document(s) evidencing the related obligation 
owed by the foreign bank to the assignee financial institution which is 
related to the foreign bank's letter of credit issued in favor of the 
exporter.
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed

[[Page 762]]

by the shipping company with the onboard ocean carrier date for each 
shipment, the airway bill; or, if shipped by rail or truck, the entry 
certificate or similar document signed by an official of the emerging 
market;
    (iii) The exporter's sales invoice(s) showing the value and basis of 
sale (e.g., FOB, CFR, or CIF) or, if services are billed separately, 
documents that the exporter or its assignee relied upon in extending the 
credit to the issuing foreign bank;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default. 
The instrument must reference the applicable foreign bank letter of 
credit and the related obligation, if applicable; and
    (v) A copy of the evidence of export report(s) previously submitted 
by the exporter to CCC pursuant to Sec.  1493.280.
    (c) Subsequent claims for defaults on installments. The exporter or 
an exporter's assignee need only provide one claim which meets full 
documentation requirements relating to a covered transaction. For 
subsequent claims relating to such failures of the foreign bank to make 
scheduled installments on the same export, the exporter or the 
exporter's assignee need only submit to CCC a notice of such failure 
containing the information stated in paragraphs (b) (1), (2), and (3) of 
this section; an instrument of subrogation as per paragraph (b)(4)(iv) 
of this section, and the date the original claim was filed with CCC.



Sec.  1493.310  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.  1493.300, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the facility payment guarantee, this subpart, program 
announcement(s) and notice(s) to participants. If CCC determines that it 
is liable to the exporter or the exporter's assignee, CCC will pay the 
exporter or the exporter's assignee in accordance with paragraphs (b) 
and (c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims for loss submitted with respect to any facility payment 
guarantee, not including any late interest payments due in accordance 
with paragraph (c) of this section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the facility payment 
guarantee, plus eligible interest; or
    (2) The guaranteed percentage (as indicated in the facility payment 
guarantee) of the exported value indicated in the evidence of export 
report (Sec.  1493.280(a)(7)), plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the claim was found by CCC to be in 
good order and continuing until and including the date that payment is 
made by CCC. Late interest will be paid on the guaranteed amount, as 
determined by paragraphs (b)(1) and (2) of this section, and will be 
calculated based on the latest average investment rate of the most 
recent Treasury 91-day bill auction as announced by the Department of 
Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract, the 
foreign bank's letter of credit, or any obligation owed by the foreign 
bank to the assignee U.S. financial institution which is related to the 
foreign bank's letter of credit issued in favor of the exporter, unless 
it is determined to be in the best interest of CCC by the Controller, 
CCC. Notwithstanding the foregoing, CCC at its option may declare the 
entire amount of the unpaid balance, plus accrued interest, in default 
and make payment to the exporter or the exporter's assignee in addition 
to such other claimed amount as may be due from CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to the value of goods or 
services covered by a facility payment guarantee, CCC will not hold the 
assignee

[[Page 763]]

responsible or take any action or raise any defense against the assignee 
for any action, omission or statement by the exporter of which the 
assignee has no knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec.  1493.270 and Sec.  1493.280 excluding post-export adjustments 
(i.e., corrections of evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec.  1493.300.



Sec.  1493.320  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the foreign bank of CCC's rights 
under the subrogation agreement to recover all monies in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer, the foreign bank or any other source whatsoever, such 
monies shall be immediately paid to the Treasurer, CCC. If such monies 
are not received by CCC within 15 days from the date of recovery by the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will owe to CCC interest from the date of recovery to the date 
of receipt by CCC. This interest will be calculated based on the latest 
average investment rate of the most recent Treasury 91-day auction, as 
announced by the Department of Treasury, in effect on the date of 
recovery and will accrue from such date to the date of payment by the 
exporter or the exporter's assignee to CCC. Such interest will be 
charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a facility 
payment guarantee for which a claim has been paid by CCC, CCC will pay 
the holder of the facility payment guarantee its pro rata share 
immediately, provided that the required information necessary for 
determining pro rata distribution has been furnished. If payment is not 
made by CCC within 15 days from the date of recovery or 15 days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and will accrue from such date to the date of 
payment by CCC. The interest will apply only to the portion of the 
recovery payable to the holder of the facility payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer or the foreign bank, and recoveries received by CCC from the 
exporter, the exporter's assignee or any other source whatsoever, will 
be allocated by CCC to the exporter or the exporter's assignee and to 
CCC on a pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined amount of principal and interest 
in default. Once CCC has paid out a particular claim under a facility 
payment guarantee, CCC prorates any collections it receives and shares 
these collections proportionately with the holder of the guarantee until 
both CCC and the holder of the guarantee have been reimbursed in full. 
Appendix to Sec.  1493.320 provides an example of the methodology used 
by CCC in applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
facility payment guarantee, the exporter may be liable to CCC for any 
amounts paid by CCC under the facility payment guarantee when and if it 
is determined by CCC that the exporter engaged in fraud, or has been or 
is in breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the facility payment 
guarantee or for fulfilling obligations under the FGP. Further, the 
exporter's assignee may be liable to CCC for any amounts paid by CCC 
under the facility payment guarantee when and if it is determined by CCC 
that the exporter's assignee engaged in fraud or otherwise violated 
program requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec.  1493.270 or the failure of an exporter to comply with the 
provisions of Sec.  1493.290 or Sec.  1493.330(e) will not affect the 
validity

[[Page 764]]

of any facility payment guarantee with respect to an assignee which had 
no knowledge of such violation or failure to comply at the time such 
exporter applied for the facility payment guarantee or at the time of 
assignment of the facility payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the foreign 
bank or the importer.

   Appendix to Sec.  1493.320--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec.  1493.320, regarding pro rata sharing of recoveries made for claims 
filed under the FGP. For the purpose of this example only, even though 
CCC interest coverage is on a floating rate basis, a constant rate of 
interest is assumed. A typical case might be as follows:
    1. The U.S. bank enters into a $300,000 three-year credit 
arrangement for the export sale of goods and services with the foreign 
bank calling for equal semi-annual payments of principal and semi-annual 
payment of interest at a rate of 10 percent per annum and a penalty 
interest rate of 12 percent per annum on overdue amounts until the 
overdue amount is paid.
    2. Exported value reported to CCC equals $300,000.
    3. The foreign bank fails to make the final principal payment of 
$50,000 and an interest payment of $2,493.15, both due on January 31.
    4. On February 10, the U.S. bank files a notice of default and claim 
in good order with CCC.
    5. CCC's guarantee states that CCC's maximum liability is limited to 
95 percent of the principal amount due ($47,500) and interest at a rate 
of 8 percent per annum (basis 365 days) on 95 percent of the principal 
($1,894.80).
    6. CCC pays the claim on February 22.
    7. The latest investment rate of the 91-day Treasury Bill auction 
average which has been published by the Department of Treasury in effect 
on the date of nonpayment by CCC (February 11) is 7 percent.

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the facility 
payment guarantee would be computed as follows:

1. CCC's Obligation under the Facility Payment Guarantee:
    (a) Principal coverage--(95% x $50,000)................   $47,500.00
    (b) Interest coverage--(8% x $47,500 x 182/365)........     1,894.80
                                                            ------------
        Total..............................................    49,394.80
    (c) Late interest due from CCC (7% per annum for 11           104.20
     days x $49,394.80)....................................
                                                            ------------
    (d) Amount paid by CCC on February 22..................    49,499.00
                                                            ============
2. Foreign Bank's Obligation under the Letter of Credit or
 the Related Obligation:
    (a) Principal due January 31...........................    50,000.00
        Interest due January 31 (10% x $ 50,000 x 182/365).     2,493.15
                                                            ------------
        Amount owed by foreign bank as of January 31.......    52,493.15
    (b) Penalty interest due (12% per annum for 22 days x $       361.64
     50,000)...............................................
                                                            ------------
    (c) Amount owed by foreign bank as of February 22......    52,854.79
3. Amount of Foreign Bank's Obligation Not Covered by CCC's     3,355.79
 Payment Guarantee:........................................
 

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the foreign bank obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the foreign bank is 
$52,854.79, CCC would be entitled to 93.65 percent ($49,499.00 divided 
by $52,854.79) and the holder of the facility payment guarantee would be 
entitled to 6.35 percent ($3,355.79 divided by $52,854.79) of any 
recoveries of losses after settlement of the claim. Since in this 
example, the losses were recovered after the claim had been paid by CCC, 
Sec.  1493.320(b) would apply.



Sec.  1493.330  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a facility payment guarantee or the 
right to such proceeds only to a financial institution in the U.S. The 
assignment must cover all amounts payable under the facility payment 
guarantee not already paid, may not be made to more than one party, and 
may not, unless approved in advance by CCC, be subject to further 
assignment. Any assignment may be made to one party as agent or trustee 
for two or more parties participating in the assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the

[[Page 765]]

assignee with the Treasurer, CCC, at the address specified in the 
Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof to such financial 
institution and to the exporter issued the facility payment guarantee in 
lieu of an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a facility payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC; or
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a facility payment guarantee approved by CCC if such financial 
institution:
    (1) At the time of assignment of a facility payment guarantee, is 
not in sound financial condition, as determined by the Treasurer of CCC;
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (d) Alternative satisfaction of facility payment guarantees. CCC 
may, with the agreement of the exporter (or if the right to proceeds 
payable under the facility payment guarantee has been assigned, with the 
agreement of the exporter's assignee), establish procedures, terms or 
conditions for the satisfaction of CCC's obligations under a facility 
payment guarantee other than those provided for in this subpart if CCC 
determines that those alternative procedures, terms or conditions are 
appropriate in rescheduling the debts arising out of any transaction 
covered by the facility payment guarantee and would not result in CCC 
paying more than the amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a facility 
payment guarantee, the exporter or the exporter's assignee, as 
applicable, must maintain and make available all records pertaining to 
sales and deliveries of and extension of credit for goods or services 
exported in connection with a facility payment guarantee, including 
those records generated and maintained by agents, and related companies 
involved in special arrangements with the exporter. The Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, must be given full and complete access 
to the premises of the exporter or the exporter's assignee, as 
applicable, during regular business hours from the effective date of the 
facility payment guarantee until the expiration of such five-year period 
to inspect, examine, audit, and make copies of the exporter's, 
exporter's assignee's, or a related company's books, records, and 
accounts concerning transactions relating to the facility payment 
guarantee, including, but not limited to, financial records and accounts 
pertaining to sales, inventory, manufacturing, processing, and 
administrative and incidental costs, both normal and unforeseen.
    (2) The exporter must maintain the proof of entry required by Sec.  
1493.290(b), and must provide access to such document if requested by 
the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.

[[Page 766]]

    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, this subpart, program announcement(s), and notice(s) to 
participants relating to the FGP, as applicable. Applicants for facility 
payment guarantees under this program are hereby on notice that they 
will be bound by any terms contained in applicable program 
announcement(s) or notice(s) to participants issued prior to the date of 
approval of a facility payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by:
    (1) Wording indicating the delegation of authority or, in the 
alternative, by a certified copy of the delegation of authority; and
    (2) The name and title of the authorized person or officer. Further, 
the exporter or exporter's assignee must ensure that all information/
reports required under this subpart are submitted within the required 
time limits. If requested in writing, CCC will acknowledge receipt of a 
submission by the exporter or the exporter's assignee. If acknowledgment 
of receipt is requested, the exporter or exporter's assignee must submit 
an extra copy of each document and a stamped self-addressed envelope for 
return by U.S. mail. If courier services are desired for the return 
receipt, the exporter or exporter's assignee must also submit a self-
addressed courier service order which includes the recipient's billing 
code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or resident Commissioner, shall be admitted to any share or part of the 
facility payment guarantee or to any benefit that may arise therefrom, 
but this provision shall not be construed to extend to the facility 
payment guarantee if made with a corporation for its general benefit.
    (i) Deadlines. (1) Where a deadline is fixed in terms of days, it 
means business days and excludes Saturdays, Sundays and federal 
holidays.
    (2) Where a deadline is fixed in terms of months, the deadline falls 
on the same day of the month as the day triggering the deadline period, 
or if there is no same day, the last day of the month; and
    (3) Where a deadline would otherwise fall on a Saturday, Sunday or 
federal holiday, the deadline shall be the next business day.



       Subpart D--CCC Supplier Credit Guarantee Program Operations

    Source: 61 FR 33831, July 1, 1996, unless otherwise noted.



Sec.  1493.400  General statement.

    (a) Overview. (1) This subpart contains the regulations governing 
the operations of the Supplier Credit Guarantee Program (SCGP). The 
restrictions and criteria set forth at subpart A for the Commodity 
Credit Corporation (CCC) Export Credit Guarantee Program (GSM-102) and 
the Intermediate Credit Guarantee Program (GSM-103) will apply to this 
subpart. The SCGP was developed to expand U.S. agricultural exports by 
making available payment guarantees to encourage U.S. exporters to 
extend financing on credit terms of not more than 180 days to importers 
of U.S. agricultural commodities.
    (2) The SCGP operates in cases where credit is necessary to increase 
or maintain U.S. exports to a foreign market and where private U.S. 
exporters would be unwilling to provide financing without CCC's 
guarantee. The program is operated in a manner intended not to interfere 
with markets for cash sales. The program is targeted toward those 
countries where the guarantees are necessary to secure financing of the 
exports but which have sufficient financial strength so that foreign 
exchange will be available for scheduled payments. In providing this 
credit guarantee facility, CCC seeks to expand market opportunities for 
U.S. agricultural exporters and assist long-term

[[Page 767]]

market development for U.S. agricultural commodities.
    (3) The credit facility created by this program is the SCGP payment 
guarantee (payment guarantee). The payment guarantee is an agreement by 
CCC to pay the exporter, or the U.S. financial institution that may take 
assignment of the exporter's right to proceeds, specified amounts of 
principal and, where applicable, interest due from, but not paid by, the 
importer incurring the obligation in connection with the export sale to 
which CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than government, financing and incurs a substantial portion of 
the risk of default by the importer. CCC assumes this risk, in order to 
be able to operate the program for the purposes specified in Sec.  
1493.2.
    (b) Credit facility mechanism. (1) For the purpose of the SCGP, CCC 
will consider applications for payment guarantees only in connection 
with export sales of U.S. agricultural commodities where the payment for 
the agricultural commodities will be made under an unconditional and 
irrevocable importer obligation to a U.S. exporter payable in U.S. 
dollars, as defined in Sec.  1493.410(n).
    (2) The exporter may assign the right to proceeds under the importer 
obligation to a U.S. bank or other financial institution so that the 
exporter may realize the proceeds of the sale prior to the deferred 
payment date(s) as set forth in the importer obligation.
    (3) The SCGP payment guarantee is designed to protect the exporter 
or the exporter's assignee against those losses specified in the payment 
guarantee resulting from defaults, whether for commercial or 
noncommercial reasons, by the importer under the importer's obligation.
    (c) Program administration. The SCGP will be administered pursuant 
to subpart A and this subpart and any Program Announcements and Notices 
to Participants issued by CCC pursuant to, and not inconsistent with, 
this subpart. This program is under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec.  1493.410(c), 
``Contacts P/R'').
    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a SCGP 
allocation for a specific country. The Program Announcement for a 
country allocation will designate specific allocations for U.S. 
agricultural commodities or products thereof, will indicate the form of 
promissory note required by CCC, and will provide other pertinent 
information. Exporters may negotiate export sales to importers in that 
country for one of the commodities specified in the Program Announcement 
and seek payment guarantee coverage within the dollar amounts of 
specified coverage for that commodity. The Program Announcement will 
contain a requirement that the exporter's sales contract contain a 
shipping deadline within the applicable program year. The final date for 
a contractual shipping deadline will be stated in the Program 
Announcement. Program Announcements may also contain a specified 
``undesignated'' or ``unallocated'' dollar amount for the purpose that 
if dollar amounts specified for a specific commodity for a country 
become fully used, an additional allocation from the ``unallocated'' or 
``undesignated'' portion of the total country allocation may then be 
designated for a specific commodity. Program Announcements that include 
an ``unallocated'' or ``undesignated'' dollar amount will contain 
further information on the ``unallocated'' or ``undesignated'' portion 
of the country allocation.



Sec.  1493.410  Definition of terms.

    Terms set forth in this subpart and in CCC Program Announcements, 
Notices to Participants, and any other CCC-originated documents 
pertaining to the SCGP will have the following meanings:

[[Page 768]]

    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
SCGP. The Contacts P/R also contains details about where to submit 
information required to qualify for program participation, to apply for 
payment guarantees, to request amendments of payment guarantees, to 
submit evidence of export reports, and to give notices of default and 
file claims for loss.
    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has been 
established or a mechanism to establish such price has been agreed upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter, or an intervening 
purchaser, to the importer in connection with a sale of an agricultural 
commodity, above and beyond the commodity's value, stated on the 
appropriate FOB, FAS, CFR or CIF basis. Discounts and allowances 
include, but are not limited to, the provision of additional goods, 
services or benefits; the promise to provide additional goods, services 
or benefits in the future; financial rebates; the assumption of any 
financial or contractual obligations; the whole or partial release of 
the importer from any financial or contractual obligations; or 
settlements made in favor of the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-week bill auction in effect at that time.
    (h) Exported value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, the value, 
FAS or FOB basis, U.S. point of export, of the export sale, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, is 
measured by the CFR or CIF value of the agricultural commodity less the 
cost of ocean freight, as determined at the time of application and, in 
the case of CIF sales, less the cost of marine and war risk insurance, 
as determined at the time of application, reduced by the value of any 
discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the commodity is sold on a CFR or CIF basis, point of entry, the total 
value of the export sale, CFR or CIF basis, point of entry, reduced by 
the value of any discounts or allowances granted to the

[[Page 769]]

importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of Sec.  
1493.420.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (l) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (m) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (n) Importer obligation. A promissory note or notes that conform(s) 
with the requirements for such note(s) specified in the applicable 
country or regional Program Announcement(s).
    (o) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms [copy] current revision):
    (1) Free Alongside Ship (FAS);
    (2) Free on Board (FOB);
    (3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF); 
and
    (4) Cost Insurance and Freight (CIF).
    (p) Intervening purchaser. A party that agrees to purchase U.S. 
agricultural commodities from an exporter and sell the same agricultural 
commodities to an importer.
    (q) Late interest. Interest, in addition to the interest due under 
the payment guarantee, which CCC agrees to pay in connection with a 
claim for loss, accruing during the period beginning on the first day 
after receipt of a claim which CCC has determined to be in good order 
and ending on the day on which payment is made on such claim for loss.
    (r) Notice to participants. A notice issued by CCC by public press 
release which serves one or more of the following functions: to remind 
participants of the requirements of the program; to clarify the program 
requirements contained in these regulations in a manner which is not 
inconsistent with the regulations; to instruct exporters to provide 
additional information in applications for payment guarantees under 
specific country and/or commodity allocations; and to supplement the 
provisions of a payment guarantee, in a manner not inconsistent with 
these regulations, before the exporter's application for such payment 
guarantee is approved.
    (s) Payment guarantee. An agreement under which CCC, in 
consideration of a fee paid, and in reliance upon the statements and 
declarations of the exporter, subject to the terms set forth in the 
written guarantee (including the required form of promissory note), this 
subpart, and any applicable Program Announcements or Notices to 
Participants, agrees to pay the exporter or the exporter's assignee in 
the event of a default by an importer under the importer obligation.
    (t) Port value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, U.S. point of 
export, the value, FAS or FOB basis, U.S. point of export, of the export 
sale, including the upward tolerance, if any, as provided by the export 
sales contract, reduced by the value of any discounts or allowances 
granted to the importer in connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, 
including the upward tolerance, if any, as provided by the export sales 
contract, is measured by the CFR or CIF value of the agricultural 
commodity less the value of ocean freight and, in the case of CIF sales, 
less the value of marine and war risk insurance, reduced by the value of 
any

[[Page 770]]

discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (u) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, the form of promissory note required 
for a particular country or region, and include other information and 
requirements.
    (v) SCGP. The Supplier Credit Guarantee Program described by this 
subpart.
    (w) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (x) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (y) USDA. United States Department of Agriculture.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6 1997]



Sec.  1493.420  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
the SCGP, the applicant must qualify for participation in this program. 
Based upon the information submitted by the applicant and other publicly 
available sources, CCC will determine whether the applicant is eligible 
for participation in the program.
    (a) Submission of documentation. In order to qualify for 
participation in the SCGP, an applicant must submit to CCC, at the 
address specified in the Contacts P/R, the following information:
    (1) The address of the applicant's headquarters office and the name 
and address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the applicant, e.g., sole 
proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the applicant, if the applicant is 
a corporation;
    (4) The name and U.S. address of the office(s) of the applicant, and 
statement indicating whether the applicant is a U.S. domestic 
corporation, a foreign corporation or another foreign entity. If the 
applicant has multiple offices, the address included in the information 
should be that which is pertinent to the particular export sale 
contemplated by the applicant under this subpart;
    (5) A certified statement describing the applicant's participation, 
if any, during the past three years in U.S. Government programs, 
contracts or agreements; and
    (6) A certification that: ``I certify, to the best of my knowledge 
and belief, that neither [name of applicant] nor any of its principals 
has been debarred, suspended, or proposed for debarment from contracting 
with or participating

[[Page 771]]

in programs administered by any U.S. Government agency. [''Principals,'' 
for the purpose of this certification, means officers; directors; owners 
of five percent or more of stock; partners; and persons having primary 
management or supervisory responsibility within a business entity (e.g., 
general manager, plant manager, head of a subsidiary division, or 
business segment, and similar positions).] I further agree that, should 
any such debarment, suspension, or notice of proposed debarment occur in 
the future, [name of applicant] will immediately notify CCC.''
    (b) Previous qualification. Any exporter that is qualified under 
subpart B, Sec.  1493.30 is qualified under this section to submit 
applications for a SCGP payment guarantee, and the information provided 
by the exporter pursuant to Sec.  1493.30 will be deemed to also have 
been provided under this section. Each application must include the 
statement required by Sec.  1493.430(a)(17) incorporating the 
certifications of Sec.  1493.440, including the certification in Sec.  
1493.440(e) that the information previously provided pursuant to Sec.  
1493.420 has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.
    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the SCGP if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or participating in any program 
administered by a U.S. Government agency; or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec.  1493.430  Application for a payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country;
    (2) Name and address of the importer;
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country;
    (4) Date of sale;
    (5) Exporter's sale number;
    (6) Delivery period as agreed between the exporter and the importer;
    (7) A full description of the commodity (including packaging, if 
any);
    (8) Mean quantity, contract loading tolerance and, if the exporter 
chooses, a request for CCC to reserve coverage up to the maximum 
quantity permitted by the contract loading tolerance;
    (9) Unit sales price of the commodity, or a mechanism to establish 
the price, as agreed between the exporter and the importer. If the 
commodity was sold on the basis of CFR or CIF, the actual (if known at 
the time of application) or estimated value of freight and, in the case 
of sales made on a CIF basis, the actual (if known at the time of 
application) or estimated value of marine and war risk insurance, must 
be specified;
    (10) Description and value of discounts and allowances, if any;
    (11) Port value (includes upward loading tolerance, if any);
    (12) Guaranteed value;
    (13) Guarantee fee;
    (14) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale;
    (15) A statement indicating whether any portion of the export sale 
for which the exporter is applying for a payment guarantee is also being 
used

[[Page 772]]

as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable;
    (16) Other information as requested by CCC or specified in Program 
Announcements and Notices to Participants, as applicable; and
    (17) The exporter's statement, ``ALL SECTION 1493.440 CERTIFICATIONS 
ARE BEING MADE IN THIS APPLICATION'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec.  1493.440.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec.  1493.450(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.
    (c) Ineligible exporter. An exporter will be ineligible to obtain a 
payment guarantee if such exporter:
    (1) Directly or indirectly owns or controls the importer;
    (2) Is directly or indirectly owned or controlled by the importer; 
or
    (3) Is directly or indirectly owned or controlled by a person(s) or 
entity(ies) which also owns or controls the importer.



Sec.  1493.440  Certification requirements for payment guarantee.

    By providing the statement in Sec.  1493.430(a)(17), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in Sec.  
1493.430(a)(17), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by Sec.  
1493.410(x).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of 
any duty, tax or fee imposed under Federal law on an imported commodity 
or product;
    (d) No person or selling agency has been employed or retained to 
solicit or secure the payment guarantee, and that there is no agreement 
or understanding for a commission, percentage, brokerage, or contingent 
fee, except in the case of bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business; and
    (e) The information provided pursuant to Sec.  1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.  1493.420, and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements. If the exporter breaches or violates these certifications 
with respect to a SCGP payment guarantee, CCC will have the right, 
notwithstanding any other rights provided under this subpart, to annul 
guarantee coverage for any commodities not yet exported and/or to 
proceed against the exporter.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]

[[Page 773]]



Sec.  1493.450  Payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the exporter or the exporter's assignee an amount not to 
exceed the guaranteed value, plus eligible interest, in the event that 
the importer fails to pay under the importer obligation. unless CCC 
determines with respect to the particular transaction and claim that the 
guaranteed portion of the port value exceeded the prevailing U.S. market 
value for the same, or same type of agricultural commodity or product. 
In making this determination, CCC will adjust the prevailing U.S. market 
value for estimated freight and/or insurance costs if the export sale 
was made on a CFR or CIF basis. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee will apply 
to a credit period not exceeding 180 days beginning either on the 
date(s) of export(s) or from the date when interest begins to accrue 
whichever is earlier, and will continue during the credit term specified 
in the payment guarantee or amendments thereto. However, the payment 
guarantee becomes effective on the date(s) of export(s) of the 
agricultural commodities or products thereof specified in the exporter's 
application for a payment guarantee.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and/or Notices to Participants in effect at the 
time the payment guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
payment guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The exporter may apply 
for a payment guarantee and, if coverage is available, pay the guarantee 
fee, based at least on, the amount of the lower loading tolerance of the 
export sales contract; however, the exporter may also request that CCC 
reserve additional guarantee coverage to accommodate up to the amount of 
the upward loading tolerance specified in the export sales contract. If 
such additional guarantee coverage is available at the time of 
application and CCC determines to make such reservation, it will so 
indicate to the exporter. In the event that the exporter ships a 
quantity greater than the amount on which the guarantee fee was paid 
(i.e., lower loading tolerance), it may obtain the additional coverage 
from CCC, up to the amount of the upward loading tolerance, by filing 
for an amendment to the payment guarantee, and by paying the additional 
amount of fee applicable. If such amendment to the payment guarantee is 
not filed with CCC by the exporter within 30 days after the date of the 
last export against the sales contract, CCC may determine not to reserve 
the coverage originally set aside for the exporter.
    (f) Ineligible exports. Commodities with a date of export prior to 
the date of receipt by CCC of the exporter's telephonic or written 
application for a payment guarantee, or with a date of export made after 
the final date for export shown on the payment guarantee or any 
amendments thereof, are ineligible for guarantee coverage under this 
subpart, except where it is determined by the GSM to be in the best 
interests of CCC to provide guarantee coverage on such commodities.
    (g) Foreign agricultural component. CCC may approve payment 
guarantees under this subpart only in connection with sales of United 
States agricultural commodities as defined in Sec.  1493.410(x). CCC may 
not provide guarantee coverage under this subpart on credit extended for 
the value of any foreign agricultural component.
    (h) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the payment guarantee are binding on the 
exporter or the exporter's assignee.
    (i) Amendments. A request for an amendment of a payment guarantee 
may be submitted only by the exporter (with the concurrence of the 
assignee, if any). CCC will consider such a request only if the 
amendment sought is consistent with this subpart and any

[[Page 774]]

applicable Program Announcements and Notices to Participants. Amendments 
may include, but will not be limited to, a change in the credit period 
and an extension of time to export. Any amendment to the payment 
guarantee, particularly those that result in an increase in CCC's 
liability under the payment guarantee, may result in an increase in the 
guarantee fee. (Technical corrections or corrections of a clerical error 
which may be submitted by the exporter or the exporter's assignee are 
not viewed as amendments.)



Sec.  1493.460  Guarantee rates and fees.

    (a) Guarantee fee rates. The current payment guarantee fee rate(s) 
will be available by Program Announcement.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the guaranteed value by the guarantee fee rate.
    (c) Payment of fee. The exporter shall remit, with his written 
application, the full amount of the guarantee fee. Applications will not 
be approved until the guarantee fee has been received by CCC. The 
exporter's check for the guarantee fee shall be made payable to CCC and 
mailed or delivered by courier to the office specified in the Contacts 
P/R.
    (d) Refunds of fee. Guarantee fees paid in connection with approved 
applications will ordinarily not be refundable. CCC's approval of the 
application will be final and refund of the guarantee fee will not be 
made after approval unless the GSM determines that such refund will be 
in the best interest of CCC. If the application for a payment guarantee 
is not approved or is approved only for a part of the guarantee coverage 
requested, a full or pro rata refund of the fee remittance will be made.



Sec.  1493.470  Evidence of export.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment made under the payment 
guarantee. This report must include the following:
    (1) Payment guarantee number;
    (2) Date of export;
    (3) Exporter's sale number;
    (4) Exported value;
    (5) Quantity;
    (6) A full description of the commodity exported;
    (7) Unit sales price received for the commodity exported and the 
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export 
differs from the unit sales price indicated in the exporter's 
application for a payment guarantee, the exporter is also required to 
submit a statement explaining the reason for the difference;
    (8) Description and value of discounts and allowances, if any;
    (9) Number of the Agreement assigned by USDA under any other program 
if any portion of the export sale was also approved for participation in 
any of the following CCC or USDA export program: Export Enhancement 
Program, Dairy Export Incentive Program, Sunflowerseed Oil Assistance 
Program, or Cottonseed Oil Assistance Program; and
    (10) The exporter's statement, ``ALL SECTION 1493.480 CERTIFICATIONS 
ARE BEING MADE IN THIS EVIDENCE OF EXPORT'' which, when included in the 
evidence of export by the exporter, will constitute a certification that 
it is in compliance with all the requirements set forth in Sec.  
1493.480.
    (b) Time limit for submission of evidence of export. The exporter 
must provide a written report to the office specified in the Contacts P/
R within 60 calendar days if the export was by rail or truck; or 30 
calendar days if the export was by any other carrier. The time period 
for filing a report of export will commence upon each date of export of 
the commodity covered under a payment guarantee. If the evidence of 
export report is not received by CCC within the time period for filing, 
the payment guarantee will become null and void only if and only to the 
extent that failure to make timely filing resulted, or would be likely 
to result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the 
program;
    (3) Obstruction of the fair administration of the program; or
    (4) A threat to the integrity of the program. The time limit for 
submission of an evidence of export report may be extended if such 
extension is

[[Page 775]]

determined by the GSM to be in the best interests of CCC.
    (c) Export sales reporting. Exporters may have a mandatory reporting 
responsibility under section 602 of the Agricultural Trade Act of 1978, 
as amended (7 U.S.C. 5712) for exports of wheat and wheat flour, feed 
grains, oilseeds, cotton, and other agricultural commodities and 
products thereof.



Sec.  1493.480  Certification requirements for the evidence of export.

    By providing the statement contained in Sec.  1493.470(a)(10), the 
exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been or will be met. The exporter will be 
required to provide further explanation or documentation with regard to 
reports that do not include this statement. If the exporter breaches or 
violates these certifications with respect to a SCGP payment guarantee, 
CCC will have the right, notwithstanding any other rights provided under 
this subpart, to annul guarantee coverage for any commodities not yet 
exported and/or to proceed against the exporter. The exporter, in 
submitting the evidence of export and providing the statement set forth 
in Sec.  1493.470(a)(10), certifies that:
    (a) The agricultural commodity or product exported under the payment 
guarantee is a U.S. agricultural commodity as defined by Sec.  
1493.410(x).
    (b) Agricultural commodities of the grade, quality and quantity 
called for in the exporter's sales contract with the importer have been 
exported to the country specified in the payment guarantee;
    (c) There is an importer obligation as defined in Sec.  1493.410(n) 
to cover the exported value of the commodity exported;
    (d) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law; and
    (e) The information provided pursuant to Sec.  1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec.  1493.420 and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec.  1493.490  Proof of entry.

    (a) Diversion. The diversion of commodities covered by a SCGP 
payment guarantee to a country other than that shown on the payment 
guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the agricultural commodities 
exported in connection with the SCGP in the country that was the 
intended country of destination of such commodities. Records 
demonstrating proof of entry must be in English or be accompanied by a 
certified or other translation acceptable to CCC. Records acceptable to 
meet this requirement include an original certification of entry signed 
by a duly authorized customs or port official of the importing country, 
by the importer, by an agent or representative of the vessel or shipline 
which delivered the agricultural commodity to the importing country, or 
by a private surveyor in the importing country, or other documentation 
deemed acceptable by the GSM showing:
    (1) That the agricultural commodity entered the importing country;
    (2) The identification of the export carrier;
    (3) The quantity of the agricultural commodity;
    (4) The kind, type, grade and/or class of the agricultural 
commodity; and
    (5) The date(s) and place(s) of unloading of the agricultural 
commodity in the importing country. (Records of proof of entry need not 
be submitted with a claim for loss, except as may be provided in Sec.  
1493.500(b)(4)(ii).)

[[Page 776]]



Sec.  1493.500  Notice of default and claims for loss.

    (a) Notice of default. If the importer fails to make payment 
pursuant to the terms of the importer obligation, the exporter or the 
exporter's assignee must submit a notice of default to CCC as soon as 
possible, but not later than 10 calendar days after the date that 
payment was due from the importer (the due date). A notice of default 
must be submitted in writing to the Treasurer, CCC, at the address 
specified in the Contacts P/R. If the exporter or the exporter's 
assignee fails to promptly notify CCC of defaults in accordance with 
this paragraph, CCC may make the payment guarantee null and void with 
respect to any payment(s) applicable to such default. This time limit 
may be extended only under extraordinary circumstances and if such 
extension is determined by the Controller, CCC, to be in the best 
interests of CCC. The notice of default must include:
    (1) Payment guarantee number;
    (2) Name of the country;
    (3) Name of the defaulting importer;
    (4) Due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of importer's refusal to pay, if applicable; and
    (7) Reason for importer's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue, and the interest rate on the importer 
obligation applicable to the claim;
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i) The importer obligation;
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the importing country;
    (iii)(A) The exporter's invoice showing, as applicable, the FAS, 
FOB, CFR or CIF values; or
    (B) If there was an intervening purchaser, both the exporter's 
invoice to the intervening purchaser and the intervening purchaser's 
invoice to the importer;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default 
under the applicable export sale. The instrument must reference the 
applicable importer obligation; and
    (v) A copy of the report(s) of export previously submitted by the 
exporter to CCC pursuant to Sec.  1493.470(a).
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the exporter or an exporter's assignee 
need only provide all of the required claims documents with the initial 
claim relating to a covered transaction. For subsequent claims relating 
to failure of the importer to make scheduled installments on the same 
export shipment, the exporter or the exporter's assignee need only 
submit to CCC a notice of such failure containing the information stated 
in paragraph (b) (1), (2), and (3) of this section; an instrument of 
subrogation as per paragraph (b)(4)(iv) of this section, and including 
the date the original claim was filed with CCC.



Sec.  1493.510  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec.  1493.500, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the applicable payment guarantee, this subpart and any

[[Page 777]]

applicable supplemental Program Announcements and Notices to 
Participants. If CCC determines that it is liable to the exporter and/or 
the exporter's assignee, CCC will pay the exporter or the exporter's 
assignee in accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. Subject to a determination by CCC 
with respect to prevailing U.S. market value pursuant to Sec.  
1493.450(a) of this part, CCC's maximum liability for any claims for 
loss submitted with respect to any payment guarantee, not including any 
late interest payments due in accordance with paragraph (c) of this 
section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
eligible interest; or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the exported value indicated in the evidence of export, 
plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the day of receipt of a claim found 
by CCC to be in good order and continuing until and including the date 
that payment is made by CCC. Late interest will be paid on the 
guaranteed amount, as determined by paragraphs (b)(1) and (2) of this 
section, and will be calculated based on the average investment rate of 
the most recent Treasury 91-day bill auction as announced by the 
Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract or the 
importer obligation unless it is determined to be in the best interests 
of CCC by the Controller, CCC. Notwithstanding the foregoing, CCC at its 
option may declare the entire amount of the unpaid balance, plus accrued 
interest, in default and make payment to the exporter or the exporter's 
assignee in addition to such other claimed amount as may be due from 
CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to commodities covered by a 
payment guarantee, CCC will not, except pursuant to a determination 
under Sec.  1493.450(a) of this part, hold the assignee responsible or 
take any action or raise any defense against the assignee for any 
action, omission, or statement by the exporter of which the assignee has 
no knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec. Sec.  1493.470 and 1493.480, excluding post-export adjustments 
(i.e., corrections to evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec.  1493.500.



Sec.  1493.520  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the importer of CCC's rights under 
the subrogation agreement to recover all moneys in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer or any other source whatsoever, such monies shall be 
immediately paid to the Treasurer, CCC. If such monies are not received 
by CCC within 15 business days from the date of recovery by the exporter 
or the exporter's assignee, the exporter or the exporter's assignee will 
owe to CCC interest from the date of recovery to the date of receipt by 
CCC. This interest will be calculated based on the latest average 
investment rate of the most recent Treasury 91-day bill auction, as 
announced by the Department of Treasury, in effect on the date of 
recovery and will accrue from such date to the date of payment by the 
exporter or the exporter's assignee to CCC. Such interest will be 
charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the payment guarantee its pro rata share

[[Page 778]]

immediately, provided that the required information necessary for 
determining pro rata distribution has been furnished. If payment is not 
made by CCC within 15 business days from the date of recovery or 15 
business days from receiving the required information for determining 
pro rata distribution, whichever is later, CCC will pay interest 
calculated on the latest average investment rate of the most recent 
Treasury 91-day bill auction, as announced by the Department of 
Treasury, in effect on the date of recovery and such interest will 
accrue from such date to the date of payment by CCC. The interest will 
apply only to the portion of the recovery payable to the holder of the 
payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer, and recoveries received by CCC from the exporter, the 
exporter's assignee, or any other source whatsoever, will be allocated 
by CCC to the exporter or the exporter's assignee and to CCC on a pro 
rata basis determined by their respective interests in such recoveries. 
The respective interest of each party will be determined on a pro rata 
basis, based on the combined amount of principal and interest in 
default. Once CCC has paid out a particular claim under a payment 
guarantee, CCC pro rates any collections it receives and shares these 
collections proportionately with the holder of the guarantee until both 
CCC and the holder of the guarantee have been reimbursed in full. 
Appendix A to Sec.  1493.520--Illustration of Pro Rata Allocation of 
Recoveries--provides an example of the methodology used by CCC in 
applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, the exporter may be liable to CCC for any amounts 
paid by CCC under the payment guarantee when and if it is determined by 
CCC that the exporter has engaged in fraud, or has been or is in 
material breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the payment guarantee 
or for fulfilling obligations under SCGP. Further, the exporter's 
assignee may be liable to CCC for any amounts paid by CCC under the 
payment guarantee when and if it is determined by CCC that the 
exporter's assignee has engaged in fraud or otherwise violated program 
requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec. Sec.  1493.440(b) and 1493.480(d) or the failure of an exporter 
to comply with the provisions of Sec. Sec.  1493.490 or 1493.530(e) will 
not affect the validity of any payment guarantee with respect to an 
assignee which had no knowledge of such violation or failure to comply 
at the time such exporter applied for the payment guarantee or at the 
time of assignment of the payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the importer.

  Appendix A to Sec.  1493.520--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec.  1493.520(c), regarding pro rata sharing of recoveries made for 
claims filed under the SCGP. A typical case might be as follows:
    1. The U.S. exporter enters into a $200,000, 180 day credit 
arrangement with the importer calling for two equal payments of 
principal and two equal payments of interest at a rate of 10 percent per 
annum and a penalty interest rate of 12 percent per annum (basis 360 
days) on overdue amounts until the overdue amount is paid. (Basis for 
interest calculation may be 360 or 365 days.)
    2. The importer fails to make the final principal payment of 
$100,000 and an interest payment of $2,500.00 (10% per annum for 90 days 
on $100,000), both due on January 31.
    3. On February 10, the U.S. exporter files a claim in good order 
with CCC.
    4. CCC's guarantee states that CCC's maximum liability is limited to 
60 percent of the principal amount due ($60,000) and interest at a rate 
of 8 percent per annum (basis 365 days) on 60 percent of the principal 
outstanding ($1,183.56) (8% per annum for 90 days on $60,000). (CCC's 
basis for interest calculation is 365 days.)
    5. CCC pays the claim on February 22.
    6. The average investment rate of the most recent 91-day Treasury 
Bill auction average which has been published by the Department of 
Treasury in effect on the date of nonpayment by CCC (January 31) is 7 
percent. (CCC's late interest rate.)

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the payment 
guarantee would be computed as follows:

[[Page 779]]



1. CCC's Obligation under the Payment Guarantee:
    (a) Principal coverage--(60% $100,000)...........         $60,000.00
    (b) Interest coverage--(8% per annum for 90 days            1,183.56
     on $60,000, basis 365 days).....................
                                                      ------------------
                                                              $61,183.56
    (c) Late interest due from CCC (7% per annum for              129.07
     11 days on $61,183.56, basis 365 days)..........
                                                      ------------------
    (d) Amount paid by CCC on February 22............         $61,312.63
                                                      ==================
2. Importer's obligation under the importer
 obligation:
    (a) Principal due January 31.....................        $100,000.00
        Interest due January 31 (10% per annum for 90           2,500.00
         days on $100,000, basis 360 days)...........
                                                      ------------------
        Amount owed by importer as of January 31.....        $102,500.00
    (b) Penalty interest due (12% per annum for 22                751.67
     days on $102,500.00, basis 360 days)............
                                                      ------------------
    (c) Amount owed by importer as of February 22....        $103,251.67
3. Amount of importer's obligation not covered by
 CCC's payment guarantee: $41,939.04 ($103,251.67-
 $61,312.63).........................................
 

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the importer obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the importer is 
$103,251.67, CCC would be entitled to 59.38 percent ($61,312.63 divided 
by $103,251.67) and the holder of the payment guarantee would be 
entitled to 40.62 percent ($41,939.04 divided by $103,251.67) of any 
recoveries of losses after settlement of the claim. Since in this 
example, the losses were recovered after the claim has been paid by CCC, 
Sec.  1493.520(b) would apply.



Sec.  1493.530  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a payment guarantee or the right to 
such proceeds only to a financial institution in the U.S. The assignment 
must cover all amounts payable under the payment guarantee not already 
paid, may not be made to more than one party, and may not, unless 
approved in advance by CCC, be:
    (i) Made to one party acting for two or more parties; or
    (ii) Subject to further assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof, to the financial 
institution and to the exporter issued the payment guarantee, in lieu of 
an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:

[[Page 780]]

    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a payment guarantee, including those records 
generated and maintained by agents, intervening purchasers, and related 
companies involved in special arrangements with the exporter. The 
Secretary of Agriculture and the Comptroller General of the United 
States, through their authorized representatives, must be given full and 
complete access to the premises of the exporter or the exporter's 
assignee, as applicable, during regular business hours from the 
effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's, or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by Sec.  
1493.490(b), and must provide access to such documentation if requested 
by the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, all regulations, Program Announcements, and Notices to 
Participants issued pursuant to this subpart. Applicants for payment 
guarantees are hereby on notice that they will be bound by any terms 
contained in applicable Program Announcements or Notices to Participants 
issued prior to the date of approval of a payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by: Wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority; and the name and title of the authorized 
person or officer. Further, the exporter or exporter's assignee must 
ensure that all information/reports required under these regulations are 
submitted within the required time limits. If requested in writing, CCC 
will acknowledge receipt of a submission by

[[Page 781]]

the exporter or the exporter's assignee. If acknowledgment of receipt is 
requested, the exporter or exporter's assignee must submit an extra copy 
of each document and a stamped self-addressed envelope for return by 
U.S. mail. If courier services are desired for the return receipt, the 
exporter or exporter's assignee must also submit a self-addressed 
courier service order which includes the recipient's billing code for 
such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information requirements contained in this part (7 CFR part 
1493, subpart D) have been approved by the Office of Management and 
Budget (OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 
and have been assigned OMB Control Number 0551-0037.



PART 1494--EXPORT BONUS PROGRAMS--Table of Contents




             Subpart A--Export Enhancement Program Criteria

Sec.
1494.10 General statement.
1494.20 Criteria.

            Subpart B--Export Enhancement Program Operations

1494.101 General statement.
1494.201 Definitions of terms.
1494.301 Information required for program participation.
1494.401 Performance security.
1494.501 Submission of offers to CCC.
1494.601 Acceptance of offers by CCC.
1494.701 Payment of bonus.
1494.801 Enforcement and termination of agreements with CCC.
1494.901 Dispute resolution and appeals.
1494.1001 Miscellaneous provisions.

           Subpart C--Dairy Export Incentive Program Criteria

1494.1100 General statement.
1494.1101 Criteria.

          Subpart D--Dairy Export Incentive Program Operations

1494.1200 Program operations.
1494.1201 Paperwork Reduction Act.

    Source: 56 FR 25011, June 3, 1991, unless otherwise noted.



             Subpart A--Export Enhancement Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec.  1494.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity Credit Corporation's (CCC) Export Enhancement Program 
(EEP). These criteria are interrelated and will be considered together 
in order to select eligible commodities and eligible countries for EEP 
initiatives which will best meet the program's objectives. The 
objectives of the program are to discourage unfair trade practices by 
other countries, to increase U.S. agricultural commodity exports, and to 
encourage other countries exporting agricultural commodities to 
undertake serious negotiations on agricultural trade problems. Under the 
EEP, bonuses are made available by CCC to enable exporters to meet 
prevailing world prices for targeted commodities in targeted 
destinations. In the operation of the EEP, CCC will make reasonable 
efforts to avoid the displacement of usual marketings of U.S. 
agricultural commodities.



Sec.  1494.20  Criteria.

    The criteria considered by CCC in reviewing proposals for 
initiatives will include, but not be limited to, the following:
    (a) The expected contribution of proposed initiatives in furthering 
trade policy negotiations and, in particular, in furthering the U.S. 
trade policy negotiating strategy of countering competitors' subsidies 
and other unfair trade practices by displacing such

[[Page 782]]

countries' subsidized exports in targeted countries;
    (b) The contribution which initiatives will make toward realizing 
U.S. agricultural export goals and, in particular, in developing, 
expanding, or maintaining markets for U.S. agricultural commodities;
    (c) The effect that sales facilitated by initiatives would have on 
non-subsidizing exporters of agricultural products; and
    (d) The subsidy requirements of proposed initiatives compared to the 
expected benefits.



            Subpart B--Export Enhancement Program Operations

    Authority. 15 U.S.C. 714c; 7 U.S.C. 5602, 5651, 5661, 5662, 5676.



Sec.  1494.101  General statement.

    This subpart contains the regulations governing the operation of the 
Export Enhancement Program (EEP) of the Commodity Credit Corporation 
(CCC). CCC will, from time to time, announce, through public press 
release, initiatives to facilitate the export of U.S. agricultural 
commodities to targeted markets. The public press release, which will 
contain the name of a person for interested parties to contact, will be 
followed by the issuance of an Invitation for Offers (Invitation). 
Invitations will be issued pursuant to this subpart by the General Sales 
Manager (GSM) and will specify the eligible country(ies) (the targeted 
market), the unit of measure, the eligible commodity, the maximum 
quantity of the eligible commodity eligible for a CCC bonus, the quality 
specifications of the eligible commodity (including possible 
restrictions on type, kind, grade and/or class or other quality 
specifications), the eligible buyer(s), the method and rate for 
determining liquidated damages and performance security requirements, 
and any other terms and conditions peculiar to that Invitation. 
Invitations may be one of the following two types: Those inviting 
exporters which have a sales contract with an eligible buyer to submit a 
competitive offer for a CCC Bonus; and those inviting exporters which 
have a sales contract with an eligible buyer to apply for an Announced 
CCC Bonus. After an interested person has qualified to submit an offer 
for an eligible commodity, the eligible exporter may submit an offer to 
CCC in response to an Invitation. Such offer must contain the 
information required by this subpart and any additional information 
required by the applicable Invitation. The exporter's offer will include 
either the Announced CCC Bonus, if applicable, or an amount in dollars 
and cents for a bonus deemed necessary by the exporter to make a 
commercial sale of the eligible commodity for export to the eligible 
country competitive with export sales of the commodity by other 
exporting countries to buyers in the eligible country. If the exporter 
has furnished the required performance security and the offer is 
acceptable to CCC, then CCC will notify the exporter that its offer has 
been accepted. CCC and the exporter will enter into an Agreement in 
which CCC will agree to pay the bonus to the exporter in return for the 
exporter's submission of proof that the eligible commodity has been 
exported from the United States and entered into the eligible country, 
in accordance with the terms and conditions of the Agreement.



Sec.  1494.201  Definitions of terms.

    Terms used in this subpart, Invitations issued pursuant to this 
subpart, and any documents pertaining to the EEP shall have the 
following meaning, unless otherwise specified in such Invitations or 
documents:
    (a) Agreement or EEP Agreement--The Agreement entered into between 
CCC and the exporter consisting of:
    (1) The terms and conditions of this subpart;
    (2) The terms and conditions of the applicable Invitation;
    (3) The exporter's offer;
    (4) CCC's acceptance of the exporter's offer; and
    (5) The public press release for the Announced CCC Bonus in effect 
at the time of the offer, if applicable.
    (b) Announced CCC bonus--A CCC bonus announced by CCC by public 
press release in connection with an Invitation which specifies that the 
CCC bonus amount will be pre-determined and announced by CCC.

[[Page 783]]

    (c) FSA--The Farm Service Agency, U.S. Department of Agriculture.
    (d) Bonus value--The CCC bonus multiplied by the quantity of the 
eligible commodity exported pursuant to an Agreement, provided that the 
eligible commodity enters into the eligible country. (The bonus value is 
paid to the exporter in CCC certificates or other form of payment.)
    (e) Business day--Days during which employees of the U.S. Department 
of Agriculture in Washington, DC or in Kansas City, Missouri, as 
applicable depending upon the office to which a submission is to be 
made, are on official duty during normal business hours.
    (f) CCC--The Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (g) CCC bonus--A dollar and cents amount, established through CCC's 
acceptance of the exporter's offer for such bonus amount, to be paid to 
the exporter for each unit of the eligible commodity exported pursuant 
to an Agreement, provided that the eligible commodity enters into the 
eligible country.
    (h) CCC Certificate--The CCC Commodity Certificate or Certificates 
issued by CCC that may be transferred or exchanged for a CCC-owned 
commodity pursuant to CCC's regulations on Commodity Certificates, In 
Kind Payments, and Other Forms of Payment, currently codified at 7 CFR 
part 1470.
    (i) CCC Operations Division (CCCOD)--The CCC Operations Division, 
FAS, U.S. Department of Agriculture.
    (j) Date of entry--Either the date on the certificate of entry 
specified in Sec.  1494.401(f)(2) indicating that the eligible commodity 
entered the eligible country on that date or the date that an entry 
document was issued by a customs port authority or other government 
official, whichever is later.
    (k) Date of export--One of the following dates, depending upon the 
method of shipment:
    (1) The on-board date shown on the export carrier's bill of lading, 
when the eligible commodity is shipped from the U.S. without being 
transshipped through a Canadian port;
    (2) The on-board date at the Canadian port shown on the export 
carrier's bill of lading, when the eligible commodity is shipped from a 
Canadian transshipment port on the St. Lawrence River, provided its 
identity had been preserved until shipped from Canada;
    (3) The on-board date shown on the export carrier's through bill of 
lading, when the eligible commodity is loaded to a lash barge for 
shipment from the U.S.; or
    (4) The date of entry shown on an authenticated landing certificate 
or similar document issued by an official of the government of the 
eligible country, when the eligible commodity is shipped by rail or 
truck from the U.S.
    (l) Date of sale--The earliest date the exporter has knowledge that 
a sales contract, as defined in paragraph (bb) of this section, exists 
with an eligible buyer.
    (m) Director--The Director, Kansas City Commodity Office, FSA, U.S. 
Department of Agriculture, or the Director's designee.
    (n) Eligible Buyer--Unless otherwise specified in the Invitation, a 
buyer, located in the eligible country, that has entered, or will enter, 
into a sales contract with an exporter. (The applicable Invitation may 
limit the eligible buyer to one or more particular buyers in an eligible 
country.)
    (o) Eligible country--The country or countries, as specified in an 
Invitation, which will be the only country or countries into which an 
exported eligible commodity must ultimately be entered in order for the 
exporter to earn a bonus from CCC under that Invitation.
    (p) Eligible commodity--The U.S. agricultural commodity specified as 
eligible for export under the applicable Invitation, which is of the 
kind, type, grade and/or class of commodity specified in the applicable 
Invitation. (If the eligible commodity is grain, it must meet the 
definition applicable for that grain under the U.S. Grain Standards Act 
and the regulations issued thereunder.)
    (q) Eligible exporter. A person that has been notified by CCC that 
such person is qualified to submit offers in response to Invitations.
    (r) Export or exported--The shipment of the eligible commodity from 
the United States or from the Canadian transshipment port, as permitted 
by

[[Page 784]]

this subpart, destined for the eligible country.
    (s) Exporter--An eligible exporter that enters into an Agreement 
with CCC under this subpart.
    (t) Export carrier--The carrier on which the eligible commodity is 
shipped under the Agreement to the eligible country or to a port in a 
nearby country, if transshipments other than through Canada are allowed 
by the applicable Invitation. (``Export carrier'' may mean an ocean 
vessel and, on Canadian transshipments, will mean the ocean vessel 
loaded at the Canadian transshipment port; or, on overland shipments, a 
railcar or truck; or a container or lash barge loaded with the eligible 
commodity for which a through on-board bill of lading is issued for 
shipment to the eligible country, provided that the loaded container or 
lash barge is subsequently lifted aboard an ocean vessel.)
    (u) FAS--The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (v) GSM--The General Sales Manager, FAS, U.S. Department of 
Agriculture, acting in the capacity of Vice President, CCC, or the GSM's 
designee.
    (w) Invitation--The Invitation for Offers issued by CCC pursuant to 
this subpart, generally specifying the eligible country, the eligible 
commodity, the maximum quantity of the eligible commodity eligible for a 
CCC bonus, the quality specifications of the eligible commodity, the 
eligible buyer(s), the method and rate for determining liquidated 
damages and performance security requirements, allowances for 
transshipments, and any other terms and conditions particular to that 
Invitation. (If the Invitation contains terms or conditions that are 
inconsistent with this subpart, the terms and conditions of the 
Invitation will prevail for the purposes of Agreements entered into 
pursuant to such Invitation.)
    (x) Notice to exporters--EEP Contacts--A notice issued by FAS by 
public press release which contains specific addresses; telephone, 
facsimile and telex numbers; and contacts within FAS and FSA to obtain 
further information concerning qualification as an eligible exporter, 
the submission of offers in response to Invitations, amendments to 
Agreements, requests for bonus payments, the submission of export and 
entry documentation, and other matters related to the EEP.
    (y) Official Inspection Certificate--A valid official export 
inspection or other quality analysis certificate, as specified in the 
applicable Invitation.
    (z) Official weight certificate--A valid official export weight or 
other quantity certificate, as specified in the applicable Invitation.
    (aa) Person--An individual, partnership, corporation, association or 
other legal entity.
    (bb) Sales contract--The sales contract entered into between an 
eligible exporter and an eligible buyer which sets forth the terms and 
conditions of a sale of the eligible commodity from the eligible 
exporter to the buyer. (Written evidence of sale may be in the form of a 
signed sales contract, an offer and acceptance between parties, or other 
documentary evidence of sale. The written evidence of sale for the 
purposes of the EEP must, at a minimum, document the following 
information: the eligible commodity, quantity, quality specifications, 
delivery terms (FOB, C&F, etc.) to the eligible country, delivery 
period, unit price, payment terms, date of sale, and evidence of 
agreement between buyer and seller. A sales contract with an intervening 
purchaser or an affiliate or subsidiary of the eligible exporter is not 
an eligible sales contract for the purpose of this subpart.)
    (cc) Transshipment--The entry of the eligible commodity into a 
country other than the eligible country which occurs prior to the 
subsequent entry of the eligible commodity into the eligible country.
    (dd) Time--All references to time shall refer to local time in 
Washington, DC.
    (ee) Unit of measure--The unit of measure for the eligible 
commodity, as specified in the applicable Invitation.
    (ff) United States or U.S.--All of the 50 States, the District of 
Columbia, and the territories and possessions of the United States.
    (gg) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or

[[Page 785]]

    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995; 62 
FR 24561, May 6, 1997]



Sec.  1494.301  Information required for program participation.

    Before CCC will consider an offer from an interested person, such 
person must qualify for participation in the program. Based upon 
information submitted by the interested person and available from public 
sources, CCC will determine whether the interested person is eligible 
for participation in the program.
    (a) Submission of documentation. An interested person that wishes to 
qualify as an eligible exporter must furnish the following information 
or documentation to CCC at the address referenced in the Notice to 
Exporters--EEP Contacts:
    (1) The address of the interested person's office and the name and 
address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the interested person, e.g., 
sole proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the interested person, if the 
interested person is a corporation;
    (4) The name and address of an office(s) of the interested person 
within the U.S., if the interested person is a foreign corporation or 
other foreign entity; and
    (5) A certified statement describing the interested person's 
participation, if any, during the past three years in U.S. Government 
programs, contracts or agreements.
    (6) The following certification: ``I certify, to the best of my 
knowledge and belief, that neither [name of interested person] nor any 
of its principals has been debarred, suspended, or proposed for 
debarment from contracting with or participating in programs 
administered by any U.S. Government agency. [``Principals,'' for the 
purpose of this certification, means officers; directors; owners of five 
percent or more of stock; partners; and persons having primary 
management or supervisory responsibility within a business entity (e.g., 
general manager, plant manager, head of a subsidiary division or 
business segment, and similar positions).] I further agree that, should 
any such debarment, suspension, or notice of proposed debarment occur in 
the future, [name of interested person] will immediately notify CCC.''
    (b) Necessity to qualify. An interested person may not submit an 
offer, and CCC will not consider any such offer, until CCC has notified 
the interested person that such person has qualified as an eligible 
exporter.
    (c) Additional submissions. CCC will promptly notify interested 
persons that have submitted information required by this section whether 
they have qualified to have their offers considered. Any person failing 
to qualify will be notified of the basis of CCC's decision and will be 
given an opportunity to provide additional information for consideration 
by CCC.
    (d) Previous performance. CCC may request additional information 
with respect to the interested person's performance under any U.S. 
Government programs or in connection with any contracts or agreements 
with the U.S. Government during the past three years.
    (e) Ineligibility for program participation. A person may be 
ineligible to participate in the EEP if such person:
    (1) Is currently debarred, suspended or proposed for debarment from 
contracting with or participating in any program administered by a U.S. 
Government agency; or
    (2) Is controlled or can be controlled, in whole or in part, by any 
individuals or entities currently debarred, suspended or proposed for 
debarment from contracting with or participating in

[[Page 786]]

programs administered by a U.S. Government agency.
    (f) Duty to update information provided to CCC. An eligible exporter 
is under a continuing obligation to inform CCC of any changes in the 
information or documentation submitted to CCC pursuant to paragraph (a) 
of this section and to provide current and accurate information to CCC.
    (g) Payment of bonus to exporters without proven EEP participation. 
An eligible exporter that has not yet demonstrated its ability to 
participate successfully in the EEP will be eligible to receive a bonus 
payment(s) only after the eligible commodity specified in an EEP 
Agreement has entered into the eligible country. Such an exporter must 
furnish performance security under ``Option B'' of the applicable 
Invitation and follow the procedure specified in Sec.  1494.701(d) to 
request the payment of the bonus. An eligible exporter may demonstrate 
its ability to participate successfully in the EEP by entering or 
causing to be entered into the eligible country at least 95% of the 
quantity of the eligible commodity specified in any one EEP Agreement. 
CCC will consider that an exporter has proven its ability to participate 
successfully in the EEP as of the date on which CCC pays to the exporter 
a bonus for entry of a quantity that brings the total entered quantity 
for any one EEP Agreement to at least 95%. For all EEP Agreements that 
such exporter enters into with CCC subsequent to that date, the exporter 
may furnish performance security under ``Option A'' of the applicable 
Invitation and will be eligible to receive bonus payments in accordance 
with Sec.  1494.701(c).

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995]



Sec.  1494.401  Performance security.

    (a) Requirement to establish performance security. Prior to the 
submission of an offer to CCC in response to an Invitation, an eligible 
exporter must establish performance security, in a form which is 
acceptable to CCC, in order to guarantee the eligible exporter's 
faithful performance of the Agreement. If CCC enters into an Agreement 
with the eligible exporter, this performance security must remain in 
effect until its cancellation or reduction is authorized by CCC pursuant 
to paragraph (f) of this section. An offer made by an eligible exporter 
will not be considered if proof of the establishment of the performance 
security is not made available to CCC by 3 p.m. on the date for which 
the offer is submitted for consideration.
    (b) Form of performance security. The performance security must be 
acceptable to CCC and may be an irrevocable standby letter of credit, a 
bond, or a certified or cashier's check. If a standby letter of credit 
is furnished as performance security, the opening bank may be a U.S. 
bank or a foreign bank. If the standby letter of credit is opened by a 
foreign bank, it must be 100 percent confirmed by a U.S. bank. If a bond 
is furnished as performance security, the surety(ies) must be among 
those appearing on the list of approved sureties maintained by the U.S. 
Department of the Treasury. If a cashier's or certified check is 
furnished as performance security, the bank issuing the cashier's or 
certified check must be a U.S. bank.
    (c) Amount of performance security. The amount of the performance 
security to be furnished to CCC in response to a particular Invitation 
will depend upon whether the eligible exporter intends to select 
``Option A'' or ``Option B'' for the timing of the bonus payment. If the 
eligible exporter furnishes performance security under ``Option A'' of 
the applicable Invitation, the eligible exporter may request payment of 
the bonus after export of the eligible commodity but before entry of the 
commodity into the eligible country. If the eligible exporter furnishes 
performance security under ``Option B'' of the applicable Invitation, 
the eligible exporter may request payment of the bonus only after the 
exported eligible commodity has entered into the eligible country. The 
applicable Invitation will specify the exact amount of performance 
security for the eligible commodity required under either ``Option A'' 
or ``Option B'' and the method and rate for determining liquidated 
damages. After the exporter and CCC enter into an Agreement, the 
exporter may request CCC to change the performance

[[Page 787]]

security option for an entire Agreement from ``Option B'' to ``Option 
A'' and, if CCC agrees to this change, the exporter will increase the 
performance security amount to the level required by the applicable 
Invitation for ``Option A''.
    (d) Additional security. The exporter shall promptly furnish such 
additional security as CCC may determine is necessary to protect CCC 
under an Agreement if the surety(ies) or obligating bank:
    (1) Becomes unacceptable to the U.S. Government or CCC; and/or
    (2) Fails to furnish reports on its financial condition as required 
by the U.S. Government or CCC.
    (e) Right to funds under the performance security. If CCC enters 
into an Agreement with an exporter under the EEP, CCC will have the 
right to funds from the performance security established by the exporter 
for such Agreement to recover:
    (1) The amount of any bonus paid to the exporter under the Agreement 
if the exporter fails to perform in accordance with such Agreement;
    (2) Any funds owed by the exporter to CCC related to the specific 
EEP Agreement for which the performance security was established, 
including those for liquidated damages, discounts for late performance, 
overpayments made by CCC, storage charges, or other damages or charges 
as determined by CCC; and/or
    (3) Any amounts or funds that could be owed by the exporter to CCC 
in accordance with subparagraphs (e) (1) and (2) of this section for 
unfulfilled obligations under the Agreement if the performance security 
should expire prior to the exporter's fulfillment of these obligations. 
Should the exporter fulfill these obligations, in accordance with the 
Agreement, after CCC has drawn upon the performance security, CCC will 
return the funds drawn to the exporter or other appropriate party, as 
determined by CCC. CCC may return the performance security if it 
determines that the exporter is not liable for any damages incurred by 
CCC as a result of the exporter's failure to fulfill its obligations 
under the Agreement and that the exporter will not retain any bonus 
payment which was not earned.
    (f) Cancellation or reduction of performance security. (1) CCC will 
agree, upon request by the exporter, to a cancellation of the 
performance security established for an Agreement when CCC determines, 
on the basis of evidence provided by the exporter or other evidence 
available to CCC, that:
    (i) The exporter has fully performed under the Agreement;
    (ii) The exporter has fully compensated CCC for all costs incurred 
or damages suffered by CCC, unless CCC has determined to hold the 
exporter harmless for such damages pursuant to Sec.  1494.801(d) as a 
result of the exporter's nonperformance of the Agreement; or
    (iii) It is no longer in the best interest of the EEP to require the 
exporter to maintain the performance security, and the exporter submits 
to CCC a written statement agreeing that all other terms and conditions 
of the Agreement will remain unchanged pending final resolution of the 
exporter's liabilities to CCC.
    (2) To support a request for the cancellation of performance 
security furnished in connection with an Agreement, the exporter must 
provide to CCC evidence of the export of the eligible commodity as 
provided by Sec.  1494.701(c), and the entry of the eligible commodity 
into the eligible country or countries. The entry certification must be 
in English or accompanied by a certified or other translation acceptable 
to CCC. To show entry of the eligible commodity into the eligible 
country, the exporter must furnish to CCC an original certification 
signed by a duly authorized customs or port official of the eligible 
country, by the eligible buyer, by an agent or representative of the 
vessel or shipline which delivered the eligible commodity to the 
eligible country, or by a private surveyor in the target country or 
other documentation deemed acceptable by the GSM showing:
    (i) That the eligible commodity entered the eligible country;
    (ii) The identification of the export carrier;
    (iii) The quantity of the eligible commodity unloaded;

[[Page 788]]

    (iv) The kind, type, grade and/or class of the eligible commodity; 
and
    (v) The date(s) and place(s) of unloading of the eligible commodity 
in the eligible country.
    (3) If the exporter makes multiple shipments against a sales 
contract with an eligible buyer, CCC may agree to a proportional 
reduction in the amount of the required performance security when the 
exporter has furnished evidence that the exporter has performed under 
the Agreement with respect to a particular shipment.
    (4) Upon the payment of liquidated damages by an exporter to CCC 
under a specific Agreement or the determination by CCC, pursuant to 
Sec.  1494.801(d), to hold the exporter harmless for the payment of 
liquidated damages owed to CCC under a specific Agreement, CCC will 
allow the exporter to cancel or reassign that portion of the performance 
security opened for such specific Agreement that would relate to the 
value of the liquidated damages.



Sec.  1494.501  Submission of offers to CCC.

    (a) Consideration of offers. Unless otherwise specified in the 
Invitation, CCC will consider offers on a daily basis from the date of 
issuance of the Invitation until such time that CCC announces that 
offers will no longer be accepted under the Invitation, the total 
quantity of the eligible commodity announced in the Invitation has been 
awarded, or the Invitation has expired as indicated by the expiration 
date shown in the Invitation.
    (1) Prior to the submission of an offer to CCC, the eligible 
exporter must have entered into a sales contract, as defined in Sec.  
1494.201(bb), with an eligible buyer for the export sale and the 
delivery of the eligible commodity to the eligible country.
    (2) The date of sale of the eligible exporter's sales contract with 
an eligible buyer must be after the issuance date of the applicable 
Invitation.
    (3) The sales contract between the eligible exporter and an eligible 
buyer may be conditioned upon the eligible exporter's entering into an 
Agreement with CCC under the EEP for the payment of a bonus.
    (4) CCC will not be responsible to any person for any loss caused by 
the failure of the eligible exporter to obtain a CCC bonus.
    (5) The eligible exporter must promptly notify CCC in writing of any 
amendment to the sales contract with an eligible buyer.
    (b) Submission of offers. Eligible exporters must submit offers, or 
modifications or withdrawals thereof, to the address, telephone, telex 
or facsimile numbers specified in the Notice to Exporters--Contacts for 
EEP. Telephonic offers must be confirmed in writing immediately 
thereafter by telex or facsimile. If a telephonic offer is not confirmed 
in writing by 9 a.m. on the next business day, the offer will not be 
considered. The date and time affixed to submissions will be as 
determined by CCC.
    (c) Content of offers. Offers to CCC for a CCC bonus under the EEP 
must contain the information shown below in the same numerical order as 
shown below. CCC reserves the right to reject any offer that so 
materially departs from this prescribed format that its consideration 
would hinder the offer review process. The applicable Invitation may 
require the submission of further information necessary for the 
consideration of an offer.
    (1) The use of the numerical designation assigned to the applicable 
Invitation, which shall signify that the offer is submitted subject to 
all the terms and conditions of this subpart and the Invitation in 
response to which the offer is being submitted for consideration by CCC.
    (2) The date and time for which the offer is submitted for 
consideration. The time shall be stated as ``after 3 p.m.'' For example, 
the information required by paragraphs (c)(1) and (c)(2) of this section 
could be stated as follows: ``Invitation No. GSM-500-1, Revision No. X, 
For Consideration After 3 p.m. on August 1, 1991.''
    (3) The full business name and address of the eligible exporter 
making the offer.
    (4) The name and title of the individual signing the offer.
    (5) The telephone number and telex or facsimile number of the 
eligible exporter submitting the offer.
    (6) The CCC bonus in dollar and cents requested by the eligible 
exporter for

[[Page 789]]

each unit of measure of the eligible commodity to be exported to the 
eligible country. The offer shall contain only one CCC bonus. In offers 
submitted in response to an Invitation in which CCC has announced the 
bonus amount, the eligible exporter shall state the dollar and cents 
amount of the Announced CCC Bonus.
    (7) The quantity, on a net weight basis, (less any dockage, if 
applicable) of the eligible commodity for which the eligible exporter 
wishes to receive a CCC bonus pursuant to an EEP Agreement. This 
quantity shall be exclusive of tolerances and expressed in the unit of 
measure specified in the applicable Invitation. This quantity may be 
less than the sales contract quantity.
    (8) The U.S. coast of export. The Invitation may require the 
eligible exporter to indicate: The coasts of export if more than one 
coast of export is allowed for an offer; the Canadian port if the 
eligible commodity is to be transshipped through a Canadian port on the 
St. Lawrence River; or the U.S. city and state from which the shipments 
will cross the border into the eligible country if the eligible 
commodity is to be shipped by rail or truck.
    (9) The quality of the eligible commodity to be exported to the 
eligible buyer, if required by the applicable Invitation, including any 
additional quality specifications not found in the Invitation but 
included in the tender specifications by the eligible buyer or the sales 
contract with the eligible buyer. The Invitation may limit an offer to 
one or more quality designations for the eligible commodity.
    (10) The names of the eligible buyer and the eligible country. 
Unless otherwise provided for in the applicable Invitation, an offer 
shall contain only one eligible buyer and one eligible country. The 
Invitation may also provide that the eligible buyer need not necessarily 
be located in the eligible country.
    (11) The date of sale of the sales contract with the eligible buyer.
    (12) The number assigned by the eligible exporter to the sales 
contract.
    (13) The quantity of the eligible commodity specified in the sales 
contract, expressed in the unit of measure specified in the applicable 
Invitation.
    (14) The sales contract loading tolerance, if any, expressed in a 
percentage.
    (15) The sales contract unit price, delivery terms (e.g., FOB, C&F, 
etc.); the nature of any arrangements or understandings of the eligible 
exporter and any other person that would affect the sales contract, 
including but not limited to arrangements or understandings concerning 
commissions, rebates, and other payments if applicable; credit payment 
terms (e.g., GSM-102, GSM-103, or other credit arrangements); and, if 
required by the applicable Invitation, the discharge port. The possible 
credit payment terms referenced in an offer are for CCC's information 
only and are not to be construed as a contingency for consideration or 
acceptance. The eligible exporter is fully responsible for the 
arrangement of such payment terms independently from the EEP offer and 
CCC bears no responsibility if such credit payment terms cannot be 
secured.
    (16) The delivery period specified in the sales contract expressed 
on the basis of either shipment from the United States or the Canadian 
transshipment port or arrival in the eligible country. If an arrival 
period is shown, the offer must also indicate an anticipated shipment 
period. If a multiple month delivery schedule is agreed upon in the 
sales contract the offer must specify the quantity of the eligible 
commodity to be delivered each month or at other specified intervals.
    (17) Any options which may be exercised by the eligible buyer under 
the sales contract. If the offer is accepted by CCC, the exporter must 
immediately inform CCC if any such options are exercised by the buyer.
    (18) The name and address of the sales agent, if any, for the sales 
contract.
    (19) The designation of bonus payment under ``Option A'' or ``Option 
B,'' as described in Sec.  1494.401(c).
    (20) The words ``ALL ITEM 20 CERTIFICATIONS ARE BEING MADE IN THIS 
OFFER'' which, when included in the offer by the eligible exporter, will 
indicate that the eligible exporter is certifying that:

[[Page 790]]

    (i) The information furnished to CCC with respect to the sales 
contract is correct;
    (ii) The date of sale with an eligible buyer was after the issuance 
date of the applicable Invitation;
    (iii) The sale does not replace any sale made to the eligible buyer 
by the eligible exporter, or any affiliate or subsidiary of the eligible 
exporter, prior to the issuance date of the applicable Invitation;
    (iv) There are no other arrangements or understandings between the 
eligible exporter and any other person that would alter the information 
provided under paragraph (c) of this section;
    (v) There were and will be no corrupt payments or extra sales 
services, or other items extraneous to the export sale provided in 
connection with the export sale, and the transaction complied with 
applicable U.S. law;
    (vi) The CCC bonus requested in the offer has been arrived at 
independently, without any consultation, communication, or agreement 
with any other eligible exporter or competitor relating to:
    (A) The amount of the CCC bonus;
    (B) The intention to submit an offer; or
    (C) The methods or factors used to calculate the CCC bonus 
requested;
    (vii) The CCC bonus requested in the offer has not been and will not 
knowingly be disclosed by the eligible exporter, directly or indirectly, 
to any other eligible exporter or competitor before the time the offer 
is to be considered by CCC, unless otherwise required by law;
    (viii) No attempt has been made, or will be made, by the eligible 
exporter to induce any other concern to submit, or not to submit, an 
offer for the purpose of restricting competition;
    (ix) The signatory of the offer:
    (A) Is the person in the eligible exporter's organization 
responsible for determining the CCC bonus being requested and has not 
participated and will not participate in any action contrary to 
subparagraphs (c)(20) (vi), (vii), and (viii) of this section; or
    (B) Has been authorized in writing to act as agent for the eligible 
exporter for the purposes of paragraphs (b) and (c) of this section and 
certifies that the eligible exporter named in the offer and the 
signatory have not participated and will not participate in any action 
contrary to subparagraphs (c)(20) (vi), (vii), and (viii) of this 
section;
    (x) If the eligible commodity is vegetable oil or a vegetable oil 
product, that none of the eligible commodity has been or will be used as 
the basis of a claim of a refund, as drawback, pursuant to Section 313 
of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, tax or fee 
imposed under Federal law on an imported commodity or product;
    (xi) The agricultural commodity or product to be exported under an 
EEP Agreement is a U.S. agricultural commodity as defined by Sec.  
1494.201(gg).
    (xii) The eligible exporter is providing the assurances required by 
Sec. Sec.  15.4 and 15b.5 of this title (7 CFR part 15 relates to 
various non-discrimination provisions);
    (xiii) The eligible exporter still meets all of the qualification 
and program eligibility requirements of Sec.  1494.301 and will 
immediately notify CCC if there is a change of circumstances which 
should cause it to fail to meet such requirements; and
    (xiv) The eligible exporter is providing any other certification 
required by the applicable Invitation.

Any eligible exporter which is unable to make the certifications 
specified in this subparagraph (c)(20) must provide a written statement 
to that effect to CCC and may include any explanation or any additional 
information for the consideration of CCC. CCC will reject an offer if 
the eligible exporter states that it is unable to provide the required 
certifications, unless CCC determines that acceptance of the offer would 
be in the best interests of the EEP.
    (d) Conditional offers. Any qualification or condition in, or added 
to, the offer and not expressly authorized by this subpart or the 
applicable Invitation may make such offer ineligible for consideration 
by CCC.
    (e) CCC's right to additional information. CCC may require the 
individual who signed the offer to provide documentary evidence of such 
individual's authority to execute an Agreement

[[Page 791]]

with CCC on behalf of the eligible exporter making the offer. CCC may 
require the eligible exporter to submit any other information which CCC 
deems necessary for consideration of the eligible exporter's offer. The 
exporter must furnish a copy of the sales contract to CCC upon request.
    (f) Considerations in making an offer. In making an offer, the 
eligible exporter should take into consideration that the exchange of 
CCC Certificates which may be issued as a bonus will be governed by the 
terms and conditions stated on the certificates and by any applicable 
regulations or procedures issued by or on behalf of CCC.

[56 FR 25011, June 3, 1991, as amended at 62 FR 24561, May 6, 1997]



Sec.  1494.601  Acceptance of offers by CCC.

    (a) Establishment of acceptable sales prices and CCC bonuses. For 
each Invitation, CCC will establish sales prices for the eligible 
commodity and CCC bonus amounts which would be acceptable to CCC in 
terms of furthering the objectives of the EEP.
    (1) In establishing acceptable sales prices for the eligible 
commodity, CCC will consider available relevant market data.
    (2) In determining acceptable CCC bonus amounts, CCC may take into 
consideration factors such as, but not limited to, the following: The 
prevailing domestic market price of the eligible commodity; the price of 
the same agricultural commodity exported by other exporting countries to 
the eligible country; ocean freight rates for the export of the eligible 
commodity from the U.S. and other exporting countries to the eligible 
country; the particular preferences or purchasing practices of buyers in 
the eligible country which would customarily affect the acceptability of 
the eligible commodity relative to that of competing exports of the same 
agricultural commodity to the eligible country from other exporting 
countries; and the cost effectiveness of the payment of a CCC bonus 
amount in view of CCC's obligation to maximize the use of resources 
available for the operation of the EEP.
    (3) The acceptable sales prices and bonus amounts will be modified 
by CCC as necessary to take advantage of updated information that 
becomes available to CCC.
    (b) Acceptance of offers for a CCC bonus on a competitive basis. An 
offer from an eligible exporter for a CCC bonus on a competitive bonus 
that meets all of the requirements of this subpart will first be 
reviewed to determine if the offer contains an acceptable sales price. 
If the sales price contained in the offer is found to be acceptable, 
then the CCC bonus contained in the offer will be reviewed to determine 
if the CCC bonus requested is found to be acceptable. Offers with 
acceptable sales prices and acceptable CCC bonuses will be accepted 
under each Invitation beginning with the offer having the lowest CCC 
bonus amount, subject to the limitations in paragraphs (f) and (h) of 
this section.
    (c) Acceptance of offers for an announced CCC bonus. Offers from 
eligible exporters for an Announced CCC Bonus that meet all of the 
requirements of this subpart and which contain an acceptable sales price 
will be accepted under each Invitation on a first-come, first-served 
basis according to the time of receipt of the offer, as determined by 
CCC, subject to the limitations in paragraphs (f) and (h) of this 
section.
    (d) Notification of acceptance of offers. CCC will notify an 
eligible exporter by telephone of the acceptance or rejection of its 
offer as soon as possible after review of the exporter's offer by CCC 
but not later than 10 a.m. of the next business day after the date the 
offer was submitted for consideration. If an offer is rejected, CCC will 
notify the eligible exporter of the basis for the rejection. Acceptance 
of offers will be confirmed in writing. The date of the telephonic 
notification of acceptance by CCC of the eligible exporter's offer will 
be the effective date of the exporter's Agreement with CCC.
    (e) Announcement of acceptance of offers. CCC will generally 
announce the acceptance of offers by public press release as soon as 
possible after the notification to the exporter. The announcement will 
generally include the eligible commodity, the eligible country, the 
exporter, the delivery period, the CCC bonus, and, if applicable, the 
class of the eligible commodity.

[[Page 792]]

    (f) Limitation on acceptance of offers. The total quantity of the 
eligible commodity, exclusive of tolerances, to be exported under all 
offers that are accepted by CCC pursuant to a particular Invitation will 
not be greater than the total quantity of the eligible commodity stated 
in such Invitation. CCC may refuse to accept further offers under an 
applicable Invitation if the quantity of the eligible commodity, 
exclusive of tolerances, already accepted totals the quantity, exclusive 
of tolerances, that is being tendered for by the eligible buyer, even 
though such quantity may be less than the total quantity available under 
that Invitation.
    (g) Rejection of offers. Any offer or part of an offer submitted for 
consideration that is not accepted by CCC by 10 a.m. of the next 
business day after the date for which the offer was submitted for 
consideration will be deemed to have been rejected.
    (h) CCC's right of rejection. Notwithstanding any other provisions 
of this subpart, CCC reserves the right to reject any or all offers 
submitted for consideration on a particular day, including those offers 
that have acceptable sales prices and CCC bonus amounts.



Sec.  1494.701  Payment of bonus.

    (a) Forms of bonus. The bonus may be paid to the exporter in CCC 
Certificates or in any other form specified in the applicable Invitation 
which CCC determines to be appropriate.
    (b) Quantity on which bonus is paid. The quantity of the eligible 
commodity exported from the U.S. which is eligible for the payment of a 
CCC bonus is the net weight (less any dockage, if applicable) or count 
which is established by the Official Inspection Certificate, the 
Official Weight Certificate or the export bill of lading, whichever is 
less. If the exporter has furnished performance security under ``Option 
A'' of the applicable Invitation and wishes the bonus to be paid prior 
to the entry of the eligible commodity into the eligible country, this 
quantity will be used in calculating the bonus value for the purposes of 
making payment to the exporter. If the exporter is not paid the bonus 
until the commodity enters into the eligible country, then this quantity 
will also be used in calculating the bonus value for the purposes of 
making payment to the exporter, unless in the determination of CCC, 
there is evidence to suggest that there was destruction, diversion or 
loss of the eligible commodity prior to entry into the eligible country. 
The payment of a bonus value to an exporter does not indicate that the 
bonus has been earned by the exporter under the Agreement; pursuant to 
Sec.  1494.801(a)(3), the bonus is not earned by the exporter until the 
eligible commodity enters into the eligible country in accordance with 
the Agreement and the exporter submits proof of such entry to CCC.
    (c) Request for bonus payment under ``Option A.'' If the exporter 
has furnished performance security under ``Option A'' of the applicable 
Invitation and wishes the bonus to be paid after export of the eligible 
commodity, the exporter must, within 30 calendar days after the date of 
export of the eligible commodity, furnish to the Director, at the 
address referenced in the Notice to Exporters--Contacts for EEP, a 
written request for payment of the bonus. All documents submitted to 
support such a request must be acceptable to the Director.
    (1) To support each bonus payment request, the exporter must furnish 
to the Director the following:
    (i) The original or an original copy of the on-board bill of lading 
issued for the export carrier and signed by an agent of the export 
carrier. The bill of lading must show:
    (A) The identification of the export carrier;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity;
    (D) An on-board date; and
    (E) That the eligible commodity is destined for the eligible 
country.
    (ii) The original or an original copy of the Official Weight 
Certificate, as required in the applicable Invitation. The certificate 
must show:
    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance; and
    (C) The weight or count of the eligible commodity.

[[Page 793]]

    (iii) The original or an original copy of the Official Inspection 
Certificate, as required in the applicable Invitation. The certificate 
must show:
    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity to which the certificate 
relates; and
    (D) The quality description of the eligible commodity.
    (iv) If the documents submitted under paragraphs (c)(1)(ii) and 
(iii) of this section do not specify the export carrier, the exporter 
must also submit a signed certification that the commodity represented 
by the Official Inspection and/or the Official Weight certificates is 
the identical eligible commodity represented on the export bill of 
lading.
    (2) If the export of the eligible commodity was by lash barge, the 
exporter must furnish, in addition to the documents required by 
paragraph (c)(1) of this section, a statement from the vessel's agent 
showing that the lash barge was loaded to the lash vessel named in the 
on-board lash bill of lading and that the eligible commodity is destined 
for the eligible country.
    (3) If the export of the eligible commodity was from a Canadian 
transshipment port on the St. Lawrence River, the exporter must furnish 
to the Director the following, in addition to the documents required by 
paragraph (c)(1) of this section:
    (i) Documentary evidence covering the movement of the eligible 
commodity from the United States to the export carrier described in the 
on-board bill of lading issued at the Canadian transshipment port and 
showing the information provided in paragraphs (c)(1) and, if 
applicable, (c)(2) of this section; and
    (ii) A certification that the eligible commodity exported is the 
identical eligible commodity that was shipped from the United States.
    (4) If the export of the eligible commodity was by railcar or truck, 
the exporter must furnish to the Director the following, in addition to 
the documents required by paragraphs (c)(1)(ii) and (iii) of this 
section:
    (i) The authenticated landing certificate or similar document issued 
by the government of the eligible country; and
    (ii) The original or an original copy of the bill of lading issued 
at the point of loading the railcar or truck. The bill of lading must 
show:
    (A) The identification of the export carrier;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity;
    (D) The date that the railcar or truck was loaded; and
    (E) That the eligible commodity is destined for the eligible 
country.
    (d) Request for bonus payment under ``Option B.'' If the exporter 
has furnished performance security under ``Option B'' of the applicable 
Invitation and wishes the bonus to be paid after the entry of the 
exported eligible commodity into the eligible country, the exporter 
must, within 60 calendar days after the date of entry of the eligible 
commodity into the eligible country, furnish to the Director at the 
address referenced in the Notice to Exporters--Contracts for EEP, a 
written request for payment of the bonus. To support each request, the 
exporter must furnish to the Director, in a form acceptable to the 
Director, the documents specified in paragraph (c) of this section, as 
applicable, along with the certification of entry specified in Sec.  
1494.401(f)(2).
    (e) Time frame for payment of a bonus. CCC will endeavor to pay the 
bonus to the exporter within 10 business days after CCC determines that 
the documents supporting the bonus request are acceptable.
    (f) Certificate amount. If CCC decides to pay the bonus in the form 
of a CCC Certificate(s), the dollar value of the certificate(s) issued 
to the exporter will be determined by multiplying the CCC bonus 
specified in the Agreement by the net quantity of the eligible commodity 
on which the bonus is to be paid, as specified in paragraph (b) of this 
section, less any dockage if applicable.
    (g) Late requests for bonus payment. If CCC decides to pay the bonus 
in the form of a CCC Certificate(s) and the exporter fails to request 
issuance of the certificate(s) within 30 calendar days

[[Page 794]]

after the date of export of the eligible commodity, if the exporter has 
chosen performance security ``Option A,'' or within 60 days after the 
entry of the eligible commodity into the eligible country, if the 
exporter has chosen performance security ``Option B'', CCC may, upon 
issuing the certificate(s), discount the certificate(s) in an amount 
determined appropriate by CCC to compensate it for costs which may be 
incurred by CCC as a result of the exporter's delay.



Sec.  1494.801  Enforcement and termination of agreements with CCC.

    (a) Performance in accordance with an Agreement with CCC. (1) An 
exporter which enters into an Agreement with CCC must ensure that the 
eligible commodity is exported from the U.S. and enters the eligible 
country in accordance with the terms and conditions of the Agreement.
    (2) The diversion of the eligible commodity to a country other than 
the eligible country is prohibited. Transshipments of the eligible 
commodity are permitted only if specifically allowed in the applicable 
Invitation or for shipment through a Canadian transshipment port on the 
St. Lawrence River if the eligible commodity had been shipped from the 
United States via the Great Lakes coastal range and its identity had 
been preserved until shipped from Canada.
    (3) Regardless of whether or not a bonus has been paid by CCC to the 
exporter pursuant to Sec.  1494.701, the bonus is not earned by the 
exporter until the eligible commodity enters into the eligible country 
in accordance with the Agreement. In order to retain a bonus or request 
payment of a bonus, depending upon the option chosen for furnishing 
performance security, and to request cancellation of the performance 
security, the exporter must provide evidence to CCC, as specified in 
Sec.  1494.401(f)(2), that the eligible commodity entered into the 
eligible country. If, on the basis of evidence available to it, CCC 
determines that there was destruction, diversion or loss of the eligible 
commodity prior to entry into the eligible country, CCC will not release 
the amount of performance security corresponding to the amount of 
eligible commodity for which insufficient evidence of entry into the 
eligible country was presented to CCC until:
    (i) CCC recovers from the exporter the amount of the bonus 
corresponding to such amount of the eligible commodity, if the exporter 
has already been paid the bonus under performance security ``Option A''; 
and
    (ii) The requirements of either Sec.  1494.401(f)(1)(ii) or Sec.  
1494.401(f)(1)(iii) have been met.
    (4) The failure of an exporter to perform in full and to fulfill all 
of its obligations under the Agreement will constitute a breach of the 
Agreement. An exporter which breaches the Agreement may be required to 
forfeit its right to receive or retain part or all of the bonus 
authorized or paid under the Agreement and may also be liable to CCC for 
damages. Examples of an exporter's failure to perform under the 
Agreement include, but are not limited to, the following:
    (i) The exporter does not ship all of the required amount of the 
eligible commodity in accordance with the delivery period stated in the 
Agreement;
    (ii) The exporter exports an amount of the eligible commodity that 
is inconsistent with the quality specifications in the Agreement;
    (iii) The exporter is unable to provide a certification that all of 
the eligible commodity exported pursuant to the Agreement was entered 
into the eligible country;
    (iv) The eligible commodity is transshipped through any country, 
other than Canada, unless specifically allowed in the applicable 
Invitation; or
    (v) The eligible commodity is transshipped through Canada without 
having its identity preserved.
    (5) If the eligible commodity is to be delivered to the eligible 
buyer in multiple shipments, CCC may decide to consider the shipments 
separately in determining whether the exporter has failed to perform 
under the Agreement.
    (b) Return of bonus. An exporter that fails to fulfill all of its 
obligations under the Agreement shall be in default. If an exporter that 
has already been paid the bonus value defaults, CCC shall have the right 
to recover the bonus value paid for the quantity of the eligible 
commodity with respect to

[[Page 795]]

which the exporter failed to perform under the Agreement.
    (1) If CCC has paid this bonus value in the form of a CCC 
Certificate(s), the exporter shall pay to CCC the higher of:
    (i) The dollar value of the CCC Certificate(s);
    (ii) The dollar amount received for the CCC Certificate(s) if the 
CCC Certificate(s) was transferred to another party; or
    (iii) The dollar amount of the proceeds from the sale of the CCC-
owned commodities exchanged for the CCC Certificate(s) if the 
commodities were sold to another party.
    (2) If CCC has paid this bonus value in some other form, as 
specified in the applicable Invitation, the exporter shall pay to CCC 
the dollar and cents amount or equivalent of the bonus value paid to the 
exporter.
    (c) Liability for liquidated damages. The exporter's failure to 
perform under the Agreement will cause serious and substantial losses to 
CCC, such as damages to the EEP and CCC's domestic price support 
program, storage charges, and administrative and other costs incurred. 
If the exporter breaches the Agreement, the exporter will be liable to 
pay to CCC as liquidated damages an amount obtained by applying the 
method or rate for determining damages specified in the applicable 
Invitation to the quantity of the eligible commodity with respect to 
which the exporter failed to perform under such Agreement. In submitting 
an offer in response to an Invitation issued under this subpart, the 
exporter agrees that such liquidated damages are reasonable estimates of 
the probable actual damages which may be incurred by CCC.
    (d) Decision to hold the exporter harmless for liquidated damages. 
CCC will hold an exporter harmless for the payment of liquidated damages 
if:
    (1) The exporter's failure to perform under the Agreement was due to 
causes solely without the exporter's fault or negligence and the 
exporter had taken the necessary action to enable it to export the 
required quantity of the eligible commodity and enter it into the 
eligible country; or
    (2) The eligible commodity was lost or destroyed after it had been 
placed aboard the export carrier.

In making the decision whether to hold an exporter harmless pursuant to 
this paragraph, CCC may consider any information available to CCC, 
including any information provided to it by the exporter.
    (e) Fraud, scheme or device. Notwithstanding any other provision of 
law, CCC may take action to recover any bonus paid or to hold the 
exporter liable for the payment of damages caused to CCC if the exporter 
engages in fraud with respect to the EEP, or adopts or participates in 
adopting a scheme or device which is designed to evade this subpart or 
which has the effect of evading this subpart. Such acts shall include, 
but are not limited to:
    (1) Concealing information which is required by this subpart; or
    (2) Submitting information which is known by the exporter to be 
false or erroneous.
    (f) CCC's right to recover amounts due CCC by exporters. If the 
exporter breaches its obligations under the Agreement and becomes liable 
to CCC for repayment of the bonus value or for liquidated or other 
damages, CCC reserves the right to recover such amounts due CCC by 
making a claim against the performance security furnished to CCC, as 
described under Sec.  1494.401, or by taking any other measures 
available to CCC as a result of this subpart or any laws or regulations, 
including debt settlement regulations, applicable to CCC.
    (g) Shipping tolerances. If the exporter exports and enters into the 
eligible country, in accordance with the requirements of the Agreement, 
a quantity of the eligible commodity which is less than the quantity 
specified in Sec.  1494.501(c)(7) but not less than such quantity minus 
5 percent, the exporter shall not be required to pay liquidated damages 
for failure to perform under the Agreement for the quantity which failed 
to be exported and entered into the eligible country. If an exporter 
exports and enters into the eligible country, in accordance with the 
requirements of the Agreement, a quantity of the eligible commodity 
which is greater than the quantity specified in

[[Page 796]]

Sec.  1494.501(c)(7), the exporter may request payment of the bonus 
value based upon the actual quantity, on a net weight basis, exported 
and entered into the eligible country, but not greater than the quantity 
specified in Sec.  1494.501(c)(7), plus 5 percent.
    (h) Termination of agreements. (1) CCC may, by written notice to the 
exporter, terminate an Agreement, in whole or in part, as a result of:
    (i) the failure of the exporter to carry out any provisions of the 
Agreement;
    (ii) the failure of the exporter to maintain a business office in 
the U.S.;
    (iii) the failure of the exporter to maintain an agent in the U.S. 
for service of process; or
    (iv) the suspension or debarment of the exporter from participation 
in CCC or other U.S. Government programs.

If an Agreement is terminated by CCC pursuant to this subparagraph, CCC 
will not compensate the exporter for any costs incurred by the exporter. 
The exporter will be liable to CCC for any funds owed to CCC for the 
repayment of any bonus already paid and may be liable to CCC for 
liquidated or other damages suffered by CCC. If CCC intends to hold the 
exporter liable for liquidated damages, and it has not already so 
notified the exporter prior to the termination of the Agreement, CCC 
will generally do so at the time that it notifies the exporter of the 
termination of the Agreement.
    (2) CCC may, by written notice to the exporter, terminate an 
Agreement, in whole or in part, if CCC determines it to be in the best 
interest of CCC. If an agreement is so terminated, the exporter will be 
compensated for reasonable losses, as determined by CCC, resulting from 
such termination. These losses will not include lost profits and will 
not exceed the bonus value under the Agreement.
    (i) Amendment of agreements. (1) CCC will have the authority to 
amend an Agreement, either before or after such Agreement has been 
breached by the exporter, if the exporter requests that the Agreement be 
amended and CCC determines that such amendment would serve the best 
interests of the EEP. The exporter may be required to submit documentary 
evidence to CCC to demonstrate that it is making progress toward 
fulfilling the Agreement before CCC will consider amending the 
Agreement. All requests for amendments submitted by exporters, and all 
amendments made by CCC to an Agreement, under this subpart shall be in 
writing.
    (2) Prior to amending an Agreement with the exporter, CCC will 
consider whether the amendment to the Agreement should include a 
reduction in the CCC bonus or a modification of the sales price. If CCC 
determines that the CCC bonus and the sales price are still acceptable, 
it may amend the Agreement to incorporate the exporter's requested 
change, while maintaining the current CCC bonus and sales price, 
provided that the amendment would otherwise serve the best interests of 
the EEP. If CCC determines that the CCC bonus and/or the sales price are 
no longer acceptable, due to changes in market or other conditions, it 
will so inform the exporter. If the exporter still requests that the 
Agreement be amended, CCC and the exporter will enter into discussions 
in an attempt to arrive at a new CCC bonus and/or sales price which 
would be acceptable to CCC. If these discussions are successful, then 
CCC may amend the Agreement to incorporate the exporter's requested 
change as well as the new CCC bonus and/or sales price, provided that 
the amendment would otherwise serve the best interests of the EEP. If 
these discussions are unsuccessful, then the Agreement will not be 
amended and the exporter will be considered to be in breach of the 
Agreement if it fails to perform under the terms of the Agreement.
    (j) Amendments to sales contracts. In the event of an amendment to 
the sales contract between the exporter and the eligible buyer or a 
change in the delivery schedule, CCC will determine whether the 
amendment or change would constitute a breach of the Agreement. If CCC 
determines that the amendment or change would constitute a breach of the 
Agreement, CCC may terminate the Agreement. In the alternative, if CCC 
determines that a continuation of the Agreement would serve the best 
interests of the EEP, and if the exporter requests an amendment, CCC may 
amend the Agreement to take into account the amendment to the

[[Page 797]]

sales contract or change in delivery schedule. An amendment to an 
Agreement will be in accordance with paragraph (i)(1) of this section. 
CCC will promptly advise the exporter of its determination in writing by 
letter, facsimile, or telex.



Sec.  1494.901  Dispute resolution and appeals.

    (a) Dispute resolution. (1) The Director of the CCC Operations 
Division (Director, CCCOD) and the exporter will attempt to resolve any 
disputes, including any adverse determinations made by CCC, arising 
under the EEP, this subpart, the applicable Invitation, or the 
Agreement.
    (2) The exporter may seek reconsideration of a determination by the 
Director, CCCOD relating to the Agreement by submitting a letter 
requesting reconsideration to the Director, CCCOD, within 30 days of the 
date of the determination. For the purposes of this section, the date of 
a determination will be the date of the letter or other means of 
notification to the exporter of the determination. The exporter may 
include with the letter requesting reconsideration any additional 
information which it wishes the Director, CCCOD, to consider in 
reviewing its request. The Director, CCCOD, will respond to the request 
for reconsideration within 30 days of the date on which the request or 
the final documentary evidence submitted by the exporter is received by 
him, whichever is later, unless the GSM extends the time permitted for 
response. If the exporter fails to request reconsideration of a 
determination by the Director, CCCOD, that the exporter owes any funds 
to CCC under the Agreement, then such funds will become a debt of the 
exporter to CCC at the expiration of the 30-day period for submitting 
such a request.
    (3) If the exporter requested a reconsideration of a determination 
by the Director, CCCOD, pursuant to subparagraph (a)(2) of this section, 
and the Director, CCCOD, upheld the original determination, then the 
exporter may appeal the determination to the GSM in accordance with the 
procedures set forth in paragraph (b) of this section. If the exporter 
fails to appeal the determination to the GSM, then any funds owed to CCC 
will become a debt of the exporter to CCC at the expiration of the 30-
day period for submitting an appeal to the GSM.
    (b) Appeal procedures. (1) An exporter which has exhausted the 
procedures set forth in paragraph (a) of this section may appeal to the 
GSM a determination of the Director, CCCOD, relating to the Agreement 
between the exporter and CCC. An appeal to the GSM must be in writing 
and filed with the office of the GSM no later than 30 days following the 
date of the final determination by the Director, CCCOD. In this appeal 
to the GSM, the exporter shall be entitled to an administrative hearing 
before the GSM, if the exporter indicates in its appeal letter that it 
desires such a hearing.
    (2) If the exporter does not desire an administrative hearing, the 
exporter may submit any additional written information or documentation 
which it desires the GSM to consider in acting upon its appeal. This 
information or documentation may be submitted to the GSM up until the 
time that a decision is made by the GSM. The GSM will base the 
determination upon information contained in the administrative record. 
The GSM will endeavor to make a decision on an appeal not involving a 
hearing within 60 days of the date on which the GSM receives the appeal 
or the date that final documentary evidence is submitted by the exporter 
to the GSM, whichever is later.
    (3) If the exporter has indicated that it desires an administrative 
hearing, the GSM will set a date and time for the hearing which is 
mutually convenient for the GSM and the exporter. This date will 
ordinarily be within 60 days of the date on which the GSM receives the 
request for hearing. The hearing will be an informal procedure. The 
exporter and/or its counsel may present any administrative or 
documentary evidence to the GSM which it desires to have the GSM 
consider in making a determination. A transcript of the hearing will not 
ordinarily be prepared unless the exporter bears the costs involved in 
preparing the transcript, although the GSM may arrange

[[Page 798]]

to have a transcript prepared at the expense of the Government if it is 
determined to be appropriate. The exporter may provide additional 
written information to the GSM up until the time that the GSM makes a 
determination. The GSM will base the determination upon the information 
contained in the administrative record and will endeavor to make a 
decision within 60 days of the date of the hearing or the date of 
receipt of the transcript, if one is to be prepared, whichever is later.
    (4) The decision of the GSM will be the final determination of CCC 
and the exporter will be entitled to no further administrative appellate 
rights.
    (5) If the GSM upholds a determination of the Director, CCCOD, that 
the exporter owes any funds to CCC under the Agreement, then such funds 
will become a debt of the exporter to CCC.
    (c) Failure to comply with determination. If, for any reason, the 
exporter has failed to pay funds to CCC which have been determined to be 
owed to CCC under the Agreement and the exporter has exhausted its 
rights under this section or has failed to exercise such rights, then 
CCC will have the right to withdraw funds from the performance security 
established by the exporter or to take any other measures available to 
CCC as result of this subpart or any laws or regulations, including debt 
settlement regulations, applicable to CCC.
    (d) Exporter's obligation to perform. The exporter will continue to 
have an obligation to perform under the Agreement pending the conclusion 
of all procedures under this section.



Sec.  1494.1001  Miscellaneous provisions.

    (a) Assignments. The exporter may not assign the Agreement or any 
rights thereunder, including the right to receive a bonus under the 
Agreement.
    (b) Maintenance of records and access to premises. (1) For a period 
of five years after CCC agrees to the cancellation of an exporter's 
performance security for an Agreement, the exporter must maintain 
accurate records showing sales and deliveries of the eligible commodity 
exported in connection with the Agreement. The Secretary of Agriculture 
and the Comptroller General of the United States, through their 
authorized representatives, will have full and complete access to the 
premises of the exporter during regular business hours from the 
effective date of the Agreement until the expiration of such five-year 
period to inspect, examine, audit and make copies of the exporter's 
books, records and accounts concerning transactions relating to the 
Agreement, including, but not limited to, financial records and accounts 
pertaining to sales, inventory, processing, and administrative and 
incidental costs, both normal and unforeseen. From the effective date of 
the Agreement and until the expiration of such five-year period, the 
exporter may be required to make available to the Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, records that pertain to transactions 
conducted outside the program, if, in the opinion of the GSM, such 
records would pertain directly to the review of transactions undertaken 
by the exporter in connection with the performance of an EEP Agreement.
    (2) The exporter must maintain the certification of entry specified 
in Sec.  1494.401(f)(2), and must provide access to such document if 
requested by the Secretary of Agriculture or an authorized 
representative, for the five-year period specified in subparagraph 
(b)(1) of this section.
    (c) Arrival verification reviews. CCC will review, on an annual 
basis, a sufficient number of exports made in connection with EEP 
Agreements to ensure that the eligible commodity which was exported 
pursuant to each such Agreement arrived in the eligible country 
specified in the Agreement.
    (d) Signatory on certifications. Any certification required from a 
person pursuant to this subpart or an Invitation must be signed by the 
person, if an individual, or by a partner or officer of the person, if 
the person is a partnership or a corporation, respectively.
    (e) Officials not to benefit. No member of or Delegate to Congress, 
or Resident Commissioner, will participate or share in any of the 
benefits of any Agreement entered into pursuant to the EEP, but this 
provision may not be construed to extend to an Agreement

[[Page 799]]

made by CCC with a corporation for its general benefit.
    (f) Paperwork Reduction Act. The information collection requirements 
contained in this subpart have been approved by the Office of Management 
and Budget (OMB) in accordance with the provisions of 44 U.S.C. chapter 
35 and have been assigned OMB control number 0551-0028.
    (g) Waiver of irregularities. CCC reserves the right to waive any 
informality or minor irregularity with respect to any aspect of the 
operation of the EEP or any Agreement executed thereunder in order to 
best accomplish the purposes of the program.



           Subpart C--Dairy Export Incentive Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec.  1494.1100  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity Credit Corporation's (CCC) Dairy Export Incentive Program 
(DEIP). These criteria are interrelated and will be considered together 
in order to select eligible commodities and eligible countries for DEIP 
initiatives which will best meet the program's objectives. The 
objectives of the program are to increase U.S. agricultural commodity 
exports and to encourage other countries exporting agricultural 
commodities to undertake serious negotiations on agricultural trade 
problems. Under the DEIP, bonuses are made available by CCC to enable 
exporters to meet prevailing world prices for targeted dairy products in 
targeted destinations. In the operation of the DEIP, CCC will make 
reasonable efforts to avoid the displacement of commercial export sales 
of U.S. dairy products and to ensure that sales facilitated by the DEIP 
are in addition to, and not in place of, any export sales of dairy 
products that the exporter would have otherwise made in the absence of 
the program.



Sec.  1494.1101  Criteria.

    The criteria considered in evaluating and approving proposals for 
the DEIP are those set forth in Sec.  1494.20 of this part.



          Subpart D--Dairy Export Incentive Program Operations

    Authority: 15 U.S.C. 713a-14, 714c.

    Source: 57 FR 45263, Oct. 1, 1992, unless otherwise noted.



Sec.  1494.1200  Program operations.

    This subpart contains the regulations governing the operation of the 
Dairy Export Incentive Program (DEIP) of the Commodity Credit 
Corporation (CCC). Under the DEIP, CCC facilitates the export of U.S. 
dairy products by paying bonuses to exporters which export U.S. dairy 
products to targeted markets in accordance with the terms and conditions 
of an Agreement entered into between the exporter and CCC. Except as 
otherwise provided in this subpart, the program operations provisions of 
subpart B of this part, relating to the Export Enhancement Program, will 
also apply to the DEIP. Any terms or conditions applicable to a 
particular Invitation for Offers (Invitation) under the DEIP, beyond 
those terms or conditions set forth in this subpart or subpart B of this 
part, will be specifically provided for in such Invitation.



Sec.  1494.1201  Paperwork Reduction Act.

    The information collection requirements contained in this subpart 
have been approved by the Office of Management and Budget (OMB) in 
accordance with the provisions of 44 U.S.C. chapter 35 and have been 
assigned OMB control No. 0551-0029.

                          PART 1495 [RESERVED]



PART 1496--PROCUREMENT OF PROCESSED AGRICULTURAL COMMODITIES FOR DONATION 
UNDER TITLE II, PUB. L. 480--Table of Contents




Sec.
1496.1 General statement.
1496.2 Administration.

[[Page 800]]

1496.3 Definitions.
1496.4 Issuance of invitations.
1496.5 Consideration of bids.
1496.6 Data to be used.
1496.7 Final contract determinations.

    Authority: 7 U.S.C. 1721-1726a; 1731-1736g-2; 46 U.S.C. App. 
1241(b), and 1241(f).

    Source: 44 FR 27407, May 10, 1979, unless otherwise noted.



Sec.  1496.1  General statement.

    This subpart sets forth the policies, procedures and requirements 
governing procurement, including allocation to U.S. ports, of processed 
agricultural commodities for donation under Title II, Pub. L. 480.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec.  1496.2  Administration.

    (a) The program will be carried out by the Farm Service Agency 
(referred to in this subpart as ``FSA'') under the general supervision 
and direction of the Executive Vice President of CCC. The program will 
be administered through the Office of the Deputy Administrator, 
Commodity Operations, FSA, Washington, DC and the Kansas City Commodity 
Office (KCCO), FSA, Kansas City, Missouri. Procurement will be in 
accordance with USDA-1, ``General Terms and Conditions for the 
Procurement of Agricultural Commodities or Services'', as amended or 
revised, applicable provisions of the Federal Acquisition Regulations 
(48 CFR), and applicable purchase announcements and bid invitations.
    (b) Purchases are made to fulfill commodity requests received in 
KCCO from AID.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec.  1496.3  Definitions.

    As used in the regulations in this subpart and in the forms and 
documents related thereto, the following terms shall have the meaning 
assigned to them in this section.
    (a) AID means the Agency for International Development, an agency 
within the United States Department of State.
    (b) FSA means the Farm Service Agency, an agency within the United 
States Department of Agriculture.
    (c) DACO means the Deputy Administrator, Commodity Operations, FSA.
    (d) CCC means Commodity Credit Corporation, a corporate agency 
within the United States Department of Agriculture.
    (e) Commodity Office means the Kansas City Commodity Office, within 
FSA, which is responsible for assigned inventory management, 
acquisition, disposition and related program activities of CCC.
    (f) Lowest landed cost means the lowest combined total cost of the 
commodity plus transportation charges to the port of discharge.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec.  1496.4  Issuance of invitations.

    From time to time, CCC will issue invitations to purchase or process 
agricultural products for utilization in the Title II, Pub. L. 480 
program. The invitations will specify the contract terms; the closing 
date for acceptance of bids; the date contracts will be awarded; and 
other pertinent information. Invitations will be issued at least 10 days 
prior to the deadline for submission of bids. The bid submission 
deadlines and contract awards will be timed so not more than one market 
day elapses between bid opening (bid submission deadline) and contract 
awards.



Sec.  1496.5  Consideration of bids.

    (a)(1) Lowest landed cost. The general principle of awarding 
contracts that will result in the lowest landed cost will prevail. 
Lowest landed cost will be calculated on the basis of U.S. flag rates 
and service for that portion of the commodities being purchased that CCC 
determines is necessary and practicable to meet cargo preference 
requirements and on an overall (foreign and U.S. flag) basis for the 
remaining portion of the commodities being purchased. However, the 
additional factors set forth in this section will be considered in 
awarding contracts.
    (b)(1) Availability of ocean service. Prior to receipt of offers 
from commodity suppliers, CCC will review

[[Page 801]]

ocean freight information from available sources including, but not 
limited to, trade journal newspapers, port publications, and steamship 
publications to determine the availability of appropriate ocean service.
    (2) Additional information will be gathered, if necessary by direct 
contact with the steamship company involved, regarding such factors as 
the minimum tonnage and/or revenue required to perform the service 
needed.
    (3) Special emphasis will be placed on assuring that under normal 
conditions the vessels will be calling at U.S. ports to coordinate 
loading with cargo arrival from suppliers.
    (4) Freight rates will be obtained from published ocean tariffs to 
make cost comparisons between various steamship companies and coastal 
ranges.
    (5) Available service will be analyzed to ensure that the port or 
coastal range selected for exportation has available ocean 
transportation service that will provide maximum compliance with the 
stated policy of AID with regard to the utilization of U.S. and other 
flag vessels to carry commodities shipped under Title II, Pub. L. 480.
    (c) Adequacy of service. (1) Prior to the selection of a coastal 
range or U.S. port from which commodities will be shipped, the ocean 
transportation service available may be examined to determine adequacy 
of service. The data utilized may include, but not necessarily be 
limited to, the past performance of a particular vessel or steamship 
line in terms of loss and/or damage to cargo when received at 
destination port; past performance in meeting established delivery 
schedules, etc. CCC may eliminate from consideration ports or coastal 
ranges where ocean transportation service is considered inadequate by 
CCC. When clearly superior service is available at another port or 
coastal range it may be selected over other service.
    (d) Port performance. (1) Each port will be contacted prior to bid 
evaluation to determine their cargo handling capabilities for Title II, 
Pub. L. 480, commodities when it is reasonably expected that quantities 
of 1,000 tons or more may be shipped. Allocations to that port will be 
governed by the minimum or maximum quantities indicated.
    (2) Limits of quantities purchased for delivery to a port or coastal 
range may also be imposed by the amount of vessel space available during 
the expected delivery and loading period.
    (3) Prior to the final selection of a U.S. port from which 
commodities will be shipped, the adequacy of the port to receive, 
accumulate, warehouse, handle, store, and protect the cargo will be 
considered.
    (4) Factors which will be considered in this determination will 
include, but are not necessarily limited to, the adequacy of building 
structures, proper ventilation, freedom from insects and rodents, 
cleanliness, and overall good housekeeping and warehousing practices.
    (5) When it is determined that the U.S. port is congested, 
facilities are overloaded, and a vessel would not be able to dock and 
load cargo without delay, or when labor disputes or lack of labor will 
prohibit the loading of the cargo onboard a vessel in a timely manner, 
another coastal range or port will be considered.
    (e) Transit time. CCC will consider total transit time, as it 
relates to a final delivery date, in order to satisfy program 
requirements.
    (f) Great Lakes ports. (1) Commodities offered for delivery ``free 
alongside ship'' (f.a.s.) Great Lakes port range or intermodal bridge-
port Great Lakes port range that represent the overall (foreign and U.S. 
flag) lowest landed cost will be awarded on that basis. Such offers will 
not be reevaluated on a lowest landed cost U.S.-flag basis unless CCC 
determines that 25 percent of the total annual tonnage of bagged, 
processed or fortified commodities furnished under Title II of Public 
Law 480 has been, or will be, transported from the Great Lakes port 
range during that fiscal year.
    (2) CCC will consider commodity offers as offers for delivery 
``intermodal bridge-port Great Lakes port range'' only if:
    (i) The offer specifies delivery at a marine cargo-handling facility 
that is capable of loading ocean going vessels

[[Page 802]]

at a Great Lakes port, as well as loading ocean going conveyances such 
as barges and container vans, and
    (ii) The commodities will be moved from one transportation 
conveyance to another at such a facility.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5729, Feb. 25, 1987; 63 
FR 11104, Mar. 6, 1998]



Sec.  1496.6  Data to be used.

    (a) CCC will use all available historical and current data as a 
basis for procurement considerations, including evaluations and 
decisions regarding the physical facilities and performance of ports. 
Heavy reliance will be placed upon current port conditions as determined 
from first hand observations and reports from USDA and other reliable 
sources.
    (b) The primary source of historical data will be documents used in 
the normal course of conducting business. Sources include contract 
documents, ocean bills of lading, survey and/or outturn reports made by 
commercial cargo surveyors, claim settlement agreements, claim payment 
documents, etc. CCC will utilize only such data and make only those 
analyses that it believes will provide a valid measure of program 
performance.



Sec.  1496.7  Final contract determinations.

    The KCCO shall be responsible for making lowest landed cost 
determinations. KCCO shall provide that information to an Ad Hoc 
Committee designated by the Administrator, FSA, to review the lowest 
landed cost determinations as a result of any or all of the factors 
referred to herein. If, after the committee makes its review and it is 
recommended that contracts should be awarded based on the additional 
factors which would override lowest landed cost determinations, these 
recommendations will be presented to the Contracting Officer for a final 
decision. These decisions will be fully doc umented and explained as to 
the reasons the lowest landed cost was not selected.



PART 1499--FOREIGN DONATION PROGRAMS--Table of Contents




Sec.
1499.1 Definitions.
1499.2 General purpose and scope.
1499.3 Eligibility requirements for Cooperating Sponsor.
1499.4 Availability of commodities from CCC inventory.
1499.5 Program Agreements and Plans of Operation.
1499.6 Usual marketing requirements.
1499.7 Apportionment of costs and advances.
1499.8 Ocean transportation.
1499.9 Arrangements for entry and handling in the foreign country.
1499.10 Restrictions on commodity use and distribution.
1499.11 Agreement between Cooperating Sponsor and Recipient Agencies.
1499.12 Sales and barter of commodities provided and use of proceeds.
1499.13 Processing, packaging and labeling of section 416(b) commodities 
          in the foreign country.
1499.14 Disposition of commodities unfit for authorized use.
1499.15 Liability for loss, damage, or improper distribution of 
          commodities--claims and procedures.
1499.16 Records and reporting requirements.
1499.17 Audits.
1499.18 Suspension of the program.
1499.19 Sample documents and guidelines for developing proposals and 
          reports.
1499.20 Paperwork reduction requirement.

    Authority: 7 U.S.C. 1431(b); 7 U.S.C. 1736o; E.O. 12752.

    Source: 61 FR 60515, Nov. 29, 1996, unless otherwise noted.



Sec.  1499.1  Definitions.

    Activity--a Cooperating Sponsor's use of agricultural commodities 
provided under Program Agreements or use of sale proceeds.
    Agricultural Counselor or Attache--the United States Foreign 
Agricultural Service representative stationed abroad, who has been 
assigned responsibilities with regard to the country into which the 
commodities provided are imported, or such representative's designee.
    CCC--the Commodity Credit Corporation.
    Commodities--agricultural commodities or products.

[[Page 803]]

    Director, P.L. 480-OD--the Director, Pub. L. 480 Operations 
Division, Foreign Agricultural Service, USDA.
    Director, CCCPSD--the Director, CCC Program Support Division, 
Foreign Agricultural Service, USDA.
    Director, PDD--the Director, Program Development Division, Foreign 
Agricultural Service, USDA.
    Deputy Administrator--Deputy Administrator for Export Credits, 
Foreign Agricultural Service, USDA.
    Force Majeure--damage caused by perils of the sea or other waters; 
collisions; wrecks; stranding without the fault of the carrier; 
jettison; fire from any cause; Act of God; public enemies or pirates; 
arrest or restraint of princes, princesses, rulers of peoples without 
the fault of the carrier; wars; public disorders; captures; or detention 
by public authority in the interest of public safety.
    General Sales Manager--General Sales Manager and Associate 
Administrator, Foreign Agricultural Service, USDA, who is a Vice 
President, CCC.
    KCCO--Kansas City Commodity Office, Farm Services Agency, USDA, P.O. 
Box 419205, Kansas City, Missouri, 64141-6205.
    KCMO/DMD--Kansas City Management Office/Debt Management Division, 
Farm Services Agency, USDA, P.O. Box 419205, Kansas City, Missouri, 
64141-6205.
    Ocean freight differential--the amount, as determined by CCC, by 
which the cost of ocean transportation is higher than would otherwise be 
the case by reason of the requirement that the commodities be 
transported on U.S.-flag vessels.
    Program Agreement--an agreement entered into between CCC and 
Cooperating Sponsors.
    Program income--interest on sale proceeds and money received by the 
Cooperating Sponsor, other than sales proceeds, as a result of carrying 
out approved activities.
    Recipient agency--an entity located in the importing country which 
receives commodities or commodity sale proceeds from a Cooperating 
Sponsor for the purpose of implementing activities.
    Sale proceeds--money received by a Cooperating Sponsor from the sale 
of commodities.
    Section 416(b)--Section 416(b) of the Agricultural Act of 1949.
    USDA--the United States Department of Agriculture.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997, as amended at 63 
FR 59877, Nov. 6, 1998]



Sec.  1499.2  General purpose and scope.

    This part establishes the general terms and conditions governing 
CCC's donation of commodities to Cooperating Sponsors under the section 
416(b) and Food for Progress programs. This does not apply to donations 
to intergovernmental agencies or organizations (such as the World Food 
Program) unless CCC and such intergovernmental agency or organization 
enters into an agreement incorporating this part.



Sec.  1499.3  Eligibility requirements for Cooperating Sponsor.

    A Cooperating Sponsor may be either:
    (a) A foreign government;
    (b) An entity registered with the Agency for International 
Development (AID) in accordance with AID regulations; or
    (c) An entity that demonstrates to CCC's satisfaction:
    (1) Organizational experience and resources available to implement 
and manage the type of program proposed, i.e., targeted food assistance 
or sale of commodities for economic development activities;
    (2) Experience working in the targeted country; and
    (3) Experience and knowledge on the part of personnel who will be 
responsible for implementing and managing the program. CCC may require 
that an entity submit a financial statement demonstrating that it has 
the financial means to implement an effective donation program.



Sec.  1499.4  Availability of commodities from CCC inventory.

    CCC will periodically announce the types and quantities of 
agricultural commodities available for donation from CCC inventory for 
the section 416(b) program.

[[Page 804]]



Sec.  1499.5  Program Agreements and Plans of Operation.

    (a) Plan of Operation. (1) Prior to entering into a section 416(b) 
Program Agreement, a Cooperating Sponsor shall submit a Plan of 
Operation to the Director, PDD and to the Agricultural Counselor or 
Attache, if an Agricultural Counselor or Attache is resident in the 
country where activities are to be implemented. After approval by CCC, 
the Plan of Operation will be incorporated into the section 416(b) 
Program Agreement as ``Attachment A.''
    (2) CCC may require Cooperating Sponsors to submit a Plan of 
Operation in connection with the Food for Progress program.
    (3) A Plan of Operation shall be in the following format and provide 
the following information:

    1. Name and Address of Applicant:
    2. Country of Donation:
    3. Kind and Quantity of Commodities Requested:
    4. Delivery Schedule:
    5. Program Description:
    Provide the following information:
    (a) Activity objectives, including a description of any problems 
anticipated in achieving the activities' objectives;
    (b) Method for choosing beneficiaries of activities;
    (c) Program administration including, as appropriate, plans for 
administering the distribution or sale of commodities and the 
expenditure of sale proceeds, and identification of the administrative 
or technical personnel who will implement the activities;
    (d) Activity budgets, including costs that will be borne by the 
Cooperating Sponsor, other organizations or local governments;
    (e) The recipient agency, if any, that will be involved in the 
program and a description of each recipient agency's capability to 
perform its responsibilities as stated in the Plan of Operation;
    (f) Governmental or nongovernmental entities involved in the program 
and the extent to which the program will strengthen or increase the 
capabilities of such entities to further economic development in the 
recipient country;
    (g) Method of educating consumers as to the source of the provided 
commodities and, where appropriate, preparation and use of the 
commodity; and
    (h) Criteria for measuring progress towards achieving the objectives 
of activities and evaluating program outcome.
    6. Use of Funds or Goods and Services Generated:
    When the activity involves the use of sale proceeds, the receipt of 
goods or services from the barter of commodities, or the use of program 
income, the following information must be provided:
    (a) the quantity and type of commodities to be sold or bartered;
    (b) extent to which any sale or barter of the agricultural 
commodities provided would displace or interfere with any sales that may 
otherwise be made;
    (c) the amount of sale proceeds anticipated to be generated from the 
sale, the value of the goods or services anticipated to be generated 
from the barter of the agricultural commodities provided, or the amount 
of program income expected to be generated;
    (d) the steps taken to use, to the extent possible, the private 
sector in the process of selling commodities;
    (e) the specific uses of sale proceeds or program income and a 
timetable for their expenditure; and
    (f) procedures for assuring the receipt and deposit of sale proceeds 
and program income into a separate special account and procedures for 
the disbursement of the proceeds and program income from such special 
account.
    7. Distribution Methods:
    (a) a description of the transportation and storage system which 
will be used to move the agricultural commodities from the receiving 
port to the point at which distribution is made to the recipient;
    (b) a description of any reprocessing or repackaging of the 
commodities that will take place; and
    (c) a logistics plan that demonstrates the adequacy of port, 
transportation, storage, and warehouse facilities to handle the flow of 
commodities to recipients without undue spoilage or waste.
    8. Duty Free Entry:
    Documentation indicating that any commodities to be distributed to 
recipients, rather than sold, will be imported and distributed free from 
all customs, duties, tolls, and taxes.
    9. Economic Impact:
    Information indicating that the commodities can be imported and 
distributed without a disruptive impact upon production, prices and 
marketing of the same or like products within the importing country.

    (b) Agreements. CCC and the Cooperating Sponsor will enter into a 
written Program Agreement which will incorporate the terms and 
conditions set forth in this part. The commodities provided by CCC, and 
any packaging, will meet the specifications set forth in such Program 
Agreement. A Program Agreement may contain special terms or conditions, 
in addition to or in lieu

[[Page 805]]

of, the terms and conditions set forth in the regulations in this part 
when CCC determines that such special terms or conditions are necessary 
to effectively carry out the particular Program Agreement.



Sec.  1499.6  Usual marketing requirements.

    (a) A foreign government Cooperating Sponsor shall provide to the 
Director, PDD, data showing commercial and non-commercial imports of the 
types of agricultural commodities requested during the prior five years, 
by country of origin, and an estimate of imports of such commodities 
during the current year.
    (b) CCC may require that a Program Agreement with a foreign 
government include a ``usual marketing requirement'' that establishes a 
specific level of imports for a specified period. The Program Agreement 
may also include a prohibition on the export of provided commodities, as 
well as of other similar commodities specified in the Program Agreement.



Sec.  1499.7  Apportionment of costs and advances.

    (a) CCC will bear the costs of processing, packaging, 
transportation, handling and other incidental charges incurred in 
delivering commodities to Cooperating Sponsors. CCC will deliver bulk 
grain shipments f.o.b. vessel, and shipments of all other commodities 
f.a.s. vessel or intermodal points. CCC will choose the point of 
delivery based on lowest cost to CCC.
    (b) When the General Sales Manager approves in advance and in 
writing, CCC may agree to bear all or a portion of reasonable costs 
associated with:
    (1) Transportation from U.S. ports to designated ports or points of 
entry abroad, maritime survey costs, and in cases of urgent and 
extraordinary relief requirements, transportation from designated ports 
or points of entry abroad to designated storage and distribution sites;
    (2) In cases of urgent and extraordinary relief requirements, 
reasonable storage and distribution costs; and
    (3) Under the Food for Progress Program, administration or 
monitoring of food assistance programs, or technical assistance 
regarding sales of commodities provided by CCC.
    (c) CCC will not pay any costs incurred by the Cooperating Sponsor 
prior to the date of the Program Agreement.
    (d) Except as provided in paragraph (b) of this section, the 
Cooperating Sponsor shall ordinarily bear all costs incurred subsequent 
to CCC's delivery of commodities at U.S. ports or intermodal points.
    (e) A Cooperating Sponsor seeking agreement by CCC to bear the costs 
identified in paragraphs (b)(2) or (b)(3) of this section shall submit 
to the Director, PDD, a Program Operation Budget detailing such costs. 
If approved, the Program Operation Budget shall become part of the 
Program Agreement. The non-government Cooperating Sponsor may make 
adjustments between line items of an approved Program Operations Budget 
up to 20 percent of the total amount approved or $5,000, whichever is 
less without any further approval. Adjustments beyond these limits must 
be specifically approved by the Director, PDD.
    (f) The Cooperating Sponsor may request advance of up to 85 percent 
of the amount of an approved Program Operating Budget. However, CCC will 
not approve any request for an advance received earlier than 60 days 
after the date of a previous advance made in connection with the same 
Program Agreement.
    (g) Funds advanced shall be deposited in an interest bearing account 
until expended. Interest earned may be used only for the purposes for 
which the funds were advanced.
    (h) The Cooperating Sponsor shall return to CCC any funds not 
obligated as of the 180th day after being advanced, together with any 
interest earned on such unexpended funds. Funds and interest shall be 
returned within 30 days of such date.
    (i) The Cooperating Sponsor shall, not later than 10 days after the 
end of each calendar quarter, submit a financial statement to the 
Director, PDD, accounting for all funds advanced and all interest 
earned.
    (j) CCC will pay all other costs for which it is obligated under the 
Program Agreement by reimbursement.

[[Page 806]]

However, CCC will not pay any cost incurred after the final date 
specified in the Program Agreement.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec.  1499.8  Ocean transportation.

    (a) Cargo preference. Shipments of commodities provided under either 
the section 416(b) or Food for Progress programs are subject to the 
requirements of sections 901(b) and 901b of the Merchant Marine Act, 
1936, regarding carriage on U.S.-flag vessels. CCC will endeavor to meet 
these requirements separately for each program for each 12-month 
compliance period. A Cooperating Sponsor shall comply with the 
instructions of CCC regarding the quantity of commodities that must be 
carried on U.S. flag vessels.
    (b) Freight procurement requirements. When CCC is financing any 
portion of the ocean freight, whether on U.S.-flag or non-U.S. flag 
vessels, and the Cooperating Sponsor arranges ocean transportation:
    (1) The Cooperating Sponsor shall arrange ocean transportation 
through competitive bidding and shall obtain approval of all invitations 
for bids from the offices specified in the Program Agreement prior to 
issuance.
    (2) Invitations for bids shall be issued through the Transportation 
News Ticker (TNT), New York, and at least one other comparable means of 
trade communication.
    (3) Freight invitations for bids shall include specified procedures 
for payment of freight, including the party responsible for the freight 
payments, and expressly require that:
    (i) Offers include a contract canceling date no later than the last 
contract layday specified in the invitation for bids;
    (ii) Offered rates be quoted in U.S. dollars per metric ton;
    (iii) If destination bagging or transportation to a point beyond the 
discharge port is required, the offer separately state the total rate 
and the portion thereof attributable to the ocean segment of the 
movement;
    (iv) Any non-liner U.S. flag vessel 15 years or older offer, in 
addition to any other offered rate, a one-way rate applicable in the 
event the vessel is scrapped or transferred to foreign flag registry 
prior to the end of the return voyage to the United States;
    (v) In the case of packaged commodities, U.S. flag carriers specify 
whether delivery will be direct breakbulk shipment, container shipment, 
or breakbulk transshipment and identify whether transshipment (including 
container relays) will be via U.S. or foreign flag vessel;
    (vi) Vessels offered subject to Maritime Administration approval 
will not be accepted; and
    (vii) Offers be received by a specified closing time, which must be 
the same for both U.S. and non-U.S. flag vessels.
    (4) In the case of shipments of bulk commodities and non-liner 
shipments of packaged commodities, the Cooperating Sponsor shall open 
offers in public in the United States at the time and place specified in 
the invitation for bids and consider only offers that are responsive to 
the invitation for bids without negotiation. Late offers shall not be 
considered or accepted.
    (5) All responsive offers received for both U.S. flag and foreign 
flag service shall be presented to KCCO which will determine the extent 
to which U.S.-flag vessels will be used.
    (6) The Cooperating Sponsor shall promptly furnish the Director, 
Public Law 480-OD, or other official specified in the Program Agreement, 
copies of all offers received with the time of receipt indicated 
thereon. The Director, Public Law 480-OD, or other official specified in 
the Program Agreement, will approve all vessel fixtures. The Cooperating 
Sponsor may fix vessels subject to the required approval; however, the 
Cooperating Sponsor shall not confirm a vessel fixture until advised of 
the required approval and the results of the Maritime Administration's 
guideline rate review. The Cooperating Sponsor shall not request 
guideline rate advice from the Maritime Administration. The Cooperating 
Sponsor will, promptly after receipt of vessel approval, issue a public 
notice of the fixture details on the TNT or other means of communication 
approved by the Director, Public Law 480-OD.
    (7) Non-Vessel Operating Common Carriers may not be employed to 
carry

[[Page 807]]

shipments on either U.S. or foreign-flag vessels.
    (8) The Cooperating Sponsor shall promptly furnish the Director 
Public Law 480-OD, a copy of the signed laytime statement and statement 
of facts at the discharge port.
    (c) Shipping agents. (1) The Cooperating Sponsor may appoint a 
shipping agent to assist in the procurement of ocean transportation. The 
Cooperating Sponsor shall nominate the shipping agent in writing to the 
Deputy Administrator, Room 4077-S, Foreign Agricultural Service, U.S. 
Department of Agriculture, Washington, DC 20250-1031, and include a copy 
of the proposed agency agreement. The Cooperating Sponsor shall specify 
the time period of the nomination.
    (2) The shipping agent so nominated shall submit the information and 
certifications required by 7 CFR 17.4 to the Deputy Administrator.
    (3) A person may not act as a shipping agent for a Cooperating 
Sponsor unless the Deputy Administrator has notified the Cooperating 
Sponsor in writing that the nomination is accepted.
    (d) Commissions. (1) When any portion of the ocean freight is paid 
by CCC, total commissions earned on U.S. and foreign flag bookings by 
all parties arranging vessel fixtures, shall not exceed 2\1/2\ percent 
of the total freight costs.
    (2) Address commissions are prohibited.
    (e) Contract terms. When CCC is paying any portion of the ocean 
freight, charter parties and liner booking contracts must conform to the 
following requirements, as applicable:
    (1) Packaged commodities on liner vessels shall be shipped on the 
basis of full berth terms with no demurrage or despatch;
    (2) Shipments of bulk liquid commodities may be contracted in 
accordance with trade custom. Other bulk commodities, including 
shipments that require bagging or stacking for the account of the 
vessel, shall be shipped on the basis of vessel load, free out, with 
demurrage and despatch applicable at load and discharge ports; except 
that, if bulk commodities require further inland distribution, they 
shall be shipped on the basis of vessel load with demurrage and despatch 
at load and berth terms discharge, i.e., no demurrage, despatch, or 
detention at discharge. Demurrage and despatch shall be settled between 
the ocean carrier and commodity suppliers at load port and between the 
ocean carrier and charterers at discharge ports. CCC is not responsible 
for resolving disputes involving the calculation of laytime or the 
payment of demurrage or despatch.
    (3) If the Program Agreement requires the Cooperating Sponsor to 
arrange an irrevocable letter of credit for ocean freight, the 
Cooperating Sponsor shall be liable for detention of the vessel for 
loading delays attributable solely to the decision of the ocean carrier 
not to commence loading because of the failure of the Cooperating 
Sponsor to establish such letter of credit. Charter parties and liner 
booking contracts may not contain a specified detention rate. The ocean 
carrier shall be entitled to reimbursement, as damages for detention for 
all time so lost, for each calendar day or any part of the calendar day, 
including Saturdays, Sundays and holidays. The period of such delay 
shall not commence earlier than upon presentation of the vessel at the 
designated loading port within the laydays specified in the charter 
party or liner booking contract, and upon notification of the vessel's 
readiness to load in accordance with the terms of the applicable charter 
party or liner booking contract. The period of such delay shall end at 
the time that operable irrevocable letters of credit have been 
established for ocean freight or the time the vessel begins loading, 
whichever is earlier. Time calculated as detention shall not count as 
laytime. Reimbursement for such detention shall be payable no later than 
upon the vessel's arrival at the first port of discharge.
    (4) Charges including, but not limited to charges for inspection, 
fumigation, and carrying charges, attributable to the failure of the 
vessel to present before the canceling date will be for the account of 
the ocean carrier.
    (5) Ocean freight is earned under a charter party when the vessel 
and cargo arrive at the first port of discharge, Provided, That if a 
force majeure

[[Page 808]]

prevents the vessel's arrival at the first port of discharge, 100% of 
the ocean freight is payable or, if the charter party provides for 
completing additional requirements after discharge such as bagging, 
stacking, or inland transportation, not more than 85% of the ocean 
freight is payable, at the time the General Sales Manager determines 
that such force majeure was the cause of nonarrival; and
    (6) When the ocean carrier offers delivery to destination ports on 
U.S.-flag vessels, but foreign-flag vessels are used for any part of the 
voyage to the destination port without first obtaining the approval of 
the Cooperating Sponsor, KCCO, and any other approval that may be 
required by the Program Agreement, the ocean freight rate will be 
reduced to the lowest responsive foreign-flag vessel rate offered in 
response to the same invitation for bids and the carrier agrees to pay 
CCC the difference between the contracted ocean freight rate and the 
freight rate offered by such foreign-flag vessel.
    (f) Coordination between CCC and the Cooperating Sponsor. When a 
Program Agreement specifies that the Cooperating Sponsor will arrange 
ocean transportation:
    (1) KCCO will furnish the Cooperating Sponsor, or its agent, with a 
Notice of Commodity Availability (Form CCC-512) which will specify the 
receiving country, commodity, quantity, and date at U.S. port or 
intermodal delivery point.
    (2) The Cooperating Sponsor shall complete the Form CCC-512 
indicating name of steamship company, vessel name, vessel flag and 
estimated time of arrival at U.S. port; and shall sign and return the 
completed form to KCCO, with a copy to the Director, P.L. 480-OD. If CCC 
agrees to pay any part of the ocean transportation for liner cargoes, 
the Cooperating Sponsor shall also indicate on the Form CCC-512 the 
applicable Federal Maritime Commission tariff rate, and tariff 
identification.
    (3) KCCO will issue instructions to have the commodity delivered 
f.a.s. or f.o.b. vessel, U.S. port of export or intermodal delivery 
point, consigned to the Cooperating Sponsor.
    (g) Documents required for payment of freight--(1) General rule. To 
receive payment for ocean freight, the following documents shall be 
submitted to the Director, CCCPSD:
    (i) One signed copy of completed Form CCC-512;
    (ii) Four copies of the original on-board bills of lading indicating 
the freight rate and signed by the originating carrier;
    (iii) For all non-containerized grain cargoes,
    (A) One signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate (Vessel Hold Certificate);
    (B) One signed copy of the National Cargo Bureau Certificate of 
Readiness (Vessel Hold Inspection Certificate); and
    (C) One signed copy of the National Cargo Bureau Certificate of 
Loading;
    (iv) For all containerized grain and grain product cargoes, one 
signed copy of the FGIS Container Condition Inspection Certificate;
    (v) One signed copy of liner booking note or charter party covering 
ocean transportation of cargo;
    (vi) For charter shipments, a signed notice of arrival at first 
discharge port submitted by the Cooperating Sponsor;
    (vii) For all liner cargoes, a copy of the tariff page.
    (viii) Four copies of either:
    (A) A request by the Cooperating Sponsor for reimbursement of ocean 
freight or ocean freight differential indicating the amount due, and 
accompanied by a certification from the ocean carrier that payment has 
been received from the Cooperating Sponsor; or
    (B) A request for direct payment to the ocean carrier, indicating 
amount due; or
    (C) A request for direct payment of ocean freight differential to 
the ocean carrier accompanied by a certification from the carrier that 
payment of the Cooperating Sponsor's portion of the ocean freight has 
been received.
    (ix) Each request to CCC for payment must provide a document, on 
letterhead and signed by an official or agent of the requester, the name 
of the entity to receive payment, the bank ABA number to which payment 
is to be

[[Page 809]]

made; the account number for the deposit at the bank; the requester's 
taxpayer identification number; and the type of the account into which 
funds will be deposited.
    (2) In cases of force majeure. To receive payment in cases where the 
General Sales Manager determines that circumstances of force majeure 
have prevented the vessel's arrival at the first port of discharge, the 
Cooperating Sponsor shall submit all documents required by paragraph 
(g)(1) of this section except for the notice of arrival required by 
paragraph (g)(1)(vi) of this section.
    (h) CCC payment of ocean freight or ocean freight differential--(1) 
General rule. CCC will pay, not later than 30 days after receipt in good 
order of the required documentation, 100 percent of either the ocean 
freight or the ocean freight differential, whichever is specified in the 
Program Agreement.
    (2) Additional requirements after discharge. Where the charter party 
or liner booking note provide for the completion of additional services 
after discharge, such as bagging, stacking or inland transportation, CCC 
will pay, not later than 30 days after receipt in good order of the 
required documentation, either not more than 85 percent of the total 
freight charges or 100 percent of the ocean freight differential, 
whichever is specified in the Program Agreement. CCC will pay the 
remaining balance, if any, of the freight charges not later than 30 days 
after receipt of notification from the Cooperating Sponsor that such 
additional services have been provided; except that CCC will not pay any 
remaining balance where the GSM determines that the vessel's arrival at 
first port of discharge was prevented by force majeure.
    (3) No demurrage. CCC will not pay demurrage.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997, as amended at 63 
FR 8837, Feb. 23, 1998; 63 FR 59877, Nov. 6, 1998]



Sec.  1499.9  Arrangements for entry and handling in the foreign country.

    (a) The Cooperating Sponsor shall make all necessary arrangements 
for receiving the commodities in the recipient country, including 
obtaining appropriate approvals for entry and transit. The Cooperating 
Sponsor shall store and maintain the commodities from time of delivery 
at port of entry or point of receipt from originating carrier in good 
condition until their distribution, sale or barter.
    (b) When CCC has agreed to pay costs of transporting, storing, and 
distributing commodities from designated points of entry or ports of 
entry, the Cooperating Sponsor shall arrange for such services, by 
through bill of lading, or by contracting directly with suppliers of 
services, as CCC may approve. If the Cooperating Sponsor contracts 
directly with the suppliers of such services, the Cooperating Sponsor 
may seek reimbursement by submitting documentation to CCC indicating 
actual costs incurred. All supporting documentation must be sent to the 
Director, CCCPSD. CCC, at its option, will reimburse the Cooperating 
Sponsor for the cost of such services in U.S. dollars at the exchange 
rate in effect on the date of payment by CCC, or in foreign currency.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997]



Sec.  1499.10  Restrictions on commodity use and distribution.

    (a) The Cooperating Sponsor may use the commodities provided only in 
accordance with the terms of the Program Agreement.
    (b) Commodities shall not be distributed within the importing 
country on the basis of political affiliation, geographic location, or 
the ethnic, tribal or religious identity or affiliations of the 
potential consumers or recipients.
    (c) Commodities shall not be distributed, handled or allocated by 
military forces without specific CCC authorization.
    (d) In the event that its participation in the program terminates, 
the non-government cooperating sponsor will safeguard any undistributed 
commodities and sales proceeds and dispose of such commodities and 
proceeds as directed by CCC.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]

[[Page 810]]



Sec.  1499.11  Agreement between Cooperating Sponsor and recipient agencies.

    (a) The Cooperating Sponsor shall enter into a written agreement 
with a recipient agency prior to the transfer of any commodities, sale 
proceeds or program income to the recipient agency. Copies of such 
agreements shall be provided to the Agricultural Counselor or Attache, 
and the Director, PDD. Such agreements shall require the recipient 
agency to pay the Cooperating Sponsor the value of any commodities, sale 
proceeds or program income that are used for purposes not expressly 
permitted under the Program Agreement, or that are lost, damaged, or 
misused as result of the recipient agency's failure to exercise 
reasonable care;
    (b) CCC may waive the requirements of paragraph (a) of this section 
where it determines that such an agreement is not feasible or 
appropriate.



Sec.  1499.12  Sales and barter of commodities provided and use of proceeds.

    (a) Commodities may be sold or bartered without the prior approval 
of CCC where damage has rendered the commodities unfit for intended 
program purposes and sale or barter is necessary to mitigate loss of 
value.
    (b) A Cooperating Sponsor may, but is not required to, negotiate an 
agreement with the host government under which the commodities imported 
for a sale or barter may be imported, sold, or bartered without 
assessment of duties or taxes. In such cases and where the commodities 
are sold, they shall be sold at prices reflecting prevailing local 
market value.
    (c) The Cooperating Sponsor shall deposit all sale proceeds into an 
interest-bearing account unless prohibited by the laws or customs of the 
importing country or CCC determines that to do so would constitute an 
undue burden. Interest earned on such deposits shall only be used for 
approved activities.
    (d) Except as otherwise provided in this part, the Cooperating 
Sponsor may use sale proceeds and resulting interest only for those 
purposes approved in the applicable Plan of Operation.
    (e) CCC will approve the use of sale proceeds and interest to 
purchase real and personal property where local law permits the 
Cooperating Sponsor to retain title to such property, but will not 
approve the use of sale proceeds or interest to pay for the acquisition, 
development, construction, alteration or upgrade of real property that 
is;
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious activity, or
    (2) Used in whole or in part for sectarian purposes; except that, a 
Cooperating Sponsor may use such sale proceeds or interest to pay for 
repairs or rehabilitation of a structure located on such real property 
to the extent necessary to avoid spoilage or loss of provided 
commodities but only if such structure is not used in whole or in part 
for any religious or sectarian purposes while the provided commodities 
are stored in such structure. When not approved in the Plan of 
Operation, such use may be approved by the Agricultural Counsellor or 
Attache.
    (f) The Cooperating Sponsor shall follow commercially reasonable 
practices in procuring goods and services and when engaging in 
construction activity in accordance with the approved Plan of Operation. 
Such practices shall include procedures to prevent fraud, self-dealing 
and conflicts of interest, and shall foster free and open competition to 
the maximum extent practicable.
    (g) To the extent required by the Program Agreement, the Cooperating 
Sponsor shall submit to the Controller, CCC, and to the Director, PDD, 
an inventory of all assets acquired with sale proceeds or interest or 
program income. In the event that its participation in the program 
terminates, the Cooperating Sponsor shall dispose, at the direction of 
the Director, PDD, of any property, real or personal, so acquired.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997]



Sec.  1499.13  Processing, packaging and labeling of section 416(b) 
commodities in the foreign country.

    (a) Cooperating Sponsors may arrange for the processing of 
commodities provided under a section 416(b) Program Agreement, or for 
packaging or repackaging prior to distribution. When a third party 
provides such processing, packaging or repackaging, the

[[Page 811]]

Cooperating Sponsor shall enter into a written agreement requiring that 
the provider of such services maintain adequate records to account for 
all commodities delivered and submit periodic reports to the Cooperating 
Sponsor. The Cooperating Sponsor shall submit a copy of the executed 
agreement to the Agricultural Counselor or Attache.
    (b) If, prior to distribution, the Cooperating Sponsor arranges for 
packaging or repackaging commodities provided under section 416(b), the 
packaging shall be plainly labeled in the language of the country in 
which the commodities are to be distributed with the name of the 
commodity and, except where the commodities are to be sold or bartered 
after processing, packaging or repackaging, to indicate that the 
commodity is furnished by the people of the United States of America and 
not to be sold or exchanged. If the commodities are not packaged, the 
Cooperating Sponsor shall, to the extent practicable, display banners, 
posters or other media containing the information prescribed in this 
paragraph.
    (c) CCC will reimburse Cooperating Sponsors that are nonprofit 
private voluntary organizations or cooperatives for expenses incurred 
for repackaging if the packages of commodities provided under section 
416(b) are discharged from the vessel in damaged condition, and are 
repackaged to ensure that the commodities arrive at the distribution 
point in wholesome condition. No prior approval is required for such 
expenses equaling $500 or less. If such expense is estimated to exceed 
$500, the authority to repackage and incur such expense must be approved 
by the Agricultural Counselor or Attache in advance of repackaging.



Sec.  1499.14  Disposition of commodities unfit for authorized use.

    (a) Prior to delivery to Cooperating Sponsor at discharge port or 
point of entry. If the commodity is damaged prior to delivery to a 
governmental Cooperating Sponsor at discharge port or point of entry 
overseas, the Agricultural Counselor or Attache will immediately arrange 
for inspection by a public health official or other competent authority. 
If the commodity is damaged prior to delivery to a nongovernmental 
Cooperating Sponsor at the discharge port or point of entry, the 
nongovernmental Cooperating Sponsor shall arrange for such inspection. 
If inspection discloses the commodity to be unfit for the use authorized 
in the Program Agreement, the Agricultural Counselor or Attache or the 
nongovernmental Cooperating Sponsor shall dispose of the commodities in 
accordance with the priority set forth in paragraph (b) of this section. 
Expenses incidental to the handling and disposition of the damaged 
commodity will be paid by CCC from the sale proceeds or from an 
appropriate CCC account designated by CCC. The net proceeds of sales 
shall be deposited with the U.S. Disbursing Officer, American Embassy, 
for the credit of CCC in an appropriate CCC account designated by CCC; 
however, if the commodities are provided for a sales program, the net 
sale proceeds, net of expenses incidental to handling and disposition of 
the damaged commodity, shall be deposited to the special account 
established for sale proceeds. The Cooperating Sponsor shall consult 
with CCC regarding the inspection and disposition of commodities and 
accounting for sale proceeds in the event the Cooperating Sponsor 
executed a sales agreement under which title passed to the purchaser 
prior to delivery to the Cooperating Sponsor.
    (b) After delivery to Cooperating Sponsor. (1) If after arrival in a 
foreign country and after delivery to a Cooperating Sponsor, it appears 
that the commodity, or any part thereof, may be unfit for the use 
authorized in the Program Agreement, the Cooperating Sponsor shall 
immediately arrange for inspection of the commodity by a public health 
official or other competent authority approved by the Agricultural 
Counselor or Attache. If no competent local authority is available, the 
Agricultural Counselor or Attache may determine whether the commodities 
are unfit for the use authorized in the Program Agreement and, if so, 
may direct disposal in accordance with this paragraph (b) of this 
section. The Cooperating Sponsor shall arrange for the recovery of that 
portion of the commodities designated during the inspection as suitable 
for authorized use. If, upon

[[Page 812]]

inspection, the commodity (or any part thereof) is determined to be 
unfit for the authorized use, the Cooperating Sponsor shall notify the 
Agricultural Counselor or Attache of the circumstances pertaining to the 
loss or damage. With the concurrence of the Agricultural Counselor or 
Attache, the commodity determined to be unfit for authorized use shall 
be disposed of in the following order of priority:
    (i) By transfer to an approved section 416(b) program for use as 
livestock feed. CCC shall be advised promptly of any such transfer so 
that shipments from the United States to the livestock feeding program 
can be reduced by an equivalent amount;
    (ii) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, or industrial use, at the highest obtainable price. When the 
commodity is sold, all U.S. Government markings shall be obliterated or 
removed;
    (iii) By donation to a governmental or charitable organization for 
use as animal feed or for other non-food use; or
    (iv) If the commodity is unfit for any use or if disposal in 
accordance with paragraph (b)(1) (i), (ii) or (iii) of this section is 
not possible, the commodity shall be destroyed under the observation of 
a representative of the Agricultural Counselor or Attache, if 
practicable, in such manner as to prevent its use for any purpose.
    (2) Actual expenses incurred, including third party costs, in 
effecting any sale may be deducted from the sale proceeds and, if the 
commodities were intended for direct distribution, the Cooperating 
Sponsor shall deposit the net proceeds with the U.S. Disbursing Officer, 
American Embassy, with instructions to credit the deposit to an 
appropriate CCC account as designated by CCC. If the commodities were 
intended to be sold, the Cooperating Sponsor shall deposit the gross 
proceeds into the special interest bearing account and, after approved 
costs related to the handling and disposition of damaged commodities are 
paid, shall use the remaining funds for purposes of the approved 
program. The Cooperating Sponsor shall promptly furnish to the 
Agricultural Counselor or Attache a written report of all circumstances 
relating to the loss and damage on any commodity loss in excess of 
$5,000; quarterly reports shall be made on all other losses. If the 
commodity was inspected by a public health official or other competent 
authority, the report and any supplemental report shall include a 
certification by such public health official or other competent 
authority as to the condition of the commodity and the exact quantity of 
the damaged commodity disposed. Such certification shall be obtained as 
soon as possible after the discharge of the cargo. A report must also be 
provided to the Chief, Debt Management Division, KCMO/DMD, of action 
taken to dispose of commodities unfit for authorized use.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec.  1499.15  Liability for loss, damage, or improper distribution of 
commodities--claims and procedures.

    (a) Fault of Cooperating Sponsor prior to loading on ocean vessel. 
The Cooperating Sponsor shall immediately notify KCCO, Chief, Export 
Operations Division if the Cooperating Sponsor will not have a vessel 
for loading at the U.S. port of export in accordance with the agreed 
shipping schedule. CCC will determine whether the commodity will be: 
moved to another available outlet; stored at the port for delivery to 
the Cooperating Sponsor when a vessel is available for loading; or 
disposed of as CCC may deem proper. The Cooperating Sponsor shall take 
such action as directed by CCC and shall reimburse CCC for expenses 
incurred if CCC determines that the expenses were incurred because of 
the fault or negligence of the Cooperating Sponsor.
    (b) Fault of others prior to loading on ocean vessel. The 
Cooperating Sponsor shall immediately notify the Chief, Debt Management 
Office, KCMO/DMD, when any damage or loss to the commodity occurs that 
is attributable to a warehouseman, carrier, or other person between the 
time title is transferred to a Cooperating Sponsor and the time the 
commodity is loaded on board vessel at the designated port of export. 
The Cooperating Sponsor shall promptly assign to CCC any rights to 
claims which may arise as a result of such loss

[[Page 813]]

or damage and shall promptly forward to CCC all documents pertaining 
thereto. CCC shall have the right to initiate claims, and retain the 
proceeds of all claims, for such loss or damage.
    (c) Survey and outturn reports related to claims against ocean 
carriers. (1) If the Program Agreement provides that CCC will arrange 
for an independent cargo surveyor to attend the discharge of the cargo, 
CCC will require the surveyor to provide a copy of the report to the 
Cooperating Sponsor.
    (2)(i) If the Cooperating Sponsor arranges for an independent cargo 
surveyor, the Cooperating Sponsor shall forward to the Chief, Debt 
Management Office, KCMO/DMD, any narrative chronology or other 
commentary it can provide to assist in the adjudication of ocean 
transportation claims and shall prepare such a narrative in any case 
where the loss is estimated to be in excess of $5,000.00. The 
Cooperating Sponsor may, at its option, also engage the independent 
surveyor to supervise clearance and delivery of the cargo from customs 
or port areas to the Cooperating Sponsor or its agent and to issue 
delivery survey reports thereon.
    (ii) In the event of cargo loss and damage, the Cooperating Sponsor 
shall provide to the Chief, Debt Management Office, KCMO/DMD, the names 
and addresses of individuals who were present at the time of discharge 
and during survey and who can verify the quantity lost or damaged. For 
bulk grain shipments, in those cases where the Cooperating Sponsor is 
responsible for survey and outturn reports, the Cooperating Sponsor 
shall obtain the services of an independent surveyor to:
    (A) Observe the discharge of the cargo;
    (B) Report on discharging methods including scale type, calibrations 
and any other factor which may affect the accuracy of scale weights, 
and, if scales are not used, state the reason therefore and describe the 
actual method used to determine weights;
    (C) Estimate the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (D) Advise on the quality of sweepings;
    (E) Obtain copies of port or vessel records, if possible, showing 
quantity discharged;
    (F) Provide immediate notification to the Cooperating Sponsor if 
additional services are necessary to protect cargo interests or if the 
surveyor has reason to believe that the correct quantity was not 
discharged; and
    (G) In the case of shipments arriving in container vans, list the 
container van numbers and seal numbers shown on the container vans, and 
indicate whether the seals were intact at the time the container vans 
were opened, and whether the container vans were in any way damaged. To 
the extent possible, the independent surveyor should observe discharge 
of container vans from the vessel to ascertain whether any damage to the 
container van occurred and arrange for surveying as container vans are 
opened.
    (iii) Cooperating Sponsors shall send copies to KCMO/DMD, Chief, 
Debt Management Office of all reports and documents pertaining to the 
discharge of commodities.
    (iv) CCC will reimburse the Cooperating Sponsor for costs incurred 
upon receipt of the survey report and the surveyor's invoice or other 
documents that establish the survey cost. CCC will not reimburse a 
Cooperating Sponsor for the costs of a delivery survey unless the 
surveyor also prepares a discharge survey, or for any other survey not 
taken contemporaneously with the discharge of the vessel, unless CCC 
determines that such action was justified in the circumstances.
    (3) Survey contracts shall be let on a competitive bid basis unless 
CCC determines that the use of competitive bids would not be 
practicable. CCC may preclude the use of certain surveyors because of 
conflicts of interest or lack of demonstrated capability to properly 
carry out surveying responsibilities.
    (4) If practicable, all surveys shall be conducted jointly by the 
surveyor, the consignee, and the ocean carrier, and the survey report 
shall be signed by all parties.
    (d) Ocean carrier loss and damage. (1) Notwithstanding transfer of 
title, CCC shall have the right to file, pursue, and retain the proceeds 
of collection from

[[Page 814]]

claims arising from ocean transportation cargo loss and damage arising 
out of shipments of commodities provided to governmental Cooperating 
Sponsors; however, when the Cooperating Sponsor pays the ocean freight 
or a portion thereof, it shall be entitled to pro rata reimbursement 
received from any claims related to ocean freight charged. CCC will pay 
general average contributions for all valid general average incidents 
which may arise from the movement of commodity to the destination ports. 
CCC shall receive and retain all allowances in general average.
    (2) Nongovernmental Cooperating Sponsors shall: file notice with the 
ocean carrier immediately upon discovery of any cargo loss or damage; 
promptly initiate claims against the ocean carriers for such loss and 
damage; take all necessary action to obtain restitution for losses, and 
(iv) provide CCC copies of all such claims. Notwithstanding the 
preceding sentence the nongovernmental Cooperating Sponsor need not file 
a claim when the cargo loss is less than $100, or in any case when the 
loss is between $100 and $300 and the nongovernmental Cooperating 
Sponsor determines that the cost of filing and collecting the claim will 
exceed the amount of the claim. The nongovernmental Cooperating Sponsor 
shall transmit to KCMO/DMD, Chief, Debt Management Office information 
and documentation on such lost or damaged shipments when no claim is to 
be filed. In the event of a declaration General Average:
    (i) The Cooperating Sponsor shall assign all claim rights to CCC and 
shall provide CCC all documentation relating to the claim, if 
applicable;
    (ii) CCC will be responsible for settling general average and marine 
salvage claims;
    (iii) CCC has sole authority to authorize any disposition of 
commodities which have not commenced ocean transit or of which the ocean 
transit is interrupted;
    (iv) CCC will receive and retain any monetary proceeds resulting 
from such disposition;
    (v) CCC will initiate, prosecute, and retain all proceeds of cargo 
loss and damage against ocean carriers and any allowance in general 
average; and
    (vi) CCC will pay any general average or marine salvage claims 
determined to be due.
    (3) Amounts collected by nongovernmental Cooperating Sponsors on 
claims against ocean carriers which are less than $200 may be retained 
by the nongovernmental Cooperating Sponsor. On claims involving loss or 
damage of $200 or more, nongovernmental Cooperating Sponsors may retain 
from collections received by them, either $200 plus 10 percent of the 
difference between $200 and the total amount collected on the claim, up 
to a maximum of $500; or the actual administrative expenses incurred in 
collection of the claim, provided retention of such administrative 
expenses is approved by CCC. Allowable collection costs shall not 
include attorneys fees, fees of collection agencies, and similar costs. 
In no event will CCC pay collection costs in excess of the amount 
collected on the claim.
    (4) A nongovernmental Cooperating Sponsor also may retain from claim 
recoveries remaining after allowable deductions for administrative 
expenses of collection, the amount of any special charges, such as 
handling and packing costs, which the nongovernmental Cooperating 
Sponsor has incurred on the lost or damaged commodity and which are 
included in the claims and paid by the liable party.
    (5) A nongovernmental Cooperating Sponsor may redetermine claims on 
the basis of additional documentation or information not considered when 
the claims were originally filed when such documentation or information 
clearly changes the ocean carrier's liability. Approval of such changes 
by CCC is not required regardless of amount. However, copies of 
redetermined claims and supporting documentation or information shall be 
furnished to CCC.
    (6) A nongovernmental Cooperating Sponsor may negotiate compromise 
settlements of claims of any amount, provided that proposed compromise 
settlements of claims having a value of $5,000 or more shall require 
prior approval in writing by CCC. When a claim is compromised, a 
nongovernmental Cooperating Sponsor may retain from

[[Page 815]]

the amount collected, the amounts authorized in paragraph (d)(3) of this 
section, and in addition, an amount representing such percentage of the 
special charges described in paragraph (d)(4) of this section as 
compromised amount is to the full amount of the claim. When a claim is 
less than $600, a nongovernmental Cooperating Sponsor may terminate 
collection activity when it is determined that pursuit of such claims 
will not be economically sound. Approval for such termination by CCC is 
not required; however, the nongovernmental Cooperating Sponsor shall 
notify KCMO/DMD, Chief, Debt Management Division when collection 
activity on a claim is terminated.
    (7) All amounts collected in excess of the amounts authorized in 
this section to be retained shall be remitted to CCC. For the purpose of 
determining the amount to be retained by a nongovernmental Cooperating 
Sponsor from the proceeds of claims filed against ocean carriers, the 
word ``claim'' shall refer to the loss and damage to commodities which 
are shipped on the same voyage of the same vessel to the same port 
destination, irrespective of the kinds of commodities shipped or the 
number of different bills of lading issued by the carrier.
    (8) If a nongovernmental Cooperating Sponsor is unable to effect 
collection of a claim or negotiate an acceptable compromise settlement 
within the applicable period of limitation or any extension thereof 
granted in writing by the party alleged responsible for the damage, the 
nongovernmental Cooperating Sponsor shall assign its rights to the claim 
to CCC in sufficient time to permit the filing of legal action prior to 
the expiration of the period of limitation or any extension thereof. 
Generally, a nongovernmental Cooperating Sponsor should assign claim 
rights to CCC no later than 60 days prior to the expiration of the 
period of limitation or any extension thereof. In all cases, a 
nongovernmental Cooperating Sponsor shall keep CCC informed of the 
progress of its collection efforts and shall promptly assign their claim 
rights to CCC upon request. Subsequently, if CCC collects on or settles 
the claim, CCC shall, except as indicated in this paragraph pay to a 
nongovernmental Cooperating Sponsor the amount to which it would have 
been entitled had it collected on the claim. The additional 10 percent 
on amounts collected in excess of $200 will be payable, however, only if 
CCC determines that reasonable efforts were made to collect the claim 
prior to the assignment, or if payment is determined to be commensurate 
with the extra efforts exerted in further documenting the claim. If 
documentation requirements have not been fulfilled and the lack of such 
documentation has not been justified to the satisfaction of CCC, CCC 
will deny payment of all allowances to the nongovernmental Cooperating 
Sponsor.
    (9) When a nongovernmental Cooperating Sponsor permits a claim to 
become time-barred, or fails to take timely actions to insure the right 
of CCC to assert such claims, and CCC determines that the 
nongovernmental Cooperating Sponsor failed to properly exercise its 
responsibilities under the Agreement, the nongovernmental Cooperating 
Sponsor shall be liable to the United States for the cost and freight 
value of the commodities lost to the program.
    (e) Fault of Cooperating Sponsor in country of distribution. If a 
commodity, sale proceeds or program income is used for a purpose not 
permitted by the Program Agreement, or if a Cooperating Sponsor causes 
loss or damage to a commodity, sale proceeds, or program income through 
any act or omission or failure to provide proper storage, care and 
handling, the cooperating sponsor shall pay to the United States the 
value of the commodities, sale proceeds or program income lost, damaged 
or misused. CCC will consider normal commercial practices in the country 
of distribution in determining whether there was a proper exercise of 
the Cooperating Sponsor's responsibility. Payment by the Cooperating 
Sponsor shall be made in accordance with paragraph (g) of this section.
    (f) Fault of others in country of distribution and in intermediate 
country. (1) In addition to survey or outturn reports to determine ocean 
carrier loss and damage, the Cooperating Sponsor

[[Page 816]]

shall, in the case of landlocked countries, arrange for an independent 
survey at the point of entry into the recipient country and make a 
report as set forth in paragraph (c)(1) of this section. CCC will 
reimburse the Cooperating Sponsor for the costs of survey as set forth 
in paragraph (c)(2)(iv) of this section.
    (2) Where any damage to or loss of the commodity or any loss of sale 
proceeds or program income is attributable to a warehouseman, carrier or 
other person, the Cooperating Sponsor shall make every reasonable effort 
to pursue collection of claims for such loss or damage. The Cooperating 
Sponsor shall furnish a copy of the claim and related documents to the 
Agricultural Counselor or Attache. Cooperating Sponsors who fail to file 
or pursue such claims shall be liable to CCC for the value of the 
commodities or sale proceeds or program income lost, damaged, or 
misused: Provided, however, that the Cooperating Sponsor may elect not 
to file a claim if the loss is less than $500. The Cooperating Sponsor 
may retain $150 of any amount collected on an individual claim. In 
addition, Cooperating Sponsors may, with the written approval of the 
Agricultural Counselor or Attache, retain amounts to cover special costs 
of collection such as legal fees, or pay such collection costs with sale 
proceeds or program income. Any proposed settlement for less than the 
full amount of the claim requires prior approval by the Agricultural 
Counselor or Attache. When the Cooperating Sponsor has exhausted all 
reasonable attempts to collect a claim, it shall request the 
Agricultural Counselor or Attache to provide further instructions.
    (3) The Cooperating Sponsor shall pursue any claim by initial 
billings and at least three subsequent demands at not more than 30 day 
intervals. If these efforts fail to elicit a satisfactory response, the 
Cooperating Sponsor shall pursue legal action in the judicial system of 
country unless otherwise agreed by the Agricultural Counselor or 
Attache. The Cooperating Sponsors must inform the Agricultural Counselor 
or Attache in writing of the reasons for not pursuing legal action; and 
the Agricultural Counselor or Attache may require the Cooperating 
Sponsor to obtain the opinion of competent legal counsel to support its 
decision prior to granting approval. If the Agricultural Counselor or 
Attache approves a Cooperating Sponsor's decision not to take further 
action on the claim, the Cooperating Sponsor shall assign the claim to 
CCC and shall forward all documentation relating to the claim to KCMO/
DMD.
    (4) As an alternative to legal action in the judicial system of the 
country with regard to claims against a public entity of the government 
of the cooperating country, the Cooperating Sponsor and the cooperating 
country may agree in writing to settle disputed claims by an appropriate 
administrative procedure or arbitration.
    (g) Determination of value. The Cooperating Sponsor shall determine 
the value of commodities misused, lost or damaged on the basis of the 
domestic market price at the time and place the misuse, loss or damage 
occurred. When it is not feasible to determine such market price, the 
value shall be the f.o.b. or f.a.s. commercial export price of the 
commodity at the time and place of export, plus ocean freight charges 
and other costs incurred by the U.S. Government in making delivery to 
the Cooperating Sponsor. When the value is determined on a cost basis, 
the Cooperating Sponsor may add to the value any provable costs it has 
incurred prior to delivery by the ocean carrier. In preparing the claim 
statement, these costs shall be clearly segregated from costs incurred 
by the Government of the United States. With respect to claims other 
than ocean carrier loss or damage claims, the Cooperating Sponsor may 
request the Agricultural Counselor or Attache to approve a commercially 
reasonable alternative basis to value the claim.
    (h) Reporting losses to the Agricultural Counselor or Attache or CCC 
designated representative. (1) The Cooperating Sponsor shall promptly 
notify the Agricultural Counselor or Attache or CCC designated 
representative, in writing, of the circumstances pertaining to any loss, 
damage, or misuse of commodities valued at $500 or more occurring within 
the country of distribution or intermediate country. The report shall be

[[Page 817]]

made as soon as the Cooperating Sponsor has adequately investigated the 
circumstances, but in no event more than ninety days from the date the 
loss became known to the Cooperating Sponsor. The report shall identify 
the party in possession of the commodities and the party responsible for 
the loss, damage or misuse; the kind and quantities of commodities; the 
size and type of containers; the time and place of misuse, loss, or 
damage; the current location of the commodity; the Program Agreement 
number, the CCC contract numbers, or if unknown, other identifying 
numbers printed on the commodity containers; the action taken by the 
Cooperating Sponsor with respect to recovery or disposal; and the 
estimated value of the commodity. The report shall explain why any of 
the information required by this paragraph cannot be provided. The 
Cooperating Sponsor shall also report the details regarding any loss or 
misuse of sale proceeds or program income.
    (2) The Cooperating Sponsor shall report quarterly to the 
Agricultural Counselor or Attache any loss, damage to or misuse of 
commodities resulting in loss of less than $500. The Cooperating Sponsor 
shall inform the Agricultural Counselor or Attache or CCC designated 
representative if it has reason to believe there is a pattern or trend 
in the loss, damage, or misuse of such commodities and submit a report 
as described in paragraph (h)(1) of this section, together with any 
other relevant information the Cooperating Sponsor has available to it. 
The Agricultural Counselor or Attache may require additional information 
about any commodities lost, damaged or misused.
    (i) Handling claims proceeds. Claims against ocean carriers shall be 
collected in U.S. dollars (or in the currency in which freight is paid) 
and shall be remitted (less amounts authorized to be retained) by 
Cooperating Sponsors to CCC. Claims against Cooperating Sponsors shall 
be paid to CCC in U.S. dollars. With respect to commodities lost, 
damaged or misused, amounts paid by Cooperating Sponsors and third 
parties in the country of distribution shall be deposited with the U.S. 
Disbursing Officer, American Embassy, preferably in U.S. dollars with 
instructions to credit the deposit to an appropriate CCC account as 
determined by CCC, or in local currency at the highest rate of exchange 
legally obtainable on the date of deposit with instructions to credit 
the deposit to an appropriate CCC account as determined by CCC. With 
respect to sale proceeds and program income, amounts recovered may be 
deposited in the same account as the sale proceeds and may be used for 
purposes of the program.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec.  1499.16  Records and reporting requirements.

    (a) Records and reports--general requirements. The Cooperating 
Sponsor shall maintain records for a period of three (3) years from the 
date of export of the commodities that accurately reflect the receipt 
and use of the commodities and any proceeds realized from the sale of 
commodities. The Government of the Exporting Country may, at reasonable 
times, inspect the Cooperating Sponsor's records pertaining to the 
receipt and use of the commodities and proceeds realized from the sale 
of the commodities, and have access to the Cooperating Sponsor's 
commodity storage and distribution sites and to locations of activities 
supported with proceeds realized from the sale of the commodities.
    (b) Evidence of export. The Cooperating Sponsor's freight forwarder 
shall, within thirty (30) days after export, submit evidence of export 
of the agricultural commodities to the Chief, Export Operations 
Division, KCCO. If export is by sea or air, the Cooperating Sponsor's 
freight forwarder shall submit five copies of the carrier's on board 
bill of lading or consignee's receipt authenticated by a representative 
of the U.S. Customs Service. The evidence of export must show the kind 
and quantity of agricultural commodities exported, the date of export, 
and the destination country.
    (c) Reports. (1) The Cooperating Sponsor shall submit a semiannual 
logistics report to the Agricultural Counselor or Attache and to the 
Director, CCC Program Support Division, FAS/USDA, Washington, DC 20250-
1031, covering

[[Page 818]]

the receipt of commodities. Cooperating sponsors must submit reports on 
Form CCC-620 and submit the first report by May 16 for agreements signed 
during the period, October 1 through March 31, or by November 16 for 
agreements signed during the period, April 1 through September 30. The 
first report must cover the time period from the date of signing and 
subsequent reports must be provided at six months intervals covering the 
period from the due date of the last report until all commodities have 
been distributed or sold and such distribution or sale reported to CCC. 
The report must contain the following data:
    (i) Receipts of agricultural commodities including the name of each 
vessel, discharge port(s) or point(s) of entry, the date discharge was 
completed, the condition of the commodities on arrival, any significant 
loss or damage in transit; advice of any claim for, or recovery of, or 
reduction of freight charges due to loss or damage in transit on U.S. 
flag vessels;
    (ii) Estimated commodity inventory at the end of the reporting 
period;
    (iii) Quantity of commodity on order during the reporting period;
    (iv) Status of claims for commodity losses both resolved and 
unresolved during the reporting period;
    (v) Quantity of commodity damaged or declared unfit during the 
reporting period; and
    (vi) Quantity and type of the commodity that has been directly 
distributed by the Cooperating Sponsor, distribution date, region of 
distribution, and estimated number of individuals benefiting from the 
distribution.
    (2) If the Program Agreement authorizes the sale or barter of 
commodities by the Cooperating Sponsor, the Cooperating Sponsor shall 
also submit a semiannual monetization report to the Agricultural 
Counselor or Attache and to the Director, CCC Program Support Division, 
FAS/USDA, Washington, DC 20250-1031, a monetization report covering the 
deposits into and disbursements from the special account for the 
purposes specified in the Program Agreement. Cooperating Sponsors must 
submit reports on Form CCC-621 and submit the first report by May 16 for 
agreements signed during the period, October 1 through March 31, or by 
November 16 for agreements signed during the period, April 1 through 
September 30. The first report must cover the time period from the date 
of signing and subsequent reports must be provided at six months 
intervals covering the period from the due date of the last report until 
all funds generated from commodity sales have been distributed and such 
distribution reported to CCC. The report must contain the following 
information and include both local currency amounts and U.S. dollar 
equivalents:
    (i) Quantity and type of commodities sold;
    (ii) Proceeds generated from the sale;
    (iii) Proceeds deposited to the special account including the date 
of deposit;
    (iv) Interest earned on the special account;
    (v) Disbursements from the special account, including date, amount 
and purpose of the disbursement;
    (vi) Any balance carried forward in the special account from the 
previous reporting period; and
    (vii) In connection with a section 416(b) Program Agreement only, a 
description of the effectiveness of sales and barter provisions in 
facilitating the distribution of commodities and products to targeted 
recipients, and a description of the extent, if any, that sales, barter 
or use of commodities:
    (A) Affected the usual marketings of the United States;
    (B) Displaced or interfered with commercial sales of the United 
States;
    (C) Disrupted world commodity prices or normal patterns of trade 
with friendly countries;
    (D) Discouraged local production and marketing of commodities in the 
recipient country;
    (E) Achieved the objectives of the Program Agreement; and
    (F) Could be improved in future agreements.
    (3) The Cooperating Sponsor shall furnish the Government of the 
Exporting Country such additional information and reports relating to 
the agreement as the Government of the Exporting Country may reasonably 
request.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59878, Nov. 6, 1998]

[[Page 819]]



Sec.  1499.17  Audits.

    Nongovernmental Cooperating Sponsors shall assure that audits are 
performed to assure compliance with Program Agreements and the 
provisions of this part. An audit undertaken in accordance with OMB 
Circular A-133, shall fulfill the audit requirements of this section. 
Audits shall be performed at least annually until all commodities have 
been distributed and sale proceeds expended. Both the auditor and the 
auditing standards to be used by the Cooperating Sponsor must be 
acceptable to CCC. The Cooperating Sponsor is also responsible for 
auditing the activities of recipient agencies that receive more than 
$25,000 of provided commodities or sale proceeds. This responsibility 
may be satisfied by relying upon independent audits of the recipient 
agency or upon a review conducted by the Cooperating Sponsor.



Sec.  1499.18  Suspension of the program.

    All or any part of the assistance provided under a Program 
Agreement, including commodities in transit, may be suspended by CCC if:
    (a) The Cooperating Sponsor fails to comply with the provisions of 
the Program Agreement or this part;
    (b) CCC determines that the continuation of such assistance is no 
longer necessary or desirable; or
    (c) CCC determines that storage facilities are inadequate to prevent 
spoilage or waste, or that distribution of commodities will result in 
substantial disincentive to, or interference with, domestic production 
or marketing in the recipient country.



Sec.  1499.19  Sample documents and guidelines for developing proposals 
and reports.

    CCC has developed guidelines to assist the Cooperating Sponsors in 
developing proposals and reporting on program logistics and commodity 
sales. Cooperating Sponsors may obtain these guidelines from the 
Director, PDD.



Sec.  1499.20  Paperwork reduction requirement.

    The paperwork and record keeping requirements imposed by this part 
have been previously submitted to the Office of Management and Budget 
(OMB) for review under the Paperwork Reduction Act of 1995. OMB has 
assigned control number 0551-0035 for this information collection.

[[Page 821]]



   CHAPTER XV--FOREIGN AGRICULTURAL SERVICE, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1520            Availability of information to the public...         823
1530            The Refined Sugar Re-Export Program, the 
                    Sugar Containing Products Re-Export 
                    Program, and the Polyhydric Alcohol 
                    Program.................................         823
1540            International agricultural trade............         830
1560            Procedures to monitor Canadian fresh fruit 
                    and vegetable imports...................         835
1570            Export Bonus Programs.......................         836
1580            Trade Adjustment Assistance for Farmers.....         837
1599            McGovern-Dole International Food for 
                    Education and Child Nutrition Program...         844

[[Page 823]]



PART 1520--AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents




Sec.
1520.1 General statement.
1520.2 Location and hours.
1520.3 Indexes/Record Systems.
1520.4 Agency FOIA Officer.
1520.5 Agency Appeal Official.
1520.6 Other information.

    Authority: 5 U.S.C. 552

    Source: 67 FR 45895, July 11, 2002, unless otherwise noted.



Sec.  1520.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture 7 CFR, part 1--Administrative Regulations, 
Subpart A--Official Records, Sec.  1.3, Agency Implementing Regulations, 
for the Freedom of Information Act (5 U.S.C. 552). The Secretary's 
Regulations, as implemented by the regulations in this part govern the 
availability of records of the Foreign Agricultural Service (FAS) to the 
public.



Sec.  1520.2  Location and hours.

    Members of the public should contact the FAS FOIA Officer to arrange 
a place and time to review documents. Contact the U.S. Department of 
Agriculture, Foreign Agriculture Service, Public Affairs Division, 1400 
Independence Avenue SW., Washington, DC 20250-1004. The office will be 
open from 8:30 a.m. to 5 p.m. Monday through Friday, except national 
holidays, Tel.: 202-720-3448, Fax: 202-720-1727.



Sec.  1520.3  Indexes/Record systems.

    5 U.S.C. 552(a)(2) required that each agency publish or otherwise 
make available a current index of all materials for public inspection 
and copying. The Foreign Agricultural Service maintains the following 
record systems. FAS regulations, manuals, and notices; attache reports; 
general publications; and statements of policy and procedures for 
various FAS programs. Copies of the FAS index may be obtained free of 
charge by contacting the office specified in Sec.  1520.2.



Sec.  1520.4  Agency FOIA Officer.

    Requests for records shall be made to the Freedom of Information 
Officer, Public Affairs Division, Foreign Agricultural Service, Ag Box 
1004, U.S. Department of Agriculture, 1400 Independence Avenue, SW., 
Washington, DC 20250-1004. Tel.: 202-720-3448, Fax: 202-720-1727.



Sec.  1520.5  Agency Appeal Official.

    Any person whose request under Sec.  1520.4 is denied shall have the 
right to appeal such a denial. For appeals, write to the following 
official and mark your letters ``FOIA Appeal'': Administrator, Foreign 
Agricultural Service, U.S. Department of Agriculture, 1400 Independence 
Avenue SW., Washington, DC 20250-1004, Attn: FOIA Appeal.



Sec.  1520.6  Other information.

    Many documents are available to the public without having to file an 
FOIA request. These include press releases, speeches, congressional 
testimony, program regulations, and some letters and memoranda. Some of 
this information can be found on the FAS web site, www.fas.uda.gov. 
Also, the FAS annual FOIA report is available on the agency's web site 
at www.fas.usda.gov. Click on FOIA at the bottom of the page. To request 
a paper copy of the FAS FOAI annual report, write to: Foreign 
Agricultural Service, U.S. Department of Agriculture, 1400 Independence 
Ave. SW., Ag Box 1004, Washington, DC 20250-1004, Attn: Freedom on 
Information Officer.



PART 1530--THE REFINED SUGAR RE-EXPORT PROGRAM, THE SUGAR CONTAINING 

PRODUCTS RE-EXPORT PROGRAM, AND THE POLYHYDRIC ALCOHOL PROGRAM--Table 
of Contents




Sec.
1530.100 General statement.
1530.101 Definitions.
1530.102 Nature of the license.
1530.103 License eligibility.
1530.104 Application for a license.
1530.105 Terms and conditions.
1530.106 License charges and credits.
1530.107 Bond or letter of credit requirements.
1530.108 Revocation or surrender of licenses.
1530.109 Reporting.
1530.110 Records, certification, and documentation.
1530.111 Enforcement and penalties.

[[Page 824]]

1530.112 Administrative appeals.
1530.113 Waivers.
1530.114 Implementation.
1530.115 Paperwork Reduction Act assigned number.

    Authority: Additional U.S. note 6 to chapter 17 of the Harmonized 
Tariff Schedule of the United States (19 U.S.C. 1202); 19 U.S.C. 3314; 
Proc. 6641, 58 FR 66867, 3 CFR, 1994 Comp., p. 172; Proc. 6763, 60 FR 
1007, 3 CFR, 1995 Comp., p. 146.

    Source: 64 FR 7062, Feb. 12, 1999, unless otherwise noted.



Sec.  1530.100  General statement.

    This part provides regulations for the Refined Sugar Re-Export 
Program, the Sugar Containing Products Re-Export Program, and the 
Polyhydric Alcohol Program. Under these provisions, refiners may enter 
raw sugar unrestricted by the quantitative limit established for the raw 
sugar tariff-rate quota or the requirements of certificates of quota 
eligibility provided for in 15 CFR part 2011, as long as licensees under 
the programs export an equivalent quantity of refined sugar, either as 
refined sugar or as an ingredient in sugar containing products, or use 
the refined sugar in the production of certain polyhydric alcohols.



Sec.  1530.101  Definitions.

    Affiliated persons means two or more persons where one or more of 
said persons directly or indirectly controls or has the power to control 
the other(s), or, a third person controls or has the power to control 
the others. Indications of control include, but are not limited to: 
interlocking management or ownership, identity of interests among family 
members, shared facilities and equipment, and common use of employees.
    Agent means a person who represents the licensee in any program 
transaction. An agent shall not, at any time, own any of the product 
produced by the program licensee. Agents may include brokers, shippers, 
freight forwarders, expediters, and co-packers.
    Bond or letter of credit means an insurance agreement pledging 
surety for the entry of foreign sugar without the required re-export 
within the program guidelines.
    Certain polyhydric alcohols means any polyhydric alcohol, except 
polyhydric alcohol produced by distillation or polyhydric alcohol used 
as a substitute for sugar as a sweetener in human food.
    Co-packer means a person who adds value to a licensed manufacturer's 
product, or produces a product for export by a licensed manufacturer.
    Date of entry means the date raw sugar enters the U.S. Customs 
Territory.
    Date of export means the date refined sugar or sugar containing 
products are exported from the U.S. Customs Territory, or, if exported 
to a restricted foreign trade zone, the date shown on the U.S. Customs 
Service form designating the product as restricted for export.
    Date of transfer means the date that ownership of program sugar is 
conveyed from a refiner to a manufacturer or producer licensee.
    Day means calendar day. When the day for complying with an 
obligation under this part falls on a weekend or Federal holiday, the 
obligation may be completed on the next business day.
    Documentation agreement means a signed and notarized letter from a 
licensee specifying certain documentation that the licensee shall obtain 
and maintain on file before said licensee requests from USDA updating of 
a license balance.
    Enter or entry means importation into the U.S. Customs Territory, or 
withdrawal from warehouse for consumption, as those terms are used by 
the U.S. Customs Service.
    Export means the conveyance (shipment) of sugar or a sugar 
containing product from a licensee under this part to a country outside 
the U.S. Customs Territory, or to a restricted foreign trade zone.
    Licensing Authority means a person designated by the Director, 
Import Policies and Programs Division, Foreign Agricultural Service, 
USDA.
    Manufacturer means a person who produces or causes to be produced on 
their behalf a sugar containing product for export under the provisions 
of this part.
    Person means any individual, partnership, corporation, association, 
estate, trust, or any other business enterprise or legal entity.
    Program sugar means sugar that has been charged or credited to the 
license

[[Page 825]]

of a licensee in conformity with the provisions of this part.
    Program transaction means an appropriate entry, transfer, use, or 
export of program sugar.
    Refined sugar means any product that is produced by a refiner by 
refining raw cane sugar and that can be marketed as commercial, 
industrial or retail sugar.
    Refiner means any person in the U.S. Customs Territory that refines 
raw cane sugar through affination or defecation, clarification, and 
further purification by absorption or crystallization.
    Sugar containing product means any product, other than those 
products normally marketed by cane sugar refiners, that is produced from 
refined sugar or to which refined sugar has been added as an ingredient.
    Transfer means the transfer of legal title of program sugar from a 
licensed refiner to a licensed manufacturer of a sugar containing 
product or a licensed producer of certain polyhydric alcohols for the 
production of sugar containing products or the production of certain 
polyhydric alcohols.
    Unique number means a tracking number established by a licensee for 
a transaction (entry, transfer, export, or use). A unique number is 
established for a transaction to or from a specific country or licensee. 
The unique number is also assigned by the licensee to a file that 
contains all of the supporting documentation for the transaction for 
which it was established. The unique number is the means by which 
program transactions will be tracked.



Sec.  1530.102  Nature of the license.

    (a) A person who wishes to participate in the Refined Sugar Re-
export Program, the Sugar Containing Products Re-export Program, or the 
Polyhydric Alcohol Program must first obtain a license from the USDA, 
through the Licensing Authority.
    (b) A license under the Refined Sugar Re-export Program permits a 
refiner to enter raw cane sugar under subheading 1701.11.20 of the HTS, 
and export an equivalent quantity of refined sugar onto the world market 
or transfer an equivalent quantity of refined sugar to licensees under 
the Sugar Containing Products Re-export Program or the Polyhydric 
Alcohol Program.
    (c) A license under the Sugar Containing Products Re-export Program 
or Polyhydric Alcohol Program permits licensees to receive transfers and 
export an equivalent quantity of sugar as an ingredient in sugar 
containing products, or use an equivalent quantity of sugar in the 
production of certain polyhydric alcohols.
    (d) All refining, manufacturing, and production shall be 
accomplished in the U.S. Customs Territory, and within time-frames and 
quantity limitations prescribed in this part. Program sugar and non-
program sugar are substitutable.
    (e) A licensee must establish a bond or a letter of credit in favor 
of the U.S. Department of Agriculture to charge program sugar in 
anticipation of the export or transfer of refined sugar, the export of 
sugar in sugar containing products, or the production of certain 
polyhydric alcohols.



Sec.  1530.103  License eligibility.

    (a) A raw cane sugar refiner, a manufacturer of sugar containing 
products, or a producer of certain polyhydric alcohols, that owns and 
operates a facility within the U.S. Customs Territory, is eligible for a 
license to participate in the Refined Sugar Re-export Program, the Sugar 
Containing Products Re-export Program, or the Polyhydric Alcohol 
Program, respectively.
    (b) No person may apply for or hold more than one license, including 
a license held by an affiliated person.
    (c) Notwithstanding paragraph (b) of this section, a person who owns 
one or more wholly-owned subsidiary corporations manufacturing sugar 
containing products or producing certain polyhydric alcohols, which 
would otherwise qualify for an individual license, is eligible for a 
consolidated license to cover the program transactions and other program 
activities of both the parent corporation and the subsidiary 
corporation(s). The program transactions and other program activities of 
the subsidiary corporation(s) covered by a consolidated license shall be 
treated as the activities of the corporation holding the consolidated 
license.

[[Page 826]]

    (d) Notwithstanding paragraph (c) of this section, each wholly-owned 
subsidiary manufacturing sugar containing products or producing certain 
polyhydric alcohols may establish a license for program activities 
instead of the parent corporation establishing a consolidated license. 
The sum total of license limits for the parent corporation and its 
wholly-owned subsidiary corporation(s) shall not exceed the quantitative 
limits established in Sec.  1530.105 of this part.



Sec.  1530.104  Application for a license.

    (a) A person seeking a license shall apply in writing to the 
Licensing Authority and shall submit the following information:
    (1) The name and address of the applicant;
    (2) The address at which the applicant will maintain the records 
required under Sec.  1530.110;
    (3) The address(es) of the applicant's processing plant(s), 
including any wholly-owned subsidiary(s) and plant(s) in the case of a 
consolidated license, and including those of any co-packer(s);
    (4) In the case of a refined sugar product, the polarity of the 
product and the formula proposed by the refiner for calculating the 
refined sugar in the product;
    (5) In the case of a sugar containing product, the percentage of 
refined sugar (100 degree polarity), on a dry weight basis, contained in 
such product(s);
    (6) In the case of polyhydric alcohol, the quantity of refined sugar 
used producing certain polyhydric alcohols; and
    (7) A certification explaining that the applicant is not affiliated 
with any other licensee, or explaining any affiliations, should they 
exist.
    (b) A documentation agreement must be concluded with the Licensing 
Authority.
    (c) If any of the information required by paragraph (a) of this 
section changes, the licensee shall promptly apply to the Licensing 
Authority to amend the application to include such changes.



Sec.  1530.105  Terms and conditions.

    (a) A licensed refiner (refiner) shall, not later than 90 days after 
entering a quantity of raw cane sugar under subheading 1701.11.20 of the 
HTS, export or transfer an equivalent quantity of refined sugar if the 
entry results in a positive license balance.
    (b) A licensed sugar containing products manufacturer (manufacturer) 
or a licensed polyhydric alcohol producer (producer) shall, not later 
than 18 months from the date of transfer of a quantity of refined sugar 
from a refiner, export an equivalent quantity of refined sugar as an 
ingredient in a sugar containing product if the transfer results in a 
positive license balance, or use an equivalent quantity of refined sugar 
in the production of certain polyhydric alcohols if the transfer results 
in a positive license balance, respectively.
    (c) Notwithstanding paragraphs (a) and (b) of this section, 
licensees may receive credit for the exportation or transfer of refined 
sugar, the exportation of a sugar containing product, or the production 
of certain polyhydric alcohols prior to the corresponding date of entry 
of raw cane sugor the date of transfer of refined sugar.
    (d) Licensees are encouraged to submit monthly program transaction 
reports, but shall report no later than 90 days from the date of entry, 
transfer, export, or use.
    (e) A refiner may enter raw sugar, or a manufacturer or producer may 
receive a transfer of refined sugar, in anticipation of the transfer or 
export of refined sugar (refiner), the export of sugar in sugar 
containing products (manufacturer) or the production of a polyhydric 
alcohol (producer) not to exceed the value of a bond or letter of 
credit, which must be established pursuant to Sec.  1530.107 of this 
part. The value of a bond or letter of credit shall not exceed the 
license limits established in this section.
    (f) A refiner shall not exceed a license balance of 50,000 metric 
tons, raw value for the sum of all charges and credits.
    (g) A refiner may enter raw sugar from Mexico and re-export, within 
30 days of entry, refined sugar to Mexico without a charge against the 
refiner's

[[Page 827]]

license balance. If the refined sugar is not re-exported to Mexico 
within 30 days of entry, the license shall be charged the quantity that 
has not been re-exported.
    (h) A manufacturer or a producer shall not exceed a license balance 
of 10,000 short tons, refined value for the sum of all charges and 
credits.
    (i) A manufacturer's or a producer's consolidated license balance, 
or the sum of a parent company and wholly-owned subsidiary license 
balances if held separately, shall not exceed a license balance of 
25,000 short tons, refined value for the sum of all charges and credits.
    (j) For the purposes of the programs governed by this part, sugar is 
fully substitutable. The refined sugar transferred, exported, or used 
does not need to be the same sugar produced by refining raw sugar 
entered under subheading 1701.11.20 of the HTS.
    (k) A licensee may use an agent to carry out the requirements of 
participation in the program. The licensee must retain ownership of and 
responsibility for the product until exported from the U.S. Customs 
Territory, to a restricted foreign trade zone, or used in the production 
of certain polyhydric alcohols, and must establish and maintain 
sufficient documentation, as agreed in the documentation agreement 
pursuant to Sec.  1530.110, to substantiate export of the product or the 
production of certain polyhydric alcohols.
    (l) A license may be assigned only with the written permission of 
the Licensing Authority and subject to such terms and conditions as the 
Licensing Authority may impose.
    (m) The Licensing Authority may impose such conditions, limitations 
or restrictions in connection with the use of a license at such time and 
in such manner as the Licensing Authority, at his or her discretion, 
determines to be necessary or appropriate to achieve the purposes of the 
relevant program.



Sec.  1530.106  License charges and credits.

    (a) A license shall be charged or credited for the quantity of sugar 
entered, transferred, exported, or used, adjusted to a dry weight basis. 
Refiner quantities shall be adjusted to raw value, using the formulas 
set forth in paragraphs (a) (1), (2), and (3) of this section. 
Manufacturer and producer quantities shall be adjusted to 100 degrees 
polarity on a dry weight basis.
    (1) To adjust the raw value for sugar with a polarization of less 
than 92 degrees, divide the total sugar content by 0.972 (polarization x 
outturn weight/.972).
    (2) To adjust the raw value for sugar with polarization of 92 
degrees or above, multiply the polarization times 0.0175, subtract 0.68, 
and multiply the difference by the outturn weight (((polarization x 
0.0175)-0.68) x outturn weight).
    (3) To determine the quantity of refined sugar that must be 
transferred or exported to equal a corresponding quantity of entered raw 
sugar charged to a license, divide the quantity of entered raw sugar by 
1.07 (raw quantity/1.07).
    (b) [Reserved]



Sec.  1530.107  Bond or letter of credit requirements

    (a) The licensee may charge program sugar in anticipation of the 
transfer or export of refined sugar, the export of sugar in sugar 
containing products, or the production of certain polyhydric alcohols, 
if the licensee establishes a performance bond or a letter of credit 
with the U.S. Department of Agriculture, which meets the criteria set 
forth in this section.
    (b) The bond or letter of credit may cover entries made either 
during the period of time specified in the bond (a term bond) or for a 
specified entry (a single entry bond).
    (c) Only the licensee who will refine the sugar, manufacture the 
sugar containing product, or produce certain polyhydric alcohols may be 
the principal on the bond or letter of credit covering such sugar to be 
re-exported or used in the production of certain polyhydric alcohols. 
The surety or sureties shall be among those listed by the Secretary of 
the Treasury as acceptable on Federal bonds.
    (d) The obligation under the bond or letter of credit shall be made 
effective no later than the date of entry of the

[[Page 828]]

sugar for refiners or the date of transfer of the corresponding sugar 
for manufacture into a sugar containing product or certain polyhydric 
alcohols.
    (e) The amount of the bond or letter of credit shall be equal to 20 
cents per pound of sugar to be entered under the license.
    (f) If a licensee fails to qualify for credit to a license within 
the specified time period of the date of export or use of corresponding 
sugar in an amount sufficient to offset the charge to the license for 
that corresponding sugar, payment shall be made to the U.S. Treasury. 
The payment shall be equal to the difference between the Number 11 
contract price and the Number 14 contract price (New York Coffee, Sugar 
and Cocoa Exchange) in effect on the last market day before the date of 
entry of the sugar or the last market day before the end of the period 
during which export or use was required, whichever difference is 
greater. The difference shall be multiplied by the quantity of refined 
sugar, converted to raw value, that should have been exported in 
compliance with this part. If there was not a Number 11, or a Number 14 
contract price for the relevant market day, the Licensing Authority may 
estimate such price as he or she deems appropriate.



Sec.  1530.108  Revocation or surrender of licenses.

    (a) A license may be revoked upon written notice by the Licensing 
Authority.
    (b) A licensee may surrender a license when the sum of all credits 
is equal to or greater than the sum of all charges.



Sec.  1530.109  Reporting.

    (a) A licensee may submit as often as monthly for charges and 
credits against a license balance, but must submit at least a quarterly 
report to the Licensing Authority not later than 90 days after the 
earliest transaction in the report for which credits or charges are 
being submitted. The licensee need not report when there have not been 
transactions during the reporting period.
    (b) Reports may be submitted by e-mail, U.S. mail, private courier, 
or in person, but must be in an integrated database format acceptable to 
the Licensing Authority. A copy of this format may be obtained from the 
Licensing Authority. Applicants unable to submit a report in the 
specified electronic format may seek a temporary waiver to permit them 
to submit the report on paper.
    (c) The reports must include the following for all program 
transactions:
    (1) A unique number associated with the transaction;
    (2) The date of the entry, transfer (only a refiner shall report 
transfers to the Licensing Authority), export, or use;
    (3) The quantity of program sugar entered, transferred, exported as 
refined sugar, or used in the production of certain polyhydric alcohols;
    (4) The licensee's license number, or if a transfer is being 
reported, the licensee's license number as well as the transfer 
recipient's license number;
    (5) The country of origin (entry of raw sugar) or final destination 
(refined exports), using the exact country code designated in the HTS; 
and
    (6) The initial and final polarization, and final weight (when 
available) for entries of raw sugar.
    (d) Licensees have an affirmative and continuing duty to maintain 
the accuracy of the information contained in previously submitted 
reports.
    (1) The licensee shall immediately notify the Licensing Authority 
and promptly request that previously claimed credits be charged back 
upon discovery that previously claimed exports of refined sugar, refined 
sugar in sugar containing products, or refined sugar used in the 
production of polyhydric alcohol were re-entered into the U.S. Customs 
Territory without substantial transformation, not used in the production 
of certain polyhydric alcohols, made under a false underlying proof of 
export, or made but previously submitted exports do not otherwise 
satisfy the requirements of regulations or the documentation agreement.
    (2) Charge backs shall be as of the date of the erroneously claimed 
credit.

[[Page 829]]



Sec.  1530.110  Records, certification, and documentation.

    (a) A licensee shall establish a documentation agreement with the 
Licensing Authority before submitting for credit against a license. The 
licensee shall propose to the Licensing Authority a list of documents to 
substantiate entries, transfers, exports, or use as appropriate. The 
Licensing Authority shall consider the licensee's proposal to assure 
that it provides that a program transaction is fully substantiated, and 
shall then respond in writing to the licensee in a timely fashion 
outlining any deficiencies. Once agreed, the licensee shall submit a 
notarized letter specifying the documents to be maintained on file and 
certifying that the charges and credits made pursuant to Sec.  1530.106 
will be kept on file, identifiable by a unique number, and available for 
inspection pursuant to Sec.  1530.110.
    (b) For all transactions, the documentation shall:
    (1) Substantiate the information required in Sec.  1530.109 (c), and 
the completion of the reported transaction;
    (2) Establish the buyer and seller specifications for a transaction;
    (3) Include all U.S. Customs forms submitted in the entry or export 
process;
    (4) Provide the correct telephone numbers and addresses of any 
agents, consignees, foreign purchasers, and non-vessel operating common 
carriers used in completing the transaction;
    (5) Indicate the port of entry or export for the program 
transaction;
    (6) Provide the percentage of sugar in a sugar containing product or 
certain polyhydric alcohols; and
    (7) Provide the name of export carrier, vessel name, and container 
number.
    (c) The licensee shall maintain the documentation established in the 
documentation agreement for 5 years from the date of such program 
transaction.
    (d) Upon request, the licensee shall make the records, outlined by 
the documentation agreement and identified (associated) by the unique 
number assigned by the licensee to the program transaction as reported 
to the Licensing Authority for posting against a license balance, 
available for inspection and copying by the Licensing Authority, the 
Compliance Review Staff of the Foreign Agricultural Service, and/or the 
Office of the Inspector General, USDA, the U.S. Department of Justice, 
or any U.S. Government regulatory or investigative office.



Sec.  1530.111  Enforcement and penalties.

    (a) The Licensing Authority may revoke credits granted on a license 
if the credits granted do not meet the requirements set forth in the 
regulations of this part, or if the licensee does not voluntarily charge 
back credits erroneously claimed in accordance with these regulations. 
The Licensing Authority may also recommend revocation of a license, if 
the licensee has been in violation of Sec.  1530.109 (c) of this part.
    (b) The Administrator of the Foreign Agricultural Service, USDA, may 
suspend or revoke a license upon recommendation of the Licensing 
Authority. Suspension of a license will be governed by 7 CFR part 3017, 
subpart D and debarment will be governed by 7 CFR part 3017, subpart C.



Sec.  1530.112  Administrative appeals.

    (a) The licensee may appeal the Licensing Authority's determination 
by filing a written notice of appeal, signed by the licensee or the 
licensee's agent, with the Director, Import Policies and Programs 
Division, Foreign Agricultural Service (Director), or his or her 
designee. The decision on such an appeal shall be made by the Director, 
and will be governed by Sec.  3017.515 of this title. The appeal must be 
filed not later than 30 days after the date of the Licensing Authority's 
determination, and shall contain the licensee's written argument.
    (b) The licensee may request an informal hearing. The Director shall 
arrange a place and time for the hearing, except that it shall be held 
within 30 days of the filing date of the notice of appeal if the 
licensee so requests.
    (c) The licensee may be represented by counsel, and shall have full 
opportunity to present any relevant evidence, documentary or 
testimonial. The Director may permit other individuals to present 
evidence at the hearing and the licensee shall have an opportunity to 
question those witnesses.

[[Page 830]]

    (d) The licensee may request a verbatim transcript of the hearing, 
and shall be responsible for arranging for a professional reporter and 
shall pay all attendant expenses.
    (e) The Director shall make the determination on appeal, and may 
affirm, reverse, modify or remand the Licensing Authority's 
determination. The Director shall notify the licensee in writing of the 
determination on appeal and of the basis thereof. The determination on 
appeal exhausts the licensee's administrative remedies.



Sec.  1530.113  Waivers.

    Upon written application of the licensee or at the discretion of the 
Licensing Authority, and for good cause, the Licensing Authority may 
extend the period for transfer, export, or production, and/or may 
temporarily increase a maximum license limit, may extend the period for 
submitting regularly scheduled reports, or may temporarily waive or 
modify any other requirement imposed by this part if the Licensing 
Authority determines that such a waiver will not undermine the purpose 
of the relevant program or adversely affect domestic sugar policy 
objectives. The Licensing Authority may specify additional requirements 
or procedures in place of the requirements or procedures waived or 
modified.



Sec.  1530.114  Implementation.

    Current program participants may qualify under this rule upon 
concluding a documentation agreement with the Licensing Authority, but 
must conclude a documentation agreement within 24 months of the 
effective date of this rule. Participant license balances, as of the 
effective date of this rule, shall continue under this rule.



Sec.  1530.115  Paperwork Reduction Act assigned number.

    Licensees are not required to respond to requests for information 
unless the form for collecting information displays a currently valid 
Office of Management and Budget (OMB) control number. OMB has approved 
the information collection requirements contained in this part in 
accordance with 44 U.S.C. chapter 35. OMB number 0551-0015 has been 
assigned and will expire November 30, 1999.



PART 1540--INTERNATIONAL AGRICULTURAL TRADE--Table of Contents




    Subpart A--Emergency Relief From Duty-Free Imports of Perishable 
                                Products

Sec.
1540.1 Applicability of subpart.
1540.2 Definitions.
1540.3 Who may file request.
1540.4 Contents of request.
1540.5 Submission of recommendations.
1540.6 Information.
1540.7 Paperwork Reduction Act assigned number.

 Subpart B--Emergency Relief From Certain Perishable Products Imported 
                               From Israel

1540.20 Applicability of subpart.
1540.21 Definition.
1540.22 Who may file request.
1540.23 Contents of request.
1540.24 Determination of the Secretary of Agriculture.
1540.25 Information.
1540.26 Paperwork Reduction Act assigned number.

    Subpart C--Emergency Relief From Duty-Free Imports of Perishable 
                 Products From Certain Andean Countries

1540.40 Applicability of subpart.
1540.41 Definitions.
1540.42 Who may file request.
1540.43 Contents of request.
1540.44 Submission of recommendations by the Secretary of Agriculture.
1540.45 Information.

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f)); 5 U.S.C. 301; sec. 404, Pub. L. 98-573, 98 Stat. 3016, as 
amended (19 U.S.C. 2112 note); 5 U.S.C. 301.



    Subpart A--Emergency Relief From Duty-Free Imports of Perishable 
                                Products

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f); 5 U.S.C. 301.

    Source: 49 FR 22265, May 29, 1984, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.

[[Page 831]]



Sec.  1540.1  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 213(f) of the Caribbean Basin Economic Recovery Act of 
1983, title II of Pub. L. 98-67, 97 Stat. 384 (19 U.S.C. 2701 et seq.) 
(the Act).



Sec.  1540.2  Definitions.

    (a) Perishable product means:
    (1) Live plants provided for in subpart A of part 6 of schedule 1 of 
the Tariff Schedules of the United States (TSUS);
    (2) Fresh or chilled vegetables provided for in items 135.10 through 
138.42 of the TSUS;
    (3) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (4) Fresh fruit provided for in items 146.10, 146.20, 146.30, 146.50 
through 146.62, 146.90, 146.91, 147.03 through 147.33, 147.50 through 
149.21 and 149.50 of the TSUS;
    (5) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (6) Concentrated citrus fruit juice provided for in items 165.25 and 
165.35 of the TSUS.
    (b) Beneficiary country means any country listed in section 212(b) 
of the Act with respect to which there is in effect a proclamation by 
the President designating such country as a beneficiary country for 
purposes of the Act.



Sec.  1540.3  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec.  1540.4  Contents of request.

    A request for emergency action under section 213(f) of the Act shall 
be submitted in duplicate to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250. 
Such requests shall be supported by appropriate information and data and 
shall include to the extent possible:
    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (c) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (d) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (e) A statement indicating why emergency action would be warranted 
under section 213(f) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of the 
duty-free treatment accorded under the Act).

A copy of the petition and the supporting evidence filed with the United 
States International Trade Commission under section 201 of the Trade Act 
of 1974, as amended, must be provided with the request for emergency 
action.



Sec.  1540.5  Submission of recommendations.

    If the Secretary has reason to believe that the perishable product 
which is the subject of a petition under Sec.  1540.4 of this subpart is 
being imported into the United States in such increased quantities as to 
be a substantial cause of serious injury, or the threat thereof, to the 
domestic industry producing a perishable product like or directly

[[Page 832]]

competitive with the imported perishable product and that emergency 
action is warranted, the Secretary, within 14 days after the filing of 
the petition under Sec.  1540.4 of this subpart, shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary shall publish a notice of such determination and will so 
advise the petitioner within 14 days after the filing of the petition.



Sec.  1540.6  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 213(f) of the Act 
should address such inquiries to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250.



Sec.  1540.7  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0018 has been assigned.



 Subpart B--Emergency Relief From Certain Perishable Products Imported 
                               From Israel

    Authority: Sec. 404, Pub. L. 98-573, 98 Stat. 3016, as amended (19 
U.S.C. 2112 note); 5 U.S.C. 301.

    Source: 50 FR 43692, Oct. 29, 1985, unless otherwise noted.

    Cross Reference: For U.S. International Trade Commission regulations 
concerning investigations of import injury and the rules pertaining to 
the filing of a section 201 petition, see 19 CFR part 206.



Sec.  1540.20  Applicability of subpart.

    This subpart applies to requests filed with the Department of 
Agriculture under section 404 of the Trade and Tariff Act of 1984, Pub. 
L. 98-573, for emergency relief from imports of certain perishable 
products from Israel entering the United States at a reduced rate of 
duty or duty-free pursuant to a trade agreement between the United 
States and Israel entered into under section 102(b)(1) of the Trade Act 
of 1974, as amended.



Sec.  1540.21  Definition.

    Perishable product means:
    (a) Live plants provided for in subpart A of part 6 of schedule 1 of 
the 1985 Tariff Schedules of the United States (the ``TSUS'');
    (b) Fresh or chilled vegetables provided for in items 135.03 through 
138.46 of the TSUS;
    (c) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (d) Fresh fruits provided for in items 146.10, 146.20, 146.30, 
146.50 through 146.62, 146.90, 146.91, 147.03 through 147.44, 147.50 
through 149.21 and 149.50 of the TSUS;
    (e) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (f) Concentrated citrus fruit juice provided for in items 165.25, 
165.29 and 165.36 of the TSUS.



Sec.  1540.22  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported from Israel into the 
United States at a reduced duty or duty-free under the provisions of a 
trade agreement between the United States and Israel entered into under 
section 102(b)(1) of the Trade Act of 1974, as amended, in such 
increased quantities as to be a substantial cause of serious injury, or 
the threat thereof, to such domestic industry.



Sec.  1540.23  Contents of request.

    A request for emergency action under section 404 of the Trade and 
Tariff Act of 1984 shall be submitted in duplicate to the Administrator, 
Foreign Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:

[[Page 833]]

    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from Israel in 
increased quantities as compared with imports of the same product from 
Israel during a previous representative period of time (including a 
statement of why the period selected by the petitioner should be 
considered to be representative);
    (c) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from Israel; and
    (d) A statement indicating why emergency action would be warranted 
under section 404 (including all available evidence that the injury 
caused by the increased quantities of imports from Israel would be 
relieved by the withdrawal of the reduction of the duty or elimination 
of the duty-free treatment provided to the product under the trade 
agreement). A copy of the petition and the supporting evidence filed 
with the United States International Trade Commission under section 201 
of the Trade Act of 1974, as amended, must be provided with the request 
for emergency action.



Sec.  1540.24  Determination of the Secretary of Agriculture.

    If the Secretary of Agriculture has reason to believe that the 
perishable product(s) which is the subject of a petition under this 
subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec.  1540.23 shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary, within 14 days after the filing of the petition, will publish 
in the Federal Register a notice of such determination and will so 
advise the petitioner.



Sec.  1540.25  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 404 of the Trade 
and Tariff Act of 1984 should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250.



Sec.  1540.26  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0023 has been assigned.



    Subpart C--Emergency Relief From Duty-Free Imports of Perishable 
                 Products From Certain Andean Countries

    Authority: Title II, sec. 204(e), Pub. L. 102-182, 105 Stat. 1239 
(19 U.S.C. 3203(e)); 5 U.S.C. 301.

    Source: 58 FR 16104, Mar. 25, 1993, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.



Sec.  1540.40  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 204(e) of the Andean Trade Preference Act, title II of 
Public Law 102-182, 105 Stat. 1236 (19 U.S.C. 3201 et seq.) (the 
``Act'').



Sec.  1540.41  Definitions.

    (a) Perishable product means:
    (1) Live plants and fresh cut flowers provided for in chapter 6 of 
the Harmonized Tariff Schedule (HTS);
    (2) Fresh or chilled vegetables provided in heading 0701 through 
0709 (except subheading 0709.52.00) and heading 0714 of the HTS;

[[Page 834]]

    (3) Fresh fruit provided for in subheadings 0804.20 through 0810.90 
(except citrons of subheadings 0805.90.00, tamarinds and kiwi fruit of 
subheading 0810.90.20, and cashew apples, mameyes colorados, sapodillas, 
soursops and sweetsops of subheading 0810.90.40) of the HTS; or
    (4) Concentrated citrus fruit juice provided for in subheadings 
2009.11.00, 2009.19.40, 2009.20.40, 2009.30.20, and 2009.30.60 of the 
HTS.
    (b) Beneficiary country means any country listed in subsection 
203(b)(1) of the Act with respect to which there is in effect a 
proclamation by the President designating such country as a beneficiary 
country for purposes of the Act.



Sec.  1540.42  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group of workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec.  1540.43  Contents of request.

    (a) A request for emergency action under section 204(e) of the Act 
shall be submitted in duplicate to the Administrator, Foreign 
Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:
    (1) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (2) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (3) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (4) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (5) A statement indicating why emergency action would be warranted 
under section 204(e) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of duty-
free treatment accorded under the Act).
    (b) A copy of the petition and the supporting evidence filed with 
the United States International Trade Commission under Section 201 of 
the Trade Act of 1974, as amended, must be provided with the request for 
emergency action.



Sec.  1540.44  Submission of recommendations by the Secretary of 
Agriculture.

    If the Secretary has reason to believe that the perishable 
product(s) which is the subject of a petition under Sec.  1504.43 of 
this subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec.  1540.43 of this subpart, shall 
recommend to the President that the President take emergency action. If 
the Secretary determines not to recommend the imposition of emergency 
action, the Secretary within 14 days after the filing of the petition 
shall publish a notice of such determination and so advise the 
petitioner.



Sec.  1540.45  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation

[[Page 835]]

of section 204(e) of the Act should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250. Issued at Washington, DC this 19th 
day of March, 1993.



PART 1560--PROCEDURES TO MONITOR CANADIAN FRESH FRUIT AND VEGETABLE 
IMPORTS--Table of Contents




Sec.
1560.1 Scope.
1560.2 Definitions.
1560.3 Determination of fresh fruit or vegetable.
1560.4 Calculation of data to support imposition of temporary duty.
1560.5 Calculation of data to support removal of temporary duty.

    Authority: Secs. 105 and 301(a) of the United States-Canada Free-
Trade Agreement Implementation Act of 1988, Pub. L. 100-449 (102 Stat. 
1855 and 1865-67).

    Source: 54 FR 1327, Jan. 13, 1989, unless otherwise noted.



Sec.  1560.1  Scope.

    This part outlines the procedures that will be used by the 
Administrator of the Foreign Agricultural Service to monitor and inform 
the Secretary of Agriculture of data regarding the importation of fresh 
fruits and vegetables from Canada.



Sec.  1560.2  Definitions.

    The following definitions shall be applicable to this part:
    (a) Administrator means the Administrator of the Foreign 
Agricultural Service, United States Department of Agriculture.
    (b) Average Monthly Import Price means the average unit value for 
all shipments of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada during a particular calendar month 
based on official data from the U.S. Customs Service and/or the Bureau 
of Census, and shall be calculated by dividing the total value of the 
fresh fruit or vegetable imported in that month by the total quantity of 
the fresh fruit or vegetable imported in that month.
    (c) Average Planted Acreage means the average of the annual planted 
acreage in the U.S. for a particular fresh fruit or vegetable for the 
preceding five years excluding the years with the highest and lowest 
acreages based on available data from agencies within the United States 
Department of Agriculture and data from appropriate state agencies, as 
required.
    (d) Canadian fresh fruit or vegetable means a fresh fruit or 
vegetable that is a product of Canada as determined in accordance with 
the rules of origin set forth in section 202 of the U.S.-Canada Free-
Trade Agreement Implementation Act of 1988.
    (e) Corresponding Five-Year Average Monthly Import Price for a 
particular day means the average import price of a Canadian fresh fruit 
or vegetable imported into the United States from Canada, for the 
calendar month in which that day occurs, for that month in each of the 
preceding 5 years, excluding the years with the highest and lowest 
monthly averages.
    (f) F.O.B. Point of Shipment Price in Canada means the daily average 
of prices of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada that are reported to the U.S. Customs 
Service at the U.S. border as part of the official documentation 
accompanying such shipments less freight costs where applicable.
    (g) Fresh Fruit or Vegetable means a fruit or vegetable determined 
in accordance with Sec.  1560.3 within one of the HS headings.
    (h) HS heading means any of the following tariff headings of the 
Harmonized System (HS) as modified by the description for each heading:

------------------------------------------------------------------------
         HS tariff heading                       Description
------------------------------------------------------------------------
07.01.............................  Potatoes, fresh or chilled.
07.02.............................  Tomatoes, fresh or chilled.
07.03.............................  Onions, shallots, garlic, leeks, and
                                     other alliaceous vegetables, fresh
                                     or chilled.
07.04.............................  Cabbages, cauliflowers, kohlrabi,
                                     kale and similar edible brassicas,
                                     fresh or chilled.
07.05.............................  Lettuce (lactica sativa) and chicory
                                     (cichorium spp.), fresh or chilled.
07.06.............................  Carrots, salad beets or beetroot,
                                     salsify, celeriac, radishes and
                                     similar edible roots (excluding
                                     turnips), fresh or chilled.
07.07.............................  Cucumbers and gherkins, fresh or
                                     chilled.
07.08.............................  Leguminous vegetables, shelled or
                                     unshelled, fresh or chilled.
07.09.............................  Other vegetables (excluding
                                     truffles), fresh or chilled.
08.06.10..........................  Grapes, fresh.

[[Page 836]]

 
08.08.20..........................  Pears and quinces, fresh.
08.09.............................  Apricots, cherries, peaches
                                     (including nectarines), plums and
                                     sloes, fresh.
08.10.............................  Other fruit (excluding cranberries
                                     and blueberries), fresh.
------------------------------------------------------------------------

    (i) Import Price means the unit value based on data available from 
the U.S. Customs Service of a particular Canadian fresh fruit or 
vegetable imported into the U.S. from Canada taking into account any 
other relevant data, as necessary.
    (j) Secretary means the Secretary of Agriculture.
    (k) United States means the United States Customs Territory which 
includes the fifty states, the District of Columbia and Puerto Rico.
    (l) Wine Grape means grapes of labrusca, vinifera or hybrid vinifera 
varieties used for making wine.
    (m) Working Day means a day which falls on a Monday through Friday, 
excluding holidays observed by the United States Government and days in 
which the U.S. Customs Service is not operating.



Sec.  1560.3  Determination of fresh fruit or vegetable.

    The specific group of articles that will be monitored as a 
particular fresh fruit or vegetable will be determined based on the 
practicability of monitoring at the eight digit subheading level of the 
Harmonized Tariff Schedule of the United States. The determination of 
practicability will be made by the Administrator taking into account: 
(a) The availability of reliable volume and price data on imports from 
Canada and data on U.S. planted acreage, (b) market differentiation for 
the group of articles, and (c) such other factors as the Administrator 
determines to be appropriate.



Sec.  1560.4  Calculation of data to support imposition of temporary duty.

    The Administrator will inform the Secretary when the following 
conditions are met with respect to a particular fresh fruit or vegetable 
imported into the United States from Canada:
    (a) If for each of five consecutive working days the import price of 
the fresh fruit or vegetable is below ninety percent of the 
corresponding five-year average monthly import price for such fresh 
fruit or vegetable excluding the years with the highest and lowest 
corresponding monthly import price; and
    (b) The planted acreage in the United States for such fresh fruit or 
vegetable based on the most recent data available is no higher than the 
average planted acreage over the preceding five years excluding the 
years with the highest and lowest planted acreages. For the purposes of 
calculating any planted acreage increase attributed directly to a 
reduction in wine grape planted acreage existing on October 4, 1987 
shall be excluded.



Sec.  1560.5  Calculation of data to support removal of temporary duty.

    During the time a temporary duty on a particular fresh fruit or 
vegetable is imposed pursuant to section 301(a) of the United States-
Canada Free-Trade Agreement Implementation Act of 1988, the 
Administrator will inform the Secretary if the F.O.B. point of shipment 
price in Canada of such fresh fruit or vegetable exceeds, for five 
consecutive working days, ninety percent of the corresponding five-year 
average monthly import price excluding the years with the highest and 
lowest average corresponding monthly import price, adjusted to an F.O.B. 
point of shipment price, if necessary, for that fresh fruit or 
vegetable.



PART 1570--EXPORT BONUS PROGRAMS--Table of Contents




   Subpart A--Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

Sec.
1570.10 General statement.
1570.20 Criteria.

             Subpart B--SOAP and COAP Drawback Certification

1570.1100 Drawback certification.

    Source: 56 FR 42223, Aug. 27, 1991, unless otherwise noted.

[[Page 837]]



   Subpart A--Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

    Authority: 7 U.S.C. 5663.



Sec.  1570.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Sunflowerseed Oil Assistance Program (SOAP) and Cottonseed Oil 
Assistance Program (COAP) administered by the Foreign Agricultural 
Service (FAS). These criteria are interrelated and will be considered 
together in order to select eligible countries for SOAP and COAP 
initiatives which will best meet the programs' objective. The objective 
of the programs is to encourage the sale of additional quantities of 
sunflowerseed oil and cottonseed oil in world markets at competitive 
prices. Under the SOAP and the COAP, bonuses are made available by FAS 
to enable exporters to meet prevailing world prices for sunflowerseed 
oil and cottonseed oil in targeted destinations. In the operation of the 
SOAP and the COAP, FAS will make reasonable efforts to avoid the 
displacement of usual marketings of U.S. agricultural commodities.



Sec.  1570.20  Criteria.

    The criteria considered by FAS in reviewing proposals for SOAP and 
COAP initiatives will include, but not be limited to, the following:
    (a) The expected contribution which initiatives will make toward 
realizing U.S. agricultural export goals and, in particular, in 
developing, expanding, or maintaining markets for U.S. sunflowerseed 
and/or cottonseed oil;
    (b) The subsidy requirements of proposed initiatives in relation to 
the sums made available to operate the programs in any given fiscal 
year; and
    (c) The likelihood that sales facilitated by initiatives would have 
the unintended effect of displacing normal commercial sales of 
sunflowerseed and/or cottonseed oil.



             Subpart B--SOAP and COAP Drawback Certification

    Authority: 7 U.S.C. 5676.



Sec.  1570.1100  Drawback certification.

    An offer submitted by an exporter to FAS for an export bonus under 
the SOAP or the COAP must contain, in addition to any other information 
required by FAS, a certification stating the following: ``None of the 
eligible commodity (sunflowerseed oil and/or cottonseed oil) has been or 
will be used as the basis for a claim of a refund, as drawback, pursuant 
to section 313 of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, 
tax, or fee imposed under Federal law on an imported commodity or 
product.'' This certification must be signed by the exporter, if the 
exporter is an individual, or by a partner or officer of the exporter, 
if the exporter is a partnership or a corporation, respectively. FAS 
will reject any offer that does not contain the prescribed 
certification.



PART 1580--TRADE ADJUSTMENT ASSISTANCE FOR FARMERS--Table of Contents




Sec.
1580.101 General statement.
1580.102 Definitions.
1580.201 Petitions for trade adjustment assistance.
1580.202 Hearings, petition reviews, and amendments.
1580.203 Determination of eligibility and certification by the 
          Administrator.
1580.301 Application for trade adjustment assistance.
1580.302 Technical assistance and services.
1580.303 Adjustment assistance payments.
1580.401 Subsequent qualifying year eligibility.
1580.501 Administration.
1580.502 Maintenance of records, audits and compliance.
1580.503 Debarment and suspension.
1580.504 Fraud and recovery of overpayments.
1580.505 Appeals.
1580.601 Implementation.
1580.602 Paperwork Reduction Act assigned number.

    Authority: 19 U.S.C. 2401.

    Source:  68 FR 50049, Aug. 20, 2003, unless otherwise noted.

[[Page 838]]



Sec.  1580.101  General statement.

    This part provides regulations for the Trade Adjustment Assistance 
for Farmers program. Under these provisions, producers of agricultural 
commodities may petition the Department of Agriculture for eligibility 
to apply for trade adjustment assistance based on criteria set forth in 
the Trade Act of 1974, as amended by the Trade Act of 2002 (19 U.S.C. 
2251, et seq.). If the Administrator determines that the national 
average price for a commodity is less than 80 percent of the preceding 
5-year average and that an increase in imports has contributed 
importantly to the decline in commodity prices, the producers may apply 
for technical assistance and cash benefits under the program.



Sec.  1580.102  Definitions.

    As used in the part, the following terms mean:
    Adjusted gross income means income as defined in 7 CFR 1400.601.
    Administrator means the Administrator of the Foreign Agricultural 
Service (FAS).
    Agricultural commodity means any commodity in its raw or natural 
state found in chapters 1, 4, 5, 6, 7, 8, 10, 12, 14, 23, 24, 41, 51, 
and 52 of the Harmonized Tariff Schedule of the United States (HTS), and 
articles that are either aquaculture products or directly competitive 
with aquaculture products found in chapter 3 of the HTS.
    Aquaculture means the propagation and rearing of aquatic organisms 
in a controlled aquatic environment for the purpose of human 
consumption.
    Articles like or directly competitive generally means products 
falling under the same HTS number used to identify the agricultural 
commodity in the petition. A ``like'' product means substantially 
identical in inherent or intrinsic characteristics, and the term 
``directly competitive'' means those articles which are substantially 
equivalent for commercial purposes, that is, are adapted to the same 
uses and are essentially interchangeable therefore.
    Authorized representative means an association of agricultural 
commodity producers.
    Certification date means the effective date on which the 
Administrator announces in the Federal Register or by Department news 
release a certification of eligibility to apply for adjustment 
assistance.
    Contributed importantly means a cause which is important, but not 
necessarily more important than any other cause.
    Department means the U.S. Department of Agriculture.
    Deputy Administrator means the Deputy Administrator of the Farm 
Service Agency (FSA).
    Extension Service means the Cooperative State Research, Education, 
and Extension Service of the U.S. Department of Agriculture.
    Family member means an individual to whom a person is related as 
spouse, lineal ancestor, lineal descendent, or sibling, including:
    (1) Great grandparent;
    (2) Grandparent;
    (3) Parent;
    (4) Children, including legally adopted children;
    (5) Grandchildren;
    (6) Great grandchildren;
    (7) Sibling of the family member in the farming operation; and
    (8) Spouse of a person listed in paragraphs (1) through (7) of this 
definition.
    Farm Service Agency (FSA) means the Farm Service Agency of the U.S. 
Department of Agriculture.
    Filing date means the date that a notice of petition is published in 
the Federal Register.
    Group means three or more producers who are not members of the same 
family.
    Impacted area means one or more States of the United States.
    Marketing year means the marketing season or year as defined by 
National Agriculture Statistic Service (NASS), or a specific period as 
proposed by the petitioners and certified by the Administrator.
    National average price means the average price paid to producers for 
an agricultural commodity in a marketing year as determined by the 
Administrator.
    Net farm income means net farm profit or loss, excluding payments 
under this part, reported on Internal Revenue Service Schedule F (Form 
1040) and Form 4835 for the tax year that most

[[Page 839]]

closely corresponds with the marketing year under consideration.
    Net fishing income means net profit or loss, excluding payments 
under this part, reported on Internal Revenue Service Schedules C or C-
EZ (Form 1040) for individuals or taxable income, excluding payments 
under this part, reported on Form 1120 for corporations during the tax 
year that most closely corresponds with the marketing year under 
consideration.
    Person means an individual, partnership, joint stock owner, 
corporation, association, trust, estate, or any other legal entity as 
defined in 7 CFR 1400.3.
    Pre-adjustment year means the tax year previous to that associated 
with the most recent marketing year in the initial producer petition.
    Producer means a person who is either 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 a qualified fisherman.
    Qualified fisherman means a person whose catch competes in the 
marketplace with like or directly competitive aquaculture products and 
report net fishing income to the Internal Revenue Service on Schedules C 
or C-EZ (Form 1040).
    Raw or natural state means unaltered by any process other than 
cleaning, grading, coating, sorting, trimming, mixing, conditioning, 
drying, dehulling, shelling, chilling, cooling, blanching, irradiating, 
or fumigating.
    United States means the 50 States of the United States, the District 
of Columbia, and Puerto Rico.

[68 FR 50049, Aug. 20, 2003; 68 FR 62731, Nov. 6, 2003]



Sec.  1580.201  Petitions for trade adjustment assistance.

    (a) A group of agricultural commodity producers or qualified 
fishermen in the United States or their authorized representative may 
file a petition for trade adjustment assistance.
    (b) Filings may be written or electronic, as provided for by the 
Administrator, and submitted to FAS from August 15 through January 31. 
Petitions received after January 31 will be returned to the sender. If 
January 31 falls on a weekend, the petition will be accepted the next 
business day.
    (c) Petitions shall include the following information.
    (1) Name, business address, phone number, and email address (if 
available) of each producer in the group, or their authorized 
representative. A petition filed by a group shall identify a contact 
person for the group.
    (2) The agricultural commodity and its Harmonized Tariff Schedule of 
the United States (HTS) number.
    (3) The production area represented by the group or its authorized 
representative. The petitioners shall indicate if they are filing on 
behalf of all producers in the United States, or if they are filing 
solely on behalf of all producers in a specifically identified impacted 
area. In the latter case, at least one member of the group must reside 
in each State within the impacted area, or the authorized representative 
must have members residing in each State within the impacted area.
    (4) The beginning and ending dates for the marketing year during 
which domestic prices were affected by imports. A petition may be filed 
for only the most recent marketing year for which national average 
prices are available.
    (5) A justification statement explaining why the petitioners should 
be considered eligible for adjustment assistance.
    (6) Price data supporting the petition.
    (i) If the petition is filed on behalf of all producers of the 
agricultural commodity in the United States, the Administrator shall use 
national average prices compiled by the National Agricultural Statistics 
Service (NASS), whenever possible. If NASS has not compiled price data 
for the commodity, the petitioners shall provide national average prices 
for the marketing year under review and for the previous five marketing 
years, and identify the source of the price series.
    (ii) If the petition is filed on behalf of producers in a 
specifically identified impacted area, the petitioners shall provide 
national average prices for the impacted area for the marketing year 
under review and for the previous five

[[Page 840]]

marketing years, and identify the source of the price series.
    (iii) The Administrator may request petitioners to provide records 
to support their national average price data.
    (d) Once the petition is received, the Administrator shall determine 
if it meets the requirements of Sec.  1580.201(c), and if so, publish 
notice in the Federal Register that a petition has been filed and that 
an investigation has begun. The notice shall identify the agricultural 
commodity, including any like or directly competitive commodities, the 
marketing year being investigated, the price series being used, and the 
production area covered by the petition. The notice may also announce 
the scheduling of a public hearing, if requested by the petitioners. If 
the petition does not meet the requirements of Sec.  1580.201(c), the 
Administrator shall notify as soon as possible the contact person for 
the group or the authorized representative of the deficiencies.



Sec.  1580.202  Hearings, petition reviews, and amendments.

    (a) If the petitioner, or any other person(s) found by the 
Administrator to have a substantial interest in the proceedings, submits 
not later than 10 days after the filing date a request in writing for a 
hearing, the Administrator shall provide for a public hearing and afford 
such interested person an opportunity to be present, to produce 
evidence, and to be heard.
    (b) If the petitioner, or any other person(s) having an interest in 
the proceedings takes issue with any of the information published in the 
Federal Register concerning the petition, they may submit to the 
Administrator their comments in writing or electronically for 
consideration by the Administrator not later than 10 days after the 
filing date.
    (c) A producer residing outside the impacted area identified in a 
petition may file to become a party to the petition by fulfilling the 
requirements of Sec.  1580.201(c) within 10 days of the filing date. The 
Administrator may amend the original petition to expand the impacted 
area and include the additional filer, or consider it a separate filing.
    (d) The Administrator shall publish in the Federal Register as soon 
as possible any changes to the original notice resulting from any 
actions taken under this section.



Sec.  1580.203  Determination of eligibility and certification by the 
Administrator.

    (a) As soon as practicable after the filing date, but in any event 
not later than 40 days after that date, the Administrator shall 
determine whether the petitioners satisfy the following conditions for 
adjustment assistance.
    (1) The national average price for the agricultural commodity for 
the marketing year under review is less than 80 percent of the average 
of the national average prices for the 5 marketing years preceding the 
most recent marketing year, and
    (2) Increases in imports of articles like or directly competitive 
with the agricultural commodity contributed importantly to the decline 
in price described in paragraph (a)(1) of this section.
    (b) If the Administrator determines that the above conditions have 
been satisfied, the producers covered by the petition shall be certified 
as eligible for adjustment assistance.
    (c) Upon making a determination, whether affirmative or negative, 
the Administrator shall promptly publish in the Federal Register a 
summary of the determination, together with the reasons for making the 
determination.
    (d) In addition, the Administrator shall notify producers covered by 
a certification how to apply for adjustment assistance. Notification 
methods may include direct mailings to known producers, messages to 
directly affected producer groups and organizations, electronic 
communications, internet web site notices, and use of broadcast and 
print media.
    (e) Whenever a group of agricultural producers is certified as 
eligible for assistance, the Administrator shall use the occasion to 
notify and inform other producers about the Trade Adjustment Assistance 
Program and how they may petition for adjustment assistance.

[68 FR 50049, Aug. 20, 2003; 68 FR 62731, Nov. 6, 2003]

[[Page 841]]



Sec.  1580.301  Application for trade adjustment assistance.

    (a) Only producers covered by a certification of eligibility may 
apply for adjustment assistance. Producers may request advice from FSA 
regarding the preparation and submission of their applications.
    (b) An eligible producer may submit an application for adjustment 
assistance by submitting to FSA a designated application form at any 
time after the certification date but not later than 90 days after the 
certification date. If the 90-day application period ends on a weekend 
or legal holiday, the producer may apply the following business day.
    (c) When submitting an application, the producer shall provide 
documentation to support the amount of production reported to FSA for 
the most recent marketing year.
    (d) Upon submitting their application, producers shall be 
immediately eligible to request trade adjustment technical assistance 
from the Extension Service at no cost.
    (e) Producers able to furnish their applications with all the 
following certifications shall be eligible for adjustment assistance 
payments:
    (1) Certification that technical assistance from the Extension 
Service under Sec.  1580.302 has been received.
    (2) Certification that cash benefits have not been received under 
any of the provisions of the Trade Act of 1974, as amended, other than 
those permitted under this part.
    (3) Certification that adjustment assistance payments have not 
exceeded the $10,000 limitation for the Federal fiscal year.
    (4) Certification that net farm or fishing income for the most 
recent tax year was less than that during the producer's pre-adjustment 
year.
    (5) Certification that their average adjusted gross income, as 
determined in accordance with 7 CFR 1400.601, for the 3 preceding tax 
years does not exceed $2,500,000.
    (6) To comply with certifications in (e)(4) and (e)(5) of this 
section, an applicant shall provide either--
    (i) Supporting documentation from a certified public accountant or 
attorney, or
    (ii) Relevant documentation and other supporting financial data, 
such as financial statements, balance sheets, and reports prepared for 
or provided to the Internal Revenue Service or another U.S. Government 
agency.
    (f) Persons legally authorized to execute program documents for 
estates or trusts will be accepted only if such person furnishes 
evidence of the authority to execute such documents.



Sec.  1580.302  Technical assistance and services.

    (a) Any producer of an agricultural commodity covered by a 
certification of eligibility may apply for and receive information and 
technical assistance from the Extension Service that will assist in 
adjusting to import competition and be at no cost to the producer.
    (b) To qualify for technical assistance, producers shall apply under 
Sec.  1580.301.
    (c) Producers shall have an opportunity to meet at least once with 
an Extension Service employee within 180 days of petition certification 
to receive information regarding the feasibility and desirability of 
substituting one or more alternative commodities for the adversely 
affected agricultural commodity and to receive technical assistance that 
will improve the competitiveness of the production and marketing of the 
adversely affected agricultural commodity by the producer, including 
yield and marketing improvements. The Extension Service shall provide to 
producers written confirmation of all technical assistance meetings. 
Producers shall also have access to technical information provided in 
writing and electronically.
    (d) Producers shall also be provided information concerning 
procedures for applying for and receiving other Federal assistance and 
services available to workers facing economic distress.
    (e) Producers that furnish all certifications required under Sec.  
1580.301(e) shall be entitled to employment services and training 
benefits under trade adjustment assistance for workers managed by the 
Department of Labor.

[68 FR 50049, Aug. 20, 2003; 68 FR 62732, Nov. 6, 2003]

[[Page 842]]



Sec.  1580.303  Adjustment assistance payments.

    (a) Applicants shall satisfy by September 30 all conditions of Sec.  
1580.301 to qualify for adjustment assistance payments.
    (b) The FSA office shall issue a payment to a producer that is equal 
to the product of the amount of the agricultural commodity produced in 
the most recent marketing year multiplied by one-half the difference 
between--
    (1) An amount equal to 80 percent of the average of the national 
average prices of the agricultural commodity covered by the petition for 
the 5 marketing years preceding the most recent marketing year, and
    (2) The national average price of the agricultural commodity for the 
most recent marketing year.
    (c) The maximum amount of payments under this part that a person may 
receive during the Federal fiscal year shall not exceed $10,000.
    (d) The total amount of payments made under this part to a person 
during any crop year when considered with the total amount of counter-
cyclical payments made in accordance with part 1412 of this title for a 
corresponding crop year shall not exceed $65,000 per crop year, as 
determined by the Administrator.
    (e) Any person who may be entitled to a payment may assign their 
rights to such payment in accordance with 7 CFR part 1404 or successor 
regulations as designated by the Department.
    (f) 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 7 CFR part 707 may receive 
such benefits, as determined appropriate by FSA.
    (g) If the Administrator, FAS, determines in September that program 
funds may be insufficient to meet the requirements for adjustment 
assistance payments under this part during the coming fiscal year, FSA 
may delay making adjustment payments in order to prorate amounts owed 
producers.
    (h) FSA shall not make adjustment assistance payments to producers 
who have not met at least once with an Extension Service employee to 
receive technical assistance.

[68 FR 50049, Aug. 20, 2003; 68 FR 62732, Nov. 6, 2003]



Sec.  1580.401  Subsequent qualifying year eligibility.

    (a) Prior to the anniversary of a certification date,
    (1) groups and authorized representatives that provided national 
average prices to justify their initial certifications shall provide the 
Administrator national average prices for the most recent marketing 
year, and
    (2) the Administrator shall determine whether or not--
    (i) The national average price for the agricultural commodity 
produced by the group for the most recent marketing year is equal to or 
less than 80 percent of the average of national average prices for the 5 
marketing years used to make the first certification under Sec.  
1580.203(a)(1), and
    (ii) Further increases in imports are contributing importantly to 
the decline in price.
    (b) The Administrator shall promptly publish in the Federal Register 
the determination with supporting justification statement.
    (c) In the case of a re-certification, FSA shall notify producers 
that they may be eligible to receive trade adjustment assistance for a 
subsequent qualifying year.
    (d) To qualify for assistance in subsequent qualifying years, 
producers shall--
    (1) Submit an application pursuant to Sec.  1580.301, and
    (2) Contact the Extension Service for technical adjustment 
assistance.
    (e) The amount of an adjustment assistance payment during a 
qualifying year shall be determined in the same manner as in the 
originating year, except that the average national price shall be 
determined by using the 5-marketing-year period used to determine the 
amount of cash benefits for the first certification.
    (f) An eligible producer who did not apply for adjustment assistance 
in the initial year may apply pursuant to Sec.  1580.301.

[[Page 843]]



Sec.  1580.501  Administration.

    (a) The application process 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 FSA committees and representatives do not have 
the authority to modify or waive any of the provisions of this part.
    (c) The State FSA committee shall take any action required by this 
part that has not been taken by a 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 that is not in accordance with this 
part; and
    (2) Require a county FSA committee to withhold taking or reversing 
any action that is not in accordance with this part.
    (d) No delegation in this part to a State or county FSA committee 
shall prevent the Deputy Administrator from determining any question 
arising under the program or from reversing or modifying any 
determination made by a State or county FSA committee.
    (e) The Administrator, FAS, may, by timely and appropriate public 
notification, modify non-statutory opening dates and deadlines for 
submitting petitions.
    (f) The Deputy Administrator may, in consultation with the 
Administrator, FAS, authorize the State and county committees to waive 
or modify non-statutory application deadlines or other program 
requirements in cases where lateness or failure to meet such other 
requirements by applicants does not adversely affect the operation of 
the program.



Sec.  1580.502  Maintenance of records, audits and compliance.

    (a) 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, as may be requested by 
FSA. Such records and accounts must be retained for 2 years after the 
date of the final payment to the producer under this program.
    (b) At all times during regular business hours, authorized 
representatives of FSA, the United States Department of Agriculture, or 
the Comptroller General of the United States shall have access to the 
premises of the producer in order to inspect, examine, and make copies 
of the books, records, and accounts, and other written data as specified 
in paragraph (a) of this section.
    (c) Audits of certifications of average adjusted gross income may be 
conducted as necessary to determine compliance with the requirements of 
this subpart. As a part of this audit, income tax forms may be requested 
and if requested, must be supplied. If a producer has submitted 
information to FSA, including a certification from a certified public 
accountant or attorney, that relied upon information from a form 
previously filed with the Internal Revenue Service, such producer shall 
provide FSA a copy of any amended form filed with the Internal Revenue 
Service with 30 days of the filing.
    (d) If requested in writing by the United States Department of 
Agriculture or the Comptroller General of the United States, the 
producer shall provide all information and documentation the reviewing 
authority determines necessary to verify any information or 
certification provided under this subpart, including all documents 
referred to in Sec.  1580.301(c), within 30 days. Acceptable production 
documentation may be submitted by facsimile, in person, or by mail and 
may include copies of receipts, ledgers, income statements, deposit 
slips, register tapes, invoices for custom harvesting, records to verify 
production costs, contemporaneous measurements, truck scale tickets, 
fish tickets, landing reports, and contemporaneous diaries that are 
determined acceptable by the county committee. Failure to provide 
necessary and accurate information to verify compliance, or failure to 
comply with this subpart's requirements, will result in ineligibility 
for all program benefits subject to this subpart for the year or years 
subject to the request.

[[Page 844]]



Sec.  1580.503  Debarment and suspension.

    The Government-wide Debarment and Suspension (Nonprocurement) 
regulations and Government Requirements for Drug-Free Workplace 
(Grants), 7 CFR part 3017--subparts A through E, apply to this part.



Sec.  1580.504  Fraud and recovery of overpayments.

    (a) If the Administrator, FSA, or a court of competent jurisdiction, 
determines that any person has received any payment under this program 
to which the person was not entitled, such person will be liable to 
repay such amount to the Administrator, FSA. The Administrator, FSA, may 
waive such repayment if it is determined that:
    (1) The payment was made without fault on the part of the person; 
and
    (2) Requiring such repayment would be contrary to equity and good 
conscience.
    (b) Unless an overpayment is otherwise recovered, or waived under 
paragraph (a), the Administrator, FSA, shall recover the overpayment by 
deductions from any sums payable to such person.
    (c) If the Administrator, FSA, or a court of competent jurisdiction, 
determines that a person:
    (1) Knowingly has made, or caused another to make, a false statement 
or representation of a material fact, or
    (2) Knowingly has failed, or caused another to fail, to disclose a 
material fact, and, as a result of such false statement or 
representation, or of such nondisclosure, such person has received any 
payment under this program to which the person was not entitled, such 
person shall, in addition to any other penalty provided by law, be 
ineligible for any further payment under this program.
    (d) Except for overpayments determined by a court of competent 
jurisdiction, no repayment may be required, and no deduction may be 
made, under this section until a determination and an opportunity for a 
fair hearing has been given to the person concerned, and the 
determination has become final.
    (e) Whoever makes a false statement of a material fact knowing it to 
be false, or knowingly fails to disclose a material fact, for the 
purpose of obtaining or increasing for himself or for any other person 
any payments authorized to be furnished under this program shall be 
fined not more that $10,000 or imprisoned for not more than 1 year, or 
both.



Sec.  1580.505  Appeals.

    Any person may obtain reconsideration and review of determinations 
made with respect to applications for program benefits under this part 
in accordance with appeal regulations of the 7 CFR part 780.



Sec.  1580.601  Implementation.

    Trade adjustment assistance is available for the most recent 
marketing year for which prices were available on February 3, 2003.



Sec.  1580.602  Paperwork Reduction Act assigned number.

    FAS is committed to compliance with the Government Paperwork 
Elimination Act (GPEA), which requires Government agencies, in general, 
to provide the public the option of submitting information or 
transacting business electronically to maximum extent possible. The 
information collection requirements contained in these regulations (7 
CFR part 1580) have been approved by the Office of Management and Budget 
under the provisions of 44 U.S.C. Chapter 35 and been assigned OMB 
control number 0551-0040.



PART 1599--MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD 
NUTRITION PROGRAM--Table of Contents




Sec.
1599.1 What special definitions apply?
1599.2 What is the general purpose and scope of the regulations?
1599.3 Are there eligibility requirements for Cooperating Sponsors?
1599.4 How do I apply?
1599.5 When is a usual marketing requirement included?
1599.6 How are costs and advances apportioned?
1599.7 What procedures apply to procuring ocean transportation?
1599.8 Who arranges for entry and handling in the foreign country?

[[Page 845]]

1599.9 What are the restrictions on commodity use and distribution?
1599.10 Are there special requirements for agreements between 
          Cooperating Sponsor and Recipient Agencies?
1599.11 What procedures apply to sales and barter of commodities 
          provided and the use of proceeds?
1599.12 What procedures apply to the processing, packaging and labeling 
          of commodities in the foreign country?
1599.13 How does the Cooperating Sponsor dispose of commodities unfit 
          for authorized use?
1599.14 How is liability established for loss, damage, or improper 
          distribution of commodities?
1599.15 Are there special record keeping and reporting requirements?
1599.16 What are the Cooperating Sponsor's audit requirements?
1599.17 When may FAS suspend a program?
1599.18 Are there sample documents and guidelines available for 
          developing proposals and reports?
1599.19 Has the Office of Management and Budget reviewed the paperwork 
          and record keeping requirements contained in this part?

    Authority: 7 U.S.C. 1736-1; Presidential Memorandum, March 11, 2003.

    Source: 68 FR 36888, June 20, 2003, unless otherwise noted.



Sec.  1599.1  What special definitions apply?

    Activity--a Cooperating Sponsor's use of agricultural commodities 
and financial and technical assistance provided under Program 
Agreements.
    Agricultural Counselor or Attache--the United States Foreign 
Agricultural Service representative stationed abroad, who has been 
assigned responsibilities with regard to the country into which the 
commodities provided are imported, or such representative's designee.
    Associate Administrator--Associate Administrator, Foreign 
Agricultural Service.
    CCC--the Commodity Credit Corporation.
    Commodities--U.S. agricultural commodities or products.
    Director, CCC-OD--the Director, CCC Operations Division, Foreign 
Agricultural Service, USDA.
    Director, PAD--the Director, Program Administration Division, 
Foreign Agricultural Service, USDA.
    Director, PPDED--the Director, Program Planning, Development & 
Evaluation Division, Foreign Agricultural Service, USDA.
    Deputy Administrator--Deputy Administrator for Export Credits, 
Foreign Agricultural Service, USDA.
    FAS--Foreign Agricultural Service, USDA.
    Force Majeure--damage caused by perils of the sea or other waters; 
collisions; wrecks; stranding without the fault of the carrier; 
jettison; fire from any cause; Act of God; public enemies or pirates; 
arrest or restraint of princes, princesses, rulers of peoples without 
the fault of the carrier; wars; public disorders; captures; or detention 
by public authority in the interest of public safety.
    KCCO--Kansas City Commodity Office, Farm Services Agency, USDA, PO 
Box 419205, Kansas City, Missouri, 64141-6205.
    KCMO/DMD--Debt Management Division, Kansas City Management Office, 
Farm Services Agency, USDA, PO Box 419205, Kansas City, Missouri, 64141-
6205.
    Ocean freight differential--the amount, as determined by FAS, by 
which the cost of ocean transportation is higher than would otherwise be 
the case by reason of the requirement that the commodities be 
transported on U.S.-flag vessels.
    Program Agreement--an agreement entered into by FAS and Cooperating 
Sponsors to implement the McGovern-Dole International Food for Education 
and Child Nutrition Program.
    Program income--interest on sale proceeds and money received by the 
Cooperating Sponsor, other than sales proceeds, as a result of carrying 
out approved activities.
    Recipient agency--an entity located in the importing country which 
receives commodities or commodity sale proceeds from a Cooperating 
Sponsor for the purpose of implementing activities.
    Sale proceeds--money received by a Cooperating Sponsor from the sale 
of commodities.
    USDA--the United States Department of Agriculture.

[[Page 846]]



Sec.  1599.2  What is the general purpose and scope of the regulations?

    This part establishes the general terms and conditions governing the 
donation of commodities and financial and technical assistance to 
Cooperating Sponsors under the McGovern-Dole International Food for 
Education and Child Nutrition Program. This part does not apply to 
donations to intergovernmental agencies or organizations (such as the 
World Food Program) unless FAS and such intergovernmental agency or 
organization enter into an agreement incorporating this part. 
Cooperating Sponsors should also familiarize themselves with regulations 
at 7 CFR part 3019--Uniform Administrative Requirements for Grants and 
Agreements with Institutions of Higher Education, Hospitals and Other 
Non-Profit Organizations. In addition to the regulations in this part 
1599, grants awarded to non-governmental Cooperating Sponsors by FAS are 
subject to 7 CFR 3015.205, 7 CFR part 3019 and 7 CFR part 3052.



Sec.  1599.3  Are there eligibility requirements for Cooperating Sponsors?

    A Cooperating Sponsor may be either:
    (a) A foreign government;
    (b) An entity registered with the Agency for International 
Development (AID) in accordance with AID regulations; or
    (c) An entity that demonstrates to FAS' satisfaction:
    (1) Organizational experience and resources available to implement 
and manage the type of program proposed, i.e., targeted food assistance, 
activities that improve the food security, health and nutrition of women 
and children, and economic development activities;
    (2) Experience working in the targeted country; and
    (3) Experience and knowledge on the part of personnel who will be 
responsible for implementing and managing the program. FAS may require 
that an entity submit a financial statement demonstrating that it has 
the financial means to implement an effective donation program.



Sec.  1599.4  How do I apply?

    To apply for this program, a Cooperating Sponsor shall submit an SF-
424, which is a standard application for federal assistance, a Program 
Introduction, a Plan of Operation, and a Budget Proposal to the 
Director, PPDED and to the Agricultural Counselor or Attach[eacute] 
responsible for the country where activities are to be implemented. 
Electronic submissions of these items are preferred, particularly 
through the FAS on-line system. If on-line submission is not available, 
e-mail or hard copy are acceptable.
    (a) SF-424
    (b) Program Introduction shall include the following:
    (1) Information about the organization's past food aid activities 
with particular emphasis on school feeding, maternal child health or 
other relevant development activities, its experience within the country 
where the program is proposed, and any other relevant information to 
demonstrate its capability to implement the program in the country, with 
particular emphasis on the organizations ability to:
    (i) Identify and assess the needs of beneficiaries, especially 
malnourished or undernourished mothers and their children who are 5 
years of age or younger, and school-age children who are malnourished, 
undernourished, or do not regularly attend school;
    (ii) In the case of preschool and school-age children, target low-
income areas where child enrollment and attendance in school is low or 
girls enrollment and participation in preschool or school is low;
    (iii) Incorporate developmental objectives for improving literacy 
and primary education (especially with girls); and,
    (iv) In the case of maternal and child nutrition activities, 
coordinate supplementary feeding and nutrition programs with existing or 
newly established maternal, infant, and child programs that meet 
maternal, prenatal, postnatal, and newborns health needs;
    (2) Reasons for the need for the food aid and in particular, a 
school feeding program in the country. The organization shall include 
statistics on poverty, food deficits, and related items such as:

[[Page 847]]

    (i) Literacy rates for the target population;
    (ii) Percentage of school age children attending schools, especially 
females;
    (iii) Malnutrition rates;
    (iv) Public expenditures on primary education;
    (v) Country's current school feeding operations, if they exists, 
along with current funding resources;
    (vi) Any information regarding teacher training, community 
infrastructure (PTAs), health, nutrition, and water and sanitation 
information; and lastly,
    (vii) Other potential donors;
    (3) Verification that the national government is committed to or is 
working toward, through a national action plan, the goals of the World 
Declaration on Education for All convened in 1990 in Jomtien, Thailand, 
and the follow-up Dakar Framework for Action of the World Education 
Forum, convened in 2000;
    (4) Steps to graduate the program from food aid and address 
sustainability, or sustainable program components, which will continue 
after the end of food aid donations. In addressing graduation or 
sustainability,
    (i) Address how the program will sustain the benefits of the 
education, enrollment, and attendance of children in schools in the 
targeted communities when the provision of commodities and assistance to 
a recipient country under FFE terminates;
    (ii) Estimate the time required until the recipient country or 
eligible organizations will be able to provide sufficient assistance 
without additional assistance under FFE; or in the absence of 
sustainability; and
    (iii) Explain how the program will provide other long term benefits 
to targeted populations of the recipient country;
    (5) Information on methods used to involve indigenous institutions 
as well as local communities and governments in the development and 
implementation of the programs and activities to foster local capacity 
building and leadership;
    (6) An explanation of how each requested expenditure identified in 
Sec.  1599.6(b)(4)(i) would enhance the effectiveness of the activities 
implemented under this subpart. For purposes of this section, 
``expenditures that would enhance the effectiveness of the activities 
implemented under this subpart'' are those expenditures which would 
increase the likelihood of meeting the objectives of the activities as 
stated in the Plan of Operation. Examples of costs that may enhance the 
effectiveness of a school feeding program may be the purchase of 
utensils and food trays, text books, and incentives for teachers, as 
well as the use of consultancies to provide technical assistance in the 
educational improvement area when conducting teacher training. These 
costs may include a limited amount to procure locally produced foods.
    (7) If your proposal includes monetization or barter, demonstrate 
that monetization or bartering of commodities offers more benefits than 
a direct cash outlay.
    (c) A Plan of Operation shall provide the following information:

    (1) Country of donation.
    (2) Kind, quantity and delivery schedule of commodities requested.
    (3) Activity objectives. Briefly state what the goals to be 
accomplished for the program are.
    (4) Program description shall include the following:
    (i) Fully describe the steps involved in program implementation;
    (ii) Method for choosing beneficiaries of activities;
    (iii) Program administration, including a description of the 
Cooperating Sponsors plan to develop, implement, monitor, report on, and 
provide accountability for activities. The Cooperating Sponsor shall 
also include, as appropriate, plans for administering the distribution 
or sale of commodities and the expenditure of sale proceeds, and 
identification of the administrative or technical personnel who will 
implement the activities;
    (iv) Activity budgets, including costs that will be borne by the 
Cooperating Sponsor, other organizations or local governments. If a 
nongovernmental Cooperating Sponsor requests FAS to fund costs 
identified in Sec.  1599.6(b)(4)(i), the Cooperating Sponsor shall 
include a detailed description of:

[[Page 848]]

    (A) The costs for which funding is requested; and,
    (B) The amount of funding requested for each cost;
    (v) The recipient agency, if any, that will be involved in the 
program and a description of each recipient agency's capability to 
perform its responsibilities as stated in the Plan of Operation;
    (vi) Governmental or nongovernmental entities involved in the 
program and the extent to which the program will strengthen or increase 
the capabilities of such entities to further economic development in the 
recipient country. The Cooperating Sponsor shall also include a 
description of the steps that the government of the host country is 
taking to improve the preschool and school systems in the country;
    (vii) Method of educating consumers as to the source of the provided 
commodities and, where appropriate, preparation and use of the 
commodity; and
    (viii) Criteria for measuring progress towards achieving the 
objectives of activities and evaluating program outcome, including 
health, nutrition and education.
    (5) Use of funds or goods and services generated: If the activity 
involves the use of sale proceeds, the receipt of goods or services from 
the barter of commodities, or the use of program income, the cooperating 
sponsor shall provide the following information:
    (i) The quantity and type of commodities to be sold or bartered;
    (ii) Extent to which any sale or barter of the agricultural 
commodities provided would displace or interfere with any sales that may 
otherwise be made;
    (iii) The amount of sale proceeds anticipated to be generated from 
the sale, the value of the goods or services anticipated to be generated 
from the barter of the agricultural commodities provided, or the amount 
of program income expected to be generated;
    (iv) The steps taken to use, to the extent possible, the private 
sector in the process of selling commodities;
    (v) The specific uses of sale proceeds or program income and a 
timetable for their expenditure; and
    (vi) Procedures for assuring the receipt and deposit of sale 
proceeds and program income into a separate special account and 
procedures for the disbursement of the proceeds and program income from 
such special account.
    (6) Distribution methods: (i) A description of the transportation 
and storage system which will be used to move the agricultural 
commodities from the receiving port to the point at which distribution 
is made to the recipient;
    (ii) A description of any reprocessing or repackaging of the 
commodities that will take place; and
    (iii) A logistics plan that demonstrates the adequacy of port, 
transportation, storage, and warehouse facilities to handle the flow of 
commodities to recipients without undue spoilage or waste.
    (7) Duty free entry: Documentation indicating that any commodities 
to be distributed to recipients, rather than sold, will be imported and 
distributed free from all customs, duties, tolls, and taxes.
    (8) Economic impact: Information indicating that the commodities can 
be imported and distributed without a disruptive impact upon production, 
prices and marketing of the same or like products within the importing 
country.
    (d) Budget proposals shall include funds requested, from either cash 
or monetization resources, to fund administrative, ITSH, technical and 
financial assistance costs. Budget proposals shall be submitted in a 
spreadsheet format.
    (e) After submission and approval by FAS, a Program Agreement will 
be developed. The Program Agreement, which will incorporate the terms 
and conditions set forth in this part, the commodities provided by FAS, 
and any packaging, will meet the specifications set forth in such 
Program Agreement. A Program Agreement may contain special terms or 
conditions, in addition to or in lieu of, the terms and conditions set 
forth in the regulations in this part when FAS determines that such 
special terms or conditions are necessary to effectively carry out the 
particular Program Agreement. The Plan of Operation, Budget Proposal, 
and Commodity specifications will be incorporated into the Program 
Agreement as Attachments.

[[Page 849]]



Sec.  1599.5  When is a usual marketing requirement included?

    (a) A foreign government Cooperating Sponsor shall provide to the 
Director, PPDED, data showing commercial and non-commercial imports of 
the types of agricultural commodities requested during the prior five 
years, by country of origin, and an estimate of imports of such 
commodities during the current year.
    (b) FAS may require that a Program Agreement with a foreign 
government include a ``usual marketing requirement'' that establishes a 
specific level of imports for a specified period. The Program Agreement 
may also include a prohibition on the export of provided commodities, as 
well as of other similar commodities specified in the Program Agreement.



Sec.  1599.6  How are costs and advances apportioned?

    (a) FAS will bear the costs of the packaging, enrichment, 
preservation, and fortification of agricultural commodities, and the 
processing, transportation, handling and other incidental charges 
incurred in delivering commodities to Cooperating Sponsors. FAS will 
deliver bulk grain shipments f.o.b. vessel, and shipments of all other 
commodities f.a.s. vessel or intermodal points. FAS will choose the 
point of delivery based on lowest cost to FAS.
    (b) When the Associate Administrator approves in advance and in 
writing, FAS may agree to bear all or a portion of reasonable costs 
associated with:
    (1) Transportation from U.S. ports to designated ports or points of 
entry abroad;
    (2) Maritime survey costs;
    (3) Transportation from designated ports or points of entry abroad 
to designated storage and distribution sites, and reasonable storage and 
distribution costs if the recipient country is a low income, net food-
importing country that:
    (i) Meets the poverty criteria established by the International Bank 
for Reconstruction and Development for Civil Works Preference; and
    (ii) Has a national government that is committed to or is working 
toward, through a national action plan, the goals of the World 
Declaration on Education for All and the Dakar Framework for Action of 
the World Education Forum; and
    (4) The costs of a nongovernmental Cooperating Sponsor:
    (i) In the recipient country that enhance the effectiveness of the 
activities including packaging, enrichment, preservation and 
fortification of agricultural commodities; and
    (ii) For administrative or monitoring expenses specified in the 
program agreement.
    (5) The administrative expenses of any Federal agency implementing 
or assisting in the implementation of the McGovern-Dole International 
Food for Education and Child Nutrition Program, including the 
administrative costs of the Food and Nutrition Service to provide 
technical advice on the establishment and implementation of programs, 
including providing field expertise in recipient countries.
    (c) FAS will not pay any costs incurred by the Cooperating Sponsor 
prior to the date of the Program Agreement.
    (d) Except as provided in paragraph (b) of this section, the 
Cooperating Sponsor shall ordinarily bear all costs incurred subsequent 
to FAS' delivery of commodities at U.S. ports or intermodal points.
    (e) A Cooperating Sponsor seeking agreement by FAS to bear the 
storage and distribution costs identified in paragraph (b)(3) of this 
section or the costs identified in paragraph (b)(4) of this section 
shall submit to the Director, PPDED, a Program Operation Budget 
detailing such costs. If approved, the Program Operation Budget shall 
become part of the Program Agreement. The non-governmental Cooperating 
Sponsor may make adjustments between line items of an approved Program 
Operation Budget up to 10 percent of the total amount of the budget as 
last approved without any further approval. Adjustments beyond these 
limits must be specifically approved by the Director, PPDED.
    (f) The Cooperating Sponsor may request advance of up to 100 percent 
of the amount of an approved Program Operating Budget if FAS determines

[[Page 850]]

that the Cooperating Sponsor's financial management system meets the 
requirements of 7 CFR 3019.21. However, FAS will not approve any request 
for an advance received earlier than 60 days after the date of a 
previous advance made in connection with the same Program Agreement.
    (g) Funds advanced shall be deposited in an interest bearing account 
until expended. Interest earned on advance of funds must be returned to 
FAS.
    (h) The Cooperating Sponsor shall return to FAS any funds not 
obligated as of the 180th day after being advanced, together with 
interest earned on such unexpended funds. Funds and interest shall be 
returned within 30 days of such date.
    (i) The Cooperating Sponsor shall, not later than 10 days after the 
end of each calendar quarter, submit a financial statement to the 
Director, PPDED, accounting for all funds advanced and all interest 
earned.
    (j) FAS will pay all other costs for which it is obligated under the 
Program Agreement by reimbursement. However, FAS will not pay any cost 
incurred after the final date specified in the Program Agreement.
    (k) Program income may be used to further eligible activity 
objectives.



Sec.  1599.7  What procedures apply to procuring ocean transportation?

    (a) Cargo preference. Shipments of commodities are subject to the 
requirements of sections 901(b) and 901b of the Merchant Marine Act, 
1936, regarding carriage on U.S.-flag vessels. A Cooperating Sponsor 
shall comply with the instructions of FAS regarding the quantity of 
commodities that must be carried on U.S. flag vessels.
    (b) Freight procurement requirements. When FAS is financing any 
portion of the ocean freight, whether on U.S. flag or non-U.S. flag 
vessels, and the Cooperating Sponsor arranges ocean transportation:
    (1) The Cooperating Sponsor shall arrange ocean transportation 
through competitive bidding and shall obtain approval of all invitations 
for bids from the Director, CCC-OD.
    (2) Invitations for bids shall be posted on FAS' Web site and a 
commercially available news wire service.
    (3) Freight invitations for bids shall include specified procedures 
for payment of freight, including the party responsible for the freight 
payments, and expressly require that:
    (i) Offers include a contract canceling date no later than the last 
contract layday specified in the invitation for bids;
    (ii) Offered rates be quoted in U.S. dollars per metric ton;
    (iii) If destination bagging or transportation to a point beyond the 
discharge port is required, the offer separately state the total rate 
and the portion thereof attributable to the ocean segment of the 
movement;
    (iv) Any non-liner U.S. flag vessel 15 years or older offer, in 
addition to any other offered rate, a one-way rate applicable in the 
event the vessel is scrapped or transferred to foreign flag registry 
prior to the end of the return voyage to the United States;
    (v) In the case of packaged commodities, U.S. flag carriers specify 
whether delivery will be direct breakbulk shipment, container shipment, 
or breakbulk transshipment and identify whether transshipment (including 
container relays) will be via U.S. or foreign flag vessel;
    (vi) Vessels offered subject to Maritime Administration approval 
will not be accepted; and
    (vii) Offers be received by a specified closing time, which must be 
the same for both U.S. and non-U.S. flag vessels.
    (4) In the case of shipments of bulk commodities and non-liner 
shipments of packaged commodities, the Cooperating Sponsor shall open 
offers in public in the United States at the time and place specified in 
the invitation for bids and consider only offers that are responsive to 
the invitation for bids without negotiation. Late offers shall not be 
considered or accepted.
    (5) All responsive offers received for both U.S. flag and foreign 
flag service shall be presented to KCCO which will determine the extent 
to which U.S.-flag vessels will be used.
    (6) The Cooperating Sponsor shall promptly furnish the Director, 
CCC-OD, or other official specified in the Program Agreement, copies of 
all offers received with the time of receipt indicated thereon. The 
Director, CCC-

[[Page 851]]

OD, or other official specified in the Program Agreement, will approve 
all vessel fixtures. The Cooperating Sponsor may fix vessels subject to 
the required approval; however, the Cooperating Sponsor shall not 
confirm a vessel fixture until advised of the required approval and the 
results of the Maritime Administration's guideline rate review. The 
Cooperating Sponsor shall not request guideline rate advice from the 
Maritime Administration.
    (7) Non-Vessel Operating Common Carriers may not be employed to 
carry shipments on either U.S. or foreign-flag vessels.
    (8) The Cooperating Sponsor shall promptly furnish the Director CCC-
OD, a copy of the signed laytime statement and statement of facts at the 
discharge port.
    (c) Shipping agents. (1) The Cooperating Sponsor may appoint a 
shipping agent to assist in the procurement of ocean transportation. The 
Cooperating Sponsor shall nominate the shipping agent in writing to the 
Deputy Administrator, Room 4077-S, Foreign Agricultural Service, U.S. 
Department of Agriculture, Washington, DC 20250-1031, and include a copy 
of the proposed agency agreement. The Cooperating Sponsor shall specify 
the time period of the nomination.
    (2) The shipping agent so nominated shall submit the information and 
certifications required by 7 CFR 17.4 to the Deputy Administrator.
    (3) A person may not act as a shipping agent for a Cooperating 
Sponsor unless the Deputy Administrator has notified the Cooperating 
Sponsor in writing that the nomination is accepted.
    (d) Commissions. (1) When any portion of the ocean freight is paid 
by FAS, total commissions earned on U.S. and foreign flag bookings by 
all parties arranging vessel fixtures, shall not exceed 2\1/2\ percent 
of the total freight costs.
    (2) Address commissions are prohibited.
    (e) Contract terms. When FAS is paying any portion of the ocean 
freight, charter parties and liner booking contracts must conform to the 
following requirements, as applicable:
    (1) Packaged commodities on liner vessels shall be shipped on the 
basis of full berth terms with no demurrage or despatch;
    (2) Shipments of bulk liquid commodities may be contracted in 
accordance with trade custom. Other bulk commodities, including 
shipments that require bagging or stacking for the account of the 
vessel, shall be shipped on the basis of vessel load, free out, with 
demurrage and despatch applicable at load and discharge ports; except 
that, if bulk commodities require further inland distribution, they 
shall be shipped on the basis of vessel load with demurrage and despatch 
at load and berth terms discharge, i.e., no demurrage, despatch, or 
detention at discharge. Demurrage and despatch shall be settled between 
the ocean carrier and commodity suppliers at load port and between the 
ocean carrier and charterers at discharge ports. FAS is not responsible 
for resolving disputes involving the calculation of laytime or the 
payment of demurrage or despatch.
    (3) If the Program Agreement requires the Cooperating Sponsor to 
arrange an irrevocable letter of credit for ocean freight, the 
Cooperating Sponsor shall be liable for detention of the vessel for 
loading delays attributable solely to the decision of the ocean carrier 
not to commence loading because of the failure of the Cooperating 
Sponsor to establish such letter of credit. Charter parties and liner 
booking contracts may not contain a specified detention rate. The ocean 
carrier shall be entitled to reimbursement, as damages for detention for 
all time so lost, for each calendar day or any part of the calendar day, 
including Saturdays, Sundays and holidays. The period of such delay 
shall not commence earlier than upon presentation of the vessel at the 
designated loading port within the laydays specified in the charter 
party or liner booking contract, and upon notification of the vessel's 
readiness to load in accordance with the terms of the applicable charter 
party or liner booking contract. The period of such delay shall end at 
the time that operable irrevocable letters of credit have been 
established for ocean freight or the time the vessel begins loading, 
whichever is earlier. Time calculated

[[Page 852]]

as detention shall not count as laytime. Reimbursement for such 
detention shall be payable no later than upon the vessel's arrival at 
the first port of discharge.
    (4) Charges including, but not limited to charges for inspection, 
fumigation, and carrying charges, attributable to the failure of the 
vessel to present before the canceling date will be for the account of 
the ocean carrier.
    (5) 100% of ocean freight is earned and payable under a charter 
party when the vessel and cargo arrive at the first port of discharge, 
Provided, That if a force majeure prevents the vessel's arrival at the 
first port of discharge, 100% of the ocean freight is payable, and 
provided further, that if the charter party provides for completing 
additional requirements after discharge such as bagging, stacking, or 
inland transportation, not more than 85% of the ocean freight is earned 
and payable at the time the Associate Administrator determines that such 
force majeure was the cause of nonarrival; and
    (6) When the ocean carrier offers delivery to destination ports on 
U.S.-flag vessels, but foreign-flag vessels are used for any part of the 
voyage to the destination port without first obtaining the approval of 
the Cooperating Sponsor, KCCO, and any other approval that may be 
required by the Program Agreement, the ocean freight rate will be 
reduced to the lowest responsive foreign-flag vessel rate offered in 
response to the same invitation for bids and the carrier agrees to pay 
FAS the difference between the contracted ocean freight rate and the 
freight rate offered by such foreign-flag vessel.
    (f) Coordination between FAS and the Cooperating Sponsor. When a 
Program Agreement specifies that the Cooperating Sponsor will arrange 
ocean transportation:
    (1) FAS will provide that KCCO furnishes the Cooperating Sponsor, or 
its agent, a Notice of Commodity Availability (Form FAS-512) which will 
specify the receiving country, commodity, quantity, and date at U.S. 
port or intermodal delivery point.
    (2) The Cooperating Sponsor shall complete the Form FAS-512 
indicating name of steamship company, vessel name, vessel flag and 
estimated time of arrival at U.S. port; and shall sign and return the 
completed form to KCCO, with a copy to the Director, CCC-OD. If FAS 
agrees to pay any part of the ocean transportation for liner cargoes, 
the Cooperating Sponsor shall also indicate on the Form FAS-512 the 
applicable Federal Maritime Commission tariff rate, and tariff 
identification.
    (3) FAS will arrange for KCCO to issue instructions to have the 
commodity delivered f.a.s. or f.o.b. vessel, U.S. port of export or 
intermodal delivery point, consigned to the Cooperating Sponsor.
    (g) Documents required for payment of freight--(1) General rule. To 
receive payment for ocean freight, the Cooperating Sponsor shall submit 
the following documents to the Director, CCC-OD:
    (i) One signed copy of completed Form FAS-512;
    (ii) Four copies of the original on-board bills of lading indicating 
the freight rate and signed by the originating carrier;
    (iii) For all non-containerized grain cargoes,
    (A) One signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate (Vessel Hold Certificate);
    (B) One signed copy of the National Cargo Bureau Certificate of 
Readiness (Vessel Hold Inspection Certificate); and
    (C) One signed copy of the National Cargo Bureau Certificate of 
Loading;
    (iv) For all containerized grain and grain product cargoes, one copy 
of the FGIS Container Condition Inspection Certificate;
    (v) One signed copy of liner booking note or charter party covering 
ocean transportation of cargo;
    (vi) For charter shipments, a signed notice of arrival at first 
discharge port submitted by the Cooperating Sponsor;
    (vii) For all liner cargoes, a copy of the tariff page;
    (viii) Four copies of either:
    (A) A request by the Cooperating Sponsor for reimbursement of ocean 
freight or ocean freight differential indicating the amount due, and 
accompanied by a certification from the ocean carrier that payment has 
been

[[Page 853]]

received from the Cooperating Sponsor; or
    (B) A request for direct payment to the ocean carrier, indicating 
amount due; or
    (C) A request for direct payment of ocean freight differential to 
the ocean carrier accompanied by a certification from the carrier that 
payment of the Cooperating Sponsor's portion of the ocean freight has 
been received.
    (ix) Each request to FAS for payment must provide a document, on 
letterhead and signed by an official or agent of the requester, the name 
of the entity to receive payment, the bank ABA number to which payment 
is to be made; the account number for the deposit at the bank; the 
requester's taxpayer identification number; and the type of the account 
into which funds will be deposited.
    (2) In cases of force majeure. To receive payment in cases where the 
Associate Administrator determines that circumstances of force majeure 
have prevented the vessel's arrival at the first port of discharge, the 
Cooperating Sponsor shall submit all documents required by paragraph 
(g)(1) of this section except for the notice of arrival required by 
paragraph (g)(1)(vi) of this section.
    (h) FAS payment of ocean freight or ocean freight differential--(1) 
General rule. FAS will pay, not later than 30 days after receipt in good 
order of the required documentation, 100 percent of either the ocean 
freight or the ocean freight differential, whichever is specified in the 
Program Agreement.
    (2) Additional requirements after discharge. Where the charter party 
or liner booking note provide for the completion of additional services 
after discharge, such as bagging, stacking or inland transportation, FAS 
will pay, not later than 30 days after receipt in good order of the 
required documentation, either not more than 85 percent of the total 
freight charges or 100 percent of the ocean freight differential, 
whichever is specified in the Program Agreement. FAS will pay the 
remaining balance, if any, of the freight charges not later than 30 days 
after receipt of notification from the Cooperating Sponsor that such 
additional services have been provided; except that FAS will not pay any 
remaining balance where the Associate Administrator determines that the 
vessel's arrival at first port of discharge was prevented by force 
majeure.
    (3) No demurrage. FAS will not pay demurrage.



Sec.  1599.8  Who arranges for entry and handling in the foreign country?

    (a) The Cooperating Sponsor shall make all necessary arrangements 
for receiving the commodities in the recipient country, including 
obtaining appropriate approvals for entry and transit. The Cooperating 
Sponsor shall store and maintain the commodities from time of delivery 
at port of entry or point of receipt from originating carrier in good 
condition until their distribution, sale or barter.
    (b) When FAS has agreed to pay costs of transporting, storing, and 
distributing commodities from designated points of entry or ports of 
entry, the Cooperating Sponsor shall arrange for such services, by 
through bill of lading, or by contracting directly with suppliers of 
services, as FAS may approve. If the Cooperating Sponsor contracts 
directly with the suppliers of such services, the Cooperating Sponsor 
may seek reimbursement by submitting documentation to FAS indicating 
actual costs incurred. All supporting documentation must be sent to the 
Director, CCC-OD. FAS, at its option, will reimburse the Cooperating 
Sponsor for the cost of such services in U.S. dollars at the exchange 
rate in effect on the date of payment by FAS, or in foreign currency.



Sec.  1599.9  What are the restrictions on commodity use and distribution?

    (a) The Cooperating Sponsor may use the commodities provided only in 
accordance with the terms of the Program Agreement.
    (b) In the event that its participation in the program terminates, 
the nongovernmental Cooperating Sponsor will safeguard any undistributed 
commodities and sales proceeds and dispose of such commodities and 
proceeds as directed by FAS.

[[Page 854]]



Sec.  1599.10  Are there special requirements for agreements between 
Cooperating Sponsor and Recipient Agencies?

    (a) The Cooperating Sponsor shall enter into a written agreement 
with a recipient agency prior to the transfer of any commodities, sale 
proceeds or program income to the recipient agency. Copies of such 
agreements shall be provided to the Agricultural Counselor or Attache, 
and the Director, PPDED. Such agreements shall require the recipient 
agency to pay the Cooperating Sponsor the value of any commodities, sale 
proceeds or program income that are used for purposes not expressly 
permitted under the Program Agreement, or that are lost, damaged, or 
misused as a result of the recipient agency's failure to exercise 
reasonable care;
    (b) FAS may waive the requirements of paragraph (a) of this section 
where it determines that such an agreement is not feasible or 
appropriate.



Sec.  1599.11  What procedures apply to sales and barter of commodities 
provided and the use of proceeds?

    (a) Commodities may be sold or bartered without the prior approval 
of FAS where damage has rendered the commodities unfit for intended 
program purposes and sale or barter is necessary to mitigate loss of 
value.
    (b) A Cooperating Sponsor may, but is not required to, negotiate an 
agreement with the host government under which the commodities imported 
for a sale or barter may be imported, sold, or bartered without 
assessment of duties or taxes. In such cases and where the commodities 
are sold, they shall be sold at prices reflecting prevailing local 
market value.
    (c) The Cooperating Sponsor shall deposit all sale proceeds into an 
interest-bearing account unless prohibited by the laws or customs of the 
importing country or FAS determines that to do so would constitute an 
undue burden. Interest earned on such deposits shall only be used for 
approved activities.
    (d) Except as otherwise provided in this part, the Cooperating 
Sponsor may use sale proceeds and resulting interest only for those 
purposes approved in the applicable Plan of Operation.
    (e) FAS will approve the use of sale proceeds and interest to 
purchase real and personal property where local law permits the 
Cooperating Sponsor to retain title to such property, but will not 
approve the use of sale proceeds or interest to pay for the acquisition, 
development, construction, alteration or upgrade of real property that 
is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious activity, or
    (2) Used in whole or in part for sectarian purposes; except that, a 
Cooperating Sponsor may use such sale proceeds or interest to pay for 
repairs or rehabilitation of a structure located on such real property 
to the extent necessary to avoid spoilage or loss of provided 
commodities but only if such structure is not used in whole or in part 
for any religious or sectarian purposes while the provided commodities 
are stored in such structure. When not approved in the Plan of 
Operation, such use may be approved by the Agricultural Counselor or 
Attache.
    (f) The Cooperating Sponsor shall follow commercially reasonable 
practices in procuring goods and services and when engaging in 
construction activity in accordance with the approved Plan of Operation. 
Such practices shall include procedures to prevent fraud, self-dealing 
and conflicts of interest, and shall foster free and open competition to 
the maximum extent practicable.
    (g) To the extent required by the Program Agreement, the Cooperating 
Sponsor shall submit to the Director, PPDED, an inventory of all assets 
acquired with sale proceeds or interest or program income. In the event 
that its participation in the program terminates, the Cooperating 
Sponsor shall dispose, at the direction of the Director, PPDED, of any 
property, real or personal, so acquired.



Sec.  1599.12  What procedures apply to the processing, packaging and 
labeling of commodities in the foreign country?

    (a) Cooperating Sponsors may arrange for the processing of 
commodities provided under the Program Agreement, or for packaging or 
repackaging prior to distribution. When a third party provides such 
processing,

[[Page 855]]

packaging or repackaging, the Cooperating Sponsor shall enter into a 
written agreement requiring that the provider of such services maintain 
adequate records to account for all commodities delivered and submit 
periodic reports to the Cooperating Sponsor. The Cooperating Sponsor 
shall submit a copy of the executed agreement to the Agricultural 
Counselor or Attache.
    (b) If, prior to distribution, the Cooperating Sponsor arranges for 
packaging or repackaging commodities, the packaging shall be plainly 
labeled in the language of the country in which the commodities are to 
be distributed with the name of the commodity and, except where the 
commodities are to be sold or bartered after processing, packaging or 
repackaging, to indicate that the commodity is furnished by the people 
of the United States of America and not to be sold or exchanged. If the 
commodities are not packaged, the Cooperating Sponsor shall, to the 
extent practicable, display banners, posters or other media containing 
the information prescribed in this paragraph.
    (c) FAS will reimburse Cooperating Sponsors that are nonprofit 
private voluntary organizations or cooperatives for expenses incurred 
for repackaging if the packages of commodities are discharged from the 
vessel in damaged condition, and are repackaged to ensure that the 
commodities arrive at the distribution point in wholesome condition. No 
prior approval is required for such expenses equaling $500 or less. If 
such expense is estimated to exceed $500, the authority to repackage and 
incur such expense must be approved by the Agricultural Counselor or 
Attache in advance of repackaging.



Sec.  1599.13  How does the Cooperating Sponsor dispose of commodities 
unfit for authorized use?

    (a) Prior to delivery to Cooperating Sponsor at discharge port or 
point of entry. If the commodity is damaged prior to delivery to a 
governmental Cooperating Sponsor at discharge port or point of entry 
overseas, the Agricultural Counselor or Attache will immediately arrange 
for inspection by a public health official or other competent authority. 
If the commodity is damaged prior to delivery to a nongovernmental 
Cooperating Sponsor at the discharge port or point of entry, the 
nongovernmental Cooperating Sponsor shall arrange for such inspection. 
If inspection discloses the commodity to be unfit for the use authorized 
in the Program Agreement, the Agricultural Counselor or Attache or the 
nongovernmental Cooperating Sponsor shall dispose of the commodities in 
accordance with the priority set forth in paragraph (b) of this section. 
Expenses incidental to the handling and disposition of the damaged 
commodity will be paid by FAS from the sale proceeds or from an 
appropriate FAS account designated by FAS. The net proceeds of sales 
shall be deposited with the U.S. Disbursing Officer, American Embassy, 
in an account designated by FAS; however, if the commodities are 
provided for a sales program, the net sale proceeds, net of expenses 
incidental to handling and disposition of the damaged commodity, shall 
be deposited to the special account established for sale proceeds. The 
Cooperating Sponsor shall consult with FAS regarding the inspection and 
disposition of commodities and accounting for sale proceeds in the event 
the Cooperating Sponsor executed a sales agreement under which title 
passed to the purchaser prior to delivery to the Cooperating Sponsor.
    (b) After delivery to Cooperating Sponsor. (1) If after arrival in a 
foreign country and after delivery to a Cooperating Sponsor, it appears 
that the commodity, or any part thereof, may be unfit for the use 
authorized in the Program Agreement, the Cooperating Sponsor shall 
immediately arrange for inspection of the commodity by a public health 
official or other competent authority approved by the Agricultural 
Counselor or Attache. If no competent local authority is available, the 
Agricultural Counselor or Attache may determine whether the commodities 
are unfit for the use authorized in the Program Agreement and, if so, 
may direct disposal in accordance with this paragraph. The Cooperating 
Sponsor shall arrange for the recovery of that portion of the 
commodities designated during the inspection as suitable for authorized 
use. If, upon inspection, the

[[Page 856]]

commodity (or any part thereof) is determined to be unfit for the 
authorized use, the Cooperating Sponsor shall notify the Agricultural 
Counselor or Attache of the circumstances pertaining to the loss or 
damage. With the concurrence of the Agricultural Counselor or Attache, 
the commodity determined to be unfit for authorized use shall be 
disposed of in the following order of priority:
    (i) By transfer to an approved USDA sponsored program for use as 
livestock feed. FAS shall be advised promptly of any such transfer so 
that shipments from the United States to the livestock feeding program 
can be reduced by an equivalent amount;
    (ii) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, or industrial use, at the highest obtainable price. When the 
commodity is sold, all U.S. Government markings shall be obliterated or 
removed;
    (iii) By donation to a governmental or charitable organization for 
use as animal feed or for other non-food use; or
    (iv) If the commodity is unfit for any use or if disposal in 
accordance with paragraph (b)(1)(i), (ii) or (iii) of this section is 
not possible, the commodity shall be destroyed under the observation of 
a representative of the Agricultural Counselor or Attache, if 
practicable, in such manner as to prevent its use for any purpose.
    (2) Actual expenses incurred, including third party costs, in 
effecting any sale may be deducted from the sale proceeds and, if the 
commodities were intended for direct distribution, the Cooperating 
Sponsor shall deposit the net proceeds with the U.S. Disbursing Officer, 
American Embassy, with instructions to credit the deposit to an account 
as designated by FAS. If the commodities were intended to be sold, the 
Cooperating Sponsor shall deposit the gross proceeds into the special 
interest bearing account and, after approved costs related to the 
handling and disposition of damaged commodities are paid, shall use the 
remaining funds for purposes of the approved program. The Cooperating 
Sponsor shall promptly furnish to the Agricultural Counselor or Attache 
a written report of all circumstances relating to the loss and damage on 
any commodity loss in excess of $5,000; quarterly reports shall be made 
on all other losses. If the commodity was inspected by a public health 
official or other competent authority, the report and any supplemental 
report shall include a certification by such public health official or 
other competent authority as to the condition of the commodity and the 
exact quantity of the damaged commodity disposed. Such certification 
shall be obtained as soon as possible after the discharge of the cargo. 
A report must also be provided to the Chief, Debt Management Division, 
KCMO/DMD, of action taken to dispose of commodities unfit for authorized 
use.



Sec.  1599.14  How is liability established for loss, damage, or 
improper distribution of commodities?

    (a) Fault of Cooperating Sponsor prior to loading on ocean vessel. 
The Cooperating Sponsor shall immediately notify KCCO, Chief, Export 
Operations Division if the Cooperating Sponsor will not have a vessel 
for loading at the U.S. port of export in accordance with the agreed 
shipping schedule. FAS will determine whether the commodity will be: 
Moved to another available outlet; stored at the port for delivery to 
the Cooperating Sponsor when a vessel is available for loading; or 
disposed of as FAS may deem proper. The Cooperating Sponsor shall take 
such action as directed by FAS and shall reimburse FAS for expenses 
incurred if FAS determines that the expenses were incurred because of 
the fault or negligence of the Cooperating Sponsor.
    (b) Fault of others prior to loading on ocean vessel. The 
Cooperating Sponsor shall immediately notify the Chief, Debt Management 
Office, KCMO/DMD, when any damage or loss to the commodity occurs that 
is attributable to a warehouseman, carrier, or other person between the 
time title is transferred to a Cooperating Sponsor and the time the 
commodity is loaded on board vessel at the designated port of export. 
The Cooperating Sponsor shall promptly assign to CCC any rights to 
claims which may arise as a result of such loss or damage and shall 
promptly forward

[[Page 857]]

to CCC all documents pertaining thereto. CCC shall have the right to 
initiate claims, and retain the proceeds of all claims, for such loss or 
damage.
    (c) Survey and outturn reports related to claims against ocean 
carriers. (1) If the Program Agreement provides that CCC will arrange 
for an independent cargo surveyor to attend the discharge of the cargo, 
CCC will require the surveyor to provide a copy of the report to the 
Cooperating Sponsor.
    (2)(i) If the Cooperating Sponsor arranges for an independent cargo 
surveyor, the Cooperating Sponsor shall forward to the Chief, Debt 
Management Office, KCMO/DMD, any narrative chronology or other 
commentary it can provide to assist in the adjudication of ocean 
transportation claims and shall prepare such a narrative in any case 
where the loss is estimated to be in excess of $5,000.00. The 
Cooperating Sponsor may, at its option, also engage the independent 
surveyor to supervise clearance and delivery of the cargo from customs 
or port areas to the Cooperating Sponsor or its agent and to issue 
delivery survey reports thereon.
    (ii) In the event of cargo loss and damage, the Cooperating Sponsor 
shall provide to the Chief, Debt Management Office, KCMO/DMD, the names 
and addresses of individuals who were present at the time of discharge 
and during survey and who can verify the quantity lost or damaged. For 
bulk grain shipments, in those cases where the Cooperating Sponsor is 
responsible for survey and outturn reports, the Cooperating Sponsor 
shall obtain the services of an independent surveyor to:
    (A) Observe the discharge of the cargo;
    (B) Report on discharging methods including scale type, calibrations 
and any other factor which may affect the accuracy of scale weights, 
and, if scales are not used, state the reason therefore and describe the 
actual method used to determine weights;
    (C) Estimate the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (D) Advise on the quality of sweepings;
    (E) Obtain copies of port or vessel records, if possible, showing 
quantity discharged;
    (F) Provide immediate notification to the Cooperating Sponsor if 
additional services are necessary to protect cargo interests or if the 
surveyor has reason to believe that the correct quantity was not 
discharged; and
    (G) In the case of shipments arriving in container vans, list the 
container van numbers and seal numbers shown on the container vans, and 
indicate whether the seals were intact at the time the container vans 
were opened, and whether the container vans were in any way damaged. To 
the extent possible, the independent surveyor should observe discharge 
of container vans from the vessel to ascertain whether any damage to the 
container van occurred and arrange for surveying as container vans are 
opened.
    (iii) Cooperating Sponsors shall send copies to KCMO/DMD, Chief, 
Debt Management Office of all reports and documents pertaining to the 
discharge of commodities.
    (iv) FAS will reimburse the Cooperating Sponsor for costs incurred 
upon receipt of the survey report and the surveyor's invoice or other 
documents that establish the survey cost. FAS will not reimburse a 
Cooperating Sponsor for the costs of a delivery survey unless the 
surveyor also prepares a discharge survey, or for any other survey not 
taken contemporaneously with the discharge of the vessel, unless FAS 
determines that such action was justified in the circumstances.
    (3) Survey contracts shall be let on a competitive bid basis unless 
FAS determines that the use of competitive bids would not be 
practicable. FAS may preclude the use of certain surveyors because of 
conflicts of interest or lack of demonstrated capability to properly 
carry out surveying responsibilities.
    (4) If practicable, all surveys shall be conducted jointly by the 
surveyor, the consignee, and the ocean carrier, and the survey report 
shall be signed by all parties.
    (d) Ocean carrier loss and damage. (1) Notwithstanding transfer of 
title, CCC shall have the right to file, pursue, and retain the proceeds 
of collection from claims arising from ocean transportation cargo loss 
and damage arising

[[Page 858]]

out of shipments of commodities provided to governmental Cooperating 
Sponsors; however, when the Cooperating Sponsor pays the ocean freight 
or a portion thereof, it shall be entitled to pro rata reimbursement 
received from any claims related to ocean freight charged. FAS will pay 
general average contributions for all valid general average incidents 
which may arise from the movement of commodity to the destination ports. 
CCC shall receive and retain all allowances in general average.
    (2) Nongovernmental Cooperating Sponsors shall: File notice with the 
ocean carrier immediately upon discovery of any cargo loss or damage, 
promptly initiate claims against the ocean carriers for such loss and 
damage, take all necessary action to obtain restitution for losses, and 
provide CCC copies of all such claims. Notwithstanding the preceding 
sentence, the nongovernmental Cooperating Sponsor need not file a claim 
when the cargo loss is less than $100, or in any case when the loss is 
between $100 and $300 and the nongovernmental Cooperating Sponsor 
determines that the cost of filing and collecting the claim will exceed 
the amount of the claim. The nongovernmental Cooperating Sponsor shall 
transmit to KCMO/DMD, Chief, Debt Management Office information and 
documentation on such lost or damaged shipments when no claim is to be 
filed. In the event of a declaration of General Average:
    (i) The Cooperating sponsor shall assign all claim rights to CCC and 
shall provide CCC all documentation relating to the claim, if 
applicable;
    (ii) CCC shall be responsible for settling general average and 
marine salvage claims;
    (iii) FAS has sole authority to authorize any dispositions of 
commodities which have not commenced ocean transit or of which the ocean 
transit is interrupted;
    (iv) FAS will receive and retain any monetary proceeds resulting 
from such disposition;
    (v) CCC will initiate, prosecute, and retain all proceeds of cargo 
loss and damage against ocean carriers and any allowance in general 
average; and
    (vi) FAS will pay any general average or marine salvage claims 
determined to be due.
    (3) Amounts collected by nongovernmental Cooperating Sponsors on 
claims against ocean carriers which are less than $200 may be retained 
by the nongovernmental Cooperating Sponsor. On claims involving loss or 
damage of $200 or more, nongovernmental Cooperating Sponsors may retain 
from collections received by them, either $200 plus 10 percent of the 
difference between $200 and the total amount collected on the claim, up 
to a maximum of $500; or the actual administrative expenses incurred in 
collection of the claim, provided retention of such administrative 
expenses is approved by CCC. Allowable collection costs shall not 
include attorneys fees, fees of collection agencies, and similar costs. 
In no event will FAS pay collection costs in excess of the amount 
collected on the claim.
    (4) A nongovernmental Cooperating Sponsor also may retain from claim 
recoveries remaining after allowable deductions for administrative 
expenses of collection, the amount of any special charges, such as 
handling and packing costs, which the nongovernmental Cooperating 
Sponsor has incurred on the lost or damaged commodity and which are 
included in the claims and paid by the liable party.
    (5) A nongovernmental Cooperating Sponsor may redetermine claims on 
the basis of additional documentation or information not considered when 
the claims were originally filed when such documentation or information 
clearly changes the ocean carrier's liability. Approval of such changes 
by FAS is not required regardless of amount. However, copies of 
redetermined claims and supporting documentation or information shall be 
furnished to FAS.
    (6) A nongovernmental Cooperating Sponsor may negotiate compromise 
settlements of claims of any amount, provided that proposed compromise 
settlements of claims having a value of $5,000 or more shall require 
prior approval in writing by FAS. When a claim is compromised, a 
nongovernmental Cooperating Sponsor may retain from the amount 
collected, the amounts authorized in paragraph (d)(3) of this section, 
and in addition, an

[[Page 859]]

amount representing such percentage of the special charges described in 
paragraph (d)(4) of this section as compromised amount is to the full 
amount of the claim. When a claim is less than $600, a nongovernmental 
Cooperating Sponsor may terminate collection activity when it is 
determined that pursuit of such claims will not be economically sound. 
Approval for such termination by FAS is not required; however, the 
nongovernmental Cooperating Sponsor shall notify KCMO/DMD, Chief, Debt 
Management Division when collection activity on a claim is terminated.
    (7) All amounts collected in excess of the amounts authorized in 
this section to be retained shall be remitted to CCC. For the purpose of 
determining the amount to be retained by a nongovernmental Cooperating 
Sponsor from the proceeds of claims filed against ocean carriers, the 
word ``claim'' shall refer to the loss and damage to commodities which 
are shipped on the same voyage of the same vessel to the same port 
destination, irrespective of the kinds of commodities shipped or the 
number of different bills of lading issued by the carrier.
    (8) If a nongovernmental Cooperating Sponsor is unable to effect 
collection of a claim or negotiate an acceptable compromise settlement 
within the applicable period of limitation or any extension thereof 
granted in writing by the party alleged responsible for the damage, the 
nongovernmental Cooperating Sponsor shall assign its rights to the claim 
to CCC in sufficient time to permit the filing of legal action prior to 
the expiration of the period of limitation or any extension thereof. 
Generally, a nongovernmental Cooperating Sponsor should assign claim 
rights to CCC no later than 60 days prior to the expiration of the 
period of limitation or any extension thereof. In all cases, a 
nongovernmental Cooperating Sponsor shall keep CCC informed of the 
progress of its collection efforts and shall promptly assign their claim 
rights to CCC upon request. Subsequently, if CCC collects on or settles 
the claim, CCC shall, except as indicated in this paragraph, pay to a 
nongovernmental Cooperating Sponsor the amount to which it would have 
been entitled had it collected on the claim. The additional 10 percent 
on amounts collected in excess of $200 will be payable, however, only if 
CCC determines that reasonable efforts were made to collect the claim 
prior to the assignment, or if payment is determined to be commensurate 
with the extra efforts exerted in further documenting the claim. If 
documentation requirements have not been fulfilled and the lack of such 
documentation has not been justified to the satisfaction of CCC, CCC 
will deny payment of all allowances to the nongovernmental Cooperating 
Sponsor.
    (9) When a nongovernmental Cooperating Sponsor permits a claim to 
become time-barred, or fails to take timely actions to insure the right 
of CCC to assert such claims, and CCC determines that the 
nongovernmental Cooperating Sponsor failed to properly exercise its 
responsibilities under the Agreement, the nongovernmental Cooperating 
Sponsor shall be liable to the United States for the cost and freight 
value of the commodities lost to the program.
    (e) Fault of Cooperating Sponsor in country of distribution. If a 
commodity, sale proceeds or program income is used for a purpose not 
permitted by the Program Agreement, or if a Cooperating Sponsor causes 
loss or damage to a commodity, sale proceeds, or program income through 
any act or omission or failure to provide proper storage, care and 
handling, FAS may require the Cooperating Sponsor to pay to the United 
States the value of the commodities, sale proceeds or program income 
lost, damaged or misused, or undertake other remedies FAS deems 
appropriate. FAS will consider normal commercial practices in the 
country of distribution in determining whether there was a proper 
exercise of the Cooperating Sponsor's responsibility. Payment by the 
Cooperating Sponsor shall be made in accordance with paragraph (g) of 
this section.
    (f) Fault of others in country of distribution and in intermediate 
country. (1) In addition to survey or outturn reports to determine ocean 
carrier loss and damage, the Cooperating Sponsor

[[Page 860]]

shall, in the case of landlocked countries, arrange for an independent 
survey at the point of entry into the recipient country and make a 
report as set forth in paragraph (c)(l) of this section. FAS will 
reimburse the Cooperating Sponsor for the costs of survey as set forth 
in paragraph (c)(2)(iv) of this section.
    (2) Where any damage to or loss of the commodity or any loss of sale 
proceeds or program income is attributable to a warehouseman, carrier or 
other person, the Cooperating Sponsor shall make every reasonable effort 
to pursue collection of claims for such loss or damage. The Cooperating 
Sponsor shall furnish a copy of the claim and related documents to the 
Agricultural Counselor or Attache. Cooperating Sponsors who fail to file 
or pursue such claims shall be liable to FAS for the value of the 
commodities or sale proceeds or program income lost, damaged, or 
misused: Provided, however, that the Cooperating Sponsor may elect not 
to file a claim if the loss is less than $500. The Cooperating Sponsor 
may retain $150 of any amount collected on an individual claim. In 
addition, Cooperating Sponsors may, with the written approval of the 
Agricultural Counselor or Attache, retain amounts to cover special costs 
of collection such as legal fees, or pay such collection costs with sale 
proceeds or program income. Any proposed settlement for less than the 
full amount of the claim requires prior approval by the Agricultural 
Counselor or Attache. When the Cooperating Sponsor has exhausted all 
reasonable attempts to collect a claim, it shall request the 
Agricultural Counselor or Attache to provide further instructions.
    (3) The Cooperating Sponsor shall pursue any claim by initial 
billings and at least three subsequent demands at not more than 30 day 
intervals. If these efforts fail to elicit a satisfactory response, the 
cooperating sponsor shall pursue legal action in the judicial system of 
country unless otherwise agreed by the Agricultural Counselor or 
Attache. The Cooperating Sponsors must inform the Agricultural Counselor 
or Attache in writing of the reasons for not pursuing legal action; and 
the Agricultural Counselor or Attache may require the Cooperating 
Sponsor to obtain the opinion of competent legal counsel to support its 
decision prior to granting approval. If the Agricultural Counselor or 
Attache approves a Cooperating Sponsor's decision not to take further 
action on the claim, the Cooperating Sponsor shall assign the claim to 
CCC and shall forward all documentation relating to the claim to CCC.
    (4) As an alternative to legal action in the judicial system of the 
country with regard to claims against a public entity of the government 
of the cooperating country, the Cooperating Sponsor and the cooperating 
country may agree in writing to settle disputed claims by an appropriate 
administrative procedure or arbitration.
    (g) Determination of value. The Cooperating Sponsor shall determine 
the value of commodities misused, lost or damaged on the basis of the 
domestic market price at the time and place the misuse, loss or damage 
occurred. When it is not feasible to determine such market price, the 
value shall be the f.o.b. or f.a.s. commercial export price of the 
commodity at the time and place of export, plus ocean freight charges 
and other costs incurred by the U.S. Government in making delivery to 
the Cooperating Sponsor. When the value is determined on a cost basis, 
the Cooperating Sponsor may add to the value any provable costs it has 
incurred prior to delivery by the ocean carrier. In preparing the claim 
statement, these costs shall be clearly segregated from costs incurred 
by the Government of the United States. With respect to claims other 
than ocean carrier loss or damage claims, the Cooperating Sponsor may 
request the Agricultural Counselor or Attache to approve a commercially 
reasonable alternative basis to value the claim.
    (h) Reporting losses to the Agricultural Counselor or Attache or FAS 
designated representative. (1) The Cooperating Sponsor shall promptly 
notify the Agricultural Counselor or Attache or FAS designated 
representative, in writing, of the circumstances pertaining to any loss, 
damage, or misuse of commodities valued at $500 or more occurring within 
the country of distribution or intermediate country. The report shall be

[[Page 861]]

made as soon as the Cooperating Sponsor has adequately investigated the 
circumstances, but in no event more than ninety days from the date the 
loss became known to the Cooperating Sponsor. The report shall identify 
the party in possession of the commodities and the party responsible for 
the loss, damage or misuse; the kind and quantities of commodities; the 
size and type of containers; the time and place of misuse, loss, or 
damage; the current location of the commodity; the Program Agreement 
number, the procurement contract numbers, or if unknown, other 
identifying numbers printed on the commodity containers; the action 
taken by the Cooperating Sponsor with respect to recovery or disposal; 
and the estimated value of the commodity. The report shall explain why 
any of the above-required information can not be provided. The 
Cooperating Sponsor shall also report the details regarding any loss or 
misuse of sale proceeds or program income.
    (2) The Cooperating Sponsor shall report quarterly to the 
Agricultural Counselor or Attache any loss, damage to or misuse of 
commodities resulting in loss of less than $500. The Cooperating Sponsor 
shall inform the Agricultural Counselor or Attache or FAS designated 
representative if it has reason to believe there is a pattern or trend 
in the loss, damage, or misuse of such commodities and submit a report 
as described in paragraph (h)(1) of this section, together with any 
other relevant information the Cooperating Sponsor has available to it. 
The Agricultural Counselor or Attache may require additional information 
about any commodities lost, damaged or misused.
    (i) Handling claims proceeds. Claims against ocean carriers shall be 
collected in U.S. dollars (or in the currency in which freight is paid) 
and shall be remitted (less amounts authorized to be retained) by 
Cooperating Sponsors to CCC. Claims against Cooperating Sponsors shall 
be paid to CCC in U.S. dollars. With respect to commodities lost, 
damaged or misused, amounts paid by Cooperating Sponsors and third 
parties in the country of distribution shall be deposited with the U.S. 
Disbursing Officer, American Embassy, preferably in U.S. dollars with 
instructions to credit the deposit to an account as determined by FAS, 
or in local currency at the highest rate of exchange legally obtainable 
on the date of deposit with instructions to credit the deposit to an FAS 
account as determined by FAS. With respect to sale proceeds and program 
income, amounts recovered may be deposited in the same account as the 
sale proceeds and may be used for purposes of the program.



Sec.  1599.15  Are there special record keeping and reporting requirements?

    (a) Records and reports--general requirements. The Cooperating 
Sponsor shall maintain records for a period of three (3) years from the 
final date specified in the program agreement. FAS may, at reasonable 
times, inspect the Cooperating Sponsor's records pertaining to the 
receipt and use of the commodities and proceeds realized from the sale 
of the commodities, and have access to the Cooperating Sponsor's 
commodity storage and distribution sites and to locations of activities 
supported with proceeds realized from the sale of the commodities.
    (b) Evidence of export. The Cooperating Sponsor's freight forwarder 
shall, within thirty (30) days after export, submit evidence of export 
of the agricultural commodities to the Chief, Export Operations 
Division, KCCO. If export is by sea or air, the Cooperating Sponsor's 
freight forwarder shall submit five copies of the carrier's on board 
bill of lading or consignee's receipt authenticated by a representative 
of the U.S. Customs Service. The evidence of export must show the kind 
and quantity of agricultural commodities exported, the date of export, 
and the destination country.
    (c) Reports. (1) The Cooperating Sponsor shall submit a semiannual 
logistics report to the Agricultural Counselor or Attache and to the 
Director, PPDED, FAS/USDA, Washington, DC 20250-1034, covering the 
receipt of commodities. Cooperating sponsors must submit reports on Form 
CCC-620 and submit the first report by May 16 for agreements signed 
during the period, October 1 through March 31, or by November 16

[[Page 862]]

for agreements signed during the period, April 1 through September 30. 
The first report must cover the time period from the date of signing and 
subsequent reports must be provided at six months intervals covering the 
period from the due date of the last report until all commodities have 
been distributed or sold and such distribution or sale reported to FAS. 
The report must contain the following data:
    (i) Receipts of agricultural commodities including the name of each 
vessel, discharge port(s) or point(s) of entry, the date discharge was 
completed, the condition of the commodities on arrival, any significant 
loss or damage in transit; advice of any claim for, or recovery of, or 
reduction of freight charges due to loss or damage in transit on 
vessels;
    (ii) Estimated commodity inventory at the end of the reporting 
period;
    (iii) Quantity of commodity on order during the reporting period;
    (iv) Status of claims for commodity losses both resolved and 
unresolved during the reporting period;
    (v) Quantity of commodity damaged or declared unfit during the 
reporting period; and
    (vi) Quantity and type of the commodity that has been directly 
distributed by the Cooperating Sponsor, distribution date, region of 
distribution, and estimated number of individuals benefitting from the 
distribution.
    (2) Program Agreements will require Cooperating Sponsors to report 
periodically, against collected, established baseline indicators, on the 
number of meals served, enrollment levels, total attendance numbers, 
including female attendance levels, learning developments, nutrition and 
health progress of mothers and children, and progress towards sustaining 
the feeding program.
    (3) If the Program Agreement authorizes the sale or barter of 
commodities by the Cooperating Sponsor, the Cooperating Sponsor shall 
also submit a semiannual monetization report to the Agricultural 
Counselor or Attache and to the Director, PPDED, FAS/USDA, Washington, 
DC 20250-1034, covering the deposits into and disbursements from the 
special account for the purposes specified in the Program Agreement. 
Cooperating Sponsors must submit reports on Form CCC-621 and submit the 
first report by May 16 for agreements signed during the period, October 
1 through March 31, or by November 16 for agreements signed during the 
period, April 1 through September 30. The first report must cover the 
time period from the date of signing and subsequent reports must be 
provided at six months intervals covering the period from the due date 
of the last report until all funds generated from commodity sales have 
been distributed and such distribution reported to FAS. The report must 
contain the following information and include both local currency 
amounts and U.S. dollar equivalents:
    (i) Quantity and type of commodities sold;
    (ii) Proceeds generated from the sale;
    (iii) Proceeds deposited to the special account including the date 
of deposit;
    (iv) Interest earned on the special account;
    (v) Disbursements from the special account, including date, amount 
and purpose of the disbursement; and
    (vi) Any balance carried forward in the special account from the 
previous reporting period.
    (4) The Cooperating Sponsor shall furnish FAS such additional 
information and reports relating to this agreement as FAS may reasonably 
request.



Sec.  1599.16  What are the Cooperating Sponsor's audit requirements?

    Non-governmental Cooperating Sponsors are subject to the audit 
requirements of OMB Circular A-133 as implemented in USDA by 7 CFR part 
3052, ``Audits of States, Local Governments, and Non-Profit 
Organizations.'' The Cooperating Sponsor is also responsible for 
auditing the activities of recipient agencies that receive more than 
$25,000 of provided commodities or sale proceeds. This responsibility 
may be satisfied by relying upon independent audits of the recipient 
agency or upon a review conducted by the Cooperating Sponsor.

[[Page 863]]



Sec.  1599.17  When may FAS suspend a program?

    All or any part of the assistance provided under a Program 
Agreement, including commodities in transit, may be suspended by FAS if:
    (a) The Cooperating Sponsor fails to comply with the provisions of 
the Program Agreement or this part;
    (b) FAS determines that the continuation of such assistance is no 
longer necessary or desirable; or
    (c) FAS determines that storage facilities are inadequate to prevent 
spoilage or waste, or that distribution of commodities will result in 
substantial disincentive to, or interference with, domestic production 
or marketing in the recipient country.



Sec.  1599.18  Are there sample documents and guidelines available for 
developing proposals and reports?

    FAS has developed guidelines to assist the Cooperating Sponsors with 
effective reporting on program logistics and commodity sales. 
Cooperating Sponsors may obtain these guidelines from the Director, 
PPDED.



Sec.  1599.19  Has the Office of Management and Budget reviewed the 
paperwork and record keeping requirements contained in this part?

    The paperwork and record keeping requirements imposed by this part 
have been submitted to the Office of Management and Budget for review 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et. seq.). OMB 
has assigned control number 0051-0039 for this information collection.

[[Page 865]]



                              FINDING AIDS




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

  A list of current CFR titles, subtitles, chapters, subchapters and 
parts and an alphabetical list of agencies publishing in the CFR are 
included in the CFR Index and Finding Aids volume to the Code of Federal 
Regulations which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 867]]

            Material Approved for Incorporation by Reference

                     (Revised as of January 1, 2004)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


7 CFR (PARTS 1200-1599)

COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE
                                                                   7 CFR


Joint Cotton Industry Bale Packaging Committee, National Cotton Council 
of America

  P.O. Box 12285
  Memphis, TN 38112
Specifications for Cotton Bale Packaging Material,                1427.5
  June 1995.

[[Page 869]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2004)

                      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)
      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)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 870]]

    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)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      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)
     LXVII  Institute of Museum and Library Services (Part 7701)
      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--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

[[Page 871]]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        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)
       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)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      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)

[[Page 872]]

      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     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  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 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)

[[Page 873]]

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         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, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (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)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

[[Page 874]]

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, 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)

[[Page 875]]

      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     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)

[[Page 876]]

         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)
       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)

                          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)

[[Page 877]]

      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--1699)
         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)

                           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--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)

[[Page 878]]

       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)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            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)
       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  Employee Benefits Security 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)

[[Page 879]]

       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)
         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 Homeland Security (Parts 1-
                -199)
        II  Corps of Engineers, Department of the Army (Parts 200-
                -399)

[[Page 880]]

        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)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        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)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

[[Page 881]]

             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--1099)
        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)

          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 Service, 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)

[[Page 882]]

       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 of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (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

[[Page 883]]

        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)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 1-
                -199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (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)

[[Page 884]]

       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)
        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)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        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)

[[Page 885]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        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 Homeland Security (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)
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1599)

                   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)

[[Page 886]]

         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 887]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2004)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
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
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 888]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
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
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
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
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  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
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 889]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
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
Employee Benefits Security Administration         29, XXV
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                5, III, LXXVII; 14, VI; 
                                                  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

[[Page 890]]

  Trade Representative, Office of the United      15, XX
       States
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
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

[[Page 891]]

  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
  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
  Centers for Medicare & Medicaid Services        42, IV
  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
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
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 Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
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; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General

[[Page 892]]

  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
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  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, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  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 Review, Executive Office for        8, V
  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
  Employee Benefits Security Administration       29, XXV
  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
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A

[[Page 893]]

  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of 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
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  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
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
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 Crime Prevention and Privacy Compact     28, IX
     Council
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 Interstate Low-Level Radioactive Waste  10, XVIII
   Commission
[[Page 894]]

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 Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  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; 28, XI
  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

[[Page 895]]

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
  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
  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 Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            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 Service,        41, 61; 20, IX
     Office of the 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 897]]



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, 
2001, 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, 2001, see the ``List of CFR Sections 
Affected 1949-1963, 1964-1972, 1973-1985, and 1986-2000'' published in 
11 separate volumes.

                                  2001

7 CFR
                                                                   66 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3)(ii) table revised..........................58052
1210.301--1210.367 (Subpart) Revised and designated as (Subpart A)
                                                                   56388
1210.400--1210.405 (Subpart) Revised and designated as (Subpart B)
                                                                   56388
1210.500--1210.540 (Subpart) Revised and designated as (Subpart C)
                                                                   56388
1210.501 Revised...................................................13402
1210.600--1210.607 (Subpart D) Added...............................56388
1218.3 Amended.....................................................37118
1218.23 Amended....................................................37118
1218.40 Undesignated center heading revised........................37118
    Amended........................................................37119
1218.41 Amended....................................................37119
1218.42 Amended....................................................37119
1218.43 Amended....................................................37119
1218.44 Amended....................................................37119
1218.45 Amended....................................................37119
1218.46 Amended....................................................37119
1218.47 Amended....................................................37119
1218.48 Amended....................................................37119
1218.50 Amended....................................................37119
1218.51 Amended....................................................37119
1218.52 Amended....................................................37119
1218.53 Amended....................................................37119
1218.54 Amended....................................................37119
1218.55 Amended....................................................37119
1218.56 Amended....................................................37119
1218.60 Amended....................................................37119
1218.62 Amended....................................................37119
1218.70 Amended....................................................37119
1218.73 Amended....................................................37119
1218.75 Amended....................................................37119
1218.77 Amended....................................................37119
1230.110 Revised; eff.1-28-02......................................67073
1240 Heading and authority citation revised........................21829
1240.1--1240.67 (Subpart A) Heading added..........................21829
1240.1 Redesignated as 1240.26; new 1240.1 redesignated from 
        1240.2.....................................................21829
1240.2 Redesignated as 1240.1; new 1240.2 redesignated from 
        1240.18; new 1240.2 revised................................21829
1240.3 Redesignated as 1240.18; new 1240.3 redesignated from 
        1240.16; new 1240.3 revised................................21829
1240.4 Redesignated as 1240.10; new 1240.4 redesignated from 
        1240.14....................................................21829
1240.5 Redesignated as 1240.12; new 1240.5 added...................21829
1240.6 Redesignated as 1240.20; new 1240.6 redesignated from 
        1240.11....................................................21829
1240.7 Redesignated as 1240.8; new 1240.7 redesignated from 
        1240.20....................................................21829
1240.8 Redesignated as 1240.9; new 1240.8 redesignated from 
        1240.7; new 1240.8 revised.................................21829
1240.9 Redesignated as 1240.21; new 1240.9 redesignated from 
        1240.8.....................................................21829

[[Page 898]]

1240.10 Redesignated as 1240.13; new 1240.10 redesignated from 
        1240.4; new 1240.10 revised................................21829
1240.11 Redesignated as 1240.6; new 1240.11 added..................21829
1240.12 Redesignated as 1240.22; new 1240.12 redesignated from 
        1240.5.....................................................21829
1240.13 Redesignated as 1240.25; new 1240.13 redesignated from 
        1240.10; new 1240.13 revised...............................21829
1240.14 Redesignated as 1240.4.....................................21829
    Added..........................................................21830
1240.16 Redesignated as 1240.3.....................................21829
    Added..........................................................21830
1240.17 Redesignated as 1240.28; new 1240.17 redesignated from 
        1240.22....................................................21829
1240.18 Redesignated as 1240.2; new 1240.18 redesignated from 
        1240.3.....................................................21829
1240.19 Redesignated as 1240.27; new 1240.19 redesignated from 
        1240.21....................................................21829
    Revised........................................................21830
1240.20 Redesignated as 1240.7; new 1240.20 redesignated from 
        1240.6.....................................................21829
1240.21 Redesignated as 1240.19; new 1240.21 redesignated from 
        1240.9.....................................................21829
1240.22 Redesignated as 1240.17; new 1240.22 redesignated from 
        1240.12....................................................21829
1240.23 Added......................................................21830
1240.24 Added......................................................21830
1240.25 Redesignated from 1240.13..................................21829
    Revised........................................................21830
1240.26 Redesignated from 1240.1...................................21829
1240.27 Redesignated from 1240.19..................................21829
1240.28 Redesignated from 1240.17..................................21829
1240.30 Revised....................................................21830
1240.31 Revised....................................................21830
1240.32 (b)(6) removed; (b)(7) and (8) redesignated as (b)(6) and 
        (7); (a)(1), (3), (b)(1), (2), new (6) and (7) revised; 
        (b)(8) through (12) added..................................21830
1240.33 Added......................................................21831
1240.34 (a) and (b) revised; (c) amended...........................21831
1240.35 (a) revised................................................21832
1240.38 (c), (d), (e), (j), (g), (k), (l) and (m) revised..........21832
1240.39 Undesignated center heading and text revised...............21832
1240.40 (a) and (b) revised........................................21832
1240.41 Revised....................................................21833
1240.42 (c) and (f) removed; (d) and (e) redesignated as (c) and 
        (d); (a), new (c) and (d) revised..........................21833
1240.43 Removed; new 1240.43 redesignated from 1240.44.............21829
1240.44 Redesignated as 1240.43....................................21829
    Added..........................................................21833
1240.50 Revised....................................................21834
1240.51 Revised....................................................21834
1240.52 Revised....................................................21834
1240.61 Revised....................................................21834
1240.62 (a) amended; (c) removed; (d) redesignated as (c); new (c) 
        revised....................................................21834
1260.314 (b) revised; (c) redesignated as (e); new (c) and (d) 
        added......................................................26784
Chapter XIII
1309.4 Revised.....................................................23833
Chapter XIV
1400 Authority citation revised....................................15176
1400.1 (g) table amended...........................................15176
1410.12 Added......................................................22099
1421 Authority citation revised.............................13404, 15176
1421.1 (e) introductory text, (1), (2) introductory text and (v) 
        revised....................................................15176
1421.300--1421.307 (Subpart) Added.................................13404
1427 Authority citation revised....................................15176
1427.1 (d) introductory text, (1), (2) introductory text and (v) 
        revised....................................................15176
1430.2 (a)(1) revised..............................................15541
1430.401 (a) revised...............................................15541
1430.403 (a) revised...............................................15541
1430.407 (a)(2) revised............................................15541
1430.500--1430.509 (Subpart D) Authority citation revised..........15176
1430.500 Amended...................................................15176
1430.502 Amended...................................................15177
1430.503 Amended...................................................15177
1430.510 Revised...................................................15177
1430.511 Added.....................................................15177
1434 Added.........................................................15177
1435.2 Amended.....................................................15182
1435.100 (a) amended...............................................15182

[[Page 899]]

1435.102 Removed; new 1435.102 redesignated from 1435.103..........15182
1435.103 Redesignated as 1435.102; new 1435.103 redesignated from 
        1435.104...................................................15182
1435.104 Redesignated as 1435.103; new 1435.104 redesignated from 
        1435.105; (g)(2) removed; (g)(3) and (4) redesignated as 
        new (g)(2) and (3).........................................15182
1435.105 Redesignated as 1435.104; new 1435.105 redesignated from 
        1435.106; (c) and (d)(4) revised...........................15182
1435.106 Redesignated as 1435.105; new 1435.106 redesignated from 
        1435.107...................................................15182
    (b) removed; (c) through (h) redesignated as new (b) through 
(g); new (g)introductory text revised..............................15183
1435.107 Redesignated as 1435.106; new 1435.107 redesignated from 
        1435.108...................................................15182
1435.108 Redesignated as 1435.107; new 1435.108 redesignated from 
        1435.109...................................................15182
1435.109 Redesignated as 1435.108; new 1435.109 redesignated from 
        b1435.110..................................................15182
1435.110 Redesignated as 1435.109; new 1435.110 redesignated from 
        1435.111...................................................15182
1435.111 Redesignated as 1435.110..................................15182
1436 Revised........................................................4612
1436.5 Second (a)(6) and (7) through (10) correctly redesignated 
        as (a)(7) through (11).....................................17073
1439.101--1439.109 (Subpart B) Revised.............................15542
1439.301--1439.357 (Subpart D) Revised.............................15544
1439.901 Revised...................................................15547
1439.906 (a) amended...............................................15547
1446.102 (c) amended................................................1810
1446.103 Amended....................................................1810
1446.307 (g) removed................................................1810
    Correctly designated...........................................10353
1464 Authority citation revised....................................53509
1464.8 (d)(1) revised..............................................53509
1464.401 (a) revised...............................................53509
1464.403 Revised...................................................53509
1464.404 Amended...................................................53510
1469 Authority citation revised....................................13841
1469.201--1469.214 (Subpart C) Added...............................13841
1470 Added.........................................................13843
1476 Added.........................................................15183
1480 Added.........................................................15979
1481 Added.........................................................14481
1481.3 Corrected...................................................18869
1482 Added; interim................................................30802

                                  2002

7 CFR
                                                                   67 FR
                                                                    Page
Chapter XI
1200 Authority citation revised....................................10830
    Heading revised................................................44350
1200.1--1200.20 (Subpart) Redesignated as Subpart A; authority 
        citation added.............................................44350
1200.2 (a) amended; (e) revised....................................10830
    Revised........................................................44350
1200.12 (b) revised................................................10830
1200.17 (c) and (d) revised........................................10830
1200.50--1200.52 (Subpart) Redesignated as Subpart B; authority 
        citation added.............................................44350
1200.51 (e) revised................................................10830
    Revised........................................................44350
1200.52 (c) amended................................................10830
1205.12 Amended....................................................21169
1205.18 Revised....................................................21169
1205.20 Revised....................................................21169
1205.26 (a)(1), (2) and (d) revised; (g) added.....................21169
1205.27 Revised....................................................21169
1205.29 Revised....................................................21170
1205.510 (b)(2) and (3)(ii) table revised; interim.................36795
1209.230 Added; interim............................................46579
1210.601--1210.607 (Subpart D) Correctly designated................17907
1219 Added..........................................................7264
1219.1--1219.77 (Subpart A) Added..................................56897
1219.101 (b) correctly revised.....................................13563
1230.110 Revised...................................................58322
1230.112 Revised...................................................58323
1260.141 (a) and table revised.....................................11412
1260.311 (a) and (c) revised; (f) added............................61766
1280 Added.........................................................17857
1280.401--1280.405 (Subpart C) added; interim......................39253

[[Page 900]]

Chapter XIII
Chapter XIII Removed...............................................30769
Chapter XIV
1400 Authority citation revised....................................61469
1400.1 Revised.....................................................61469
1400.3 (b) amended.................................................61470
1400.5 (b) amended.................................................61470
1405 Authority citation revised....................................64751
1405.7 Added.......................................................64751
1410.2 Amended......................................................2132
1410.20 (a)(2) revised..............................................2132
1410.54 Revised.....................................................2132
1412 Heading and authority citation revised.................61472, 64751
1412.1--1412.11 (Subpart A) Added..................................61472
    Redesignated as 1412.801--1412.811 (Subpart H).................64751
1412.101--1412.105 (Subpart A) Redesignated as (Subpart B).........61472
     Redesignated as (Subpart A) and revised.......................64751
1412.201--1412.207 (Subpart B) Redesignated as (Subpart C).........61472
    Redesignated as (Subpart B) and revised........................64751
1412.301--1412.304 (Subpart C) Redesignated as (Subpart D).........61472
    Redesignated as (Subpart C) and revised........................64751
1412.401--1412.407 (Subpart D) Redesignated as (Subpart E).........61472
    Redesignated as (Subpart D) and revised........................64751
1412.501 (Subpart E) Redesignated as (Subpart F)...................61472
    Redesignated as (Subpart E) and revised........................64751
1412.601--1412.608 (Subpart F) Added...............................64751
1412.701--1412.703 (Subpart G) Added...............................64751
1412.801--1412.811 (Subpart H) Redesignated from 1412.1--1412.11 
        (Subpart A)................................................64751
1421 Authority citation and heading revised........................63511
1421.1--1421.14 (Subpart A) Added..................................63511
1421.1--1421.32 (Subpart) Removed..................................63511
1421.100--1421.114 (Subpart B) Added...............................63511
1421.200--1421.202 (Subpart C) Added...............................63511
1421.200 (Subpart) removed.........................................63511
1421.300--1421.307 (Subpart) Designated as Subpart D...............63511
1421.300 (a) revised...............................................63523
1401.303 (a), (d) and (e) revised; (f) added.......................63523
1421.304 Amended...................................................63524
1421.305 (a), (c) and (f) revised..................................63524
1421.5551--1421.5559 (Subpart) Designated as Subpart E.............63511
1425 Authority citation revised....................................64458
1425.3 Amended.....................................................64458
1425.4 (a) amended.................................................64458
1425.6 (b) introductory text amended...............................64459
1425.25 Revised....................................................64459
1427 Authority citation revised....................................64459
1427.1--1427.25 (Subpart A) Revised................................64459
1427.50--1427.58 (Subpart B) Removed...............................64459
1427.100--1427.108 (Subpart C) Revised.............................64459
1427.160--1427.175 (Subpart D) Revised.............................64459
1427.1100--1427.1111 (Subpart F) Removed...........................64459
1427.1200--1427.1208 (Subpart G) Revised...........................64459
1430 Authority citation revised....................................64476
1430.1--1430.2 (Subpart A) Revised.................................64476
1430.200--1430.226 (Subpart B) Revised.............................64476
1430.400--1430.410 (Subpart C) Removed..............................7057
1434 Authority citation revised....................................64480
1434.1 Revised.....................................................64480
1434.6 (b),(c),(d) redesignated as (c),(d), (e); new (b) added.....64480
1434.10 (a) revised................................................64480
1434.18 (a) introductory text amended..............................64481
1434.21 (a), (b)(3) and (f)(1) revised.............................64481
1434.23 (c) removed................................................64481
1435 Revised.......................................................54928
1435.308 Corrected.................................................65690
1436 Authority citation revised....................................54938
1436.3 Amended.....................................................54938
1436.4 (b) amended; (c) added......................................54938

[[Page 901]]

1436.5 (a) introductory text revised; (b) added....................54938
1436.6 (f) added...................................................54938
1436.7 Revised.....................................................54939
1436.8 (h) and (i) added...........................................54939
1436.9 (h) revised; (j) and (k) added..............................54939
1436.12 (d) added..................................................54939
1436.15 (f) added..................................................54939
1436.19 Added......................................................54939
    Correctly designated...........................................65690
1437 Revised; interim..............................................12448
1437.4 (c)(4)(vi) and (vii) amended; (c)(4)(viii) added............62324
1437.310 Added.....................................................62324
1439 Authority citation revised.....................................7266
1439.201--1439.208 (Subpart C) Revised..............................7266
1464.2 (b)(2) introductory text, (ii) through (v) and (vii) 
        revised......................................................483
    Regulation at 67 FR 483 confirmed..............................15097
1464.7 (d) revised...................................................484
    Regulation at 67 FR 484 confirmed..............................15097
1464.10 (i)(1)(i), (2) and (3)(i) revised............................484
    Regulation at 67 FR 484 confirmed..............................15097
1464.500--1464.515 (Subpart F) Added...............................12829
1467 Authority citation revised....................................39254
1467.4 (c)(2) revised..............................................39255
1470 Authority citation revised.............................57720, 63243
1470.1--1470.16 (Subpart) Designated as (Subpart A); heading added
                                                                   57720
1470.101--1470.117 (Subpart B) Added...............................57720
1470.201--1470.218 (Subpart C) Added...............................63243
1487 Added; interim................................................57327
Chapter XV
1520 Revised.......................................................45895
    Technical correction...........................................48252

                                  2003

7 CFR
                                                                   68 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3)(iii) table revised.........................27900
1206 Added.........................................................58554
1208 Removed........................................................1366
    Technical correction............................................2108
1220.201 (a) table revised.........................................57327
1220.312 (b) table revised; eff. 4-1-04............................69954
Chapter XIV
1400 Authority citation revised....................................33346
1400.1 (h) added...................................................33346
1400.213 Added.....................................................33346
1400.600--1400.603 (Subpart G) Added...............................33346
1405 Authority citation revised.............................32337, 39448
1405.6 (a) introductory text amended...............................32337
1405.8 Added.......................................................39448
1410 Revised; interim..............................................24835
1411 Removed.......................................................61326
1412 Technical correction..........................................55433
1412.101 Revised...................................................37939
1412.103 Amended...................................................37939
1412.201 (f) added.................................................37939
1412.301 (b) added.................................................37939
1412.401 (d) revised...............................................37939
1412.406 (e)(1) revised............................................37939
1412.407 (d)(2) revised; (e) amended...............................16184
    (e) amended....................................................37939
1412.408 Added.....................................................37939
1412.703 (f) revised...............................................37939
    (b) revised....................................................67939
1413 Added..........................................................5207
1413.101 (b) revised...............................................16185
1413.105 Second (c)(1) and (2) redesignated (c)(2) and (3).........16185
1421 Technical correction..........................................55433
1421.3 Amended.....................................................37940
1421.109 (e)(1) and (g) corrected..................................67939
1424 Revised.......................................................24600
1427 Authority citation revised....................................20332
1427.5 (b)(3) and (10) revised; interim............................49328
1427.10 (e) added; interim.........................................49328
1427.18 (k) added; interim.........................................49328
1427.21 (d) added; interim.........................................49329
1427.1100--1427.1111 (Subpart F) Added.............................20332
1439 Authority citation revised....................................37940
    Technical correction...........................................55433
1439.100--1439.112 (Subpart B) Revised.............................37940

[[Page 902]]

1439.201--1439.208 (Subpart C) Removed.............................61326
1439.401--1439.408 (Subpart E) Removed.............................61326
1439.900--1439.915 (Subpart I) Removed.............................61326
1447 Removed.......................................................61326
1464 Authority citation revised....................................18834
1464.1 (a) amended.................................................65385
1464.2 (b)(2)(iii), (iv), (v) and (vii) amended....................65385
1464.4 (b) amended.................................................65386
1464.7 (f) removed.................................................65386
1464.8 (e)(2) amended..............................................65385
1464.10 (e), (j)(2) and (3) amended................................65385
1464.12 (h), (i) and (j) added.....................................34779
1464.24 Revised....................................................65386
1464.101 (b) amended...............................................65385
1464.105 Amended...................................................65385
1464.108 Amended...................................................65385
1464.201--1464.205 (Subpart C) Removed.............................61326
1464.300--1464.315 (Subpart D) Removed.............................61326
1464.401--1464.414 (Subpart E) Removed.............................61326
1464.500--1464.515 (Subpart F) Removed.............................61326
1464.601--1464.613 (Subpart G) Added...............................18834
1464 Appendix A amended............................................65386
1465 Added.........................................................17273
1466 Revised.......................................................32348
1469 Removed.......................................................61326
1476 Removed.......................................................61326
1477 Removed.......................................................61326
1478 Removed.......................................................61326
1479 Removed.......................................................61326
1480 Revised.......................................................37943
    Technical correction...........................................55433
1481 Revised.......................................................49330
1487.1 Amended.....................................................42564
1487.5 (a), (b)(2)(ii) revised; (b)(2)(iii) through (b)(2)(vii) 
        redesignated as (b)(2)(iv) through (b)(2)(viii); new 
        (b)(2)(iii) added..........................................42564
1487.6 (a)(7) removed; (a)(1), (2) through (6) and (8) 
        redesignated as new (a)(7) and (1) through (6); new (a)(2) 
        revised; new (a)(8) added..................................42564
1487.7 Revised.....................................................42564
1487.8 Removed.....................................................42564
1487.9 Redesignated as 1487.8; revised.............................42564
1491 Added.........................................................26474
Chapter XV
1580 Added.........................................................50049
1580.102 Corrected.................................................62731
1580.203 (a)(1) corrected..........................................62731
1580.302 (e) corrected.............................................62732
1580.303 (d) corrected.............................................62732
1599 Added.........................................................36888

                                  2004

                 (Correction published January 5, 2004)

7 CFR
                                                                   69 FR
                                                                    Page
Chapter XI
1480.17 (m) corrected................................................250


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