[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2014 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 7

Agriculture


________________________

Parts 1200 to 1599

                         Revised as of January 1, 2014

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2014
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as 
                    Special Edition of the Federal Register

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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                                415
          Chapter XV--Foreign Agricultural Service, Department 
          of Agriculture                                          1027
  Finding Aids:
      Table of CFR Titles and Chapters........................    1067
      Alphabetical List of Agencies Appearing in the CFR......    1087
      List of CFR Sections Affected...........................    1097

[[Page iv]]





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

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

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

[[Page v]]



                               EXPLANATION

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

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

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

LEGAL STATUS

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

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2014), 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.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

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.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed 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, 8601 Adelphi Road, College Park, MD 20740-6001, 
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 Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

    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.

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 
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CFR Sections Affected), The United States Government Manual, the Federal 
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    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Printing Office. It is 
available at www.ecfr.gov.

    Charles A. Barth,
    Director,
    Office of the Federal Register.
    January 1, 2014.







[[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, 1600-1759, 1760-1939, 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, 2014.

    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.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of the 
Managing Editor, assisted by Ann Worley.


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                          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..          63
1207            Potato research and promotion plan..........          77
1208            Processed raspberry promotion, research, and 
                    information order.......................          92
1209            Mushroom promotion, research, and consumer 
                    information order.......................         111
1210            Watermelon research and promotion plan......         132
1212            Honey packers and importers research, 
                    promotion, consumer education and 
                    industry information order..............         155
1214            Christmas tree promotion, research, and 
                    information order.......................         172
1215            Popcorn promotion, research, and consumer 
                    information.............................         187
1216            Peanut promotion, research, and information 
                    order...................................         199
1217            Softwood lumber research, promotion, 
                    consumer education and industry 
                    information order.......................         213
1218            Blueberry promotion, research, and 
                    information order.......................         231
1219            Hass avocado promotion, research, and 
                    information.............................         246
1220            Soybean promotion, research, and consumer 
                    information.............................         265
1221            Sorghum promotion, research, and information 
                    order...................................         290
1222            Paper and paper-based packaging promotion, 
                    research and information order..........         313

[[Page 6]]

1230            Pork promotion, research, and consumer 
                    information.............................         316
1250            Egg research and promotion..................         342
1260            Beef promotion and research.................         361
1270

Wool and mohair advertising and promotion [Reserved]

1280            Lamb promotion, research, and information 
                    order...................................         385
1290            Specialty crop block grant program..........         407
1291            Specialty crop block grant program--farm 
                    bill....................................         409

[[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]

[[Page 8]]



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_Procedures for the Conduct of Referenda in Connection With 
                   Cotton Research and Promotion Order

1205.200 General.
1205.201 Definitions.
1205.202 Agencies through which a referendum shall be conducted.
1205.203 Voting eligibility.
1205.204 Voting.
1205.205 Canvass of ballots.
1205.206 Reporting results of referendum.
1205.207 Challenge of correctness of county summary of ballots.
1205.208 Disposition of ballots and records.
1205.209 Confidential Information.
1205.210 Additional 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.
1205.519 Organic exemption.

                             Reimbursements

1205.520 Procedure for obtaining reimbursement.

                           Warehouse Receipts

1205.525 Entry of gin code number.

[[Page 18]]

                           Reports and Records

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

                        Confidential Information

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

Subpart--Fiscal Period [Reserved]

    Authority: 7 U.S.C. 2101-2118 and 7 U.S.C. 7401.



            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 2006 calendar year.

[72 FR 51160, Sept. 6, 2007]



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.

[[Page 19]]



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 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 2006; 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 2006.
    (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; 72 
FR 51160, Sept. 6, 2007]



Sec. 1205.27  Participation in the sign-up period.

    The sign-up period will be from September 4, 2007, through November 
30, 2007. 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 November 
30, 2007.
    (a) Before the sign-up period begins, FSA shall establish a list of 
known, eligible, Upland cotton producers in the country that it serves 
during the representative period, and AMS shall also establish a list of 
known, eligible Upland cotton importers.
    (b) Before the start of the sign-up period, AMS shall mail a request 
form to

[[Page 20]]

each known, eligible, cotton importer. Importers who wish to request a 
referendum and who do not receive a request form in the mail by 
September 4, 2007, may particiapte in the sign-up period by submitting a 
signed, written request for a continuance referendum, along with a copy 
of a U.S. Customs and Border Protection form 7501 showing payment of a 
cotton assessment for calendar year 2006. Importers must submit their 
requests and supporting documents to USDA, FSA, DAFO, Attention: Rick 
Pinkston, P.O. Box 23103, Washington, DC 20026-3103. All requests and 
supporting documents must be received by November 30, 2007.
    (c) Each person on the county FSA office lists may participate in 
the sign-up period. Eligible producers must date 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 officer where FSA administratively 
maintains and processes the producer's farm records. It is the 
responsibility of the person to provide the information need 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 the 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 November 30, 2007.

[72 FR 51161, Sept. 6, 2007]



Sec. 1205.28  Counting.

    County FSA offices and FSA, Deputy Administrator for Field 
Operations (DAFO), shall begin counting requests no later than November 
30, 2007. 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; 72 
FR 51161, Sept. 6, 2007]



Sec. 1205.29  Reporting results.

    (a) Each county FSA office shall prepare and transmit to the state 
FSA office by December 7, 2007, 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) DAFO shall prepare, by December 7, 2007, 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 December 7, 2007, forward all 
county reports to DAFO. By December 14, 2007, DAFO 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.

[72 FR 51161, Sept. 6, 2007]

[[Page 21]]



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_Procedures for the Conduct of Referenda in Connection With 

                   Cotton Research and Promotion Order

    Source: 74 FR 51070, Oct. 5, 2009, unless otherwise noted.



Sec. 1205.200  General.

    Referenda for the purpose of ascertaining whether producers and 
importers favor the issuance, continuance, amendment, suspension, or 
termination of the Cotton Research and Promotion Order shall be 
conducted in accordance with this subpart.



Sec. 1205.201  Definitions.

    (a) Act means the Cotton Research and Promotion Act, as amended (7 
U.S.C. 2101-2118; Pub. L. 89-502, as amended).
    (b) 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.
    (c) Agricultural Marketing Service also referred to as ``AMS'' means 
the Agricultural Marketing Service of the Department.
    (d) Cotton means all Upland cotton harvested in the United States or 
imports of Upland cotton, including the Upland cotton content of the 
products derived thereof. The term cotton shall not, however, include 
any entry of imported cotton by an importer which has a value or weight 
less than the de minimis value established by the Secretary or 
industrial products as that term is defined by regulation.
    (e) Upland Cotton means all cultivated varieties of the species 
Gossypium hirsutum L.
    (f) Department means the U.S. Department of Agriculture.
    (g) Deputy Administrator means the Deputy Administrator for Field 
Operations and also referred to as ``DAFO.''
    (h) Farm Service Agency also referred to as ``FSA'' means the Farm 
Service Agency of the Department.
    (i)(1) Importer means any person who enters, or withdraws from 
warehouse, cotton for consumption in the customs territory of the United 
States and who, during a 12-month period ending no later than 90 days 
prior to the conduct of the referendum, imported Upland cotton, and
    (2) the term import means any such entry.
    (j) Order means the Cotton Research and Promotion Order.
    (k) Person means any individual 18 years of age or older, or any 
partnership, corporation, association, or any other entity.
    (l) 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.
    (m) Representative Period means the period designated by the 
Secretary pursuant to section 8 of the Act (7 U.S.C. 2107).
    (n) 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 be hereafter be 
delegated, the authority to act in the Secretary's stead.
    (o) State means each of the 50 states.
    (p) United States means 50 states of the United States of America.
    (q) Customs and Border Protection means the U.S. Customs and Border 
Protection of the Department of Homeland Security. Customs and Border 
Protection is also referred to as ``CBP.''



Sec. 1205.202  Agencies through which a referendum shall be conducted.

    (a) Agricultural Marketing Service. The Administrator shall:
    (1) Determine the referendum period.
    (2) Give producers and importers reasonable advance notice of the 
referendum
    (i) by utilizing without advertising expense, available media of 
public information (including, but not being limited to, press and radio 
facilities) to

[[Page 22]]

announce the dates, places, or methods of voting, and other pertinent 
information, and
    (ii) by such other means as the Administrator may deem advisable.
    (3) Provide ballots and related material to be used in the 
referendum to FSA. The ballots:
    (i) shall provide for recording essential information for 
ascertaining whether the person voting is an eligible voter, and
    (ii) may provide for recording the total amount of Upland cotton 
produced by the producer or the total amount of cotton imported by the 
importer during the appropriate representative period.
    (4) Make available to producers through FSA county offices 
instructions on voting, an appropriate ballot and, except in the case of 
a referendum on the termination or suspension of an order, a summary of 
the terms and conditions of the order. The instructions on voting shall 
explain the method to be used in determining the amount of Upland cotton 
produced during the representative period and shall specify whether such 
amount is to be entered on the ballot by the voter, subject to the 
following terms and conditions:
    (i) If a current production year for which harvesting has not been 
completed is designated as the representative period, the amount of 
Upland cotton produced shall be determined by the FSA county office on 
the basis of the acreage planted or in the case of approved prevented 
plantings under the disaster payment program, the acreage the person 
intended to plant up to the allotted acreage as determined by the FSA 
county office, and the established yield for FSA program payment 
purposes: Provided, That on farms for which an established yield has not 
been established, the county committee shall determine an established 
yield based on actual production records on the farm for the preceding 
three years, as adjusted for any abnormal conditions, if available; if 
not available, on the basis of yield on similar farms in the area.
    (ii) On farms in which more than one eligible voter is engaged in 
production, the vote cast by each voter shall represent only the amount 
of Upland cotton that is the voter's share of the crop, or proceeds 
thereof.
    (iii) If an eligible voter is engaged in production of Upland cotton 
on more than one farm, such voter is entitled to only one vote but any 
vote cast by such voter shall represent the total amount of Upland 
cotton that is that voter's share of the crop, or proceeds thereof, on 
all such farms: Provided, That only farms for which records are 
maintained by the FSA county office designated as the voter's polling 
place shall be considered unless the voter, prior to the expiration of 
the referendum period, establishes to the satisfaction of such county 
office the voter's share of the crop, or proceeds thereof, on an 
additional farm or farms.
    (5) Make available to importers through FSA instructions on voting, 
an appropriate ballot and, except in the case of a referendum on the 
termination or suspension of an order, a summary of the terms and 
conditions of the order. The instructions on voting shall explain the 
appropriate method to be used in determining the amount of cotton 
imported during the representative period and specify whether such 
amount is to be entered on the ballot. If applicable, the following 
terms and conditions apply:
    (i) For importer entities in which more than one importer is 
eligible to vote, the vote cast by each importer shall represent only 
the amount in weight or value of cotton imported by each eligible voter.
    (ii) If an eligible importer is engaged in importation of cotton as 
more than one importer entity, such voter is entitled to only one vote 
but any vote cast by such voter shall represent the total amount in 
weight or value, of cotton in the voters share of cotton imported from 
each such importer entity: Provided, that only the importer entities for 
which records are maintained by CBP or other source determined by the 
Administrator shall be considered unless the voter, prior to the 
expiration of the referendum period, establishes to the satisfaction of 
the Administrator the voters share, in weight or value, of the imported 
cotton.
    (b) Farm Service Agency. Except for the functions specified in 
paragraph (a)

[[Page 23]]

of this section the Deputy Administrator shall be in charge of and 
responsible for conducting the referendum. Each FSA county office shall 
be in charge and responsible for conducting such referendum in its 
State. Each county office shall be responsible for the proper holding of 
such referendum in its county. It shall be the duty of each FSA county 
office to conduct each referendum in a fair, unbiased, and impartial 
manner in accordance with the regulations in this subpart.



Sec. 1205.203  Voting eligibility.

    (a) General eligibility requirements. The following persons shall be 
eligible to vote in an announced referendum--
    (1) each person who was engaged in the production of Upland cotton 
during the representative period; and
    (2) each person who is an importer of Upland cotton and who, during 
a 12-month period ending no later than 90 days prior to the conduct of 
the referendum, imported Upland cotton.
    (b) Special eligibility requirements. (1)(i) A person may qualify as 
an eligible voter by meeting the eligibility requirements, but no such 
person shall be entitled to more than one vote regardless of the number 
of importing entities or Upland cotton farms in which the person is 
interested or the number of communities, counties, or States in which 
are located farms in which such person is interested: Provided, however, 
That the individual members of a qualified partnership shall each have 
one vote, but the partnership as such shall not have a vote and an 
individual who qualifies as an eligible voter by reason of that 
individual's separate farming or importing operations will be entitled 
to one vote even though that person is interested in an entity such as 
(but not limited to) a corporation which is also eligible as a voter and 
entitled to one vote. A person who, as a guardian, administrator, 
executor, or trustee engages in the production of Upland cotton or 
importation of cotton will be eligible to vote in such a fiduciary 
capacity if, in such a capacity, that person qualifies as an eligible 
voter.
    (ii) In such cases the person for whom he or she is acting in a 
fiduciary capacity will not be eligible to vote. An individual may, if 
otherwise eligible, cast a ballot in his or her individual capacity 
although that person may also cast a ballot as a guardian, 
administrator, executor, or trustee. An individual who holds more than 
one fiduciary position may vote as a fiduciary in each case in which 
that person is otherwise eligible, as for example, if an individual is 
administrator of estate X, he or she may cast a ballot as administrator 
of estate X, and if the same individual is administrator of estate Y, he 
or she may cast another ballot as administrator or estate Y.
    (2) Where a group of several persons, such as a spouse or marital 
partner, and children, or unrelated individuals, are engaged in the 
production of Upland cotton under the same lease or cropping agreement, 
only the person or persons who signed or entered into the lease or 
cropping agreement shall be eligible to vote. In the event two or more 
persons are engaged in the production of Upland cotton as joint tenants, 
tenants in common, or owners of community property, each such person 
shall be entitled to one vote if otherwise qualified. For example, a 
husband or a wife is eligible to vote if he or she shares with his or 
her spouse in the proceeds of the required crop as an owner, cash 
tenant, share tenant, sharecropper or landlord of a fixed rent, standing 
rent or share tenant. Thus, if a husband and wife are tenants or 
sharecropper on a farm, jointly responsible under the rental or 
sharecropping agreement, both are eligible to vote. This is true whether 
the rental or sharecropping agreement is written, signed by both 
parties, or oral, provided both husband and wife made the oral 
agreement. A minor is not disqualified from voting solely because of 
minority if otherwise eligible and the minor is not less than 18 years 
of age.
    (c) Voting by proxy prohibited. There shall be no voting by proxy or 
agent but a duly authorized officer of a corporation, association or 
their legal entity may cast its vote.



Sec. 1205.204  Voting.

    (a) Place of voting. The FSA county office serving the county in 
which the producer's farm is located shall be the producer's polling 
place. For a person

[[Page 24]]

not participating in an FSA program, the opportunity to vote in a 
referendum will be provided at the FSA county office serving the county 
where the person owns or rents land. If a person's operation is located 
in several counties, the voting office shall be determined based on the 
major portion of the operation's location. The U.S. Department of 
Agriculture, FSA, DAFO, P.O. Box 23704, Washington, DC 20026-3704 shall 
be the polling place for all cotton importers.
    (b) Register of eligible voters. The FSA county office shall 
establish a register of known eligible producer voters prior to the 
referendum. AMS shall establish a register of known eligible importer 
voters prior to the referendum and provide the list to FAS.
    (c) Voting. (1) For Upland producers to vote, eligible persons may 
obtain form CN-100 in-person, by mail or by facsimile from FSA county 
offices or through the Internet during the voting period. A completed 
and signed CN-100 and supporting documentation, such as a sales receipt 
or remittance form, must be returned to the appropriate FSA county 
office. Forms obtained via the Internet will be located at http://
www.ams.usda.gov/Cotton. Upon request by Upland producers, ballots shall 
be mailed by FSA county offices.
    (2) For cotton importers to vote, eligible persons may obtain form 
CN-100 in-person, by mail or by facsimile from USDA, FSA in Washington, 
D.C. or through the Internet during the voting period. In addition, 
before the referendum, USDA shall mail a request form to each known, 
eligible, cotton importer. A completed and signed CN-100 and supporting 
documentation of CBP Form 7501, must be returned USDA, FSA, DAFO, P.O. 
Box 23704, Washington, DC 20026-3704. Forms obtained via the Internet 
will be located at http://www.ams.usda.gov/Cotton.
    (d) Returning ballot to polling place. Each person to whom a ballot 
is issued by Internet, mail, facsimile, or in-person shall only be 
allowed to vote in the referendum by completing and signing the ballot, 
placing it in an envelope, and delivering or mailing it to the 
appropriate polling place. In order to be eligible for tabulation, voted 
ballots must be received at the polling place during the period 
established for holding the referendum. A ballot shall be considered to 
have been received during the referendum period if:
    (1) In the case of the ballot delivered to the polling place, it was 
received in the office prior to the close of the work day on the final 
day of the referendum period, or
    (2) In the case of the mailed ballot, it was postmarked not later 
than midnight of the final day of the referendum period and was received 
in the polling place prior to the start of canvassing the ballots.
    (e) Placing ballots in ballot box. Notwithstanding the fact that a 
ballot(s) may be later challenged by FSA county office or a 
representative of FSA, envelopes containing ballots received at the 
polling place during the referendum period shall remain unopened and 
shall be placed immediately in a ballot box provided by FSA for 
producers and importers. Such ballot box shall be arranged so that 
ballots cannot be read or moved without breaking the seal on the 
container.



Sec. 1205.205  Canvass of ballots.

    (a) Canvassing procedure. Canvassing of returned ballots shall take 
place as soon as possible after the opening of the FSA offices on the 
fifth day following the close of the referendum period. Such canvassing 
shall be in the presence of at least one member of the FSA county office 
for producer ballots or an FSA representative for importer ballots and 
shall be open to the public. The canvassing and ballots shall be handled 
in such a manner so that no member of the public may see how any person 
voted in the referendum. The county office or FSA representative shall 
supervise the opening of the sealed ballot box, the opening of the 
envelopes containing the ballots and a determination as to:
    (1) The number of eligible voters favoring the Order and where 
necessary, the amount of cotton represented by them,
    (2) The number of eligible voters disapproving the Order and, where 
necessary, the amount of cotton represented by them.

[[Page 25]]

    (3) The number of ballots cast by voters found to be ineligible to 
vote in the referendum, and
    (4) The number of spoiled ballots. The ballots determined to be 
spoiled or cast by ineligible voters shall not be considered as 
approving or disapproving the Order, and the persons who cast such 
ballots shall not be regarded as participating in the referendum.
    (b) Spoiled ballots. A ballot shall be considered as a spoiled 
ballot if:
    (1) It is mutilated or marked in such a way that it is not possible 
to determine with certainty how the ballot was intended to be counted, 
or
    (2) It does not contain the signature of the voter, or the voter's 
properly witnessed mark.
    (c) Challenge of ballots. A producer ballot may be challenged by the 
member of the FSA county office and the importer ballot may be 
challenged by the representative of FSA. Before a challenged ballot is 
either counted or declared invalid, a determination shall be made by the 
FSA county office or representative of FSA as to the eligibility of the 
voter to vote in the referendum.



Sec. 1205.206  Reporting results of referendum.

    (a) Each FSA county office shall transmit a written county summary 
of ballots showing the results of the referendum in its county to its 
State office.
    (b) Each State office shall transmit a written summary of the 
referendum results from the county offices within its State to DAFO, and 
DAFO will provide a copy to the AMS. AMS will make the results available 
for public inspection for a period of 5 years following the end of the 
referendum period.
    (c) AMS shall prepare and submit to the Secretary a report as to the 
results of the referendum. The Secretary shall then publically proclaim 
the results of the referendum.



Sec. 1205.207  Challenge of correctness of county summary of ballots.

    The FSA state offices shall make a prompt investigation and decision 
in case of any dispute or challenge regarding the correctness of the 
county summary of ballots in any county:Provided, That no dispute of 
challenge shall be investigated unless it is brought to the attention of 
the State FSA office within 3 days after receipt by the FSA State office 
of the county summary of ballots from such county.



Sec. 1205.208  Disposition of ballots and records.

    The FSA county office shall seal the voted ballots, challenged 
ballots found to be ineligible, spoiled ballots, register sheets, and 
summary sheets for the county in one or more envelopes or packages, 
plainly marked with the identification of the referendum, the date and 
the names of the county and State, and place them under lock and key in 
a safe place under the custody of the FSA county office for a period of 
45 days after the referendum period. If no notice to the contrary is 
received by the end of such time, and after the ballots and other 
records have been examined by a representative of the State FSA office, 
the voted ballots and challenged ballots shall be destroyed, but the 
registers and county summary sheets shall be filed for a period of 5 
years in the office of the FSA county office.



Sec. 1205.209  Confidential information.

    (a) The ballots cast or the manner in which any person voted and all 
information furnished to, compiled by, or in the possession of the 
referendum agent shall be regarded as confidential.
    (b) 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. 1205.210  Additional instructions and forms.

    AMS is hereby authorized to prescribe additional instructions and 
forms not inconsistent with the provisions of this subpart for the use 
of State and County FSA offices in conducting a referendum. Such 
additional instructions may include procedures for FSA county and State 
offices to report and announce the results of the preliminary count of 
the votes in the county and the State.

[[Page 26]]



               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]



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,

[[Page 27]]

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

[75 FR 24374, May 5, 2010]



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, 
South Carolina, and Virginia;
    (b) Midsouth Region: Arkansas, Louisiana, Mississippi, Missouri-
Illinois, and Tennessee-Kentucky;
    (c) Southwest Region: Kansas, Oklahoma and Texas;
    (d) Western Region: Arizona, California-Nevada, and New Mexico.

[75 FR 24374, May 5, 2010]



Sec. 1205.320  Marketing year.

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

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



Sec. 1205.321  Part and subpart.

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

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

                              Cotton Board



Sec. 1205.322  Establishment and membership.

    (a) There is hereby established a Cotton Board composed of:
    (1) Representatives of cotton producers, each of whom shall have an 
alternate, selected by the Secretary from nominations submitted by 
eligible producer organizations within a cotton-producing state, as 
certified pursuant to Sec. 1205.341, or, if the Secretary determines 
that a substantial number of producers are not members of or their 
interests are not represented by any such eligible organizations, from 
nominations made by producers in a manner authorized by the Secretary, 
and
    (2) Representatives of cotton importers, each of whom shall have an 
alternate, selected by the Secretary from nominations submitted by 
eligible importer organizations, as certified pursuant to Sec. 
1205.342, or, if the Secretary determines that a substantial number

[[Page 28]]

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]



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

[[Page 29]]

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 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

[[Page 30]]

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 records and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g) To cause its books to be audited by a competent public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and to submit a copy of each such audit to 
the Secretary;
    (h) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that his representative may attend such 
meetings;
    (i) To act as intermediary between the Secretary and any producer, 
importer, or handler.
    (j) To submit to the Secretary such information as he may request.

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

                         Research and Promotion



Sec. 1205.333  Research and promotion.

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

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

                        Expenses and Assessments



Sec. 1205.334  Expenses.

    (a) The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart.
    (b) The Board shall reimburse the Secretary for:
    (1) Expenses up to $300,000 incurred by the Secretary in connection 
with any referendum conducted under the Act and
    (2) Expenses incurred by the Department of Agriculture for 
administrative and supervisory costs up to five employee years annually.

[[Page 31]]

    (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 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

[[Page 32]]

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 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:

[[Page 33]]

    (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 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

[[Page 34]]

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 35]]

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 36]]

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 37]]

    (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 38]]

    (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 $1.2876 cents per kilogram.
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion factor 
for determining the raw fiber content for each kilogram of the HTS. HTS 
numbers for raw cotton have no conversion factor in the table. The right 
column indicates the total assessment per kilogram of the article 
assessed.
    (i) Any line item entry of cotton appearing on Customs entry 
documentation in which the value of the cotton contained therein results 
in the calculation of an assessment of two dollars ($2.00) or less will 
not be subject to assessments as described in this section.
    (ii) In the event that any HTS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the physical properties, description, or cotton content 
of the product involved, assessments will continue to be collected based 
on the new number.

                         Import Assessment Table
                           [Raw cotton fiber]
------------------------------------------------------------------------
                                                  Conv.
                   HTS No.                       factor       Cents/kg.
------------------------------------------------------------------------
5007106010..................................        0.2713        0.3493
5007106020..................................        0.2713        0.3493
5007906010..................................        0.2713        0.3493
5007906020..................................        0.2713        0.3493
5112904000..................................        0.1085        0.1397
5112905000..................................        0.1085        0.1397
5112909010..................................        0.1085        0.1397
5112909090..................................        0.1085        0.1397
5201000500..................................        0             1.2876
5201001200..................................        0             1.2876
5201001400..................................        0             1.2876
5201001800..................................        0             1.2876
5201002200..................................        0             1.2876
5201002400..................................        0             1.2876
5201002800..................................        0             1.2876
5201003400..................................        0             1.2876
5201003800..................................        0             1.2876
5204110000..................................        1.0526        1.3553
5204190000..................................        0.6316        0.8132
5204200000..................................        1.0526        1.3553
5205111000..................................        1             1.2876
5205112000..................................        1             1.2876
5205121000..................................        1             1.2876
5205122000..................................        1             1.2876
5205131000..................................        1             1.2876
5205132000..................................        1             1.2876
5205141000..................................        1             1.2876
5205142000..................................        1             1.2876
5205151000..................................        1             1.2876
5205152000..................................        1             1.2876
5205210020..................................        1.044         1.3443
5205210090..................................        1.044         1.3443
5205220020..................................        1.044         1.3443
5205220090..................................        1.044         1.3443
5205230020..................................        1.044         1.3443
5205230090..................................        1.044         1.3443
5205240020..................................        1.044         1.3443
5205240090..................................        1.044         1.3443
5205260020..................................        1.044         1.3443

[[Page 39]]

 
5205260090..................................        1.044         1.3443
5205270020..................................        1.044         1.3443
5205270090..................................        1.044         1.3443
5205280020..................................        1.044         1.3443
5205280090..................................        1.044         1.3443
5205310000..................................        1             1.2876
5205320000..................................        1             1.2876
5205330000..................................        1             1.2876
5205340000..................................        1             1.2876
5205350000..................................        1             1.2876
5205410020..................................        1.044         1.3443
5205410090..................................        1.044         1.3443
5205420021..................................        1.044         1.3443
5205420029..................................        1.044         1.3443
5205420090..................................        1.044         1.3443
5205430021..................................        1.044         1.3443
5205430029..................................        1.044         1.3443
5205430090..................................        1.044         1.3443
5205440021..................................        1.044         1.3443
5205440029..................................        1.044         1.3443
5205440090..................................        1.044         1.3443
5205460021..................................        1.044         1.3443
5205460029..................................        1.044         1.3443
5205460090..................................        1.044         1.3443
5205470021..................................        1.044         1.3443
5205470029..................................        1.044         1.3443
5205470090..................................        1.044         1.3443
5205480020..................................        1.044         1.3443
5205480090..................................        1.044         1.3443
5206110000..................................        0.7368        0.9487
5206120000..................................        0.7368        0.9487
5206130000..................................        0.7368        0.9487
5206140000..................................        0.7368        0.9487
5206150000..................................        0.7368        0.9487
5206210000..................................        0.7692        0.9904
5206220000..................................        0.7692        0.9904
5206230000..................................        0.7692        0.9904
5206240000..................................        0.7692        0.9904
5206250000..................................        0.7692        0.9904
5206310000..................................        0.7368        0.9487
5206320000..................................        0.7368        0.9487
5206330000..................................        0.7368        0.9487
5206340000..................................        0.7368        0.9487
5206350000..................................        0.7368        0.9487
5206410000..................................        0.7692        0.9904
5206420000..................................        0.7692        0.9904
5206430000..................................        0.7692        0.9904
5206440000..................................        0.7692        0.9904
5206450000..................................        0.7692        0.9904
5207100000..................................        0.9474        1.2199
5207900000..................................        0.6316        0.8132
5208112020..................................        1.0852        1.3973
5208112040..................................        1.0852        1.3973
5208112090..................................        1.0852        1.3973
5208114020..................................        1.0852        1.3973
5208114040..................................        1.0852        1.3973
5208114060..................................        1.0852        1.3973
5208114090..................................        1.0852        1.3973
5208116000..................................        1.0852        1.3973
5208118020..................................        1.0852        1.3973
5208118090..................................        1.0852        1.3973
5208124020..................................        1.0852        1.3973
5208124040..................................        1.0852        1.3973
5208124090..................................        1.0852        1.3973
5208126020..................................        1.0852        1.3973
5208126040..................................        1.0852        1.3973
5208126060..................................        1.0852        1.3973
5208126090..................................        1.0852        1.3973
5208128020..................................        1.0852        1.3973
5208128090..................................        1.0852        1.3973
5208130000..................................        1.0852        1.3973
5208192020..................................        1.0852        1.3973
5208192090..................................        1.0852        1.3973
5208194020..................................        1.0852        1.3973
5208194090..................................        1.0852        1.3973
5208196020..................................        1.0852        1.3973
5208196090..................................        1.0852        1.3973
5208198020..................................        1.0852        1.3973
5208198090..................................        1.0852        1.3973
5208212020..................................        1.0852        1.3973
5208212040..................................        1.0852        1.3973
5208212090..................................        1.0852        1.3973
5208214020..................................        1.0852        1.3973
5208214040..................................        1.0852        1.3973
5208214060..................................        1.0852        1.3973
5208214090..................................        1.0852        1.3973
5208216020..................................        1.0852        1.3973
5208216090..................................        1.0852        1.3973
5208224020..................................        1.0852        1.3973
5208224040..................................        1.0852        1.3973
5208224090..................................        1.0852        1.3973
5208226020..................................        1.0852        1.3973
5208226040..................................        1.0852        1.3973
5208226060..................................        1.0852        1.3973
5208226090..................................        1.0852        1.3973
5208228020..................................        1.0852        1.3973
5208228090..................................        1.0852        1.3973
5208230000..................................        1.0852        1.3973
5208292020..................................        1.0852        1.3973
5208292090..................................        1.0852        1.3973
5208294020..................................        1.0852        1.3973
5208294090..................................        1.0852        1.3973
5208296020..................................        1.0852        1.3973
5208296090..................................        1.0852        1.3973
5208298020..................................        1.0852        1.3973
5208298090..................................        1.0852        1.3973
5208312000..................................        1.0852        1.3973
5208314020..................................        1.0852        1.3973
5208314040..................................        1.0852        1.3973
5208314090..................................        1.0852        1.3973
5208316020..................................        1.0852        1.3973
5208316040..................................        1.0852        1.3973
5208316060..................................        1.0852        1.3973
5208316090..................................        1.0852        1.3973
5208318020..................................        1.0852        1.3973
5208318090..................................        1.0852        1.3973
5208321000..................................        1.0852        1.3973
5208323020..................................        1.0852        1.3973
5208323040..................................        1.0852        1.3973
5208323090..................................        1.0852        1.3973
5208324020..................................        1.0852        1.3973
5208324040..................................        1.0852        1.3973
5208324060..................................        1.0852        1.3973
5208324090..................................        1.0852        1.3973
5208325020..................................        1.0852        1.3973
5208325090..................................        1.0852        1.3973
5208330000..................................        1.0852        1.3973
5208392020..................................        1.0852        1.3973
5208392090..................................        1.0852        1.3973
5208394020..................................        1.0852        1.3973
5208394090..................................        1.0852        1.3973
5208396020..................................        1.0852        1.3973
5208396090..................................        1.0852        1.3973
5208398020..................................        1.0852        1.3973
5208398090..................................        1.0852        1.3973
5208412000..................................        1.0852        1.3973
5208414000..................................        1.0852        1.3973
5208416000..................................        1.0852        1.3973
5208418000..................................        1.0852        1.3973
5208421000..................................        1.0852        1.3973

[[Page 40]]

 
5208423000..................................        1.0852        1.3973
5208424000..................................        1.0852        1.3973
5208425000..................................        1.0852        1.3973
5208430000..................................        1.0852        1.3973
5208492000..................................        1.0852        1.3973
5208494010..................................        1.0852        1.3973
5208494020..................................        1.0852        1.3973
5208494090..................................        1.0852        1.3973
5208496010..................................        1.0852        1.3973
5208496020..................................        1.0852        1.3973
5208496030..................................        1.0852        1.3973
5208496090..................................        1.0852        1.3973
5208498020..................................        1.0852        1.3973
5208498090..................................        1.0852        1.3973
5208512000..................................        1.0852        1.3973
5208514020..................................        1.0852        1.3973
5208514040..................................        1.0852        1.3973
5208514090..................................        1.0852        1.3973
5208516020..................................        1.0852        1.3973
5208516040..................................        1.0852        1.3973
5208516060..................................        1.0852        1.3973
5208516090..................................        1.0852        1.3973
5208518020..................................        1.0852        1.3973
5208518090..................................        1.0852        1.3973
5208521000..................................        1.0852        1.3973
5208523020..................................        1.0852        1.3973
5208523035..................................        1.0852        1.3973
5208523045..................................        1.0852        1.3973
5208523090..................................        1.0852        1.3973
5208524020..................................        1.0852        1.3973
5208524035..................................        1.0852        1.3973
5208524045..................................        1.0852        1.3973
5208524055..................................        1.0852        1.3973
5208524065..................................        1.0852        1.3973
5208524090..................................        1.0852        1.3973
5208525020..................................        1.0852        1.3973
5208525090..................................        1.0852        1.3973
5208591000..................................        1.0852        1.3973
5208592015..................................        1.0852        1.3973
5208592025..................................        1.0852        1.3973
5208592085..................................        1.0852        1.3973
5208592095..................................        1.0852        1.3973
5208594020..................................        1.0852        1.3973
5208594090..................................        1.0852        1.3973
5208596020..................................        1.0852        1.3973
5208596090..................................        1.0852        1.3973
5208598020..................................        1.0852        1.3973
5208598090..................................        1.0852        1.3973
5209110020..................................        1.0309        1.3274
5209110025..................................        1.0309        1.3274
5209110035..................................        1.0309        1.3274
5209110050..................................        1.0309        1.3274
5209110090..................................        1.0309        1.3274
5209120020..................................        1.0309        1.3274
5209120040..................................        1.0309        1.3274
5209190020..................................        1.0309        1.3274
5209190040..................................        1.0309        1.3274
5209190060..................................        1.0309        1.3274
5209190090..................................        1.0309        1.3274
5209210020..................................        1.0309        1.3274
5209210025..................................        1.0309        1.3274
5209210035..................................        1.0309        1.3274
5209210050..................................        1.0309        1.3274
5209210090..................................        1.0309        1.3274
5209220020..................................        1.0309        1.3274
5209220040..................................        1.0309        1.3274
5209290020..................................        1.0309        1.3274
5209290040..................................        1.0309        1.3274
5209290060..................................        1.0309        1.3274
5209290090..................................        1.0309        1.3274
5209313000..................................        1.0309        1.3274
5209316020..................................        1.0309        1.3274
5209316025..................................        1.0309        1.3274
5209316035..................................        1.0309        1.3274
5209316050..................................        1.0309        1.3274
5209316090..................................        1.0309        1.3274
5209320020..................................        1.0309        1.3274
5209320040..................................        1.0309        1.3274
5209390020..................................        1.0309        1.3274
5209390040..................................        1.0309        1.3274
5209390060..................................        1.0309        1.3274
5209390080..................................        1.0309        1.3274
5209390090..................................        1.0309        1.3274
5209413000..................................        1.0309        1.3274
5209416020..................................        1.0309        1.3274
5209416040..................................        1.0309        1.3274
5209420020..................................        0.9767        1.2576
5209420040..................................        0.9767        1.2576
5209420060..................................        0.9767        1.2576
5209420080..................................        0.9767        1.2576
5209430030..................................        1.0309        1.3274
5209430050..................................        1.0309        1.3274
5209490020..................................        1.0309        1.3274
5209490040..................................        1.0309        1.3274
5209490090..................................        1.0309        1.3274
5209513000..................................        1.0309        1.3274
5209516015..................................        1.0852        1.3973
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6216000800..................................        0.0685        0.0882
6216001300..................................        0.3427        0.4413
6216001720..................................        0.6397        0.8237
6216001730..................................        0.1599        0.2059
6216001900..................................        0.3427        0.4413
6216002110..................................        0.578         0.7442
6216002120..................................        0.2477        0.3189
6216002410..................................        0.6605        0.8505
6216002425..................................        0.1651        0.2126
6216002600..................................        0.1651        0.2126
6216002910..................................        0.6605        0.8505
6216002925..................................        0.1651        0.2126
6216003100..................................        0.1651        0.2126
6216003300..................................        0.5898        0.7594
6216003500..................................        0.5898        0.7594
6216003800..................................        1.1796        1.5189
6216004100..................................        1.1796        1.5189
6217109510..................................        0.9646        1.2420
6217109520..................................        0.1809        0.2329
6217109530..................................        0.2412        0.3106
6217909003..................................        0.9646        1.2420
6217909005..................................        0.1809        0.2329
6217909010..................................        0.2412        0.3106
6217909025..................................        0.9646        1.2420
6217909030..................................        0.1809        0.2329
6217909035..................................        0.2412        0.3106
6217909050..................................        0.9646        1.2420
6217909055..................................        0.1809        0.2329
6217909060..................................        0.2412        0.3106
6217909075..................................        0.9646        1.2420
6217909080..................................        0.1809        0.2329
6217909085..................................        0.2412        0.3106
6301300010..................................        0.8305        1.0694
6301300020..................................        0.8305        1.0694
6301900030..................................        0.2215        0.2852
6302100005..................................        1.1073        1.4258
6302100008..................................        1.1073        1.4258
6302100015..................................        1.1073        1.4258
6302213010..................................        1.1073        1.4258
6302213020..................................        1.1073        1.4258
6302213030..................................        1.1073        1.4258
6302213040..................................        1.1073        1.4258
6302213050..................................        1.1073        1.4258
6302215010..................................        0.7751        0.9980
6302215020..................................        0.7751        0.9980
6302215030..................................        0.7751        0.9980
6302215040..................................        0.7751        0.9980
6302215050..................................        0.7751        0.9980
6302217010..................................        1.1073        1.4258
6302217020..................................        1.1073        1.4258
6302217030..................................        1.1073        1.4258
6302217040..................................        1.1073        1.4258
6302217050..................................        1.1073        1.4258
6302219010..................................        0.7751        0.9980
6302219020..................................        0.7751        0.9980
6302219030..................................        0.7751        0.9980
6302219040..................................        0.7751        0.9980
6302219050..................................        0.7751        0.9980
6302221010..................................        0.5537        0.7129
6302221020..................................        0.3876        0.4991
6302221030..................................        0.5537        0.7129
6302221040..................................        0.3876        0.4991
6302221050..................................        0.3876        0.4991
6302221060..................................        0.3876        0.4991
6302222010..................................        0.3876        0.4991
6302222020..................................        0.3876        0.4991
6302222030..................................        0.3876        0.4991
6302290020..................................        0.2215        0.2852

[[Page 54]]

 
6302313010..................................        1.1073        1.4258
6302313020..................................        1.1073        1.4258
6302313030..................................        1.1073        1.4258
6302313040..................................        1.1073        1.4258
6302313050..................................        1.1073        1.4258
6302315010..................................        0.7751        0.9980
6302315020..................................        0.7751        0.9980
6302315030..................................        0.7751        0.9980
6302315040..................................        0.7751        0.9980
6302315050..................................        0.7751        0.9980
6302317010..................................        1.1073        1.4258
6302317020..................................        1.1073        1.4258
6302317030..................................        1.1073        1.4258
6302317040..................................        1.1073        1.4258
6302317050..................................        1.1073        1.4258
6302319010..................................        0.7751        0.9980
6302319020..................................        0.7751        0.9980
6302319030..................................        0.7751        0.9980
6302319040..................................        0.7751        0.9980
6302319050..................................        0.7751        0.9980
6302321010..................................        0.5537        0.7129
6302321020..................................        0.3876        0.4991
6302321030..................................        0.5537        0.7129
6302321040..................................        0.3876        0.4991
6302321050..................................        0.3876        0.4991
6302321060..................................        0.3876        0.4991
6302322010..................................        0.5537        0.7129
6302322020..................................        0.3876        0.4991
6302322030..................................        0.5537        0.7129
6302322040..................................        0.3876        0.4991
6302322050..................................        0.3876        0.4991
6302322060..................................        0.3876        0.4991
6302390030..................................        0.2215        0.2852
6302402010..................................        0.9412        1.2119
6302511000..................................        0.5537        0.7129
6302512000..................................        0.8305        1.0694
6302513000..................................        0.5537        0.7129
6302514000..................................        0.7751        0.9980
6302593020..................................        0.5537        0.7129
6302600010..................................        1.1073        1.4258
6302600020..................................        0.9966        1.2832
6302600030..................................        0.9966        1.2832
6302910005..................................        0.9966        1.2832
6302910015..................................        1.1073        1.4258
6302910025..................................        0.9966        1.2832
6302910035..................................        0.9966        1.2832
6302910045..................................        0.9966        1.2832
6302910050..................................        0.9966        1.2832
6302910060..................................        0.9966        1.2832
6302931000..................................        0.4429        0.5703
6302932000..................................        0.4429        0.5703
6302992000..................................        0.2215        0.2852
6303191100..................................        0.8859        1.1407
6303910010..................................        0.609         0.7841
6303910020..................................        0.609         0.7841
6303921000..................................        0.2768        0.3564
6303922010..................................        0.2768        0.3564
6303922030..................................        0.2768        0.3564
6303922050..................................        0.2768        0.3564
6303990010..................................        0.2768        0.3564
6304111000..................................        0.9966        1.2832
6304113000..................................        0.1107        0.1425
6304190500..................................        0.9966        1.2832
6304191000..................................        1.1073        1.4258
6304191500..................................        0.3876        0.4991
6304192000..................................        0.3876        0.4991
6304193060..................................        0.2215        0.2852
6304910020..................................        0.8859        1.1407
6304910070..................................        0.2215        0.2852
6304920000..................................        0.8859        1.1407
6304996040..................................        0.2215        0.2852
6505001515..................................        1.1189        1.4407
6505001525..................................        0.5594        0.7203
6505001540..................................        1.1189        1.4407
6505002030..................................        0.9412        1.2119
6505002060..................................        0.9412        1.2119
6505002545..................................        0.5537        0.7129
6507000000..................................        0.3986        0.5132
9404901000..................................        0.2104        0.2709
9404908020..................................        0.9966        1.2832
9404908040..................................        0.9966        1.2832
9404908505..................................        0.6644        0.8555
9404908536..................................        0.0997        0.1284
9404909505..................................        0.6644        0.8555
9404909570..................................        0.2658        0.3422
9619002100..................................        0.8681        1.1178
9619002500..................................        0.1085        0.1397
9619003100..................................        0.9535        1.2277
9619003300..................................        1.1545        1.4865
9619004100..................................        0.2384        0.3070
9619004300..................................        0.2384        0.3070
9619006100..................................        0.8528        1.0981
9619006400..................................        0.2437        0.3138
9619006800..................................        0.3655        0.4706
9619007100..................................        1.1099        1.4291
9619007400..................................        0.2466        0.3175
9619007800..................................        0.2466        0.3175
9619007900..................................        0.2466        0.3175
------------------------------------------------------------------------

    (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

[[Page 55]]

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

[57 FR 29432, July 2, 1992]

    Editorial Note: For Federal Register citations affecting Sec. 
1205.510, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and at www.fdsys.gov.



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.

[[Page 56]]

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

[[Page 57]]

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

[[Page 58]]

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

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



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

assessment.

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

[57 FR 29191, July 1, 1992]



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 59]]

    (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 60]]

    (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]



Sec. 1205.519  Organic exemption.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (h) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To apply for an exemption under this section, an eligible cotton 
producer shall submit a request for exemption to the Board--on a form 
provided by the Board--at any time initially and annually thereafter on 
or before the beginning of the crop year as long as the producer 
continues to be eligible for the exemption.
    (c) The request shall include the following: The producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified in paragraph (a) of this section for an 
assessment exemption, and such other information as may be required by 
the Board and with the approval of the Secretary.

[[Page 61]]

    (d) If the producer complies with the requirements of this section, 
the Board will grant the exemption and issue a Certificate of Exemption 
to the producer. For exemption requests received on or before August 15, 
2005, the Board will have 60 days to approve the exemption request; 
after August 15, 2005, the Board will have 30 days to approve the 
exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells cotton. The handler 
shall maintain records showing the exempt producer's name and address 
and the exemption number assigned by the Board.
    (f) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic cotton and 100 percent 
organic cotton products--on a form provided by the Board--at any time 
initially and annually thereafter as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (c) of this section. If 
the importer complies with the requirements of this section, the Board 
will grant the exemption and issue a Certificate of Exemption to the 
importer. The Board will also issue the importer a 9-digit alphanumeric 
Harmonized Tariff Schedule (HTS) classification valid for 1 year from 
the date of issue. This HTS classification should be entered by the 
importer on the Customs entry documentation. Any line item entry of 100 
percent organic cotton and cotton products bearing this HTS 
classification assigned by the Board will not be subject to assessments.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (h) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2754, Jan. 14, 2005]

                             Reimbursements



Sec. 1205.520  Procedure for obtaining reimbursement.

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

[[Page 62]]

    (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]



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]

[[Page 63]]



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_Mango Promotion, Research, and Information Order Definitions

Sec.
1206.1 Act.
1206.2 Board.
1206.3 Conflict of interest.
1206.4 Customs.
1206.5 Department.
1206.6 First handler.
1206.7 Fiscal period.
1206.8 Foreign producer.
1206.9 Importer.
1206.10 Information.
1206.11 Mangos.
1206.12 Market or marketing.
1206.13 Order.
1206.14 Part.
1206.15 Person.
1206.16 Producer.
1206.17 Promotion.
1206.18 Research.
1206.19 [Reserved]
1206.20 Secretary.
1206.21 Suspend.
1206.22 Terminate.
1206.23 United States.
1206.24 [Reserved]

                     National Mango Promotion Board

1206.30 Establishment and membership.
1206.31 Nominations and appointments.
1206.32 Term of office.
1206.33 Vacancies.
1206.34 Procedure.
1206.35 Compensation and reimbursement.
1206.36 Powers and duties.
1206.37 Prohibited activities.

                        Expenses and Assessments

1206.40 Budget and expenses.
1206.41 Financial statements.
1206.42 Assessments.
1206.43 Exemptions.

                  Promotion, Research, and Information

1206.50 Programs, plans, and projects.
1206.51 Independent evaluation.
1206.52 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

                       Reports, Books, and Records

1206.60 Reports.
1206.61 Books and records.
1206.62 Confidential treatment.

                              Miscellaneous

1206.70 Right of the Secretary.
1206.71 Referenda.
1206.72 Suspension and termination.
1206.73 Proceedings after termination.
1206.74 Effect of termination or amendment.
1206.75 Personal liability.
1206.76 Separability.
1206.77 Amendments.
1206.78 OMB control number.

                     Subpart B_Referendum Procedures

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.

                     Subpart C_Rules and Regulations

1206.200 Terms defined.
1206.201 Definitions.
1206.202 Exemption for organic mangos.

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

[[Page 64]]


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



 Subpart A_Mango Promotion, Research, and Information Order Definitions

    Source: 69 FR 59122, Oct. 4, 2004, unless otherwise noted.



Sec. 1206.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425; Public Law 104-127; 110 Stat. 1029), or any 
amendments thereto.



Sec. 1206.2  Board.

    Board or National Mango Promotion Board means the administrative 
body established pursuant to Sec. 1206.30, or such other name as 
recommended by the Board and approved by the Department.



Sec. 1206.3  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. 1206.4  Customs.

    Customs means the Customs and Border Protection of the U.S. 
Department of Homeland Security.



Sec. 1206.5  Department.

    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.



Sec. 1206.6  First handler.

    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.



Sec. 1206.7  Fiscal period.

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



Sec. 1206.8  Foreign producer.

    Foreign producer means any person:
    (1) Who is engaged in the production and sale of mangos outside of 
the United States and who owns, or shares the ownership and risk of loss 
of the crop for sale in the U.S. market or
    (2) Who is engaged, outside of the United States, in the business of 
producing, or causing to be produced, mangos beyond the person's own 
family use and having value at first point of sale.



Sec. 1206.9  Importer.

    Importer means any person importing 500,000 or more pounds of 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.



Sec. 1206.10  Information.

    Information means information and programs that are designed to 
develop new markets, marketing strategies, increase market efficiency, 
and activities that are designed to enhance the image of mangos in the 
United States. 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 
mangos; and
    (b) Industry information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or

[[Page 65]]

increased efficiency for the mango industry, and activities to enhance 
the image of the mango industry.



Sec. 1206.11  Mangos.

    Mangos means all fresh fruit of Mangifera indica L. of the family 
Anacardiaceae.



Sec. 1206.12  Market or marketing.

    Marketing means the sale or other disposition of mangos in the U.S. 
domestic market. To market means to sell or otherwise dispose of mangos 
in interstate or intrastate channels of commerce.



Sec. 1206.13  Order.

    Order means an order issued by the Department 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. 1206.14  Part.

    Part means part 1206 which includes the Mango Promotion, Research, 
and Information Order and all rules, regulations, and supplemental 
orders issued pursuant to the Act and the Order.



Sec. 1206.15  Person.

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



Sec. 1206.16  Producer.

    Producer means any person who is engaged in the production and sale 
of mangos in the United States and who owns, or shares the ownership and 
risk of loss of, the crop or a person who is engaged in the business of 
producing, or causing to be produced, mangos beyond the person's own 
family use and having value at first point of sale.



Sec. 1206.17  Promotion.

    Promotion means any action taken to present a favorable image of 
mangos to the general public and the food industry for the purpose of 
improving the competitive position of mangos and stimulating the sale of 
mangos in the United States. This includes paid advertising and public 
relations.



Sec. 1206.18  Research.

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



Sec. 1206.19  [Reserved]



Sec. 1206.20  Secretary.

    Secretary means the Secretary of Agriculture of the United States.



Sec. 1206.21  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. 1206.22  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 certain date specified in the rule.



Sec. 1206.23  United States.

    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. 1206.24  [Reserved]

                     National Mango Promotion Board



Sec. 1206.30  Establishment and membership.

    (a) Establishment of the National Mango Promotion Board. There is 
hereby established a National Mango Promotion Board composed of eight 
importers, one first handler, two domestic producers, and seven foreign 
producers. The chairperson shall reside in the United States and the 
Board office shall also be located in the United States.
    (b) Importer districts. The importer seats shall be allocated based 
on the volume of mangos imported into the Customs Districts identified 
by their

[[Page 66]]

name and Code Number as defined in the Harmonized Tariff Schedule of the 
United States. The initial allocation will be two seats for District I, 
three seats for District II, two seats for District III, and one seat 
for District IV.
    (1) District I includes the Customs Districts of Portland, ME (01), 
St. Albans, VT (02), Boston, MA (04), Providence, RI (05), Ogdensburg, 
NY (07), Buffalo, NY (09), New York City, NY (10), Philadelphia, PA 
(11), Baltimore, MD (13), Norfolk, VA (14), Charlotte, NC (15), 
Charleston, SC (16), Savannah, GA (17), Tampa, FL (18), San Juan, PR 
(49), Virgin Islands of the United States (51), Miami, FL (52) and 
Washington, DC (54).
    (2) District II includes the Customs Districts of Mobile, AL (19), 
New Orleans, LA (20), Port Arthur, TX (21), Laredo, TX (23), 
Minneapolis, MN (35), Duluth, MN (36), Milwaukee, WI (37), Detroit, MI 
(38), Chicago, IL (39), Cleveland, OH (41), St. Louis, MO (45), Houston, 
TX (53), and Dallas-Fort Worth, TX (55).
    (3) District III includes the Customs Districts of El Paso, TX (24), 
Nogales, AZ (26), Great Falls, MT (33), and Pembina, ND (34).
    (4) District IV includes the Customs Districts of San Diego, CA 
(25), Los Angeles, CA (27), San Francisco, CA (28), Columbia-Snake, OR 
(29), Seattle, WA (30), Anchorage, AK (31), and Honolulu, HI (32).
    (c) Adjustment of membership. At least once every five years, the 
Board will review the geographical distribution of production of mangos 
in the United States, the geographical distribution of the importation 
of mangos into the United States, the quantity of mangos produced in the 
United States, and the quantity of mangos imported into the United 
States. The review will be based on Board assessment records and 
statistics from the Department. If warranted, the Board will recommend 
to the Department that membership on the Board be altered to reflect any 
changes in geographical distribution of domestic mango production and 
importation and the quantity of domestic production and imports. To 
ensure equitable representation, additional first handlers may be added 
to the Board to reflect increases in domestic production.

[69 FR 59122, Oct. 4, 2004, as amended at 76 FR 36283, June 22, 2011]



Sec. 1206.31  Nominations and appointments.

    (a) Voting for first handler, importer, and domestic producer 
members will be made by mail ballot.
    (b) There shall be two nominees for each position on the Board.
    (c) Nominations for the initial Board will be handled by the 
Department. Subsequent nominations will be handled by the Board's staff.
    (d) Nominees to fill the first handler member position on the Board 
shall be solicited from all known first handlers. The nominees shall be 
placed on a ballot which will be sent to all first handlers for a vote. 
The nominee receiving the highest number of votes and the nominee 
receiving the second highest number of votes shall be submitted to the 
Department as the first handlers' first and second choice nominees.
    (e) Nominees to fill the importer positions on the Board shall be 
solicited from all known importers of mangos. The members from each 
district shall select the nominees for two positions on the Board. Two 
nominees shall be submitted for each position. The nominees shall be 
placed on a ballot which will be sent to importers in the districts for 
a vote. For each position, the nominee receiving the highest number of 
votes and the nominee receiving the second highest number of votes shall 
be submitted to the Department as the importers' first and second choice 
nominees.
    (f) Nominees to fill the domestic producer member positions on the 
Board shall be solicited from all known domestic producers. The nominees 
shall be placed on a ballot which will be sent to all domestic producers 
for a vote. The nominee receiving the highest number of votes and the 
nominee receiving the second highest number of votes shall be submitted 
to the Department as the producers' first and second choice nominees.
    (g) Nominees to fill the foreign producer member positions on the 
Board shall be solicited from organizations of

[[Page 67]]

foreign mango producers and from foreign mango producers. Organizations 
of foreign mango producers shall submit two nominees for each position, 
and foreign mango producers may submit their name or the names of other 
foreign mango producers directly to the Board. The nominees shall be 
representative of the major countries exporting mangos to the United 
States.
    (h) From the nominations, the Secretary shall select the members of 
the Board.

[69 FR 59122, Oct. 4, 2004, as amended at 76 FR 36283, June 22, 2011; 78 
FR 39566, July 2, 2013]



Sec. 1206.32  Term of office.

    The term of office for first handler, importer, domestic producer, 
and foreign producer members of the Board will be three years, and these 
members may serve a maximum of two consecutive three-year terms. When 
the Board is first established, the first handler, two importers, one 
domestic producer, and two foreign producers will be assigned initial 
terms of four years; three importers, one domestic producer, and two 
foreign producers will be assigned initial terms of three years; and 
three importers and three foreign producers will be assigned initial 
terms of two years. Thereafter, each of these positions will carry a 
full three-year term. Members serving initial terms of two or four years 
will be eligible to serve a second term of three years. Each term of 
office will end on December 31, with new terms of office beginning on 
January 1.

[76 FR 36283, June 22, 2011]



Sec. 1206.33  Vacancies.

    (a) In the event that 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 Board member, or if a member of the Board engages in acts of 
dishonesty or willful misconduct, the Board may recommend to the 
Department that the member be removed from office. If the Department 
finds the recommendation of the Board shows adequate cause, the 
Department shall remove such member from office.
    (c) Should any member position become vacant, successors for the 
unexpired term of the member shall be appointed in the manner specified 
in Sec. 1206.31, except that nomination and replacement shall not be 
required if the unexpired term is less than six months.



Sec. 1206.34  Procedure.

    (a) At a Board meeting, it will be considered a quorum when at least 
ten voting members are present.
    (b) At the start of each fiscal period, the Board will select a 
chairperson and vice chairperson who will conduct meetings throughout 
that period.
    (c) All Board members will be notified at least 30 days in advance 
of all Board and committee meetings unless an emergency meeting is 
declared.
    (d) Each voting 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) 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. 
Committees may consist of individuals other than Board members, and such 
individuals may vote in committee meetings. Committee members shall 
serve without compensation but shall be reimbursed for reasonable travel 
expenses, as approved by the Board.
    (f) 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 any other means of communication. 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 Board. All 
telephone votes shall be confirmed promptly in writing. All votes shall 
be recorded in Board minutes.

[[Page 68]]

    (g) There shall be no voting by proxy.
    (h) The chairperson shall be a voting member and shall reside in the 
U.S.
    (i) 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 Department.



Sec. 1206.35  Compensation and reimbursement.

    The members of the Board 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. 1206.36  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 Department 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 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, plans, and projects, and enter into 
contracts or agreements, which must be approved by the Department 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 
Department considers relevant. Furthermore, 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 Department or the Board may require;
    (3) The Department 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 Department calendar 
year budgets in accordance with Sec. 1206.40;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Department as the 
Department 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 calendar year and at such other times as the Department may 
request, and to submit a report of the audit directly to the Department;
    (i) To give the Department the same notice of Board and committee 
meetings as is given to members in order that the Department's 
representative(s) may attend such meetings.
    (j) To act as intermediary between the Department and any first 
handler or importer;

[[Page 69]]

    (k) To furnish to the Department any information or records that the 
Department may request;
    (l) To receive, investigate, and report to the Department complaints 
of violations of the Order;
    (m) To recommend to the Department 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 mango industry's 
position in the U.S. domestic market; maintain and expand existing 
markets and uses for mangos; and to carry out programs, plans, and 
projects designed to provide maximum benefits to the mango industry.



Sec. 1206.37  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 is a conflict of interest; and
    (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, by local, state, national, and foreign governments, 
other than recommending to the Department amendments to the Order.

                        Expenses and Assessments



Sec. 1206.40  Budget and expenses.

    (a) At least 60 days prior to the beginning of each calendar year, 
and as may be necessary thereafter, the Board shall prepare and submit 
to the Department a budget for the calendar 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 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 Department, including shifting 
funds from 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 
Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Department finds 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 Department, 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. Voluntary 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 Department for all expenses 
incurred by the Department 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 calendar year an amount that exceeds 15 
percent of the assessments and other income received by the Board for 
that calendar

[[Page 70]]

year. Reimbursements to the Department required under paragraph (g) of 
this section, are excluded from this limitation on spending.
    (i) 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 do not exceed one 
fiscal period's budget. Subject to approval by the Department, such 
reserve funds may be used to defray any expenses authorized under this 
part.



Sec. 1206.41  Financial statements.

    (a) As requested by the Department, the Board shall prepare and 
submit financial statements to the Department 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 Department 
within 30 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Department an annual 
financial statement within 90 days after the end of the calendar year to 
which it applies.



Sec. 1206.42  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on first handlers and importers, donations from any person 
not subject to assessments under this Order, and other funds available 
to the Board and subject to the limitations contained therein.
    (b) The assessment rate shall be \3/4\ of a cent per pound on all 
mangos. The assessment rate will be reviewed and may be modified by the 
Board with the approval of the Department, after the first referendum is 
conducted as stated in Sec. 1206.71(b). The Department will amend this 
section if the assessment rate is modified.
    (c) Domestic mangos. First handlers of domestic mangos are required 
to pay assessments on all mangos handled for the U.S. market. This 
includes mangos of the first handler's own production.
    (d) Imported mangos. Each importer of mangos shall pay an assessment 
to the Board through Customs on mangos imported for marketing in the 
United States.
    (1) The assessment rate for imported mangos shall be the same or 
equivalent to the rate for mangos produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
mangos that are identified by the numbers 0804.50.4040 and 0804.50.6040 
in the Harmonized Tariff Schedule of the United States.
    (3) The assessments due on imported mangos shall be paid when they 
enter or are withdrawn for consumption in the United States.
    (e) Each person responsible for remitting assessments under 
paragraph (c) of this section shall remit the amounts due to the Board's 
office on a monthly basis no later than the fifteenth day of the month 
following the month in which the mangos were marketed, in such manner as 
prescribed by the Board.
    (f) A late payment charge shall be imposed on any person failing to 
remit to the Board the total amount for which the person is liable by 
the payment due date established under this section. The amount of the 
late payment charge shall be prescribed by the Department.
    (g) 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 by the Department.
    (h) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (i) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Department.

[68 FR 58554, Oct. 9, 2003, as amended at 77 FR 21846, Apr. 12, 2012]



Sec. 1206.43  Exemptions.

    (a) Any first handler or importer of less than 500,000 pounds of 
mangos per

[[Page 71]]

calendar year may claim an exemption from the assessments required under 
Sec. 1206.42. Mangos produced domestically and exported from the United 
States may annually claim an exemption from the assessments required 
under Sec. 1206.42.
    (b) A first handler or importer desiring an exemption shall apply to 
the Board, on a form provided by the Board, for a certificate of 
exemption. A first handler shall certify that the first handler will 
handle less than 500,000 pounds of domestic mangos for the fiscal period 
for which the exemption is claimed. An importer shall certify that the 
importer will import less than 500,000 pounds of mangos during the 
fiscal period for which the exemption is claimed.
    (c) 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 who is 
eligible to receive one. It is the responsibility of these persons to 
retain a copy of the certificate of exemption.
    (d) Importers who receive a certificate of exemption shall be 
eligible for reimbursement of assessments collected by Customs. These 
importers shall apply to the Board for reimbursement of any assessments 
paid. No interest will be paid on the assessments collected by Customs. 
Requests for reimbursement shall be submitted to the Board within 90 
days of the last day of the calendar year the mangos were actually 
imported.
    (e) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board, on a form provided 
by the Board, for a certificate of exemption.
    (f) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
mangos and, in the case of importers, proof of payment of assessments.

                  Promotion, Research, and Information



Sec. 1206.50  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Department 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 mangos; and
    (2) The establishment and conduct of research with respect to: the 
use, nutritional value and benefits, sale, distribution, and marketing 
of mangos in the United States; the creation of new products thereof, to 
the end that the marketing and use of mangos in the United States may be 
encouraged, expanded, improved, or made more acceptable; and to advance 
the image, desirability, or quality of mangos in the United States.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Department. 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 
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 information, then the Board shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Mangos of all origins shall be treated equally.



Sec. 1206.51  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

[[Page 72]]

the effectiveness of the Order and other programs conducted by the Board 
pursuant to the Act. The Board shall submit to the Department, and make 
available to the public, the results of each periodic independent 
evaluation conducted under this paragraph.



Sec. 1206.52  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 Department Upon termination of this 
subpart, Sec. 1206.73 shall apply to determine disposition of all such 
property.

                       Reports, Books, and Records



Sec. 1206.60  Reports.

    (a) Each first handler will be required to provide to the Board 
periodically such information as may be required by the Board, with the 
approval of the Department, which may include but not be limited to the 
following:
    (1) Number of pounds of domestic mangos handled;
    (2) Number of pounds of domestic mangos on which an assessment was 
paid;
    (3) Name and address of the producers from whom the first handler 
has received mangos;
    (4) Date that assessment payments were made on each pound of 
domestic mangos handled;
    (5) Number of pounds of domestic mangos exported;
    (6) The first handler's tax identification number;
    (b) Each importer may be required to provide to the Board 
periodically such information as may be required by the Board, with the 
approval of the Department, which may include but not be limited to the 
following:
    (1) Number of pounds of mangos imported;
    (2) Number of pounds of mangos on which an assessment was paid;
    (3) Name, address, and tax identification number of the importer; 
and
    (4) Date that assessment payments were made on each pound imported.



Sec. 1206.61  Books and records.

    Each first handler and importer shall maintain and make available 
for inspection by the Department such books and records as are necessary 
to carry out the provisions of this part, any 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.



Sec. 1206.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part 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, 
first handlers, or importers. 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

[[Page 73]]

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 part, together 
with a statement of the particular provisions of this part violated by 
such person.

                              Miscellaneous



Sec. 1206.70  Right of the Secretary.

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



Sec. 1206.71  Referenda.

    (a) Initial Referendum. The Order shall not become effective unless:
    (1) The Department 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 the first handlers and 
importers voting, who, during a representative period determined by the 
Department, have been engaged in the handling or importation of mangos.
    (b) Subsequent referenda. Every five years, the Department shall 
hold a referendum to determine whether first handlers and importers of 
mangos favor the continuation of the Order. The Order shall continue if 
it is favored by a majority of the first handlers and importers voting 
who, during a representative period determined by the Department, have 
been engaged in the handling or importation of mangos. The Department 
will also conduct a referendum if 10 percent or more of all non-exempt, 
first handlers and importers of mangos request the Department to hold a 
referendum. In addition, the Department may hold a referendum at any 
time.



Sec. 1206.72  Suspension and termination.

    (a) The Department shall suspend or terminate this part or subpart 
or a provision thereof if the Department finds that the subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Department determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) The Department shall suspend or terminate this subpart at the 
end of the marketing year whenever the Department determines that its 
suspension or termination is approved or favored by a majority of the 
first handlers and importers voting who, during a representative period 
determined by the Department, have been engaged in the handling or 
importation of mangos.
    (c) If, as a result of a referendum the Department determines that 
this subpart is not approved, the Department 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. 1206.73  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Department to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Department, 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 Department;
    (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 Department 
may direct; and
    (4) Upon request of the Department, execute such assignments or 
other instruments necessary and appropriate to vest in such persons 
title and right to all funds, property and claims vested

[[Page 74]]

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 Department to be disposed of, 
to the extent practical, to one or more mango industry organizations in 
the interest of continuing mango promotion, research, and information 
programs.



Sec. 1206.74  Effect of termination or amendment.

    Unless otherwise expressly provided by the Department, the 
termination or amendment of this part or any subpart 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 part; or
    (b) Release or extinguish any violation of this part; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Department, or of any other persons with respect to any such 
violation.



Sec. 1206.75  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. 1206.76  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. 1206.77  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 Department.



Sec. 1206.78  OMB control number.

    The control numbers assigned to the information collection 
requirements of 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 number 0505-0001 and OMB control number 0581-0209.



                     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 75]]

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 76]]

    (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.



                     Subpart C_Rules and Regulations

    Source: 70 FR 2754, Jan. 14, 2005, unless otherwise noted.



Sec. 1206.200  Terms defined.

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



Sec. 1206.201  Definitions.

    Organic Act means section 2103 of the Organic Foods Production Act 
of 1990 (7 U.S.C. 6502).



Sec. 1206.202  Exemption for organic mangos.

    (a) A first handler who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan, handles only products that 
are eligible to be labeled as 100 percent organic under the NOP, and is 
not a split operation shall be exempt from the payment of assessments.
    (b) To obtain this exemption, an eligible first handler shall submit 
a request for exemption to the Board--on a form provided by the Board--
at any time initially and annually thereafter on or before the beginning 
of the fiscal period as long as the first handler continues to be 
eligible for the exemption.
    (c) The request shall include the following: The first handler's 
name and address, a copy of the organic farm or organic handling 
operation certificate

[[Page 77]]

provided by a USDA-accredited certifying agent as defined in the Organic 
Act, a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the first handler complies with the requirements of paragraph 
(a) of this section, the Board will grant an assessment exemption and 
shall issue a Certificate of Exemption to the first handler. For 
exemption requests received on or before August 15, 2005, the Board will 
have 60 days to approve the exemption request; after August 15, 2005, 
the Board will have 30 days to approve the exemption request. If the 
application is disapproved, the Board will notify the applicant of the 
reason(s) for disapproval within the same timeframe.
    (e) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic mangos--on a form 
provided by the Board--at any time initially and annually thereafter on 
or before the beginning of the fiscal period as long as the importer 
continues to be eligible for the exemption. This documentation shall 
include the same information required of first handlers in paragraph 
(c). If the importer complies with the requirements of this section, the 
Board will grant the exemption and issue a Certificate of Exemption to 
the importer within the applicable timeframe. The Board will also issue 
the importer a 9-digit alphanumeric Harmonized Tariff Schedule (HTS) 
classification valid for 1 year from the date of issue. This HTS 
classification should be entered by the importer on the Customs entry 
documentation. Any line item entry of 100 percent organic mangos bearing 
this HTS classification assigned by the Board will not be subject to 
assessments.
    (f) The exemption will apply immediately following the issuance of 
the certificate of exemption.



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.
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 [Reserved]

[[Page 78]]

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 Exemption for organic potatoes.
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 and 7 U.S.C. 7401.



               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.



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.

[[Page 79]]



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 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]

[[Page 80]]



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 (c), the last sentence; and in paragraph (d), the 
last two sentences of the introductory text were 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

[[Page 81]]

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 projects and to enter into contracts or 
agreements for the development and carrying out of programs or projects 
of research, development, advertising or promotion, and the payment of 
the costs thereof with funds collected pursuant to this plan;
    (e) To keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Board. Minutes of each Board meeting 
shall be promptly reported to the Secretary;
    (f) To cause the books of the Board to be audited by a certified 
public accountant at least once each fiscal period, and at such other 
time as the Board may deem necessary. The report of such audit shall 
show the receipt and expenditure of funds collected pursuant to this 
part. Two copies of each such report shall be furnished to the

[[Page 82]]

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 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

[[Page 83]]

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 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:

[[Page 84]]

    (a) The issuance of general statements based upon the reports of a 
number of handlers or importers subject to this Plan, which statements 
do not identify the information furnished by any person; or
    (b) The publication by direction of the Secretary of the name of any 
person violating this Plan, together with a statement of the particular 
provisions of this Plan violated by such person.

[56 FR 40230, Aug. 14, 1991]

                              Miscellaneous



Sec. 1207.360  Influencing governmental action.

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



Sec. 1207.361  Right of the Secretary.

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



Sec. 1207.362  Suspension or termination.

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

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



Sec. 1207.363  Proceedings after termination.

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

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

[[Page 85]]



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  [Reserved]



Sec. 1207.502  Determination of membership.

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

[56 FR 40231, Aug. 14, 1991]



Sec. 1207.503  Nominations.

    (a) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
producers in producing sections or States each year to nominate producer 
members for the Board. Such nominations may be conducted at meetings or 
by mail ballots. One individual shall be nominated for each position to 
become vacant. A list of nominees shall be submitted to the Secretary 
for consideration by November 1 of each year.
    (b) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
importers each year to nominate importer members for the Board. Such 
nominations may be conducted at meetings or by mail ballots.

[[Page 86]]

    (c) Nomination meetings or mail balloting shall be well publicized 
with notice given to producers, importers, and the Secretary at least 10 
days prior to each meeting or mailing of ballots.
    (d) The public member shall be nominated by the producer and 
importer members of the Board.

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



Sec. 1207.504  Term of office.

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

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



Sec. 1207.505  Procedure.

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

[62 FR 46179, Sept. 2, 1997]



Sec. 1207.506  Policy.

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



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 nine Vice-
Chairpersons, one of whom shall also serve as the Secretary and 
Treasurer of the Board.
    (b) The Administrative Committee shall act for the Board in 
implementing such marketing research, development, advertising, and/or 
promotion activities as directed by the Board, and shall, subject to 
such direction, be charged with developing and submitting to the 
Secretary for his approval specific programs or projects in the name of 
the Board. The Administrative Committee shall further act for the Board 
in authorizing contracts or agreements for the development and carrying 
out of such programs or projects and the payment of the costs thereof 
with funds collected pursuant to Sec. 1207.342 of the plan.
    (1) The Administrative Committee also shall act for the Board in 
contracting with cooperating agencies for the collection of assessments 
pursuant to Sec. 1207.513(d).
    (2) [Reserved]
    (c) The Board may assign such other administrative powers and duties 
to the Administrative Committee as it shall determine, and the 
Administrative Committee shall act on behalf of and in the name of the 
Board in all administrative matters.

[37 FR 17379, Aug. 26, 1972, as amended by Amdt. 6, 42 FR 55879, Oct. 
20, 1977; 44 FR 25621, May 2, 1979; 50 FR 25199, June 18, 1985; 56 FR 
40231, Aug. 14, 1991; 59 FR 44036, Aug. 26, 1994; 71 FR 76901, Dec. 22, 
2006; 78 FR 52082, Aug. 22, 2013]



Sec. 1207.508  USDA costs.

    Pursuant to Sec. 1207.341 of the Plan the Board shall pay those 
administrative

[[Page 87]]

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 3 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 3 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 3 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 and Border Protection 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, frozen or processed    -------------------------
          potatoes, and seed potatoes            Cents/cwt     Cents/kg
------------------------------------------------------------------------
0701.10.0020..................................          3.0        0.066
0701.10.0040..................................          3.0        0.066
0701.90.1000..................................          3.0        0.066
0701.90.5015..................................          3.0        0.066
0701.90.5025..................................          3.0        0.066
0701.90.5035..................................          3.0        0.066
0701.90.5045..................................          3.0        0.066
0701.90.5055..................................          3.0        0.066
0701.90.5065..................................          3.0        0.066
0710.10.0000..................................          6.0        0.132
2004.10.4000..................................          6.0        0.132
2004.10.8020..................................          6.0        0.132
2004.10.8040..................................          6.0        0.132
2005.20.0070..................................        4.716        0.104
0712.90.3000..................................       21.429        0.472
1105.10.0000..................................       21.429        0.472
1105.20.0000..................................       21.429        0.472
2005.20.0040..................................       21.429        0.472
2005.20.0020..................................       12.240         0.27
1108.13.0010..................................         27.0        0.595
------------------------------------------------------------------------

    (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; 71 FR 11296, Mar. 7, 2006; 71 FR 50330, Aug. 
25, 2006; 74 FR 63543, Dec. 4, 2009; 75 FR 14491, Mar. 26, 2010]



Sec. 1207.511  Determination of assessable quantity.

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



Sec. 1207.512  Designated handler.

    The assessment on each lot of potatoes produced in the 50 States of 
the United States and handled shall be paid by the designated handler as 
hereafter set forth.

[[Page 88]]

    (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 processor assumes the 
responsibility of designated handler.
    (8) Producer utilizes potatoes of his own production for seed in 
planting his subsequent crop. Such seed potatoes do not enter the 
current of commerce; there is no designated handler in this instance 
since the potatoes have not been handled as heretofore defined and no 
assessment is due. However, seed potatoes sold or shipped to other 
producers for planting or to other persons for subsequent disposition 
enter the current of commerce and are subject to assessment. The 
producer of seed potatoes shall be the designated handler of such 
potatoes shipped to other producers for planting and the assessment is 
due when he first sells or otherwise handles such potatoes. The first 
person who acquires seed potatoes from the producer thereof for 
subsequent disposition other than planting by said person shall be the 
designated handler of such potatoes. However, the seed producer will be 
the designated handler responsible for filing reports and making 
payments, unless he can show that the first person who obtained the 
potatoes from him disposed of them other than by planting. To show this 
the seed producer must submit to the Potato Board the name and address 
of the first person who obtained the potatoes from him and an invoice of 
sale or settlement sheet on which it is indicated that such person will 
be the designated handler and therefore will be responsible for the 
payment of the assessments. Only by showing this is the seed producer no 
longer considered the designated handler and therefore not liable for 
the assessments.
    (b) Any person who handles potatoes for a producer thereof under 
oral or written contract or agreement providing for the sale thereof 
shall be the designated handler for such potatoes,

[[Page 89]]

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 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

[[Page 90]]

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  Exemption for organic potatoes.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (h) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To apply for an exemption under this section, the producer shall 
submit a request for exemption to the Board--on a form provided by the 
Board--at any time initially and annually thereafter on or before July 1 
as long as the producer continues to be eligible for the exemption.
    (c) The request shall include the following: The producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified in paragraph (a) of this section for an 
assessment exemption, and such other information as may be required by 
the Board and with the approval of the Secretary.
    (d) If the producer complies with the requirements of this section, 
the Board will grant the exemption and issue a Certificate of Exemption 
to the producer. For exemption requests received on or before August 15, 
2005, the Board will have 60 days to approve the exemption request; 
after August 15, 2005, the Board will have 30 days to approve the 
exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells potatoes. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7

[[Page 91]]

CFR part 205) and who is not a split operation shall be exempt from the 
payment of assessments. That importer may submit documentation to the 
Board and request an exemption from assessment on 100 percent organic 
potatoes, potato products, and seed potatoes--on a form provided by the 
Board--at any time initially and annually thereafter on or before July 1 
as long as the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
in paragraph (c) of this section. If the importer complies with the 
requirements of this section, the Board will grant the exemption and 
issue a Certificate of Exemption to the importer. The Board will also 
issue the importer a 9-digit alphanumeric Harmonized Tariff Schedule 
(HTS) classification valid for 1 year from the date of issue. This HTS 
classification should be entered by the importer on the Customs entry 
documentation. Any line item entry of 100 percent organic potatoes, 
potato products, and seed potatoes bearing this HTS classification 
assigned by the Board will not be subject to assessments.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (h) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2755, Jan. 14, 2005]



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 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

[[Page 92]]

assigned OMB Control number 0581-0093.

[49 FR 23826, June 8, 1984]

                        Confidential Information



Sec. 1207.540  Confidential books, records, and reports.

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

[56 FR 40232, Aug. 14, 1991]



Sec. 1207.545  Right of the Secretary.

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



Sec. 1207.546  Personal liability.

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



PART 1208_PROCESSED RASPBERRY PROMOTION, RESEARCH, AND INFORMATION ORDER--

Table of Contents



Subpart A_Processed Raspberry Promotion, Research, and Information Order

                               Definitions

Sec.
1208.1 Act.
1208.2 Conflict of interest.
1208.3 Crop year.
1208.4 Customs.
1208.5 Department.
1208.6 First handler.
1208.7 Fiscal period.
1208.8 Foreign producer.
1208.9 Handle.
1208.10 Importer.
1208.11 Information.
1208.12 Market or marketing.
1208.13 National Processed Raspberry Council.
1208.14 Order.
1208.15 Part and subpart.
1208.16 Person.
1208.17 Processed raspberries.
1208.18 Processor.
1208.19 Producer.
1208.20 Promotion.
1208.21 Qualified national organization representing importer interests.
1208.22 Qualified organization representing foreign producer interests.
1208.23 Raspberries.
1208.24 Research.
1208.25 Secretary.
1208.26 State.
1208.27 Suspend.
1208.28 Terminate.
1208.29 United States.

                  National Processed Raspberry Council

1208.40 Establishment and membership.
1208.41 Nominations and appointments.
1208.42 Term of office.
1208.43 Vacancies.
1208.44 Alternate members.
1208.45 Procedure.
1208.46 Compensation and reimbursement.
1208.47 Powers and duties.
1208.48 Prohibited activities.

                        Expenses and Assessments

1208.50 Budget and expenses.
1208.51 Financial statements.
1208.52 Assessments.
1208.53 Exemption and reimbursement procedures.
1208.54 Programs, plans, and projects.
1208.55 Independent evaluation.
1208.56 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

                       Reports, Books, and Records

1208.60 Reports.
1208.61 Books and records.
1208.62 Confidential treatment.

                              Miscellaneous

1208.70 Right of the Secretary.
1208.71 Referenda.
1208.72 Suspension and termination.
1208.73 Proceedings after termination.
1208.74 Effect of termination or amendment.
1208.75 Personal liability.
1208.76 Separability.
1208.77 Amendments.
1208.78 OMB control numbers.

                     Subpart B_Referendum Procedures

1208.100 General.
1208.101 Definitions.
1208.102 Voting.
1208.103 Instructions.
1208.104 Subagents.
1208.105 Ballots.

[[Page 93]]

1208.106 Referendum report.
1208.107 Confidential information.
1208.108 OMB control number.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

    Source: 75 FR 6091, Feb. 8, 2010, unless otherwise noted.



Subpart A_Processed Raspberry Promotion, Research, and Information Order

    Source: 77 FR 26919, May 8, 2012, unless otherwise noted.

                               Definitions



Sec. 1208.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.



Sec. 1208.2  Conflict of interest.

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



Sec. 1208.3  Crop year.

    Crop year means the 12-month period from April 1 to March 31 or such 
other period approved by the Secretary.



Sec. 1208.4  Customs.

    Customs means the United States Customs and Border Protection or 
U.S. Customs Service, an agency of the United States Department of 
Homeland Security.



Sec. 1208.5  Department.

    Department means the United States 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.



Sec. 1208.6  First handler.

    First handler means any person (excluding a common or contract 
carrier) receiving raspberries for processing from producers in a 
calendar year and who as owner or agent, ships or causes processed 
raspberries or raspberries for processing 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 processed raspberries or raspberries for 
processing in commercial quantities. This definition excludes a 
retailer, except a retailer who purchases or acquires from, or handles 
on behalf of, any producer of raspberries for processing. The term first 
handler includes a producer who handles or markets processed raspberries 
of the producer's own production.



Sec. 1208.7  Fiscal period.

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



Sec. 1208.8  Foreign producer.

    Foreign producer means any person:
    (a) Who is engaged in the production and sale of raspberries for 
processing outside of the United States and who owns, or shares the 
ownership and risk of loss of raspberries for processing for sale in the 
U.S. market; or
    (b) Who is engaged, outside of the United States, in the business of 
producing, or causing to be produced, processed raspberries beyond the 
person's own family use and having value at first point of sale.



Sec. 1208.9  Handle.

    Handle means to pack, process, sell, transport, purchase, or in any 
other way to place or cause processed raspberries or raspberries for 
processing 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 raspberries for processing by the producer thereof to a 
handler.



Sec. 1208.10  Importer.

    Importer means any person importing 20,000 pounds or more of 
processed raspberries 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 processed raspberries outside of the United States 
for sale in the United States,

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and who is listed in the import records as the importer of record for 
such processed raspberries.



Sec. 1208.11  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 processed raspberries or raspberries for 
processing on a national 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 
processed raspberries and raspberries for processing.
    (b) Food industry information, which means any action taken to 
provide information to, and broaden the understanding of, the food 
industry regarding the consumption, use, nutritional attributes, and 
care of processed raspberries and raspberries for processing.
    (c) Industry information, which means any action taken to provide 
information to or collect information from, and broaden the 
underestimating of, the raspberry industry regarding the production, 
consumption, use, nutritional attributes, and care of processed 
raspberries and raspberries for processing.



Sec. 1208.12  Market or marketing.

    (a) Marketing means the sale or other disposition of processed 
raspberries in interstate, foreign or intrastate commerce.
    (b) To market means to sell or otherwise dispose of processed 
raspberries in any channel of commerce.



Sec. 1208.13  National Processed Raspberry Council.

    National Processed Raspberry Council or such other name as 
recommended by the Council and approved by the Department means the 
administrative body established pursuant to Sec. 1208.40.



Sec. 1208.14  Order.

    Order means the Processed Raspberry Promotion, Research, and 
Information Order.



Sec. 1208.15  Part and subpart.

    Part means the Processed Raspberry 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. 1208.16  Person.

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



Sec. 1208.17  Processed raspberries.

    Processed raspberries means raspberries which have been frozen, 
dried, pureed, made into juice, or delivered in any other form altered 
by mechanical processes other than fresh.



Sec. 1208.18  Processor.

    Processor means a person engaged in the preparation of raspberries 
for processing for market who owns or who shares the ownership and risk 
of loss of such raspberries.



Sec. 1208.19  Producer.

    Producer means any person who grows 20,000 pounds or more of 
raspberries for processing in the United States for sale in commerce, 
and a person who is engaged in the business of producing, or causing to 
be produced for any market, raspberries for processing beyond the 
person's own family use and having value at first point of sale.



Sec. 1208.20  Promotion.

    Promotion means any action taken to present a favorable image of 
processed raspberries to the general public and the food industry for 
the purpose of improving the competitive position of processed 
raspberries both in the United States and abroad and stimulating the 
sale of processed raspberries including paid advertising and public 
relations.



Sec. 1208.21  Qualified national organization representing importer interests.

    Qualified national organization representing importer interests 
means an organization that the Secretary certifies

[[Page 95]]

as being eligible to nominate importer and alternate importer members to 
the Council.



Sec. 1208.22  Qualified organization representing foreign producer interests.

    Qualified organization representing foreign producer interests means 
an organization that the Secretary certifies as being eligible to 
nominate foreign producer and alternate foreign producer members to the 
Council.



Sec. 1208.23  Raspberries.

    Raspberries mean and include all kinds, varieties, and hybrids of 
cultivated raspberries of the genus ``rubus idaeus L.'' grown in or 
imported into the United States.



Sec. 1208.24  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of processed raspberries or raspberries for 
processing, including but not limited to research relating to 
nutritional value, cost of production, new product development, health 
research, and marketing of processed raspberries or raspberries for 
processing.



Sec. 1208.25  Secretary.

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



Sec. 1208.26  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec. 1208.27  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. 1208.28  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 certain date specified in the rule.



Sec. 1208.29  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 Processed Raspberry Council



Sec. 1208.40  Establishment and membership.

    (a) Establishment of the National Processed Raspberry Council. There 
is hereby established a National Processed Raspberry Council, or such 
other name as recommended by the Council and approved by the Department, 
hereinafter called Council, composed of thirteen (13) members and 
thirteen (13) alternate members, appointed by the Secretary from 
nominations as follows:
    (1) Six (6) processed raspberry producer members and alternate 
members from States producing a minimum of three (3) million pounds of 
raspberries delivered for processing. Distribution of the seats among 
the eligible States shall be proportional to the percent determined by 
the average of the total pounds produced and delivered to processors for 
processing over the previous three years divided by the average total 
pounds by all of the eligible States for the previous three years. Only 
States whose producers deliver raspberries for processing and pay 
assessments are eligible for nomination and election to the Council. 
Average production will be based upon either State production figures or 
the Department data for the initial election, and production figures 
generated by either the Council or the Department thereafter;
    (2) One (1) processed raspberry producer member and alternate member 
representing all other States producing less than a three (3) million 
pounds of raspberries delivered for processing. All States producing 
less than three million pounds of raspberries delivered

[[Page 96]]

for processing will constitute a region from which one producer member 
and alternate will be nominated to the Council. Only States whose 
producers deliver raspberries for processing and pay assessments are 
eligible for nomination and election to the Council. Average production 
will be based upon either State production figures or the Department 
data for the initial election, and production figures generated by 
either the Council or the Department thereafter;
    (3) Three (3) processed raspberry importer members and alternate 
members;
    (4) Two (2) foreign producers and their alternate members from 
countries exporting a minimum of three million pounds of raspberries for 
processing to the U.S, based on a three-year average; and
    (5) One (1) at-large member and an alternate recommended by the 
Council and shall be submitted by the Council to the Secretary for 
approval. In recommending the at-large member and alternate, the Council 
shall give consideration to nutrition health professionals and others 
interested in raspberry industry. Nominations for the initial Council 
will be handled by the Department.
    (b) Adjustment of membership. At least once every five years, but 
not more frequently than once every three years, the Council will review 
the geographic distribution of United States production of processed 
raspberries and the quantity and source of processed raspberry imports. 
The review will be conducted through an audit of State crop production 
figures and Council assessment receipts. If warranted, the Council will 
recommend to the Secretary that membership on the Council be altered to 
reflect any changes in geographic distribution of domestic raspberry 
production for processing and the quantity of imports. If the level of 
imports increases or decreases, importer members and alternates may be 
added or reduced on the Council, subject to recommendation by the 
Council and approval of the Secretary. However, the foreign producer 
seats will remain the same regardless of the volume of imports from 
importing countries.
    (c) Council's Ability to Serve the Diversity of the Industry. When 
making recommendations for appointments, the industry should take into 
account the diversity of the population served and the knowledge, 
skills, and abilities of the members to serve a diverse population, size 
of the operations, methods of production and distribution, and other 
distinguishing factors to ensure that the Council represents the diverse 
interest of persons responsible for paying assessments, and others in 
the marketing chain, if appropriate.



Sec. 1208.41  Nominations and appointments.

    (a) Voting for regional and State producer representatives will be 
made by mail ballot.
    (b) Nominations for the initial Council will be handled by the 
Department. Subsequent nominations will be handled by the Council.
    (c) The nominations for the six producer and alternate members from 
States producing a minimum three year average of three million pounds of 
raspberries delivered for processing will be submitted to the Council in 
the following manner:
    (1) For those States that have a State raspberry commission or State 
marketing order, the State raspberry commission or committee will 
nominate producers and their alternates to serve. Nominations will be 
sent to the Council and placed on a ballot which will then be sent to 
producers in the State for a vote. The 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 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. Once the Council has received all of the nominations from 
commissions or committees, the information will be submitted to the 
Secretary for appointment. Nominations for the initial Council will be 
handled by the Department. Subsequent nominations will be handled by the 
Council staff and shall be submitted to the Secretary not less than 90 
days prior to the expiration of the term of office; or

[[Page 97]]

    (2) For those States that do not have a State raspberry commission 
or State marketing order, the Council will seek nominations from the 
State Departments of Agriculture for members and alternates from the 
specific States. The State Departments of Agriculture will have the 
opportunity to participate in nomination caucuses and may directly 
submit as a group, a single slate of nominations to the Department for 
the six producer positions and producer alternate positions for the 
initial Council. Subsequent nominations shall be submitted to the 
Council and will be handled by the Council staff who in turn shall 
submit those nominations to the Secretary not less than 90 days prior to 
the expiration of the term of office.
    (3) The distribution of the six producer and alternate seats will be 
proportional to the percentage determined by the average of the total 
pounds produced and delivered to processors for processing over the 
previous three years divided by the average total pounds produced over 
the previous three years.
    (d) The nominee for the one raspberry producer of raspberries for 
processing and alternate member who represents all other States 
producing less than a minimum three year average of three million pounds 
of raspberries delivered for processing, will constitute a region and 
the nominations will be submitted to the Council in the following 
manner:
    (1) For those States that have a State raspberry commission or State 
marketing order, the State raspberry commission or committee will 
nominate producers and their alternates to serve. The State raspberry 
commission or committee nominations will be sent to the Council and 
placed on a ballot which will then be sent to producers in the Region 
for a vote. The 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 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. Once the Council has 
received all of the nominations from commissions or committees, the 
information will be submitted to the Secretary for appointment. 
Nominations for the initial Council will be handled by the Department. 
Subsequent nominations will be handled by the Council staff and shall be 
submitted to the Secretary not less than 90 days prior to the expiration 
of the term of office; or
    (2) For those States that do not have a State raspberry commission 
or State marketing order, the Council will seek nominations from the 
State Departments of Agriculture for the member and alternate from the 
specific States. The State Departments of Agriculture will have the 
opportunity to participate in nomination caucuses and will directly 
submit as a group a single slate of nominations to the Department for 
the producer position and the producer alternate position for the 
initial Council. Subsequent nominations shall be submitted to the 
Council and will be handled by the Council staff who in turn shall 
submit those nominations to the Secretary not less than 90 days prior to 
the expiration of the term of office.
    (e) Only producers from States that deliver raspberries for 
processing and are covered under the program are eligible for nomination 
and election to the Council. Average production will be based upon 
Department production data for the initial nomination and production 
figures generated by either the Council or the Department thereafter.
    (f) Nominations for the importer positions and their alternates will 
be made by qualified national organizations representing importers as 
follows:
    (1) All qualified national organizations representing importers will 
have the opportunity to participate in nomination caucuses and will 
submit as a group a single slate of nominations to the Secretary for the 
importer positions and the importer alternate positions on the Council. 
Eligible organizations must submit nominations to the Department not 
less than 90 days prior to the expiration of the term of office. Two 
nominees for each member and each alternate position will be submitted 
to the Secretary for consideration.

[[Page 98]]

    (2) If the Department determines that there are no qualified 
national organizations representing importers, individuals who have paid 
their assessments to the Council in the most recent fiscal year or for 
the initial Council, those that imported processed raspberries into the 
U.S., may directly submit nominations to the Department for the initial 
Council. Subsequent nominations shall be submitted to the Council and 
will be handled by the Council staff who in turn shall submit those 
nominations to the Secretary not less than 90 days prior to the 
expiration of the term of office.
    (g) Nominations for the foreign producer positions and their 
alternates will be made by qualified organizations representing foreign 
producers as follows:
    (1) All qualified organizations representing foreign producer 
interests will have the opportunity to participate in nomination 
caucuses and will submit as a group a single slate of nominations to the 
Secretary for the foreign producer positions and the foreign producer 
alternate positions on the Council.
    (2) If the Department determines that there are no qualified 
organizations representing foreign producer interests, individual 
foreign producers may directly submit nominations to the Department for 
the initial Council. Subsequent nominations shall be submitted to the 
Council and will be handled by the Council staff who in turn shall 
submit those nominations to the Secretary not less than 90 days prior to 
the expiration of the term of office. For the initial Council, persons 
that meet the definition of foreign producer as defined in this subpart 
will certify such qualification and upon certification, if qualified, 
may submit nominations. Two nominees for each member and each alternate 
position will be submitted to the Secretary for consideration.
    (h) Nominations for the at-large member and alternate will be 
conducted at a Council meeting by the Council and shall be submitted by 
the Council to the Secretary for approval. Nominations for the initial 
Council will be handled by the Department. Subsequent nominations will 
be handled by the Council and shall be submitted to the Secretary not 
less than 90 days prior to the expiration of the term of office.
    (i) From the nominations, the Secretary shall select the members of 
the Council and alternates for each position on the Council. Members 
will serve until their replacements have been appointed by the 
Secretary.
    (j) If there is an insufficient number of nominees from whom to 
appoint members to the Council, the Secretary may appoint members in 
such a manner as the Secretary determines appropriate.
    (k) Qualified national organization representing importer interests. 
To be certified as a qualified national organization representing 
importer interests, an organization must meet the following criteria, as 
evidenced by a report submitted by the organization to the Secretary:
    (1) The organization must represent a substantial number of 
importers who market or produce a substantial volume of raspberries for 
processing;
    (2) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (3) The organization must promote processed raspberries importers' 
welfare; and
    (4) The organization must derive a portion of its operating funds 
from importers.
    (l) Qualified organization representing foreign producer interests. 
To be certified by the Secretary as a qualified organization 
representing foreign producer interests, an organization must meet the 
following criteria, as evidenced by a report submitted by the 
organization to the Secretary:
    (1) The organization must represent a substantial number of foreign 
producers who produce a substantial volume of raspberries for 
processing;
    (2) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (3) The organization must promote processed raspberry foreign 
producers' welfare;
    (4) The organization must derive a portion of its operating funds 
from foreign producers; and

[[Page 99]]

    (5) The organization must be from a country exporting a minimum of 
three million pounds of raspberries for processing to the U.S. based on 
a three-year average.
    (m) Eligible organizations, foreign producers, or importers must 
submit nominations to the Secretary not less than 90 days prior to the 
expiration of the term of office. At least two nominees for each 
position to be filled must be submitted.



Sec. 1208.42  Term of office.

    Council members and alternates will serve for a term of three years 
and be able to serve a maximum of two consecutive terms. A Council 
member may serve as an alternate during the years the member is 
ineligible for a member position. When the Council is first established, 
four producer members, two importers, one of the two foreign producers, 
and the at-large member and their respective alternates will be assigned 
initial terms of three years. The remaining three producer members, one 
importer member, and the second foreign producer and their alternates 
will serve an initial term of two years. Members serving an initial term 
of two years will be eligible to serve a second term of three years. 
Thereafter, each of these positions will carry a full three-year term. 
Council nominations and appointments will take place in two out of every 
three years. 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. Each term of office will end on 
December 31, with new terms of office beginning on January 1.



Sec. 1208.43  Vacancies.

    (a) In the event that any member of the Council ceases to be a 
member of the category of membership from which the member was appointed 
to the Council, such position shall automatically become vacant.
    (b) 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 engages 
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 may 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. 1208.40 and Sec. 
1208.41, except that said nomination and replacement shall not be 
required if said unexpired terms are less than six months.



Sec. 1208.44  Alternate members.

    An alternate member of the Council, 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 a producer, importer, foreign producer, 
or at-large member of the Council and their alternate are unable to 
attend a meeting, the Council may not designate any other alternate to 
serve in such member's or alternate's place and stead for such a 
meeting.



Sec. 1208.45  Procedure.

    (a) At a Council meeting, it will be considered a quorum when a 
majority (one more than half) of the Council members is present. An 
alternate will be counted for the purpose of determining a quorum only 
if the member for whom the person is the alternate is absent or 
disqualified from participating.
    (b) At the start of each fiscal period, the Council will select a 
chairperson, vice chairperson, and other officers as appropriate, who 
will conduct meetings throughout that period.
    (c) The chairperson and the treasurer shall reside in the United 
States, and the Council office shall also be located in the United 
States.
    (d) All Council meetings shall be held in the United States.

[[Page 100]]

    (e) All Council members and alternates will receive a minimum of 20 
days advance notice of all Council and committee meetings.
    (f) 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 one 
(1) vote more than 50 percent of the total votes represented by the 
Council members present.
    (g) It will be considered a quorum at a Council committee meeting 
when at least one more than half of those assigned to the Council 
committee are present. Alternates may also be assigned to Council 
committees as necessary. Council committees may consist of persons other 
than Council members and such persons may vote in Council committee 
meetings.
    (h) 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 if supported by one vote more 
than 50 percent of the members present, 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 Council. All votes 
shall be recorded in Council minutes.
    (i) There shall be no voting by proxy.
    (j) The chairperson shall be a voting member.
    (k) The organization of the Council and the procedures for the 
conducting of meetings of the Council shall be in accordance with its 
bylaws, which shall be established by the Council and approved by the 
Secretary.



Sec. 1208.46  Compensation and reimbursement.

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



Sec. 1208.47  Powers and duties.

    The Council 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 Council, 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 
Council a chairperson, other officers, committees, and subcommittees, as 
the Council determines to be appropriate;
    (d) To employ persons, other than members, as the Council considers 
necessary to assist the Council in carrying out its duties and to 
determine the compensation and specify the duties of such persons;
    (e) To develop and carry our generic promotion, research, and 
information activities relating to processed raspberries;
    (f) 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 Council shall develop and submit to the Council 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 Council of activities conducted under the contract or 
agreement; and make such other reports available as the Council or the 
Secretary considers necessary. 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;

[[Page 101]]

    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Council of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Council may require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically;
    (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;
    (g) To prepare and submit for approval of the Secretary, before the 
beginning of each fiscal year, rates of assessment and a fiscal year 
budget of the anticipated expenses to be incurred in the administration 
of the Order, including the probable cost of each promotion, research, 
and information activity proposed to be developed or carried out by the 
Council in accordance with Sec. 1208.50;
    (h) To borrow funds necessary for the startup expenses of the order;
    (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 require and to make the records available to the Secretary for 
inspection and audit; 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 
Council;
    (j) To cause its books to be audited by a independent 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 Council 
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 Council to the Secretary;
    (l) To act as intermediary between the Secretary and any producer, 
first handler, processor, importer, or foreign producer;
    (m) To furnish to the Secretary any information or records that the 
Secretary may request;
    (n) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (o) To recommend to the Secretary such amendments to the Order as 
the Council considers appropriate;
    (p) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the processed raspberry 
industry's position in the marketplace; maintain and expand existing 
markets and uses for processed raspberries; and to carry out programs, 
plans, and projects designed to provide maximum benefits to the 
processed raspberry industry; and
    (q) To pay the cost of the activities with assessments collected 
under Sec. 1208.52.



Sec. 1208.48  Prohibited activities.

    The Council may not engage in, and shall prohibit the employees and 
agents of the Council from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Council 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; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the Order that may be 
false or misleading or disparaging to another agricultural commodity.

                        Expenses and Assessments



Sec. 1208.50  Budget and expenses.

    (a) 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. The budget for 
research, promotion, or information may not be implemented prior to 
approval of the

[[Page 102]]

budget by the Secretary. No later than forty-five (45) days after the 
receipt of such budget, the Secretary shall notify the Council whether 
the Secretary approves or disapproves the budget. Each 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 of at 
least one preceding year (except for the initial budget); and
    (3) A summary of proposed expenditures for each program, plan, or 
project;
    (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 one program, plan, or project to another. Shifts in funds 
which do not cause an increase in the Council's approved budget, and 
which are consistent with by laws, need not have prior approval by the 
Department.
    (d) 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.
    (e) With 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. Any funds 
borrowed by the Council shall be expended for startup costs and capital 
outlays and are limited to the first year of operation of the Council.
    (f) The Council is authorized to repay startup costs associated with 
establishing a program and an initial referendum. If approved, these 
costs would be amortized and repaid over a maximum three (3) year 
period.
    (g) The Council 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 encumbrance by the donor and the Council shall retain complete 
control of their use.
    (h) The Council 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.
    (i) The Council shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement, and supervision of the Order, including all referendum 
costs in connection with the Order.
    (j) The Council may not expend for administration, maintenance, and 
functioning of the Council in any fiscal year an amount that exceeds 15 
percent of the assessments and other income received by the Council for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (i) of this section are excluded from this limitation on 
spending.
    (k) The Council 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.
    (l) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Council may invest assessments 
and all other revenues collected under this section 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) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System; 
or

[[Page 103]]

    (4) Obligations fully guaranteed as to principal interest by the 
United States.



Sec. 1208.51  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.



Sec. 1208.52  Assessments.

    (a) The funds to cover the Council's expenses shall be paid from 
assessments on producers and importers at a rate not to exceed one cent 
per pound; the initial rate is one cent per pound, donations from any 
person not subject to assessments under this Order, and other funds 
available to the Council including those collected pursuant to Sec. 
1208.56 and subject to the limitations contained therein.
    (b) The collection of assessments on domestic processed raspberries 
will be the responsibility of the first handler receiving the 
raspberries for processing. In the case of the producer acting as its 
own first handler, the producer will be required to collect and remit 
its individual assessments. The rate of assessments shall be prescribed 
in regulations issued by the Secretary.
    (c) The Council may recommend to the Secretary an increase or 
decrease to the assessment rate. Such an increase or decrease may occur 
not more than once annually. Any change in the assessment rate shall be 
subject to rulemaking by the Department.
    (d) Each importer of processed raspberries shall pay an assessment 
to the Council on processed raspberries imported for marketing in the 
United States, through Customs. If Customs does not collect an 
assessment from an importer, the importer would be responsible for 
paying the assessment directly to the Council. The assessment rate for 
imported processed raspberries shall not exceed one cent per pound, with 
the initial rate being one cent per pound.
    (1) The assessment rate for imported processed raspberries shall be 
the same or equivalent to the rate for processed raspberries produced in 
the United States.
    (2) The import assessment shall be uniformly applied to imported 
processed red raspberries that are identified by the numbers 
0811.20.2025, 2007.99.65.10, and 2009.80.60.55 in the Harmonized Tariff 
Schedule of the United States or any other numbers used to identify 
processed raspberries. Processed raspberries entering the United States 
under HTS code 2007.99.65.10 will be initially assessed using a 1:1 
ratio to HTS code 0811.20.2025. Processed raspberries entering the 
United States under HTS code 2009.80.60.55 will be assessed using a 
6.8:1 ratio to HTS code 0811.20.2025. Assessments and conversion ratios 
on other types of processed raspberries may be added at the 
recommendation of the Council subject to the approval of the Secretary.
    (3) Each importer of processed raspberries shall pay through Customs 
to the Council an assessment on processed raspberries imported into the 
United States as described in section 804(a) of Title VIII of the Tariff 
Act of 1930, as amended (19 U.S.C. 1202-1683g), provided that it can be 
categorized in the HTS numbers listed in paragraph (d)(2) of this 
section.
    (4) Imported processed raspberries covered under the program will 
have a quantity associated with it in either kilograms or liters. The 
factor used to convert one pound to kilograms is .45359237. The factor 
used to convert one pound to liters is .45359237 liters of water weight. 
Therefore, the assessment rate for imported processed raspberries will 
be $.022 per kilogram/liter.
    (5) Table I, Processed Raspberry Products Assessment Table, contains 
the applicable HTS classification numbers of processed red raspberries, 
processed red raspberry paste and puree, and processed red raspberry 
juice and

[[Page 104]]

juice concentrate, and assessment rates in dollars per kilograms and 
dollars per liter. Accordingly, the assessment rate per kilogram/liter 
is as follows.

         Table I--Processed Raspberry Products Assessment Table
------------------------------------------------------------------------
                                                           Default rate
 Frozen red raspberries, IQF, bulk                          per unit of
frozen, puree, preserves, or juice     Unit of measure      product (in
        concentrate HTS No.                                  dollars)
------------------------------------------------------------------------
0811.20.20.25.....................  kilogram............            .022
2007.99.65.10.....................  kilogram............            .022
2009.80.60.55.....................  liter...............           .1496
------------------------------------------------------------------------

    (6) In the event that any HTS classification number is changed, 
replaced by another number, or added, and still falls within the 
definition of processed raspberries as defined in Sec. 1208.17, 
assessments will be collected based on the HTS classification number.
    (e) All assessment payments will be submitted to the office of the 
Council. All final payments for a crop year are to be received no later 
than October 31 of that year for producers of processed raspberries 
within the United States. A late payment charge shall be imposed on any 
handler or importer who fails to remit to the Council, the total amount 
for which any such first handler or importer is liable on or before the 
due date established by the Council. In addition to the late payment 
charge, an interest charge shall be imposed on the outstanding amount 
for which the first handler or importer 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 Council may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (h) Council may provide credits of assessments for those persons who 
contribute to local, regional, or State organizations engaged in similar 
generic research, promotion, and information programs as partial 
fulfillment of assessment due to the Council subject to approval of the 
Secretary, for expenditure on generic research, promotion and 
information programs conducted within the United States.
    (1) No credit will be given for funds expended for administrative 
purposes.
    (2) No credit shall be given for research, promotion, and 
information program activity conducted outside of the United States.
    (3) The aggregate credit allowable in any one year shall be limited 
to an amount determined by the Council subject to the approval of the 
secretary, and shall be equal to not more than the determined percentage 
rate of the total assessments paid by any individual in a year to any 
State, regional, or local program.
    (4) Credit shall only be given for generic research, promotion, and 
information program activities.
    (5) Credit of assessment may be obtained only by following the 
procedures prescribed in this section and any regulations recommended by 
the Council and prescribed by the Secretary. An individual owing 
assessments shall make a written request to the Council and the request 
shall contain the assessment paying individual's signature and shall 
show:
    (i) The name and address of the assessment paying individual;
    (ii) The name and address of the person who collected the 
assessment;
    (iii) The quantity of processed raspberries on which a credit is 
requested;
    (iv) The total amount of credit requested;
    (v) The date or dates on which the assessments were paid;
    (vi) A certification that the assessment was not collected from 
another producer or documentation of assessments collected from local, 
State, or regional organizations; and
    (vii) The individual's signature or properly witnessed mark.
    (6) The evidence of payment as required under Sec. 1208.61, or a 
copy thereof, or such other evidence deemed necessary to the Council 
shall accompany the individual's credit of assessment request.



Sec. 1208.53  Exemption and reimbursement procedures.

    (a) Any producer who produces less than 20,000 pounds of raspberries 
for processing annually who desires to

[[Page 105]]

claim an exemption from assessments during a fiscal year as provided in 
Sec. 1208.52 shall apply to the Council, on a form provided by the 
Council, for a certificate of exemption. Such producer shall certify 
that the producer's production of raspberries for processing shall be 
less than 20,000 pounds for the fiscal year for which the exemption is 
claimed. Any importer who imports less than 20,000 pounds of processed 
raspberries annually who desires to claim an exemption from assessments 
during a fiscal year as provided in Sec. 1208.52 shall apply to the 
Council, on a form provided by the Council, for a certificate of 
exemption. Such importer shall certify that the importer's importation 
of processed raspberries shall not exceed 20,000 pounds, for the fiscal 
year for which the exemption is claimed. If a producer or importer 
determines at the end of the year that they did not meet the 20,000 
pounds minimum, the producer or importer can request a reimbursement on 
the assessments paid to the Council by 60 days of the last day of the 
year. If, after a person has been exempt from paying assessments for any 
year pursuant to this section, and the person no longer meets the 
requirements of paragraph of this section for an exemption, the person 
shall file a report with the Council in the form and manner prescribed 
by the Council and pay an assessment on or before March 15 of the 
subsequent year on all raspberries for processing produced or processed 
raspberries imported by such persons during the year for which the 
person claimed the exemption.
    (b) On receipt of an application, the Council shall determine 
whether an exemption may be granted. The Council will then issue, if 
deemed appropriate, a certificate of exemption to the producer or 
importer which is eligible to receive one. Each producer who is exempt 
from assessment must provide an exemption number as supplied by the 
Council to the first handler in order to be exempt from the collection 
of an assessment on raspberries for processing. First handlers shall 
maintain records showing the exemptee's name and address along with the 
exemption number assigned by the Council.
    (c) Importers who are eligible for reimbursement of assessments 
collected by Customs shall apply to the Council for reimbursement of 
such assessments paid. No interest will be paid on assessments collected 
by Customs. Requests for reimbursement shall be submitted within 60 days 
of the last day of the year the processed raspberries were actually 
imported. Any claim for reimbursement submitted after sixty (60) days 
will be considered null and void.
    (d) A producer who produces raspberries for processing who operates 
under an approved National Organic Program (NOP) (7 CFR part 205) system 
plan, produces only products that are eligible to be labeled as 100 
percent organic under the NOP, and is not a split operation shall be 
exempt from the payment of assessments.
    (1) To obtain this exemption, an eligible producer shall submit a 
request for exemption to the Council--on a form provided by the 
Council--at any time initially and annually thereafter on or before the 
beginning of the fiscal period as long as the producer continues to be 
eligible for the exemption.
    (2) The request shall include the following: The producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
the Organic Act, a signed certification that the applicant meets all of 
the requirements specified for an assessment exemption, and such other 
information as may be required by the Council and with the approval of 
the Secretary.
    (3) If the producer complies with the requirements of paragraph (d) 
of this section, the Council will grant an assessment exemption and 
shall issue a Certificate of Exemption to the producer. For exemption 
requests received on or before March 15 of the fiscal year, the Council 
will have 60 days to approve the exemption request; after March 15 of 
the fiscal year, the Council will have 30 days to approve the exemption 
request. If the application is disapproved, the Council will notify the 
applicant of the reason(s) for disapproval within the same timeframe.
    (4) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7

[[Page 106]]

CFR part 205) and who is not a split operation shall be exempt from the 
payment of assessments. That importer may submit documentation to the 
Council and request an exemption from assessment on 100 percent organic 
processed raspberries--on a form provided by the Council--at any time 
initially and annually thereafter on or before the beginning of the 
fiscal period as long as the importer continues to be eligible for the 
exemption. This documentation shall include the same information 
required of a producer in paragraph (d)(3) of this section. If the 
importer complies with the requirements of this section, the Council 
will grant the exemption and issue a Certificate of Exemption to the 
importer within the applicable timeframe. The Council will also issue 
the importer a 9-digit alphanumeric Harmonized Tariff Schedule (HTS) 
classification valid for 1 year from the date of issue. This HTS 
classification should be entered by the importer on the Customs entry 
documentation. Any line item entry of 100 percent organic processed 
raspberries bearing this HTS classification assigned by the Council will 
not be subject to assessments.
    (e) Any person who desires an 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.
    (f) The Council, with the Secretary's approval, may request that 
persons claiming an exemption from assessments under Sec. 1208.53 must 
provide it with any information it deems necessary about the exemption, 
including, without limitation, the disposition of the exempted 
commodity.
    (g) The exemption will apply immediately following the issuance of 
the certificate of exemption.



Sec. 1208.54  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 a program, 
plan, or project shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, and information, including 
producer and consumer industry information, with respect to processed 
raspberries; and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, production, health, sale, distribution, and 
marketing of processed raspberries, and the creation of new products or 
product development, thereof, to the end that the marketing and use of 
processed raspberries may be encouraged, expanded, improved, or made 
more acceptable and to advance the image, desirability, or quality of 
processed raspberries.
    (b) A program, plan, or project may not be implemented prior to 
approval of the program, plan, or project by the Secretary. No later 
than forty-five (45) days after the receipt of such program, plan, or 
project, the Secretary shall notify the Council whether the Secretary 
approves or disapproves the program, plan, or project. Once a program, 
plan, or project is so approved, the Council 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 Council to ensure 
that it contributes to an effective program of promotion, research, or 
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, or information, then the Council shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading, or disparage another agricultural commodity. 
Processed raspberries of all origins shall be treated equally.



Sec. 1208.55  Independent evaluation.

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

[[Page 107]]

each periodic independent evaluation conducted under this paragraph.



Sec. 1208.56  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 
Council under this subpart shall be the property of the U.S. Government 
as represented by the Council 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 Council, shall be considered income subject to the 
same fiscal, budget, and audit controls as other funds of the Council, 
and may be licensed subject to approval by the Secretary. Upon 
termination of this subpart, Sec. 1208.73 shall apply to determine 
disposition of all such property.

                       Reports, Books, and Records



Sec. 1208.60  Reports.

    (a) Each first handler subject to this subpart may be required to 
provide to the Council periodically such information as may be required 
by the Council, 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 Council 30 days after the end of the crop year.
    (b) Each importer subject to this subpart may be required to provide 
to the Council periodically such information as may be required by the 
Council, with the approval of the Secretary, which may include but not 
be limited to the following:
    (1) Number of pounds processed raspberries imported;
    (2) Number of pounds which an assessment was paid;
    (3) Name and address of the importer;
    (4) Date collection was made on each pound processed raspberries 
imported. All reports are due to the Council 30 days after the end of 
the crop year.



Sec. 1208.61  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 records shall be 
retained for at least two (2) years beyond the fiscal period of their 
applicability.



Sec. 1208.62  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 Council, 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, exporters, foreign 
producers, 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

[[Page 108]]

    (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. 1208.70  Right of the Secretary.

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



Sec. 1208.71  Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a majority of producers and importers voting 
for approval in the initial referendum who, during a representative 
period determined by the Secretary, have been engaged in the production 
of raspberries for processing or the importation of processed 
raspberries.
    (b) Subsequent referenda. Every seven years, the Secretary shall 
hold a referendum to determine whether producers of raspberry delivered 
for processing and importers of processed raspberries favor the 
continuation of the Order. The Order shall continue if it is favored by 
a majority of producers and importers voting for approval in the 
referendum who, during a representative period determined by the 
Secretary, have been engaged in the production or importation of 
processed raspberries. The Secretary will also conduct a subsequent 
referendum if 10 percent or more of all eligible producers of 
raspberries for processing and importers of processed raspberries 
request the Secretary to hold a referendum or if the Council established 
under Sec. 1208.40 requests that the Secretary hold a referendum. In 
addition, the Secretary may hold a referendum at any time.



Sec. 1208.72  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 by a majority of 
producers and importers voting for approval who, during a representative 
period determined by the Secretary, have been engaged in the production 
or importation of processed raspberries.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) days after making 
the determination, suspend or terminate, as the case may be, collection 
of assessments under this subpart.
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec. 1208.73  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council 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 Council. 
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 Council, 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 Council 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 
Council and the trustees, to such person or persons as the Secretary may 
direct.

[[Page 109]]

    (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 Council 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 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 disposed of, 
to the extent practical, to one or more domestic raspberry industry 
organizations in the interest of continuing processed raspberry 
promotion, research, and information programs.



Sec. 1208.74  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.
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder.
    (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. 1208.75  Personal liability.

    No member, alternate member, or employee of the Council 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.



Sec. 1208.76  Separability.

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



Sec. 1208.77  Amendments.

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



Sec. 1208.78  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 0505-0001, OMB control number 0581-0093, and OMB control number 
0581-0257.



                     Subpart B_Referendum Procedures



Sec. 1208.100  General.

    Referenda to determine whether eligible producers of raspberries for 
processing and importers of processed raspberries favor the issuance, 
amendment, suspension, or termination of the Processed Raspberry 
Promotion, Research, and Information Order shall be conducted in 
accordance with this subpart.



Sec. 1208.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, 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 producer means any person who grows 20,000 pounds or 
more of

[[Page 110]]

raspberries for processing 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, raspberries for processing beyond the person's 
own family use and having value at first point of sale.
    (d) Eligible importer means any person importing 20,000 or more 
pounds of processed raspberries 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 processed raspberries outside of the United 
States for sale in the United States, and who is listed as the importer 
of record for such processed raspberries that are identified in the 
Harmonized Tariff Schedule of the United States by the numbers 
0811.20.20.20, during the representative period. Importation occurs when 
processed raspberries originating outside of the United States are 
released from custody by Customs and introduced into the stream of 
commerce in the United States. Included are persons who hold title to 
foreign-produced processed raspberries immediately upon release by 
Customs, as well as any persons who act on behalf of others, as agents 
or brokers, to secure the release of processed raspberries from Customs 
when such processed raspberries are entered or withdrawn for consumption 
in the United States.
    (e) Raspberries mean and include all kinds, varieties, and hybrids 
of cultivated raspberries of the genus ``Rubus'' grown in or imported 
into the United States.
    (f) Processed Raspberries means raspberries which have been frozen, 
dried, pureed, made into juice, or delivered in any other form altered 
by mechanical processes other than fresh.
    (g) Order means the Processed Raspberry Promotion, Research, and 
Information Order.
    (h) 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 raspberry 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.
    (i) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (j) Representative period means the period designated by the 
Department.
    (k) 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. 1208.102  Voting.

    (a) Each eligible producer of raspberries for processing and 
eligible importer of processed raspberries 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 process raspberries, in which 
more than one of the parties is a producer or importer, shall be 
entitled to cast one ballot in the referendum covering only such 
producer or importer'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 as instructed by the 
Department.

[[Page 111]]



Sec. 1208.103  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
    (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. 1208.104  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 of such appointment, shall be performed by the agent.



Sec. 1208.105  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. 1208.106  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. 1208.107  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. 1208.108  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-NEW.



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.

[[Page 112]]

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

                            Mushroom Council

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

   Promotion, Research, Consumer Information, and Industry Information

1209.40 Programs, plans, and projects.

                        Expenses and Assessments

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

                       Reports, Books, and Records

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

                              Miscellaneous

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

                     Subpart B_Rules and Regulations

                               Definitions

1209.200 Terms defined.

                          Nomination Procedures

1209.230 [Reserved]
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 and 7 U.S.C. 7401.

    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

[[Page 113]]

evaluations and decisions regarding the purchase, preparation, and use 
of mushrooms.



Sec. 1209.4  Council.

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



Sec. 1209.5  Department.

    Department means the United States Department of Agriculture.



Sec. 1209.6  First handler.

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



Sec. 1209.7  Fiscal year.

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



Sec. 1209.8  Importer.

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



Sec. 1209.9  Industry information.

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



Sec. 1209.10  Marketing.

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



Sec. 1209.11  Mushrooms.

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

[[Page 114]]



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) of this section, importers shall be 
appointed by the Secretary to the Council under Sec. 1209.33 once 
imports, on average, reach at least 50,000,000 pounds of mushrooms 
annually.
    (b) For purposes of nominating and appointing producers to the 
Council, the United States shall be divided into three geographic 
regions and the number of Council members from each region shall be as 
follows:
    (1) Region 1: All other States including the District of Columbia 
and the Commonwealth of Puerto Rico except for Pennsylvania and 
California--2 Members.
    (2) Region 2: The State of Pennsylvania--4 Members.
    (3) Region 3: The State of California--2 Members.
    (c) Importers shall be represented by a single, separate region, 
referred to as Region 4, consisting of the United States when imports, 
on average, equal or exceed 50,000,000 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) of this section, or modification of the number of members from such 
regions, as determined under the rules established in paragraph (e), of 
this section 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) of this section:
    (1) Each region that produces, on average, at least 50,000,000 
pounds of mushrooms annually shall be entitled to one representative on 
the Council.
    (2) As provided in paragraph (c) of this section, importers shall be 
represented by a single, separate region, which shall be entitled to one 
representative, if such region imports, on average, at least 50,000,000 
pounds of mushrooms annually.
    (3) If the annual production of a region is greater than 110,000,000 
pounds, but less than or equal to 180,000,000 pounds, the region shall 
be represented by 1 additional member.
    (4) If the annual production of a region is greater than 180,000,000 
pounds, but less than or equal to 260,000,000 pounds, the region shall 
be represented by 2 additional members.
    (5) If the annual production of a region is greater than 260,000,000 
pounds, the region shall be represented by 3 additional members.
    (6) Should, in the aggregate, regions be entitled to levels of 
representation under paragraphs (e)(1), (2), (3), (4) and (5) of this 
section that would exceed the nine-member limit on the Council

[[Page 115]]

under the Act, the seat or seats assigned shall be assigned to that 
region or those regions with greater on-average production or import 
volume than the other regions otherwise eligible at that increment 
level.
    (f) In determining the volume of mushrooms produced in the United 
States or imported into the United States for purposes of this section, 
the Council and the Secretary shall:
    (1) Only consider mushrooms produced or imported by producers and 
importers, respectively, as those terms are defined in 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.

[58 FR 3449, Jan. 8, 1993, as amended at 74 FR 50919, Oct. 2, 2009]



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.

[[Page 116]]

    (iii) If a producer nominee is engaged in the production of 
mushrooms in more than one region or is also an importer, such 
individual shall participate within the region that such individual so 
elects in writing to the Council and such election shall remain 
controlling until revoked in writing to the Council.
    (e) After the regional caucuses for the initial Council, the Council 
may conduct the selection of nominees by mail ballot in lieu of a 
regional caucus.
    (f) When producers or importers are voting for nominees to the 
Council, whether through a regional caucus or a mail ballot, the 
following conditions shall apply:
    (1) Voting for any open position shall be on the basis of:
    (i) One vote per eligible voter; and
    (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

[[Page 117]]

than 35,000,000 pounds, the minimum established for representation on 
the Council, importers will not initially have a member appointed to the 
Council.
    (c)(1) Except with respect to terms of office of the initial 
Council, the term of office for each member of the Council shall begin 
on January 1 or such other date that may be approved by the Secretary.
    (2) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary, except that time in 
the interim period from appointment until the following January 1, or 
such other date that is the generally applicable beginning date for 
terms under paragraph (c)(1) approved by the Secretary, shall not count 
toward the initial term of office.
    (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 118]]

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 119]]

    (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) To develop and propose to the Secretary programs for good 
agricultural and good handling practices and related activities for 
mushrooms.
    (m) Such other powers as may be approved by the Secretary; and
    (n) 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.

[58 FR 3449, Jan. 8, 1993, as amended at 74 FR 50920, Oct. 2, 2009]



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:

[[Page 120]]

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

[[Page 121]]

    (d) The Council may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Council shall retain complete control of their use. 
The donor may recommend that the whole or a portion of the contribution 
be applied to an ongoing program, plan, or project.
    (e) The Council shall reimburse the Secretary, from funds received 
by the Council, for administrative costs incurred by the Secretary in 
implementing and administering this subpart, except for the salaries of 
Department employees incurred in conducting referenda.
    (f) The Council may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established, except that the funds in the reserve shall not exceed 
approximately 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 numbers, 0709.51.01 and 0709.59 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,

[[Page 122]]

or at such other time as may be established by rules and regulations 
prescribed by the Council and approved by the Secretary and under such 
procedures as are provided in such rules and regulations.
    (5) Only one assessment shall be paid on each unit of mushrooms 
imported.
    (f) The collection of assessments under this section shall commence 
on all mushrooms marketed in or imported into the United States on or 
after the date established by the Secretary, and shall continue until 
terminated by the Secretary. If the Council is not constituted on the 
date the first assessments are to be collected, the Secretary shall have 
the authority to receive assessments on behalf of the Council and may 
hold such assessments until the Council is constituted, then remit such 
assessments to the Council.
    (g)(1) Each person responsible for remitting assessments under 
paragraphs (a), (c), or (e) shall remit the amounts due from assessments 
to the Council on a monthly basis no later than the fifteenth day of the 
month following the 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.

[58 FR 3449, Jan. 8, 1993, as amended at 72 FR 41427, July 30, 2007]



Sec. 1209.52  Exemption from assessment.

    (a) The following persons shall be exempt from assessments under 
this part:
    (1) A person who produces or imports, on average, 500,000 pounds or 
less of mushrooms annually; and
    (2) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in Sec. 1209.252(a)(2)(vi); and is not a split 
operation; and
    (3) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation.
    (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

[[Page 123]]

and regulations to prevent improper use of this exemption.

[58 FR 3449, Jan. 8, 1993, as amended at 70 FR 2756, Jan. 14, 2005]



Sec. 1209.53  Influencing governmental action.

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

                       Reports, Books and Records



Sec. 1209.60  Reports.

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

[[Page 124]]

Nothing in this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

                              Miscellaneous



Sec. 1209.70  Right of the Secretary.

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



Sec. 1209.71  Suspension or termination.

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

[[Page 125]]

subject to the same obligations imposed upon the Council and upon the 
trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information 
programs, plans, or projects authorized under this subpart.



Sec. 1209.73  Effect of termination or amendment.

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



Sec. 1209.74  Personal liability.

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



Sec. 1209.231  Nominations.

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

[[Page 126]]

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 will be contacted by the Council and

[[Page 127]]

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 128]]

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) Types of exemptions and requirements. (1) 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 shall apply to the Council, on a form provided by the 
Council, for a Certificate of Exemption. The producer or importer shall 
certify that the person's production or importation of mushrooms shall 
not exceed 500,000 pounds, on average, for the fiscal year for which the 
exemption is claimed. An average shall be calculated by averaging a 
person's estimated production or importation for the fiscal year for 
which an exemption is claimed with the person's production or 
importation in the preceding fiscal year.
    (2) To apply for an exemption for organic mushrooms:
    (i) An eligible mushroom producer shall submit a request for 
exemption to the Council--on a form provided by the Council--at any time 
initially and annually thereafter on or before January 1 as long as the 
producer continues to be eligible for the exemption.
    (ii) The request shall include the following: The producer's name 
and address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Council and with the approval of 
the Secretary.
    (iii) If the producer complies with the requirements of Sec. 
1209.52 (a)(2), the Council will grant the exemption and issue a 
Certificate of Exemption to the producer. For exemption requests 
received on or before August 15, 2005, the Council will have 60 days to 
approve the exemption request; after August 15, 2005, the Council will 
have 30 days to approve the exemption request. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.

[[Page 129]]

    (iv) An eligible importer may submit documentation to the Council 
and request an exemption from assessment on 100 percent organic 
mushrooms--on a form provided by the Council--at any time initially and 
annually thereafter on or before January 1 as long as the importer 
continues to be eligible for the exemption. This documentation shall 
include the same information required of producers. If the importer 
complies with the requirements of this section, the Council will grant 
the exemption and issue a Certificate of Exemption to the importer. The 
Council will also issue the importer a 9-digit alphanumeric Harmonized 
Tariff Schedule (HTS) classification valid for 1 year from the date of 
issue. This HTS classification should be entered by the importer on the 
Customs entry documentation. Any line item entry of 100 percent organic 
mushrooms bearing this HTS classification assigned by the Council will 
not be subject to assessments.
    (v) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (vi) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.
    (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.

[58 FR 3449, Jan. 8, 1993, as amended at 70 FR 2756, Jan. 14, 2005]

                                 Reports



Sec. 1209.260  Reports.

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

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

                              Miscellaneous



Sec. 1209.280  OMB control numbers.

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

[[Page 130]]



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 the amendment, continuation, suspension, or termination of the 
Mushroom Promotion, Research, and Consumer Information Order shall be 
conducted in accordance with these procedures.

[74 FR 18464, Apr. 23, 2009]



Sec. 1209.301  Definitions.

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



Sec. 1209.302  Voting.

    (a) Each person who is an eligible producer or importer, as defined 
in this

[[Page 131]]

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.



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.

[[Page 132]]



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.

                     Subpart C_Rules and Regulations

                               Definitions

1210.500 Terms defined.

                                 General

1210.501 Realignment of districts.
1210.502 Importer members.
1210.504 Contracts.
1210.505 Department of Agriculture costs.

                               Assessments

1210.515 Levy of assessments.
1210.516 Exemption for organic watermelons.
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.

[[Page 133]]

                     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 and 7 U.S.C. 7401.

    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 ``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

[[Page 134]]

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.
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

[[Page 135]]

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; 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

[[Page 136]]

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.



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

[[Page 137]]

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;
    (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]

[[Page 138]]

                         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 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

[[Page 139]]

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 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

[[Page 140]]

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 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

[[Page 141]]

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 
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

[[Page 142]]

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 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

[[Page 143]]

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 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

[[Page 144]]

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.
    (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

[[Page 145]]

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]

                            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.

[[Page 146]]

    (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 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.

[[Page 147]]

                               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:
    (a) District 1--The Florida counties of Brevard, Broward, Charlotte, 
Collier, Dade, Desoto, Glades, Hardee, Hendry, Highlands, Hillsborough, 
Indian River, Lake, Lee, Manatee, Martin, Monroe, Okeechobee, Orange, 
Osceola, Palm Beach, Pasco, Pinellas, Polk, Sarasota, Seminole, St. 
Lucie, and Volusia.
    (b) District 2--The Florida counties of Alachua, Baker, Bay, 
Bradford, Calhoun, Citrus, Clay, Columbia, Dixie, Duval, Escambia, 
Flagler, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hernando, Holmes, 
Jackson, Jefferson, Lafayette, Leon, Levy, Liberty, Madison, Marion, 
Nassau, Okaloosa, Putnam, Santa Rosa, St. Johns, Sumter, Suwannee, 
Taylor, Union, Wakulla, Walton, and Washington, and the States of North 
Carolina and South Carolina.
    (c) District 3--The State of Georgia.
    (d) District 4--The States of Alabama, Connecticut, Delaware, 
Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, 
New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, 
Tennessee, Virginia, Vermont, Wisconsin, West Virginia, and Washington, 
DC.
    (e) District 5--The State of California.
    (f) District 6--The State of Texas.
    (g) District 7--The States of Alaska, Arkansas, Arizona, Colorado, 
Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, 
Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, 
Oregon, South Dakota, Utah, Washington, and Wyoming.

[76 FR 42012, July 18, 2011]



Sec. 1210.502  Importer members.

    Pursuant to Sec. 1210.320(d) of the Plan, there are eight importer 
representatives on the Board based on the proportionate percentage of 
assessments paid by importers to the Board.

[76 FR 42012, July 18, 2011]



Sec. 1210.504  Contracts.

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



Sec. 1210.505  Department of Agriculture costs.

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

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

                               Assessments



Sec. 1210.515  Levy of assessments.

    (a) An assessment of three cents per hundredweight shall be levied 
on all watermelons produced for ultimate consumption as human food, and 
an assessment of three cents per hundredweight shall be levied on all 
watermelons first handled for ultimate consumption as human food. An 
assessment of six cents per hundredweight

[[Page 148]]

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 0807.11.30 and 0807.11.40 
in the Harmonized Tariff Scheudle of the United States of 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; 
72 FR 41428, July 30, 2007; 72 FR 61051, Oct. 29, 2007]



Sec. 1210.516  Exemption for organic watermelons.

    (a) A producer who produces only products that are eligible to be 
labeled as 100 percent organic under the National Organic Program (NOP) 
(7 CFR part 205), except as provided for in paragraph (h) of this 
section, or a handler who handles only products that are eligible to be 
labeled as 100 percent organic under the NOP; and who operates under an 
approved NOP system plan, and is not a split operation shall be exempt 
from the payment of assessments.
    (b) To apply for this exemption, the producer or handler shall 
submit the request to the Board--on a form provided by the Board--at any 
time initially and annually thereafter on or before January 1 as long as 
the producer or handler continues to be eligible for the exemption.
    (c) The request shall include the following: The applicant's name 
and address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer or handler complies with the requirements of 
this section, the Board will approve the exemption and issue a 
Certificate of Exemption to the producer or handler. For exemption 
requests received on or before August 15, 2005, the Board will have 60 
days to approve the exemption request; after August 15, 2005, the Board 
will have 30 days to approve the exemption request. If the application 
is disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells watermelons. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) An importer imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic watermelons. The 
importer may request the exemption--on a form provided by the Board--at 
any time initially and annually thereafter on or before January 1, as 
long as the importer continues to be eligible for the exemption. This 
documentation shall include the same information required of producers 
and handlers in paragraph (c) of this section. If the importer complies 
with the requirements of this section, the Board will grant the 
exemption and issue a Certificate of Exemption to the importer. The 
Board will also issue the importer a 9-digit alphanumeric Harmonized 
Tariff Schedule (HTS) classification valid for 1 year from the date of 
issue. This HTS classification should be entered by the importer on the 
Customs entry documentation. Any line

[[Page 149]]

item entry of 100 percent organic watermelons bearing this HTS 
classification assigned by the Board will not be subject to assessments.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (h) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2756, Jan. 14, 2005]



Sec. 1210.517  Determination of handler.

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

[[Page 150]]

    (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.
    (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.

[[Page 151]]

    (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.
    (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.

[[Page 152]]

    (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]

                                 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)

[[Page 153]]

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 possession 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, 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:

[[Page 154]]

    (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 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

[[Page 155]]

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.



PART 1212_HONEY PACKERS AND IMPORTERS RESEARCH, PROMOTION, CONSUMER EDUCATION 

AND INDUSTRY INFORMATION ORDER--Table of Contents



  Subpart A_Honey Packers and Importers Research, Promotion, Consumer 
                Education, and Industry Information Order

                               Definitions

Sec.
1212.1 Act.
1212.2 Board.
1212.3 Conflict of interest.
1212.4 Department.
1212.5 Exporter.
1212.6 First handler.
1212.7 Fiscal period for marketing year.
1212.8 Handle.
1212.9 Honey.
1212.10 Honey products.
1212.11 Importer.
1212.12 Importer-Handler Representative.
1212.13 Information.
1212.14 Market or marketing.
1212.15 Order.
1212.16 Part and subpart.
1212.17 Person.
1212.18 Plans and programs.
1212.19 Producer.
1212.20 Promotion.
1212.21 Qualified national organization representing handler interests.
1212.22 Qualified national organization representing importer interests.
1212.23 Qualified national organization representing producer interests.
1212.24 Qualified national organization representing cooperative 
          interests.
1212.25 Referendum.
1212.26 Research.
1212.27 Secretary.
1212.28 Suspend.
1212.29 State.
1212.30 Terminate.
1212.31 United States.
1212.32 United States Customs Service.

                    Honey Packers and Importers Board

1212.40 Establishment and membership.
1212.41 Term of office.

[[Page 156]]

1212.42 Nominations and appointments.
1212.43 Removal and vacancies.
1212.44 Procedure.
1212.45 Reimbursement and attendance.
1212.46 Powers.
1212.47 Duties.
1212.48 Reapportionment of Board membership.

                        Expenses and Assessments

1212.50 Budget and expenses.
1212.51 Financial statements.
1212.52 Assessments.
1212.53 Exemption from assessment.
1212.54 Operating reserve.
1212.55 Prohibition on use of funds.

                  Promotion, Research, and Information

1212.60 Programs, plans, and projects.
1212.61 Independent evaluation.
1212.62 Patents, copyrights, inventions, product formulations, and 
          publications.

                       Reports, Books, and Records

1212.70 Reports.
1212.71 Books and records.
1212.72 Confidential treatment.

                              Miscellaneous

1212.80 Right of the Secretary.
1212.81 Referenda.
1212.82 Suspension or termination.
1212.83 Proceedings after termination.
1212.84 Effect of termination or amendment.
1212.85 Personal liability.
1212.86 Separability.
1212.87 Amendments.
1212.88 OMB Control Numbers.

                     Subpart B_Referendum Procedures

1212.100 General.
1212.101 Definitions.
1212.102 Voting.
1212.103 Instructions.
1212.104 Subagents.
1212.105 Ballots.
1212.106 Referendum report.
1212.107 Confidential information.
1212.108 OMB control number.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

    Source: 73 FR 11472, Mar. 3, 2008.



  Subpart A_Honey Packers and Importers Research, Promotion, Consumer 

                Education, and Industry Information Order

    Source: 73 FR 29397, May 21, 2008, unless otherwise noted.

                               Definitions



Sec. 1212.1  Act.

    ``Act'' means the Commodity Promotion, Research, and Information Act 
of 1996, (7 U.S.C. 7411-7425), and any amendments to that Act.



Sec. 1212.2  Board.

    ``Board'' or ``Honey Packers and Importers Board'' means the 
administrative body established pursuant to Sec. 1212.40, or such other 
name as recommended by the Board and approved by the Department.



Sec. 1212.3  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. 1212.4  Department.

    ``Department'' means the United States 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.



Sec. 1212.5  Exporter.

    ``Exporter'' means any person who exports honey or honey products 
from the United States.



Sec. 1212.6  First handler.

    ``First handler'' means the first person who buys or takes 
possession of honey or honey products from a producer for marketing. If 
a producer markets honey or honey products directly to consumers, that 
producer shall be considered to be the first handler with respect to the 
honey produced by the producer.



Sec. 1212.7  Fiscal period.

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

[[Page 157]]



Sec. 1212.8  Handle.

    ``Handle'' means to process, package, sell, transport, purchase or 
in any other way place honey or honey products, or causes them to be 
placed, in commerce. This term includes selling unprocessed honey that 
will be consumed without further processing or packaging. This term does 
not include the transportation of unprocessed honey by the producer to a 
handler or transportation by a commercial carrier of honey, whether 
processed or unprocessed for the account of the first handler or 
producer.



Sec. 1212.9  Honey.

    ``Honey'' means the nectar and saccharine exudations of plants that 
are gathered, modified, and stored in the comb by honeybees, including 
comb honey.



Sec. 1212.10  Honey products.

    ``Honey products'' mean products where honey is a principal 
ingredient. For purposes of this subpart, a product shall be considered 
to have honey as a principal ingredient if the product contains at least 
50% honey by weight.



Sec. 1212.11  Importer.

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



Sec. 1212.12  Importer-Handler Representative.

    ``Importer-Handler Representative'' means any person who is an 
importer and first handler, who must import at least 75 percent of the 
honey they market in the United States and must handle at least 250,000 
pounds annually.



Sec. 1212.13  Information.

    ``Information'' means activities or programs designed to develop new 
and existing markets, new and existing marketing strategies and 
increased efficiency and activities to enhance the image of honey and 
honey products. These include:
    (a) Consumer education, 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 
honey and honey 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 honey industry, and activities to 
enhance the image of the honey industry.



Sec. 1212.14  Market or marketing.

    (a) ``Marketing'' means the sale or other disposition of honey or 
honey products in any channel of commerce.
    (b) ``Market'' means to sell or otherwise dispose of honey or honey 
products in interstate, foreign, or intrastate commerce.



Sec. 1212.15  Order.

    ``Order'' means the Honey Packers and Importers Research, Promotion, 
Consumer Education and Industry Information Order.



Sec. 1212.16  Part and subpart.

    ``Part'' means the Honey Packers and Importers Research, Promotion, 
Consumer Education, and Industry Information Order (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. 1212.17  Person.

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



Sec. 1212.18  Plans and programs.

    ``Plans and programs'' mean those research, promotion and 
information programs, plans, or projects established pursuant to this 
Order.



Sec. 1212.19  Producer.

    ``Producer'' means any person who is engaged in the production and 
sale of honey in any State and who owns, or shares the ownership and 
risk of loss of

[[Page 158]]

the production of honey or a person who is engaged in the business of 
producing, or causing to be produced, honey beyond personal use and 
having value at first point of sale.



Sec. 1212.20  Promotion.

    ``Promotion'' means any action, including paid advertising and 
public relations that presents a favorable image for honey or honey 
products to the public and food industry with the intent of improving 
the perception and competitive position of honey and stimulating sales 
of honey or honey products.



Sec. 1212.21  Qualified national organization representing first handler interests.

    ``Qualified national organization representing first handler 
interests'' means an organization that the Secretary certifies as being 
eligible to nominate first handler and alternate first handler members 
of the Board under Sec. 1212.42.



Sec. 1212.22  Qualified national organization representing importer interests.

    ``Qualified national organization representing importer interests'' 
means an organization that the Secretary certifies as being eligible to 
nominate importer, importer-handler, and alternate importer and 
importer-handler members of the Board under Sec. 1212.42.



Sec. 1212.23  Qualified national organization representing producer interests.

    ``Qualified national organization representing producer interests'' 
means an organization that the Secretary certifies as being eligible to 
nominate producer and alternate producer members of the Board under 
Sec. 1212.42.



Sec. 1212.24  Qualified national organization representing cooperative 

interests.

    ``Qualified national organization representing cooperative 
interests'' means an organization that the Secretary certifies as being 
eligible to nominate cooperative and alternate cooperative members of 
the Board under Sec. 1212.42.



Sec. 1212.25  Referendum.

    ``Referendum'' means a referendum to be conducted by the Secretary 
pursuant to the Act whereby first handlers and importers shall be given 
the opportunity to vote to determine whether the implementation of or 
continuance of this part is favored by a majority of eligible persons 
voting in the referendum and a majority of volume voted in the 
referendum.



Sec. 1212.26  Research.

    ``Research'' means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, product 
development, or quality of honey and honey products, including research 
relating to nutritional value, cost of production, new product 
development, testing the effectiveness of market development and 
promotion efforts. 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.



Sec. 1212.27  Secretary.

    ``Secretary'' means the Secretary of Agriculture of the United 
States, or any other officer or employee of the Department to whom 
authority the Secretary delegated the authority to act on his or her 
behalf.



Sec. 1212.28  Suspend.

    ``Suspend'' means to issue a rule under 5 U.S.C. 553 to temporarily 
prevent the operation of an order or part thereof during a particular 
period of time specified in the rule.



Sec. 1212.29  State.

    ``State'' means any of the fifty States of the United States of 
America, the District of Columbia, the Commonwealth of Puerto Rico and 
the territories and possessions of the United States.



Sec. 1212.30  Terminate.

    ``Terminate'' means to issue a rule under 5 U.S.C. 553 to cancel 
permanently the operation of an order or

[[Page 159]]

part thereof beginning on a date certain specified in the rule.



Sec. 1212.31  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. 1212.32  United States Customs Service.

    ``United States Customs Service'' or ``Customs'' means the United 
States Customs and Border Protection, an agency of the Department of 
Homeland Security.

                    Honey Packers and Importers Board



Sec. 1212.40  Establishment and membership.

    The Honey Packers and Importers Board is established to administer 
the terms and provisions of this part. The Board shall have ten members, 
composed of three first handler representatives, two importer 
representatives, one importer-handler representative, three producer 
representatives, and one marketing cooperative representative. The 
importer-handler representative must import at least 75 percent of the 
honey or honey products they market in the United States and handle at 
least 250,000 pounds annually. In addition, the producer representatives 
must produce a minimum of 150,000 pounds of honey in the United States 
annually based on the best three-year average of the most recent five 
calendar years, as certified by producers. The Secretary will appoint 
members to the Board from nominees submitted in accordance with Sec. 
1212.42. The Secretary shall also appoint an alternate for each member.



Sec. 1212.41  Term of office.

    With the exception of the initial Board, each Board member and 
alternate will serve a three-year term or until the Secretary selects 
his or her successor. No member or alternate may serve more than two 
consecutive terms, excluding any initial two-year term of office. The 
terms of the initial Board members shall be staggered for two-, three-, 
and four-year terms. For the initial Board, one producer, one first 
handler, one importer, and the representative of a national honey 
cooperative will serve a two-year term of office. One producer, one 
first handler, and the importer-handler representative, will serve a 
three-year term of office. One producer, one first handler, and one 
importer will serve a four-year term of office. Determination of which 
of the initial members and their alternates shall serve two-year, three-
year or four-year terms, shall be designated by the Secretary. 
Thereafter, each of these positions will carry a full three-year term. 
Members serving initial terms of two or four years will be eligible to 
serve a second term of three years. Each term of office will end on 
December 31, with new terms of office beginning on January 1. If this 
part becomes effective on a date such that the initial period is less 
than six months in duration, then the tolling of time for purposes of 
this subsection shall not begin until the beginning of the first 12-
month fiscal period.



Sec. 1212.42  Nominations and appointments.

    All nominations to the Board will be made as follows:
    (a) All qualified national organizations representing first handler 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for the first handler positions 
and the alternate positions on the Board. If the Secretary determines 
that there are no qualified national organizations representing first 
handler interests, individual first handlers who have paid assessments 
to the Board in the most recent fiscal period may submit nominations. 
For the initial Board, persons that meet the definition of first 
handlers as defined in this subpart will certify their qualification and 
upon certification, if qualified, may submit nominations.
    (b) All qualified national organizations representing importer 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for importer positions,

[[Page 160]]

for the importer-handler position and for the alternate positions on the 
Board. If the Secretary determines that there are no qualified national 
organizations representing importer interests, individual importers who 
have paid assessments to the Board in the most recent fiscal period may 
submit nominations. For the initial Board, persons that meet the 
definition of importer as defined in this subpart will certify such 
qualification and upon certification, if qualified, may submit 
nominations.
    (c) All qualified national organizations representing producer 
interests will have the opportunity to participate in a nomination 
caucus and will, to the extent practical, submit as a group a single 
slate of nominations to the Secretary for the producer positions and the 
producer alternate positions on the Board. If the Secretary determines 
that there are no qualified national organizations representing producer 
interests, individual producers may submit nominations to the Secretary. 
For the initial Board, persons that meet the definition of producer as 
defined in this subpart will certify such qualification and upon 
certification, if qualified, may submit nominations.
    (d) For the purposes of this subpart, a national honey-marketing 
cooperative means any entity that is organized under the Capper-Volstead 
Act (7 U.S.C. 291) or state law as a cooperative and markets honey or 
honey products in at least 20 states. All national honey-marketing 
cooperatives that are first handlers will have the opportunity to 
participate in a nomination caucus and will, to the extent practical, 
submit as a group a single slate of nominations to the Secretary of 
persons who serve as an officer, director, or employee of a national 
honey marketing cooperative for the cooperative position and the 
alternate position on the Board.
    (e) Eligible organizations, cooperatives, producers, first handlers 
or importers must submit nominations to the Secretary six months before 
the new Board term begins. At least two nominees for each position to be 
filled must be submitted.
    (f) Qualified national organization representing first handler 
interests. To be certified by the Secretary as a qualified national 
organization representing first handler interests, an organization must 
meet the following criteria, as evidenced by a report submitted by the 
organization to the Secretary:
    (1) The organization's voting membership must be comprised primarily 
of first handlers of honey or honey products;
    (2) The organization must represent a substantial number of first 
handlers who market a substantial volume of honey or honey products in 
at least 20 states;
    (3) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (4) The organization must have as a primary purpose promoting honey 
first handlers' economic welfare;
    (5) The organization must derive a portion of its operating funds 
from first handlers; and
    (6) The organization must demonstrate it is willing and able to 
further the Act's purposes.
    (g) Qualified national organization representing importer interests. 
To be certified as a qualified national organization representing 
importer interests, an organization must meet the following criteria, as 
evidenced by a report submitted by the organization to the Secretary:
    (1) The organization's importer membership must represent at least a 
majority of the volume of honey or honey products imported into the 
United States;
    (2) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (3) The organization must have as a primary purpose promoting honey 
importers' economic welfare;
    (4) The organization must derive a portion of its operating funds 
from importers; and
    (5) The organization must demonstrate it is willing and able to 
further the Act's purposes.
    (h) Qualified national organization representing producer interests. 
To be certified by the Secretary as a qualified national organization 
representing producer interests, an organization

[[Page 161]]

must meet the following criteria, as evidenced by a report submitted by 
the organization to the Secretary:
    (1) The organization's membership must be comprised primarily of 
honey producers;
    (2) The organization must represent a substantial number of 
producers who produce a substantial volume of honey in at least 20 
states;
    (3) The organization has a history of stability and permanency and 
has been in existence for more than one year;
    (4) The organization must have as one of its primary purposes 
promoting honey producers' economic welfare;
    (5) The organization must derive a portion of its operating funds 
from producers; and
    (6) The organization must demonstrate it is willing and able to 
further the Act's purposes.
    (i) To be certified by the Secretary as a qualified national 
organization representing first handler, producer or importer interests, 
an organization must agree to:
    (1) Take reasonable steps to publicize to non-members the 
availability of open Board first handler, producer or importer 
positions; and
    (2) Consider nominating a non-member first handler, producer or 
importer, if he or she expresses an interest in serving on the Board.
    (j) National honey-marketing cooperative. The Secretary can certify 
that an entity qualifies as a national honey-marketing cooperative, as 
defined in Sec. 1212.42(d). Such an entity shall not be eligible for 
certification as a qualified national organization representing producer 
interests.



Sec. 1212.43  Removal and vacancies.

    (a) In the event that 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 position shall become vacant.
    (b) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently refuses to perform his or 
her duties or engages in dishonest acts or willful misconduct. The 
Secretary may remove the member if he or she finds that the Board's 
recommendation shows adequate cause.
    (c) A vacancy for any reason will be filled as follows:
    (1) If a member position becomes vacant, the alternate for that 
position will serve the remainder of the member's term. In accordance 
with Sec. 1212.42, the Secretary will request nominations for a 
replacement alternate and will appoint a nominee to serve the remainder 
of the term. The Secretary does not have to appoint a replacement if the 
unexpired term is less than six months.
    (2) If both a member position and an alternate position become 
vacant, in accordance with Sec. 1212.42, the Secretary will request 
nominations for replacements and appoint a member and alternate to serve 
the remainder of the term. The Secretary does not have to appoint a new 
member or alternate if the unexpired term for the position is less than 
six months.
    (3) No successor appointed to a vacated term of office shall serve 
more than two successive three-year terms on the Board.



Sec. 1212.44  Procedure.

    (a) A majority of the Board members will constitute a quorum so long 
as at least one of the members present is an importer member and one of 
the members present is a first handler member. An alternate will be 
counted for the purpose of determining a quorum only if a member from 
his or her membership class is absent or disqualified from 
participating. Any Board action will require the concurring votes of a 
majority of those present and voting; with the exception of the two-
thirds vote requirement in Sec. 1212.52(f). All votes at meetings will 
be cast in person. The Board must give timely notice of all Board and 
committee meetings to members and alternates.
    (b) The Board may take action by any means of communication when, in 
the opinion of the Board chairperson, an emergency requires that action 
must be taken before a meeting can be called. Any action taken under 
this procedure is valid only if:
    (1) All members and the Secretary are notified and the members are 
provided the opportunity to vote;

[[Page 162]]

    (2) Each proposition is explained accurately, fully, and 
substantially identically to each member;
    (3) With the exception of the two-thirds vote requirement in Sec. 
1212.52(f), a majority of the members vote in favor of the action; and
    (4) All votes are promptly confirmed in writing and recorded in the 
Board minutes.



Sec. 1212.45  Reimbursement and attendance.

    Board members and alternates, when acting as members, will serve 
without compensation but will be reimbursed for reasonable travel 
expenses, as approved by the Board, that they incur when performing 
Board business. The Board may request that alternates attend any meeting 
even if their respective members are expected to attend or actually 
attend the meeting.



Sec. 1212.46  Powers.

    The Board shall have the following powers subject to Sec. 1212.80:
    (a) Administer this subpart in accordance with its terms and 
provisions of the Act;
    (b) Require its employees to receive, investigate, and report to the 
Secretary complaints of violations of this part;
    (c) Recommend adjustments to the assessments as provided in this 
part;
    (d) Recommend to the Secretary amendments to this part;
    (e) Establish, issue, and administer appropriate programs and enter 
into contracts or agreements with the approval of the Secretary for 
promotion, research, and information programs and plans including 
consumer and industry information, and advertising designed to 
strengthen the honey industry's position in the marketplace and to 
maintain, develop, and expand domestic and foreign markets for honey and 
honey products; and
    (f) Invest assessments collected and other funds received pursuant 
to the Order and use earnings from invested assessments to pay for 
activities carried out pursuant to the Order.



Sec. 1212.47  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 other industry 
representatives; and to develop and recommend such rules, regulations, 
and by-laws to the Secretary for approval to conduct its business as it 
may deem advisable;
    (b) To employ or contract with 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 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 establish, issue, and administer appropriate programs and 
enter into contracts or agreements with the approval of the Secretary 
for promotion, research, and information including consumer and industry 
information, and advertising designed to strengthen the honey industry's 
position in the marketplace and to maintain, develop, and expand 
domestic and foreign markets for honey and honey products.
    (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 
first handlers, producers, and importers reports of its activities 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.

[[Page 163]]

    (i) To submit to the Secretary such information pertaining to this 
part or subpart as he or she may request.
    (j) To give the Secretary the same notice of Board meetings and 
committee meetings that 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 to the Secretary.
    (k) To notify first handlers, importers, and producers of all Board 
meetings through press releases or other means.
    (l) To appoint and convene, from time to time, working committees or 
subcommittees that may include first handlers, importers, exporters, 
producers, members of the wholesale or retail outlets for honey, or 
other members of the honey industry and the public to assist in the 
development of research, promotion, advertising, and information 
programs for honey and honey products.
    (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.
    (n) To provide 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 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 
Department.



Sec. 1212.48  Reapportionment of Board membership.

    At least once in each 5-year period, but not more frequently than 
once in each 3-year period, the Board shall:
    (a) Review, based on a three-year average, the geographical 
distribution in the United States of the production of honey and the 
quantity or value of the honey and honey products imported into the 
United States; and
    (b) If warranted, recommend to the Secretary the reapportionment of 
the Board membership to reflect changes in the geographical distribution 
of the production of honey and the quantity or value of the honey and 
honey products imported into the United States.

                        Expenses and Assessments



Sec. 1212.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal period, 
and as may be necessary thereafter; the Board shall prepare and submit 
to the Department a budget for the fiscal period covering its 
anticipated expenses and disbursements in administering this subpart. 
The budget shall allocate five percent (5%) of the Board's anticipated 
revenue from assessments each fiscal period for production research and 
research relating to the production of honey.
    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 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 Department, including shifting 
funds from 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 
Department.
    (d) The Board is authorized to incur such expenses, including 
provision for a

[[Page 164]]

reserve, as the Department finds 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 Department, 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. Voluntary 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 Department for all expenses 
incurred by the Department in the implementation, administration, 
enforcement 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 calendar year an amount that exceeds 15 
percent of the assessments and other income received by the Board for 
that calendar year. Reimbursements to the Department required under 
paragraph (g) of this section, are excluded from this limitation on 
spending.
    (i) The Board 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.



Sec. 1212.51  Financial statements.

    (a) The Board shall prepare and submit financial statements to the 
Department 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 Department 
within 30 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Department an annual 
financial statement within 90 days after the end of the calendar year to 
which it applies.



Sec. 1212.52  Assessments.

    (a) The Board will cover its expenses by levying in a manner 
prescribed by the Secretary an assessment on first handlers and 
importers.
    (b) Each first handler shall pay an assessment to the Board at the 
rate of $0.01 per pound of domestically produced honey or honey products 
the first handler handles. A producer shall pay the Board the assessment 
on all honey or honey products for which the producer is the first 
handler.
    (c) Each first handler responsible for remitting assessments under 
paragraph (b) of this section shall remit the amounts due to the Board's 
office on a monthly basis no later than the fifteenth day of the month 
following the month in which the honey or honey products were marketed.
    (d) Each importer shall pay an assessment to the Board at the rate 
of $0.01 per pound of honey or honey products the importer imports into 
the United States. An importer shall pay the assessment to the Board 
through the United States Customs Service (Customs) when the honey or 
honey products being assessed enters the United States. If Customs does 
not collect an assessment from an importer, the importer is responsible 
for paying the assessment to the Board.
    (e) The import assessment recommended by the Board and approved by 
the Secretary shall be uniformly applied to imported honey or honey 
products that are identified as HTS heading numbers 0409.00.00 and 
2106.90.9988 by the Harmonized Tariff Schedule of the United States.
    (f) The Board may recommend to the Secretary an increase or decrease 
in the assessment as it deems appropriate by at least a two-thirds vote 
of members present at a meeting of the Board.

[[Page 165]]

The Board may not recommend an increase in the assessment of more than 
$0.02 per pound of honey or honey products and may not increase the 
assessment by more than $0.0025 in any single fiscal year.
    (g) In situations of late payment:
    (1) The Board shall impose a late payment charge on any first 
handler or importer who fails to remit to the Board the total amount for 
which the first handler or importer is liable on or before the payment 
due date the Board recommends. The amount of the late payment charge 
shall be prescribed by the Department.
    (2) The Board shall require any first handler or importer subject to 
a late payment charge to pay interest on the unpaid assessments for 
which the first handler or importer is liable. The rate of interest 
shall be prescribed by the Department.
    (3) First handlers or importers who fail to remit total assessments 
in a timely manner may also be subject to actions under federal debt 
collection procedures.
    (h) Advance payment. The Board may accept advance payment of 
assessments from first handlers or importers that will be credited 
toward any amount for which the first handlers or importers may become 
liable. The Board does not have to pay interest on any advance payment.
    (i) 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.



Sec. 1212.53  Exemption from assessment.

    (a) A first handler who handles less than 250,000 pounds of honey or 
honey products per calendar year or an importer who imports less than 
250,000 pounds of honey or honey products per calendar year is exempt 
from paying assessments.
    (b) A first handler who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan, handles only products that 
are eligible to be labeled as 100 percent organic under the NOP, and is 
not a split operation, shall be exempt from the payment of assessments. 
An importer who imports only products that are eligible to be labeled as 
100 percent organic under the NOP, and is not a split operation, shall 
be exempt from the payment of assessments.
    (c) A first handler or importer desiring an exemption shall apply to 
the Board, on a form provided by the Board, for a certificate of 
exemption. A first handler shall certify that the first handler will 
handle less than 250,000 of honey and honey products for the calendar 
year for which the exemption is claimed. An importer shall certify that 
the importer will import less than 250,000 pounds of honey and honey 
products during the calendar year for which the exemption is claimed.
    (d) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted. The Board will then issue, if 
deemed appropriate, a certificate of exemption to each person who is 
eligible to receive one. It is the responsibility of these persons to 
retain a copy of the certificate of exemption.
    (e) Exempt importers shall be eligible for reimbursement of 
assessments collected by Customs. These importers shall apply to the 
Board for reimbursement of any assessment paid. No interest will be paid 
on the assessment collected by Customs. Requests for reimbursement shall 
be submitted to the Board within 90 days of the last day of the calendar 
year the honey or honey products were imported.
    (f) If a person has been exempt from paying assessments for any 
calendar year under this section and no longer meets the requirements 
for an exemption, the person shall file a report with the Board in the 
form and manner prescribed by the Board and begin to pay the assessment 
on all honey or honey products handled or imported.
    (g) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board, on a form provided 
by the Board, for a certificate of exemption.
    (h) The Board may recommend to the Secretary that honey and honey 
products exported from the United States

[[Page 166]]

be exempt from this subpart and recommend procedures for refunding 
assessments paid on exported honey and honey products and any necessary 
safeguards to prevent improper use of this exemption.



Sec. 1212.54  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 do not exceed one 
fiscal period's budget. Subject to approval by the Department, such 
reserve funds may be used to defray any expenses authorized under this 
part.



Sec. 1212.55  Prohibition on use of funds.

    (a) The Board may not engage in, and shall prohibit the employees 
and agents of the Board from engaging in:
    (1) Any action that is a conflict of interest;
    (2) Except as otherwise provided in paragraph (b) of this section, 
using funds collected by the Board 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.
    (3) A program, plan or project conducted pursuant to this subpart 
that includes false or misleading claims on behalf of honey or honey 
products.
    (4) Any advertising, including promotion, research and information 
activities authorized that may be false or misleading or disparaging to 
another agricultural commodity.
    (b) The prohibition in paragraph (a)(2) of this section shall not 
apply:
    (1) To the development and recommendation of amendments to this 
subpart; or
    (2) To the communication to appropriate government officials, in 
response to a request made by the officials, of information relating to 
the conduct, implementation, or results of promotion, research, consumer 
information, education, industry information, or producer information 
activities authorized under this subpart.

                  Promotion, Research, and Information



Sec. 1212.60  Programs, plans and projects.

    (a) Scope of activities. The Board must develop and submit to the 
Secretary for approval plans and programs authorized by this section. 
The plans and programs may provide for:
    (1) Establishing, issuing, and administering appropriate programs 
for promotion, research, and information including consumer and industry 
information, and advertising designed to strengthen the honey industry's 
position in the marketplace and to maintain, develop, and expand 
domestic and foreign markets for honey and honey products;
    (2) Establishing and conducting research and development activities 
to encourage and expand the acquisition of knowledge about honey and 
honey products, their consumption and use, or to encourage, expand or 
improve the quality, marketing, and utilization of honey and honey 
products;
    (3) Conducting activities that may lead to developing new markets or 
marketing strategies for honey and honey products;
    (4) Conducting activities related to production issues or bee 
research activities; and
    (5) Conducting activities designed to make the honey industry more 
efficient, to improve the quality of honey or to enhance the image of 
honey and honey products and the honey industry.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Department. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) The Board must periodically evaluate each plan and program 
authorized under this part to ensure that it contributes to an effective 
and coordinated program of research, promotion and information. The 
Board must submit the evaluations to the Secretary. If the Board and the 
Secretary find that a plan or program does not further the purposes of 
the Act, then such plan or program should be terminated.

[[Page 167]]



Sec. 1212.61  Independent evaluation.

    The Board must authorize and fund not less than once every five 
years an independent evaluation of the effectiveness of this subpart and 
the plans and programs conducted by the Board under the Act. The Board 
must submit this independent evaluation to the Secretary and make the 
results available to the public.



Sec. 1212.62  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 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 
Department. Upon termination of this Order, Sec. 1212.83 shall apply to 
determine disposition of all such property.

                       Reports, Books, and Records



Sec. 1212.70  Reports.

    (a) Each first handler or importer subject to this part must report 
to the Board, at the time and in the manner it prescribes, and subject 
to the approval of the Secretary, the information the Board deems 
necessary to perform its duties.
    (b) First handlers must report:
    (1) The total quantity of honey and honey products acquired during 
the reporting period;
    (2) The total quantity of honey and honey products handled during 
the period;
    (3) The quantity of honey processed for sale from the first 
handler's own production;
    (4) The quantity of honey and honey products purchased from a first 
handler or importer responsible for paying the assessment due pursuant 
to this Order;
    (5) The date that assessment payments were made on honey and honey 
products handled; and
    (6) The first handler's tax identification number.
    (c) Unless provided by Customs, importers must report:
    (1) The total quantity of honey and honey products imported during 
the reporting period;
    (2) A record of each lot of honey or honey products imported during 
such period, including the quantity, date, country of origin, and port 
of entry; and
    (3) The importer of record's tax identification number.
    (d) The Board may request any other information from first handlers 
and importers that it deems necessary to perform its duties under this 
subpart, subject to the approval of the Secretary.
    (e) The Board, with the Secretary's approval, may request that 
persons claiming an exemption from assessments under Sec. 1212.52(b) or 
(d) must provide it with any information it deems necessary about the 
exemption, including, without limitation, the disposition of exempted 
honey or honey products.



Sec. 1212.71  Books and records.

    Each first handler and importer, including those who are exempt 
under this subpart, must maintain any books and records necessary to 
carry out the provisions of this part, and any regulations issued under 
this part, including the books and records necessary to verify any 
required reports. Books and records must be made available during normal 
business hours for inspection by the Board's or Secretary's employees or 
agents. A first handler or importer must maintain the books and records 
for two years beyond the fiscal period to which they apply.



Sec. 1212.72  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part shall be kept confidential by all persons, including 
all employees and former employees of the Board, all

[[Page 168]]

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, 
first handlers, or importers. 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 
thereof, 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 part, together 
with a statement of the particular provisions of this part violated by 
such person.

                              Miscellaneous



Sec. 1212.80  Right of the Secretary.

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



Sec. 1212.81  Referenda.

    (a) After the initial referendum, the Secretary shall conduct 
subsequent referenda;
    (1) Every seven years, to determine whether first handlers and 
importers of honey or honey products favor the continuation, suspension, 
or termination of the Order. The Order shall continue if it is favored 
by a majority of first handlers and importers voting in the referendum 
and a majority of volume voting in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the handling or importation of honey or honey products;
    (2) At the request of the Board established in this Order;
    (3) At the request of ten (10) percent or more of the number of 
persons eligible to vote under the Order; or
    (4) Whenever the Department deems that a referendum is necessary.
    (b) Approval of order. Approval in a referendum shall be established 
by a majority of eligible persons voting in the referendum and a 
majority of volume voting in the referendum who are first handlers or 
importers during the representative period by those voting as 
established by the Secretary.
    (c) Manner of conducting referenda. A referendum conducted under 
this section shall be conducted in the manner determined by the 
Secretary to be appropriate.



Sec. 1212.82  Suspension or termination.

    The Secretary shall suspend or terminate the operation of this part 
or subpart or any provision thereof, if the Secretary finds that this 
part or subpart or the provision obstructs or does not tend to 
effectuate the declared policy of the Act.



Sec. 1212.83  Proceedings after termination.

    (a) If this subpart terminates, the Board shall recommend to the 
Secretary up to five of its members to serve as trustees for the purpose 
of liquidating the Board's affairs. Such persons, upon designation by 
the Secretary, will become trustees of any funds and property the Board 
possesses or controls at that time and any existing claims it has, 
including, without limitation, claims for any unpaid or undelivered 
funds or property.
    (b) The trustees will:
    (1) Serve until discharged by the Secretary;
    (2) Carry out the Board's obligations under any contracts or 
agreements entered into pursuant to the Order;
    (3) Account from time to time for all receipts and disbursements and 
deliver all property on hand, together with all the Board's and 
trustees' books and records to any person the Secretary directs; and

[[Page 169]]

    (4) Execute at the Secretary's direction any assignments or other 
instruments necessary or appropriate to vest in any person full title 
and right to all of the funds, property, and claims owned by the Board 
or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to the Order will be subject to the 
same obligations imposed upon Board and the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Department to be disposed of, 
to the extent practical, to one or more honey industry organizations in 
the interest of continuing honey promotion, research, and information 
programs.



Sec. 1212.84  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, terminating or 
amending this subpart or any regulation issued under it will not:
    (a) Affect or waive any right, duty, obligation, or liability that 
arose or may arise in connection with any provision of this part;
    (b) Release or extinguish any violation of this part; or
    (c) Affect or impair any rights or remedies of the United States or 
any person with respect to any violation.



Sec. 1212.85  Personal liability.

    No member, alternate member, or employee of the Board may 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 a member, alternate 
member, or employee, except for acts of dishonesty or willful 
misconduct.



Sec. 1212.86  Separability.

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



Sec. 1212.87  Amendments.

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



Sec. 1212.88  OMB control number.

    The control number 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, 
is OMB control number 0505-0001, and OMB control number 0581-[NEW, to be 
assigned by OMB].



                     Subpart B_Referendum Procedures



Sec. 1212.100  General.

    Referenda to determine whether eligible first handlers and importers 
of honey and honey products favor the issuance, continuance, amendment, 
suspension, or termination of the Honey Packers and Importers Research, 
Promotion, Consumer Education, and Industry Information Order shall be 
conducted in accordance with this subpart.



Sec. 1212.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to re-delegate, 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) who handled 250,000 or more pounds of domestic honey 
and honey products during the representative period, who first buys or 
takes possession of honey or honey products from a producer for 
marketing. If a producer markets the honey directly to

[[Page 170]]

consumers, the producer shall be considered the first handler with 
respect to the honey produced by the producer.
    (d) Eligible importer means any person who imports 250,000 or more 
pounds of honey and honey products into the United States as a principal 
or as an agent, broker, or consignee of any person who produces or 
handles 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 that are identified in the Harmonized Tariff 
Schedule of the United States by the numbers 0409.00.00 and 
2106.90.9988, during the representative period. Importation occurs when 
honey or honey products originating outside of the United States are 
released from custody by the United States Customs and Border 
Protection, referred to as 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 honey or honey products immediately upon 
release by the U.S. Customs Service, as well as any persons who acts on 
behalf of others, as agents or brokers, to secure the release of honey 
or honey products from the U.S. Customs Service when such honey or honey 
products are entered or withdrawn for consumption in the United States.
    (e) 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 commerce. This term includes selling unprocessed honey that 
will be consumed without further processing or packaging. This term does 
not include the transportation of unprocessed honey by the producer to a 
handler or transportation by a commercial carrier of honey, whether 
processed or unprocessed for the account of the first handler or 
producer.
    (f) Honey means the nectar and saccharine exudations of plants that 
are gathered, modified, and stored in the comb by honeybees, including 
comb honey.
    (g) Honey products mean products where honey is a principal 
ingredient. For purposes of this subpart, a product shall be considered 
to have honey as a principal ingredient, if the product contains at 
least 50 percent honey by weight.
    (h) Order means the Honey Packers and Importers Research, Promotion, 
Consumer Education and Industry Information Order.
    (i) 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, 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 an 
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.
    (j) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (k) Representative period means the period designated by the 
Department.
    (l) 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. 1212.102  Voting.

    (a) Each eligible first handler and eligible importer of honey or 
honey products 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

[[Page 171]]

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. 1212.103  Instructions.

    (a) Referenda. The Order shall not become effective unless the 
Department determines that the Order is consistent with and will 
effectuate the purposes of the Act; and for initial and subsequent 
referenda the Order is favored by a majority of eligible persons voting 
in the referendum and a majority of volume voting in the referendum who, 
during a representative period determined by the Department, have been 
engaged in the handling or importation of honey or honey products and 
are subject to assessments under this Order and excluding those exempt 
from assessment under the Order.
    (b) 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:
    (1) Determine the period during which ballots may be cast.
    (2) 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.
    (3) Give reasonable public notice of the referendum:
    (i) 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
    (ii) By such other means as the agent may deem advisable.
    (4) 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.
    (5) 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.
    (6) Prepare a report on the referendum.
    (7) Announce the results to the public.



Sec. 1212.104  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 of such appointment, shall be performed by the agent.



Sec. 1212.105  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. 1212.106  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. 1212.107  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

[[Page 172]]

strictly confidential and shall not be disclosed.



Sec. 1212.108  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 0505-0001, OMB control number 0581-0217, and OMB 
control number 0581-[NEW, to be assigned by OMB].



PART 1214_CHRISTMAS TREE PROMOTION, RESEARCH, AND INFORMATION ORDER--Table of Contents



   Subpart A_Christmas Tree Promotion, Research, and Information Order

                               Definitions

Sec.
1214.1 Act.
1214.2 Board.
1214.3 Christmas tree.
1214.4 Conflict of interest.
1214.5 Crop year.
1214.6 Customs or CBP.
1214.7 Department.
1214.8 Fiscal period
1214.9 Importer.
1214.10 Information.
1214.11 Marketing.
1214.12 Order.
1214.13 Part and subpart.
1214.14 Person.
1214.15 Programs, plans, and projects.
1214.16 Produce.
1214.17 Producer.
1214.18 Promotion.
1214.19 Research.
1214.20 Secretary.
1214.21 State.
1214.22 Suspend.
1214.23 Terminate.
1214.24 United States.

                     Christmas Tree Promotion Board

1214.40 Establishment and membership.
1214.41 Nominations and appointments.
1214.42 Term of office.
1214.43 Vacancies.
1214.44 Procedure.
1214.45 Compensation and reimbursement.
1214.46 Powers and duties.
1214.47 Prohibited activities.

                        Expenses and Assessments

1214.50 Budget and expenses.
1214.51 Financial statements.
1214.52 Assessments.
1214.53 Exemption from and refunds of assessments.
1214.54 Refund escrow accounts.

                   Promotion, Research and Information

1214.60 Programs, plans, and projects.
1214.61 Independent evaluation.
1214.62 Patents, copyrights, trademarks, information, publications, and 
          product formulations.

                       Reports, Books, and Records

1214.70 Reports.
1214.71 Books and records.
1214.72 Confidential treatment.

                              Miscellaneous

1214.80 Right of the Secretary.
1214.81 Referenda.
1214.82 Suspension and termination.
1214.83 Proceedings after termination.
1214.84 Effect of termination or amendment.
1214.85 Personal liability.
1214.86 Separability.
1214.87 Amendments.
1214.88 OMB control numbers.

                     Subpart B_Referendum Procedures

1214.100 General.
1214.101 Definitions.
1214.102 Voting.
1214.103 Instructions.
1214.104 Subagents.
1214.105 Ballots.
1214.106 Referendum report.
1214.107 Confidential information.
1214.108 OMB control number.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

    Source: 76 FR 69103, Nov. 8, 2011, unless otherwise noted.



   Subpart A_Christmas Tree Promotion, Research, and Information Order

    Editorial Note: At 76 FR 71241, November 17, 2011, subpart A of 7 
CFR 1214, published November 8, 2011 (76 FR 69094), is stayed 
indefinitely.

                               Definitions



Sec. 1214.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.

[[Page 173]]



Sec. 1214.2  Board.

    Board or the Christmas Tree Promotion Board means the administrative 
body established pursuant to Sec. 1214.40.



Sec. 1214.3  Christmas tree.

    Christmas tree means any tree of the coniferous species, that is 
severed or cut from its roots and marketed as a Christmas tree for 
holiday use.



Sec. 1214.4  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. 1214.5  Crop year.

    Crop year means the period August 1 through July 31.



Sec. 1214.6  Customs or CBP.

    Customs or CBP means the United States Customs and Border Protection 
or U.S. Customs Service, an agency of the United States Department of 
Homeland Security.



Sec. 1214.7  Department.

    Department means the United States 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.



Sec. 1214.8  Fiscal period.

    Fiscal period means the period August 1 through July 31.



Sec. 1214.9  Importer.

    Importer means any person importing Christmas trees into the United 
States in a fiscal period as a principal or as an agent, broker, or 
consignee of any person who domestically produces Christmas trees 
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 
Christmas trees.



Sec. 1214.10  Information.

    Information means information, program, and activities that are 
designed to increase efficiency in processing, enhance the development 
of new markets and marketing strategies, increase market efficiency, and 
enhance the image of Christmas trees and the Christmas tree industry in 
the United States.



Sec. 1214.11  Marketing.

    Marketing means to sell or otherwise dispose of Christmas trees in 
interstate, foreign or intrastate commerce.



Sec. 1214.12  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. 1214.13  Part and subpart.

    Part means the Christmas Tree 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. 1214.14  Person.

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



Sec. 1214.15  Programs, plans and projects.

    Programs, plans and projects mean those research, promotion and 
information programs, plans, or projects established pursuant to this 
Order.



Sec. 1214.16  Produce.

    Produce means to engage in the cutting and selling of Christmas 
trees for the holiday market.



Sec. 1214.17  Producer.

    Producer means any person who is engaged in the production of 
Christmas trees in the United States, and who owns, or shares the 
ownership and risk of loss of the production of Christmas trees or a 
person who is engaged in the business of producing, or causing to be

[[Page 174]]

domestically produced, Christmas trees beyond personal use and having 
value at first point of sale.



Sec. 1214.18  Promotion.

    Promotion means any action, including paid advertising and public 
relations that presents a favorable image of Christmas trees to the 
general public with the intent of improving the perception and 
competitive position of Christmas trees and stimulating sales of 
Christmas trees.



Sec. 1214.19  Research.

    Research means any type of test, systematic study, study, 
investigation, analysis and/or evaluation designed to advance the image, 
desirability, use, marketability, quality, product development, or 
production of Christmas trees, including but not limited to research 
related to cost of production, market development, testing the 
effectiveness of market development and promotional efforts, new species 
of Christmas trees and environmental issues relating to the Christmas 
tree industry.



Sec. 1214.20  Secretary.

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



Sec. 1214.21  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec. 1214.22  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. 1214.23  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 certain date specified in the rule.



Sec. 1214.24  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.

                     Christmas Tree Promotion Board



Sec. 1214.40  Establishment and membership.

    (a) Establishment of the Christmas Tree Promotion Board. There is 
hereby established a Christmas Tree Promotion Board, composed of no more 
than twelve (12) members as follows:
    (1) Producer members from each of the following regions:
    (i) Five producer members from Region 1--Western Region 
(states from the Pacific Ocean east to the Rocky Mountains): Alaska, 
Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New 
Mexico, Oregon, Utah, Washington, Wyoming and all U.S. Territories 
located in the Pacific Ocean.
    (ii) Two producer members from Region 2--Central Region 
(states east of the Rocky Mountains to the Great Lakes): Arkansas, 
Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, 
Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Texas, and 
Wisconsin.
    (iii) Four producer members from Region 3--Eastern Region 
(states east of the Great Lakes): Alabama, Connecticut, Delaware, 
Florida, Georgia, Kentucky, Louisiana, New York, Maine, Maryland, 
Massachusetts, Mississippi, New Hampshire, New Jersey, North Carolina, 
Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, 
Vermont, Washington, DC, West Virginia, and all U.S. Territories located 
in the Atlantic Ocean and Caribbean Sea, including but not limited to 
Puerto Rico.
    (2) One Importer member.
    (b) Adjustment of membership. At least once every five years upon 
implementation of the Order, but not more frequently than once every 
three years, the Board will review the geographic distribution of United 
States production of Christmas trees and the quantity and source of 
Christmas tree imports. The review will be conducted

[[Page 175]]

through State crop production figures and Board assessment records, 
including the amount of assessments collected from importers, or other 
government data. If warranted, the Board will recommend to the Secretary 
that membership on the Board be altered to reflect any changes in 
geographic distribution of domestic Christmas tree production and the 
quantity of imports. Provided, that there shall be at least one importer 
member on the Board. Such adjustments shall not increase the total 
number of Board members. The adjustments to the Board membership would 
be submitted to the Secretary by Board recommendation and be implemented 
by the Secretary through rulemaking.



Sec. 1214.41  Nominations and appointments.

    (a) Voting for producer members will be made by mail ballot, 
electronic mail, in person, or by facsimile.
    (b) Nominations for the initial Board will be conducted by the 
Department. Subsequent nominations will be conducted by the Board.
    (c) The Board shall outreach to all segments of the Christmas tree 
industry and solicit nominations as described in paragraphs (d) and (e) 
of this section. Nominees must domestically produce or import more than 
500 Christmas trees during the most recent fiscal period.
    (d) Nomination of producer members will be conducted by the Board. 
The Board staff will seek nominations for each vacant producer seat from 
each region from producers who have paid their assessments to the Board 
in the most recent fiscal period. Producers who produce Christmas trees 
in more than one region may seek nomination only in the region in which 
they produce the majority of their Christmas trees. For selection to the 
initial Board, the Secretary will notify producers to request 
nominations to the Board. Subsequent nominations will be submitted to 
the Board office and placed on a ballot that will be sent to producers 
in each region for a vote. Producers who produce Christmas trees in more 
than one region may only vote in the region in which they produce the 
majority of their Christmas trees. The nominee receiving the highest 
number of votes and the nominee receiving the second highest number of 
votes shall be submitted to the Department as the producers' first and 
second choice nominees. The Board shall submit nominations to the 
Secretary not less than 90 days prior to the expiration of the term of 
office.
    (e) Nominations for the importer member(s) will be conducted by the 
Board. The Board will solicit importer nominations from those importers 
who have paid their assessments to the Board in the most recent fiscal 
period. For selection to the initial Board, the Secretary will notify 
importers to request nominations to the Board. Subsequent nominations 
will be submitted to the Board office and placed on a ballot that will 
be sent to importers for a vote. The Board shall submit those 
nominations to the Secretary not less than 90 days prior to the 
expiration of the term of office. Two nominees for each importer 
position will be submitted to the Secretary for consideration.
    (f) From the nominations, the Secretary shall select the members of 
the Board for each position on the Board. Members will serve until their 
successors have been appointed by the Secretary.



Sec. 1214.42  Term of office.

    Board members will serve for a term of three years and be able to 
serve a maximum of two consecutive three-year terms. When the Board is 
first established, the members will be assigned initial terms of two, 
three, and four years. Initial terms will be staggered to assure 
continuity of the Board. The term of office will begin on January 1 and 
conclude on December 31. Members serving the initial term of two and 
four years will be eligible to serve a second term of three-years. 
Thereafter, each of the positions will carry a full three-year term. 
Board members shall serve during the term of office for which they have 
been appointed and qualified, and until their successors are appointed 
and have qualified.

[[Page 176]]



Sec. 1214.43  Vacancies.

    (a) In the event that any member of the Board ceases to be a member 
of the category of membership 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 may 
remove such member 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 would be detrimental to the achievement 
of the purposes of the Act.
    (c) Should any member position become vacant, successors for the 
unexpired terms of such member shall be appointed in the manner 
specified in Sec. 1214.41. A vacancy will not be required to be filled 
if the unexpired term is less than six months.



Sec. 1214.44  Procedure.

    (a) At a Board meeting, it will be considered a quorum when a 
majority of the Board members is present.
    (b) All Board members will receive a minimum of 14 days advance 
notice of all Board and committee meetings, except when emergency 
circumstances exist and meetings need to be held prior to the advance 
notice.
    (c) Each member of the Board will be entitled to one vote on any 
matter put to the Board. For any action of the Board to pass, at least a 
majority of the Board members present must vote in support of such 
action.
    (d) The Board may appoint committees as necessary. It will be 
considered a quorum at a committee meeting when at least a majority of 
those appointed to the committee are present. Committees may consist of 
persons other than Board members, and such persons may vote in committee 
meetings as the Board shall determine. These committee members shall 
serve without compensation, but shall be reimbursed for reasonable 
travel expenses, as approved by the Board.
    (e) In lieu of voting at a properly convened meeting, and when, in 
the opinion of the Board's chairperson, such action is considered 
necessary, the Board may take action by mail, telephone, electronic 
mail, facsimile, or any other means of communication. Any action taken 
under this procedure is valid only if:
    (1) All members and the Secretary are notified and the members are 
provided the opportunity to vote;
    (2) A majority of the members vote in favor of the action; and
    (3) All votes are promptly confirmed in writing and recorded in the 
Board minutes.
    (f) There shall be no voting by proxy.
    (g) The chairperson shall be a voting member.



Sec. 1214.45  Compensation and reimbursement.

    The members of the Board 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. 1214.46  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, provided that the committee and 
subcommittee members may also include individuals other than Board 
members;
    (d) To notify producers and importers of all Board meetings through 
press releases or other means;

[[Page 177]]

    (e) To give the Secretary the same notice of meetings of the Board 
and committees as is given to members, including committee members if 
committee members are not members of the Board, in order that the 
Secretary's representative(s) may attend such meetings, and to keep and 
report minutes of each meeting of the Board and all committees to the 
Secretary;
    (f) To appoint and convene, from time to time, committees that may 
include importers, exporters, producers or other members of the 
Christmas tree industry and public to assist in the development of 
research, promotion, advertising, and information programs for Christmas 
trees;
    (g) To employ persons, other than 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;
    (h) To act as an intermediary between the Secretary and any producer 
or importer;
    (i) To furnish to the Secretary any information or records that the 
Secretary may request;
    (j) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (k) 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 require and to make the records available to the Secretary for 
inspection and audit; 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;
    (l) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate;
    (m) To develop and carry out generic promotion, research, and 
information activities relating to Christmas trees;
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, evaluation, and information designed to 
strengthen the Christmas tree industry's position in the marketplace; 
maintain and expand existing markets for Christmas trees; and to carry 
out programs, plans, and projects designed to provide maximum benefits 
to the Christmas tree industry;
    (o) To develop programs, plans, 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 necessary. 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;
    (p) To prepare and submit for approval of the Secretary, within 60 
days after assessments are due to the Board, rates of assessment and a 
fiscal period budget of the anticipated expenses to be incurred in the 
administration of the Order, in accordance with Sec. 1214.50;

[[Page 178]]

    (q) To borrow funds necessary for the startup expenses of the order;
    (r) To invest assessments collected under this part in accordance 
with Sec. 1214.50;
    (s) To pay the cost of the activities with assessments collected 
under Sec. 1214.52;
    (t) To recommend adjustments to the assessments as provided in Sec. 
1214.52;
    (u) To periodically prepare, make public and to make available to 
producers and importers, reports of its activities and, at least once 
each fiscal period, to make public an accounting of funds received and 
expended; and
    (v) To cause its books to be audited by an independent certified 
public accountant at the end of each fiscal period and at such other 
times as the Secretary may request, and to submit a report of the audit 
directly to the Secretary.



Sec. 1214.47  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, by local, state, national, and foreign governments or 
any subdivision thereof, other than recommending to the Secretary 
amendments to the Order; and
    (c) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Christmas trees of all origins shall be treated equally.

                        Expenses and Assessments



Sec. 1214.50  Budget and expenses.

    (a) Within 60 days after assessments are due to the Board, and as 
may be necessary thereafter, the Board shall prepare and submit to the 
Secretary a budget for the fiscal period covering its anticipated 
expenses and disbursements in administering this part. Each 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 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 part.
    (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.
    (d) The Board is authorized to incur such expenses, including 
provision for a 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 part. 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 such funds 
borrowed by the Board shall be expended for startup costs 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 approved by the Secretary. Such contributions shall be free 
from any encumbrance by the donor and the Board shall retain complete 
control of their use.
    (g) In accordance with Sec. 1214.54, the Board shall deposit funds 
in a refund escrow account and shall not use such funds for expenses, 
except as provided for in that section.
    (h) The Board may also receive funds provided through the 
Department's

[[Page 179]]

Foreign Agricultural Service or from other sources, with the approval of 
the Secretary, for authorized activities.
    (i) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement, and supervision of the Order, including all referendum 
costs in connection with the Order.
    (j) For fiscal years beginning 3 or more years after the date of the 
establishment of the Board, the Board may not expend for administration, 
maintenance, and functioning of the Board in a fiscal year an amount 
that exceeds 10 percent of the assessment and other income received by 
the Board. Reimbursements to the Secretary required under paragraph (i) 
of this section are excluded from this limitation on spending.
    (k) 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 do not exceed one 
fiscal period's budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this part.
    (l) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments and 
all other revenues collected under this section 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) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System; 
or
    (4) Obligations fully guaranteed as to principal interest by the 
United States.



Sec. 1214.51  Financial statements.

    (a) The Board shall prepare and submit quarterly financial 
statements to the Secretary, or at any other time requested by the 
Secretary. 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 45 days after the end of the time period to which it applies.
    (c) The Board shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal period to 
which it applies.



Sec. 1214.52  Assessments.

    (a) The funds to cover the Board's expenses shall be paid from 
assessments on producers, importers, and donations from any person 
including those not subject to assessments under this Order, and other 
funds available to the Board including those collected pursuant to Sec. 
1214.62 and subject to the limitations contained therein.
    (b) The payment of assessments on domestic Christmas trees that are 
cut and sold will be the responsibility of the producer who produces the 
Christmas trees or causes the trees to be cut.
    (c) Each importer of Christmas trees shall pay the assessment to the 
Board on Christmas trees imported for marketing in the United States, 
through Customs. If Customs does not collect an assessment from an 
importer, the importer will be responsible for paying the assessment 
directly to the Board 30 calendar days after importation.
    (1) The assessment rate for imported Christmas trees shall be the 
same or equivalent to the rate for Christmas trees domestically produced 
in the United States.
    (2) The import assessment shall be uniformly applied to imported 
Christmas trees that are identified by the numbers 0604.91.00.20, 
0604.91.00.40, and 0604.91.00.60 in the Harmonized Tariff Schedule of 
the United States or any other numbers used to identify Christmas trees 
in that schedule.
    (3) The assessments due on imported Christmas trees shall be paid 
when they enter into the United States.
    (d) Such assessments shall be levied at an initial rate of 15 cents 
per Christmas tree domestically produced or imported into the United 
States. The assessment rate will be reviewed by the Board, after the 
initial referendum is conducted pursuant to this subpart. The assessment 
rate may be increased

[[Page 180]]

or decreased no more than 2 cents per Christmas tree during the fiscal 
period. Any change in the assessment rate shall be subject to rulemaking 
by the Department. The assessment rate shall not exceed 20 cents per 
Christmas tree, nor shall it be less than 10 cents per Christmas tree, 
unless a majority of producers and importers approve such other levels 
of assessment through a referendum conducted pursuant to this subpart.
    (e) All assessment payments and reports will be submitted to the 
office of the Board. All assessment payments are to be received no later 
than February 15 of the crop year in which they are produced or 
imported. A late payment charge, may be imposed on any producer or 
importer who fails to remit to the Board, the total amount for which any 
such producer or importer is liable on or before the due date 
established by the Board. In addition to the late payment charge, an 
interest charge may be imposed on the outstanding amount for which the 
producer or importer is liable. The rate for late payment and interest 
charges shall be specified by the Secretary through rulemaking.
    (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 Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.



Sec. 1214.53  Exemption from and refunds of assessments.

    (a) Producers that domestically produce and importers that import 
less than 500 Christmas trees.
    (1) Any producer who domestically produces less than 500 Christmas 
trees who desires to claim an exemption from assessments as provided in 
Sec. 1214.52 shall file an application on a form provided by the Board, 
for a certificate of exemption. Such producer shall certify that he/she 
will domestically produce less than 500 trees for the fiscal period for 
which the exemption is claimed. It is the responsibility of the producer 
to retain a copy of the certificate of exemption.
    (2) Any importer who imports less than 500 trees in a fiscal period 
who desires to claim an exemption from assessments as provided in Sec. 
1214.52 shall file an application on a form provided by the Board, for a 
certificate of exemption. Such importer shall certify that the 
importer's total imports of Christmas trees are fewer than 500 trees for 
the fiscal period for which the exemption is claimed. It is the 
responsibility of the importer to retain a copy of the certificate of 
exemption.
    (3) On receipt of an exemption application, the Board shall 
determine whether an exemption may be granted. The Board will then 
issue, if deemed appropriate, a certificate of exemption to the producer 
or importer which is eligible to receive one.
    (4) The Board, with the Secretary's approval, may require persons 
receiving an exemption from assessments to provide to the Board reports 
on the disposition of exempt Christmas trees and, in the case of 
importers, proof of payment of assessments.
    (5) The exemption will apply immediately following the issuance of 
the certificate of exemption.
    (6) Producers and importers who received an exemption certificate 
from the Board but domestically produced or imported more than 500 
Christmas trees during the fiscal period shall pay the Board the 
applicable assessments owed and submit any necessary reports to the 
Board pursuant to Sec. 1214.70.
    (7) Producers and importers who did not apply to the Board for an 
exemption and domestically produced or imported less than 500 Christmas 
trees during the fiscal period shall receive a refund from the Board for 
the applicable assessments within 30 calendar days after the end of the 
fiscal year. Board staff shall determine the assessments paid and refund 
the amount due to the producers and importers accordingly.
    (8) The Board may develop additional procedures as it deems 
necessary for accurately accounting for this exemption. Such procedures 
shall be implemented through rulemaking by the Secretary.
    (b) Assessment refunds to importers. (1) Importers who are exempt 
from assessment shall be eligible for a refund of

[[Page 181]]

assessments collected by Customs during the applicable fiscal period. No 
interest will be paid on assessments collected by Customs. The Board 
shall refund such importers their assessments as collected by Customs no 
later than 60 calendar days after receipt by the Board.
    (c) Organic. (1) Organic Act means section 2103 of the Organic Foods 
Production Act of 1990 (7 U.S.C. 6502).
    (2) A producer who domestically produces Christmas trees under an 
approved National Organic Program (NOP) (7 CFR part 205) system plan, 
produces only products that are eligible to be labeled as 100 percent 
organic under the NOP and is not a split operation shall be exempt from 
payment of assessments. To obtain an organic exemption, an eligible 
producer shall submit a request for exemption to the Board, on a form 
provided by the Board, at any time initially and annually thereafter on 
or before the start of the fiscal period as long as such producer 
continues to be eligible for the exemption. The request shall include 
the following: The producer's name and address; a copy of the organic 
operation certificate provided by a USDA-accredited certifying agent as 
defined in the Organic Act, a signed certification that the applicant 
meets all of the requirements specified for an assessment exemption, and 
such other information as may be required by the Board and with the 
approval of the Secretary. The Board shall have 30 calendar days to 
approve the exemption request. If the exemption is not granted, the 
Board will notify the applicant and provide reasons for the denial 
within the same time frame.
    (3) An importer who imports only Christmas trees that are eligible 
to be labeled as 100 percent organic under the NOP and is not a split 
operation shall be exempt from the payment of assessments. To obtain an 
organic exemption, an eligible importer must submit documentation to the 
Board and request an exemption from assessment on 100 percent of organic 
Christmas trees, on a form provided by the Board, at any time initially 
and annually thereafter on or before the beginning of the fiscal period 
as long as the importer continues to be eligible for the exemption. This 
documentation shall include the same information as required by 
producers in paragraph (c)(2) of this section. If the importer complies 
with the requirements of this section, the Board will grant the 
exemption and issue a Certificate of Exemption to the importer. The 
Board will also issue the importer a 9-digit alphanumeric number of the 
United States classification valid for 1 year from the date of issue. 
This alphanumeric number should be entered by the importer on the 
Customs entry documentation. Any line item entry of 100 percent organic 
Christmas trees bearing this alphanumeric number assigned by the Board 
will not be subject to assessments.
    (4) Importers who are exempt from assessment in paragraph (c)(3) of 
this section shall also be eligible for reimbursement of assessments 
collected by Customs and may apply to the Board for a reimbursement. The 
importer would be required to submit satisfactory proof to the Board 
that the importer paid the assessment on exempt organic products.
    (5) The exemption will apply immediately following the issuance of 
the exemption certificate.



Sec. 1214.54  Refund escrow accounts.

    (a) The Board shall establish an interest bearing escrow account 
with a financial institution that is a member of the Federal Reserve 
System and will deposit into such account an amount equal to 10 percent 
of the assessments collected 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.
    (b) If the Order is not approved by the required referendum, the 
Board shall promptly pay refunds of assessments to all producers and 
importers that have paid assessments 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

[[Page 182]]

of all refunds that producers and importers subject to the Order have a 
right to receive, the Board shall prorate the amount deposited in such 
account among all producers and importers who desire a refund of 
assessments paid no later than 90 days after the required referendum 
results are announced by the Secretary.
    (d) Any producer or importer requesting a refund shall submit an 
application on the prescribed form to the Board within 30 days after the 
announcement of the referendum results of their request for a refund of 
the assessments that they paid. The producers and importer requesting a 
refund shall also submit documentation to substantiate that assessments 
were paid. Any such demand shall be made by such producer or importer in 
accordance with the provisions of this subpart and in a manner 
consistent with regulations recommended by the Board and prescribed by 
the Secretary.
    (e) If the Order is approved by the required referendum conducted 
under Sec. 1214.71 then:
    (1) The escrow account shall be closed; and,
    (2) The funds shall be available to the Board for disbursement under 
Sec. 1214.50.

                   Promotion, Research and Information



Sec. 1214.60  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 industry information, with respect to Christmas 
trees;
    (2) The establishment and conduct of research with respect to the 
image, desirability, use, marketability, quality, product development or 
production of Christmas trees, to the end that the marketing and use of 
Christmas trees may be encouraged, expanded, improved, or made more 
acceptable and to advance the image, desirability, or quality of 
Christmas trees.
    (b) A program, plan, or project may not be implemented prior to 
approval of the program, plan, or project 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 
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 information, then the Board shall terminate such program, 
plan, or project.



Sec. 1214.61  Independent evaluation.

    The Board shall, not less often than once every five years, 
authorize and fund, from funds otherwise available to the Board, an 
independent evaluation of the effectiveness of the Order and 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 paragraph.



Sec. 1214.62  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. 1214.83 shall apply to determine disposition of all such 
property.

[[Page 183]]

                       Reports, Books, and Records



Sec. 1214.70  Reports.

    (a) Each producer and importer subject to this subpart shall be 
required to provide to the Board periodically such information as 
required by the Board, with the approval of the Secretary, which may 
include but not be limited to the following:
    (1) Number of trees produced or total imports;
    (2) Number of Christmas trees on which an assessment was paid;
    (3) Name and address of producer or importer; and
    (4) Date assessment was paid on each Christmas tree produced or 
imported.
    (b) All reports required under Sec. 1214.70 are due to the Board by 
February 15 of the crop year.
    (c) This report shall accompany the payment of the collected 
assessments.



Sec. 1214.71  Books and records.

    Each producer and importer subject to this subpart, including those 
who are exempt under this subpart, shall maintain any books and records 
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 books and records must be made 
available during normal business hours for inspection by the Board's or 
Secretary's employees or agents. Such records shall be retained for at 
least two years beyond the fiscal period of their applicability.



Sec. 1214.72  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, or importers. 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.

                              Miscellaneous



Sec. 1214.80  Right of the Secretary.

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



Sec. 1214.81  Referenda.

    (a) Required referendum. For the purpose of ascertaining whether the 
persons subject to this Order favor the amendment, continuation, 
suspension, amendment, or termination of this Order, the Secretary shall 
conduct a referendum among persons subject to assessments under Sec. 
1214.52 who, during a representative period determined by the Secretary, 
have engaged in the production or importation of Christmas trees:
    (1) The first referendum shall be conducted not later than 3 years 
after assessments first begin under the Order;
    (2) The order will be approved in a referendum if:
    (i) A majority of producers and importers vote for approval in the 
referendum.
    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:

[[Page 184]]

    (1) For the purpose of ascertaining whether producers and importers 
favor the continuation, suspension, or termination of the Order;
    (2) Every seven years the Secretary shall hold a referendum to 
determine whether producers and importers of Christmas trees favor the 
continuation of the Order. The Order shall continue if it is favored by 
a majority of producers and importers voting for approval in the 
referendum who have been engaged in the production or importation of 
Christmas trees;
    (3) At the request of the Board established in this Order;
    (4) At the request of 10 percent or more of the number of persons 
eligible to vote in a referendum as set forth under the Order; or
    (5) At any time as determined by the Secretary.



Sec. 1214.82  Suspension or 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 purpose 
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 fiscal period whenever the Secretary determines that its 
suspension or termination is favored by a majority of producers and 
importers voting in a referenda who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of Christmas trees.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (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. 1214.83  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 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 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 one or more Christmas tree organizations in 
the United States in the interest of continuing Christmas tree 
promotion, research, and information programs.



Sec. 1214.84  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:

[[Page 185]]

    (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 any 
regulation issued thereunder.
    (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. 1214.85  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. 1214.86  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. 1214.87  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.



Sec. 1214.88  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 0505-0001, and OMB control number 0581-0267 and 0581-0268.



                     Subpart B_Referendum Procedures

    Source: 76 FR 69113, Nov. 8, 2011, unless otherwise noted.



Sec. 1214.100  General.

    Referenda to determine whether eligible domestic producers and 
importers of Christmas trees favor the continuance, amendment, 
suspension, or termination of the Christmas Tree Promotion, Research, 
and Information Order shall be conducted in accordance with this 
subpart.



Sec. 1214.101  Definitions.

    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, 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) Customs means the United States Customs and Border Protection or 
U.S. Customs Service, an agency of the United States Department of 
Homeland Security.
    (c) 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.
    (d) Eligible domestic producer means any person who domestically 
produces more than 500 Christmas trees annually in the United States, 
and who:
    (1) Owns, or shares the ownership and risk of loss of the production 
of Christmas trees;
    (2) Rents Christmas tree production land, facilities and/or 
equipment resulting in the ownership of all or a portion of the 
Christmas trees domestically produced;
    (3) Owns Christmas tree production facilities and equipment but does 
not manage them and, as compensation, obtains the ownership of a portion 
of the Christmas trees domestically produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to domestically produce Christmas trees who share the risk of loss 
and receive a share of the Christmas trees domestically produced. No 
other acquisition of legal title to Christmas trees shall be

[[Page 186]]

deemed to result in persons becoming eligible domestic producers.
    (e) Eligible importer means any person importing more than 500 
Christmas trees annually into the United States as a principal or as an 
agent, broker, or consignee of any person who domestically produces or 
handles Christmas trees outside of the United States for sale in the 
United States, and who is listed as the importer of record for such 
Christmas trees that are identified in the Harmonized Tariff Schedule of 
the United States by the numbers 0604.91.00.20, 0604.91.00.40, and 
0604.91.00.60 during the representative period. Importation occurs when 
Christmas trees originating outside of the United States are released 
from custody by Customs and introduced into the stream of commerce in 
the United States. Included are persons who hold title to foreign-
produced Christmas trees immediately upon release by Customs, as well as 
any persons who act on behalf of others, as agents or brokers, to secure 
the release of Christmas trees from Customs when such Christmas trees 
are entered or withdrawn for consumption in the United States.
    (f) Christmas tree means any tree of the coniferous species, that is 
severed or cut from its roots and marketed as a Christmas tree for 
holiday use.
    (g) Order means the Christmas Tree Promotion, Research, and 
Information Order.
    (h) 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 Christmas tree 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.
    (i) Referendum agent or agent means the individual or individuals 
designated by the Department to conduct the referendum.
    (j) 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. 1214.102  Voting.

    (a) Each eligible domestic producer and eligible importer of 
Christmas trees shall be entitled to cast only one ballot in the 
referendum. However, each domestic producer in a landlord/tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to domestically produce Christmas 
trees, in which more than one of the parties is a domestic producer or 
importer, shall be entitled to cast one ballot in the referendum 
covering only such domestic producer or importer's share of the 
ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate domestic 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 as instructed by the 
Department.
    (d) Eligible domestic producers or eligible importers may be asked 
to provide proof of sales or acreage as proof of eligibility to vote in 
any referendum.



Sec. 1214.103  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

[[Page 187]]

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 domestic 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. 1214.104  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 of such appointment, shall be performed by the agent.



Sec. 1214.105  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. 1214.106  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. 1214.107  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. 1214.108  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 0581-0267.



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.

[[Page 188]]

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.

    Authority: 7 U.S.C. 7481-7491 and 7 U.S.C. 7401.

    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.

[[Page 189]]



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.



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 five members. The 
number of members on the board may be changed by rulemaking: 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.

[62 FR 39389, July 22, 1997, as amended at 75 FR 67610, Nov. 3, 2010]



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

[[Page 190]]

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 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

[[Page 191]]

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 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,

[[Page 192]]

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;
    (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:

[[Page 193]]

    (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 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:

[[Page 194]]

    (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 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

[[Page 195]]

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) Persons that operate under an approved National Organic Program 
(NOP) (7 CFR part 205) system plan; process only products that are 
eligible to be labeled as 100 percent organic under the NOP; and are not 
split operations shall be exempt from the payment of assessments.
    (c) To claim an exemption, persons shall apply to the Board, in the 
form and manner prescribed in the rules and regulations.

[70 FR 2757, Jan. 14, 2005]



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).

[[Page 196]]

    (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.
    (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

[[Page 197]]

(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 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

[[Page 198]]

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) Persons that process solely 100 percent organic products and 
that do not process any conventional or nonorganic products as provided 
in Sec. 1215.52 paragraph (b) of this part may apply for an exemption 
by submitting a request for exemption to the Board on a form provided by 
the Board at any time initially. The request shall include the 
following: The applicant's name and address, a copy of the organic farm 
or organic handling operation certificate provided by a USDA-accredited 
certifying agent as defined in section 2103 of the Organic Foods 
Production Act of 1990 (7 U.S.C. 6502), a signed certification that the 
applicant meets all of the requirements specified for an assessment 
exemption, and such other information as may be required by the Board 
and with the approval of the Secretary.
    (c) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted and issue a Certificate of Exemption 
to the producer. For exemption requests received on or before August 15, 
2005, the Board will have 60 days to approve the exemption request; 
after August 15, 2005, the Board will have 30 days to approve the 
exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (d) Any person who desires to renew the exemption from assessments 
for a subsequent fiscal year shall reapply to the Board by January 1 of 
that year.
    (e) The exemption will apply at the first reporting period following 
the issuance of the Certificate of Exemption.
    (f) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
popcorn.

[62 FR 39389, July 22, 1997, as amended at 70 FR 2757, Jan. 14, 2005]

                              Miscellaneous



Sec. 1215.400  OMB control numbers.

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

[[Page 199]]



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



       Subpart A_Peanut Promotion, Research, and Information Order

                               Definitions

Sec.
1216.1 Act.
1216.2-1216.3 [Reserved]
1216.4 Board.
1216.5 Conflict of interest.
1216.6 [Reserved]
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 [Reserved]
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.
1216.56 Exemption for organic peanuts.

                       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. 7411-7425 and 7 U.S.C. 7401.

    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. Sec. 1216.2-1216.3  [Reserved]



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

[[Page 200]]

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  [Reserved]



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 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, Mississippi, New Mexico, 
North Carolina, Oklahoma, South Carolina, Texas, and Virginia.

[73 FR 14921, Mar. 20, 2008]



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

[[Page 201]]

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, 
Mississippi, 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.

[73 FR 14921, Mar. 20, 2008]



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.



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  [Reserved]



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

[[Page 202]]

National Peanut Board, hereinafter called the Board, composed of no more 
than 11 peanut producers and alternates, appointed by the Secretary from 
nominations as follows:
    (1) Ten 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.

[64 FR 41256, July 29, 1999, as amended at 73 FR 14921, Mar. 20, 2008]



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

[[Page 203]]

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 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;

[[Page 204]]

    (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, 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

[[Page 205]]

    (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 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

[[Page 206]]

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 necessary to pay for programs and other costs 
authorized by this part 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 or first 
purchaser/handler 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 one (1%) percent 
of the price paid for all farmers stock peanuts sold. Price paid is one 
(1%) percent of loan value.
    (d) For peanuts placed under a marketing assistance loan with the 
Department's Commodity Credit Corporation, the Commodity Credit 
Corporation, or any entity determined by the Commodity Credit 
Corporation shall deduct and remit to the Board, from the proceeds of 
the loan paid to the producer, one (1%) percent of the loan value of the 
peanuts as determined by the warehouse receipt accompanying such 
peanuts, no more than 60 days after the last day of the month in which 
the peanuts were placed under a marketing assistance loan.
    (e) If a producer places peanuts under a marketing assistance loan 
and subsequently redeems and sells such peanuts at a price greater than 
the loan amount, the producer shall pay the difference between the sales 
price and the loan value of the peanuts multiplied by one (1%) percent 
to the Board within sixty (60) days after the final day of the loan 
availability period.
    (f) 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.
    (g) 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.
    (h) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (i) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (j) The assessment rate may not be increased unless the new rate is 
approved by a referendum among eligible producers.

[70 FR 55226, Sept. 21, 2005]



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.

[[Page 207]]

    (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 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.



Sec. 1216.56  Exemption for organic peanuts.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (g) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) In order to apply for this exemption, an eligible peanut 
producer shall submit a request for exemption to the Board--on a form 
provided by the Board--at any time initially and annually thereafter on 
or before August 1 as long as the producer continues to be eligible for 
the exemption.
    (c) The request shall include the following: The producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer complies with the requirements of this section, 
the Board will approve the exemption and issue a Certificate of 
Exemption to the producer. For exemption requests received on or before 
August 15, 2005, the Board will have 60 days to approve the exemption 
request; after August 15, 2005, the Board will have 30 days to approve 
the exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for approval within the same 
timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells peanuts. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) The exemption will apply at the first reporting period following 
the

[[Page 208]]

issuance of the Certificate of Exemption.
    (g) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2757, Jan. 14, 2005]

                       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

[[Page 209]]

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 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

[[Page 210]]

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.
    (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

[[Page 211]]

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.



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

[[Page 212]]

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 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.

[[Page 213]]



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 held confidential and shall not be disclosed.



PART 1217_SOFTWOOD LUMBER RESEARCH, PROMOTION, CONSUMER EDUCATION AND INDUSTRY 

INFORMATION ORDER--Table of Contents



 Subpart A_Softwood Lumber Research, Promotion, Consumer Education and 
                       Industry Information Order

                               Definitions

Sec.
1217.1 Act.
1217.2 Blue Ribbon Commission or BRC.
1217.3 Board or Softwood Lumber Board.
1217.4 Board foot.
1217.5 Conflict of interest.
1217.6 Customs or CBP.
1217.7 Department or USDA.
1217.8 Domestic manufacturer.
1217.9 Export.
1217.10 Fiscal period or year.
1217.11 Importer.
1217.12 Information.
1217.13 Manufacture.
1217.14 Manufacturer for the U.S. market.
1217.15 Marketing.
1217.16 Nominal size.
1217.17 Order.
1217.18 Part and subpart.
1217.19 Person.
1217.20 Planing.
1217.21 Programs, plans and projects.
1217.22 Promotion.
1217.23 Research.
1217.24 Secretary.
1217.25 Softwood.
1217.26 Softwood lumber.
1217.27 State.
1217.28 Suspend.
1217.29 Terminate.
1217.30 United States.

                          Softwood Lumber Board

1217.40 Establishment and membership.
1217.41 Nominations and appointments.
1217.42 Term of office.
1217.43 Removal and vacancies.
1217.44 Procedure.
1217.45 Reimbursement and attendance.
1217.46 Powers and duties.
1217.47 Prohibited activities.

                        Expenses and Assessments

1217.50 Budget and expenses.
1217.51 Financial statements.
1217.52 Assessments.
1217.53 Exemption from assessment.

                   Promotion, Research and Information

1217.60 Programs, plans and projects.
1217.61 Independent evaluation.
1217.62 Patents, copyrights, inventions, product formulations, and 
          publications.

                       Reports, Books, and Records

1217.70 Reports.
1217.71 Books and records.
1217.72 Confidential treatment.

                              Miscellaneous

1217.80 Right of the Secretary.
1217.81 Referenda.
1217.82 Suspension or termination.
1217.83 Proceedings after termination.
1217.84 Effect of termination or amendment.
1217.85 Personal liability.
1217.86 Separability.
1217.87 Amendments.
1217.88 OMB control numbers.

                     Subpart B_Referendum Procedures

1217.100 General.
1217.101 Definitions.
1217.102 Voting.
1217.103 Instructions.
1217.104 Subagents.
1217.105 Ballots.
1217.106 Referendum report.
1217.107 Confidential information.
1217.108 OMB Control number.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

    Source: 76 FR 22755, Apr. 22, 2011, unless otherwise noted.



 Subpart A_Softwood Lumber Research, Promotion, Consumer Education, and 

                       Industry Information Order

    Source: 76 FR 46193, Aug. 2, 2011, unless otherwise noted.

[[Page 214]]

                               Definitions



Sec. 1217.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.



Sec. 1217.2  Blue Ribbon Commission or BRC.

    Blue Ribbon Commission or BRC means the 21-member committee 
representing businesses that manufacture softwood lumber in the United 
States or import softwood lumber to the United States formed to pursue 
an industry research, promotion, and information program.



Sec. 1217.3  Board or Softwood Lumber Board.

    Board or Softwood Lumber Board means the administrative body 
established pursuant to Sec. 1217.40, or such other name as recommended 
by the Board and approved by the Department.



Sec. 1217.4  Board foot.

    Board foot or BF means a unit of measurement of softwood lumber 
represented by a board 12-inches long, 12-inches wide, and 1-inch thick 
or its cubic equivalent. A board foot calculation for softwood lumber 1 
inch or more in thickness is based on its nominal thickness and width 
and the actual length. Softwood lumber with a nominal thickness of less 
than 1 inch is calculated as 1 inch.



Sec. 1217.5  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. 1217.6  Customs or CBP.

    Customs or CBP means Customs and Border Protection, an agency of the 
United States Department of Homeland Security.



Sec. 1217.7  Department or USDA.

    Department or USDA 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.



Sec. 1217.8  Domestic manufacturer.

    Domestic manufacturer means any person who is a first handler and is 
engaged in the manufacturing, sale and shipment of softwood lumber in 
the United States during a fiscal period and who owns, or shares in the 
ownership and risk of loss of manufacturing of softwood lumber or a 
person who is engaged in the business of manufacturing, or causes to be 
manufactured, sold and shipped such softwood lumber in the United States 
beyond personal use. This term does not include any person who re-
manufactures softwood lumber that has already been subject to assessment 
under this Order.



Sec. 1217.9  Export.

    Export means to manufacture and ship softwood lumber from within the 
United States to locations outside of the United States.



Sec. 1217.10  Fiscal period or year.

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



Sec. 1217.11  Importer.

    Importer means any person who imports softwood lumber from outside 
the United States for sale in the United States as a principal or as an 
agent, broker, or consignee of any person who manufactures softwood 
lumber outside the United States for sale in the United States, and who 
is listed in the import records as the importer of record for such 
softwood lumber.



Sec. 1217.12  Information.

    Information means activities or programs designed to disseminate the 
results of research, new and existing marketing programs, new and 
existing marketing strategies, new and existing uses and applications, 
and to enhance the image of softwood lumber and the forests from which 
it comes. These include:

[[Page 215]]

    (a) Consumer education, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding softwood lumber; and
    (b) Industry information, which means information and programs that 
would enhance the image of the softwood lumber industry.



Sec. 1217.13  Manufacture.

    Manufacture means the process of transforming softwood logs into 
softwood lumber.



Sec. 1217.14  Manufacturer for the U.S. market.

    Manufacturer for the U.S. market means domestic manufacturers and 
importers of softwood lumber as defined in this Order.



Sec. 1217.15  Marketing.

    Marketing means the sale or other disposition of softwood lumber in 
interstate, foreign, or intrastate commerce.



Sec. 1217.16  Nominal size.

    Nominal size means the size by which softwood lumber is known and 
sold in the marketplace that differs from actual size and is based on 
the thickness and width of a board when it is first cut from a log, or 
rough cut, prior to drying and planing.



Sec. 1217.17  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. 1217.18  Part and subpart.

    Part means the Softwood Lumber Research, Promotion, Consumer 
Education, and Industry 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. 1217.19  Person.

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



Sec. 1217.20  Planing.

    Planing means the act of smoothing the surface of a board to make 
the wood a uniform size.



Sec. 1217.21  Programs, plans, and projects.

    Programs, plans and projects mean those research, promotion and 
information programs, plans, or projects established pursuant to this 
Order.



Sec. 1217.22  Promotion.

    Promotion means any action taken, including paid advertising, public 
relations and other communications, and promoting the results of 
research, that presents a favorable image of softwood lumber to the 
public and to any and all consumers and those who influence consumption 
of softwood lumber with the intent of improving the perception, markets 
and competitive position of softwood lumber and stimulating sales of 
softwood lumber.



Sec. 1217.23  Research.

    Research means any activity that advances the position of softwood 
lumber in the marketplace that includes any type of test, study, or 
analysis designed to advance the image, desirability, use, 
marketability, sales, product development, or quality of softwood 
lumber; new applications; improving softwood lumber's position in 
building and fire codes; softwood lumber product testing and safety; and 
evaluating the effectiveness of market development and promotion efforts 
including life cycle studies, forestry, sustainable forest management, 
environmental preferrability, competitiveness, efficiency, pest and 
disease control, water quality and other management aspects of forestry 
and the forests from which softwood lumber originates.



Sec. 1217.24  Secretary.

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

[[Page 216]]



Sec. 1217.25  Softwood.

    Softwood means one of the botanical groups of trees that have 
needle-like or scale-like leaves, or conifers.



Sec. 1217.26  Softwood lumber.

    Softwood lumber means and includes softwood lumber and products 
manufactured from softwood as described in section 804(a) of Title VIII 
of the Tariff Act of 1930, as amended (19 U.S.C. 1202-1683g), and as 
assessed under Sec. 1217.52.



Sec. 1217.27  State.

    State means any of the several 50 States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
territories and possessions of the United States.



Sec. 1217.28  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. 1217.29  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. 1217.30  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.

                          Softwood Lumber Board



Sec. 1217.40  Establishment and membership.

    (a) Establishment of the Board. There is hereby established a 
Softwood Lumber Board to administer the terms and provisions of this 
Order and promote the use of softwood lumber. The Board shall be 
composed of manufacturers for the U.S. market who manufacture and 
domestically ship or import 15 million board feet or more of softwood 
lumber in the United States during a fiscal period. Seats on the Board 
shall be apportioned based on the volume of softwood lumber manufactured 
and shipped within the United States by domestic manufacturers and the 
volume of softwood lumber imported into the United States. Commencing 
with the term of office beginning January 1, 2015, seats on the Board 
shall also be apportioned based on size of operation within each 
geographic region, as specified in paragraphs (b)(1)(i), (b)(1)(ii), 
(b)(2)(i), and (b)(2)(ii) of this section. For purposes of this section, 
large means manufacturers for the U.S. market who account for the top 
two-thirds of the total annual volume of assessable softwood lumber and 
small means those who account for the remaining one-third of the total 
annual volume of assessable softwood lumber. If there are no eligible 
nominees for a large or small seat within a region, that seat may be 
filled by a nominee representing an eligible manufacturer for the U.S. 
market of any size. Should the size of a manufacturer for the U.S. 
market change during a member's term of office, that member could serve 
for the remainder of the term.
    (b) The Board shall be composed of 18 or 19 members, depending upon 
whether an additional importer member is appointed to the Board, 
pursuant to paragraph (b)(2)(iii) of this section. The Board shall be 
established as follows:
    (1) Domestic manufacturers. Twelve members shall be domestic 
manufacturers from the following three regions:
    (i) Six members shall be from the U.S. South Region, which consists 
of the states of Alabama, Arkansas, Florida, Georgia, Louisiana, 
Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, 
Virginia and West Virginia. Commencing with the term of office beginning 
January 1, 2015, of these six members, two must be large and four must 
be small;
    (ii) Five members shall be from the U.S. West Region, which consists 
of the states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, 
Montana, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, 
Washington and Wyoming. Commencing with the term of office beginning 
January 1, 2015, of these five members, four must be large and one must 
be small; and
    (iii) One member shall be from the Northeast and Lake States Region,

[[Page 217]]

which consists of the states of Connecticut, Delaware, Illinois, 
Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New 
York, Ohio, Pennsylvania, Rhode Island, Vermont, Wisconsin and all other 
parts of the United States not listed in paragraphs (b)(1)(i), 
(b)(1)(ii), or (b)(1)(iii) of this section.
    (2) Importers. Six members shall be importers who represent the 
following regions:
    (i) Four members shall import softwood lumber from the Canadian West 
Region, which consists of the provinces of British Columbia and Alberta. 
Commencing with the term of office beginning January 1, 2015, of these 
four members, three must be large and one must be small; and
    (ii) Two members shall import softwood lumber from the Canadian East 
Region, which consists of the Canadian territories and all other 
Canadian provinces not listed in paragraph (b)(2)(i) of this section 
that import softwood lumber into the United States. Commencing with the 
term of office beginning January 1, 2015, of these two members, one must 
be large and one must be small.
    (iii) If the Secretary, at the request of the Board or on his or her 
own, determines that it would be consistent with the provisions of the 
Act, the Secretary may appoint an additional importer to the Board to 
represent a region not otherwise specified in paragraphs (b)(2)(i) and 
(ii) of this section. Nominees would be solicited as prescribed in Sec. 
1217.41(b), or in the case of the Secretary acting on his or her own 
will be handled by the Secretary, and all the names of eligible 
candidates would be submitted to the Secretary for consideration. Such 
nominees must certify that the majority of their softwood lumber is 
imported from such region. In addition, representation for the region 
not otherwise specified in paragraphs (b)(2)(i) and (ii) of this section 
would be subject to the Board review and reapportionment provided for in 
paragraph (c) of this section.
    (c) In each five-year period, but not more frequently than once in 
each three-year period, the Board shall:
    (1) Review, based on a three-year average, the geographical 
distribution of the volume of softwood lumber manufactured and shipped 
within the United States by domestic manufacturers and the volume of 
softwood lumber imported into the United States; and
    (2) Review, based on a three-year average, the distribution of the 
size of operations within each region; and
    (3) If warranted, recommend to the Secretary the reapportionment of 
the Board membership to reflect changes in the geographical distribution 
of the volume of softwood lumber manufactured and shipped within the 
United States by domestic manufacturers and the volume of softwood 
lumber imported into the United States. The destination of volumes 
between regions and the distribution of the size of operations within 
regions shall also be considered. The number of Board members may also 
be changed. Any changes in Board composition shall be implemented by the 
Secretary through rulemaking.

[76 FR 46193, Aug. 2, 2011, as amended at 78 FR 77333, Dec. 23, 2013]



Sec. 1217.41  Nominations and appointments.

    (a) Initial nominations will be submitted to the Secretary by the 
Blue Ribbon Commission. Before considering any nominations, the BRC 
shall publicize the nomination process, using trade press or other means 
it deems appropriate, and shall outreach to all known manufacturers for 
the U.S. market who domestically manufacture and/or import 15 million 
board feet or more of softwood lumber per fiscal year in order to 
generate nominees that reflect the different operations within the 
softwood lumber industry. The BRC may use regional caucuses, mail or 
other methods to elicit potential nominees. The BRC shall submit the 
nominations to the Secretary and recommend two nominees for each Board 
position specified in paragraphs (b)(1), (b)(2)(i) and (b)(2)(ii) of 
Sec. 1217.40. All nominees solicited pursuant to Sec. 
1217.40(b)(2)(iii) shall be submitted to the Secretary through the BRC. 
From the nominations submitted by the BRC, the Secretary shall select 
the members of the Board.

[[Page 218]]

    (b) Subsequent nominations shall be conducted as follows:
    (1) The Board shall conduct outreach to all segments of the softwood 
lumber industry. Softwood lumber domestic manufacturers and importers 
may submit nominations to the Board. Subsequent nominees must 
domestically manufacture and/or import 15 million board feet or more of 
softwood lumber per fiscal year;
    (2) Domestic manufacturers and importer nominees may provide the 
Board a short background statement outlining their qualifications to 
serve on the Board;
    (3) Nominees that are both a domestic manufacturer and an importer 
may seek nomination to the Board and vote in the nomination process as 
either a domestic manufacturer or an importer, but not both. Such 
nominees must domestically manufacture and import 15 million board feet 
or more of softwood lumber per fiscal year;
    (4) The names of domestic manufacturer nominees shall be placed on a 
ballot by region. The ballots along with the background statements shall 
be mailed to domestic manufacturers in each respective region for a 
vote. Domestic manufacturers who manufacture softwood lumber in more 
than one region may seek nomination and vote in one region of their 
choice. The votes shall be tabulated for each region with the nominee 
receiving the highest number of votes at the top of the list in 
descending order by vote. The top two candidates for each position shall 
be submitted to the Secretary;
    (5) The names of importer nominees shall be placed on a ballot by 
region. The ballots along with the background statements shall be mailed 
to importers in each respective region for a vote. Importers who import 
softwood lumber from more than one region may seek nomination and vote 
in one region of their choice. The votes shall be tabulated for each 
region with the nominee receiving the highest number of votes at the top 
of the list in descending order by vote. The top two candidates for each 
position shall be submitted to the Secretary.
    (6) The Board must submit nominations to the Secretary at least six 
months before the new Board term begins. From the nominations submitted 
by the Board, the Secretary shall select the members of the Board;
    (7) No two members shall be employed by a single corporation, 
company, partnership, or any other legal entity; and
    (8) The Board may recommend to the Secretary modifications to its 
nomination procedures as it deems appropriate. Any such modifications 
shall be implemented through rulemaking by the Secretary.

[76 FR 46193, Aug. 2, 2011, as amended at 78 FR 77334, Dec. 23, 2013]



Sec. 1217.42  Term of office.

    (a) With the exception of the initial Board, each Board member will 
serve a three-year term or until the Secretary selects his or her 
successor. Each term of office shall begin on January 1 and end on 
December 31. No member may serve more than two consecutive terms, 
excluding any term of office less than three years.
    (b) For the initial board, the terms of Board members shall be 
staggered for two, three, and four years. Determination of which of the 
initial members shall serve a term of two, three, or four years shall be 
recommended to the Secretary by the Blue Ribbon Commission.



Sec. 1217.43  Removal and vacancies.

    (a) In the event that any member of the Board ceases to work for or 
be affiliated with a domestic manufacturer or importer or ceases to do 
business in the region he or she represents, such position shall become 
vacant.
    (b) The Board may recommend to the Secretary that a member be 
removed from office if the member consistently refuses to perform his or 
her duties or engages in dishonest acts or willful misconduct. The 
Secretary may remove the member if he or she finds that the Board's 
recommendation shows adequate cause. 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 would be detrimental

[[Page 219]]

to the achievement of the purposes of the Act.
    (c) If a position becomes vacant, nominations to fill the vacancy 
may be conducted using the nominations process set forth in Sec. 
1217.41(b) or the Board may nominate eligible persons. A vacancy will 
not be required to be filled if the unexpired term is less than 6 
months.

[76 FR 46193, Aug. 2, 2011, as amended at 78 FR 77334, Dec. 23, 2013]



Sec. 1217.44  Procedure.

    (a) A majority of the Board members (10) will constitute a quorum so 
long as at least three of the members present are importer members and 
six of the members present are domestic manufacturers. If participation 
by telephone or other means is permitted, members participating by such 
means shall count as present in determining quorum or other voting 
requirements set forth in this section.
    (b) All votes at meetings of the Board and executive committee will 
be cast in person or by electronic voting or other means as the Board 
and Secretary deem appropriate to allow members participating by 
telephone or other electronic means to cast votes. Voting by proxy will 
not be allowed.
    (c) 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 10 
Board members, except for recommendations to change the assessment rate 
or to adopt a budget, both of which require affirmation by at least two-
thirds (12 members for an 18 member Board and 13 members for a 19 member 
Board) of the Board members. If a Board has vacant positions, 
recommendations to change the assessment rate or to adopt a budget must 
pass by an affirmative vote of at least two-thirds of the Board members, 
exclusive of the vacant seats.
    (d) The Board must give members and the Secretary timely notice of 
all Board, executive and committee meetings.
    (e) In lieu of voting at a properly convened meeting, and when, in 
the opinion of the Board's chairperson, such action is considered 
necessary, the Board may take action by mail, telephone, electronic 
mail, facsimile, or any other means of communication. Any action taken 
under this procedure is valid only if:
    (1) All members and the Secretary are notified and the members are 
provided the opportunity to vote;
    (2) Ten (10) Board members vote in favor of the action (unless two-
thirds vote of the Board members is required under the Order); and
    (3) All votes are promptly confirmed in writing and recorded in the 
Board minutes.



Sec. 1217.45  Reimbursement and attendance.

    Board members will serve without compensation. Board members will be 
reimbursed for reasonable travel expenses, as approved by the Board, 
which they incur when performing Board business.



Sec. 1217.46  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer this 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, regulations 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 its members a 
chairperson and, such other officers as may be necessary;
    (d) To create an executive committee of five members of the Board 
comprised of the chairperson and four other members elected by the 
Board. The duties of the executive committee shall be specified in 
bylaws that are recommended by the Board and approved by the Secretary;
    (e) To create other committees or subcommittees, which may include 
individuals other than Board members, as the Board deems necessary from 
its membership and other representatives it deems appropriate;
    (f) To employ or contract with such persons, other than the members, 
as it may deem necessary to assist the Board in carrying out its duties, 
and to

[[Page 220]]

determine the compensation and define the duties of each;
    (g) To notify manufacturers for the U.S. market of all Board 
meetings through press releases or other means and to give the Secretary 
the same notice of Board meetings, executive committee, and subcommittee 
meetings that 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 to the Secretary;
    (h) To develop and administer programs, plans, and projects and 
enter into contracts or agreements, which must be approved by the 
Secretary before becoming effective, for promotion, research, and 
information, including consumer and industry information, research and 
advertising designed to strengthen the softwood lumber industry's 
position in the marketplace and to maintain, develop, and expand markets 
for softwood lumber. The payment of costs for such activities shall be 
with funds collected pursuant to the Order, including funds collected 
pursuant to Sec. 1217.50(f). Each 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 that specifies 
the cost to be incurred to carry out the activity;
    (2) The contractor or agreeing party shall keep accurate records of 
all of 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 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.
    (i) To prepare and submit to the Secretary for approval 60 calendar 
days in advance of the beginning of a fiscal period, rates of assessment 
and a budget of the anticipated expenses to be incurred in the 
administration of the Order, including the probable cost of each 
promotion, research, and information activity proposed to be developed 
or carried out by the Board;
    (j) To borrow funds necessary for startup expenses of the Order;
    (k) To invest assessments collected and other funds received 
pursuant to the Order and use earnings from invested assessments to pay 
for activities carried out pursuant to the Order;
    (l) To recommend changes to the assessment rates as provided in this 
part;
    (m) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and at such other times as 
the Secretary may request, and to submit a report of each audit directly 
to the Secretary;
    (n) To periodically prepare and make public and to make available to 
manufacturers for the U.S. market reports of its activities and, at 
least once each fiscal period, to make public an accounting of funds 
received and expended;
    (o) 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, and to submit to the Secretary such information 
pertaining to this part or subpart as he or she may request;
    (p) To act as an intermediary between the Secretary and any 
manufacturer for the U.S. market;
    (q) To receive, investigate and report to the Secretary complaints 
of violations of the Order; and
    (r) 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 purposes of the Act.



Sec. 1217.47  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, by local, state, national,

[[Page 221]]

and foreign governments or subdivision thereof, other than recommending 
to the Secretary amendments to the Order; and
    (c) No program, plan or project including advertising shall be false 
or misleading or disparaging to another agricultural commodity. Softwood 
lumber of all geographic origins shall be treated equally.

                        Expenses and Assessments



Sec. 1217.50  Budget and expenses.

    (a) At least 60 calendar days prior to the beginning of each fiscal 
period, and as may be necessary thereafter, the Board shall prepare and 
submit to the Department a budget for the fiscal period covering its 
anticipated expenses and disbursements in administering this part. The 
budget for research, promotion or information may not be implemented 
prior to approval by the Secretary. 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 fiscal 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 fiscal 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 Order.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Department, including shifting 
funds from one program, plan, or project to another.
    (d) The Board is authorized to incur such expenses, including 
provision for a reserve, as the Secretary finds 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 Department, the Board may borrow money for 
the payment of startup expenses subject to the same fiscal, budget, and 
audit controls as other funds of the Board. Any funds borrowed shall be 
expended only for startup costs and capital outlays and are limited to 
the first year of operation by the Board.
    (f) The Board may accept voluntary contributions, and is encouraged 
to seek other appropriate funding sources to carry out activities 
authorized by the Order. Such contributions shall be free from any 
encumbrances by the donor and the Board shall retain complete control of 
their use. The Board may receive funds from outside sources (i.e., 
Federal or State grants, Foreign Agricultural Service funds), with 
approval of the Secretary, for specific authorized projects.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, 
enforcement and supervision of the Order, including all referendum costs 
in connection with the Order.
    (h) For fiscal years beginning two years after the date the of the 
first Board meeting, the Board may not expend for administration, 
maintenance, and the functioning of the Board an amount that is greater 
than 8 percent of the assessment and other income received by and 
available to the Board for the fiscal year. For purposes of this 
limitation, reimbursements to the Secretary shall not be considered 
administrative costs.
    (i) 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 do not exceed one 
fiscal period's budget of expenses. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this subpart.
    (j) Pending disbursement of assessments and all other revenue under 
a budget approved by the Secretary, the Board may invest assessments and 
all other revenues collected under this part in:

[[Page 222]]

    (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) Interest bearing accounts or certificates of deposit of 
financial institutions that are members of the Federal Reserve System;
    (4) Obligations fully guaranteed as to principal interest by the 
United States; or
    (5) Other investments as authorized by the Secretary.



Sec. 1217.51  Financial statements.

    (a) The Board shall prepare and submit financial statements to the 
Department on a quarterly basis, or at any other time as requested by 
the Secretary. 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 Department 
within 30 calendar days after the end of the time period to which it 
applies.
    (c) The Board shall submit to the Department an annual financial 
statement within 90 calendar days after the end of the fiscal year to 
which it applies.



Sec. 1217.52  Assessments.

    (a) The Board's programs and expenses shall be paid by assessments 
on manufacturers for the U.S. market, other income of the Board, and 
other funds available to the Board.
    (b) Subject to the exemptions specified in Sec. 1217.53, each 
manufacturer for the U.S. market shall pay an assessment to the Board at 
the rate of $0.35 per thousand board feet of softwood lumber except that 
no person shall pay an assessment on the first 15 million board feet of 
softwood lumber otherwise subject to assessment in a fiscal year. 
Domestic manufacturers shall pay assessments based on the volume of 
softwood lumber shipped within the United States and importers shall pay 
assessments based on the volume of softwood lumber imported to the 
United States.
    (c) At least 24 months after the Order becomes effective and 
periodically thereafter, the Board shall review and may recommend to the 
Secretary, upon an affirmative vote by at least two-thirds of the Board 
members, a change in the assessment rate. In no event may the rate be 
less than $0.35 per thousand board feet nor more than $0.50 per thousand 
board feet. A change in the assessment rate is subject to rulemaking by 
the Secretary.
    (d) Domestic manufacturers shall remit to the Board the amount due 
no later than the 30th calendar day of the month following the end of 
the quarter in which the softwood lumber was shipped.
    (e) Domestic product that cannot be categorized in the Harmomized 
Tariff Schedule of the United States (HTSUS) numbers listed in paragraph 
(h) of this section if it were an import is not covered under this 
Order.
    (f) Softwood lumber originating in the United States that is 
exported to another country and shipped back to the United States is 
covered under this Order, provided that it can be categorized in the 
HTSUS numbers listed in paragraph (h) of this section.
    (g) Each importer of softwood lumber shall pay through Customs to 
the Board an assessment on softwood lumber imported into the United 
States as described in section 804(a) of Title VIII of the Tariff Act of 
1930, as amended (19 U.S.C. 1202-1683g), provided that it can be 
categorized in the HTSUS numbers listed in paragraph (h) of this 
section.
    (h) The HTSUS categories and assessment rates on imported softwood 
lumber are listed in the table below. A factor shall be used to 
determine the equivalent volume of softwood lumber in thousand board 
feet. The factor used to convert one cubic meter to one thousand board 
feet is 0.423776001. Accordingly, the assessment rate per cubic meter is 
as follows.

------------------------------------------------------------------------
                                                           Assessment $/
                     Softwood lumber                        cubic meter
------------------------------------------------------------------------
4407.10.01..............................................         $0.1483
4409.10.05..............................................          0.1483
4409.10.10..............................................          0.1483
4409.10.20..............................................          0.1483
4409.10.90..............................................          0.1483
4418.90.25..............................................          0.1483
------------------------------------------------------------------------


[[Page 223]]

    (i) In the event that any HTSUS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the description of the softwood lumber involved, 
assessments will continue to be collected based on the new number.
    (j) If Customs does not collect an assessment from an importer, the 
importer is responsible for paying the assessment directly to the Board 
no later than the 30th calendar day of the month following the end of 
the quarter in which the softwood lumber was imported.
    (k) Articles brought into the United States temporarily and for 
which an exemption is claimed under subchapter XIII of chapter 98 of the 
HTSUS are not covered under this Order. If assessments are collected by 
Customs for these products, the importer may apply to the Board for a 
refund of assessments.
    (l) When a domestic manufacturer or importer fails to pay the 
assessment within 60 calendar days of the date it is due, the Board may 
impose a late payment charge and interest. The late payment charge and 
rate of interest shall be prescribed in regulations issued by the 
Secretary. All late assessments shall be subject to the specified late 
payment charge and interest. Persons failing to remit total assessments 
due in a timely manner may also be subject to actions under Federal debt 
collection procedures.
    (m) The Board may accept advance payment of assessments from any 
manufacturer for the U.S. market that will be credited toward any amount 
for which that person may become liable. The Board may not pay interest 
on any advance payment.
    (n) If the Board is not in place by the date the first assessments 
are to be collected, the Secretary shall receive assessments and shall 
pay such assessments and any interest earned to the Board when it is 
formed.



Sec. 1217.53  Exemption from assessment.

    (a) Manufacturers for the U.S. market who domestically ship and/or 
import less than 15 million board feet annually. (1) Domestic 
manufacturers who ship less than 15 million board feet of softwood 
lumber within the United States in a fiscal year are exempt from paying 
assessments. Such manufacturers must apply to the Board, on a form 
provided by the Board, for a certificate of exemption prior to the start 
of the fiscal year. This is an annual exemption and domestic 
manufacturers must reapply each year. Such manufacturers shall certify 
that they will ship less than 15 million board feet of softwood lumber 
during the fiscal year for which the exemption is claimed. Upon receipt 
of an application for exemption, the Board shall determine whether an 
exemption may be granted. The Board may request past shipment data to 
support the exemption request. The Board will then issue, if deemed 
appropriate, a certificate of exemption to the eligible domestic 
manufacturer. It is the responsibility of the domestic manufacturer to 
retain a copy of the certificate of exemption.
    (2) Importers who import into the United States less than 15 million 
board feet of softwood lumber in a fiscal year are exempt from paying 
assessments. Such importers must apply to the Board, on a form provided 
by the Board, for a certificate of exemption prior to the start of the 
fiscal year. This is an annual exemption and importers must reapply each 
year. Such importers shall certify that they will import less than 15 
million board feet of softwood lumber during the fiscal year for which 
the exemption is claimed. Upon receipt of an application for exemption, 
the Board shall determine whether an exemption is granted. The Board may 
request past import data to support the exemption request. The Board 
will then issue, if deemed appropriate, a certificate of exemption to 
the eligible importer. It is the responsibility of the importer to 
retain a copy of the certificate of exemption. The importer may be 
requested to submit a copy of the certificate to Customs. If Customs 
collects the assessment, the Board shall refund such importers their 
assessments no later than 60 calendar days after receipt of such 
assessments by the Board. No interest shall be paid on the assessments 
collected by Customs.

[[Page 224]]

    (3) Domestic manufacturers who did not apply to the Board for an 
exemption and shipped less than 15 million board feet of softwood lumber 
within the United States during the fiscal year shall receive a refund 
from the Board for the applicable assessments within 30 calendar days 
after the end of the fiscal year. Board staff shall determine the 
assessments paid and refund the amount due to the domestic manufacturer 
accordingly.
    (4) Importers who did not apply to the Board for an exemption and 
imported less than 15 million board feet of softwood lumber during the 
fiscal year shall receive a refund from the Board for the applicable 
assessments within 30 calendar days after the end of the fiscal year.
    (5) If an entity is both a domestic manufacturer and an importer, 
the sum of such entity's domestic shipments and imports during a fiscal 
year shall count towards the 15 million board feet exemption.
    (6) Domestic manufacturers and importers who received an exemption 
certificate from the Board but domestically shipped or imported 15 
million board feet or more of softwood lumber during the fiscal year 
shall pay the Board the applicable assessments owed on the domestic 
shipments or imports over the 15 million board foot-exemption threshold 
within 30 calendar days after the end of the fiscal year and submit any 
necessary reports to the Board pursuant to Sec. 1217.70.
    (7) The Board may develop additional procedures to administer this 
exemption as appropriate. Such procedures shall be implemented through 
rulemaking by the Secretary.
    (b) Manufacturers for the U.S. market who domestically ship and/or 
import 15 million board feet or more annually. (1) Domestic 
manufacturers who domestically ship 15 million board feet or more per 
fiscal year shall not pay assessments on their first 15 million board 
feet of softwood lumber shipped during the applicable fiscal year.
    (2) Importers who import 15 million board feet or more per fiscal 
year shall be exempt from paying assessments on their first 15 million 
board feet of softwood lumber imported during the applicable fiscal 
year. Such importers shall receive a refund from the Board for the 
applicable assessments collected by Customs. The Board shall refund such 
importers their assessments no later than 60 calendar days after receipt 
by the Board.
    (c) Export. Shipments of softwood lumber by domestic manufacturers 
to locations outside of the United States are exempt from assessment. 
The Board shall establish procedures for approval by the Secretary for 
refunding assessments that may be paid on such shipments and establish 
any necessary safeguards as deemed appropriate. Safeguard procedures 
shall be implemented by the Secretary through rulemaking. The Board may 
also recommend to the Secretary that such shipments be assessed if it 
deems appropriate. Such action shall be implemented by the Secretary 
through rulemaking.
    (d) Organic. (1) Organic Act means section 2103 of the Organic Foods 
Production Act of 1990 (7 U.S.C. 6501-6522).
    (2) A domestic manufacturer who operates under an approved National 
Organic Program (NOP) (7 CFR part 205) system plan, only manufactures 
and ships softwood lumber that is eligible to be labeled as 100 percent 
organic under the NOP and is not a split operation shall be exempt from 
payment of assessments. To obtain an organic exemption, an eligible 
domestic manufacturer shall submit a request for exemption to the Board, 
on a form provided by the Board, at any time initially and annually 
thereafter on or before the start of the fiscal year as long as such 
manufacturer continues to be eligible for the exemption. The request 
shall include the following: The manufacturer's name and address; a copy 
of the organic operation certificate provided by a USDA-accredited 
certifying agent as defined in the Organic Act, a signed certification 
that the applicant meets all of the requirements specified for an 
assessment exemption, and such other information as may be required by 
the Board and with the approval of the Secretary. The Board shall have 
30 calendar days to approve the exemption request. If the exemption is 
not granted, the Board will notify the applicant and provide reasons for 
the denial within the same time frame.

[[Page 225]]

    (3) An importer who imports only softwood lumber that is eligible to 
be labeled as 100 percent organic under the NOP and is not a split 
operation shall be exempt from the payment of assessments. To obtain an 
organic exemption, an eligible importer must submit documentation to the 
Board and request an exemption from assessment on 100 percent of organic 
softwood lumber, on a form provided by the Board, at any time initially 
and annually thereafter on or before the beginning of the fiscal year as 
long as the importer continues to be eligible for the exemption. This 
documentation shall include the same information as required by domestic 
manufacturers in paragraph (d)(2) of this section. If the importer 
complies with the requirements of this section, the Board will grant the 
exemption and issue a Certificate of Exemption to the importer. The 
Board will also issue the importer a 9-digit alphanumeric number valid 
for 1 year from the date of issue. This alphanumeric number should be 
entered by the importer to Customs at entry summary. Any line item entry 
of 100 percent organic softwood lumber bearing this alphanumeric number 
assigned by the Board will not be subject to assessments.
    (4) Importers who are exempt from assessment in paragraph (d)(3) of 
this section shall also be eligible for reimbursement of assessments 
collected by Customs and may apply to the Board for a reimbursement. The 
importer would be required to submit satisfactory proof to the Board 
that the importer paid the assessment on exempt organic products.
    (5) The exemption will apply immediately following the issuance of 
the exemption certificate.

                  Promotion, Research, and Information



Sec. 1217.60  Programs, plans, and projects.

    (a) The Board shall develop and submit to the Secretary for approval 
programs, plans and projects authorized by this subpart. Such programs, 
plans and projects shall provide for promotion, research, education and 
other activities including consumer and industry information and 
advertising designed to:
    (1) Maintain, develop, expand and grow markets for softwood lumber;
    (2) Enhance and strengthen the image, reputation and public 
acceptance of softwood lumber and the forests from which it comes;
    (3) Develop new markets and marketing strategies for softwood 
lumber;
    (4) Expand the knowledge and understanding of the strength, safety 
and technical applications and encourage innovation in the use of 
softwood lumber;
    (5) Transfer and disseminate the knowledge and understanding of the 
strength, safety, environmental and sustainable benefits and technical 
applications of softwood lumber; and
    (6) Develop, expand and grow existing and new opportunities and 
applications for softwood lumber.
    (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) The Board must evaluate each program, plan and project 
authorized under this subpart to ensure that it contributes to an 
effective and coordinated program of research, promotion and 
information. The Board must submit the evaluations to the Secretary. If 
the Board finds that a program, plan or project does not contribute to 
an effective program of promotion, research, or information, then the 
Board shall terminate such plan or program.



Sec. 1217.61  Independent evaluation.

    At least once every five years, the Board shall authorize and fund 
from funds otherwise available to the Board, an independent evaluation 
of the effectiveness of the Order and the 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 paragraph.

[[Page 226]]



Sec. 1217.62  Patents, copyrights, trademarks, inventions, product 

formulations, and publications.

    Any patents, copyrights, trademarks, inventions, product 
formulations, and publications 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, inventions, 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. 1217.83 shall apply to determine disposition of all 
such property.

                       Reports, Books, and Records



Sec. 1217.70  Reports.

    (a) Each manufacturer for the U.S. market will be required to 
provide periodically to the Board such information as the Board, with 
the approval of the Secretary, may require. Such information may 
include, but not be limited to:
    (1) For domestic manufacturers:
    (i) The name, address and telephone number of the domestic 
manufacturer;
    (ii) The board feet of softwood lumber shipped within the United 
States;
    (iii) The board feet of softwood lumber for which assessments were 
paid; and
    (iv) The board feet of softwood lumber that was exported.
    (2) For importers:
    (i) The name, address and telephone number of the importer;
    (ii) The board feet of softwood lumber imported;
    (iii) The board feet of softwood lumber for which assessments were 
paid; and
    (iv) The country of export.
    (b) For domestic manufacturers, such information shall accompany the 
collected payment of assessments on a quarterly basis specified in Sec. 
1217.52. For importers who pay their assessments directly to the Board, 
such information shall accompany the payment of collected assessments 
within 30 calendar days after the end of the quarter in which the 
softwood lumber was imported.

[76 FR 46193, Aug. 2, 2011, as amended at 78 FR 77334, Dec. 23, 2013]



Sec. 1217.71  Books and records.

    Each manufacturer for the U.S. market, including those exempt under 
Sec. 1217.53, shall maintain any books and records necessary to carry 
out the provisions of this subpart and regulations issued thereunder, 
including such records as are necessary to verify any required reports. 
Domestic manufacturers who only export softwood lumber shall also retain 
such books and records. Such books and records must be made available 
during normal business hours for inspection by the Board's or 
Secretary's employees or agents. A manufacturer for the U.S. market must 
maintain the books and records for two years beyond the fiscal period to 
which they apply.



Sec. 1217.72  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 or other manufacturers for the U.S. market. 
Only those persons having a specific need for such information solely 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 at 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:

[[Page 227]]

    (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 part, together 
with a statement of the particular provisions of this part violated by 
such person.

                              Miscellaneous



Sec. 1217.80  Right of the Secretary.

    All fiscal matters, programs 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. 1217.81  Referenda.

    (a) Initial referendum. The Order shall not become effective unless 
the Order is approved by a majority of domestic manufacturers and 
importers voting in the referendum who also represent a majority of the 
volume of softwood lumber represented in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the domestic manufacturing or importation of softwood lumber. A single 
entity who domestically manufactures and imports softwood lumber may 
cast one vote in the referendum.
    (b) Subsequent referenda. The Secretary shall conduct subsequent 
referenda:
    (1) For the purpose of ascertaining whether manufacturers for the 
U.S. market favor the amendment, continuation, suspension, or 
termination of the Order;
    (2) Five years after this Order becomes effective and every five 
years thereafter, to determine whether softwood lumber manufacturers for 
the U.S. market favor the continuation of the Order. The Order shall 
continue if it is favored by a majority of domestic manufacturers and 
importers voting in the referendum who also represent a majority of the 
volume of softwood lumber represented in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the domestic manufacturing or importation of softwood lumber;
    (3) At the request of the Board established in this Order;
    (4) At the request of 10 percent or more of the number of persons 
eligible to vote in a referendum as set forth under the Order; or
    (5) At any time as determined by the Secretary.



Sec. 1217.82  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 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 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 fiscal period whenever the Secretary determines that its 
suspension or termination is favored by a majority of domestic 
manufacturers and importers voting in the referendum who also represent 
a majority of the volume represented in the referendum who, during a 
representative period determined by the Secretary, have been engaged in 
the domestic manufacturing or importation of softwood lumber.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) Not later than one hundred and eighty (180) calendar days after 
making the determination, suspend or terminate, as the case may be, the 
collection of assessments under this subpart.
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.



Sec. 1217.83  Proceedings after termination.

    (a) Upon termination of this subpart, the Board shall recommend to 
the Secretary up to nine of its members, representing all regions 
specified in

[[Page 228]]

Sec. 1217.40(b), three of whom shall be importers and six of whom shall 
be domestic manufacturers, to serve as trustees for the purpose of 
liquidating the Board's affairs. 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 existing claim 
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 trustees, to such person or person as the Secretary directs; 
and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary or 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 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 one or more softwood lumber industry 
organizations in the United States whose mission is generic softwood 
lumber promotion, research, and information programs.



Sec. 1217.84  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;
    (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. 1217.85  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. 1217.86  Separability.

    If any provision of this subpart is declared invalid or the 
applicability of it 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. 1217.87  Amendments.

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



Sec. 1217.88  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 1995, 44 U.S.C. Chapter 35, are OMB control 
number 0505-0001 (Board nominee background statement) and OMB control 
number 0581-0264.

[76 FR 46193, Aug. 2, 2011, as amended at 76 FR 53816, Aug. 30, 2011]

[[Page 229]]



                     Subpart B_Referendum Procedures



Sec. 1217.100  General.

    Referenda to determine whether eligible domestic manufacturers and 
importers favor the issuance, continuance, amendment, suspension, or 
termination of the Softwood Lumber Research, Promotion, Consumer 
Education, and Industry Information Order shall be conducted in 
accordance with this subpart.



Sec. 1217.101  Definitions.

    For the purposes of this subpart:
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, 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) Customs or CPB means Customs and Border Protection, an agency of 
the United States Department of Homeland Security.
    (c) Department or USDA 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.
    (d) Eligible domestic manufacturer means any person who manufactured 
and shipped 15 million board feet or more of softwood lumber in the 
United States during the representative period.
    (e) Eligible importer means any person who imported 15 million board 
feet or more of softwood lumber into the United States during the 
representative period as a principal or as an agent, broker, or 
consignee of any person who manufactured softwood lumber outside of the 
United States for sale in the United States, and who is listed as the 
importer of record for such softwood lumber. Importation occurs when 
softwood lumber manufactured outside of the United States is released 
from custody by Customs and introduced into the stream of commerce in 
the United States. Included are persons who hold title to foreign-
manufactured softwood lumber immediately upon release by Customs, as 
well as any persons who act on behalf of others, as agents or brokers, 
to secure the release of softwood lumber from Customs when such softwood 
lumber is entered or withdrawn for use in the United States.
    (f) Manufacture means the process of transforming softwood logs into 
softwood lumber.
    (g) Order means the Softwood Lumber Research, Promotion, Consumer 
Education and Industry Information Order.
    (h) 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 softwood lumber manufacturing entity 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, facilities, capital, 
labor, management, equipment, or other services, or any variation of 
such contributions by two or more parties, so that it results in the 
domestic manufacturing or importation of softwood lumber and the 
authority to transfer title to the softwood lumber so manufactured or 
imported.
    (i) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (j) Representative period means the period designated by the 
Department.
    (k) Softwood means one of the botanical groups of trees that have 
needle-like or scale-like leaves, the conifers.
    (l) Softwood lumber means and includes softwood lumber and products 
manufactured from softwood as described in section 804(a) within Title 
VIII (Softwood Lumber Act of 2008 or SLA of 2008) of the Tariff Act of 
1930 (19 U.S.C. 1202-1683g), as amended by section 3301 of the Food, 
Conservation and Energy Act of 2008 (Pub. L. 110-246, enacted June 18, 
2008) and categorized in

[[Page 230]]

the following Harmonized Tariff Schedule of the United States (HTSUS) 
numbers--4407.10.01, 4409.10.05, 4409.10.10, 4409.10.20, 4409.10.90, and 
4418.90.25. Domestic product that cannot be categorized in the 
referenced HTSUS numbers if it were an import is not covered under this 
order. Further, softwood lumber originating in the United States that is 
exported to another country and shipped back to the United States is 
also covered under this Order, provided it can be categorized in the 
referenced HTSUS numbers. Additionally, articles brought into the United 
States temporarily and for which an exemption is claimed under 
subchapter XIII of chapter 98 of the HTSUS are exempted from the SLA of 
2008 and are not covered under this Order.
    (m) 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. 1217.102  Voting.

    (a) Each eligible domestic manufacturer and importer of softwood 
lumber shall be entitled to cast only one ballot in the referendum. 
However, each domestic manufacturer in a landlord/tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to manufacture softwood lumber, in which more than one 
of the parties is a domestic manufacturer or importer, shall be entitled 
to cast one ballot in the referendum covering only such domestic 
manufacturer or importer's share of ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate domestic manufacturer or importer, 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 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) A single entity who domestically manufactures and imports 
softwood lumber may cast one vote in the referendum.
    (d) All ballots are to be cast by mail or other means, as instructed 
by the Department.



Sec. 1217.103  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, consistent 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 using 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 domestic manufacturers 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; and
    (g) Announce the results to the public.

[[Page 231]]



Sec. 1217.104  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 of such appointment, shall be performed by the agent.



Sec. 1217.105  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. 1217.106  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. 1217.107  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. 1217.108  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, 4 U.S.C. is OMB control 
number 0581-0264.

[78 FR 77334, Dec. 23, 2013]



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 U.S. Highbush Blueberry Council.

                     U.S. Highbush 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.

[[Page 232]]

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: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    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 to part 1218 appear at 66 FR 
37118, 37119, July 17, 2001.

    Editorial Note: Nomenclature changes to part 1218 appear at 71 FR 
77245, Dec. 26, 2006.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37118, July 17, 2001; 
71 FR 44554, Aug. 7, 2006]



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

[[Page 233]]

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.



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

[[Page 234]]

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  U.S. Highbush Blueberry Council.

    U.S. Highbush Blueberry Council or the Council means the 
administrative body established pursuant to Sec. 1218.40.

[71 FR 44554, Aug. 7, 2006]

                     U.S. Highbush Blueberry Council



Sec. 1218.40  Establishment and membership.

    (a) Establishment of the U.S. Highbush Blueberry Council. There is 
hereby established a U.S. Highbush Blueberry Council, hereinafter called 
the Council, composed of no more than 16 members and alternates, 
appointed by the Secretary from 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 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 six 
blueberry producing states, based upon the average of the total tons 
produced over the previous three years. Average tonnage will be based 
upon production and assessment figures generated by the Council.
    (3) Three importers and alternates.
    (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 
Council 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 
Council assessment records. If warranted, the Council will recommend to 
the Secretary that the membership on the Council be altered to reflect 
any changes in the 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 Council.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
71 FR 44554, Aug. 7, 2006; 75 FR 31282, June 3, 2010]



Sec. 1218.41  Nominations and appointments.

    (a) Voting for regional and state representatives will be made by 
mail ballot.
    (b) When a state has a state blueberry commission or marketing order 
in place, the state commission or committee will nominate members to 
serve on the Council. At least two nominees shall be submitted to the 
Secretary for each member and each alternate.
    (c) Nomination and election of regional and state representatives 
where

[[Page 235]]

no commission or order is in place will be handled by the Council staff. 
The Council staff will seek nominations for members and alternates from 
the specific states and/or regions. Nominations will be returned to the 
Council office and placed on a ballot which will then be sent to 
producers in the state and/or region for a 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 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 Council. 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 and 
alternate members of the Council.

[71 FR 44555, Aug. 7, 2006]



Sec. 1218.42  Term of office.

    Council members and alternates will serve for a term of three years 
and be able to serve a maximum of two consecutive terms. A Council 
member may serve as an alternate during the years the member is 
ineligible for a member position. When the Council 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. 
Council nominations and appointments will take place in two out of every 
three years. Each term of office will end on December 31, 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 Council ceases to be a 
member of the category of members from which the member was appointed to 
the Council, such position shall automatically become vacant.
    (b) 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 engages 
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.
    (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 Council, 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 Council and 
the alternate are unable to attend a meeting, the Council 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 Council meeting, it will be considered a quorum when a 
minimum

[[Page 236]]

of nine members, or their alternates serving in the absence, are 
present.
    (b) At the start of each fiscal period, the Council will select a 
chairperson and vice chairperson who will conduct meetings throughout 
that period.
    (c) All Council members and alternates will receive a minimum of 10 
days advance notice of all Council and committee meetings.
    (d) 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 one 
vote more than 50 percent of the total votes represented by the Council 
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 Council 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 Council.
    (f) 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 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 Council. All votes shall be 
recorded in Council minutes.
    (g) There shall be no voting by proxy.
    (h) The chairperson shall be a voting member.
    (i) The organization of the Council and the procedures for the 
conducting of meetings of the Council shall be in accordance with its 
bylaws, which shall be established by the Council and approved by the 
Secretary.

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001; 
75 FR 31282, June 3, 2010]



Sec. 1218.46  Compensation and reimbursement.

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

[65 FR 43963, July 17, 2000, as amended at 66 FR 37119, July 17, 2001]



Sec. 1218.47  Powers and duties.

    The Council 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 Council, 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 
Council a chairperson, other officers, committees, and subcommittees, as 
the Council determines to be appropriate;
    (d) To employ persons, other than the members, as the Council 
considers necessary to assist the Council 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 Council shall develop and submit to the Council a 
proposed activity; keep accurate records of all of its transactions 
relating to the contract or agreement; account for funds received and 
expended

[[Page 237]]

in connection with the contract or agreement; make periodic reports to 
the Council of activities conducted under the contract or agreement; and 
make such other reports available as the Council or the Secretary 
considers relevant. 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) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Council of 
activities conducted, submit accounting for funds received and expended, 
and make such other reports as the Secretary or the Council 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 Council 
contractor and who receives or otherwise uses funds allocated by the 
Council 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 
Council;
    (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 Council 
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 Council 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 Council 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 Council may not engage in, and shall prohibit the employees and 
agents of the Council from engaging in:
    (a) Any action that would be a conflict of interest; and
    (b) Using funds collected by the Council 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 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:
    (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

[[Page 238]]

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 Council's approved budget and 
which are consistent with governing bylaws need not have prior approval 
by the Secretary.
    (d) 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.
    (e) With 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. Any funds 
borrowed by the Council shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Council.
    (f) The Council may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Council shall retain complete control of their use.
    (g) The Council 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 Council 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 Council may not expend for administration, maintenance, and 
functioning of the Council in any fiscal year an amount that exceeds 15 
percent of the assessments and other income received by the Council for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (h) are excluded from this limitation on spending.
    (j) The Council 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 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.

[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

[[Page 239]]

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 $18 per ton (or 
$0.01984 per kg) on all blueberries. The assessment rate will be 
reviewed, and may be modified with the approval of the Secretary.
    (d) Each importer of fresh and processed blueberries shall pay an 
assessment to the Council 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 
0810.40.0029 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 Council 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 Council. All final payments for a crop year are to be 
received no later than November 30 of that year. A late payment charge 
shall be imposed on any handler who fails to remit to the Council, the 
total amount for which any such handler is liable on or before the due 
date established by the Council. 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 Council 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; 
78 FR 59779, Sept. 30, 2013]



Sec. 1218.53  Exemption procedures.

    (a) Any producer who produces less than 2,000 pounds of blueberries 
annually shall be exempt from the payment of assessments. Such producer 
may apply to the Council--on a form provided by the Council--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.
    (b) Any importer who imports less than 2,000 pounds of fresh and 
frozen blueberries annually shall be exempt from the payment of 
assessments. Such importer may apply to the Council--on a form provided 
by the Council--for a certificate of exemption. Such importer shall 
certify that the importer's importation of fresh and frozen blueberries 
shall not exceed 2,000 pounds for the fiscal year for which the 
exemption is claimed.
    (c) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (g) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (d) To apply for this exemption, a producer shall submit a request 
for exemption to the Council--on a form provided by the Council--at any 
time initially and annually thereafter on or before January 1 as long as 
the producer continues to be eligible for the exemption. The request 
shall include the following: The producer's name and address, with a 
copy of the organic farm

[[Page 240]]

or organic handling operation certificate provided by a USDA-accredited 
certifying agent as defined in section 2103 of the Organic Foods 
Production Act of 1990 (7 CFR part 205), a signed certification that the 
applicant meets all of the requirements specified for an assessment 
exemption, and such other information as may be required by the Board 
and with the approval of the Secretary. If a producer complies with the 
requirements in paragraph (c) of this section, the Council will grant an 
assessment exemption and issue a certification of exemption to the 
producer. For exemption requests received on or before August 15, 2005, 
the Council will have 60 days to approve the exemption request; after 
August 15, 2005, the Council will have 30 days to approve the exemption 
request. If the application is disapproved, the Council will notify the 
applicant of the reason(s) for disapproval within the same timeframe.
    (e) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic fresh and frozen 
blueberries--on a form provided by the Council--at any time initially 
and annually thereafter on or before January 1 as long as the importer 
continues to be eligible for the exemption. This documentation shall 
include the same information required of producers in paragraph (d) of 
this section. If the importer complies with the requirements of this 
section, the Council will grant the exemption and issue a Certificate of 
Exemption to the importer. The Council will also issue the importer a 9-
digit alphanumeric Harmonized Tariff Schedule (HTS) classification valid 
for 1 year from the date of issue. This HTS classification should be 
entered by the importer on the Customs entry documentation. Any line 
item entry of 100 percent organic fresh and frozen blueberries bearing 
this HTS classification assigned by the Council will not be subject to 
assessments.
    (f) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (g) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.
    (h) 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 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 Council, 
shall maintain records showing the exemptee's name and address along 
with the exemption number assigned by the Council.
    (i) 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. 
No interest will be paid on assessments collected by the U.S. Customs 
Service. Requests for reimbursement shall be submitted to the Council 
within 90 days of the last day of the year the blueberries were actually 
imported.
    (j) Any person who desires an 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.
    (k) The Council may require persons receiving an exemption from 
assessments to provide to the Council reports

[[Page 241]]

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; 
70 FR 2758, Jan. 14, 2005]



Sec. 1218.54  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, 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.
    (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 program, 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, or 
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, or information, then the Council 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 Council shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the Council, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the Council pursuant to the Act. The Council 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 
Council under this subpart shall be the property of the U.S. Government 
as represented by the Council 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 Council; shall be considered income subject to the 
same fiscal, budget, and audit controls as other funds of the Council; 
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 Council periodically such information as may be required 
by the Council, 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

[[Page 242]]

the assessments on each pound handled; and
    (4) Date collection was made on each pound handled. All reports are 
due to the Council 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 Council periodically such information as may 
be required by the Council, 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 Council 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 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 Council, 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, 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 Council 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

[[Page 243]]

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 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 Council 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 Council. 
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 Council, 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 Council 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 
Council 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 Council 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 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 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

[[Page 244]]

    (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 Council 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 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 
Council 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 Council 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

[[Page 245]]

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:
    (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:

[[Page 246]]

    (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 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.

[[Page 247]]

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.

                     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.

                     Subpart C_Rules and Regulations

1219.200 Terms defined.
1219.201 Definitions.
1219.202 Exemption for organic Hass avocados.
1219.203 Reapportionment of membership.

    Authority: 7 U.S.C. 7801-7813 and 7 U.S.C. 7401.

    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.

[[Page 248]]



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 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.

[[Page 249]]



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.



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

[[Page 250]]

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.



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.

[[Page 251]]

    (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 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

[[Page 252]]

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 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;

[[Page 253]]

    (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 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.

[[Page 254]]

    (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:
    (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

[[Page 255]]

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 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

[[Page 256]]

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 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

[[Page 257]]

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.
    (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

[[Page 258]]

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, 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

[[Page 259]]

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 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;

[[Page 260]]

    (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 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.

[[Page 261]]

                              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.



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

[[Page 262]]

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.



                     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

[[Page 263]]

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]



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.

[[Page 264]]

    (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 
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.



                     Subpart C_Rules and Regulations

    Source: 70 FR 2758, Jan. 14, 2005, unless otherwise noted.



Sec. 1219.200  Terms defined.

    Unless otherwise defined in this subpart, the definitions of terms 
used in this subpart shall have the same meaning as the definitions of 
such terms which appear in Subpart A--Hass Avocado Promotion, Research, 
and Information Order of this part.



Sec. 1219.201  Definitions.

    Organic Act means section 2103 of the Organic Foods Production Act 
of 1990 (7 U.S.C. 6502).



Sec. 1219.202  Exemption for organic Hass avocados.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; only produces products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (h) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To obtain this exemption, an eligible Hass avocado producer 
shall submit a request for exemption to the Board--on a form provided by 
the Board--at any time initially and annually thereafter on or before 
November 1 as long as the producer continues to be eligible for the 
exemption.

[[Page 265]]

    (c) The request shall include the following: the producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
the Organic Act, a signed certification that the applicant meets all of 
the requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer complies with the requirements of paragraph (a) 
of this section, the Board will grant an assessment exemption and shall 
issue a Certificate of Exemption to the producer. For exemption requests 
received on or before August 15, 2005, the Board will have 60 days to 
approve the exemption request; after August 15, 2005, the Board will 
have 30 days to approve the exemption request. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each handler to whom the producer sells Hass avocados. The 
handler shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board.
    (f) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic Hass avocados--on a 
form provided by the Board--at any time initially and annually 
thereafter on or before November 1 as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (c) of this section. If 
the importer complies with the requirements of this section, the Board 
will grant the exemption and issue a Certificate of Exemption to the 
importer. The Board will also issue the importer a 9-digit alphanumeric 
Harmonized Tariff Schedule (HTS) classification valid for 1 year from 
the date of issue. This HTS classification should be entered by the 
importer on the Customs entry documentation. Any line item entry of 100 
percent organic Hass avocados bearing this HTS classification assigned 
by the Board will not be subject to assessments.
    (g) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (h) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.



Sec. 1219.203  Reapportionment of membership.

    Pursuant to Sec. 1219.30(c), the positions authorized in Sec. 
1219.30(b)(3) are reapportioned as follows: 3 importer members and their 
alternates.

[71 FR 26823, May 9, 2006]



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.

[[Page 266]]

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.

                     Subpart B_Rules and Regulations

                               Definitions

1220.301 Terms defined.
1220.302 Exemption.

                               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 Farm Service Agency.
1220.604 Farm Service Agency County Committee.
1220.605 Farm Service Agency County Executive Director.
1220.606 Farm Service Agency State Committee.
1220.607 Farm Service Agency State Executive Director.
1220.608 Order.
1220.609 Person.
1220.610 Producer.
1220.611 Public notice.
1220.612 Representative period.
1220.613 Secretary.
1220.614 Soybeans.
1220.615 State and United States.

                               Procedures

1220.616 General.
1220.617 Supervision of the process for requesting a referendum.
1220.618 Eligibility.
1220.619 Time and place for requesting a referendum.
1220.620 Facilities.
1220.621 Certification and request form.
1220.622 Certification and request procedures.
1220.623 Canvassing requests.
1220.624 Confidentiality.
1220.625 Counting requests.
1220.626 FSA county office report.
1220.627 FSA State office report.
1220.628 Results of the request for referendum.
1220.629 Disposition of records.

[[Page 267]]

1220.630 Instructions and forms.

    Authority: 7 U.S.C. 6301-6311 and 7 U.S.C. 7401.



             Subpart A_Soybean Promotion and Research Order

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

                               Definitions



Sec. 1220.101  Act.

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



Sec. 1220.102  Board.

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



Sec. 1220.103  Commerce.

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



Sec. 1220.104  Committee.

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



Sec. 1220.105  Consumer information.

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



Sec. 1220.106  [Reserved]



Sec. 1220.107  Cooperator organization.

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



Sec. 1220.108  Department.

    Department means the United States Department of Agriculture.



Sec. 1220.109  Eligible organization.

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



Sec. 1220.110  First purchaser.

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

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



Sec. 1220.111  Fiscal period.

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



Sec. 1220.112  Industry information.

    The term industry information means information and programs that 
will 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

[[Page 268]]

    (b) Is governed by a Board of directors of agricultural producers 
representing soybean producers on a national basis;



Sec. 1220.115  Net market price.

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

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



Sec. 1220.116  Part and subpart.

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



Sec. 1220.117  Plans and projects.

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



Sec. 1220.118  Person.

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



Sec. 1220.119  Producer.

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



Sec. 1220.120  [Reserved]



Sec. 1220.121  Promotion.

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



Sec. 1220.122  Qualified State Soybean Board.

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



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

[[Page 269]]

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:

------------------------------------------------------------------------
                                                               Number of
                            Unit                                members
------------------------------------------------------------------------
Illinois....................................................           4
Iowa........................................................           4
Minnesota...................................................           4
Indiana.....................................................           4
Nebraska....................................................           4
Ohio........................................................           4
Missouri....................................................           3
Arkansas....................................................           3
South Dakota................................................           3
Kansas......................................................           3
Michigan....................................................           3
North Dakota................................................           3
Mississippi.................................................           3
Louisiana...................................................           2
Tennessee...................................................           2
North Carolina..............................................           2
Kentucky....................................................           2
Pennsylvania................................................           2
Virginia....................................................           2
Maryland....................................................           2
Wisconsin...................................................           2
Georgia.....................................................           1
South Carolina..............................................           1
Alabama.....................................................           1
Delaware....................................................           1
Texas.......................................................           1
Oklahoma....................................................           1
New York....................................................           1
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                               Number of
                            Unit                                members
------------------------------------------------------------------------
Eastern Region (Massachusetts, New Jersey, Connecticut,                1
 Florida, Rhode Island, Vermont, New Hampshire, Maine, West
 Virginia, District of Columbia, and Puerto Rico)...........
Western Region (Montana, Wyoming, Colorado, New Mexico,                1
 Idaho, 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

[[Page 270]]

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; 71 FR 
69430, Dec. 1, 2006; 74 FR 62676, Dec. 1, 2009; 78 FR 2, Jan. 2, 2013]



Sec. 1220.202  Term of office.

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



Sec. 1220.203  Nominations.

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

[[Page 271]]

    (d) At least two nominations shall be submitted for each position to 
be filled.
    (e) Nominations may be submitted in order of preference and for the 
initial Board, in order of preference for staggered terms. Should the 
Secretary reject any nomination submitted and there are insufficient 
nominations submitted from which appointments can be made, the Secretary 
may request additional nominations under paragraph (a) or (b) of this 
section, whichever provision is applicable for such unit.
    (f) Any organization authorized pursuant to State law to collect 
assessments from producers may notify the Secretary of the 
organization's intent to nominate members to the initial Board for the 
State or unit, as established under Sec. 1220.201, in which such 
organization operates and is authorized by State law. Such eligibility 
shall be based only upon the criteria established pursuant to Sec. 
1220.228(a)(1). There shall only be one organization authorized per 
State pursuant to this section to submit nominations to the initial 
Board. If no such entity exists in a State, any organization meeting 
those requirements of Sec. 1220.228(a)(2) may request eligibility to 
submit nominations.



Sec. 1220.204  Appointment.

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



Sec. 1220.205  Nominee's agreement to serve.

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



Sec. 1220.206  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request nominations for a successor pursuant to Sec. 1220.203, and such 
successor shall be appointed pursuant to Sec. 1220.204.



Sec. 1220.207  Alternate members.

    (a) The Secretary shall solicit, pursuant to the procedures of Sec. 
1220.203, nominations for alternate members of the Board.
    (b) The Secretary shall appoint one alternate member of the Board 
for each unit which has only one member pursuant to Sec. 1220.204 and 
Sec. 1220.205.
    (c) Alternate members of the Board may attend meetings of the Board 
as a voting member upon the following circumstances:
    (1) A member of the Board for the unit which the alternate member 
represents is absent; and
    (2) Such member, or in the case of incapacitation or death of the 
member, a relative, has contacted the appropriate officer of the Board 
to inform such officer of such absence;
    (d) An alternate member of the Board, when attending Board meetings 
in an official capacity, shall have the rights, duties and obligations 
of a Board member.



Sec. 1220.208  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the 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

[[Page 272]]

(b)(2)(ii) of this section, each unit as established under Sec. 
1220.201, shall cast one vote for each percent, or portion of a percent, 
of the average total amount of assessments remitted to the Board that 
was remitted from the unit (minus refunds) during each of the three 
previous fiscal years of the Board under Sec. 1220.223.
    (ii)(A) During the first fiscal year of the Board, the percentage 
used to determine the votes given to a unit will be based on annual 
average soybean production of the three previous years. If a unit is 
represented by more than one member, each member representing the unit 
shall receive an equal percentage of the votes allocated to the unit.
    (B) During the second and third year this subpart is in effect, the 
percentage used to determine the votes given to a unit will be based 
upon averaging the unit's percentage of annual assessments remitted to 
the Board (minus refunds).
    (iii) Should a member representing a unit not be present, then the 
other members representing such unit shall vote, on an equal basis if 
there is more than one member representing the unit present, the number 
of votes which the absent member would have been entitled to vote.
    (iv) A motion will carry on a roll call vote if approved by both a 
simple majority of all votes cast and a simple majority of all units 
voting (with the vote of each unit determined by a simple majority of 
all votes cast by members in that unit).
    (3) A member may not cast votes by proxy.
    (c) In lieu of a properly convened meeting and, when in the opinion 
of the chairperson of the Board such action is considered necessary, the 
Board may take action upon the concurring votes of a majority of its 
members, or if a roll call vote is requested, a simple majority of all 
votes cast and a simple majority of all units voting by mail, telephone, 
facsimile, or telegraph, but any such action by telephone shall be 
confirmed promptly in writing. In the event that such action is taken, 
all members must be notified and provided the opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a regular or special meeting of the Board.
    (d) On or after the end of the three-year period beginning on the 
effective date of this subpart, the Board may recommend to the Secretary 
changes in the voting procedures of the Board described in paragraph (b) 
of this section.



Sec. 1220.210  Compensation and reimbursement.

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



Sec. 1220.211  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Secretary regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules to effectuate the terms and provisions of this 
subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To disseminate information to producers or producer 
organizations through programs or by direct contact 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

[[Page 273]]

collected through assessments authorized under Sec. 1220.223 in, and 
only in, obligations of the United States or any agency thereof, in 
general obligations of any State or any political subdivision thereof, 
in any interest-bearing account or certificate of deposit of a bank 
which is a member of the Federal Reserve System, or in obligations fully 
guaranteed as to principal and interest by the United States.



Sec. 1220.212  Duties.

    The Board shall have the following duties:
    (a) To meet not less than three times annually, or more often if 
required for the Board to carry out its responsibilities pursuant to 
this subpart.
    (b) To organize and select from among its members a chairperson, 
vice chairperson, a treasurer and such other officers as may be 
necessary.
    (c) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Board and within 
the policies determined by the Board.
    (d) To employ or contract for such persons to perform administrative 
functions as it may deem necessary and define the duties and determine 
the compensation of each.
    (e) To develop and submit to the Secretary for approval, promotion, 
research, consumer information, and industry information plans or 
projects.
    (f) To prepare, and submit to the Secretary for approval, budgets on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this subpart, including probable costs of 
promotion, research, consumer information, and industry information 
plans or projects, and also including a description of the proposed 
promotion, research, consumer information, and industry information 
programs contemplated therein.
    (g) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it.
    (h) With the approval of the Secretary, to enter into contracts or 
agreements with appropriate parties, including national nonprofit 
producer-governed organizations, for the development and conduct of 
activities authorized under Sec. 1220.230 of this subpart and for the 
payment of the cost thereof with funds collected through assessments 
pursuant to Sec. 1220.223. Provided, that the Board shall contract with 
only one national nonprofit producer-governed organization to administer 
all projects within a program area.
    Any such contract or agreement shall provide that:
    (1) The contractor shall develop and submit to the Board a plan or 
project together with a budget or budgets which shall show the estimated 
cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective only upon 
approval of the Secretary; and
    (3) The contracting party shall keep complete and accurate records 
of all of its transactions and make periodic reports to the Board of 
activities conducted pursuant to a contract and an accounting for funds 
received and expended, and such other reports as the Secretary or the 
Board may require. The Board and Secretary may audit the records of the 
contracting party periodically.
    (i) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended.
    (j) [Reserved]
    (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.

[[Page 274]]

    (n) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybean 
and soybean products produced in the United States.

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995]

                 Soybean Program Coordinating Committee



Sec. 1220.213  Establishment and membership.

    (a) The Board may establish, with the approval of the Secretary, a 
Soybean Program Coordinating Committee to assist in the administration 
of this subpart. The Committee shall consist of 15 members. The 
Committee shall be composed of 10 Board members elected by the Board and 
5 producers elected by the Cooperator Organization.
    (b) Board representation on the Committee shall consist of the 
Chairperson and Treasurer of the Board, and eight additional members 
duly elected by the Board to serve on the Committee. The eight 
representatives to the Committee elected by the Board shall, to the 
extent practicable, reflect the geographic and unit distribution of 
soybean production.
    (c) Cooperator Organization representation on the Committee shall 
consist of five members elected by the Cooperator Organization Board of 
Directors. The Cooperator Organization shall submit to the Secretary the 
names of the representatives elected by the Cooperator Organization to 
serve on the Committee, the manner in which such election was held, and 
verify that such representatives are producers. The prospective 
Cooperator Organization representatives shall file with the Secretary a 
written agreement to serve on the Committee and to disclose any 
relationship with any soybean entity or with any organization that has 
or is being considered for a contractual relationship with the Board. 
When the Secretary is satisfied that the above conditions are met, the 
Secretary shall certify such representatives as eligible to serve on the 
Committee.



Sec. 1220.214  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec. 1220.215  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Cooperator Organization, depending upon which organization is 
represented by the vacancy, shall submit the name of a successor for the 
position in the manner utilized to appoint representatives pursuant to 
Sec. 1220.213 above.



Sec. 1220.216  Procedure.

    (a) Attendance of at least 12 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds (\2/3\) of the members present. The Committee shall establish 
rules concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than 
twelve of its members by mail, telephone, facsimile, or telegraph. 
Action taken by this emergency procedure is valid only if all members 
are notified and provided the opportunity to vote and any telephone vote 
is confirmed promptly in writing. Any action so taken shall have the 
same 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.

[[Page 275]]



Sec. 1220.218  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The Chairperson of the Board shall be Chairperson of the 
Committee.
    (b) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec. 1220.219  Powers of the Committee.

    If established by the Board, the Committee may have the following 
powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of soybeans and soybean 
products as well as plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Board regarding such proposals; and
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable.



Sec. 1220.220  Duties of the Committee.

    If established by the Board, the Committee may have the following 
duties:
    (a) To meet and to organize;
    (b) To prepare and submit to the Board for approval, budgets on a 
fiscal period basis of proposed costs of promotion, research, consumer 
information, and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information, and industry information programs contemplated 
therein;
    (c) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees as is given to members in order that the 
Secretary, or the Secretary's representative, may attend such meetings;
    (d) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (e) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybeans 
and soybean products.

                        Expenses and Assessments



Sec. 1220.222  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. However, 
during any fiscal year, expenses incurred by the Board for 
administrative staff costs and their benefits shall not exceed l percent 
of the projected level of assessments, net of projected refunds, of the 
Board for that fiscal year. Such expenses shall be paid from assessments 
received pursuant to Sec. 1220.223. The administrative expenses of the 
Board, including the cost of administrative staff, shall not exceed 5 
percent of the projected level of assessments, net of projected refunds, 
of the Board for that fiscal year.
    (b) The Board shall reimburse the Secretary, from assessments 
received pursuant to Sec. 1220.223, for administrative costs incurred 
after an Order has been submitted to the Department pursuant to section 
1968(b) of the Act; Provided, that the Board shall only be required to 
reimburse the Secretary for one-half (50%) of the costs incurred by the 
Secretary to conduct the refund referendum relating to continuation of 
authority to pay refunds.
    (c)(1) The Board may, with the approval of the Secretary, authorize 
a credit to Qualified State Soybean Boards of up to 5 percent of the 
amount 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

[[Page 276]]

governmental agencies or first purchasers for collection of the 
assessments where the payment of such fees by the Qualified State 
Soybean Board is required by State law enacted prior to November 28, 
1990:
    (i) Shall not exceed one-half of such fees paid to State 
governmental agencies or first purchasers, and;
    (ii) Shall not exceed 2.5 percent of the amount of assessments 
collected and remitted to the Board.
    (3) Except for that portion of the credit issued pursuant to 
paragraph (c)(2) of this section, credits authorized by paragraph (c)(1) 
of this section will be included as part of the Board's administrative 
expenses.



Sec. 1220.223  Assessments.

    (a)(1) Except as prescribed by regulations approved by the Secretary 
or as otherwise provided in this section, each first purchaser of 
soybeans shall collect an assessment from the producer, and each 
producer shall pay such assessment to the first purchaser, at the rate 
of one-half of one percent (0.5%) of the net market price of the 
soybeans purchased. Each first purchaser shall remit such assessment to 
the Board or to a Qualified State Soybean Board, as provided in 
paragraph (a)(5) of this section.
    (2) Any producer marketing processed soybeans or soybean products of 
that producer's own production, shall remit to a Qualified State Soybean 
Board or to the Board, as provided in paragraph (a)(5) of this section, 
an assessment on such soybeans or soybean products at a rate of one-half 
of one percent (0.5%) of the net market price of the soybeans involved 
or the equivalent thereof.
    (3) In determining the assessment due from each producer under 
paragraph (a)(1) or (a)(2) of this section, a producer who is 
contributing to a Qualified State Soybean Board shall receive a credit 
from the Board for contributions to such Qualified State Soybean Board 
on any soybeans assessed under this section in an amount not to exceed 
one-quarter of one percent of the net market price of the soybeans 
assessed.
    (4) In order for a producer to receive the credit provided for in 
paragraph (a)(3) of this section, the Qualified State Soybean Board or 
the first purchaser must establish to the satisfaction of the Board that 
the producer has contributed to a Qualified State Soybean Board.
    (5)(i) If the soybeans, for which an assessment is paid, were grown 
in a State other than the State which is the situs of the first 
purchaser, the first purchaser that collects the assessment shall remit 
the assessment and information as to the State of origin of the soybeans 
to the Qualified State Soybean Board operating in the State in which the 
first purchaser is located. The Qualified State Soybean Board operating 
in the State in which the first purchaser is located shall remit such 
assessments to the Qualified State Soybean Board operating in the State 
in which the soybeans were grown. If no such Qualified State Soybean 
Board exists in such State, then the assessments shall be remitted to 
the Board. The Board, with the approval of the Secretary, may authorize 
Qualified State Soybean Boards to propose modifications to the foregoing 
``State of Origin'' rule to ensure effective coordination of assessment 
collections between Qualified State Soybean Boards.
    (ii)(A) If a producer pledges soybeans grown by that producer as 
collateral for a loan issued by the Commodity Credit Corporation and if 
that producer forfeits said soybeans in lieu of loan repayment, the 
Commodity Credit Corporation shall at the time of the loan settlement, 
collect from the producer the assessments due based on 0.5 percent of 
the principal loan amount received by the producer and remit the 
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

[[Page 277]]

the assessment pursuant to paragraph (a)(2) of this section.
    (iii) Qualified State Soybean Boards and the Board shall coordinate 
assessment collection procedures to ensure that producers marketing 
soybeans are required to pay only one assessment per bushel of soybeans 
and collections are adjusted among States on a mutually agreeable basis.
    (b) The collection of assessments pursuant to paragraph (a) of this 
section, shall commence on and after the date assessments are required 
to be paid and shall continue until terminated by the Secretary. If the 
Board is not constituted on the date the first assessments are to be 
collected, the Secretary shall have the authority to receive the 
assessments on behalf of the Board, and to hold such assessments until 
the Board is constituted, then remit such assessments to the Board.
    (c)(1) Each person responsible for the collection of assessments 
under paragraph (a) of this section, shall collect and remit the 
assessments to the Board or a Qualified State Soybean Board on a monthly 
basis or as required by State law, but no less than quarterly, unless 
the Board, with the approval of the Secretary, has specifically 
authorized otherwise.
    (2) Any unpaid assessments due the Board or a Qualified State 
Soybean Board from a person responsible for remitting assessments to the 
Board or a Qualified State Soybean Board pursuant to paragraph (a) of 
this section, shall be increased two percent (2%) each month beginning 
with the day following the date such assessments were due under this 
subpart. Any remaining amount due shall be increased at the same rate on 
the corresponding day of each month thereafter until paid.
    (3) The amounts payable pursuant to this section shall be computed 
monthly on unpaid assessments and shall include any unpaid late charges 
previously applied pursuant to this section.
    (4) For the purpose of this section, any assessment that was 
determined at a date later than prescribed by this subpart because of a 
person's failure to submit a report to the Board or a Qualified State 
Soybean Board when due, shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.
    (d) Prior to the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure that each Qualified 
State Soybean Board is provided credit in accordance with the provisions 
of section 1969(n)(1) and subject to section 1969(n)(3) of the Act.
    (e) Following the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure annually that each 
Qualified State Soybean Board is provided credit in accordance with the 
provisions of section 1969(n)(2) and subject to section 1969(n)(3) of 
the Act.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31096, July 14, 1992]



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

[[Page 278]]

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) If the entity is authorized or required to pay refunds to 
producers, any requests from producers for refunds for contributions to 
it by the producer following the termination of authority to pay 
refunds, will be honored by forwarding to the Board that portion of such 
refunds equal to the amount of credit received by the producer for 
contributions to it pursuant to Sec. 1220.223(a)(3);
    (vi) [Reserved]
    (vii) Furnish the Board with an annual report by a certified public 
accountant or an authorized State agency of all funds remitted to such 
Board pursuant to this subpart; and
    (viii) Not use funds it collects pursuant to this subpart to fund 
plans or projects which make use of any unfair or deceptive acts or 
practices with respect to the quality, value or use of any product that 
competes with soybeans or soybean products; and
    (ix)(A) Except as otherwise provided in paragraph (a)(1)(ix)(B) of 
this section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (B) The prohibition in paragraph (a)(1)(ix)(A) of this section, 
shall not apply to--
    (1) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under the Order;
    (2) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (3) The development and recommendation of amendments to this 
subpart.
    (2) If no entity elects to serve as a Qualified State Soybean Board 
within a State pursuant to paragraph (a)(1) of this section, any State 
soybean promotion entity that is organized and operating within a State, 
and receives assessments or contributions from producers and conducts 
soybean or soybean product promotion, research, consumer information, or 
industry information programs, may apply for certification as the 
Qualified State Soybean Board for such State so that producers may 
receive credit pursuant to Sec. 1220.223(a)(3) for contributions to 
such organizations. All provisions of this subpart applicable to 
Qualified State Soybean Boards will be applicable to such entity. The 
Board shall review such applications for certification and shall make a 
determination as to the certification of each applicant.
    (b) In order for the State soybean entity to be certified by the 
Board pursuant to paragraph (a)(2) of this section, as a Qualified State 
Soybean Board, the entity must:
    (1) Conduct activities as defined in Sec. 1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such State entity will collect 
assessments paid on soybeans marketed within the State and establish 
procedures for ensuring compliance with this subpart with regard to the 
payment of such assessments;
    (4) Certify to the Board that such organization will remit to the 
Board each assessment paid and remitted to it, minus credits issued 
pursuant to Sec. 1220.222(c) and authorized credits issued to producers 
pursuant to Sec. 1220.223(a)(3), and other required deductions by the 
last day of the month following the month in which the assessment was 
remitted to it unless the 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

[[Page 279]]

    (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; 72 FR 2769, Jan. 23, 2007]



Sec. 1220.229  Influencing governmental action.

    (a) Except as otherwise provided in paragraph (b) of this section, 
funds collected or received by the Board under this subpart shall not be 
used in any manner for the purpose of influencing any action or policy 
of the United States Government, any foreign or State government, or any 
political subdivision thereof.
    (b) The prohibition in paragraph (a) of this section shall not apply 
to--
    (1) The development and recommendation of amendments to this 
subpart;
    (2) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart; or
    (3) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof.



Sec. 1220.230  Promotion, research, consumer information, and industry 

information.

    (a) The Board shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans or projects 
authorized in this subpart. Such plans or projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate promotion, research, consumer information, and industry 
information activities with respect to soybean and soybean products;
    (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

[[Page 280]]

    (3) Such other activities as are authorized by the Act and this 
subpart.
    (b) Each plan or project described in paragraph (a) of this section, 
shall be periodically reviewed or evaluated by the Board to ensure that 
each such plan or project contributes to an effective program of 
promotion, research, consumer information, and industry information. If 
it is found by the Board that any such plan or project does not further 
the purposes of the Act, then the Board shall terminate such plan or 
project.
    (c) No such plans or projects shall make use of unfair or deceptive 
acts or practices with respect to the quality, value or use of any 
competing product. In carrying out any plan or project funded by the 
Board described in paragraph (a) of this section, no preference shall be 
given to a brand or trade name of any soybean product without the 
approval of the Board and the Secretary.

                       Reports, Books, and Records



Sec. 1220.241  Reports.

    Each producer marketing processed soybeans or soybean products of 
that producer's own production and each first purchaser responsible for 
the collection of assessments under Sec. 1220.223 shall be required to 
report to the Board periodically such information as may be required by 
the regulations recommended by the Board and approved by the Secretary. 
Such information may include but not be limited to the following:
    (a) The number of bushels of soybeans purchased, initially 
transferred, or which, in any other manner, is subject to the collection 
of assessment;
    (b) The amount of assessments remitted;
    (c) The basis, if necessary, to show why the remittance is less than 
one-half percent (0.5%) of the net market price per bushel of soybeans 
purchased multiplied by the number of bushels purchased; and
    (d) The date any assessment was paid.



Sec. 1220.242  Books and records.

    (a) Except as provided in paragraph (b) of this section, each person 
who is subject to this subpart shall maintain and make available for 
inspection by the Board or Secretary such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued under this part, including such records as are 
necessary to verify any reports required. Such records shall be retained 
for at least two years beyond the fiscal period of their applicability.
    (b) Any producer who plants less than 25 acres of soybeans annually 
and does not market such soybeans shall not be required to maintain 
books or records pursuant to this subpart.



Sec. 1220.243  Confidential treatment.

    Except as otherwise provided in the Act, financial or commercial 
information that is obtained under the Act and this subpart and that is 
privileged and confidential shall be kept confidential by all persons, 
including employees and former employees of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and employees and all former officers and employees of 
contracting agencies having access to such information, and shall not be 
available to Board members or any other producers. Only those persons 
having a specific need for such information in order to effectively 
administer the provisions of this part shall have access to such 
information.

                              Miscellaneous



Sec. 1220.251  Proceedings after termination.

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

[[Page 281]]

    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec. 1220.212(h);
    (3) From time to time account for all receipts and disbursements; 
and
    (4) Deliver all property on hand, together with all books and 
records of the Board and of the trustees, to such persons as the 
Secretary may direct, and upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such persons full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information plans 
or projects authorized pursuant to this subpart.



Sec. 1220.252  Effect of termination or amendment.

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



Sec. 1220.253  Personal liability.

    No member, employee or agent of the Board, including employees, 
agents or board members of Qualified State Soybean Boards, acting 
pursuant to authority provided in this subpart, shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission, of such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec. 1220.254  Patents, copyrights, inventions, and publications.

    (a) Any patents, copyrights, inventions, or publications developed 
through the use of funds remitted to the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
inure to the benefit of the Board. Upon termination of this subpart, 
Sec. 1220.251 shall apply to determine disposition of all such 
property.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
if patents, copyrights, inventions, or publications are developed by the 
use of funds remitted to the Board under this subpart. Should patents, 
copyrights, inventions or publications be developed through the use of 
funds remitted to the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, inventions, or publications shall be determined by 
agreement between the Board and the party contributing funds towards the 
development of such patent, copyright, invention or publication.



Sec. 1220.255  Amendments.

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



Sec. 1220.256  Separability.

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

[[Page 282]]

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.



Sec. 1220.302  Exemption.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (g) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To apply for an exemption under this section, the producer shall 
submit the request to the Board or other party as designated by the 
Board--on a form provided by the Board--at any time initially and 
annually thereafter on or before January 1 as long as the producer 
continues to be eligible for the exemption.
    (c) The request shall include the following: the producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer complies with the requirements of this section, 
the Board or designee will grant the exemption and issue a Certificate 
of Exemption to the producer. For exemption requests received on or 
before August 15, 2005, the Board will have 60 days to approve the 
exemption request; after August 15, 2005, the Board will have 30 days to 
approve the exemption request. If the application is disapproved, the 
Board will notify the applicant of the reason(s) for disapproval within 
the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each first purchaser. The first purchaser shall maintain 
records showing the exempt producer's name and address and the exemption 
number assigned by the Board.
    (f) The exemption will apply at the first reporting period following 
the issuance of the exemption.
    (g) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2759, Jan. 14, 2005]

                               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

[[Page 283]]

producer of the soybeans in the manner designated in Sec. 1220.311.
    (b) If more than one producer shares the proceeds received for the 
soybeans marketed, each such producer is obligated to pay that portion 
of the assessments which is equivalent to each producer's proportionate 
share of the proceeds.
    (c) Failure of the first purchaser to collect the assessment on each 
bushel of soybeans marketed as designated in Sec. 1220.311 shall not 
relieve the producer of the producer's obligation to pay the assessment 
to the appropriate Qualified State Soybean Board or the United Soybean 
Board as required in Sec. 1220.312.



Sec. 1220.311  Collection and remittance of assessments.

    (a) Except as otherwise provided in this section, each first 
purchaser making payment to a producer for soybeans marketed by a 
producer shall collect from that producer at the time of settlement of 
that producer's account an assessment at the rate of 0.5 percent of the 
net market price per bushel of soybeans marketed and shall be 
responsible for remitting the assessment to the Qualified State Soybean 
Board or the United Soybean Board as provided in Sec. 1220.312. The 
first purchaser shall give to the producer a receipt indicating payment 
of the assessment. The receipt shall be any document issued by the first 
purchaser that contains the information requested in Sec. 1220.314(a).
    (b) A first purchaser who purchases soybeans pursuant to a contract 
with a producer, either on a volume basis or on a per acre basis, shall 
be responsible for remitting the assessment due on soybeans purchased as 
required in Sec. 1220.312. Such assessment shall be based upon 0.5 
percent of the net market price specified or established in the contract 
and shall be collected at the time of payment to the producer. If the 
net market price is not specified or established in the contract the 
assessment shall be based on fair market value as specified in paragraph 
(c) of this section below.
    (c) Any producer marketing processed soybeans or soybean products of 
that producer's own production either directly or through retail or 
wholesale outlets shall be responsible for remitting to the Qualified 
State Soybean Board or the United Soybean Board pursuant to Sec. 
1220.312, an assessment on the number of bushels of soybeans processed 
or manufactured into soybean products at the rate 0.5 percent of the net 
market price of the soybeans involved or the equivalent thereof. The 
assessment shall attach upon date of sale of the processed soybeans or 
soybean products and shall be based upon the posted county price for 
soybeans on the date of the sale as posted at the local ASCS office for 
the county in 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

[[Page 284]]

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

    (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; 68 FR 69954, Dec. 16, 2003]



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

[[Page 285]]

    (2) Arkansas Soybean Promotion Board
    (3) Delaware Soybean Board
    (4) Florida Soybean Advisory Council
    (5) Georgia Agricultural Commodity Commission for Soybeans
    (6) Illinois Soybean Program Operating Board
    (7) Iowa Soybean Promotion Board
    (8) Indiana Soybean Development Council, Inc.
    (9) Kansas Soybean Commission
    (10) Kentucky Soybean Promotion Board
    (11) Louisiana Soybean Promotion Board
    (12) Maryland Soybean Board
    (13) Soybean promotion Committee of Michigan
    (14) Minnesota Soybean Research and Promotion Council
    (15) Mississippi Soybean Promotion Board
    (16) Missouri Soybean Merchandising Council
    (17) Nebraska Soybean Development, Utilization, and Marketing Board
    (18) New Jersey Soybean Board
    (19) North Carolina Soybean Producers Association
    (20) North Dakota Soybean Council
    (21) Ohio Soybean Council Board of Trustees
    (22) Oklahoma Soybean Commission
    (23) Pennsylvania Soybean Board
    (24) South Carolina Soybean Board
    (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: 69 FR 13461, Mar. 23, 2004, unless otherwise noted.

                               Definitions



Sec. 1220.600  Act.

    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.

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



Sec. 1220.602  Administrator, FSA.

    Administrator, FSA, means the Administrator, of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec. 1220.603  Farm Service Agency.

    Farm Service Agency also referred to as ``FSA'' means the Farm 
Service Agency of USDA.



Sec. 1220.604  Farm Service Agency County Committee.

    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.

[[Page 286]]



Sec. 1220.605  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``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. 1220.606  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec. 1220.607  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, also referred to as 
``SED,'' means the person employed by the FSA State Committee to execute 
the policies of the FSA State Committee and to be responsible for the 
day-to-day operation of the FSA State office, or the person acting in 
such capacity.



Sec. 1220.608  Order.

    Order means the Soybean Promotion and Research Order.



Sec. 1220.609  Person.

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



Sec. 1220.610  Producer.

    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. 1220.611  Public notice.

    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 United Soybean Board is required to provide producers, 
in writing, this same information during the 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 newsletters, and the like.



Sec. 1220.612  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to section 1970 of the Act.



Sec. 1220.613  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
Department of Agriculture (USDA) or any other officer or employee of 
USDA to whom there has been delegated or to whom there may be delegated 
the authority to act in the Secretary's stead.



Sec. 1220.614  Soybeans.

    Soybeans means all varieties of glycine max or glycine soja.



Sec. 1220.615  State and United States.

    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. 1220.616  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

[[Page 287]]

on the Order, a referendum will 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 
are not met, a referendum will 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 
589,182.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009]



Sec. 1220.617  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.



Sec. 1220.618  Eligibility.

    (a) Eligible producers. Each person who was a producer and provides 
evidence that they or the producer entity they represent has paid an 
assessment on soybeans 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 or 
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. 1220.619  Time and Place for Requesting a Referendum.

    (a) 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. 1220.622 during the 
normal business hours of each county FSA office.
    (b) Producers can determine the location of county FSA offices by 
contacting the nearest county FSA office, the State FSA office or 
through an online search of FSA's web site at www.fsa.usda.gov/pas/
default.asp.
    (c) Each eligible person shall request a referendum in the county 
FSA office where FSA maintains and processes the producer's, 
corporation's, or other entities administrative farm records. For the 
producer, corporation, or other entity 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, 
corporation, or other legal entity owns or rents land. An individual or 
authorized representative of a corporation who grows soybeans in more 
than one county would request a referendum in the county FSA office 
where the individual or corporation or other entity does most of its 
business.



Sec. 1220.620  Facilities.

    Each county FSA office will provide:
    (a) A polling place that is well known and readily accessible to 
producers in the county and that is equipped and arranged so that each 
person can complete and submit their request in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) A holding container of sufficient size so arranged that no 
request can be read or removed without breaking seals on the container.



Sec. 1220.621  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'' 
vote. Individual producers and representatives of other producer 
entities should read the form

[[Page 288]]

carefully. By completing and signing the form, the individual 
simultaneously certifies eligibility and requests that a referendum be 
conducted.



Sec. 1220.622  Certification and request procedures.

    (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.
    (1) 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:
    (i) The person or the producer entity they represent was a producer 
of soybeans during the representative period;
    (ii) The individual requesting a referendum on behalf of a 
corporation or other entity is authorized to do so; and
    (iii) The individual has submitted only one request for a referendum 
unless they are also an authorized representative for another eligible 
corporation or other entity.
    (2) The producer, corporation, or other entity must also provide 
documentation, such as a sales receipt, showing that the producer, 
corporation, or other entity has paid an assessment on soybeans during 
the representative period.
    (3) Only a completed and signed form LS-51-1 accompanied by 
documentation showing that soybean assessments were paid during the 
representative period 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, corporation's, or other entity's 
administrative farm records. For the producer, corporation, or other 
entity 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, corporation, or other entity owns or rents land. 
Eligible producers may also obtain form LS-51-1 via the Internet at 
http://www.ams.usda.gov/lsmarketing programs. For those persons who 
chose to obtain form LS-51-1 via the Internet, the completed form and 
required documentation must be submitted to the county FSA office where 
FSA maintains and process the producer's, corporation's, or other 
entity's administrative farm records. For producer, corporation, or 
other entity 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, corporation, or other entity owns or 
rents land.
    (c) Producers or producer entities may return form LS-51-1 and the 
accompanying documentation in-person, by mail, or facsimile to the 
appropriate county FSA office. Form LS-51-1 returned in-person or by 
facsimile, must be received in the appropriate county FSA office prior 
to the close of the work day on the final day of the Request for 
Referendum period to be considered a valid request. Form LS-51-1 and the 
accompanying documentation returned by mail must be postmarked no later 
than midnight of the final day of the Request for Referendum period and 
must be received in the county FSA office prior to the start of 
canvassing Form LS 51-1.
    (d) Producers who obtain form LS-51-1 in-person at the appropriate 
FSA county office may complete and return the form the same day, 
accompanied by documentation, such as a sales receipt, showing that 
soybean assessments were paid during the representative period.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009]



Sec. 1220.623  Canvassing requests.

    (a) Canvassing of Form LS-51-1 shall take place at the opening of 
county FSA offices on the 5th business day following the Request for 
Referendum period. Such canvassing, acting on behalf of the 
Administrator, AMS, shall be in the presence of at least two members of 
the county committee. If two or more of the counties have been combined 
and are served by one county office, the

[[Page 289]]

canvassing of the requests shall be conducted by at least one member of 
the county committee from each county served by the county office. The 
FSA State committee or the State Executive Director if authorized by the 
State Committee, may designate the County Executive Director (CED) and a 
county or State FSA office employee to canvass the requests and report 
the results instead of two members of the county committee when it is 
determined that the number of eligible voters is so limited that having 
two members of the county committee present for this function is 
impractical, and designate the CED and/or another county or State FSA 
office employee to canvass requests in any emergency situation 
precluding at least two members of the county committee from being 
present to carry out the functions required in this section.
    (b) The request for referendum should be canvassed as follows:
    (1) Number of eligible requests for a referendum. Each person who 
was a producer during the representative period and provides 
documentation to prove that they paid an assessment will be considered 
eligible to request a referendum.
    (2) Number of ineligible requests for a referendum. If FSA cannot 
determine that a producer is eligible based on the submitted 
documentation or if the producer fails to submit the required 
documentation, the producer shall be determined to be ineligible. FSA 
shall notify ineligible producers in writing as soon as practicable but 
no later than the 8th business day following the final day of the 
Request for Referendum period.
    (c) Appeal. A person declared to be ineligible by FSA can appeal 
such decision and provide additional documentation to the FSA county 
office within 5 business days after the postmark date of the letter of 
notification of ineligibility. FSA will then make a final decision on 
the producer's eligibility and notify the producer of the decision.
    (d) Number of valid requests for referendum. A person has been 
declared eligible and has provided and completed all of the required 
information on form LS-51-1.
    (e) Number of invalid requests for a referendum. An invalid request 
for referendum includes, but is not limited to the following:
    (1) Form LS-51-1 is not signed or all required information has not 
been provided;
    (2) Form LS-51-1 and supporting documentation 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 and supporting documentation returned by mail was 
not postmarked by midnight of the final day of the Request for 
Referendum period;
    (4) Form LS-51-1 and supporting documentation returned by mail was 
not received in the county FSA office prior to canvassing of the 
ballots;
    (5) Form LS-51-1 or supporting documentation is mutilated or marked 
in such a way that any required information on the form is illegible; or
    (6) Form LS-51-1 and supporting documentation not returned to the 
appropriate county FSA office.



Sec. 1220.624  Confidentiality.

    The names of persons requesting a referendum shall be confidential 
and may not be divulged except as the Secretary may direct.



Sec. 1220.625  Counting requests.

    (a) The requests for a referendum shall be counted by county FSA 
offices on the same day as the requests are canvassed if there are no 
ineligibility determinations to resolve. For those county FSA offices 
that do have ineligibility determinations, the requests shall be counted 
no later than the 14th business day following the final day of the 
Request for Referendum period.
    (b) Requests for a referendum shall be counted as follows:
    (1) Total number of producers who returned a Request for Referendum 
form LS-51-1;
    (2) Number of ineligible producers requesting a referendum;
    (3) Number of eligible producers requesting a referendum;
    (4) Number of valid requests for a referendum; and
    (5) Number of invalid requests for a referendum.

[[Page 290]]



Sec. 1220.626  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, as soon as may be reasonably possible, but in no event later than 
18th business day following the final day of the specified period, have 
prepared and certified the county summary of requests 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. 1220.627  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the 20th business day 
following the final day of the Request for Referendum period, a report 
summarizing the data contained in each of the reports from the county 
FSA offices. One copy of the State summary shall be filed for a period 
of not less than 12 months after the results have been released and 
available for public inspection after the results have been released.



Sec. 1220.628  Results of the request for referendum.

    (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. USDA will issue an 
official press release announcing the results of the Request for 
Referendum and publish the same results in the Federal Register. In 
addition, USDA will post the official results at the following Web site: 
``http://www.ams.usda.gov/lsmarketingprograms''.
    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 2628-S, STOP 0251, 1400 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.

[69 FR 13461, Mar. 23, 2004, as amended at 74 FR 9049, Mar. 2, 2009]



Sec. 1220.629  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Request for Soybean Referendum,'' all of the 
form LS-51-1's along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of the FSA CED 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 as described above, the CED or designee shall destroy 
the records.



Sec. 1220.630  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



PART 1221_SORGHUM PROMOTION, RESEARCH, AND INFORMATION ORDER--Table of 

Contents



      Subpart A_Sorghum Promotion, Research, and Information Order

                               Definitions

Sec.
1221.1 Act.
1221.2 Board.
1221.3 Calendar year.
1221.4 Certified organization.
1221.5 Conflict of interest.
1221.6 Crop year.
1221.7 Customs.
1221.8 Department.

[[Page 291]]

1221.9 First handler.
1221.10 Fiscal period.
1221.11 Handle.
1221.12 Harvest.
1221.13 Importer.
1221.14 Information.
1221.15 Market.
1221.16 Net market price.
1221.17 Net market value.
1221.18 Order.
1221.19 Part and subpart.
1221.20 Person.
1221.21 Producer.
1221.22 Production.
1221.23 Promotion.
1221.24 Qualified sorghum producer organization.
1221.25 Referendum.
1221.26 Research.
1221.27 Secretary.
1221.28 Sorghum.
1221.29 State.
1221.30 Suspend.
1221.31 Terminate.
1221.32 United States.

           Sorghum Promotion, Research, and Information Board

1221.100 Establishment and representation.
1221.101 Nominations.
1221.102 Nominee's agreement to serve.
1221.103 Appointment.
1221.104 Term of office.
1221.105 Vacancies.
1221.106 Removal.
1221.107 Certification of organizations.
1221.108 Procedure.
1221.109 Compensation and reimbursement.
1221.110 Powers and duties.
1221.111 Prohibited activities.

                        Expenses and Assessments

1221.112 Budget and expenses.
1221.113 Financial statements.
1221.114 Operating reserve.
1221.115 Investment of funds.
1221.116 Assessments.
1221.117 Exemptions.
1221.118 Refund escrow accounts.
1221.119 Refunds.
1221.120 Procedure for obtaining a refund.

                  Promotion, Research, and Information

1221.121 Programs, plans, and projects.
1221.122 Independent evaluation.
1221.123 Patents, copyrights, inventions, trademarks, information, 
          publications, and product formulations.

                       Reports, Books, and Records

1221.124 Reports.
1221.125 Books and records.
1221.126 Use of information.
1221.127 Confidential treatment.

             Qualification of Sorghum Producer Organizations

1221.128 Qualification.

                              Miscellaneous

1221.129 Right of the Secretary.
1221.130 Referenda.
1221.131 Suspension or termination.
1221.132 Proceedings after termination.
1221.133 Effect of termination or amendment.
1221.134 Personal liability.
1221.135 Separability.
1221.136 Amendments.
1221.137 Rules and regulations.
1221.138 OMB control numbers.

            Subpart B_Procedures for the Conduct of Referenda

                               Definitions

1221.200 Terms defined.
1221.201 Administrator, AMS.
1221.202 Administrator, FSA.
1221.203 Eligible person.
1221.204 Farm Service Agency.
1221.205 Farm Service Agency County Committee.
1221.206 Farm Service Agency County Executive Director.
1221.207 Farm Service Agency State Committee.
1221.208 Farm Service Agency State Executive Director.
1221.209 Public notice.
1221.210 Representative period.
1221.211 Voting period.

                               Procedures

1221.220 General.
1221.221 Supervision of the process for conducting referenda.
1221.222 Eligibility.
1221.223 Time and place of the referendum.
1221.224 Facilities.
1221.225 Certification and referendum ballot form.
1221.226 Certification and voting procedures.
1221.227 Canvassing voting ballots.
1221.228 Counting ballots.
1221.229 FSA county office report.
1221.230 FSA State office report.
1221.231 Results of the referendum.
1221.232 Disposition of records.
1221.233 Instructions and forms.
1221.234 Confidentiality.

Subparts C-E [Reserved]

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    Source: 73 FR 25407, May 6, 2008, unless otherwise noted.

[[Page 292]]



      Subpart A_Sorghum Promotion, Research, and Information Order

                               Definitions



Sec. 1221.1  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7411-7425), and any amendments thereto.



Sec. 1221.2  Board.

    Board or Sorghum Promotion, Research, and Information Board means 
the administrative body established pursuant to Sec. 1221.100, or such 
other name as recommended by the Board and approved by the Secretary.



Sec. 1221.3  Calendar year.

    Calendar year means the 12-month period from January 1 through 
December 31.



Sec. 1221.4  Certified organization.

    Certified organization means any organization that has been 
certified by the Secretary pursuant to this part as eligible to submit 
nominations for membership on the Board.



Sec. 1221.5  Conflict of interest.

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



Sec. 1221.6  Crop year.

    Crop year means the time period by which the USDA reports crop 
production for sorghum and is indicated by the calendar year in which 
sorghum is normally harvested.



Sec. 1221.7  Customs.

    Customs means the U.S. Customs and Border Protection of the U.S. 
Department of Homeland Security.



Sec. 1221.8  Department.

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



Sec. 1221.9  First handler.

    First handler means the first person who buys or takes possession 
(excluding a common or contract carrier of sorghum owned by another) of 
more than 1,000 bushels of grain sorghum; or 5,000 tons of sorghum 
forage, sorghum hay, sorghum haylage, sorghum billets, or sorghum silage 
from producers in a calendar year for marketing. The term first handler 
includes a producer who markets sorghum of the producer's own production 
directly to consumers. In any case in which sorghum is pledged as 
collateral for a loan issued under any Commodity Credit Corporation 
price support loan program and the sorghum is forfeited by the producer 
in lieu of loan repayment, the Commodity Credit Corporation will be 
considered a first handler.



Sec. 1221.10  Fiscal period.

    Fiscal period 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. 1221.11  Handle.

    Handle means to engage in the receiving or acquiring of sorghum and 
in the shipment (except as a common or contract carrier of sorghum owned 
by another) or sale of sorghum, or other activity causing sorghum to 
enter the current of commerce.



Sec. 1221.12  Harvest.

    Harvest means combining or threshing sorghum for grain and/or 
severing the stalks from the land with mechanized equipment.



Sec. 1221.13  Importer.

    Importer means any person importing more than 1,000 bushels of grain 
sorghum; or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage, 
sorghum billets, or sorghum silage into the United States in a calendar 
year as a principal or as an agent, broker, or consignee of any person 
who produces or purchases sorghum outside of the United States for sale 
in the United

[[Page 293]]

States, and who is listed as the importer of record for such sorghum.



Sec. 1221.14  Information.

    Information means information and programs that are designed to 
develop new markets and marketing strategies; increase market 
efficiency; enhance the image of sorghum on a national or international 
basis; and assist producers in meeting their conservation objectives. 
These include, but are not exclusive to:
    (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 
sorghum;
    (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 sorghum industry, and activities to 
enhance the image of the sorghum industry.



Sec. 1221.15  Market.

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



Sec. 1221.16  Net market price.

    Net market price means the sales price, or other value, per 
volumetric unit, received by a producer for sorghum after adjustments 
for any premium or discount.



Sec. 1221.17  Net market value.

    Net market value means:
    (a) Except as provided in paragraph (b)and (c) of this section, the 
value found by multiplying the net market price by the appropriate 
quantity of the volumetric units or the minimum value in a production 
contract received by a producer for sorghum after adjustments for any 
premium or discount.
    (b) For imported sorghum, the total value paid by the importer for 
the sorghum as reported on the appropriate Customs form; or
    (c) For sorghum pledged as collateral for a loan issued under any 
Commodity Credit Corporation price support loan program, the principal 
amount of the loan.



Sec. 1221.18  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. 1221.19  Part and subpart.

    Part means the Sorghum 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. 1221.20  Person.

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



Sec. 1221.21  Producer.

    Producer means any person who is engaged in the production and sale 
of sorghum in the United States and who owns, or shares the ownership 
and risk of loss of, the sorghum.



Sec. 1221.22  Production.

    Production, as used in Sec. 1221.100, means:
    (a) for the purpose of establishing the initial Board in paragraphs 
(a), (b), (c), (d), and (e) of Sec. 1221.100, the volume of grain 
sorghum produced during the last 5 crop years, excluding the high and 
low years, and
    (b) For the purpose of reapportionment in paragraphs (e) and (f) of 
Sec. 1221.100, the total assessments collected by the Board during the 
last 5 crop years, excluding the high and low years.



Sec. 1221.23  Promotion.

    Promotion means any action taken to present a favorable image of 
sorghum to the public and the end-user industry for the purpose of 
improving the competitive position of sorghum and stimulating the sale 
of sorghum. This includes paid advertising and public relations.

[[Page 294]]



Sec. 1221.24  Qualified sorghum producer organization.

    Qualified sorghum producer organization means a qualified State-
legislated sorghum promotion, research, and education commission or 
organization, approved by the Secretary. For States without a qualified 
State-legislated sorghum promotion, research, and education commission 
or organization, qualified sorghum producer organization means any 
qualified organization that has the primary purpose of representing 
sorghum producers, has sorghum producers as members, and that is 
approved by the Secretary.



Sec. 1221.25  Referendum.

    Referendum means a referendum conducted by the Secretary pursuant to 
the Act whereby producers and importers are provided the opportunity to 
vote to determine whether the continuance of this subpart is favored by 
a majority of eligible persons voting.



Sec. 1221.26  Research.

    Research means any type of test, study, or analysis designed to 
advance the knowledge, image, desirability, use, marketability, 
production, product development, or quality of sorghum, including, but 
not limited to, research relating to yield, nutritional value, cost of 
production, new product development, inbred and hybrid development, 
nutritional value, health research, and marketing of sorghum.



Sec. 1221.27  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. 1221.28  Sorghum.

    Sorghum means any harvested portion of Sorghum bicolor (L.) Moench 
or any related species of the genus Sorghum of the family Poaceae. This 
includes, but is not limited to, grain sorghum (including hybrid sorghum 
seeds, inbred sorghum line seed, and sorghum cultivar seed), sorghum 
forage, sorghum hay, sorghum haylage, sorghum billets, and sorghum 
silage.



Sec. 1221.29  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. 1221.30  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. 1221.31  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 certain date specified in the rule.



Sec. 1221.32  United States.

    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.

           Sorghum Promotion, Research, and Information Board



Sec. 1221.100  Establishment and representation.

    There is hereby established a Sorghum Promotion, Research, and 
Information Board, hereinafter called the Board. Representation 
includes, but is not limited to, fixed State seats determined by total 
production with at-large seats to allow representation from a broad 
geographical area. The Board shall initially be composed of 13 
representatives, with the maximum number of producers from one State 
limited to 6, appointed by the Secretary from nominations as follows:
    (a) The largest production State based on total production shall 
have 5 sorghum producers to serve as representatives.
    (b) The second largest production State based on total production 
shall have 3 sorghum producers to serve as representatives.
    (c) The third largest production State based on total production 
shall

[[Page 295]]

have one sorghum producer to serve as a representative.
    (d) There shall be 4 sorghum producers to serve as at-large national 
representatives with at least two representatives appointed from States 
not described in paragraphs (a), (b), and (c) of this section.
    (e) If the value of assessments on imported sorghum reaches or 
exceeds the production of the third largest sorghum production State, 
there shall be one importer to serve as a representative plus an 
additional at-large national representative, with the maximum number of 
producers from one State being increased from six to seven.
    (f) At least once every 5 years, the Board will review the 
geographical distribution of production of sorghum in the United States, 
the production of sorghum in the United States, and the value of 
assessments on sorghum imported into the United States. The review will 
be based on Board assessment records and statistics from the USDA. If 
warranted, the Board may recommend to the Secretary that representation 
on the Board be altered to reflect any changes in geographical 
distribution of domestic sorghum production. If, in the review, the 
Board determines that the value of assessments on sorghum imported into 
the United States exceeds 15 percent of the production of sorghum, the 
Board shall recommend to the Secretary that the nomination procedures 
and appointments to the Board be altered as necessary or appropriate to 
facilitate the equitable representation of importers on the Board.



Sec. 1221.101  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations for State-specific and at-large national seats shall 
be obtained by the Secretary from eligible organizations certified under 
Sec. 1221.107. Certified eligible organizations representing producers 
in a State, or when making nominations for at-large seats, shall submit 
to the Secretary at least two nominees for each vacant seat. If the 
Secretary determines that a State is not represented by a certified 
eligible organization, then the Secretary may solicit nominations from 
other organizations or other persons residing in the State.
    (b) If so required pursuant to Sec. 1221.100(f), at least two 
nominations for the importer representative shall be submitted by the 
Board to the Secretary.
    (c) After the establishment of the initial Board, the Secretary 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board representatives shall be submitted to the Secretary not 
less than 90 days prior to the expiration of the terms of the 
representatives 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 section 1221.105.
    (d) When there is more than one certified eligible organization 
representing a State or when the Secretary solicits nominations from 
organizations and persons residing in that State, or when eligible 
certified organizations are nominating persons for at-large positions, 
eligible certified organizations may caucus and jointly nominate two 
qualified producers for each position on the Board for which a 
representative 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 State, or to fill an at-large 
position.



Sec. 1221.102  Nominee's agreement to serve.

    Any producer or 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 any sorghum promotion entity or 
with any organization that has or is being considered for a contractual 
relationship with the Board; and

[[Page 296]]

    (c) Withdraw from participation in deliberations, decision-making, 
or voting on matters that concern the relationship disclosed under 
paragraph (b) of this section.



Sec. 1221.103  Appointment.

    From the nominations made pursuant to Sec. 1221.101, the Secretary 
shall appoint the representatives of the Board on the basis of 
representation provided in Sec. 1221.100.



Sec. 1221.104  Term of office.

    (a) The term of office for the representatives of the Board shall be 
three years, except for the initial term, pursuant to paragraph (c) of 
this section.
    (b) Representatives may serve a maximum of 2 consecutive 3-year 
terms.
    (c) When the Board is first established, the Secretary shall 
establish staggered terms as follows:
    (1) Largest Production State--2 representatives shall serve a 2-year 
term, 1 representative shall serve a 3-year term, and 2 representatives 
shall serve a 4-year term.
    (2) Second Largest Production State--1 representative shall serve a 
2-year term, 1 representative shall serve a 3-year term, and 1 
representative shall serve a 4-year term.
    (3) Third Largest Production State--The representative shall serve a 
3-year term.
    (4) At-large national--1 representative shall serve a 2-year term, 2 
representatives shall serve a 3-year term, and 1 representative shall 
serve a 4-year term.
    (5) States with multiple representatives shall have their staggered 
terms assigned by the Secretary. At-large national representatives shall 
also have their staggered terms assigned by the Secretary.
    (6) Representatives serving initial terms of 2 or 4 years shall be 
eligible to serve a single term of 3 years after their initial 2- or 4-
year term.
    (d) Each representative shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.
    (e) Any successor appointed pursuant to Sec. 1221.105 serving 1 
year or less may serve two consecutive 3-year terms.



Sec. 1221.105  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, a successor for the 
unexpired term of such representative shall be appointed by the 
Secretary pursuant to Sec. 1221.103 from the most recent list of 
nominations for the position pursuant to Sec. 1221.101 or the Secretary 
shall request nominations for a successor pursuant to Sec. 1221.101, 
except that said nomination and replacement shall not be required if an 
unexpired term is less than 6 months.



Sec. 1221.106  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 an act 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 a detriment to 
the purposes of the Act.



Sec. 1221.107  Certification of organizations.

    (a) The eligibility of State, regional, or national organizations to 
participate in making nominations for membership on the Board shall be 
certified by the Secretary. Those organizations that may seek 
certification include:
    (1) State-legislated sorghum promotion, research, and information 
organizations;
    (2) Organizations whose primary purpose is to represent sorghum 
producers within a State, region, or at the national level; or,
    (3) Organizations that have sorghum producers as members.
    (b) Such eligibility shall be based, in addition to other 
information, upon a report submitted by the organization that shall 
contain information deemed relevant and specified by the Secretary for 
the making of such determination, including the following:
    (1) The geographic territory covered by the organization's active 
membership;
    (2) The nature and size of the organization's active membership, 
proportion

[[Page 297]]

of active membership accounted for by producers, a map showing the 
sorghum producing counties in which the organization has active members, 
the volume of sorghum produced in each such county, the number of 
sorghum producers in each such county, and the size of the 
organization's active sorghum producer membership in each such county;
    (3) The extent to which the sorghum 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) The functions of the organization; and
    (7) The ability and willingness of the organization to further the 
purpose and objectives of the Act.
    (c) The primary consideration in determining the eligibility of an 
organization shall be whether its sorghum producer membership consists 
of a sufficiently large number of sorghum producers who produce a 
relatively significant volume of sorghum to reasonably warrant its 
participation in the nomination of State specific and national at-large 
members to the Board. Any sorghum producer organization found eligible 
by the Secretary under this section shall be certified by the Secretary, 
and the Secretary's determination as to eligibility shall be final.



Sec. 1221.108  Procedure.

    (a) At a Board meeting, it will be considered a quorum when a simple 
majority of the voting representatives are present.
    (b) At the start of each fiscal period, the Board will approve a 
chairperson, vice chairperson, and secretary/treasurer who will conduct 
meetings throughout that period.
    (c) All Board representatives and the Secretary or the Secretary's 
designee will be notified at least 30 days in advance of all Board and 
committee meetings, unless an emergency meeting is declared.
    (d) Each voting representative 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 the total votes of the Board 
representatives present at the meeting.
    (e) It will be considered a quorum at a committee meeting when a 
simple majority of those assigned to the committee are present at the 
meeting. Committees may consist of individuals other than Board 
representatives, and such individuals may vote in committee meetings. 
Committee members shall serve without compensation but shall be 
reimbursed for reasonable travel expenses, as approved by the Board.
    (f) 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 a simple majority 
of the Board representatives by mail, telephone, electronic mail, 
facsimile, or any other means of communication. In that event, all 
representatives 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 Board. All 
telephone votes shall be confirmed promptly in writing. All votes shall 
be recorded in Board minutes.
    (g) There shall be no voting by proxy.
    (h) The chairperson shall be a voting representative.
    (i) 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. 1221.109  Compensation and reimbursement.

    The representatives of the Board 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 
representatives.



Sec. 1221.110  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;

[[Page 298]]

    (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 not less than annually, and organize, and select from 
among the representatives of the Board a chairperson, other officers, 
committees, and subcommittees, as the Board determines appropriate;
    (d) To employ persons, other than the representatives, 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, plans, 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, 
plans, 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. Furthermore, 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.
    (f) To prepare and submit for approval of the Secretary fiscal 
period budgets in accordance with Sec. 1221.112;
    (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 period 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 Board and committee 
meetings as is given to representatives in order that the Secretary's 
representative(s) may attend such meetings;
    (j) To act as intermediary between the Secretary and any producer, 
first handler or importer;
    (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 with the approval of the Secretary, 
to make rules and regulations to effectuate the terms and provisions of 
this subpart;
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the sorghum industry's 
position in the marketplace; maintain and expand existing markets and 
uses for sorghum; and to carry out programs, plans, and projects 
designed to provide maximum benefits to the sorghum industry;

[[Page 299]]

    (o) To provide not less than annually a report to producers and 
importers 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; and
    (p) To invest funds in accordance with Sec. 1221.115.



Sec. 1221.111  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 is 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, by local, State, national, and foreign governments, 
other than recommending to the Secretary amendments to this part; 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. 1221.112  Budget and expenses.

    (a) Prior to the beginning of each fiscal period, and as may be 
necessary thereafter, the Board shall prepare and submit to the 
Secretary a budget for the fiscal period 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 that increases the budget must be approved by the 
Secretary. Shifts of funds that do not result in an increase in the 
Board's approved budget and that are consistent with this subpart and 
the Board's 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 fiscal period 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 in accordance with the Order. Such contributions shall be 
free from any encumbrance by the donor and the Board shall retain 
complete control of their use.
    (g) In accordance with Sec. 1221.118(a), the Board shall deposit 
funds in a refund escrow account and refrain from allocating this amount 
for expenditure until the Order is approved by the required referendum 
except as provided for in Sec. 1221.118.
    (h) The Board shall allocate an appropriate amount each year to 
allow for payment of future referendums.
    (i) 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.

[[Page 300]]

    (j) The Board shall determine annually an allocation amount no less 
than 15 percent but no more than 25 percent of the total assessments 
collected on all sorghum available for any fiscal period, less the 
expenses pursuant to paragraph (i), for use by qualified sorghum 
producer organizations pursuant to Sec. 1221.128 for State programs of 
generic promotion, research, and information. Amounts allocated by the 
Board for State generic promotion, research, and information programs 
will be based on requests submitted to the Board by qualified sorghum 
producer organizations when it is determined that these requests meet 
the goals and objectives stated in the Act and Order. The request shall 
include detailed programs, plans, or projects with budgets. Qualified 
sorghum producer organizations shall not submit requests for State 
generic promotion, research, and information programs that exceed the 
annual allocation amount determined by the Board which shall be the 
product of:
    (1) The State's proportional contribution based on reports submitted 
by first handlers pursuant to Sec. 1221.124(a) to total assessments 
remitted on all sorghum for the previous fiscal period; multiplied by
    (2) The total assessments collected on all sorghum for the previous 
fiscal period less expenses pursuant to paragraph (i) of this section.
    (k) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal period an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal period except for the initial fiscal period. Reimbursements 
to the Secretary required under paragraph (i) of this section are 
excluded from this limitation on spending.
    (l) The Board shall allocate all other funds available for any 
fiscal period, to the extent practicable, subject to paragraphs (g), 
(h), (i), (j), and (k) of this section on programs, plans, or projects, 
as provided for in Sec. 1221.121.
    (m) The Board shall determine annually the allocation of total funds 
pursuant to this section, with the approval of the Secretary.



Sec. 1221.113  Financial statements.

    (a) As requested by the Secretary, the Board shall prepare and 
submit financial statements to the Secretary on a monthly 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, fiscal 
period-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 Board shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal period to 
which it applies.



Sec. 1221.114  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal period excess funds in a reserve so 
established, provided that funds in the reserve shall not exceed one 
fiscal period's anticipated expenses.



Sec. 1221.115  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 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.



Sec. 1221.116  Assessments.

    (a) The funds to cover the Board'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 and subject to the limitations contained therein.
    (b) First handlers of domestic sorghum shall be responsible for 
collecting assessments from producers on all domestically handled 
sorghum. This includes sorghum of the first handler's

[[Page 301]]

own production. Grain pledged as collateral for a Commodity Credit 
Corporation price support loan program shall be considered handled 
sorghum. A first handler shall not collect an assessment on sorghum from 
a producer when said producer presents documentation demonstrating that 
an assessment has previously been collected on said sorghum.
    (c) The following assessment rates for sorghum shall apply:
    (1) Grain sorghum shall be initially assessed at a rate of 0.6 
percent of net market value received by the producer pursuant to 
paragraph (e) of this section; and
    (2) Sorghum forage, sorghum hay, sorghum haylage, sorghum billets, 
and sorghum silage shall be initially assessed at a rate of 0.35 percent 
of net market value received by the producer pursuant to paragraph (e) 
of this section.
    (d) Importers of sorghum shall pay an assessment to the Board 
through Customs on sorghum imported into the United States. The 
following apply to imported sorghum:
    (1) The assessment rates for imported sorghum shall be the same or 
equivalent to the rates for sorghum produced in the United States.
    (2) The import assessment shall be uniformly applied to imported 
sorghum that is identified by the numbers 1007.00.0020 and 1007.00.0040 
in the Harmonized Tariff Schedule of the United States.
    (3) The assessments due on imported sorghum shall be paid when the 
sorghum enters the United States.
    (4) If Customs does not collect an assessment from an importer, the 
importer is responsible for paying the assessment to the Board.
    (e) The Board will review the assessment rates and may make 
recommendations to modify the assessment rates to the Secretary. 
Assessment rates may be raised or lowered no more than 0.2 percent of 
net market value received by producers and importers in any one calendar 
year. The maximum assessment rate cannot exceed 1 percent of the net 
market value received by producers and importers.
    (f) Each person responsible for collecting assessments under 
paragraph (b) of this section shall remit the amount due to the Board in 
such a manner as required by regulations recommended by the Board and 
prescribed by the Secretary.
    (g) Any unpaid assessment due to the Board pursuant to this section 
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 later date 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 date it would 
have been due if the report had been filed timely. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the Board.
    (h) 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 by the Secretary.
    (i) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under Federal debt collection 
procedures.
    (j) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (k) The collection of assessments pursuant to this section shall 
begin with respect to sorghum handled on or after the effective date 
established by the Secretary and shall continue until terminated or 
suspended by the Secretary.
    (l) 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

[[Page 302]]

the collection of assessments, if the Board is not in place or is 
otherwise unable to develop such rules and regulations.
    (m) 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. Sec. 1221.124 and 1221.125 shall be 
mailed to the location designated by the Board.



Sec. 1221.117  Exemptions.

    (a) Any importer of less than and including 1,000 bushels of grain 
sorghum or 5,000 tons of sorghum forage, sorghum hay, sorghum haylage, 
sorghum billets, or sorghum silage per calendar year may claim an 
exemption from the assessment required under Sec. 1221.116.
    (b) An importer desiring an exemption shall apply to the Board, on a 
form provided by the Board, for a certificate of exemption. An importer 
shall certify that the importer will import less than and including 
1,000 bushels of grain sorghum or 5,000 tons of sorghum forage, sorghum 
hay, sorghum haylage, sorghum billets, or sorghum silage.
    (c) 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 who is 
eligible to receive one. It is the responsibility of these persons to 
retain a copy of the certificate of exemption.
    (d) Importers who receive a certificate of exemption shall be 
eligible for reimbursement of assessments collected by Customs. These 
importers shall apply to the Board for reimbursement of any assessments 
paid. No interest will be paid on the assessments collected by Customs. 
Requests for reimbursement shall be submitted to the Board within 90 
days of the last day of the calendar year the sorghum was actually 
imported.
    (e) Any person who desires an exemption from assessments for a 
subsequent calendar year shall reapply to the Board, on a form provided 
by the Board, for a certificate of exemption.
    (f) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
sorghum and, in the case of importers, proof of payment of assessments.
    (g) A producer or importer who operates under an approved National 
Organic Program (NOP) (7 CFR part 205) system plan; produces or imports 
only products that are eligible to be labeled as 100 percent organic 
under the NOP, except as provided for in paragraph (m) of this section; 
and is not, or does not import products from, a split operation shall be 
exempt from the payment of assessments.
    (h) To apply for an exemption under this section, the applicant 
shall submit the request to the Board or other party as designated by 
the Board, on a form provided by the Board, at any time initially and 
annually thereafter on or before January 1 as long as the applicant 
continues to be eligible for the exemption.
    (i) The request shall include the following: The applicant's name 
and address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (j) If the applicant complies with the requirements of this section, 
the Board or designee will grant the exemption and issue a Certificate 
of Exemption to the applicant. The Board will have 30 days from the date 
of receiving the request to approve the exemption request. If the 
application is disapproved, the Board will notify the applicant of the 
reason(s) for disapproval within the same timeframe.
    (k) The producer or importer shall provide a copy of the Certificate 
of Exemption to each first handler. The first handler shall maintain 
records showing the name and address of the exempt producer or importer 
and the exemption number assigned by the Board.
    (l) The exemption will apply at the first reporting period following 
the issuance of the exemption.

[[Page 303]]

    (m) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer or importer from 
exemption under this section, except that producers or importers who 
produce or import both organic and non-organic agricultural commodities 
as a result of split operations shall not qualify for exemption. Reasons 
for conventional sales include lack of demand for organic products, 
isolated use of antibiotics for humane purposes, chemical or pesticide 
use as the result of State or emergency spray programs, and crops from a 
buffer area as described in 7 CFR part 205, provided all other criteria 
are met.



Sec. 1221.118  Refund escrow accounts.

    (a) The Board shall establish an interest bearing escrow account 
with a financial institution that is a member of the Federal Reserve 
System and will deposit into such account an amount equal to the product 
obtained by multiplying 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 ten percent (10 percent).
    (b) Upon failure of the required referendum, 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 90 days after the required 
referendum results are announced by the Secretary.
    (d) If the Order is approved by the required referendum conducted 
under Sec. 1221.130 then:
    (1) The escrow account shall be closed; and
    (2) The funds shall be available to the Board for disbursement under 
Sec. 1221.112.



Sec. 1221.119  Refunds.

    Any producer or importer 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, upon failure of the required 
referendum shall have the right to receive from the Board a refund of 
such assessment, or a prorated share thereof, upon submission of proof 
satisfactory to the Board that the producer or importer paid the 
assessment for which refund is sought. Any such demand shall be made by 
such producer or importer 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. 1221.120  Procedure for obtaining a refund.

    Upon failure of the required referendum, each producer or importer 
who paid an assessment pursuant to 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) A producer or importer shall obtain a Board-approved refund 
application form from the Board. Such forms may be obtained by written 
request to the Board and the request shall bear the producer's or 
importer's signature or properly witnessed mark.
    (b) Any producer or importer 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 or importer but no later 
than the date the results of the required referendum are announced by 
the Secretary. The refund application shall show:
    (1) Producer's or importer's name and address;

[[Page 304]]

    (2) Name and address of the person who collected applicant's 
assessment;
    (3) Number of bushels or tons of sorghum on which a refund is 
requested;
    (4) Total amount of refund requested;
    (5) Date or inclusive dates on which assessments were paid; and
    (6) The producer's or importer's signature or properly witnessed 
mark.
    (c) The documentation provided pursuant to Sec. 1221.125(b) to the 
producer by the first handler 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 refund 
application. An importer must submit documentation showing that the 
assessment was paid along with a copy of the appropriate Customs form 
stating the net market value of the sorghum.
    (d) The Board shall initiate payment of refund requests, or pay a 
prorated 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. 1221.119.

                  Promotion, Research, and Information



Sec. 1221.121  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 
consumer and industry information, with respect to sorghum; and
    (2) The establishment and conduct of research with respect, but not 
limited to: The yield, use, nutritional value and benefits, sale, 
distribution, and marketing of sorghum, and the creation of new products 
thereof, to the end that the marketing and use of sorghum may be 
encouraged, expanded, improved, or made more acceptable; and to advance 
the image, desirability, or quality of sorghum.
    (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 
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 information, then the Board shall terminate such program, 
plan, or project.
    (d) No program, plan, or project including advertising shall be 
false or misleading or disparaging to another agricultural commodity. 
Sorghum of all origins shall be treated equally.



Sec. 1221.122  Independent 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 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 paragraph.



Sec. 1221.123  Patents, copyrights, inventions, trademarks, information, 

publications, and product formulations.

    (a) Any patents, copyrights, inventions, trademarks, information, 
publications, or product formulations 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, sales, leasing, franchising, or other uses of such patents, 
copyrights, inventions, trademarks, information, publications, or 
product formulations, inure to the benefit of the Board; shall be 
considered income subject to the same fiscal,

[[Page 305]]

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. 1221.132 shall apply to determine disposition of all such 
property.
    (b) Should patents, copyrights, inventions, trademarks, information, 
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, inventions, trademarks, information, publications, 
or product formulations shall be determined by agreement between the 
Board and the party contributing funds towards the development of such 
patents, copyrights, inventions, trademarks, information, publications, 
or product formulations in a manner consistent with paragraph (a) of 
this section.

                       Reports, Books, and Records



Sec. 1221.124  Reports.

    (a) Each first handler, on a State-by-State basis, will be required 
to provide to the Board periodically such information as may be required 
by the Board, with the approval of the Secretary, which may include but 
not be limited to the following:
    (1) Number of bushels or tons of domestic sorghum within the State 
that were marketed to the first handler;
    (2) Number of bushels or tons of domestic sorghum within the State 
on which an assessment was paid;
    (3) The amount of assessments remitted on sorghum within the State;
    (4) Date that any assessments were paid within the State;
    (5) The explanation, if necessary, to show why the remittance is 
less than the applicable assessment rate multiplied by the net market 
price multiplied by the number of bushels or tons within the State that 
were marketed to the first handler; and
    (6) The first handler's tax identification number.
    (b) Each importer will be required to provide to the Board 
periodically such information as may be required by the Board, with the 
approval of the Secretary, which may include but not be limited to the 
following:
    (1) Number of bushels or tons of sorghum imported;
    (2) Number of bushels or tons of imported sorghum on which an 
assessment was paid;
    (3) The amount of assessments remitted;
    (4) Date that any assessments were paid;
    (5) The explanation, if necessary, to show why the remittance is 
less than the applicable assessment rate multiplied by the net market 
value; and
    (6) The importer's tax identification number.



Sec. 1221.125  Books and records.

    (a) Each first handler, producer, or importer subject to this 
subpart shall maintain and make available during normal business hours 
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 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) Each first handler responsible for collecting assessments 
pursuant to this subpart is required to give the producer from whom the 
assessment was collected, written evidence of payment of the assessment 
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 first handler,
    (2) Name of producer who paid the assessment,
    (3) Total number of bushels or tons of sorghum on which the 
assessment was paid,
    (4) Total assessment paid by the producer,
    (5) Date on which assessments were paid, and
    (6) Such other information as the Board, with the approval of the 
Secretary, may require.



Sec. 1221.126  Use of information.

    Information from records or reports required pursuant to this 
subpart shall be made available to the Secretary as

[[Page 306]]

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 producers, 
first handlers, or importers, that is accumulated under laws or 
regulations other than the Act or regulations issued under the Act.



Sec. 1221.127  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act and this part 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 
representatives, first handlers, producers, or importers. 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 
there from, 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 part, together 
with a statement of the particular provisions of this part violated by 
such person.

             Qualification of Sorghum Producer Organizations



Sec. 1221.128  Qualification.

    (a) Organizations receiving qualification from the Secretary will be 
entitled to submit requests for funding to the Board pursuant to Sec. 
1221.112(j). Only one sorghum producer organization per State may be 
qualified.
    (b) State-legislated sorghum promotion, research, and information 
organizations may request qualification and will be considered first for 
qualification by the Secretary.
    (c) If a State-legislated sorghum promotion, research, and 
information organization does not elect to seek qualification 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 State sorghum producer organization whose primary purpose is to 
represent sorghum producers within a State, or any other State 
organization that has sorghum producers as part of its membership, may 
request qualification.
    (d) Qualification 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, including the following:
    (1) The geographic territory covered by the organization's active 
membership;
    (2) The nature and size of the organization's active membership, 
proportion of active membership accounted for by producers, a map 
showing the sorghum-producing counties in which the organization has 
active members, the volume of sorghum produced in each such county, the 
number of sorghum producers in each such county, and the size of the 
organization's active sorghum producer membership in each such county;
    (3) The extent to which the sorghum 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 organizations operating funds are 
derived;
    (6) The functions of the organization; and
    (7) The ability and willingness of the organization to further the 
purpose and objectives of the Act.

[[Page 307]]

    (e) The primary consideration in determining the eligibility of an 
organization shall be whether its sorghum producer membership consists 
of a sufficiently large number of sorghum producers who produce a 
relatively significant volume of sorghum to reasonably warrant its 
qualification to submit requests for funding to the Board. Any sorghum 
producer organization found eligible by the Secretary under this section 
will be qualified by the Secretary, and the Secretary's determination as 
to eligibility shall be final.

                              Miscellaneous



Sec. 1221.129  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. 1221.130  Referenda.

    (a) 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. 1221.116 who, during a representative period 
determined by the Secretary, have engaged in the production or 
importation of sorghum.
    (1) The referendum shall be conducted not later than 3 years after 
assessments first begin under this part.
    (2) This part will be approved in a referendum if a majority of 
those persons voting vote for approval.
    (b) 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; or
    (3) At the request of 10 percent or more of the sorghum producers 
and importers eligible to vote to determine if the persons favor the 
continuation, suspension, or termination of this part.
    (c) 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 sorghum producers and importers 
eligible to vote.
    (d) The Board shall reimburse the Secretary for any expenses 
incurred by the Secretary to conduct referenda.
    (e) A referendum conducted under this section with respect to this 
part shall be conducted in the manner determined by the Secretary to be 
appropriate.



Sec. 1221.131  Suspension or 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 fiscal period 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 sorghum.
    (c) If, as a result of a referendum the Secretary determines that 
this subpart is not approved, the Secretary shall:
    (1) No 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. 1221.132  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its representatives 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 
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:

[[Page 308]]

    (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, by qualified organizations pursuant to Sec. 
1221.128 in the interest of continuing sorghum promotion, research, and 
information programs.



Sec. 1221.133  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination or amendment of this part or any subpart 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 part; or
    (b) Release or extinguish any violation of this part; 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. 1221.134  Personal liability.

    No representative 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 representative or 
employee, except for acts of dishonesty or willful misconduct.



Sec. 1221.135  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. 1221.136  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.



Sec. 1221.137  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. 1221.138  OMB control number.

    The control number assigned to the information collection 
requirements of this part 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 0581-0246.



            Subpart B_Procedures for the Conduct of Referenda

    Source: 75 FR 70575, November 18, 2010, unless otherwise noted.

                               Definitions



Sec. 1221.200  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. 1221.201  Administrator, AMS.

    Administrator, AMS, means the Administrator of the Agricultural 
Marketing Service, or any officer or employee of USDA to whom there has 
been delegated or may be delegated the

[[Page 309]]

authority to act in the Administrator's stead.



Sec. 1221.202  Administrator, FSA.

    Administrator, FSA, means the Administrator of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec. 1221.203  Eligible person.

    Eligible person is defined as any person subject to the assessment 
who during the representative period determined by the Secretary has 
engaged in the production or importation of sorghum. Such persons are 
eligible to participate in the referendum.



Sec. 1221.204  Farm Service Agency.

    Farm Service Agency, also referred to as ``FSA,'' means the Farm 
Service Agency of USDA.



Sec. 1221.205  Farm Service Agency County Committee.

    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. 1221.206  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``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. 1221.207  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec. 1221.208  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, also referred to as 
``SED,'' means the person within a State who is appointed by the 
Secretary to be responsible for the day-to-day operation of the FSA 
State Office, or the person acting in such capacity.



Sec. 1221.209  Public notice.

    Public notice means not later than 30 days before the referendum is 
conducted, the Secretary shall notify the eligible voters in such manner 
as determined by the Secretary, of the voting period during which voting 
in the referendum will occur. The notice shall explain any registration 
and voting procedures established under section 518 of the Act.



Sec. 1221.210  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to section 518 of the Act.



Sec. 1221.211  Voting period.

    The term voting period means a 4-week period to be announced by the 
Secretary for voting in the referendum.

                               Procedures



Sec. 1221.220  General.

    A referendum to determine whether eligible persons favor the 
continuance of this part shall be carried out in accordance with this 
subpart.
    (a) The referendum will be conducted at county FSA offices for 
producers and through AMS headquarters offices for importers.
    (b) The Secretary shall determine if at least a majority of those 
persons voting favor the continuance of this part.



Sec. 1221.221  Supervision of the process for conducting referenda.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting persons to vote in a referendum in accordance with 
this subpart.



Sec. 1221.222  Eligibility.

    (a) Any person subject to the assessment who during the 
representative period determined by the Secretary has engaged in the 
production or importation of sorghum is eligible to participate in the 
referendum. An eligible person at the time of the referendum and

[[Page 310]]

during the representative period, shall be entitled to cast only one 
vote in the referendum.
    (b) Proxy registration. Proxy registration is not authorized, except 
that an officer or employee of a corporate producer or importer, or any 
guardian, administrator, executor, or trustee of a person's estate, or 
an authorized representative of any eligible producer or importer entity 
(other than an individual person), such as a corporation or partnership, 
may vote on behalf of that entity. Further, an individual cannot vote on 
behalf of another individual (i.e., spouse, family members, sharecrop 
lease, joint tenants, tenants in common, owners of community property, a 
partnership, or a corporation).
    (c) Any individual, who votes on behalf of any producer or importer 
entity, shall certify that he or she is authorized by such entity to 
take such action. Upon request of the county FSA or AMS office, the 
person voting may be required to submit adequate evidence of such 
authority.
    (d) 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 who engaged in the 
production or importation of sorghum during the representative period as 
a producer or importer entity shall be entitled to cast only one vote; 
provided, however, that any individual member of a group who is an 
eligible person separate from the group may vote separately.



Sec. 1221.223  Time and place of the referendum.

    (a) The opportunity to vote in the 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 vote following 
the procedures established in this subpart during the normal business 
hours of each county FSA or AMS office.
    (b) Persons can determine the location of county FSA offices by 
contacting the nearest county FSA office, the State FSA office, or 
through an online search of FSA's Web site.
    (c) Each eligible producer shall cast a ballot in the county FSA 
office where FSA maintains the person's administrative farm records. For 
eligible persons not participating in FSA programs, the opportunity to 
vote will be provided at the county FSA office serving the county where 
the person owns or rents land. A person engaged in the production of 
sorghum in more than one county will vote in the county FSA office where 
the person does most of his or her business.
    (d) Each eligible importer will cast a ballot in the Marketing 
Programs Branch, Livestock and Seed Program, AMS, USDA, Room 2628-S, 
STOP 0251, 1400 Independence Avenue, SW., Washington, DC 20250-0251; 
Telephone: (202) 720-1115; Fax: (202) 720-1125.



Sec. 1221.224  Facilities.

    Each county FSA office will provide:
    (a) A voting place that is well known and readily accessible to 
persons in the county and that is equipped and arranged so that each 
person can complete and submit a ballot in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) A holding container of sufficient size so arranged that no 
ballot or supporting documentation can be read or removed without 
breaking seals on the container.



Sec. 1221.225  Certification and referendum ballot form.

    Form LS-379 shall be used to vote in the referendum and certify 
eligibility. Eligible persons will be required to complete a ballot in 
its entirety, vote ``yes'' or ``no'' to continue the program and provide 
documentation such as a sales receipt or remittance form showing that 
the person voting was engaged in the production of sorghum during the 
representative period. The person or authorized representative shall 
sign the ballot certifying that they or the entity they represent were 
engaged in the production of sorghum during the representative period.



Sec. 1221.226  Certification and voting procedures.

    (a) Each eligible person shall be provided the opportunity to cast a 
ballot

[[Page 311]]

during the voting period announced by the Secretary.
    (1) Each eligible person shall be required to complete Form LS-379 
in its entirety, sign it and, provide evidence that they were engaged in 
the production or importation of sorghum during the representative 
period. The person must legibly place his or her name and, if 
applicable, the entity represented, address, county and, telephone 
number. The person shall sign and certify on Form LS-379 that:
    (i) The person was engaged in the production or importation of 
sorghum during the representative period;
    (ii) The person voting on behalf of a corporation or other entity is 
authorized to do so;
    (iii) The person has cast only one vote; and
    (2) Only a completed and signed Form LS-379 accompanied by 
supporting documentation showing that the person was engaged in the 
production or importation of sorghum during the representative period 
shall be considered a valid vote.
    (b) To vote, eligible producers may obtain Form LS-379 in-person, by 
mail, or by facsimile from county FSA offices or through the Internet 
during the voting period. A completed and signed Form LS-379 and 
supporting documentation, such as a sales receipt or remittance form, 
must be returned to the appropriate county FSA office where FSA 
maintains and processes the person's administrative farm records. For a 
person not participating in FSA programs, the opportunity to vote in a 
referendum will be provided at the county FSA office serving the county 
where the person owns or rents land. A person engaged in the production 
of sorghum in more than one county will vote in the county FSA office 
where the person does most of his or her business. A completed and 
signed Form LS-379 and the supporting documentation may be returned in-
person, by mail, or facsimile to the appropriate county FSA office. Form 
LS-379 and supporting documentation returned in-person or by facsimile, 
must be received in the appropriate county FSA office prior to the close 
of the work day on the final day of the voting period to be considered a 
valid ballot. Form LS-379 and the accompanying documentation returned by 
mail must be postmarked no later than midnight of the final day of the 
voting period and must be received in the county FSA office on the 5th 
business day following the final day of the voting period. To vote, 
eligible importers may obtain Form LS-379 in-person, by mail or, by 
facsimile from AMS offices or through the Internet during the voting 
period. A completed and signed Form LS-379 and supporting documentation, 
such as a U.S. Customs and Border Protection form 7501, must be returned 
to the AMS headquarters office.
    (c) A completed and signed Form LS-379 and the supporting 
documentation may be returned in-person, by mail, or facsimile to the 
appropriate county FSA office for producers and to AMS office for 
importers. Form LS-379 and supporting documentation returned in-person 
or by facsimile, must be received in the appropriate county FSA office 
for producers or the AMS office for importers prior to the close of the 
work day on the final day of the voting period to be considered a valid 
ballot. Form LS-379 and the accompanying documentation returned by mail 
must be postmarked no later than midnight of the final day of the voting 
period and must be received in the county FSA office for producers and 
the AMS office for importers on the 5th business day following the final 
day of the voting period.
    (d) Persons who obtain Form LS-379 in-person at the appropriate FSA 
county office may complete and return it the same day along with the 
supporting documentation. Importers who obtain Form LS-379 in-person at 
the appropriate AMS office may complete and return it the same day along 
with the supporting documentation.



Sec. 1221.227  Canvassing voting ballots.

    (a) Canvassing of Form LS-379 shall take place at the appropriate 
county FSA offices or AMS office on the 6th business day following the 
final day of the voting period. Canvassing of producer ballots shall be 
in the presence of at least two members of the county committee. If two 
or more of the counties have been combined and are served by one county 
office, the canvassing of

[[Page 312]]

the requests shall be conducted by at least one member of the county 
committee from each county served by the county office. The FSA State 
committee or the State Executive Director, if authorized by the State 
Committee, may designate the County Executive Director (CED) and a 
county or State FSA office employee to canvass the ballots and report 
the results instead of two members of the county committee when it is 
determined that the number of eligible voters is so limited that having 
two members of the county committee present for this function is 
impractical, and designate the CED and/or another county or State FSA 
office employee to canvass requests in any emergency situation 
precluding at least two members of the county committee from being 
present to carry out the functions required in this section.
    (b) Canvassing of importer ballots will be performed by AMS 
personnel or any other person as deemed necessary.
    (c) Form LS-379 should be canvassed as follows:
    (1) Number of valid ballots. A person has been declared eligible by 
FSA or AMS to vote by completing Form LS-379 in its entirety, signing 
it, and providing supporting documentation that shows the person who 
cast the ballot during the voting period was engaged in the production 
or importation of sorghum. Such ballot will be considered a valid 
ballot.
    (2) Number of ineligible ballots. If FSA or AMS cannot determine 
that a person is eligible based on the submitted documentation or if the 
person fails to submit the required supporting documentation, the person 
shall be determined to be ineligible. FSA or AMS shall notify ineligible 
persons in writing as soon as practicable but no later than the 8th 
business day following the final day of the voting period.
    (d) Appeal. A person declared to be ineligible by FSA or AMS can 
appeal such decision and provide additional documentation to the FSA 
county office or AMS within 5 business days after the postmark date of 
the letter of notification of ineligibility. FSA or AMS will then make a 
final decision on the person's eligibility and notify the person of the 
decision.
    (e) Invalid ballots. An invalid ballot includes, but is not limited 
to the following:
    (1) Form LS-379 is not signed or all required information has not 
been provided;
    (2) Form LS-379 and supporting documentation returned in-person or 
by facsimile was not received by close of business on the last business 
day of the voting period;
    (3) Form LS-379 and supporting documentation returned by mail was 
not postmarked by midnight of the final day of the voting period;
    (4) Form LS-379 and supporting documentation returned by mail was 
not received in the county FSA or AMS office by the 5th business day 
following the final day of the voting period;
    (5) Form LS-379 or supporting documentation is mutilated or marked 
in such a way that any required information on the Form is illegible; or
    (6) Form LS-379 and supporting documentation not returned to the 
appropriate county FSA or AMS office.



Sec. 1221.228  Counting ballots.

    (a) Form LS-379 shall be counted by county FSA offices or the AMS 
office on the same day as the ballots are canvassed if there are no 
ineligibility determinations to resolve. For those county FSA offices 
that do have ineligibility determinations, the requests shall be counted 
no later than the 14th business day following the final day of the 
voting period.
    (b) Ballots shall be counted as follows:
    (1) Number of valid ballots cast;
    (2) Number of persons favoring the Order;
    (3) Number of persons not favoring the Order;
    (4) Number of invalid ballots.



Sec. 1221.229  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, as soon as may be reasonably possible, but in no event shall submit 
no later than the 18th business day following the final

[[Page 313]]

day of the specified period. 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 calendar 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. 1221.230  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the 20th business day 
following the final day of the voting period, a report summarizing the 
data contained in each of the reports from the county FSA offices. One 
copy of the State summary shall be filed for a period of not less than 
12 months after the results have been released and available for public 
inspection after the results have been released.



Sec. 1221.231  Results of the referendum.

    (a) The Administrator, FSA, shall submit to the Administrator, AMS, 
reports from all State FSA offices. The Administrator, AMS shall 
tabulate the results of the ballots. USDA will issue an official press 
release announcing the results of referendum and publish the same 
results in the Federal Register. In addition, USDA will post the 
official results on its Web site. State reports and related papers shall 
be available for public inspection upon request during normal business 
hours at the Marketing Programs Branch; Livestock and Seed Program, AMS, 
USDA, Room 2628-S; STOP 0251; 1400 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. 1221.232  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Sorghum Checkoff Program Referendum,'' all of 
the Forms LS-379 along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of FSA CED 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 as described above, the CED or designee shall destroy 
the records.



Sec. 1221.233  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



Sec. 1221.234  Confidentiality

    The names of persons voting in the referendum and ballots shall be 
confidential and the contents of the ballots shall not be 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.

Subparts C-E [Reserved]



PART 1222_PAPER AND PAPER-BASED PACKAGING PROMOTION, RESEARCH AND INFORMATION 

ORDER--Table of Contents



Subpart A [Reserved]

                     Subpart B_Referendum Procedures

Sec.
1222.100 General.
1222.101 Definitions.
1222.102 Voting.
1222.103 Instructions.
1222.104 Subagents.
1222.105 Ballots.
1222.106 Referendum report.
1222.107 Confidential information.
1222.108 OMB Control number.

    Authority: 7 U.S.C. 7411-7425; 7 U.S.C. 7401.

[[Page 314]]


    Source: 78 FR 56820, Sept. 16, 2013, unless otherwise noted.

Subpart A [Reserved]



                     Subpart B_Referendum Procedures



Sec. 1222.100  General.

    Referenda to determine whether eligible domestic manufacturers and 
importers favor the issuance, continuance, amendment, suspension, or 
termination of the Paper and Paper-Based Packaging Promotion, Research 
and Information Order shall be conducted in accordance with this 
subpart.



Sec. 1222.101  Definitions.

    For the purposes of this subpart:
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to delegate, 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) Converted products means products made from paper and paper-
based packaging.
    (c) Customs or CBP means the U.S. Customs and Border Protection, an 
agency of the U.S. Department of Homeland Security.
    (d) Department or USDA 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.
    (e) Eligible domestic manufacturer or producer means any person who 
is currently a domestic manufacturer or producer and who manufactured 
100,000 short tons or more of paper and paper-based packaging during the 
representative period.
    (f) Eligible importer means any person who is currently an importer 
and who imported 100,000 short tons or more of paper and paper-based 
packaging into the United States during the representative period as a 
principal or as an agent, broker, or consignee of any person who 
manufactured paper and paper-based packaging outside of the United 
States for sale in the United States, and who is listed as the importer 
of record for such paper and paper-based packaging. Importation occurs 
when paper and paper-based packaging manufactured outside of the United 
States is released from custody by Customs and introduced into the 
stream of commerce in the United States. Included are persons who hold 
title to foreign-manufactured paper and paper-based packaging 
immediately upon release by Customs, as well as any persons who act on 
behalf of others, as agents or brokers, to secure the release of paper 
and paper-based packaging from Customs when such paper and paper-based 
packaging is entered or withdrawn for use in the United States.
    (g) Kraft process means a process that transforms wood into a high 
quality strong pulp for making paper and paper-based packaging.
    (h) Linerboard means a grade of containerboard that is used as 
facing material in the manufacture of corrugated or solid fiber shipping 
boxes.
    (i) Manufacture or produce means the process of transforming pulp 
into paper and paper-based packaging.
    (j) Order means the Paper and Paper-Based Packaging Promotion, 
Research and Information Order.
    (k) Paper and paper-based packaging means:
    (1) Printing, writing and related paper, which is coated or uncoated 
paper that is subsequently converted into products used for printing, 
writing and other communication purposes, such as file folders, 
envelopes, catalogues, magazines and brochures. For purposes of this 
Order, printing, writing and related paper includes thermal paper but 
does not include carbonless paper;
    (2) Kraft packaging paper, which is coarse unbleached, semi-bleached 
or fully bleached grades of paper that are subsequently converted into 
products such as grocery bags, multiwall sacks, waxed paper and other 
products;
    (3) Containerboard, which is all forms of linerboard and medium that 
is used to manufacture corrugated boxes, shipping containers and related 
products; and
    (4) Paperboard, which is solid bleached kraft board, recycled board

[[Page 315]]

and unbleached kraft board that is subsequently converted into a wide 
variety of end uses, including folding boxes, food and beverage 
packaging, tubes, cans, and drums, and other miscellaneous products. 
Paperboard does not include construction-related products such as gypsum 
wallboard facings and panel board.
    (5) For purposes of this Order, paper and paper-based packaging does 
not include tissue paper, newsprint or converted products.
    (l) 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 paper and paper-based packaging manufacturing entity 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, facilities, capital, 
labor, management, equipment, or other services, or any variation of 
such contributions by two or more parties, so that it results in the 
manufacturing or importation of paper and paper-based packaging and the 
authority to transfer title to the paper and paper-based packaging so 
manufactured or imported.
    (m) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (n) Representative period means the period designated by the 
Department.
    (o) Short ton or ton means a measure of weight equal to 2,000 
pounds.
    (p) United States means collectively the 50 states of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, and 
the territories and possessions of the United States.



Sec. 1222.102  Voting.

    (a) Each eligible domestic manufacturer and importer of paper and 
paper-based packaging shall be entitled to cast only one ballot in the 
referendum. However, each domestic manufacturer in a landlord/tenant 
relationship or a divided ownership arrangement involving totally 
independent entities cooperating only to manufacture paper and paper-
based manufacturing, in which more than one of the parties is a domestic 
manufacturer or importer, shall be entitled to cast one ballot in the 
referendum covering only such domestic manufacturer or importer's share 
of ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate manufacturer or importer, 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 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) A single entity who manufactures and imports paper and paper-
based manufacturing may cast one vote in the referendum.
    (d) All ballots are to be cast by mail or other means, as instructed 
by the Department.



Sec. 1222.103  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, consistent 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 using available media or public information sources, without 
incurring

[[Page 316]]

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 domestic manufacturers 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; and
    (g) Announce the results to the public.



Sec. 1222.104  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 of such appointment, shall be performed by the agent.



Sec. 1222.105  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. 1222.106  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. 1222.107  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. 1222.108  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. is OMB 
control number 0581-NEW.



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.

[[Page 317]]

1230.32 Conduct of election.
1230.33 Appointment of importer members.
1230.34 Term of office.
1230.35 Vacancies.
1230.36 Procedure.
1230.37 Officers.
1230.38 Compensation and reimbursement.
1230.39 Powers and duties of the Delegate Body.

                           National Pork Board

1230.50 Establishment and membership.
1230.51 Term of office.
1230.52 Nominations.
1230.53 Nominee's agreement to serve.
1230.54 Appointment.
1230.55 Vacancies.
1230.56 Procedure.
1230.57 Compensation and reimbursement.
1230.58 Powers and duties of the Board.

              Promotion, Research, and Consumer Information

1230.60 Promotion, research, and consumer information.

                        Expenses and Assessments

1230.70 Expenses.
1230.71 Assessments.
1230.72 Distribution of assessments.
1230.73 Uses of distributed assessments.
1230.74 Prohibited use of distributed assessments.
1230.75 Adjustment of accounts.
1230.76 Charges.
1230.77 [Reserved]

                       Reports, Books, and Records

1230.80 Reports.
1230.81 Books and records.
1230.82 Confidential treatment.

                              Miscellaneous

1230.85 Proceedings after termination.
1230.86 Effect of termination or amendment.
1230.87 Personal liability.
1230.88 Patents, copyrights, inventions, and publications.
1230.89 Amendments.
1230.90 Separability.
1230.91 Paperwork Reduction Act assigned number.

                     Subpart B_Rules and Regulations

                               Definitions

1230.100 Terms defined.
1230.102 Exemption.

                               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.

[[Page 318]]

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 and 7 U.S.C. 7401.



   Subpart A_Pork Promotion, Research, and Consumer Information Order

    Source: 51 FR 31903, Sept. 5, 1986, unless otherwise noted.

                               Definitions



Sec. 1230.1  Act.

    Act means the Pork Promotion, Research, and Consumer Information Act 
of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec. 1230.2  Department.

    Department means the United States Department of Agriculture.



Sec. 1230.3  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any 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,

[[Page 319]]

the term means the declared value. With respect to imported pork and 
pork products, the term means an amount which represents the value of 
the live porcine animals from which the pork or pork products were 
derived, based upon the most recent annual seven-market average for 
barrows and gilts, as published by the Department.



Sec. 1230.15  Part and subpart.

    Part means the Pork Promotion, Research, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder, and the aforesaid order shall be a ``subpart of such part.



Sec. 1230.16  Person.

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



Sec. 1230.17  Plans and projects.

    Plans and projects means promotion, research, and consumer 
information plans, studies, or projects.



Sec. 1230.18  Porcine animal.

    Porcine animal means a swine, that is raised as (a) a feeder pig, 
that is, a 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.

[[Page 320]]

                  National Pork Producers Delegate Body



Sec. 1230.30  Establishment and membership.

    (a) There is hereby established a National Pork Producers Delegate 
Body which shall consist of producers and importers appointed by the 
Secretary.
    (b)(1) At least two producer members shall be allocated to each 
State, but any State that has more than 300 but less than 601 shares 
shall receive three producer members; each State with more than 600 but 
less than 1,001 shares shall receive four producer members and each 
State with more than 1,000 shares shall receive an additional member in 
excess of four for each 300 additional shares in excess of 1,000 shares, 
rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to each State on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to such State.
    (c)(1) The number of importer members to be appointed shall be 
determined by allocating three such members for the first 1,000 shares. 
Importers shall receive an additional member in 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.

[[Page 321]]

    (d) The Board shall cause notices of any election to be published at 
least one week prior to the election in a newspaper or newspapers of 
general circulation in that State, and in pork production and 
agricultural trade publications. The notices shall set forth the period 
of time and places for voting and such other information as the Board 
considers necessary.
    (e) The identity of any person who voted and the manner in which any 
person voted shall be kept confidential.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]



Sec. 1230.33  Appointment of importer members.

    The Secretary shall appoint the importer members of each Delegate 
Body after consultation with importers.



Sec. 1230.34  Term of office.

    (a) The members of the Delegate Body shall serve for terms of one 
year, except that the members of the initial Delegate Body shall serve 
only until the completion of the nomination and appointment process of 
the succeeding Delegate Body.
    (b) Each member of the Delegate Body shall serve until that member's 
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

[[Page 322]]

each vacancy on the Board that requires nominations thereafter. Each 
nomination shall be by a majority vote of the Delegate Body voting in 
person in accordance with Sec. 1230.36.

                           National Pork Board



Sec. 1230.50  Establishment and membership.

    There is hereby established a National Pork Board of 15 members 
consisting of producers representing at least 12 States or importers 
appointed by the Secretary from nominations submitted pursuant to Sec. 
1230.39(d). The Board shall be deemed to be constituted once the 
Secretary makes the appointments to the Board.



Sec. 1230.51  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall be 
designated for, and shall serve terms as follows: One-third of such 
members shall serve for one year terms; One-third shall serve for two 
year terms; and the remaining One-third shall serve for three year 
terms.
    (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.

[[Page 323]]



Sec. 1230.56  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall give timely notice of its meetings. The Board 
shall give the Secretary the same notice of its meetings, including the 
meetings of its committees, as it gives to its members in order that the 
Secretary, or a representative of the Secretary, may attend the 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, telegraph or by other means 
of communication when, in the opinion of the President of the Board, 
such action must be taken before a meeting can be called. Action taken 
by this emergency procedure is valid only if all members are notified 
and provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing and recorded in the Board minutes. Any action so 
taken shall have the same force and effect as though such action had 
been taken at a properly convened meeting of the Board.



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.

[[Page 324]]

    (h) To disseminate information to or communicate with producers or 
State associations through programs or by direct contact utilizing the 
public postage system or other systems;
    (i) To select committees and subcommittees of Board members and to 
adopt such rules and by laws for the conduct of its business as it may 
deem advisable;
    (j) To utilize advisory committees of persons other than Board 
members to assist in the development of plans or projects and pay the 
reasonable expenses and fees of the members of such committees;
    (k) To prescribe rules and regulations necessary to effectuate the 
terms and provisions of this subpart;
    (l) To recommend to the Secretary amendments to this subpart;
    (m) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1230.71 in, and only in, an 
obligation of the United States, a general obligation of any State or 
any political subdivision thereof, an interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or an obligation fully guaranteed as to principal and interest 
by the United States.
    (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.

[[Page 325]]

    (d) No plan or project shall undertake to advertise or promote pork 
or pork products by private brand or trade name unless such 
advertisement or promotion is specifically approved by the Board, with 
the concurrence of the Secretary.

                        Expenses and Assessments



Sec. 1230.70  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve that would permit an effective 
promotion, research, and consumer information program to continue in 
years when the amount of assessments may be reduced) as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
administration, maintenance, and functioning and to enable it to 
exercise its powers and perform its duties in accordance with the 
provisions of this subpart, including financing plans and projects. Such 
expenses shall be paid from assessments collected pursuant to Sec. 
1230.71 and other funds available to the Board, including donations.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1230.71, for reasonable administrative 
expenses incurred by the 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

[[Page 326]]

of a negotiable instrument made payable to the ``National Pork Board,'' 
which, together with the reports required by Sec. 1230.80, shall be 
sent to the address designated by the Board.
    (5) Each importer of a porcine animal, pork, or pork product shall 
remit an assessment to the Customs Service at the time such porcine 
animal, pork, or pork product is imported or in such manner as may be 
established by regulations prescribed by the Board and approved by the 
Secretary, if an assessment is due pursuant to paragraph (a) of this 
section.
    (c) The initial rate of assessment shall be 0.25 percent of market 
value.
    (d) The rate of assessment may, upon the recommendation of the 
Delegate Body, be increased by regulations prescribed by the Board and 
approved by the Secretary by no more than 0.1 percent of such market 
value per fiscal period to a total of not more than 0.5 percent of 
market value.
    (e) Assessments on imported pork and pork products shall be 
expressed in an amount per pound for each type of pork or pork product 
subject to assessment, which shall be established by 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

[[Page 327]]

    (4) The Secretary's administrative costs in carrying out this part.



Sec. 1230.74  Prohibited use of distributed assessments.

    (a) No funds collected under this subpart shall in any manner be 
used for the purpose of influencing legislation as that term is defined 
in section 4911 (d) and (e)(2) of the Internal Revenue Code of 1954, or 
for the purpose of influencing governmental policy or action except in 
recommending to the Secretary amendments to this part.
    (b) Organizations receiving distributions of assessments from the 
Board shall furnish the Board with annual financial statements audited 
by a certified public accountant of all funds distributed to such 
organizations pursuant to this subpart and any other reports as may be 
required by the Secretary or the Board in order to verify the use of 
such funds.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988; 
60 FR 33683, June 29, 1995]



Sec. 1230.75  Adjustment of accounts.

    Whenever the Board or the Department determines, through an audit of 
a 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

[[Page 328]]

and agents of the Board, all officers and employees and all former 
officers and employees of the Department, and by all officers and all 
employees and all former officers and employees of contracting parties 
having access to such information, and shall not be available to Board 
members. Only those persons having a specific need for such information 
in order to effectively implement, administer, or enforce the provisions 
of this subpart shall have access to such information. In addition, only 
such information so furnished or acquired shall be disclosed as the 
Secretary deems relevant and then only in a suit or administrative 
hearing brought at the direction, or upon the request, of the Secretary 
or to which the Secretary or any officer of the United States is a 
party, and involving this subpart. Nothing in this section shall be 
deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of persons subject to this subpart or of statistical data 
collected therefrom, which statements or data do not identify the 
information furnished by any person; or
    (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.

[[Page 329]]



Sec. 1230.88  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, trademarks, inventions, or publications 
developed through the use of funds collected under the provisions of 
this subpart shall be the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications inure to the benefit of the Board as income and be subject 
to the same fiscal, budget, and audit controls as other funds of the 
Board. Upon termination of this subpart, Sec. 1230.85 shall apply to 
determine disposition of all such property.



Sec. 1230.89  Amendments.

    The Secretary may from time to time amend provisions of this part. 
Any interested person or organization affected by the provisions of the 
Act may propose amendments to the Secretary.



Sec. 1230.90  Separability.

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



Sec. 1230.102  Exemption.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; produces only products that 
are eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (i) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To apply for an exemption under this section, the producer shall 
submit the request to the Board--on a form provided by the Board--at any 
time initially and annually thereafter on or before January 1 as long as 
the producer continues to be eligible for the exemption.
    (c) The request shall include the following: the producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer complies with the requirements of this section, 
the Board will grant the exemption and issue a Certificate of Exemption 
to the producer. For exemption requests received on or before August 15, 
2005, the Board will have 60 days to approve the exemption request; 
after August 15, 2005, the Board will have 30 days to approve the 
exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each person responsible for collecting and remitting the 
assessment to the Board.

[[Page 330]]

    (f) The person responsible for collecting and remitting the 
assessment to the Board shall maintain records showing the exempt 
producer's name and address and the exemption number assigned by the 
Board.
    (g) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer may submit documentation to the Board and request an 
exemption from assessment on 100 percent organic porcine animals or pork 
and pork products--on a form provided by the Board--at any time 
initially and annually thereafter on or before January 1 as long as the 
importer continues to be eligible for the exemption. This documentation 
shall include the same information required of producers in paragraph 
(c) of this section. If the importer complies with the requirements of 
this section, the Board will grant the exemption and issue a Certificate 
of Exemption to the importer. The Board will also issue the importer a 
9-digit alphanumeric Harmonized Tariff Schedule (HTS) classification 
valid for 1 year from the date of issue. This HTS classification should 
be entered by the importer on the Customs entry documentation. Any line 
item entry of 100 percent organic porcine animals or pork and pork 
products bearing this HTS classification assigned by the Board will not 
be subject to assessments.
    (h) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (i) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2760, Jan. 14, 2005]

                               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        Article description      Assessment
------------------------------------------------------------------------
0103.10.0000...................  Purebred breeding     0.40 percent
                                  animals.              Customs Entered
                                                        Value.
0103.91.00.....................  Other: Weighing less
                                  than 50 kg each.
0103.91.0010...................  Weighing less than 7  0.40 percent
                                  kg each.              Customs Entered
                                                        Value.
0103.91.0020...................  Weighing 7 kg or      0.40 percent
                                  more but less than    Customs Entered
                                  23 kg each.           Value.
0103.91.0030...................  Weighing 23 kg or     0.40 percent
                                  more but less than    Customs Entered
                                  50 kg each.           Value.
0103.92.00.....................  Weighing 50 kg or
                                  more each.
0103.92.0010...................  Imported for          0.40 percent
                                  immediate slaughter.  Customs Entered
                                                        Value.
0103.92.0090...................  Other...............  0.40 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                          Article description            ---------------------
                                                                                             Cents/lb   Cents/kg
----------------------------------------------------------------------------------------------------------------
0203..........................................  Meat of swine, fresh, chilled, or frozen:
                                                 Fresh or chilled:
0203.11.0000..................................  Carcasses and half-carcasses..............        .20    .440920
0203.12.1010..................................  Processed hams and cuts thereof, with bone        .20    .440920
                                                 in.
0203.12.1020..................................  Processed shoulders and cuts thereof, with        .20    .440920
                                                 bone in.
0203.12.9010..................................  Other hams and cuts thereof, with bone in.        .20    .440920
0203.12.9020..................................  Other shoulders and cuts thereof, with            .20    .440920
                                                 bone in.
0203.19.2010..................................  Processed spare ribs......................        .23    .507058
0203.19.2090..................................  Processed other...........................        .23    .507058

[[Page 331]]

 
0203.19.4010..................................  Bellies...................................        .20    .440920
0203.19.4090..................................  Other.....................................        .20    .440920
0203.21.0000..................................  Frozen carcasses and half-carcasses.......        .20    .440920
0203.22.1000..................................  Frozen-processed hams, shoulders, and cuts        .20    .440920
                                                 thereof, with bone in.
0203.22.9000..................................  Frozen-other hams, shoulders, and cuts            .20    .440920
                                                 thereof, with bone in.
0203.29.2000..................................  Frozen processed other....................        .23    .507058
0203.29.4000..................................  Frozen other: Other.......................        .20    .440920
0206..........................................  Edible offal of bovine animals, swine,
                                                 sheep, goats, horses, asses, mules or
                                                 hinnies, fresh, chilled, or frozen:.
0206.30.0000..................................  Of swine, fresh or chilled................        .20    .440920
0206.41.0000..................................  Of swine, frozen: Livers..................        .20    .440920
0206.49.0000..................................  Of swine, frozen: Other...................        .20    .440920
0210..........................................  Meat and edible meat offal, salted, in
                                                 brine, dried or smoked; edible flours and
                                                 meals of meat or meat offal:.
0210.11.0010..................................  Meat of swine: Hams and cuts thereof, with        .20    .440920
                                                 bone in.
0210.11.0020..................................  Meat of swine: Shoulders and cuts thereof,        .20    .440920
                                                 with bone in.
0210.12.0020..................................  Meat of swine: Bellies (streaky) and cuts         .20    .440920
                                                 thereof, Bacon.
0210.12.0040..................................  Meat of swine: Bellies (streaky) and cuts         .20    .440920
                                                 thereof, Other.
0210.19.0010..................................  Meat of swine: Canadian style bacon.......        .23    .507058
0210.19.0090..................................  Meat of Swine: Other......................        .23    .507058
1601..........................................  Sausages and similar products, of meat,
                                                 meat offal or blood; food preparations
                                                 based on these products:
1601.00.2010..................................  Pork canned...............................        .28    .617288
1601.00.2090..................................  Pork other................................        .28    .617288
1602..........................................  Other prepared or preserved meat, meat
                                                 offal or blood.
1602.41.2020..................................  Of swine: Boned and cooked and packed in          .30    .661380
                                                 airtight containers holding less than 1
                                                 kg.
1602.41.2040..................................  Of swine: Other boned and cooked and              .30    .661380
                                                 packed in airtight containers.
1602.41.9000..................................  Of swine: Other...........................        .20    .440920
1602.42.2020..................................  Of swine: Shoulders and cuts thereof:             .30    .661380
                                                 Boned and cooked and packed in airtight
                                                 containers holding less than 1 kg.
1602.42.2040..................................  Of swine: Shoulders and cuts thereof:             .30    .661380
                                                 Other boned and cooked and packed in
                                                 airtight containers.
1602.42.4000..................................  Of swine: Other shoulders and cuts thereof        .20    .440920
1602.49.2000..................................  Of swine: Other, including mixtures: Not          .28    .617288
                                                 containing cereals or vegetables: Boned
                                                 and cooked and packed in air-tight
                                                 containers.
1602.49.4000..................................  Of swine: Other, including mixtures: Not          .23    .507058
                                                 containing cereals or vegetables: Other.
1602.49.9000..................................  Of swine: Other, including mixtures: Other        .23    .507058
----------------------------------------------------------------------------------------------------------------


[69 FR 9925, Mar. 3, 2004]



Sec. 1230.111  Remittance of assessments on domestic porcine animals.

    Assessments on domestic porcine animals shall be remitted to the 
National Pork Board pursuant to Sec. 1230.71(b) in accordance with the 
following remittance schedule.
    (a) Monthly assessments totaling $25 or more shall be remitted to 
the Board by the 15th day of the month following the month in which the 
porcine animals were marketed or by the 15th day following the end of a 
Board-approved, consecutive 4-week period in which the porcine animals 
were marketed.
    (b) Assessments totaling less than $25 during each month of a 
quarter in which the porcine animals were marketed may be accumulated 
and remitted by the 15th day of the month following the end of a 
quarter. The quarters shall be: January through March; April through 
June; July through September; October through December.
    (c) Assessments totaling $25 or more during any month of a quarter 
must be remitted by the 15th day of the month following the month of the 
quarter in which the assessments totaled $25 or more, together with any 
unremitted assessments from the previous month(s) of the quarter, if 
applicable.
    (d) Assessments collected during any calendar quarter and not 
previously remitted as described in paragraphs (b) or (c) of this 
section must be remitted by the 15th day of the month following the end 
of the quarter regardless of the amount.

[56 FR 6, Jan. 2, 1991]

[[Page 332]]



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. Sec. 1230.501-1230.512  [Reserved]



           Subpart E_Procedures for the Conduct of Referendum

    Source: 65 FR 43508, July 13, 2000, unless otherwise noted.

                               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

[[Page 333]]

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.



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

[[Page 334]]

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 an 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 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.

[[Page 335]]

    (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 (Form LS-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.''



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

[[Page 336]]

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 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

[[Page 337]]

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:
    (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.

[[Page 338]]

    (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 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.

[[Page 339]]

    (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 (Form LS-74), respectively, to determine properly 
registered voters. The ballots of producers voting in-person whose names 
are not on the In-Person Voter 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;

[[Page 340]]

    (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 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.

[[Page 341]]



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 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

[[Page 342]]

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 appeal. The Administrator's, AMS, determination on an appeal 
shall be final.

[65 FR 62579, Oct. 19, 2000]



PART 1250_EGG RESEARCH AND PROMOTION--Table of Contents



                      Subpart_Referendum Procedures

Sec.
1250.200 Referenda.
1250.201 Definitions.
1250.202 Voting.
1250.203 Instructions.
1250.204 Subagents.
1250.205 Ballots.
1250.206 Referendum report.
1250.207 Confidential information.

                Subpart_Egg Research and Promotion Order

                               Definitions

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.

[[Page 343]]

                                Egg Board

1250.326 Establishment and membership.
1250.327 Term of office.
1250.328 Nominations.
1250.329 Selection.
1250.330 Acceptance.
1250.331 Vacancies.
1250.332 Alternate members.
1250.333 Procedure.
1250.334 Compensation and reimbursement.
1250.335 Powers of the Board.
1250.336 Duties.

                   Research, Education, and Promotion

1250.341 Research, education, and promotion.

                        Expenses and Assessments

1250.346 Expenses.
1250.347 Assessments.
1250.348 Exemptions.
1250.349 Collecting handlers and collection.
1250.350 [Reserved]
1250.351 Influencing governmental action.

                       Reports, Books, and Records

1250.352 Reports.
1250.353 Books and records.
1250.354 Confidential treatment.

                     Certification of Organizations

1250.356 Certification of organizations.

                              Miscellaneous

1250.357 Suspension and termination.
1250.358 Proceedings after termination.
1250.359 Effect of termination or amendment.
1250.360 [Reserved]
1250.361 Right of the Secretary.
1250.362 Amendments.
1250.363 Separability.

                      Subpart_Rules and Regulations

                               Definitions

1250.500 Terms defined.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act

1250.501 OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

                                 General

1250.505 Communications.
1250.506 Policy and objective.
1250.507 Contracts.
1250.508 Procedure.
1250.509 USDA costs.
1250.510 Determination of Board membership.

                Assessments, Collections, and Remittances

1250.514 Levy of assessments.
1250.515 Reporting period and payment.
1250.516 Collecting handlers and collection.
1250.517 Remittance to Egg Board.
1250.518 Receipts for payment of assessments.
1250.519 Late-payment charge.

                Registration, Certification, and Reports

1250.528 Registration of collecting handlers.
1250.529 Reports.
1250.530 Certification of exempt producers.

                                 Records

1250.535 Retention of records.
1250.536 Availability of records.
1250.537 Confidentiality.

            Patents, Copyrights, Trademarks, and Information

1250.542 Patents, copyrights, trademarks, and information.

                           Personal Liability

1250.547 Personal liability.

    Authority: 7 U.S.C. 2701-2718 and 7 U.S.C. 7401.



                      Subpart_Referendum Procedures

    Source: 75 FR 55256, Sept. 10, 2010, unless otherwise noted.



Sec. 1250.200  Referenda.

    Referenda for the purpose of ascertaining whether the issuance by 
the Secretary of Agriculture of an Egg Research and Promotion Order, or 
the continuance, termination, or suspension of such an order, is 
approved or favored by producers shall, unless supplemented or modified 
by the Secretary, be conducted in accordance with this subpart.



Sec. 1250.201  Definitions.

    (a) Act means the Egg Research and Consumer Information Act and as 
it may be amended (Pub. L. 93-428, 7 U.S.C. 2701 et seq.).
    (b) Administrator means the administrator of the Agricultural 
Marketing Service, with power to redelegate, or any other 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 344]]

    (c) Egg producer or producer means any person who either 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 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.
    (d) Order means the order or any amendment thereto promulgated 
pursuant to the act with respect to which the Secretary has directed 
that a referendum be conducted.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.
    (f) Referendum agent means the individual or individuals designated 
by the Secretary to conduct the referendum.
    (g) Representative period means the period designated by the 
Secretary pursuant to section 9 of the Act (7 U.S.C. 2708).
    (h) 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 be hereafter delegated, 
the authority to act in the Secretary's stead.



Sec. 1250.202  Voting.

    (a) Each person who is a producer, as defined in this subpart, at 
the time of the referendum, who was engaged in the production of 
commercial eggs during the representative period, and who is not exempt 
from the provisions of the order as provided for in Sec. 1250.348 
thereof, shall be entitled to only one vote in the referendum.
    (b) Proxy voting is not authorized, but an officer or employee of a 
corporate producer, or an administrator, executor, or trustee of a 
producing estate, or an authorized representative of any other entity 
may cast a ballot on behalf of such producer or estate. Any individual 
so voting in a referendum shall certify that such individual is an 
officer or employee of the corporate producer, or an administrator, 
executor, or trustee of the producing estate, or an authorized 
representative of such other 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 his authority.
    (c) Each producer shall be entitled to cast only one ballot in the 
referendum.



Sec. 1250.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
of the referendum, and the time when all ballots must be received by the 
referendum agent.
    (b) Determine whether ballots may be cast by mail, at polling 
places, at meetings of producers, or by any combination of the 
foregoing.
    (c) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information for ascertaining whether the person voting or on whose 
behalf the vote is cast, is an eligible voter, and the total volume of 
commercial eggs produced during a representative period.

[[Page 345]]

    (d) Give reasonable advance 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.
    (e) Make available to producers instructions on voting, appropriate 
registration, ballot, and certification forms, and, except in the case 
of a referendum on the termination or continuance of an order, a summary 
of the terms and conditions of the order: Provided, that no person who 
claims to be qualified to vote shall be refused a ballot.
    (f) If the ballots are to be cast by mail, cause all the material 
specified in paragraph (e) of this section to be mailed to each eligible 
producer whose name and address are known to the Secretary or the 
referendum agent.
    (g) If the ballots are to be cast at polling places or meetings, 
determine the necessary number of polling or meeting places, designate 
them, announce the time of each meeting or the hours during which each 
polling place will be open, provide the material specified in paragraph 
(e) of this section, and provide for appropriate custody of ballot forms 
and delivery to the referendum agent of ballots cast.
    (h) At the conclusion of the referendum, canvass the ballots, 
tabulate the results, and except as otherwise directed, report the 
outcome to the Administrator and promptly thereafter submit the 
following:
    (1) All ballots received by the agent and appointees, together with 
a certificate to the effect that the ballots listed are all of the 
ballots cast and received by the agent and appointees during the 
referendum period;
    (2) A tabulation of all challenged ballots deemed to be invalid; and
    (3) A report of the referendum including a detailed statement 
explaining the method used in giving publicity to the referendum and 
showing other information pertinent to the manner in which the 
referendum was conducted.



Sec. 1250.204  Subagents.

    The referendum agent may appoint any person or persons deemed 
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, in accordance with the requirements 
herein set forth, any or all of the following functions (which, in the 
absence of such appointment, shall be performed by said agent):
    (a) Give public notice of the referendum in the manner specified 
herein;
    (b) Preside at a meeting where ballots are to be cast or as poll 
officer at a polling place;
    (c) See the ballots and the aforesaid texts are distributed to 
producers and receive any ballots which are cast; and
    (d) Record the name and address of each person casting a ballot with 
said subagent and inquire, as deemed appropriate, into the eligibility 
of such persons to vote in the referendum.



Sec. 1250.205  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, and the results 
of any investigations made with respect thereto, and the disposition 
thereof. Invalid ballots shall not be counted.



Sec. 1250.206  Referendum report.

    Except as otherwise directed, the Administrator shall prepare and 
submit to the Secretary 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. 1250.207  Confidential information.

    The ballots cast or the manner in which any person voted and all 
information furnished to, compiled by, or in the possession of the 
referendum agent shall be regarded as confidential. The

[[Page 346]]

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.



                Subpart_Egg Research and Promotion Order

    Source: 40 FR 59190, Dec. 22, 1975, unless otherwise noted.

                               Definitions



Sec. 1250.301  Secretary.

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



Sec. 1250.302  Act.

    Act means the Egg Research and Consumer Information Act and as it 
may be amended (Pub. L. 93-428).



Sec. 1250.303  Fiscal period.

    Fiscal period means the calendar year unless the Egg Board, with the 
approval of the Secretary, selects some other budgetary period.



Sec. 1250.304  Egg Board or Board.

    Egg Board or Board or other designatory term adopted by such Board, 
with the approval of the Secretary, means the administrative body 
established pursuant to Sec. 1250.326.



Sec. 1250.305  Egg producer or producer.

    Egg producer or producer means any person who either:
    (a) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (b) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual argeement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.



Sec. 1250.306  Commercial eggs or eggs.

    Commercial eggs or eggs means eggs from domesticated chickens which 
are sold for human consumption either in shell egg form or for further 
processing into egg products.



Sec. 1250.307  Person.

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



Sec. 1250.308  United States.

    United States means the 48 contiguous States of the United States of 
America and the District of Columbia.



Sec. 1250.309  Handler.

    Handler means any person who receives or otherwise acquires eggs 
from an egg producer, and processes, prepares for marketing, or markets, 
such eggs, including eggs of his own production.



Sec. 1250.310  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image or desirability of eggs, egg products, spent fowl, or products 
of spent fowl.



Sec. 1250.311  Research.

    Research means any type of research to advance the image, 
desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or

[[Page 347]]

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 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

[[Page 348]]

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 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;

[[Page 349]]

    (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 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]

[[Page 350]]

                   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 project contributes to a 
coordinated national program of research, education, and promotion 
contributing to the maintenance of markets and for the development of 
new markets for and of new products from eggs, egg products, spent fowl, 
and products of spent fowl. If it is found by the Board that any such 
program or project does not further the national purpose of the act, 
then the Board shall terminate such program or project; and
    (e) No advertising or promotion programs shall use false or 
unwarranted claims or make any reference to private brand names of eggs, 
egg products, spent fowl, and products of spent fowl or use unfair or 
deceptive acts or practices with respect to quality, value, or use of 
any competing product.

                        Expenses and Assessments



Sec. 1250.346  Expenses.

    The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart. 
The total costs incurred by the Board for a fiscal period in collecting 
producer assessments and having an administrative staff shall not exceed 
an amount of the projected total assessments to be collected by the 
Board for such fiscal period that the Secretary determines to be 
reasonable. The funds to cover such expenses shall be paid from 
assessments received pursuant to Sec. 1250.347.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 100, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989]



Sec. 1250.347  Assessments.

    Each handler designated in Sec. 1250.349 and pursuant to 
regulations issued by the Board shall collect from each producer, except 
for those producers specifically exempted in Sec. 1250.348, and shall 
pay to the Board at such times and in such manner as prescribed by 
regulations issued by the Board an assessment at a rate not to exceed 10 
cents per 30-dozen case of eggs, or the equivalent thereof, for such 
expenses and expenditures, including provisions for a reasonable reserve 
and those administrative costs incurred by the Department of Agriculture 
after this subpart is effective, as the Secretary finds are reasonable 
and likely to be incurred by the Board and the Secretary under this 
subpart, except that no more than one such assessment shall be made on 
any case of eggs.

[59 FR 64560, Dec. 15, 1994]

[[Page 351]]



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:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec. 1250.309,
    (2) A producer who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec. 1250.309 for eggs of his own 
production, or
    (3) Such other persons as designated by the Board under rules and 
regulations issued pursuant to this subpart.
    (b) Handlers shall collect and remit to the Egg Board all 
assessments collected in the manner and in the time specified by the 
Board pursuant to rules and regulations issued by the Board.
    (c) Handlers shall maintain such records as the Egg Board may 
prescribe pursuant to rules and regulations issued by the Board.
    (d) The Board with the approval of the Secretary may authorize other 
organizations or agencies to collect assessments in its behalf.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec. 1250.350  [Reserved]



Sec. 1250.351  Influencing governmental action.

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

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

[[Page 352]]

                       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 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;

[[Page 353]]

    (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 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

[[Page 354]]

Secretary, or of any person, with respect to any such violation.



Sec. 1250.360  [Reserved]



Sec. 1250.361  Right of the Secretary.

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



Sec. 1250.362  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by an organization certified pursuant to section 16 of the 
act, or by any interested person affected by the provisions of the act, 
including the Secretary.



Sec. 1250.363  Separability.

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



                      Subpart_Rules and Regulations

    Source: 41 FR 22925, June 8, 1976, unless otherwise noted.

                               Definitions



Sec. 1250.500  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall be those definitions of terms defined in the Egg 
Research and Consumer Information Act, hereinafter called the Act, and 
the Egg Research and Promotion Order, hereinafter called the Order.
    (a) Act. ``Act'' means the Egg Research and Consumer Information Act 
as it may be amended (Pub. L. 93-428).
    (b) Secretary. ``Secretary'' means the Secretary of Agriculture or 
any other officer or employee of the Department of Agriculture to whom 
there has heretofore been delegated, or to whom there may hereafter be 
delegated, the authority to act in his stead.
    (c) Egg Board or Board. ``Egg Board'' or ``Board'' or other 
designatory term adopted by such Board, with the approval of the 
Secretary, means the administrative body established pursuant to Sec. 
1250.326.
    (d) Fiscal period. ``Fiscal period'' means the calendar year unless 
the Egg Board, with the approval of the Secretary, selects some other 
budgetary period.
    (e) Egg producer or producer. ``Egg producer'' or ``producer'' means 
any person who either:
    (1) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (2) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual agreement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.
    (f) Commercial eggs or eggs. ``Commercial eggs'' or ``eggs'' means 
eggs from domesticated chickens which are sold for human consumption 
either in shell egg form or for further processing into egg products.
    (g) Person. ``Person'' means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other entity.
    (h) Handle. ``Handle'' means to grade, carton, process, transport, 
purchase, or

[[Page 355]]

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.
    (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.

[[Page 356]]



------------------------------------------------------------------------
                                                             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 projects authorized by the Order and for carrying out of such plans 
or projects. Contractors shall agree to comply with the provisions of 
the Order, this subpart, and applicable provisions of the U.S. Code 
relative to contracting with the U.S. Department of Agriculture. 
Subcontractors who enter into contracts or agreements with a primary 
contractor and who receive or otherwise utilize funds allocated by the 
Egg Board shall be subject to the provisions of this subpart.



Sec. 1250.508  Procedure.

    The organization of the Egg Board and the procedure for conducting 
meetings of the Board shall be in accordance with the By-Laws of the 
Board.



Sec. 1250.509  USDA costs.

    Pursuant to Sec. 1250.347 of the Order, the Board shall pay those 
administrative costs incurred by the U.S. Department of Agriculture for 
the conduct of its duties under the Order as determined periodically by 
the Secretary. Payment shall be due promptly after the billing for such 
costs.



Sec. 1250.510  Determination of Board Membership.

    (a) Pursuant to Sec. 1250.328 (d) and (e) of the Order, the 48 
contiguous States of the United States shall be grouped into 6 
geographic areas, as follows: Area 1 (North Atlantic States)--
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, 
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, 
West Virginia, and the District of Columbia; Area 2 (South Atlantic 
States)--Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, 
North Carolina, Oklahoma, South Carolina; Area 3 (East North Central 
States)--Kentucky, Michigan, Missouri, Ohio, Tennessee; Area 4 (West 
North Central States)--Colorado, Idaho, Illinois, Indiana, Minnesota, 
Montana, North Dakota, South Dakota, Wisconsin, Wyoming; Area 5 (South 
Central States)--Iowa, Kansas, Nebraska; Area 6 (Western States)--
Arizona, California, Nevada, New Mexico, Oregon, Texas, Utah, and 
Washington.
    (b) Board representation among the 6 geographic areas is apportioned 
to reflect the percentages of United States egg production in each area 
times 18 (total Board membership). The distribution of members of the 
Board is:
    Area 1-3, Area 2-3, Area 3-3, Area 4-3, Area 5-3, and Area 6-3. Each 
member will have an alternate appointed from the same area.

[71 FR 41727, July 24, 2006]

[[Page 357]]

                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, 
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

[[Page 358]]

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 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.

[[Page 359]]



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 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.

    (a) Number of laying hens. 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

[[Page 360]]

handler on or before January 1 of each year 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: the name 
and address of the producer, the basis for producer exemption according 
to the requirements of Sec. 1250.348, and the signature of the 
producer.
    (b) Organic Production. A producer who operates under an approved 
National Organic Program (NOP) (7 CFR part 205) system plan; only 
produces products that are eligible to be labeled as 100 percent organic 
under the NOP, except as provided for in paragraph (b)(6) of this 
section; and is not a split operation shall be exempt from the payment 
of assessments.
    (1) To apply for an exemption under this section, a producer shall 
submit a request for exemption to the Board on a form provided by the 
Board at any time initially and annually thereafter on or before January 
1 as long as the producer continues to be eligible for the exemption.
    (2) The request shall include the following: the producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified in paragraph (b) of this section for an 
assessment exemption, and such other information as may be required by 
the Board and with the approval of the Secretary.
    (3) If the producer complies with the requirements of this section, 
the Board will grant an assessment exemption and issue a certificate of 
exemption to the producer. For exemption requests received on or before 
August 15, 2005, the Board will have 60 days to approve the exemption 
request; after August 15, 2005, the Board will have 30 days to approve 
the exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (4) The producer shall provide a copy of the certificate of 
exemption to each handler to whom the producer sells eggs. The handler 
shall maintain records showing the exempt producer's name and address 
and the exemption number assigned by the Board.
    (5) The exemption will apply at the first reporting period following 
the issuance of the Certificate of Exemption.
    (6) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.
    (c) If the exempt producer no longer qualifies for an exemption as 
specified in Sec. 1250.348 or 1250.530(b), that producer shall notify, 
within 10 days, all handlers with whom the producer has filed a 
Certificate of Exemption.

[70 FR 2761, Jan. 14, 2005]

                                 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:

[[Page 361]]

    (1) Receipts, or copies thereof, for payment of assessments; and
    (2) Such records as are necessary to verify monthly levels of egg 
production.



Sec. 1250.536  Availability of records.

    Each handler and egg producer subject to this subpart and all 
persons subject to section 7(c) of the Act shall make available for 
inspection and copying by authorized employees of the Egg Board and/or 
the Secretary during regular business hours, such information as is 
appropriate and necessary to verify compliance with this subpart.



Sec. 1250.537  Confidentiality.

    All information obtained by officers and employees of the Department 
of Agriculture, the Egg Board, or any person under contract by the Egg 
Board or otherwise acting on behalf of the Egg Board from the books, 
records, and reports of persons subject to this subpart, and all 
information with respect to refunds of assessments made to individual 
producers, shall be kept confidential in the manner and to the extent 
provided in Sec. 1250.353 of the Order.

            Patents, Copyrights, Trademarks, and Information



Sec. 1250.542  Patents, copyrights, trademarks, and information.

    Patents, copyrights, trademarks, and information accruing from work 
pursuant to any plan or project undertaken by any person on behalf of 
the Egg Board, financed by assessment funds or other revenues of the Egg 
Board; shall become property of the U.S Government as represented by the 
Egg Board; and such patents, copyrights, trademarks, and information may 
be licensed subject to approval by the Secretary of Agriculture. Upon 
termination of the Order, the Egg Board shall transfer custody of all 
such patents, copyrights, trademarks, and information to the Secretary 
of Agriculture pursuant to the procedure provided for in Sec. 1250.358 
who shall utilize them in a manner that he determines to be in the best 
interest of egg producers. Funds generated from the use of patents, 
copyrights, trademarks, and information by the Egg Board will be 
considered income subject to the same fiscal, budget, and audit control 
as the other funds of the Egg Board. Ownership of inventions made by 
employees of the Board shall be determined in accordance with Executive 
Order 10096.

[41 FR 22925, June 8, 1976; 41 FR 23930, June 14, 1976]

                           Personal Liability



Sec. 1250.547  Personal liability.

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



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.

[[Page 362]]

1260.129 Customs Service.
1260.130 Part and subpart.

              Cattlemen's Beef Promotion and Research Board

1260.141 Membership of Board.
1260.142 Term of office.
1260.143 Nominations.
1260.144 Nominee's agreement to serve.
1260.145 Appointment.
1260.146 Vacancies.
1260.147 Procedure.
1260.148 Compensation and reimbursement.
1260.149 Powers of the Board.
1260.150 Duties of the Board.
1260.151 Expenses.

                   Beef Promotion Operating Committee

1260.161 Establishment and membership.
1260.162 Term of office.
1260.163 Vacancies.
1260.164 Procedure.
1260.165 Compensation and reimbursement.
1260.166 Officers of the Committee.
1260.167 Powers of the Committee.
1260.168 Duties of the Committee.
1260.169 Promotion, research, consumer information and industry 
          information.

                               Assessments

1260.172 Assessments.
1260.173-1260.174 [Reserved]
1260.175 Late-payment charge.
1260.176 Adjustment of accounts.
1260.181 Qualified State beef councils.

                       Reports, Books and Records

1260.201 Reports.
1260.202 Books and records.
1260.203 Confidential treatment.

                              Miscellaneous

1260.211 Proceedings after termination.
1260.212 Effect of termination or amendment.
1260.213 Removal.
1260.214 Personal liability.
1260.215 Patents, copyrights, inventions and publications.
1260.216 Amendments.
1260.217 Separability.

                     Subpart B_Rules and Regulations

1260.301 Terms defined.
1260.302 Organic exemption.
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 and 7 U.S.C. 7401.



               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.

[[Page 363]]



Sec. 1260.105  Person.

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



Sec. 1260.106  Collecting person.

    Collecting person means the person making payment to a producer for 
cattle, or any other person who is responsible for collecting and 
remitting an assessment pursuant to the Act, the order and regulations 
prescribed by the Board and approved by the Secretary.



Sec. 1260.107  State.

    State means each of the 50 States.



Sec. 1260.108  United States.

    United States means the 50 States and the District of Columbia.



Sec. 1260.109  Unit.

    Unit means each State, group of States or class designation which is 
represented on the Board.



Sec. 1260.110  [Reserved]



Sec. 1260.111  Fiscal year.

    Fiscal year means the calendar year or such other annual period as 
the Board may determine.



Sec. 1260.112  Federation.

    Federation means the Beef Industry Council of the National Live 
Stock and Meat Board, or any successor organization to the Beef Industry 
Council, which includes as its State affiliates the qualified State beef 
councils.



Sec. 1260.113  Established national nonprofit industry-governed organizations.

    Established national nonprofit industry-governed organizations means 
organizations which:
    (a) Are nonprofit organizations pursuant to sections 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6));
    (b) Are governed by a board of directors representing the cattle or 
beef industry on a national basis; and
    (c) Have been active and ongoing for at least two years.

[51 FR 26138, July 18, 1986, as amended at 77 FR 52599, Aug. 30, 2012]



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.

[[Page 364]]



Sec. 1260.120  Beef products.

    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and products made therefrom.



Sec. 1260.121  Imported beef or beef products.

    Imported beef or beef products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of beef including those products which have been 
assigned one or more of the following numbers in the Tariff Schedule of 
the United States: 106.1020, 106.1040, 106.1060, 106.1080, 107.2000, 
107.2520, 107.4000, 107.4500, 107.4820, 107.4840, 107.5220, 107.5240, 
107.5500, 107.6100, 107.6200, 107.6300.



Sec. 1260.122  Promotion.

    Promotion means any action, including paid advertising, to advance 
the image and desirability of beef and beef products with the express 
intent of improving the competitive position and stimulating sales of 
beef and beef products in the marketplace.



Sec. 1260.123  Research.

    Research means studies relative to the effectiveness of market 
development and promotion efforts, studies relating to the nutritional 
value of beef and beef products, other related food science research, 
and new product development.



Sec. 1260.124  Consumer information.

    Consumer information means nutritional data and other information 
that will assist consumers and other persons in making evaluations and 
decisions regarding the purchasing, preparing, and use of beef and beef 
products.



Sec. 1260.125  Industry information.

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



Sec. 1260.126  Plans and projects.

    Plans and projects means promotion, research, consumer information 
and industry information plans, studies or projects conducted pursuant 
to this subpart.



Sec. 1260.127  Marketing.

    Marketing means the sale or other disposition in commerce of cattle, 
beef or beef products.



Sec. 1260.128  Act.

    Act means the Beef Promotion and Research Act of 1985, Title XVI, 
Subtitle A of the Food Security Act of 1985, Pub. L. 99-198 and any 
amendments thereto.



Sec. 1260.129  Customs Service.

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



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 2011 Board nominations and the associated 
appointments effective early in the year 2012, the United States shall 
be divided into 37 geographical units and, 1 unit representing 
importers, for a total of 38 units. The number of Board members from 
each unit shall be as follows:

                          Cattle and Calves \1\
------------------------------------------------------------------------
                  State/unit                     1,000 head   Directors
------------------------------------------------------------------------
1. Arizona....................................          983            1
2. Arkansas...................................        1,837            2
3. Colorado...................................        2,650            3
4. Florida....................................        1,710            2
5. Idaho......................................        2,153            2
6. Illinois...................................        1,200            1
7. Indiana....................................          873            1
8. Iowa.......................................        3,933            4
9. Kansas.....................................        6,317            6
10. Kentucky..................................        2,333            2
11. Louisiana.................................          873            1
12. Michigan..................................        1,080            1
13. Minnesota.................................        2,407            2
14. Mississippi...............................          957            1
15. Missouri..................................        4,217            4
16. Montana...................................        2,583            3
17. Nebraska..................................        6,350            6
18. New Mexico................................        1,540            2
19. New York..................................        1,410            1

[[Page 365]]

 
20. North Carolina............................          833            1
21. North Dakota..............................        1,763            2
22. Ohio......................................        1,270            1
23. Oklahoma..................................        5,417            5
24. Oregon....................................        1,290            1
25. Pennsylvania..............................        1,607            2
26. South Dakota..............................        3,733            4
27. Tennessee.................................        2,040            2
28. Texas.....................................       13,500           14
29. Utah......................................          820            1
30. Virginia..................................        1,530            2
31. Wisconsin.................................        3,367            3
32. Wyoming...................................        1,327            1
33. Northwest.................................  ...........            1
    Alaska....................................           15
    Hawaii....................................          151
    Washington................................        1,070
                                               -------------------------
        Total.................................        1,236
                                               =========================
34. Northeast.................................  ...........            1
    Connecticut...............................           50
    Delaware..................................           21
    Maine.....................................           88
    Massachusetts.............................           44
    New Hampshire.............................           38
    New Jersey................................           37
    Rhode Island..............................            5
    Vermont...................................          267
                                               -------------------------
        Total.................................          550
                                               =========================
35. Mid-Atlantic..............................  ...........            1
    Maryland..................................          192
    West Virginia.............................          400
                                               -------------------------
        Total.................................          592
                                               =========================
36. Southeast.................................  ...........            3
    Alabama...................................        1,253
    Georgia...................................        1,100
    South Carolina............................          385
                                               -------------------------
        Total.................................        2,738
                                               =========================
37. Southwest.................................  ...........            6
    California................................        5,283
    Nevada....................................          450
                                               -------------------------
        Total.................................        5,733
                                               =========================
38. Importer \2\..............................        6,887            7
------------------------------------------------------------------------
\1\ 2008, 2009, and 2010 average of January 1 cattle inventory data.
\2\ 2007, 2008, and 2009 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; 70 FR 7005, Feb. 10, 2005; 73 FR 
60098, Oct. 10, 2008; 76 FR 42014, July 19, 2011]

[[Page 366]]



Sec. 1260.142  Term of office.

    (a) The members of the Board shall serve for terms of three (3) 
years, except that the members appointed to the initial Board shall 
serve, proportionately, for terms of 1, 2, and 3 years. To the extent 
practicable, the terms of Board members from the same unit shall be 
staggered for the initial Board.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary.
    (c) No member shall serve more than two consecutive 3-year terms in 
such capacity.



Sec. 1260.143  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations. An eligible organization shall only submit nominations 
for positions on the Board representing units in which such eligible 
organization can establish that it is certified as an eligible 
organization to submit nominations for that unit. If the Secretary 
determines that a unit is not represented by an eligible organization, 
then the Secretary may solicit nominations from organizations, and 
producers residing in that unit.
    (b) Nominations for representation of the importer unit may be 
submitted by--
    (1) Organizations which represent importers of cattle, beef or beef 
products, as determined by the Secretary, or
    (2) Individual importers of cattle, beef or beef products. 
Individual importers submitting nominations for representation of the 
importer unit must establish to the satisfaction of the Secretary that 
the persons submitting the nominations are importers of cattle, beef or 
beef products.
    (c) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board members shall be submitted to the Secretary not less 
than sixty (60) days prior to the expiration of the terms of the members 
whose terms are expiring, in the manner as described in this section. In 
the case of vacancies due to reasons other than the expiration of a term 
of office, successor Board members shall be appointed pursuant to Sec. 
1260.146.
    (d) Where there is more than one eligible organization representing 
producers in a unit, they may caucus and jointly nominate two qualified 
persons for each position representing that unit on the Board for which 
a member is to be appointed. If joint agreement is not reached with 
respect to any such nominations, or if no caucus is held, each eligible 
organization may submit to the Secretary two nominees for each 
appointment to be made to represent that unit.



Sec. 1260.144  Nominee's agreement to serve.

    Any producer or importer nominated to serve on the Board shall file 
with the Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed; and
    (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.

[[Page 367]]



Sec. 1260.147  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum, and any action of the Board at such a 
meeting shall require the concurring votes of at least a majority of 
those present at such meeting. The Board shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Board emergency 
action is considered necessary, and in lieu of a properly convened 
meeting, the Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing. In the event 
that such action is taken, all members must be notified and provided the 
opportunity to vote. Any action so taken shall have the same force as 
though such action had been taken at a regular or special meeting of the 
Board.



Sec. 1260.148  Compensation and reimbursement.

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



Sec. 1260.149  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive or initiate, investigate, and report to the Secretary 
complaints of violations of the provisions of this subpart;
    (d) To adopt such rules for the conduct of its business as it may 
deem advisable;
    (e) To recommend to the Secretary amendments to this subpart; and
    (f) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1260.172, in, and only in, 
obligations of the United States or any agency thereof, in general 
obligations of any State or any political subdivision thereof, in any 
interest-bearing account or certificate of deposit of a bank that is a 
member of the Federal Reserve System, or in obligations fully guaranteed 
as to principal and interest by the United States.



Sec. 1260.150  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson, a vice-chairperson and a treasurer and 
such other officers as may be necessary;
    (b) To elect from its members an Executive Committee of no more than 
11 and no less than 9 members, whose 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

[[Page 368]]

general description of the proposed promotion, research, consumer 
information and industry information programs contemplated therein;
    (g) To prepare and submit to the Secretary for approval budgets on a 
fiscal period basis of the Board's overall anticipated expenses and 
disbursements, including the Committee's anticipated expenses and 
disbursements, in the administration of this subpart;
    (h) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (i)-(j) [Reserved]
    (k) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (l) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (m) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or his 
representative may attend such meetings;
    (n) To review applications submitted by State beef promotion 
organizations pursuant to Sec. 1260.181 and to make determinations with 
regard to such applications;
    (o) To submit to the Secretary such information pursuant to this 
subpart as may be requested; and
    (p) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the beef industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]



Sec. 1260.151  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve), as the Secretary finds are 
reasonable and likely to be incurred by the board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with this subpart. Administrative expenses incurred 
by the board shall not exceed 5 percent of the projected revenue of that 
fiscal period. Expenses authorized in this paragraph shall be paid from 
assessments collected pursuant to Sec. 1260.172.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1260.172, for administrative costs incurred 
by the Department to carry out its responsibilities pursuant to this 
subpart after the effective date of this subpart.
    (c) [Reserved]
    (d) Expenditures for the maintenance and expansion of foreign 
markets for beef and beef products shall be limited to an amount equal 
to or less than the 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

[[Page 369]]

elected to serve on the Committee shall, to the extent practical, 
reflect the geographic distribution of cattle numbers. The Federation 
shall submit to the Secretary the names of the representatives elected 
by the Federation to serve on the Committee and the manner in which such 
election was held and that such representatives are producers and are 
members or ex officio members of the Board of Directors of a qualified 
State beef council on the Federation Board of Directors. The prospective 
Federation representatives shall file with the Secretary a written 
agreement to serve on the Committee and to disclose any relationship 
with any beef promotion entity or with any organization that has or is 
being considered for a contractual relationship with the Board or the 
Committee. When the Secretary is satisfied that the above conditions are 
met, the Secretary shall certify such representatives as eligible to 
serve on the Committee.



Sec. 1260.162  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec. 1260.163  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Federation, depending upon which organization is represented by the 
vacancy, shall submit the name of a successor for the position in the 
manner utilized to elect representatives pursuant to Sec. 1260.161 (b) 
and (c) of this section.



Sec. 1260.164  Procedure.

    (a) Attendance of at least 15 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds of the members present. The Committee shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than two-
thirds of its members by mail, telephone, or telegraph. Action taken by 
this emergency procedure is valid only if all members are notified and 
provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Committee.



Sec. 1260.165  Compensation and reimbursement.

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



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.

[[Page 370]]



Sec. 1260.168  Duties of the Committee.

    The Committee shall have the following duties:
    (a) To meet and to organize;
    (b) To contract with established national nonprofit industry-
governed organizations to implement programs of promotion, research, 
consumer information and industry information;
    (c) To disseminate information to Board members;
    (d) To prepare and submit to the Board for approval budgets on a 
fiscal-period basis of its anticipated expenses and disbursements in the 
administration of its responsibilities, including probable costs of 
promotion, research, consumer information and industry information plans 
or projects, and also including a general description of the proposed 
promotion, research, consumer information and industry information 
programs contemplated therein;
    (e) To develop and submit to the Secretary for approval promotion, 
research, consumer information and industry information plans or 
projects;
    (f) With the approval of the Secretary to enter into contracts or 
agreements with established national nonprofit industry-governed 
organizations for the implementation and conduct of activities 
authorized under 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

[[Page 371]]

that each such plan or project contributes to an effective program of 
promotion, research, consumer information and industry information. If 
it is found by the Committee that any such plan or project does not 
further the purposes of the Act, then the Committee shall terminate such 
plan or project;
    (d) In carrying out any plan or project of promotion or advertising 
implemented by the Committee, no reference to a brand or trade name of 
any beef product shall be made without the approval of the Board and the 
Secretary. No such plans or projects shall make use of any unfair or 
deceptive acts or practices, including unfair or deceptive acts or 
practices with respect to the quality, value or use of any competing 
product; and
    (e) No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action, except to recommend to the Secretary amendments to this part.

                               Assessments



Sec. 1260.172  Assessments.

    (a) Domestic assessments. (1) Except as prescribed by regulations 
approved by the Secretary, each person making payment to a producer for 
cattle purchased from such producer shall be a collecting person and 
shall collect an assessment from the producer, and each producer shall 
pay such assessment to the collecting person, at the rate of one dollar 
($1) per head of cattle purchased and such collecting person shall remit 
the assessment to the Board or to a qualified State beef council 
pursuant to Sec. 1260.172(a)(5).
    (2) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, or for export purposes, shall remit 
to a qualified State beef council or to the Board an assessment on such 
cattle at the rate of one dollar ($1) per head of cattle or the 
equivalent thereof.
    (3) In determining the assessment due from each producer pursuant to 
Sec. 1260.172(a), a producer who is contributing to a qualified State 
beef council(s) shall receive a credit from the Board for contributions 
to such Council, but not to exceed 50 cents per head of cattle assessed.
    (4) In order for a producer described in Sec. 1260.172(a) to 
receive the credit authorized in Sec. 1260.172(a)(3), the qualified 
State beef council or the collecting person must establish to the 
satisfaction of the Board that the producer has contributed to a 
qualified State beef council.
    (5) Each person responsible for the remittance of the assessment 
pursuant to Sec. 1260.172 (a) (1) and (2) shall remit the assessment to 
the qualified State beef council in the State from which the cattle 
originated prior to sale, or if there is no qualified State beef council 
within such State, the assessment shall be remitted directly to the 
Board. However, the Board, with the approval of the Secretary, may 
authorize qualified 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)

[[Page 372]]

cents to producers who waive any right to the refund of the assessment 
credited by the State due pursuant to this subpart, then any producer 
subject to such State law or regulation who pays only the amount due 
pursuant to such State law or regulation and this subpart, including any 
credits issued, shall thereby waive that producer's right to receipt 
from the Board of a refund of such assessment for that portion of such 
refund for which the producer received credit pursuant to such State law 
or regulation.
    (b) Importer assessments. (1) Importers of cattle, beef, and beef 
products into the United States shall pay an assessment to the Board 
through the U.S. Customs Service, or in such other manner as may be 
established by regulations approved by the Secretary.
    (2) The assessment rates for imported cattle, beef, and beef 
products are as follows:

                          Imported Live Cattle
------------------------------------------------------------------------
                                                            Assessment
                         HTS No.                            rate (head)
------------------------------------------------------------------------
0102.10.0010............................................           $1.00
0102.10.0020............................................            1.00
0102.10.0030............................................            1.00
0102.10.0050............................................            1.00
0102.90.2011............................................            1.00
0102.90.2012............................................            1.00
0102.90.4024............................................            1.00
0102.90.4028............................................            1.00
0102.90.4034............................................            1.00
0102.90.4038............................................            1.00
0102.90.4054............................................            1.00
0102.90.4058............................................            1.00
0102.90.4062............................................            1.00
0102.90.4064............................................            1.00
0102.90.4066............................................            1.00
0102.90.4068............................................            1.00
0102.90.4072............................................            1.00
0102.90.4074............................................            1.00
0102.90.4082............................................            1.00
0102.90.4084............................................            1.00
------------------------------------------------------------------------


                     Imported Beef and Beef Products
------------------------------------------------------------------------
                                                            Assessment
                         HTS No.                            rate per kg
------------------------------------------------------------------------
0201.10.0510............................................       .01459542
0201.10.0590............................................       .00379102
0201.10.1010............................................       .01459542
0201.10.1090............................................       .00379102
0201.10.5010............................................       .01459542
0201.10.5090............................................       .00511787
0201.20.0200............................................       .00530743
0201.20.0400............................................       .00511787
0201.20.0600............................................       .00379102
0201.20.1000............................................       .00530743
0201.20.3000............................................       .00511787
0201.20.5000............................................       .00379102
0201.20.8090............................................       .00379102
0201.30.0200............................................       .00530743
0201.30.0400............................................       .00511787
0201.30.0600............................................       .00379102
0201.30.1000............................................       .00530743
0201.30.3000............................................       .00511787
0201.30.5000............................................       .00511787
0201.30.8090............................................       .00511787
0202.10.0510............................................       .01459542
0202.10.0590............................................       .00379102
0202.10.1010............................................       .01459542
0202.10.1090............................................       .00370102
0202.10.5010............................................       .01459542
0202.10.5090............................................       .00379102
0202.20.0200............................................       .00530743
0202.20.0400............................................       .00511787
0202.20.0600............................................       .00379102
0202.20.1000............................................       .00530743
0202.20.3000............................................       .00511787
0202.20.5000............................................       .00379102
0202.20.8000............................................       .00379102
0202.30.0200............................................       .00530743
0202.30.0400............................................       .00511787
0202.30.0600............................................       .00527837
0202.30.1000............................................       .00530743
0202.30.3000............................................       .00511787
0202.30.5000............................................       .00511787
0202.30.8000............................................       .00379102
0206.10.0000............................................       .00379102
0206.21.0000............................................       .00379102
0206.22.0000............................................       .00379102
0206.29.0000............................................       .00379102
0210.20.0000............................................       .00615701
1601.00.4010............................................       .00473877
1601.00.4090............................................       .00473877
1601.00.6020............................................       .00473877
1602.50.0900............................................       .00663428
1602.50.1020............................................       .00663428
1602.50.1040............................................       .00663428
1602.50.2020............................................       .00701388
1602.50.2040............................................       .00701388
1602.50.6000............................................       .00720293
------------------------------------------------------------------------

    (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

[[Page 373]]

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; 71 FR 47076, 
Aug. 16, 2006]



Sec. Sec. 1260.173-1260.174  [Reserved]



Sec. 1260.175  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec. 1260.172 
shall be increased 2.0 percent each month beginning with the day 
following the date such assessments were due. Any remaining amount due, 
which shall include any unpaid charges previously made pursuant to this 
section, shall be increased at the same rate on the corresponding day of 
each month thereafter until paid. For the purposes of this section, any 
assessment that was determined at a date later than prescribed by this 
subpart because of a person's failure to submit a report to the Board 
when due shall be considered to have been payable by the date it would 
have been due if the report had been filed when due. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the qualified State beef council or Board, 
whichever is earlier.



Sec. 1260.176  Adjustment of accounts.

    Whenever the Board or the Department determines that money is due 
the Board or that money is due any person from the Board, such person 
shall be notified of the amount due. The person shall then remit any 
amount due the Board by the next date for remitting assessments as 
provided in Sec. 1260.172. Overpayments shall be credited to the 
account of the person remitting the overpayment and shall be applied 
against amounts due in succeeding months except that the Board shall 
make prompt payment when an overpayment cannot be adjusted by a credit.



Sec. 1260.181  Qualified State beef councils.

    (a) Any beef promotion entity that is authorized by State statute or 
is organized and operating within a State, that receives assessments or 
contributions from producers and conducts beef promotion, research, 
consumer information and/or industry information programs may apply for 
certification of qualification so that producers may receive credit 
pursuant to Sec. 1260.172(a)(3) for contributions to such organization. 
The Board shall review such applications for certification and shall 
make a determination as to certification of such applicant.
    (b) In order for the State beef council to be certified by the Board 
as a qualified State beef council, the council must:
    (1) Conduct activities as defined in Sec. 1260.169 that are 
intended to strengthen the beef industry's position in the marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such council will collect assessments 
paid on cattle originating from the State or unit within which the 
council operates and shall establish procedures for ensuring compliance 
with this subpart with regard to the payment of such assessments;
    (4) Certify to the Board that such organization shall remit to the 
Board assessments paid and remitted to the council, minus authorized 
credits issued to producers pursuant to Sec. 1260.172(a)(3), by the 
last day of the month in which the assessment was remitted to the 
qualified State beef council unless the Board determines a different 
date for remittance of assessments.
    (5) [Reserved]
    (6) Certify to the Board that the council will furnish the Board 
with an annual report by a certified public accountant of all funds 
remitted to such council pursuant to this subpart and

[[Page 374]]

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: Sec. 1260.201 contains information collection 
and recordkeeping requirements and will not become effective until 
approval is given by the Office of Management and Budget.



Sec. 1260.202  Books and records.

    Each person subject to this subpart shall maintain and make 
available for inspection by the Secretary the records required by 
regulations prescribed by the Board and approved by the Secretary that 
are necessary to carry out the provisions of this subpart, including 
records necessary to verify any required reports. Such records shall be 
maintained for the period of time prescribed by the regulations issued 
hereunder.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

    Effective Date Note: Sec. 1260.202 contains information collection 
and recordkeeping requirements and will not become effective until 
approval is given by the Office of Management and Budget.



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]

[[Page 375]]

                              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]



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

[[Page 376]]

Board, and shall, along with any rents, royalties, residual payments, or 
other income from the rental, sale, leasing, franchising, or other uses 
of such patents, copyrights, inventions, or publications, ensure to the 
benefit of the Board. Upon termination of this subpart, Sec. 1260.211 
shall apply to determine disposition of all such property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec. 1260.216  Amendments.

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



Sec. 1260.217  Separability.

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



                     Subpart B_Rules and Regulations

    Source: 53 FR 5754, Feb. 26, 1988, unless otherwise noted.



Sec. 1260.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in subpart A of this part.



Sec. 1260.302  Organic exemption.

    (a) A producer who operates under an approved National Organic 
Program (NOP) (7 CFR part 205) system plan; only produces products that 
re eligible to be labeled as 100 percent organic under the NOP, except 
as provided for in paragraph (i) of this section; and is not a split 
operation shall be exempt from the payment of assessments.
    (b) To apply for an exemption under this section, the producer shall 
submit the request to the Board or QSBC--on a form provided by the Board 
or QSBC--at any time initially and annually thereafter on or before 
January 1 as long as the producer continues to be eligible for the 
exemption.
    (c) The request shall include the following: the producer's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the producer complies with the requirements of this section, 
the Board or QSBC will grant the exemption and issue a Certificate of 
Exemption to the producer. For exemption requests received on or before 
August 15, 2005, the Board or QSBC will have 60 days to approve the 
exemption request; after August 15, 2005, the Board or QSBC will have 30 
days to approve the exemption request. If the application is 
disapproved, the Board will notify the applicant of the reason(s) for 
disapproval within the same timeframe.
    (e) The producer shall provide a copy of the Certificate of 
Exemption to each person responsible for collecting and remitting the 
assessment.
    (f) The person responsible for collecting and remitting the 
assessment shall maintain records showing the exempt producer's name and 
address and the exemption number assigned by the Board or QSBC.
    (g) An importer who imports only products that are eligible to be 
labeled as 100 percent organic under the NOP (7 CFR part 205) and who is 
not a split operation shall be exempt from the payment of assessments. 
That importer

[[Page 377]]

may submit documentation to the Board and request an exemption from 
assessment on 100 percent organic cattle or beef and beef products--on a 
form provided by the Board--at any time initially and annually 
thereafter on or before January 1 as long as the importer continues to 
be eligible for the exemption. This documentation shall include the same 
information required of producers in paragraph (c) of this section. If 
the importer complies with the requirements of this section, the Board 
will grant the exemption and issue a Certificate of Exemption to the 
importer. The Board will also issue the importer a 9-digit alphanumeric 
Harmonized Tariff Schedule (HTS) classification valid for 1 year from 
the date of issue. This HTS classification should be entered by the 
importer on the Customs entry documentation. Any line item entry of 100 
percent organic cattle or beef and beef products bearing this HTS 
classification assigned by the Board will not be subject to assessments.
    (h) The exemption will apply immediately following the issuance of 
the Certificate of Exemption.
    (i) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer from exemption 
under this section, except that producers who produce both organic and 
non-organic agricultural commodities as a result of split operations 
shall not qualify for exemption. Reasons for conventional sales include 
lack of demand for organic products, isolated use of antibiotics for 
humane purposes, chemical or pesticide use as the result of State or 
emergency spray programs, and crops from a buffer area as described in 7 
CFR part 205, provided all other criteria are met.

[70 FR 2762, Jan. 14, 2005]



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

[[Page 378]]

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 auction   Sales to a slaughter/                           Sales to an order
               State                         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.
\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.

[[Page 379]]

    (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]



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

[[Page 380]]

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 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.

[[Page 381]]

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 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

[[Page 382]]

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.

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

[[Page 383]]

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 384]]

[GRAPHIC] [TIFF OMITTED] TC04SE91.000


[[Page 385]]





PART 1270_WOOL AND MOHAIR ADVERTISING AND PROMOTION [RESERVED] [NOTE]--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.
1280.406 Exemption.

Subpart D [Reserved]

              Subpart E_Procedures To Request a Referendum

1280.601 Terms defined.
1280.602 Administrator, AMS.
1280.603 Administrator, FSA.
1280.604 Eligibility.
1280.605 Farm Service Agency.
1280.606 Farm Service Agency County Committee.
1280.607 Farm Service Agency County Executive Director.
1280.608 Farm Service Agency State Committee.
1280.609 Farm Service Agency State Executive Director.
1280.610 Public Notice.
1280.611 Representative period.
1280.612 Volume of production.

[[Page 386]]

1280.613 Voting period.

                               Procedures

1280.620 General.
1280.621 Supervision of the process for conducting a referendum.
1280.622 Eligibility.
1280.623 Time and place of the referendum.
1280.624 Facilities.
1280.625 Certifications and referendum ballot form.
1280.626 Certification and voting procedures.
1280.627 Canvassing voting ballots.
1280.628 Counting ballots.
1280.629 FSA county office report.
1280.630 FSA State office report.
1280.631 Results of the referendum.
1280.632 Disposition of records.
1280.633 Instructions and forms.
1280.634 Confidentiality.

    Authority: 7 U.S.C. 7411-7425 and 7 U.S.C. 7401.

    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.



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

[[Page 387]]

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.



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.

[[Page 388]]



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:
    (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.

[[Page 389]]

    (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.
    (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

[[Page 390]]

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 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

[[Page 391]]

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.
    (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

[[Page 392]]

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 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

[[Page 393]]

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 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

[[Page 394]]

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 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 seven-tenths of a cent ($0.007) per pound on all live lambs sold. The 
rate of assessment may be raised or lowered no more than twenty-
hundredths of a cent ($0.002) 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.

[67 FR 17857, Apr. 11, 2002, as amended at 78 FR 28123, May 14, 2013]



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 
forty-two cents ($0.42) 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.

[78 FR 28123, May 14, 2013]



Sec. 1280.220  Collections.

    (a) Each first handler and each exporter responsible for the 
collection of

[[Page 395]]

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 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

[[Page 396]]

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.
    (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.

[[Page 397]]



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.
    (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

[[Page 398]]

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 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.

[[Page 399]]



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, 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

[[Page 400]]

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 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.

[[Page 401]]

    (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.



Sec. 1280.406  Exemption.

    (a) A producer, seed stock producer, or feeder who produces 
(including producing by feeding) only products that are eligible to be 
labeled as 100 percent organic under the National Organic Program (NOP) 
(7 CFR part 205), except as provided for in paragraph (h) of this 
section; a handler who handles only products that are eligible to be 
labeled as 100 percent organic under the NOP; or an exporter who exports 
only products that are eligible to be labeled as 100 percent organic 
under the NOP; and who operates under an approved NOP system plan and is 
not a split operation.
    (b) To apply for an exemption under this section, the person shall 
submit the request to the Board--on a form provided by the Board--at any 
time initially and annually thereafter on or before January 1 as long as 
the person continues to be eligible for the exemption.
    (c) The request shall include the following: the person's name and 
address, a copy of the organic farm or organic handling operation 
certificate provided by a USDA-accredited certifying agent as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502), a signed certification that the applicant meets all of the 
requirements specified for an assessment exemption, and such other 
information as may be required by the Board and with the approval of the 
Secretary.
    (d) If the person complies with the requirements of this section, 
the Board will grant the exemption and issue a Certificate of Exemption 
to the producer. For exemption requests received on or before August 15, 
2005, the Board will have 60 days to approve the exemption request; 
after August 15, 2005, the Board will have 30 days to approve the 
exemption request. If the application is disapproved, the Board will 
notify the applicant of the reason(s) for disapproval within the same 
timeframe.
    (e) An exempt producer shall provide a copy of the Certificate of 
Exemption to each person to whom the producer sells ovine animals or 
lamb and lamb products. The Certificate of Exemption must accompany the 
ovine animals through the production chain to the person responsible for 
remitting the assessment to the Board.
    (f) The person shall maintain records showing the exempt producer's 
name and address and the exemption number assigned by the Board.
    (g) The exemption will apply at the first reporting period following 
the issuance of the exemption.
    (h) Agricultural commodities produced and marketed under an organic 
system plan, as described in 7 CFR 205.201, but not sold, labeled, or 
represented as organic, shall not disqualify a producer, seed stock 
producer, or feeder from exemption under this section, except that 
persons producing or feeding both organic and non-organic agricultural 
commodities as a result of split operations shall not qualify for 
exemption. Reasons for conventional sales include lack of demand for 
organic products, isolated use of antibiotics for humane purposes, 
chemical or pesticide use as the result of State or emergency spray 
programs, and crops from a buffer area as described in 7 CFR part 205, 
provided all other criteria are met.

[70 FR 2762, Jan. 14, 2005]

Subpart D [Reserved]

[[Page 402]]



              Subpart E_Procedures To Request a Referendum

                               Definitions

    Source: 69 FR 77572, Dec. 27, 2004, unless otherwise noted.



Sec. 1280.601  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. 1280.602  Administrator, AMS.

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



Sec. 1280.603  Administrator, FSA.

    Administrator, FSA, means the Administrator, of the Farm Service 
Agency, or any officer or employee of USDA to whom there has been 
delegated or may be delegated the authority to act in the 
Administrator's stead.



Sec. 1280.604  Eligibility.

    Eligibility is defined as any person subject to the assessment who 
during the representative period determined by the Secretary have 
engaged in the production, feeding, or slaughtering of lambs. Such 
persons are eligible to participate in the referendum. Those persons 
whose only share in the proceeds of a sale of lambs is a sales 
commission, handling fee or other service fee or the person acquired 
ownership of the lambs to facilitate the transfer of ownership of such 
lambs from the seller to a third party and resold such lambs no later 
than 10 days from the date on which the person acquired ownership are 
not considered are producers, seedstock producers, or feeders and not 
subject to the assessment. Such persons will not be eligible to 
participate in the referendum.



Sec. 1280.605  Farm Service Agency.

    Farm Service Agency also referred to as ``FSA'' means the Farm 
Service Agency of USDA.



Sec. 1280.606  Farm Service Agency County Committee.

    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. 1280.607  Farm Service Agency County Executive Director.

    Farm Service Agency County Executive Director, also referred to as 
``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. 1280.608  Farm Service Agency State Committee.

    Farm Service Agency State Committee, also referred to as ``FSA State 
Committee,'' means the group of persons within a State who are appointed 
by the Secretary to act as the Farm Service Agency State Committee.



Sec. 1280.609  Farm Service Agency State Executive Director.

    Farm Service Agency State Executive Director, Farm Service Agency 
State Executive Director, also referred to as ``SED,'' means the person 
within a State who is appointed by the Secretary to be responsible for 
the day-to-day operation of the FSA State Office, or the person acting 
in such capacity.



Sec. 1280.610  Public notice.

    Public notice means not later than 30-days before the referendum is 
conducted, the Secretary shall notify the eligible voters in such manner 
as determined by the Secretary, of the voting period during which voting 
in the referendum will occur. The notice shall explain any registration 
and voting procedures established under Sec. 518 of the Act.



Sec. 1280.611  Representative period.

    Representative period means the period designated by the Secretary 
pursuant to Sec. 518 of the Act.

[[Page 403]]



Sec. 1280.612  Volume of production.

    (a) For producers and seedstock producers, the term volume of 
production means the total number of live domestic lambs owned and 
produced during the most recent calendar year.
    (b) For feeders, volume of production means the total number of 
lambs owned and fed during the most recent calendar year.
    (c) For first handlers, volume of production means the total number 
of lambs slaughtered during the most recent calendar year.



Sec. 1280.613  Voting period.

    The term voting period means a 4-week period to be announced by the 
Secretary for voting the referendum.

                               Procedures



Sec. 1280.620  General.

    A referendum to determine whether eligible persons favor the 
continuance of this part shall be carried out in accordance with this 
subpart.
    (a) The referendum will be conducted at county FSA offices.
    (b) The Secretary shall determine if at least a majority of those 
persons voting for approval who also represent a majority of the volume 
of lambs owned and produced; owned and fed; or slaughtered, favor the 
continuance of this part.



Sec. 1280.621  Supervision of the process for conducting a referendum.

    The Administrator, AMS, shall be responsible for supervising the 
process of permitting persons to vote in a referendum in accordance with 
this subpart.



Sec. 1280.622  Eligibility.

    (a) Any person subject to the assessment who during the 
representative period determined by the Secretary has engaged in the 
production, feeding, or slaughtering of lambs is eligible to participate 
in the referendum. Those persons whose only share in the proceeds of a 
sale of lambs is a sales commission, handling fee or other service fee 
or the person acquired ownership of the lambs to facilitate the transfer 
of ownership of such lambs from the seller to a third party and resold 
such lambs no later than 10 days from the date on which the person 
acquired ownership are not considered are producers, seedstock 
producers, or feeders and not subject to the assessment. Such persons 
will not be eligible to participate in the referendum.
    (b) Proxy Registration. (1) Proxy registration is not authorized, 
except that an officer or employee of a corporate producer, feeder, 
seedstock producer, or first handler, or any guardian, administrator, 
executor, or trustee of a person's estate, or an authorized 
representative of any eligible producer, feeder, seedstock producer, or 
first handler entity (other than an individual person), such as a 
corporation or partnership, may vote on behalf of that entity. Further, 
an individual cannot vote on behalf of another individual (i.e., spouse, 
sharecrop lease, etc.).
    (2) Any individual, who votes on behalf of any producer, feeder, 
seedstock producer, or first handler entity, shall certify that he or 
she is authorized by such entity to take such action. Upon request of 
the county FSA office, the person voting may be required to submit 
adequate evidence of such authority.
    (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 who engaged in the 
production, feeding, or slaughtering of lambs during the representative 
period as a producer, feeder, seedstock producer, or first handler 
entity shall be entitled to cast only one vote; provided, however, that 
any individual member of a group who is an eligible person separate from 
the group may vote separately.



Sec. 1280.623  Time and place of the referendum.

    (a) The opportunity to vote in the 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 vote following 
the procedures established in this subpart during the normal business 
hours of each county FSA office.

[[Page 404]]

    (b) Persons can determine the location of county FSA offices by 
contacting the nearest county FSA office, the State FSA office, or 
through an online search of FSA's Web site at http://www.fsa.usda.gov/
pas/default.asp.
    (c) Each eligible person shall cast a ballot in the county FSA 
office where FSA maintains the person's administrative farm records. For 
eligible persons not participating in FSA programs, the opportunity to 
vote will be provided at the county FSA office serving the county where 
the person owns or rents land. A person engaged in the production, 
feeding, slaughtering, of lambs in more than one county will vote in the 
county FSA office where the person does most of his or her business.



Sec. 1280.624  Facilities.

    Each county FSA office will provide:
    (a) a voting place that is well known and readily accessible to 
persons in the county and that is equipped and arranged so that each 
person can complete and submit their ballot in secret without coercion, 
duress, or interference of any sort whatsoever, and
    (b) a holding container of sufficient size so arranged that no 
ballot or supporting documentation can be read or removed without 
breaking seals on the container.



Sec. 1280.625  Certification and referendum form ballot form.

    Form LS-86 shall be used to vote in the referendum and certify 
eligibility. Eligible persons will be required to complete a ballot in 
its entirety, vote ``yes'' or ``no'' to continue the program, enter the 
number of lambs (volume of production) owned and produced; owned and 
fed; or slaughtered during a representative period and provide 
documentation such as a sales receipt or remittance form showing that 
the person voting was engaged in the production, feeding, or 
slaughtering of lambs during the representative period. The person or 
authorized representative shall sign the ballot certifying that they or 
the entity they represent were engaged in the production, feeding, or 
slaughtering of lambs during the representative period and that the 
volume of production voted is true and accurate.



Sec. 1280.626  Certification and voting procedures.

    (a) Each eligible person shall be provided the opportunity to cast a 
ballot during the voting period announced by the Secretary.
    (1) Each eligible person shall be required to complete form LS-86 in 
its entirety, sign it, and provide evidence that they were engaged in 
the production, feeding, or slaughtering of lambs during the 
representative period. The person must legibly place his or her name 
and, if applicable, the entity represented, address, county, and 
telephone number. The person shall sign and certify on form LS-86 that:
    (i) The person was engaged in the production, feeding, or 
slaughtering of lambs during the representative period;
    (ii) The person voting on behalf of a corporation or other entity is 
authorized to do so;
    (iii) The person has cast only one vote; and
    (iv) The volume of production listed on the ballot is true and 
accurate.
    (2) Only a completed and signed form LS-86 accompanied by supporting 
documentation showing that the person was engaged in the production, 
feeding, or slaughter of lambs during the representative period shall be 
considered a valid vote.
    (b) To vote, eligible persons may obtain form LS-86 in-person, by 
mail, or by facsimile from county FSA offices or through the Internet 
during the voting period. A completed and signed form LS-86 and 
supporting documentation, such as a sales receipt or remittance form, 
must be returned to the appropriate county FSA office where FSA 
maintains and processes the person's administrative farm records. For a 
person not participating in FSA programs, the opportunity to vote in a 
referendum will be provided at the county FSA office serving the county 
where the person owns or rents land. A person engaged in the production, 
feeding, or slaughtering of lambs in more than one county will vote in 
the county FSA office where the person does most of his or her business. 
Forms obtained via the

[[Page 405]]

Internet will be located at www.ams.usda.gov/lsmarketingprograms.
    (c) A completed and signed form LS-86 and the supporting 
documentation may be returned in-person, by mail, or facsimile to the 
appropriate county FSA office. Form LS-86 and supporting documentation 
returned in-person or by facsimile, must be received in the appropriate 
county FSA office prior to the close of the work day on the final day of 
the voting period to be considered a valid ballot. Form LS-86 and the 
accompanying documentation returned by mail must be postmarked no later 
than midnight of the final day of the voting period and must be received 
in the county FSA office on the 5th business day following the final day 
of the voting period.
    (d) Persons who obtain form LS-86 in-person at the appropriate FSA 
county office may complete and return it the same day along with the 
supporting documentation.

[69 FR 77572, Dec. 27, 2004, as amended at 73 FR 76194, Dec. 16, 2008]



Sec. 1280.627  Canvassing voting ballots.

    (a) Canvassing of form LS-86 shall take place at the county FSA 
offices on the 6th business day following the final day of the voting 
period. Such canvassing, acting on behalf of the Administrator, AMS, 
shall be in the presence of at least two members of the county 
committee. If two or more of the counties have been combined and are 
served by one county office, the canvassing of the requests shall be 
conducted by at least one member of the county committee from each 
county served by the county office. The FSA State committee or the State 
Executive Director, if authorized by the State Committee, may designate 
the County Executive Director (CED) and a county or State FSA office 
employee to canvass the ballots and report the results instead of two 
members of the county committee when it is determined that the number of 
eligible voters is so limited that having two members of the county 
committee present for this function is impractical, and designate the 
CED and/or another county or State FSA office employee to canvass 
requests in any emergency situation precluding at least two members of 
the county committee from being present to carry out the functions 
required in this section.
    (b) Form LS-86 should be canvassed as follows:
    (1) Number of valid ballots. A person has been declared eligible by 
FSA to vote by completing form LS-86 in its entirety, signing it, voting 
volume of production, and providing supporting documentation that shows 
the person who cast the ballot during the voting period was engaged in 
the production, feeding, or slaughtering of lambs during the 
representative period. Such ballot will be considered a valid ballot.
    (2) Number of ineligible ballots. If FSA cannot determine that a 
person is eligible based on the submitted documentation or if the person 
fails to submit the required supporting documentation, the person shall 
be determined to be ineligible. FSA shall notify ineligible persons in 
writing as soon as practicable but no later than the 8th business day 
following the final day of the voting period.
    (c) Appeal. A person declared to be ineligible by FSA can appeal 
such decision and provide additional documentation to the FSA county 
office within 5 business days after the postmark date of the letter of 
notification of ineligibility. FSA will then make a final decision on 
the person's eligibility and notify the person of the decision.
    (d) Invalid ballots. An invalid ballot includes, but is not limited 
to the following:
    (1) Form LS-86 is not signed or all required information has not 
been provided;
    (2) Form LS-86 and supporting documentation returned in-person or by 
facsimile was not received by close of business on the last business day 
of the voting period;
    (3) Form LS-86 and supporting documentation returned by mail was not 
postmarked by midnight of the final day of the voting period;
    (4) Form LS-86 and supporting documentation returned by mail was not 
received in the county FSA office by the 5th business day following the 
final day of the voting period;
    (5) Form LS-86 or supporting documentation is mutilated or marked in

[[Page 406]]

such a way that any required information on the form is illegible; or
    (6) Form LS-86 and supporting documentation not returned to the 
appropriate county FSA office.



Sec. 1280.628  Counting ballots.

    (a) Form LS-86 shall be counted by county FSA offices on the same 
day as the ballots are canvassed if there are no ineligibility 
determinations to resolve. For those county FSA offices that do have 
ineligibility determinations, the requests shall be counted no later 
than the 14th business day following the final day of the voting period.
    (b) Ballots shall be counted as follows:
    (1) Number of valid ballots cast;
    (2) Number of persons favoring the Order;
    (3) Number of persons not favoring the Order;
    (4) Volume of production voted favoring the continuation of the 
Order;
    (5) Volume of production voted not favoring the continuation of the 
Order; and
    (6) Number of invalid ballots.



Sec. 1280.629  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, as soon as may be reasonably possible, but in no event shall submit 
no later than 18th business day following the final day of the specified 
period. 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 calendar 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. 1280.630  FSA State office report.

    Each FSA State office shall transmit to the Administrator, FSA, as 
soon as possible, but in no event later than the 20th business day 
following the final day of the voting period, a report summarizing the 
data contained in each of the reports from the county FSA offices. One 
copy of the State summary shall be filed for a period of not less than 
12 months after the results have been released and available for public 
inspection after the results have been released.



Sec. 1280.631  Results of the referendum.

    (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 ballots. USDA will issue an official press 
release announcing the results of referendum and publish the same 
results in the Federal Register. In addition, USDA will post the 
official results at the following Web site: http://www.ams.usda.gov/
LSMarketingPrograms or such other Web site as announced by the 
Administrator of AMS. Subsequently, State reports and related papers 
shall be available for public inspection upon request during normal 
business hours in the Marketing Programs Branch; Livestock and Seed 
Program, AMS, USDA, Room 2628-S; STOP 0251; 1400 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.

[69 FR 77572, Dec. 27, 2004, as amended at 73 FR 76194, Dec. 16, 2008]



Sec. 1280.632  Disposition of records.

    Each FSA CED will place in sealed containers marked with the 
identification of the ``Lamb Checkoff Program Referendum,'' all of the 
form LS-86's along with the accompanying documentation and county 
summaries. Such records will be placed in a secure location under the 
custody of FSA CED for a period of not less than 12 months after the 
date of notification by the

[[Page 407]]

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 as 
described above, the CED or designee shall destroy the records.



Sec. 1280.633  Instructions and forms.

    The Administrator, AMS, is authorized to prescribe additional 
instructions and forms not inconsistent with the provisions of this 
subpart.



Sec. 1280.634  Confidentiality.

    The names of persons voting in the referendum and ballots shall be 
confidential and the contents of the ballots shall not be 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.



PART 1290_SPECIALTY CROP BLOCK GRANT PROGRAM--Table of Contents



Sec.
1290.1 Purpose and scope.
1290.2 Definitions.
1290.3 Eligible grant applicants.
1290.4 Eligible grant project.
1290.5 Restrictions and limitations on grant funds.
1290.6 Completed application.
1290.7 Review of grant applications.
1290.8 Grant agreements.
1290.9 Reporting and oversight requirements.
1290.10 Audit requirements.

    Authority: 7 U.S.C. 1621 note.

    Source: 71 FR 53307, Sept. 11, 2006, unless otherwise noted.



Sec. 1290.1  Purpose and scope.

    Pursuant to the authority conferred by Section 101 of the Specialty 
Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note) AMS will make 
grants to States to enhance the competitiveness of specialty crops in 
accordance with the terms and conditions set forth herein and other 
applicable federal statutes and regulations including, but not limited 
to, 7 CFR part 3016.



Sec. 1290.2  Definitions.

    (a) AMS means the Agricultural Marketing Service of the U. S. 
Department of Agriculture.
    (b) Application means application for Specialty Crop Block Grant 
Program.
    (c) ``Enhancing the competitiveness'' of specialty crops includes, 
but is not limited to: Research, promotion, marketing, nutrition, trade 
enhancement, food safety, food security, plant health programs, 
education, ``buy local'' programs, increased consumption, increased 
innovation, improved efficiency and reduced costs of distribution 
systems, environmental concerns and conservation, product development, 
and developing cooperatives.
    (d) Grant period means the period of time from when the grant 
agreement is signed until the completion of all SCBGP projects submitted 
in the State plan.
    (e) Grantee means the government to which a grant is awarded and 
which is accountable for the use of the funds provided. The grantee is 
the entire legal entity even if only a particular component of the 
entity is designated in the grant agreement.
    (f) Outcome measure means an event or condition that is external to 
the project and that is of direct importance to the intended 
beneficiaries and/or the public.
    (g) Project means all proposed activities to be funded by the SCBGP.
    (h) Specialty crop means fruits and vegetables, tree nuts, dried 
fruits, and nursery crops (including floriculture).
    (i) State means the fifty States, the District of Columbia, and the 
Commonwealth of Puerto Rico.
    (j) State department of agriculture means the agency, commission, or 
department of a State government responsible for agriculture within the 
State.
    (k) Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of funds provided.



Sec. 1290.3  Eligible grant applicants.

    Eligible grant applicants are State departments of agriculture from 
the fifty states, the District of Columbia, and the Commonwealth of 
Puerto Rico.

[[Page 408]]



Sec. 1290.4  Eligible grant project.

    (a) To be eligible for a grant, the project(s) must enhance the 
competitiveness of specialty crops.
    (b) To be eligible for a grant, the project(s) must be completed 3 
calendar years after the grant agreement prescribed in Sec. 1290.8 is 
signed. The grant period is established by the longest approved project 
submitted in the State plan. However, for cause, an extension of the 
grant period not to exceed three years may be granted by AMS on a case 
by case basis with a written request from the State.



Sec. 1290.5  Restrictions and limitations on grant funds.

    (a) Grant funds may not be used to fund political activities in 
accordance with provisions of the Hatch Act (5 U.S.C. 1501-1508 and 
7324-7326).
    (b) All travel expenses associated with SCBGP projects must follow 
Federal Travel Regulations (41 CFR Chapters 300 through 304) unless 
State travel requirements are in place.
    (c) Grant funds shall supplement the expenditure of State funds in 
support of specialty crops grown in that State, rather than replace 
State funds.



Sec. 1290.6  Completed application.

    Completed applications shall be clear and succinct and shall include 
the following documentation satisfactory to AMS.
    (a) Completed applications must include an SF-424 ``Application for 
Federal Assistance''.
    (b) Completed applications must also include one State plan to show 
how grant funds will be utilized to enhance the competitiveness of 
specialty crops. The state plan shall include the following:
    (1) Cover page. Include the lead agency for administering the plan 
and an abstract of 200 words or less for each proposed project.
    (2) Project purpose. Clearly state the specific issue, problem, 
interest, or need to be addressed. Explain why each project is important 
and timely.
    (3) Potential impact. Discuss the number of people or operations 
affected, the intended beneficiaries of each project, and/or potential 
economic impact if such data are available and relevant to the 
project(s).
    (4) Financial feasibility. For each project, provide budget 
estimates for the total project cost. Indicate what percentage of the 
budget covers administrative costs. Administrative costs should not 
exceed 10 percent of any proposed budget. Provide a justification if 
administrative costs are higher than 10 percent.
    (5) Expected measurable outcomes. Describe at least two discrete, 
quantifiable, and measurable outcomes that directly and meaningfully 
support each project's purpose. The outcome measures must define an 
event or condition that is external to the project and that is of direct 
importance to the intended beneficiaries and/or the public.
    (6) Goal(s). Describe the overall goal(s) in one or two sentences 
for each project.
    (7) Work plan. Explain briefly how each goal and measurable outcome 
will be accomplished for each project. Be clear about who will do the 
work. Include appropriate time lines. Expected measurable outcomes may 
be long term that exceed the grant period. If so, provide a timeframe 
when long term outcome measure will be achieved.
    (8) Project oversight. Describe the oversight practices that provide 
sufficient knowledge of grant activities to ensure proper and efficient 
administration.
    (9) Project commitment. Describe how all grant partners commit to 
and work toward the goals and outcome measures of the proposed 
project(s).
    (10) Multi-state projects. If the project is a multi-state project, 
describe how the States are going to collaborate effectively with 
related projects. Each State participating in the project should submit 
the project in their State plan indicating which State is taking the 
coordinating role and the percent of the budget covered by each State.



Sec. 1290.7  Review of grant applications.

    Applications will be reviewed and approved or rejected as 
appropriate for conformance with the provisions in Sec. 1290.6. AMS may 
request the applicant

[[Page 409]]

provide for additional information or clarification.



Sec. 1290.8  Grant agreements.

    (a) After review and approval of a grant application, AMS will enter 
into a grant agreement with the State department of agriculture.
    (b) AMS grant agreements will include at a minimum the following:
    (1) The projects in the approved State plan.
    (2) Total amount of Federal financial assistance that will be 
advanced.
    (3) Terms and conditions pursuant to which AMS will fund the 
project(s).



Sec. 1290.9  Reporting and oversight requirements.

    (a) An annual performance report will be required of all State 
departments of agriculture 90 days after the end of the first year of 
the date of the signed grant agreement and each year until the 
expiration date of the grant period. If the grant period is one year or 
less, then only a final performance report (see paragragh (b) of this 
section) is required. The annual performance report shall include the 
following:
    (1) Briefly summarize activities performed, targets, and/or 
performance goals achieved during the reporting period for each project.
    (2) Note unexpected delays or impediments as well as favorable or 
unusual developments for each project.
    (3) Outline work to be performed during the next reporting period 
for each project.
    (4) Comment on the level of grant funds expended to date for each 
project.
    (b) A final performance report will be required by the State 
department of agriculture within 90 days following the expiration date 
of the grant period. The final progress report shall include the 
following:
    (1) An outline of the issue, problem, interest, or need for each 
project.
    (2) How the issue or problem was approached via the project(s).
    (3) How the goals of each project were achieved.
    (4) Results, conclusions, and lessons learned for each project.
    (5) How progress has been made to achieve long term outcome measures 
for each project.
    (6) Additional information available (e.g., publications, Web 
sites).
    (7) Contact person for each project with telephone number and e-mail 
address.
    (c) A final SF-269A ``Financial Status Report (Short Form)'' (SF-269 
``Financial Status Report (Long Form)'' if the project(s) had program 
income) is required within 90 days following the expiration date of the 
grant period.
    (d) AMS will monitor States, as it determines necessary, to assure 
that projects are completed in accordance with the approved State plan. 
If AMS, after reasonable notice to a State, finds that there has been a 
failure by the State to comply substantially with any provision or 
requirement of the State plan, AMS may disqualify, for one or more 
years, the State from receipt of future grants under the SCBGP.
    (e) States shall diligently monitor performance to ensure that time 
schedules are being met, project work within designated time periods is 
being accomplished, and other performance measures are being achieved.
    (f) State departments of agriculture shall retain records pertaining 
to the SCBGP for 3 years after completion of the grant period or until 
final resolution of any audit findings or litigation claims relating to 
the SCBGP.



Sec. 1290.10  Audit requirements.

    The State is accountable for conducting a financial audit of the 
expenditures of all SCBGP funds. The State shall submit to AMS not later 
than 30 days after completion of the audit, a copy of the audit results.



PART 1291_SPECIALTY CROP BLOCK GRANT PROGRAM_FARM BILL--Table of Contents



Sec.
1291.1 Purpose and scope.
1291.2 Definitions.
1291.3 Eligible grant applicants.
1291.4 Eligible grant project.
1291.5 Restrictions and limitations on grant funds.
1291.6 Completed application.
1291.7 Review of grant applications.

[[Page 410]]

1291.8 Grant agreements.
1291.9 Unobligated funds.
1291.10 Reporting and oversight requirements.
1291.11 Audit requirements.

    Authority: 7 U.S.C. 1621 note, as amended.

    Source: 73 FR 51589, Sept. 4, 2008, unless otherwise noted.



Sec. 1291.1  Purpose and scope.

    (a) Pursuant to the authority conferred by Section 101 of the 
Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note), as 
amended by Section 10109 of the Food, Conservation, and Energy Act of 
2008, Public Law 110-246, AMS will make grants to states to enhance the 
competitiveness of specialty crops in accordance with the terms and 
conditions set forth herein and other applicable federal statutes and 
regulations, including, but not limited to, 7 CFR part 3015 and part 
3016.
    (b) AMS encourages states to develop projects solely to enhance the 
competitiveness of specialty crops pertaining to the following issues 
affecting the specialty crop industry: increasing child and adult 
nutrition knowledge and consumption of specialty crops; participation of 
industry representatives at meetings of international standard setting 
bodies in which the U.S. government participates; improving efficiency 
and reducing costs of distribution systems; assisting all entities in 
the specialty crop distribution chain in developing ``Good Agricultural 
Practices'', ``Good Handling Practices'', ``Good Manufacturing 
Practices'', and in cost-share arrangements for funding audits of such 
systems for small farmers, packers and processors; investing in 
specialty crop research, including organic research to focus on 
conservation and environmental outcomes; enhancing food safety; 
developing new and improved seed varieties and specialty crops; pest and 
disease control; and sustainability.

[74 FR 13316, Mar. 27, 2009]



Sec. 1291.2  Definitions.

    (a) AMS means the Agricultural Marketing Service of the U.S. 
Department of Agriculture.
    (b) Application means the application for the Specialty Crop Block 
Grant Program--Farm Bill (SCBGP-FB).
    (c) Beginning farmer or rancher means an individual or entity who 
has not operated a farm or ranch for more than 10 years and 
substantially participates in the operation.
    (d) Capital expenditures means expenditures for the acquisition cost 
of capital assets (equipment, buildings, land), or expenditures to make 
improvements to capital assets that materially increase their value or 
useful life. Acquisition cost means the cost of the asset including the 
cost to put it in place. Acquisition cost for equipment, for example, 
means the net invoice price of the equipment, including the cost of any 
modifications, attachments, accessories, or auxiliary apparatus 
necessary to make it usable for the purpose for which it is acquired. 
Ancillary charges, such as taxes, duty, protective in transit insurance, 
freight, and installation may be included in, or excluded from the 
acquisition cost in accordance with the governmental unit's regular 
accounting practices.
    (e) Equipment means an article of nonexpendable, tangible personal 
property having a useful life of more than one year and an acquisition 
cost which equals or exceeds the lesser of the capitalization level 
established by the governmental unit for financial statement purposes, 
or $5000.
    (f) General purpose equipment means equipment, which is not limited 
to research, scientific or other technical activities. Examples include 
office equipment and furnishings, telephone networks, information 
technology equipment and systems, reproduction and printing equipment, 
and motor vehicles.
    (g) Grant period means the period of time from when the grant 
agreement is signed to the completion of all SCBGP-FB projects submitted 
in the State plan.
    (h) Grantee means the government to which a grant is awarded and 
which is accountable for the use of the funds provided. The grantee is 
the entire legal entity even if only a particular component of the 
entity is designated in the grant agreement.
    (i) Indirect costs means those costs incurred for a common or joint 
purpose benefitting more than one cost objective, and not readily 
assignable to the

[[Page 411]]

cost objectives specifically benefitted, without effort disproportionate 
to the results achieved.
    (j) Outcome measure means an event or condition that is external to 
the project and that is of direct importance to the intended 
beneficiaries and/or the public.
    (k) Project means all proposed activities to be funded by the 
Specialty Crop Block Grant Program--Farm Bill.
    (l) Socially disadvantaged farmer or rancher means a farmer or 
rancher who is a member of a socially disadvantaged group. A ``Socially 
Disadvantaged Group'' is a group whose members have been subject to 
discrimination on the basis of race, color, national origin, age, 
disability, and where applicable, sex, marital status, familial status, 
parental status, religion, sexual orientation, genetic information, 
political beliefs, reprisal, or because all or a part of an individual's 
income is derived from any public assistance program.
    (m) Special purpose equipment means equipment which is used only for 
research, scientific, or other technical activities.
    (n) Specialty crop means fruits and vegetables, tree nuts, dried 
fruits, horticulture and nursery crops (including floriculture).
    (o) State means the fifty states, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, American Samoa, the United States 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
    (p) State department of agriculture means the agency, commission, or 
department of a state government responsible for agriculture within the 
state.
    (q) Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of funds provided.

[74 FR 13316, Mar. 27, 2009]



Sec. 1291.3  Eligible grant applicants.

    Eligible grant applicants are State departments of agriculture from 
the fifty states, the District of Columbia, the Commonwealth of Puerto 
Rico, Guam, American Samoa, the United States Virgin Islands, and the 
Commonwealth of the Northern Mariana Islands.



Sec. 1291.4  Eligible grant project.

    (a) To be eligible for a grant, the project(s) must solely enhance 
the competitiveness of U.S. grown or U.S. territory grown eligible 
specialty crops, in either domestic or foreign markets.
    (b) To be eligible for a grant, the project(s) must be completed 
within three calendar years after the grant agreement prescribed in 
Sec. 1291.8 of this part is signed. The grant period is established by 
the longest approved project submitted in the State plan. However, for 
cause, an extension of the grant period not to exceed three years may be 
granted by AMS on a case by case basis with a written request from the 
State.
    (c) Projects should benefit the specialty crop industry and/or the 
public rather than a single organization, institution, individual, or 
commercial product. Single organizations, institutions, and individuals 
are eligible to participate as project partners.
    (d) Multi-state projects that address solutions to problems that 
cross state boundaries are eligible.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13317, Mar. 27, 2009]



Sec. 1291.5  Restrictions and limitations on grant funds.

    (a) Grant funds may not be used to fund political activities in 
accordance with provisions of the Hatch Act (5 U.S.C. 1501-1508 and 
7321-7326).
    (b) Development or participation in lobbying activities pursuant to 
31 U.S.C. 1352 including costs of membership in organizations 
substantially engaged in lobbying are unallowable.
    (c) Grant funds shall supplement the expenditure of State funds in 
support of specialty crops grown in that State, rather than replace 
State funds.
    (d) Grantees and subgrantees must comply with 7 CFR part 3015.
    (e) Capital expenditures for general purpose equipment, buildings, 
and land are unallowable as direct and indirect charges.
    (f) Capital expenditures for special purpose equipment are allowable 
as direct costs, provided that items with a

[[Page 412]]

unit cost of $5000 or more have the prior approval of AMS.
    (g) Rental costs of buildings and equipment are allowable as direct 
costs in accordance with the cost principles in subpart T of 7 CFR part 
3015.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13317, Mar. 27, 2009]



Sec. 1291.6  Completed application.

    Completed applications shall be clear and succinct and shall include 
the following documentation satisfactory to AMS.
    (a) One SF-424 ``Application for Federal Assistance''.
    (b) SF-424A ``Budget Information--Non-Construction Programs'' 
showing the budget for each project.
    (c) One SF-424B ``Assurances--Non-Construction Program''.
    (d) Completed applications must also include one State plan to show 
how grant funds will be utilized solely to enhance the competitiveness 
of specialty crops. The State plan shall include the following:
    (1) Cover page and granting processes. Include the point of contact 
and lead agency for administering the plan. Provide a description of the 
affirmative steps taken to conduct outreach to socially disadvantaged 
farmers and beginning farmers. Describe how these groups were identified 
and the methods used to reach out to them. Identify if an award was made 
to either a socially disadvantaged farmer or a beginning farmer. If 
steps were not taken to conduct outreach to these groups, provide a 
justification for why not. Provide a description of the affirmative 
steps taken to conduct a competitive grant process. Include the steps 
taken to conduct outreach to specialty crop stakeholders to receive and 
consider public comment to identify their priority needs in enhancing 
the competiveness of specialty crops. Identify the methods used to 
solicit proposals that meet specialty crop stakeholders' needs, 
including any focus on multi-state projects. Include a description of 
the process used to review proposals in a fair and equitable manner. 
State departments of agriculture may also provide a copy of the issued 
request for proposals. If a competitive grant process was not used, 
provide a justification why not.
    (2) Project title and abstract. Include the title of the project and 
an abstract of 200 or fewer words for each project.
    (3) Project purpose. For each project, clearly state the purpose of 
the project. Describe the specific issue, problem, interest, or need to 
be addressed. Explain why the project is important and timely. If 
funding is being directed at a state marketing program, describe how the 
state will ensure that funding is being used solely to enhance the 
competitiveness of specialty crops as defined in Sec. 1291.2(n). If a 
project builds on a previous Specialty Crop Block Grant Program (SCBGP) 
or SCBGP-FB project, indicate clearly how the new project compliments 
previous work. For each project, indicate if the project will be or has 
been submitted to or funded by another Federal or State grant program.
    (4) Potential impact. Discuss the number of people or operations 
affected, the intended beneficiaries of each project, and/or potential 
economic impact if such data are available and relevant to the project.
    (5) Expected measurable outcomes. For each project, describe at 
least one distinct, quantifiable, and measurable outcome-oriented 
objective that directly and meaningfully supports the project's purpose. 
The measurable outcome-oriented objective must define an event or 
condition that is external to the project and that is of direct 
importance to the intended beneficiaries and/or the public. Outcome 
measures may be long term that exceed the grant period. Describe how 
performance toward meeting outcomes will be monitored. For each project, 
include a performance-monitoring plan to describe the process of 
collecting and analyzing data to meet the outcome-oriented objectives.
    (6) Work plan. For each project, explain briefly the activities that 
will be performed to accomplish the objectives of the project. Be clear 
about who will do the work. Include appropriate time lines.
    (7) Budget narrative. The limit on indirect costs, not to exceed 10 
percent, will be published in a Federal Register notice each fiscal 
year. Provide a

[[Page 413]]

justification if indirect costs exceed 10 percent or exceed that fiscal 
year's limit as announced in the Federal Register. Provide in sufficient 
detail information about the budget categories listed on SF-424A for 
each project to demonstrate that grant funds are being expended on 
eligible grant activities that meet the purpose of the program.
    (8) Project oversight. Describe the oversight practices that provide 
sufficient knowledge of grant activities to ensure proper and efficient 
administration for each project.
    (9) Project commitment. Describe how all grant partners commit to 
and work toward the goals and outcome measures of each proposed 
project(s).
    (10) Multi-state projects. If the project is a multi-state project, 
describe how the states are going to collaborate effectively with 
related projects with one state assuming the coordinating role. Indicate 
the percent of the budget covered by each state.

[74 FR 13317, Mar. 27, 2009]



Sec. 1291.7  Review of grant applications.

    (a) Applications will be reviewed and approved or rejected as 
appropriate for conformance with the provisions in Sec. 1291.6 of this 
part. AMS may request the applicant provide additional information or 
clarification.
    (b) Incomplete applications as of the deadline for submission will 
not be considered.



Sec. 1291.8  Grant agreements.

    (a) After approval of a grant application, AMS will enter into a 
grant agreement with the State department of agriculture.
    (b) AMS grant agreements will include at a minimum the following:
    (1) The projects in the approved State plan.
    (2) Total amount of Federal financial assistance that will be 
advanced.
    (3) Beginning and end dates of the grant agreement period.
    (4) Terms and conditions pursuant to which AMS will fund the 
project(s).



Sec. 1291.9  Unobligated funds.

    (a) States who do not apply for or do not request all available 
funding during the specified grant application period will forfeit all 
or that portion of available funding not requested for that application 
year.
    (b) Funds not obligated will be allocated, by a date as determined 
by the Secretary, pro rata to the remaining States who applied during 
the specified grant application period to be solely expended on projects 
previously approved in their State plan.



Sec. 1291.10  Reporting and oversight requirements.

    (a) An annual performance report will be required of all State 
departments' of agriculture within 90 days after the completion of the 
first year of the project(s), until the expiration date of the grant 
agreement. If the grant period is one year or less, then only a final 
performance report is required (See paragraph (b) of this section). The 
annual performance report shall include the following:
    (1) Activities Performed. Briefly summarize activities performed, 
targets, and/or performance goals achieved during the reporting period 
to meet measurable outcomes for each project.
    (2) Problems and Delays. Note unexpected delays or impediments for 
each project.
    (3) Future Project Plans. Outline work to be performed during the 
next reporting period for each project.
    (4) Funding Expended To Date. Comment on the level of grant funds 
expended to date for each project.
    (b) A final performance report will be required of all State 
departments of agriculture within 90 days following the expiration date 
of the grant period. The final progress report shall include the 
following:
    (1) Project Summary. An outline of the issue, problem, interest, or 
need for each project.
    (2) Project Approach. How the issue or problem was approached via 
each project.
    (3) Goals and Outcomes Achieved. How the performance goals and 
measurable outcomes were achieved for each project(s). If outcome 
measures were long term, summarize the progress that has been made 
towards achievement.
    (4) Beneficiaries. Description and quantitative data for the number 
of

[[Page 414]]

people or operations that have benefited from the project's 
accomplishments, and/or the potential economic impact of each project.
    (5) Lessons Learned. Lessons learned, results, conclusions, for each 
project. If outcome measures were not achieved, identify and share the 
lessons learned to help expedite problem-solving.
    (6) Contact Person. List the contact person for each project with 
telephone number and email address.
    (7) Additional Information. Include other relevant project 
information available (e.g. publications, Web sites, photographs).
    (c) A final SF-269A ``Financial Status Report (Short Form)'' or SF-
269 ``Financial Status Report (Long Form)'' if the project(s) had 
program income, is required within 90 days following the expiration date 
of the grant period.
    (d) AMS will monitor States, as it determines necessary, to assure 
that projects are completed in accordance with the approved State plan. 
If AMS, after reasonable notice to a State, and opportunity to be heard, 
finds that there has been a failure by the State to comply substantially 
with any provision or requirement of the State plan, AMS may disqualify, 
for one or more years, the State from receipt of future grants under the 
SCBGP or SCBGP-FB.
    (e) States shall diligently monitor performance to ensure that time 
schedules are being met, project work within designated time periods is 
being accomplished, and other performance measures are being achieved.

[73 FR 51589, Sept. 4, 2008, as amended at 74 FR 13318, Mar. 27, 2009]



Sec. 1291.11  Audit requirements.

    Each year that a State receives a grant under the SCBGP-FB, the 
State is required to conduct an audit of the expenditures of SCBGP-FB 
funds. If the Single Audit Act applies to an eligible grantee, the State 
shall submit the annual audit results to AMS within 30 days after 
completion of the audit. If the Single Audit Act does not apply, the 
State shall conduct an audit of all SCBGP-FB funds no later than 60 days 
after the end date of the grant agreement. The State shall submit to AMS 
not later than 30 days after completion of the audit, a copy of the 
audit results.

[[Page 415]]



  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE




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


  Editorial Note: Nomenclature changes to chapter XIV appear at 60 FR 
1710, Jan. 5, 1995, and 60 FR 64297, Dec. 15, 1995.

             SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES
Part                                                                Page
1400            Payment limitation and payment eligibility 
                    for 2009 and subsequent crop, program, 
                    or fiscal years.........................         417
1401            Commodity certificates, in kind payments, 
                    and other forms of payment..............         437
1402            Policy for certain commodities available for 
                    sale....................................         442
1403            Debt settlement policies and procedures.....         443
1404            Assignment of payments......................         455
1405            Loans, purchases, and other operations......         456
1407            Debarment and suspension....................         459
1409            Meetings of the Board of Directors of 
                    Commodity Credit Corporation............         459
          SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS
1410            Conservation Reserve Program................         465
1412            Direct and counter-cyclical program and 
                    average crop revenue election program 
                    for the 2008 and subsequent crop years..         487
1413            Commodity incentive payment programs........         522
1415            Grasslands Reserve Program..................         526
1416            2006 emergency agricultural disaster 
                    assistance programs.....................         542
1421            Grains and similarly handled commodities--
                    marketing assistance loans and loan 
                    deficiency payments for 2008 through 
                    2012....................................         561
1423            Commodity Credit Corporation approved 
                    warehouses..............................         597
1424            Bioenergy program...........................         600
1425            Cooperative marketing associations..........         606

[[Page 416]]

1427            Cotton......................................         612
1429            Asparagus revenue market loss assistance 
                    payment program.........................         646
1430            Dairy products..............................         651
1434            Nonrecourse marketing assistance loan and 
                    LDP regulations for honey...............         679
1435            Sugar program...............................         689
1436            Farm Storage Facility Loan Program 
                    regulations.............................         711
1437            Noninsured Crop Disaster Assistance Program.         724
1450            Biomass Crop Assistance Program (BCAP)......         749
1455            Voluntary Public Access and Habitat 
                    Incentive Program.......................         765
1463            2005-2014 Tobacco Transition Program........         770
1465            Agricultural Management Assistance..........         786
1466            Environmental Quality Incentives Program....         795
1467            Wetlands Reserve Program....................         814
1468            Conservation Farm Option....................         828
1469            Conservation Security Program...............         838
1470            Conservation Stewardship Program............         857
                      SUBCHAPTER C--EXPORT PROGRAMS
1484            Programs to help develop foreign markets for 
                    agricultural commodities................         873
1485            Grant agreements for the development of 
                    foreign markets for U.S agricultural 
                    commodities.............................         887
1486            Emerging Markets Program....................         914
1487            Technical assistance for specialty crops....         925
1488            Financing of sales of agricultural 
                    commodities.............................         928
1491            Farm and Ranch Lands Protection Program.....         939
1492

[Reserved]

1493            CCC Export Credit Guarantee Programs........         950
1494            Export Bonus Programs.......................         996
1495

[Reserved]

1499            Food for Progress Program...................        1014

Cross Reference: For regulations relative to standards, inspections, and 
  marketing practices, see Chapter I of this title.

[[Page 417]]



              SUBCHAPTER A_GENERAL REGULATIONS AND POLICIES



PART 1400_PAYMENT LIMITATION AND PAYMENT ELIGIBILITY FOR 2009 AND SUBSEQUENT 

CROP, PROGRAM, OR FISCAL YEARS--Table of Contents



                      Subpart A_General Provisions

Sec.
1400.1 Applicability.
1400.2 Administration.
1400.3 Definitions.
1400.4 Indian Tribe.
1400.5 Denial of program benefits.
1400.6 Joint and several liability.
1400.7
1400.8 Equitable treatment.
1400.9 Appeals.

                      Subpart B_Payment Limitation

1400.100 Revocable trust.
1400.101 Minor children.
1400.102 States, political subdivisions, agencies thereof.
1400.103 Charitable organizations.
1400.104 Changes in farming operations.
1400.105 Attribution of payments.
1400.106 Payment limits.
1400.107 Notification of interests.

                      Subpart C_Payment Eligibility

1400.201 General provisions for determining whether a person or legal 
          entity is actively engaged in farming.
1400.202 Persons.
1400.203 Joint operations.
1400.204 Limited partnerships, limited liability partnerships, limited 
          liability companies, corporations and other similar legal 
          entities.
1400.205 Trusts.
1400.206 Estates.
1400.207 Landowners.
1400.208 Family members.
1400.209 Sharecroppers.
1400.210 Deceased and incapacitated persons.
1400.211 Persons and legal entities not considered to be actively 
          engaged in farming.
1400.212 Growers of hybrid seed.
1400.213 Military personnel.

                       Subpart D_Cash Rent Tenants

1400.301 Eligibility.

                        Subpart E_Foreign Persons

1400.401 Eligibility.
1400.402 Notification.

           Subpart F_Average Adjusted Gross Income Limitation

1400.500 Applicability.
1400.501 Determination of average adjusted gross income.
1400.502 Compliance and enforcement.
1400.503 Commensurate reduction.

    Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-4, 
and 1308-5.

    Source: 73 FR 79273, Dec. 29, 2008, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1400.1  Applicability.

    (a) This part, except as otherwise noted, is applicable to all of 
the following programs and any other programs as provided in individual 
program regulations in this chapter (including, but not limited to, all 
price support programs in parts 1421, 1430, and 1434 of this chapter):
    (1) The Direct and Counter-cyclical Program (DCP), including the 
Average Crop Revenue Election (ACRE), part 1412 of this chapter;
    (2) The Conservation Reserve Program (CRP), part 1410 of this 
chapter with respect to contracts approved on or after October 1, 2008;
    (3) The Noninsured Crop Disaster Assistance Program (NAP), part 1437 
of this chapter;
    (4) The Supplemental Revenue Assistance Program (SURE), part 760 of 
this title;
    (5) The Livestock Forage Disaster Program (LFP), Livestock Indemnity 
Program (LIP), and the Emergency Assistance Program for Livestock, Honey 
Bees and Farm-raised Fish (ELAP), part 760 of this title;
    (6) The Tree Assistance Program (TAP), part 760 of this title; and
    (7) The Natural Resource Conservation Service (NRCS) conservation 
programs of this title including Agricultural Management Assistance 
(AMA), Agricultural Water Enhancement Program (AWEP), Chesapeake Bay 
Watershed Program (CBWP), Conservation

[[Page 418]]

Stewardship Program (CSTP), Cooperative Conservation Partnership 
Initiative (CCPI), Environmental Quality Incentives Program (EQIP), Farm 
and Ranchland Protection Program (FRPP), Grasslands Reserve Program 
(GRP), Wetlands Reserve Program (WRP), and Wildlife Habitat Incentive 
Program (WHIP).
    (8) Subparts C and D of this part do not apply to the programs 
listed in paragraphs (a)(2) through (a)(7) of this section.
    (b) This part will apply to the programs specified in:
    (1) Paragraphs (a)(1), (3), (4), and (6) of this section on a crop 
year basis;
    (2) To the program in paragraph (a)(2) of this section on a fiscal 
year basis;
    (3) To the programs in paragraph (a)(5) of this section on a 
calendar year basis; and
    (4) To the programs in paragraph (a)(7) of this section based on 
available funding.
    (c) This part will be used to determine the manner in which payments 
will be attributed to persons and legal entities for the payment 
limitations provided in this section and to other programs as provided 
in individual program regulations in this chapter.
    (d) Where more than one provision of this part may apply, the 
provision which is most restrictive on the program participant will be 
applied.
    (e) The payment limitations of this part are not applicable to:
    (1) Payments made under State conservation reserve enhancement 
program agreements approved by the Secretary and
    (2) Payments made subject to this part if ownership interest in land 
or a commodity is transferred as the result of the death of a program 
participant and the new owner of the land or commodity has succeeded to 
the contract of the prior owner. If the successor is otherwise eligible, 
payments cannot exceed the amount the previous owner was entitled to 
receive at the time of death.
    (f) The following amounts are the limitations on payments per person 
or legal entity for the applicable period for each payment or benefit.

------------------------------------------------------------------------
                                                              Limitation
                                                              per person
                                                               or legal
                     Payment or benefit                      entity, per
                                                                crop,
                                                             program, or
                                                             fiscal year
------------------------------------------------------------------------
(1) Direct Payments for covered commodities \1\............      $40,000
(2) Direct Payments for peanuts \1\........................       40,000
(3) CRP annual rental payments \2\.........................       50,000
(4) GRP....................................................       50,000
(5) WHIP...................................................       50,000
(6) WRP \3\................................................       50,000
(7) Counter-Cyclical Payments for covered commodities \3\..       65,000
(8) Counter-Cyclical Payments for peanuts \3\..............       65,000
(9) NAP payments...........................................      100,000
(10) Supplemental Agricultural Disaster Assistance \4\.....      100,000
(11) TAP...................................................      100,000
(12) CSTP \5\..............................................      200,000
(13) EQIP..................................................      300,000
------------------------------------------------------------------------
\1\ If the person or legal entity has a direct or indirect interest in
  payments earned on a farm that is in ACRE, this limitation will
  reflect a 20 percent reduction in direct payments on each farm that is
  participating in ACRE.
\2\ Limitation is applicable to annual rental payments received directly
  and indirectly from all CRP contracts regardless of contract approval
  date, except payments received directly and indirectly under CRP
  contracts approved prior to October 1, 2008, may exceed the
  limitation, subject to payment limitation rules in effect on the date
  of contract approval.
\3\ The payment limit does not apply to payments for perpetual or 30
  year easements or under 30 year contracts.
\4\ Under ACRE, this amount will be a combined limitation for counter-
  cyclical and ACRE payments. If a person or legal entity has a direct
  or indirect interest in payments earned on a farm that is
  participating in ACRE, this limitation will reflect an increase for
  the amount that the direct payments were reduced.
\5\ Total payments received under Supplemental Agricultural Disaster
  Assistance through SURE, LIP, LFP, and ELAP may not exceed $100,000.
\6\ The $200,000 limit is the total limit for 2009 through 2012.
Note: AMA, AWEP, CBWP, CCPI, and FRPP are all limited by available
  funding rather then an amount by participant.

    (g) With respect to contracts for conservation programs approved 
prior to October 1, 2008, the payment limitation rules in 7 CFR part 
1400 in effect on September 30, 2008 will be applicable (see 7 CFR part 
1400, revised as of January 1, 2008).

[73 FR 79273, Dec. 29, 2008, as amended at 74 FR 31577, July 2, 2009; 75 
FR 899, Jan. 7, 2010]



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 (referred to as 
``State committee'' and ``county committee,'' respectively).
    (b) State executive directors, county executive directors, and State 
and

[[Page 419]]

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 that 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 in this part to a State or county committee 
precludes 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 payment eligibility determinations will be made 
within 60 days after the required forms and any other supporting 
documentation needed in making such determinations are received in the 
county FSA office. If the determination is not made within 60 days, the 
producer will receive a determination for that program year that 
reflects the determination sought by the producer unless the Deputy 
Administrator determines that the producer did not follow the farm 
operating plan that was presented to the county or State committee for 
such year.
    (g) Initial determinations concerning the provisions of this part 
will be made by the FSA State office with respect to any farm operating 
plan that is for a joint operation with six or more members.
    (h) Reviews of farming operations and corresponding documentation 
submitted by program participants may be conducted at any time to 
determine compliance with applicable statutes and regulations. The 
completion of such reviews is not subject to the time constraints 
specified in paragraph (f) of this section.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010]



Sec. 1400.3  Definitions.

    (a) The terms defined in part 718 of this title are applicable to 
this part and all documents issued in accordance with this part, except 
as otherwise provided in this section.
    (b) The following definitions are also applicable to this part:
    Active personal labor means 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 CRP acreages and those physical 
activities necessary in livestock operations.
    Active personal management means personally providing and 
participating in:
    (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 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;

[[Page 420]]

    (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.
    Administrator means the Administrator of the Farm Service Agency 
including any designee of the Administrator.
    Alien means any person not a citizen or national of the United 
States.
    Attribution means the combination of any payment made directly to a 
person or legal entity with the person's or legal entity's pro rata 
direct and indirect interest in payments received by a legal entity, 
joint venture, or general partnership.
    Average Adjusted Gross Farm Income means the average of the portion 
of adjusted gross income of the person or legal entity that is 
attributable to activities related to farming, ranching, or forestry for 
the 3 taxable years preceding the most immediately preceding complete 
taxable year.
    Average Adjusted Gross Income means the average of the adjusted 
gross income as defined under 26 U.S.C. 62 or comparable measure of the 
person or legal entity over the 3 taxable years preceding the most 
immediately preceding complete taxable year.
    Average Adjusted Gross Nonfarm Income means the difference between 
the average adjusted gross income for the person or legal entity and the 
average adjusted gross farm income for the person or legal entity.
    Capital means the funding provided by a person or legal entity to 
the farming operation, independent and separate from all other farming 
operations, in order for such operation to conduct farming activities. 
In determining whether a person or legal entity has independently 
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 person or legal 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 must be a direct out-of-pocket input 
of a specified sum or an amount borrowed by the person or legal entity 
and does not include advance program payments.
    Chief means the Chief of the Natural Resources Conservation Service 
including any designee of the Chief (also referred to in this part as 
NRCS Chief).
    Contribution means providing land, capital, or equipment assets, and 
the actions of providing active personal labor or active personal 
management to a farming operation in exchange for, or with the 
expectation of, deriving benefit based solely on the success of the 
farming operation.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency including any designee.
    Equipment means 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 CRP acreages and those needed to conduct 
livestock operations. Such equipment may be leased from any source. If 
such equipment is leased from another person or legal entity with an 
interest in the farming operation, such equipment must be leased at a 
fair market value.
    Family member means a person to whom another member in the farming 
operation is related as a lineal ancestor, lineal descendant, sibling, 
spouse, or otherwise by marriage.
    Farming operation means a business enterprise engaged in the 
production of agricultural products, commodities, or livestock, operated 
by a person, legal entity, or joint operation that is eligible to 
receive payments, directly or indirectly, under one or more of the 
programs specified in Sec. 1400.1. A person or legal entity may have 
more than one farming operation if such person or legal entity is a 
member of one or more joint operations.
    Indian tribe means any Indian tribe, band, nation, pueblo, or other 
organized group or community, including

[[Page 421]]

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. 1601-1629h), which is recognized as eligible for special 
programs and services provided by the United States to Indians because 
of their status as Indians.
    Interest in a farming operation means one of the following:
    (1) Owner or renter of the land in the farming operation;
    (2) An interest in the agricultural products, commodities, or 
livestock produced by the farming operation; or
    (3) A member of a joint operation that either owns or rents land in 
the farming operation or has an interest in the agricultural products, 
commodities, or livestock produced by the farming operation.
    Irrevocable trust means a trust as specified in this definition. Any 
trust not meeting this definition will be considered a revocable trust. 
A trust may be considered to be an irrevocable trust only if:
    (1) The trust cannot be modified or terminated by the grantor;
    (2) The grantor has no future, contingent, or remainder interest in 
the corpus of the trust; and
    (3) The trust agreement 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 means a general partnership, joint venture, or other 
similar business organization in which the members are jointly and 
severally liable for the obligations of the organization.
    Land means farmland that meets the specific requirements of the 
applicable program. Such land may be leased from any source. If such 
land is leased from another person or legal entity with an interest in 
the crop or crop proceeds, such land must be leased at a fair market 
value.
    Lawful alien means 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 issued by the United 
States Citizenship and Immigration Services, Department of Homeland 
Security.
    Legal entity means an entity created under Federal or State law and 
that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Payment means:
    (1) Payments made in accordance with part 1412 or successor 
regulation of this chapter;
    (2) CRP annual rental payments made in accordance with part 1410 or 
successor regulation of this chapter;
    (3) NAP payments made in accordance with part 1437 or successor 
regulation of this chapter; and
    (4) For other programs, any payments designated in individual 
program regulations in this chapter.
    Person means an individual, natural person and does not include a 
legal entity.
    Public school means 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.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    Sharecropper means a person 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 means the provision of the following to a 
farming operation:
    (1)(i) For land, capital, or equipment contributed independently by 
a person or legal entity, a contribution that has a value at least equal 
to 50 percent of the person's or legal entity's commensurate share of 
the total:
    (A) Value of the capital necessary to conduct the farming operation;
    (B) Rental value of the land necessary to conduct the farming 
operation; or

[[Page 422]]

    (C) Rental value of the equipment necessary to conduct the farming 
operation; or
    (ii) If the contribution by a person or legal 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 person's or legal 
entity's commensurate share of the total value of the farming operation;
    (2) For active personal labor, an amount contributed by a person to 
the farming operation that is described by the smaller of the following:
    (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 person's 
or legal 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 person's or legal 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 by itself meets 
the requirement of paragraphs (2) and (3) of this definition, a 
combination of active personal labor and active personal management 
that, when made 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 defined in paragraphs (2) and (3) of this 
definition.
    Substantial amount of active personal labor means the provision of 
active personal labor to a farming operation in an amount described by 
the smaller of the following:
    (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 the person's or legal 
entity's commensurate share in the farming operation.
    Total value of the farming operation means 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.



Sec. 1400.4  Indian Tribe.

    Provisions of this part do not apply to Indian tribes as defined in 
Sec. 1400.3.



Sec. 1400.5  Denial of program benefits.

    (a) All or any part of a payment otherwise due a person or legal 
entity on all farms in which the person or legal entity has an interest 
may be withheld or be required to be refunded if the person or legal 
entity fails to comply with the provisions of this part.
    (b) All or any part of a payment otherwise due a person or legal 
entity on all farms in which the person or legal entity has an interest 
may be withheld or be required to be refunded if the person or legal 
entity fails to comply with the provisions of this part and 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 may 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 a business arrangement using rental agreements and 
other arrangements to conceal the interest of a person or legal entity 
in a farm or farming operation for the purpose of obtaining program 
payments the person or legal entity would otherwise not be eligible to 
receive. Indicators of such business arrangement include, but are not 
limited to the following:
    (i) No crops are grown or agricultural commodities produced by the 
represented operation;
    (ii) The represented operation has no appreciable assets;
    (iii) The only source of capital for the operation is the program 
payments; or
    (iv) The represented operation exists only for the receipt of 
program payments.
    (c) If the Deputy Administrator determines that a person or legal 
entity has adopted a scheme or device to

[[Page 423]]

evade, or that has the purpose of evading, the provisions of 7 U.S.C. 
1308, 1308-1, or 1308-3, as amended, such person or legal entity will be 
ineligible to receive payments under the programs specified in Sec. 
1400.1 in the year for such scheme or device was adopted and the 
succeeding year.
    (d) A person or legal entity that perpetuates a fraud, commits 
fraud, or participates in equally serious actions for the benefit of the 
person or legal entity, or the benefit of any other person or legal 
entity, to exceed the applicable limit on payments or the requirements 
of this part will be subject to a five-year denial of all program 
benefits. Such other equally serious actions may include, but are not 
limited to:
    (1) Knowingly engaged in, or aided in the creation of a fraudulent 
document;
    (2) Failed to disclose material information relevant to the 
administration of the provisions of this part, or
    (3) Any other actions of a person or legal entity determined by the 
Deputy Administrator as designed or intended to circumvent the 
provisions of this subpart.
    (e) Program payments and benefits will be denied on pro-rata basis:
    (1) In accordance to the interest held by the person or legal entity 
in any other legal entity or joint operations and
    (2) To any person or legal entity that is a cash rent tenant on land 
owned or under control of a person or legal entity for which a 
determination of this section has been made.



Sec. 1400.6  Joint and several liability.

    (a) Any legal entity, including joint operations, and any member of 
a legal entity determined to have knowingly participated in a scheme or 
device, or other such equally serious actions to evade the payment 
limitation provisions, or that has the purpose of evading the provisions 
of this part, will be jointly and severally liable for any amounts 
determined to be payable as the result of the scheme or device, or other 
such equally serious actions, including amounts necessary to recover the 
payments.
    (b) Any person or legal entity that cooperates in the enforcement of 
the payment limitation and payment eligibility provisions of this part 
may be partially or fully released from liability, as determined by the 
Executive Vice President, CCC.
    (c) The provisions of this section will be applicable in addition to 
any liability that arises under a criminal or civil statute.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010]



Sec. 1400.7  [Reserved]



Sec. 1400.8  Equitable treatment.

    (a) Actions taken by a person or legal entity in good faith based on 
action or advice of an authorized representative of the Administrator 
may be accepted as meeting the requirements of this part to the extent 
the Administrator deems necessary to provide fair and equitable 
treatment to such person or legal entity.
    (b) Actions taken by a person or legal entity in good faith based on 
action or advice of an authorized representative of the NRCS Chief may 
be accepted as meeting the requirements of this part to the extent the 
NRCS Chief deems necessary to provide fair and equitable treatment to 
such person or legal entity.



Sec. 1400.9  Appeals.

    (a) A person or legal entity may obtain reconsideration and review 
of determinations made under this part in accordance with the appeal 
regulations set forth in part 780 of this title. With respect to such 
appeals, the applicable reviewing authority will:
    (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) will 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

[[Page 424]]

    (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 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.



                      Subpart B_Payment Limitation



Sec. 1400.100  Revocable trust.

    A revocable trust and the grantor of the trust will be considered to 
be the same person.



Sec. 1400.101  Minor children.

    (a) Except as provided in paragraph (b) of this section, payments 
received by a child under 18 years of age as of June 1 of the applicable 
crop, program, or fiscal year, including such a person who is the 
beneficiary of a trust or who is an heir of an estate, will be 
attributed for the entire crop, program, or fiscal year to the parent 
receiving the greater amount of program payments subject to this part or 
to any court-appointed person such as a guardian or conservator who is 
responsible for the minor.
    (b) Payments received by a minor will not be attributed to the 
minor's parent or to any court-appointed person such as a guardian or 
conservator who is responsible for the minor if all of the following 
apply:
    (1) The minor is a producer on a farm and the minor's parents or any 
court-appointed person such as guardian or conservator who is 
responsible for the minor, does not have any interest in the farm;
    (2) The minor has established and maintains 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 minor 
personally carries out the farming activities with respect to the 
minor's farming operation for which there is a separate accounting; and
    (3) The minor does not live in the same household as such minor's 
parents and:
    (i) Is represented by a court-appointed guardian or conservator who 
is responsible for the minor and
    (ii) Ownership of the farm is vested in the minor.
    (c) A person will 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.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010]



Sec. 1400.102  States, political subdivisions, and agencies thereof.

    (a) A State, political subdivision, and agency thereof, is not 
eligible for payments or benefits under programs specified in Sec. 
1400.1(a)(1), unless the exception provided in paragraph (b) of this 
section applies.
    (b) Subject to the limitation in paragraph (c) of this section, a 
State, political subdivision, and any agency thereof, may receive 
payments or benefits under programs specified in Sec. 1400.1 if both of 
the following apply:
    (1) The land for which payments are received is owned by the State, 
political subdivision, or agency thereof and
    (2) The payments are used solely for the support of public schools;
    (c) The total payments described in paragraph (b) of this section 
cannot exceed $500,000 annually except for States with a population less 
than 1,500,000, as established by the most recent U.S. Census Bureau 
annual estimate of such State's resident population.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010]



Sec. 1400.103  Charitable organizations.

    (a) A charitable organization, including a club, society, fraternal 
organization, or religious organization will be considered a separate 
legal entity for payment limitation purposes to the extent that such an 
entity is independently engaged in the production of crops, agricultural 
commodities, or

[[Page 425]]

livestock, except where the land or the proceeds from the farming 
operation may transfer to a legal entity that exercises control or 
authority over such organization.
    (b) If the land or the proceeds from the farming operation may 
transfer to a legal entity that exercises control or authority over the 
charitable organization, payments to the charitable organization will be 
attributed to the parent organization.



Sec. 1400.104  Changes in farming operations.

    (a) Any change in a farming operation that would increase the number 
of persons or legal entities to which the provisions of this part apply 
must be bona fide and substantive. If bona fide, the following will be 
considered to be a substantive change in the farming operation:
    (1) 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 person or legal entity that is added to 
the farming operation; or
    (2) With respect to a landowner only, a change from a cash rent to a 
share rent; or
    (3) An increase through the acquisition of base acres not previously 
involved in the farming operation of at least 20 percent or more in the 
total base acres involved in the farming operation.
    (i) For the purpose of payment limitations, such an increase in base 
acres will be considered an applicable bona fide and substantive change 
for the increase of only one person or legal entity to the farming 
operation, unless;
    (ii) A representative of the State FSA office determines, based on 
the magnitude and complexity of the change represented, the increase in 
base acres supports additional persons or legal entities to the farming 
operation; or
    (4) A change in ownership by sale or gift of equipment from a person 
or legal entity previously engaged in a farming operation to a person or 
legal entity that has not been involved in such operation. The sale or 
gift of equipment will be considered to be bona fide and substantive 
only if:
    (i) The transferred amount of such equipment is commensurate with 
the new person's or legal entity's share of the farming operation,
    (ii) The sale or gift of the equipment was based on the equipment's 
fair market value,
    (iii) The former owner of the equipment has no direct or indirect 
control over such equipment,
    (iv) The transaction was not financed by the former owner, and
    (v) Preference was not given to the former owner to re-purchase the 
equipment at a later date; or
    (5) A change in ownership by sale or gift of land from a person or 
legal entity who previously has been engaged in a farming operation to a 
person or legal entity that has not been involved in such operation. The 
sale or gift of land will be considered to be bona fide and substantive 
only if:
    (i) The transferred amount of such land is commensurate with the new 
person's or legal entity's share of the farming operation,
    (ii) The sale or gift of land was based on the land's fair market 
value,
    (iii) The former owner of the land has no direct or indirect control 
over such land,
    (iv) The transaction was not financed by the former owner, and
    (v) Preference was not given to the former owner to re-purchase the 
land at a later date.
    (b) Unless the requirements in paragraph (a) of this section are 
met, the increase in persons or legal entities in the farming operation 
will not be recognized for payment limitation purposes and the 
additional persons or legal entities are not eligible for program 
payment identified in Sec. 1400.1 otherwise resulting from the farming 
operation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010]



Sec. 1400.105  Attribution of payments.

    (a) A payment made directly to a person or legal entity will be 
combined with the pro rata interest of the person or legal entity in 
payments received by a legal entity in which the person or legal entity 
has a direct or indirect

[[Page 426]]

ownership interest, unless the payments of the legal entity have been 
reduced by the pro rata share of the person or legal entity.
    (b) A payment made to a legal entity will be attributed to those 
persons who have a direct and indirect ownership interest in the legal 
entity, unless the payment of the legal entity has been reduced by the 
pro rata share of the person.
    (c) Attribution of payments made to legal entities will be tracked 
through four levels of ownership in legal entities as follows:
    (1) First level of ownership--any payment made to a legal entity 
that is owned in whole or in part by a person will be attributed to the 
person in an amount that represents the direct ownership interest in the 
first-tier or payment legal entity;
    (2)(i) Second level of ownership--any payment made to a first-tier 
legal entity that is owned in whole or in part by another legal entity 
(referred to as a second-tier legal entity) will be attributed to the 
second-tier legal entity in proportion to the ownership of the second-
tier legal entity in the first-tier legal entity;
    (ii) If the second-tier legal entity is owned in whole or in part by 
a person, the amount of the payment made to the first-tier legal entity 
will be attributed to the person in the amount that represents the 
indirect ownership in the first-tier legal entity by the person.
    (3) Third and fourth levels--except as provided in paragraph (2)(ii) 
of this section, any payments made to a legal entity at the third and 
fourth tiers of ownership will be attributed in the same manner as 
specified in paragraph (2)(i) of this section.
    (4) Fourth-tier ownership--if the fourth-tier of ownership is that 
of a legal entity and not that of a person, a reduction in payment will 
be applied to the first-tier or payment legal entity in the amount that 
represents the indirect ownership in the first-tier or payment legal 
entity by the fourth-tier legal entity.
    (d) For purposes of administering direct attribution, and to 
determine a person's or legal entity's ownership interest in a legal 
entity that receives a payment subject to limitation; the ownership 
interest on June 1 of each year will be used.
    (1) If the change in ownership interest is due to the death of an 
interest holder in the legal entity or the legal entity did not exist on 
June 1 of the applicable year, the Deputy Administrator may determine 
that a change after June 1 is considered relevant or effective for the 
current year.
    (2) Changes that occur after June 1 cannot be used to increase the 
amount of program payments a legal entity, or its members, is eligible 
to receive directly or indirectly for the applicable year.
    (e) Direct attribution of payments is not applicable to a 
cooperative association of producers with respect to commodities 
produced by the members of the association that are marketed by the 
association on behalf of the members of the association. The payments 
will instead be attributed to the producers as persons.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.106  Payment limits.

    (a) Payments made to a person or legal entity will not exceed the 
amounts specified in subpart A of this part.
    (b) Payments made to a joint operation cannot exceed, for each 
payment specified in subpart A of this part, the amount determined by 
multiplying the maximum payment amount specified in subpart A of this 
part by the number of persons and legal entities, other than joint 
operations, that comprise the ownership of the joint operation.
    (c) Payments made to a legal entity will be reduced proportionately 
by an amount that represents the direct or indirect ownership in the 
legal entity by any person or legal entity that has otherwise reached 
the applicable maximum payment limitation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.107  Notification of interests.

    (a) In order to be eligible to receive any payment specified in 
subpart A of

[[Page 427]]

this part, or any other program as provided in individual program 
regulations in this chapter, a person or legal entity must, provide 
information in the manner as prescribed by the Deputy Administrator.
    (b) The information required to be submitted under paragraph (a) of 
this section must include:
    (1) The name and social security number of each person, or the name 
and taxpayer identification number of each legal entity, that holds or 
acquires an ownership interest in the legal entity and
    (2) The name and taxpayer identification number of each legal entity 
in which the person or legal entity holds an ownership interest.



                      Subpart C_Payment Eligibility



Sec. 1400.201  General provisions for determining whether a person or legal 

entity is actively engaged in farming.

    (a) To be considered eligible to receive payments with respect to a 
particular farming operation, a person or legal entity must be actively 
engaged in farming with respect to such operation.
    (b) Actively engaged in farming means, except as otherwise provided 
in this part, that the person or legal entity:
    (1) Independently and separately makes a significant contribution to 
a farming operation of:
    (i) Capital, equipment, or land, or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the person's or legal entity's contributions to the 
operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the person's 
or legal entity's claimed share of the farming operation.
    (c) All of the following factors will be taken into consideration in 
determining if the person or legal entity is independently and 
separately contributing a significant amount of capital, equipment, or 
land, or a combination of capital, equipment, or land, to the farming 
operation:
    (1) A separate and distinct interest in the land, crop, and 
livestock involved in the farming operation;
    (2) The demonstration of separate and total responsibility for the 
interest in the land, crop, and livestock in the farming operation; and
    (3) All funds and business accounts of the farming operation are 
separate from that of any other person and legal entity.
    (d) In determining if the person or legal entity is independently 
and separately contributing a significant amount of active personal 
labor or active personal management, all of the following factors will 
be taken into consideration:
    (1) The types of crops and livestock produced by the farming 
operation;
    (2) The normal and customary farming practices of the area;
    (3) The total amount of labor and management necessary for such a 
farming operation in the area; and
    (4) Whether the person or legal entity receives compensation for the 
labor and management activities.



Sec. 1400.202  Persons.

    (a) A person will be considered to be actively engaged in farming 
with respect to a farming operation if:
    (1) The person independently and separately makes a significant 
contribution to a farming operation of:
    (i) Capital, equipment, or land, or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the person's or legal entity's contributions to the 
operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the person's 
or legal entity's claimed share of the farming operation.

[[Page 428]]

    (b) If one spouse, or an estate of a deceased spouse, is determined 
to be actively engaged in farming as specified in paragraph (a) of this 
section, the other spouse is considered to have made a significant 
contribution, as specified in paragraph (a)(1)(ii) of this section, only 
to the same farming operation.
    (c) If a farming operation is conducted by a person, and the 
capital, land, or equipment is contributed by the person, such capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a)(1)(i) of this section, 
must be contributed directly by the person and must not be acquired as a 
result of a loan made to, guaranteed, co-signed, or secured by:
    (i) Any other person, joint operation, or legal entity that has an 
interest in such farming operation;
    (ii) Such person, joint operation, or legal entity by any other 
person, joint operation, or legal entity that has an interest in such 
farming operation or
    (iii) Any other person, joint operation, or legal entity in whose 
farming operation such person, joint operation, or legal entity has an 
interest; and
    (2) To meet the requirements of paragraphs (a)(2) and (a)(3) of this 
section, and if acquired as a loan made to, guaranteed, co-signed, or 
secured by the persons, joint operations, or legal entities, the loan 
must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.203  Joint operations.

    (a) A member of a joint operation will be considered to be actively 
engaged in farming with respect to a farming operation if the member:
    (1) Makes a significant contribution of:
    (i) Capital, equipment, or land or a combination of capital, 
equipment, or land and
    (ii) Active personal labor or active personal management, or a 
combination of active personal labor and active personal management, and 
that are:
    (A) Performed on a regular basis,
    (B) Identifiable and documentable, and
    (C) Separate and distinct from such contributions of any other 
member of the farming operation;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the member's contributions to the operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the member's 
claimed share of the farming operation.
    (b) For a farming operation conducted by a joint operation in which 
the capital, land, or equipment is contributed by such joint operation, 
such capital, land, or equipment:
    (1) To meet the requirements of paragraph (a)(1)(i) of this section, 
and if contributed directly by the joint operation and must not be 
acquired as a loan made to, guaranteed, co-signed, or secured by:
    (i) Any person, legal entity, or other joint operation that has an 
interest in such farming operation, including either joint operation's 
members;
    (ii) Such joint operation by any person, legal entity, or other 
joint operation that has an interest in such farming operation; or
    (iii) Any person, legal entity, or other joint operation in whose 
farming operation such joint operation has an interest, and
    (2) To meet the requirements of paragraphs (a)(2) and (a)(3) of this 
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or joint operations 
with an interest in the operation as defined, the loan must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (c) 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(b)(2) and (b)(3), the members of the joint operation who make a 
significant contribution of active personal labor, active personal

[[Page 429]]

management, or a combination of active personal labor and active 
personal management to the farming operation as specified in paragraph 
(a)(1)(ii) of this section will be considered to be actively engaged in 
farming with respect to such farming operation.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.204  Limited partnerships, limited liability partnerships, limited 

liability companies, corporations, and other similar legal entities.

    (a) A limited partnership, limited liability partnership, limited 
liability company, corporation, or other similar legal entity will be 
considered to be actively engaged in farming with respect to a farming 
operation if:
    (1) The legal entity independently and separately makes a 
significant contribution to the farming operation of capital, equipment, 
or land, or a combination of capital, equipment, or land;
    (2) Each partner, stockholder, or member with an ownership interest 
or their spouse with an ownership interest makes a 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; that are:
    (i) Performed on a regular basis;
    (ii) Identifiable and documentable; and
    (iii) Separate and distinct from such contributions of any other 
partner, stockholder or member of the farming operation;
    (3) The collective contribution of the partners, stockholders and 
members is significant and commensurate;
    (4) The legal entity has a share of the profits or losses from the 
farming operation commensurate with the legal entity's contributions to 
the operation; and
    (5) The legal entity makes contributions to the farming operation 
that are at risk for a loss, with the level of risk being commensurate 
with the legal entity's claimed share of the farming operation.
    (b) If any partner, stockholder, or member fails to meet the 
requirements in paragraph (a)(2) of this section, any program payment 
and benefit subject to this subpart provided to the legal entity will be 
reduced by an amount commensurate with the ownership share held by that 
partner, stockholder, or member in the legal entity.
    (c) An exception to paragraph (b) of this section will apply if:
    (1) At least 50 percent of the stock is held by partners, 
stockholders, or members that are actively providing labor or management 
and
    (2) The partners, stockholders, or members are collectively 
receiving, directly or indirectly, total payments equal to or less than 
one payment limitation.
    (d) For a farming operation conducted by a legal entity in which the 
capital, land, or equipment is contributed by the legal entity, such 
capital, land, or equipment:
    (1) To meet the requirements of paragraph (a)(1) of this section, 
must be contributed directly by the legal entity and must not be 
acquired as a loan made to, guaranteed, co-signed, or secured by:
    (i) Any person, legal entity, or joint operation that has an 
interest in such farming operation, including the legal entity's 
members;
    (ii) Such legal entity by any person, legal entity, or other joint 
operation that has an interest in such farming operation; or
    (iii) Any person, legal entity, or joint operation in whose farming 
operation such legal entity has an interest, and
    (2) To meet the requirements of paragraphs (a)(4) and (a)(5) of this 
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or joint operations 
as defined, the loan must:
    (i) Bear the prevailing interest rate and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.205  Trusts.

    A trust will be considered to be actively engaged in farming with 
respect to a farming operation if:

[[Page 430]]

    (a) The trust independently and 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 a share of the profits or losses from the farming 
operation commensurate with the legal entity's contributions to the 
operation;
    (d) The trust makes contributions to the farming operation that are 
at risk for a loss, with the level of risk being commensurate with the 
legal entity's claimed share of the farming operation;
    (e) For a farming operation conducted by a trust in which the 
capital, land, or equipment is contributed by the trust, such capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a) of this section, must 
be contributed directly by the trust and must not be acquired as a loan 
made to, guaranteed, co-signed, or secured by:
    (i) Any person, legal entity, or joint operation that has an 
interest in such farming operation, including the trust's income 
beneficiaries;
    (ii) Such joint operation by any person, legal entity, or other 
joint operation that has an interest in such farming operation; or
    (iii) Any person, legal entity, or joint operation in whose farming 
operation such trust has an interest, and
    (2) To meet the requirements of paragraphs (c) and (d) of this 
section and if land, capital or equipment is acquired as a result of a 
loan made to, guaranteed, co-signed, or secured by the persons, legal 
entities, or joint operations as defined, the loan must:
    (i) Bear the prevailing interest rate; and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (f) 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
    (g) The trust has provided a copy of the trust agreement to the 
county committee unless the trust is a revocable trust.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.206  Estates.

    (a) For 2 program years after the program year in which a person 
dies, the person's estate will be considered to be actively engaged in 
farming if:
    (1) The estate, as a legal entity, 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) The combination of active personal labor and active personal 
management; and
    (3) The estate has a share of the profits or losses from the farming 
operation commensurate with the legal entity's contributions to the 
operation;
    (4) The estate makes contributions to the farming operation that are 
at risk for a loss, with the level of risk being commensurate with the 
legal entity's claimed share of the farming operation; and
    (5) The representative of the estate has provided a tax 
identification number for the estate and a copy of a court order, will, 
or other legal document that identifies the heir(s) and tax 
identification number(s) of the heir(s).
    (b) For a farming operation conducted by an estate in which the 
capital, land, or equipment is contributed by the estate, such capital, 
land, or equipment:
    (1) To meet the requirements of paragraph (a) of this section, must 
be contributed directly by the estate and must not be acquired as a loan 
made

[[Page 431]]

to, guaranteed, co-signed, or secured by:
    (i) Any person, legal entity, or joint operation that has an 
interest in such farming operation, including the estate's heirs;
    (ii) Such joint operation by any person, legal entity, or other 
joint operation that has an interest in such farming operation; or
    (iii) Any person, legal entity, or joint operation in whose farming 
operation such an estate has an interest; and
    (2) To meet the requirements of paragraphs (c)(3)and (a)(4) of this 
section, and if land, capital or equipment is acquired as a result of a 
loan made to, guaranteed, co-signed, or secured by the persons, legal 
entities, or joint operations as defined, the loan must:
    (i) Bear the prevailing interest rate; and
    (ii) Have a repayment schedule considered reasonable and customary 
for the area.
    (c) After the period set forth in paragraph (a) of this section, the 
deceased person's estate will not be considered to be actively engaged 
in farming unless, on a case by case basis, the Deputy Administrator 
determines, for the purpose of obtaining program payments, that the 
estate has not been settled.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



Sec. 1400.207  Landowners.

    (a) A person or legal entity that is a landowner, including 
landowners with an undivided interest in land, making a significant 
contribution of owned land to the farming operation, will be considered 
to be actively engaged in farming with respect to such owned land, if 
the landowner:
    (1) Receives rent or income for such use of the land based on the 
land's production or the operation's operating results;
    (2) Has a share of the profits or losses from the farming operation 
commensurate with the landowner's contributions to the operation; and
    (3) Makes contributions to the farming operation that are at risk 
for a loss, with the level of risk being commensurate with the 
landowner's claimed share of the farming operation.
    (b) 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.

    (a) Notwithstanding the provisions of Sec. Sec. 1400.201 through 
1400.206, with respect to a farming operation conducted by persons, a 
majority of whom are family members, an adult family member who makes a 
significant contribution of active personal labor, active personal 
management, or a combination of active personal labor and active 
personal management will be considered to be actively engaged in farming 
if the adult family member meets the provisions in paragraph (b) of this 
section.
    (b) An adult family member who elects to be considered actively 
engaged in farming under this section must:
    (1) Have a share of the profits or losses from the farming operation 
commensurate with such person's contributions to the operation and
    (2) Make contributions to the farming operation that are at risk for 
a loss, with the level of risk being commensurate with such person's 
claimed share of the farming operation.



Sec. 1400.209  Sharecroppers.

    (a) Notwithstanding the provisions of Sec. Sec. 1400.201 through 
1400.206 of this part, with respect to a person who is a sharecropper, 
such person will be considered to be actively engaged in farming if the 
sharecropper meets the provisions of paragraph (b) of this section.
    (b) A sharecropper who elects to be considered actively engaged in 
farming under this section must:
    (1) Make a significant contribution of active personal labor to the 
farming operation;
    (2) Have a share of the profits or losses from the farming operation 
commensurate with such person's contribution to the operation; and

[[Page 432]]

    (3) Make a contribution to the farming operation that is at risk for 
a loss, with the level of risk being commensurate with such person's 
claimed share of the farming operation.



Sec. 1400.210  Deceased and incapacitated persons.

    If the person dies or is incapacitated before a determination is 
made that the person is ``actively engaged in farming,'' the 
representative of the deceased person's estate or the incapacitated 
person, or other person if necessary, must provide the determining 
authority information to verify that such person did make a conscious 
effort to and would have been determined to be actively engaged in 
farming if not for the person's death or incapacitation. If the person 
dies or is incapacitated after being determined to be ``actively engaged 
in farming,'' the determining authority will allow such determination to 
be in effect for that program year or fiscal year, as applicable. 
However, the following year such person or the person'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 and legal entities not considered to be actively 

engaged in farming.

    Any person or legal entity that does not satisfy all of the 
applicable provisions of Sec. Sec. 1400.201 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 will not be considered to 
be actively engaged in farming with respect to the farming operation.



Sec. 1400.212  Growers of hybrid seed.

    The existence of a hybrid seed contract for a person or legal entity 
will not be taken into account when making an actively engaged in 
farming determination with respect to such person or legal entity. 
However, such person or legal entity must satisfy all other applicable 
provisions of this part.



Sec. 1400.213  Military personnel.

    If a person is called to active duty in the military before a 
determination is made that the person is actively engaged in farming, 
the person may be considered to be actively engaged in farming if the 
determining authority determines that such person did make a conscious 
effort to, and would have been determined to be, actively engaged in 
farming if the person would not have been called to active duty. If the 
person is called to active duty after being determined to be actively 
engaged in farming, such determination will remain in effect for the 
program year.



                       Subpart D_Cash Rent Tenants



Sec. 1400.301  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)(1) and (2) will not be eligible to receive any 
payment with respect to such cash-rented land unless the tenant 
independently makes a significant contribution to the farming operation 
of:
    (1) Active personal labor or
    (2) Significant contributions of both active personal management and 
equipment.
    (b) If the equipment is leased by the tenant from:
    (1) The landlord, then the lease must reflect the fair market value 
of the equipment leased with a payment schedule considered reasonable 
and customary for the area or
    (2) The same person or legal entity that is providing hired labor to 
the farming operation, then the contracts for the lease of the equipment 
and for the hired labor must be two separate contracts.
    (c) If the equipment is leased by the tenant from the landlord, or 
from the same person or legal entity that is providing hired labor to 
the farming operation, then the tenant must exercise complete control 
over the leased equipment during the entire current crop

[[Page 433]]

year. Complete control is defined as exclusive access and use by the 
tenant.
    (d) If the cash rent tenant is a joint operation, then each member 
or their spouse must make a significant contribution of active personal 
labor or active personal management as specified in Sec. 
1400.203(a)(1)(ii) to be considered eligible for the member's share of 
the program payments received by the joint operation on the cash rented 
land.
    (e) If the cash rent tenant is a legal entity, then a significant 
contribution of active personal labor or active personal management must 
be made to the legal entity as specified in Sec. 1400.204(a)(2) for the 
legal entity to be considered eligible for the program payments on the 
cash rented land.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010]



                        Subpart E_Foreign Persons



Sec. 1400.401  Eligibility.

    (a) Subject to the conditions set out in paragraphs (b) and (c) of 
this section, any person who is not a citizen of the United States or an 
alien lawfully admitted into the United States for permanent residence 
under the Immigration and Nationality Act (8 U.S.C. 1101-1778) will be 
ineligible to receive any type of loans or payments made available under 
Title I of the Food, Conservation, and Energy Act of 2008, the 
Agricultural Market Transition Act, the Commodity Credit Corporation 
Charter Act (15 U.S.C. 714-714o), or subtitle D of Title XII of the Food 
Security Act of 1985 (16 U.S.C. 3831-3836), or under any contract 
entered into under Title XII of that Act (16 U.S.C. 3801-3845), 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 personal labor in the production of crops on such farm. Likewise, and 
subject to the same conditions, such persons may be ineligible for 
payments under any other program which by its own regulations 
specifically provides for such an ineligibility and adopts these 
regulations.
    (b)(1) A corporation or other legal entity will be ineligible to 
receive payments, loans, and benefits if more than 10 percent of the 
ownership of the legal entity is held by persons who are not citizens of 
the United States or lawful aliens unless each foreign person 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 a legal entity. However, upon the written request of 
the legal entity, the Deputy Administrator may make payments in an 
amount determined by the Deputy Administrator to be representative of 
the percentage interest of the legal 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 
legal entity.
    (2) In determining whether more than 10 percent of the ownership of 
a legal entity is held by persons who are not citizens of the United 
States or by lawful aliens, the ownership interest will be the higher of 
the amount of such interest on:
    (i) The date the applicable program contract or agreement is 
executed by the legal 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 legal entity must 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 legal entity will refund such 
payment, loan, or benefit.
    (5) Where there is only one class of stock or other similar unit of 
ownership, a person's or legal entity's percentage share of the limited 
partnership, corporation, or other similar legal entity will be based 
upon the outstanding shares of stock or other similar unit of ownership 
held by the person or legal entity as compared to the

[[Page 434]]

total outstanding shares of stock or other similar unit of ownership. If 
the limited partnership, corporation, or other similar legal entity has 
more than one class of stock or other unit of ownership, the percentage 
share of the limited partnership, corporation or other similar legal 
entity owned by a person or legal entity will be determined by the 
Deputy Administrator on the basis of market quotations. If market 
quotations are unavailable or so infrequent that they do not represent 
fair market value, such percentage share will 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 legal entity 
that is not subject to this part who is in lawful possession, through a 
lease or otherwise, of a farm owned by a person or legal entity who is 
subject to this part may receive a payment, loan, and benefit without 
regard to this part.

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 19189, Apr. 14, 2010]



Sec. 1400.402  Notification.

    (a) Any legal 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 legal entity conducts its farming 
operation if:
    (1) Any person, group of persons, legal entity, or group of legal 
entities holds more than a 10 percent interest in such legal entity; and
    (2) Such person, group of persons, legal entity, or group of legal 
entities, in accordance with Sec. 1400.401, are ineligible to receive a 
payment, loan, or benefit.
    (b) Such written notification must include the name and social 
security number or taxpayer identification number of such a person or 
legal entity, if known, and of all persons and legal entities that hold 
an interest in the legal entity.
    (c) The failure of the legal entity to provide this information will 
result in the ineligibility of the legal entity to receive any payment, 
loan, or benefit.



           Subpart F_Average Adjusted Gross Income Limitation



Sec. 1400.500  Applicability.

    (a) For the 2009 through 2012 crop, program, or fiscal years, a 
person or legal entity, other than a joint venture or general 
partnership, will not be eligible to receive, directly or indirectly, 
certain program payments or benefits described in Sec. 1400.1 if the 
average adjusted gross income of the person or legal entity exceeds the 
amounts in paragraphs (b) through (d) of this section for the 3 taxable 
years preceding the most immediately preceding complete taxable year, as 
determined by the Deputy Administrator.
    (b) For 2009 through 2012 commodity programs set forth in Sec. 
1400.1, a person or legal entity with an average adjusted gross nonfarm 
income as defined in Sec. 1400.3 that exceeds $500,000 will not be 
eligible to receive program payments or benefits as identified in Sec. 
1400.1.
    (c) For 2009 through 2012 commodity programs set forth in Sec. 
1400.1, a person or legal entity that has an average adjusted gross farm 
income as defined in Sec. 1400.3 that exceeds $750,000 will not be 
eligible to receive a direct payment and other payments made applicable 
by statute or regulation.
    (d) For 2009 through 2012 conservation programs set forth in Sec. 
1400.1, a person or legal entity that has an average adjusted gross 
nonfarm income as defined in Sec. 1400.3 that exceeds $1,000,000 will 
not be eligible to receive payments or benefits under conservation and 
related programs, and other programs made applicable by statute or 
regulation, unless:
    (1) Not less than 66.66 percent of the of the average adjusted gross 
income of the person or legal entity is average adjusted gross farm 
income or
    (2) This limitation may be waived on a case-by-case basis by the 
Administrator or NRCS Chief for the protection of environmentally 
sensitive land of special significance. Such a written waiver request 
must document that land within or adjacent to the producer's 
agricultural operation contains

[[Page 435]]

critical resources such as, but not limited to, threatened, endangered, 
or at-risk species; historical or cultural resources; unique wetlands; 
or critical groundwater recharge areas. In addition, the waiver request 
must either:
    (i) Show that use of conservation program funding by an individual 
producer is critical to the success of a project that benefits multiple 
producers in a community, watershed, or other geographic area or
    (ii) Achieve enduring conservation treatment through use of a long-
term agreement that is greater than 15 years in duration or through use 
of a deed restriction on the land.
    (e) Determinations made under this subpart with regard to 
conservation programs will be based on the year for which the 
conservation program contract or agreement is approved and the 
determination will apply for the entire term of the subject agreement or 
contract.
    (f) Vendors that receive payment for technical services provided in 
conjunction with programs made subject to this subpart by regulation or 
statute, 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.
    (g) Payments to an escrow agent, or other legal entity 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.
    (h) Payments to States, counties, political subdivisions and 
agencies thereof, and Indian tribes as defined in Sec. 1400.3 are not 
subject to this subpart.



Sec. 1400.501  Determination of average adjusted gross income.

    (a) Except as otherwise provided in this subpart, average adjusted 
gross farm income of a person or legal entity includes income or 
benefits derived from or related to the following:
    (1) Production of crops, specialty crops, and unfinished raw 
forestry products;
    (2) The production of livestock, including but not limited to, 
cattle, elk, reindeer, bison, horses, deer, sheep, goats, swine, 
poultry, fish and other aquaculture products used for food, honeybees, 
and products produced by, or derived from, livestock;
    (3) The production of farm-based renewable energy;
    (4) The sale, including the sale of easements and development 
rights, of farm, ranch, forestry land, water or hunting rights, or 
environmental benefits;
    (5) The rental or lease of land or equipment, used for farming, 
ranching, or forestry operations, including water or hunting rights;
    (6) The processing, packing, storing, shedding, and transporting of 
farm, ranch, and forestry commodities, including renewable energy;
    (7) The feeding, rearing, or finishing of livestock;
    (8) The sale of land that has been used for agriculture;
    (9) Any payment or benefit, including benefits from risk management 
practices, crop insurance indemnities, and catastrophic risk protection 
plans;
    (10) Payments and benefits authorized under any program made 
applicable to this subpart by statute or regulation;
    (11) Any other activity related to farming, ranching, or forestry, 
as determined by the Deputy Administrator; and,
    (12) Any income reported on the Schedule F or other schedule used by 
the person or legal entity to report income from farming, ranching, or 
forestry operations to the Internal Revenue Service.
    (b) For the specific purpose of determining the average adjusted 
gross farm income under Sec. 1400.500(d)(1), and in addition to Sec. 
1400.501(a), the average adjusted gross farm income of a person or legal 
entity includes income or benefits derived from the following:
    (1) The sale of equipment to conduct farm, ranch, or forestry 
operations and
    (2) The provision of production inputs and services to farmers, 
ranchers, foresters, and farm operations.
    (c) Except as otherwise provided in this subpart, adjusted gross 
income means:

[[Page 436]]

    (1) For a person filing a separate tax return, the amount reported 
as ``adjusted gross income'' on the final federal income tax return for 
the person for the applicable tax year;
    (2) For a person 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 persons had 
filed two separate returns and that this calculation is consistent with 
the information 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 legal entity, the ``unrelated business taxable 
income'' of the legal 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.
    (d) For purposes of applying this subpart and calculating the 3-year 
average referenced in Sec. 1400.500, that average will be for the 
adjusted gross income for the 3 taxable years preceding the most 
immediately preceding complete taxable year, as determined by CCC. For a 
legal entity that is not required to file a federal income tax return, 
or a person or legal entity that did not have taxable income in one or 
more tax years, the average will be the adjusted gross income, including 
losses, averaged for the 3 taxable years preceding the most immediately 
preceding complete taxable year, as determined by CCC. A new legal 
entity will have its adjusted gross income averaged only for those years 
of the base period for which it was in business; however, a new legal 
entity will not be considered ``new'' to the extent it takes over an 
existing operation and has any elements of common ownership or interests 
with the preceding legal entity, or with persons or legal entities with 
an interest in the ``old'' legal entity. When there is such commonality, 
income of the ``old'' legal entity will be averaged with that of the 
``new'' legal entity for the base period.



Sec. 1400.502  Compliance and enforcement.

    (a) To comply with the average adjusted gross income limitation, a 
person or legal entity, including all interest holders in a legal 
entity, general partnership, or joint venture, must provide annually 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 person or legal entity does not exceed the applicable limitation;
    (2) A certification from the person or legal entity that the average 
adjusted gross income of the person or legal entity does not exceed the 
applicable adjusted gross income limitations;
    (3) 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 person's or legal 
entity's income; or
    (4) Authorization for CCC to obtain tax data from the Internal 
Revenue Service for purposes of verification of compliance with this 
subpart.

[[Page 437]]

    (b)(1) All persons and legal entities are subject to an audit by FSA 
of any information submitted in accordance with this subpart. As a part 
of this audit, income tax returns may be requested, and if requested, 
must be supplied by all related persons and legal entities.
    (2) In addition to any other requirement under any Federal statute, 
relevant Federal 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.
    (c) 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.



Sec. 1400.503  Commensurate reduction.

    (a) Any program payment or benefit subject to this subpart provided 
to a legal entity, general partnership, or joint venture will be reduced 
by an amount commensurate with the direct and indirect ownership 
interest in the legal entity, general partnership, or joint venture of 
each person or legal entity determined to have an average adjusted gross 
income in excess of the applicable limitation under the standards 
provided elsewhere in this subpart for the direct recipient of such 
payments.
    (b) Ownership interest in a legal entity will be reviewed to the 
fourth level of ownership, as specified in Sec. 1400.105, to determine 
whether a commensurate reduction is applicable and the extent of such 
reduction. If an ownership interest is not held by a person in the 
fourth level of ownership in a legal entity, no payment or benefit will 
be made with respect to such interest.



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 further redesignated 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

[[Page 438]]

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 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

[[Page 439]]

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.
    (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

[[Page 440]]

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 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

[[Page 441]]

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.
    (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

[[Page 442]]

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.
    (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 Sales of inventory.
1402.3 Submission of offers, terms, and conditions.
1402.4 Information availability.
1402.5 Late payments.

    Authority: 7 U.S.C. 7285, 15 U.S.C. 714b and 714c.

    Source: 71 FR 40642, July 18, 2006, unless otherwise noted.



Sec. 1402.1  General.

    To facilitate trade through usual and customary channels, 
facilities, and arrangements of trade and commerce, the Commodity Credit 
Corporation (CCC) will disseminate general sales offering information on 
the Farm Service Agency's (FSA) Commodity Operations Web site located on 
the Worldwide Web at http://www.fsa.usda.gov/daco/default.htm. The Web 
site will be reviewed and amended as necessary to reflect current 
general sales offering information. CCC will make regular amendments as 
necessary deleting or adding to the sales provisions or changing prices 
or methods of sales. The information posted at this Web site is for the 
purpose of public information and does not constitute an offer to sell 
by CCC or an invitation for offers to purchase from CCC. CCC may make 
its commodities available for sale without prior notification to storing 
warehouse operators. Information pertaining to opportunities to purchase 
commodities from CCC

[[Page 443]]

will be published on the FSA Commodity Operations Web site when such 
opportunities are available.



Sec. 1402.2  Sales of inventory.

    CCC will entertain offers from prospective buyers for the purchase 
of any commodities owned by CCC, including those commodities that are 
marketed through commercial, Internet-based marketing services. Various 
commodities owned by CCC may be offered for sale through commercial, 
Internet-based marketing services. Interested parties may submit 
requests for information related to Internet-based commodity sales to 
the Director, Warehouse and Inventory Division, Stop 0553, 1400 
Independence Avenue, SW., Washington, DC 20250-9860.



Sec. 1402.3  Submission of offers, terms, and conditions.

    Offers accepted by CCC will be subject to terms and conditions 
prescribed by CCC. These terms include, among other things, payment by 
wire transfer of funds, certified check or cashiers check before 
delivery of the commodity, removal of the commodity from CCC storage 
within a reasonable period of time, and in sales that require a 
commodity to be used for only a specific purpose, documentation that use 
of the commodity was for only that purpose.



Sec. 1402.4  Information availability.

    The terms and conditions of sale with respect to commodities that 
are not sold through Internet-based marketing service are available 
online. Requests for terms and conditions may be addressed to the 
Director, Warehouse and Inventory Division, Stop 0553, 1400 Independence 
Avenue, SW., Washington, DC 20250-9860.



Sec. 1402.5  Late payments.

    If payment is not received by CCC within the period specified in the 
sales contract, interest will be assessed by CCC. If a buyer fails to 
make arrangements for payment according to the provisions of the 
contract, CCC retains the right to terminate the sales contract. If CCC 
terminates the sales contract for default in whole or in part, CCC may 
offer the commodity for sale and the original party will be liable to 
CCC for any losses incurred and damages sustained as a result of the 
party's failure to timely remit payment for the commodity.



PART 1403_DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents



Sec.
1403.1 Applicability.
1403.2 Administration.
1403.3 Definitions.
1403.4 Demand for payment of debts.
1403.5 Collection by payment in full.
1403.6 Collection by installment payments.
1403.7 Collection by administrative offset.
1403.8 Withholding.
1403.9 Late payment interest and administrative charges.
1403.10 Waiver of late payment interest and administrative charges.
1403.11 Administrative appeal.
1403.12 Additional administrative collection action.
1403.13 Contact with debtor's employing agency.
1403.14 Prior provision of rights with respect to debt.
1403.15 Discharge of debts.
1403.16 Referral of delinquent debts to credit reporting agencies.
1403.17 Referral of debts to Department of Justice.
1403.18 Referral of delinquent debts to IRS for tax refund offset.
1403.19 Reporting of discharged debts to IRS.
1403.20 Referral of debts to private collection agencies.
1403.21 Collection of 1988 and 1989 advance deficiency overpayments.

    Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445b-2(b).

    Source: 54 FR 52878, Dec. 22, 1989, unless otherwise noted.



Sec. 1403.1  Applicability.

    Except as may otherwise be provided by statute, this part sets forth 
the manner in which the Commodity Credit Corporation (CCC) will settle 
and collect debts by and against CCC.

[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]



Sec. 1403.2  Administration.

    The regulations in this part will be administered under the general 
supervision and direction of the Executive Vice President, CCC and the 
Administrator, Farm Service Agency (FSA).

[[Page 444]]



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.
    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

[[Page 445]]

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;
    (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

[[Page 446]]

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:
    (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

[[Page 447]]

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 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

[[Page 448]]

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.
    (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

[[Page 449]]

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.
    (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.

[[Page 450]]

    (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.
    (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

[[Page 451]]

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 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

[[Page 452]]

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 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

[[Page 453]]

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.
    (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.

[[Page 454]]



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 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.

[[Page 455]]

    (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.
1404.9 OMB Control Numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 590h(g).

    Source: 54 FR 52883, Dec. 22, 1989, unless otherwise noted.



Sec. 1404.1  General statement.

    This part sets forth the manner in which a person may assign a cash 
payment which is made by the Farm Service Agency (FSA) or the Commodity 
Credit Corporation (CCC). Such payments may only be assigned in the 
manner set forth in this part.



Sec. 1404.2  Definitions.

    (a)(1) Assignee means any person, including any agency of the 
Federal Government, to whom an assignment of an FSA or CCC payment is 
made in accordance with this part.
    (2) Assignor means any person who is the recipient of a payment from 
FSA or CCC who assigns the payment to another person in accordance with 
this part.
    (3) Payment means a cash payment and excludes
    (i) Any payment made in accordance with part 1470 of this title;
    (i) Price support loan or purchase agreement proceeds; and
    (iii) Any payments made in accordance with parts 1487, 1488, 1491, 
1492, and 1493 of this title.
    (b) The terms defined in parts 719, 1413, 1421 and 1427 shall also 
be applicable to this part.



Sec. 1404.3  Payments which may be assigned.

    Except as otherwise provided in this part or in individual program 
regulations, contracts and agreements entered into by FSA or CCC, any 
payment due a person from FSA or CCC may be assigned.

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]



Sec. 1404.4  Execution of assignment form.

    (a)(1) The assignment of any FSA or CCC payment must be made by the 
execution of Form CCC-36 or Forms CCC-251 and CCC-252. Form CCC-36 is 
applicable to payments made under programs administered in accordance 
with 7 CFR parts 701, 704, 1413, 1430, 1468, 1472 and 1475. Such form is 
also applicable to any other program which is administered by a county 
ASC committee. Forms CCC-251 and 252 are applicable to all other CCC or 
FSA programs and contracts.
    (2)(i) To be recognized by FSA or CCC, Form CCC-36 must be filed in 
the county FSA office prior to the time the county committee approves 
the making of the payment covered by the assignment. To be recognized by 
FSA or CCC, Forms CCC-251 and 252 must be filed with the FSA or CCC 
office from which the payment will be made prior to the making of the 
payment.
    (ii) Form CCC-36 or Forms CCC-251 and 252 must be signed by both the 
assignor and the assignee.
    (3) The assignor and the assignee shall promptly notify the 
appropriate FSA or CCC office of any change affecting the assignment.
    (b) [Reserved]

[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]

[[Page 456]]



Sec. 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 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 crop insurance violation.
1405.9 Commodity assessments.

    Authority: 7 U.S.C. 1515; 7 U.S.C. 7416a; 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

[[Page 457]]

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 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

[[Page 458]]

commitments of the United States in the Uruguay Round Agreements.

[67 FR 64751, Oct. 21, 2002]



Sec. 1405.8  Disqualification due to crop insurance violation.

    (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) 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) The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 
et seq.).
    (8) 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, as amended at 72 FR 63361, Nov. 8, 2007]



Sec. 1405.9  Commodity assessments.

    (a) CCC will deduct from the proceeds of a marketing assistance loan 
an amount equal to the amount of an assessment otherwise required to be 
remitted to a State agency under a State statute by the producer of the 
commodity pledged as collateral for such loan or by the first purchaser 
of such commodity subject to the requirements of paragraph (b) of this 
section.
    (1) The assessment will be collected in one of the following ways, 
as requested by the State, but not both:
    (i) When the proceeds of the loan are disbursed; or
    (ii) When the commodity pledged as collateral for the loan is 
forfeited to CCC, in which case CCC will collect from the producer the 
amount of the assessment submitted by CCC to the State.
    (2) CCC will deduct from the proceeds of a marketing assistance loan 
an amount equal to the amount of an assessment otherwise authorized to 
be remitted to a federally authorized entity under a Federal statute by 
the producer of the commodity pledged as collateral for such loan or the 
first purchaser of such commodity in the manner agreed to by CCC and the 
entity to whom the Secretary of Agriculture has authorized to collect 
such assessments.
    (b) CCC will collect commodity assessments authorized under a State 
statute when:
    (1) The State entity has:
    (i) Requested that the assessment be collected;
    (ii) Identified whether the assessment is to be collected at the 
time the loan proceeds are disbursed or at the time the commodity is 
forfeited to CCC;
    (iii) Identified the person who may enter into an agreement with CCC 
that sets forth the obligations of the State and CCC with respect to the 
collection of the assessment; and

[[Page 459]]

    (iv) Provided an opinion from the Office of the Attorney General to 
CCC that concludes the person signing the agreement may obligate the 
State to comply with the agreement and the provisions of Public Law 108-
470 have been met.
    (2) The agreement described in paragraph (c) of this section has 
been executed by the appropriate State official and CCC.
    (c) CCC will enter into an agreement with an authorized State 
official to collect commodity assessments when the actions set forth in 
paragraphs (b)(1) and (2) of this section have been completed. Such 
agreement will contain the obligations and responsibilities of the State 
and CCC. All such agreements will include provisions that provide:
    (1) The State will indemnify CCC for any costs incurred in the 
collection of the assessment including costs incurred with respect to 
resolution of disputes arising from the requested collection of the 
assessment but not for administrative costs incurred by CCC in the 
collection of the assessment;
    (2) The State, in cases where an assessment has been collected two 
or more times with respect to the same quantity of the commodity subject 
to the assessment, will refund the amount of the excess collection to 
the producer.
    (3) The agreement may be terminated by either party upon 30 days 
notice.
    (4) The State, in cases where the marketing assistance loan is made 
by a cooperative marketing association or a designated marketing 
association approved by CCC, or any other similar entity that is 
approved by CCC, to obtain such a loan on behalf of its members may 
enter into individual arrangements with such entity to facilitate the 
collection of the assessment with the approval of CCC.

[70 FR 52285, Sept. 2, 2005, as amended at 75 FR 70812, Nov. 19, 2010]



PART 1407_DEBARMENT AND SUSPENSION--Table of Contents



Sec.
1407.1 Purpose.
1407.2 Nonprocurement debarment and suspension.
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.

[[Page 460]]

1409.4 Exemptions.
1409.5 Closure of meetings.
1409.6 Notices to the public.
1409.7 Records retention.
1409.8 Public inspection and copying of records; applicable fees.
1409.9 Report to Congress.

    Authority: Sec. 3(a), 90 Stat. 1244 (5 U.S.C. 552b), and sec. 4, 62 
Stat. 1070, as amended (15 U.S.C. 714b).

    Source: 42 FR 14673, Mar. 16, 1977, unless otherwise noted.



Sec. 1409.1  General statement.

    (a) It is the policy of Commodity Credit Corporation, under the 
provisions of the ``Government in the Sunshine Act'' (5 U.S.C. 552b) to 
make available to the public, to the fullest extent practicable, 
information regarding the decision process of the Board of Directors of 
Commodity Credit Corporation.
    (b) This part sets forth the procedural requirements designed to 
provide the public with such information while continuing to protect the 
rights of individuals and to maintain the capabilities of Commodity 
Credit Corporation in carrying out its responsibilities under the 
statutes administered by Commodity Credit Corporation.



Sec. 1409.2  Definitions.

    (a) The term Board means the Board of Directors of Commodity Credit 
Corporation.
    (b) The term Director means an individual who is a member of the 
Board of Directors of Commodity Credit Corporation and includes the 
Secretary of Agriculture, who is by statute an ex-officio director and 
Chairman of the Board.
    (c) The term General Counsel means the General Counsel or the 
Assistant General Counsel of Commodity Credit Corporation.
    (d) The term meeting means the deliberations of at least five 
(quorum) Directors of the Board of Directors of Commodity Credit 
Corporation where such deliberations determine or result in the joint 
conduct or disposition of official Board business but shall not include 
deliberations for:
    (1) Closing a portion or portions of a meeting or series of meetings 
as provided in Sec. 1409.5 (a) and (b) of this part, or
    (2) Calling a meeting at a date earlier than announced as provided 
in paragraph 1409.6(a)(2) of this part; or
    (3) Changing the subject matter of a publicly announced meeting as 
provided in Sec. 1409.6(b) of this part; or
    (4) Determining whether or not to withhold from disclosure 
information pertaining to a meeting or portions of a meeting or series 
of meetings as provided in Sec. 1409.5(b) of this part.
    (e) The term public observation means the right of any member of the 
public to attend and observe, but not participate or interfere in any 
way in an open meeting of the Board, within the limits of reasonable and 
comfortable accommodations made available for such purpose by Commodity 
Credit Corporation.



Sec. 1409.3  Open meetings.

    Every portion of every meeting of the Board of Directors will be 
open to public observation except as provided in 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;

[[Page 461]]

    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings,
    (ii) Deprive a person of a right to a fair trial or to an impartial 
adjudication,
    (iii) Constitute an unwarranted invasion of personal privacy, or
    (iv) Disclose the identity of a confidential source, and, in the 
case of a record compiled by a criminal enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source,
    (v) Disclose investigative techniques and procedures, or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to: (i) Lead to significant financial speculation in agricultural 
commodities or significantly endanger the stability of any financial 
institution; or
    (ii) Significantly frustrate implementation of a proposed Board 
action except where the Board has already disclosed to the public the 
content or nature of its proposed action or where Commodity Credit 
Corporation is required by law to make such disclosure on its own 
initiative prior to taking final action on such proposal; or
    (10) Specifically concern Commodity Credit Corporation's 
participation in a civil action or proceedings.
    (b) Any Board meeting or portion thereof, which may be closed, or 
any information which may be withheld under paragraph (a) of this 
section, will not be closed or withheld, respectively, in any case where 
the Board finds the public interest requires otherwise.



Sec. 1409.5  Closure of meetings.

    (a) Procedure for closing a majority of the meetings. (1) A majority 
of the meetings of the Board will be closed to the public pursuant to 
exemptions 4, 8, (9)(i) and 10 of Sec. 1409.4(a) of this part. These 
meetings will include deliberations such as those relating to the levels 
of price support for various agricultural commodities, the allocation of 
quantities of commodities for export programs, and the interest rates 
for commodity loans and farm storage facility loans. Board meetings will 
be closed pursuant to exemptions 4, 8, (9)(i) and 10 when at least five 
Directors vote at the beginning of such meeting, or portion thereof, to 
close the exempt portion or portions of the meeting. A copy of the vote, 
reflecting the vote of each Director on the question, will be made 
available to the public. The Board will, except to the extent that such 
information is exempt from disclosure under the exemptions in Sec. 
1409.4(a) of this part, provide the public with public announcement of 
the time, place, and subject matter of the meeting and of each portion 
thereof, at the earliest practicable time.
    (2) The provisions of paragraph (b) of this section and Sec. 
1409.6, except Sec. 1409.6(e), of this part will not apply to any 
meeting or portion thereof to which paragraph (a) of this section 
applies.
    (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.

[[Page 462]]

    (2) A portion or portions of a meeting may be closed on the basis of 
one or more of the exemptions in Sec. 1409.4(a) of this part only when 
at least five Directors vote to take such action.
    (3) A single vote of the entire membership of the Board may be taken 
with respect to a series of meetings, a portion or portions of which are 
proposed to be closed to the public or with respect to the withholding 
of any information concerning such series of meetings, on the basis of 
one or more of the exemptions in Sec. 1409.4(a) of this part. Each 
meeting in such series must involve the same particular matters and must 
be scheduled to be held no more than thirty days after the initial 
meeting in such series. The vote of each Director participating in such 
vote will be recorded and no proxy vote shall be allowed.
    (4) Whenever any person whose interests may be directly affected by 
a portion of a Board's meeting requests that the Board close such 
portion to the public on the basis of exemptions (5), (6), or (7) of 
Sec. 1409.4(a) of this part, the Board, upon the request of any one of 
its members, will vote whether or not to close such portion of the 
meeting. The vote of each Director participating in such vote will be 
recorded and no proxy shall be allowed.
    (c) General counsel's certification. Before every Board meeting 
closed on the basis of one or more of the exemptions in Sec. 1409.4(a) 
of this part, the General Counsel will publicly certify that, in his 
opinion, the meeting may be closed to the public and shall state each 
relevant exemption.



Sec. 1409.6  Notices to the public.

    (a)(1) The Secretary of the Board will make a public announcement at 
least one week before each Board meeting of (i) the time and place of 
the meeting, (ii) subject matter of the meeting, except to the extent 
that such information is exempt from disclosure under Sec. 1409.4(a) of 
this part, (iii) whether the meeting is to be open or closed to the 
public and (iv) the name and business telephone number of the Secretary 
of the Board.
    (2) Notwithstanding paragraph (a)(1) of this section, less than one 
week advance public notice for a meeting may be given when at least five 
Directors determine by recorded vote that the Board business requires 
that a meeting be called at an earlier date, but in such case, 
announcement of the meeting will be made at the earliest practicable 
time.
    (b)(1) When the Board votes on whether to close a portion or 
portions of a meeting or a series of meetings, or with respect to 
withholding any information concerning such meeting or series of 
meetings, in accordance with Sec. 1409.5(b) of this part, the Secretary 
of the Board will make available to the public a written copy of such 
vote reflecting the vote of each member on the question within one 
business day of such vote.
    (2) If the Board votes to close a portion or portions of a meeting 
or a series of meetings in accordance with Sec. 1409.5(b) of this part, 
the Secretary of the Board will make available to the public within one 
business day of such vote, (i) a list of the names and affiliations of 
persons expected to be present at such closed portion or portions of the 
meeting or series of meetings and (ii) a full written explanation of the 
Board's action in closing the portion of portions of the meeting or 
series of meetings, unless such disclosure would reveal the information 
that the meeting itself was closed to protect.
    (c) The time or place of a board meeting may be changed following 
the public announcement as required by paragraph (a)(1) of this section 
only if the Board publicly announces such change or changes at the 
earliest practicable time.
    (d) The subject matter of a Board meeting or the determination of 
the Board to open or close a meeting or portions thereof to the public, 
may be 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

[[Page 463]]

public promptly and fully informed of public announcements including the 
use of a bulletin board outside the office of the Secretary of the Board 
at the address indicated in Sec. 1409.8(b) of this part. Requests for 
information concerning Board meetings should be addressed to the 
Secretary of the Board.
    (f) Immediately following each public announcement required by this 
section, the information provided in such public announcement will be 
submitted for publication in the Federal Register.
    (g) The Board usually meets in room 200-A, Administration Building, 
United States Department of Agriculture, 14th Street and Independence 
Avenue, SW., Washington, DC. Each person interested in attending an open 
meeting of the Board should notify the Secretary of the Board at least 
one business day prior to the open meeting of their intention to attend 
the meeting. Any person who fails to do so may not be accommodated if 
there is insufficient space in the meeting room.



Sec. 1409.7  Records retention.

    (a) The Secretary of the Board will maintain the following records 
for each Board meeting, or portion thereof which is closed to the public 
pursuant to a vote under Sec. 1409.5 of this part:
    (1) A copy of the General Counsel's certification required by Sec. 
1409.5(c) of this part;
    (2) A copy of a statement from the presiding officer which sets 
forth the time and place of the closed meeting or portion thereof and 
list of persons present; and
    (3) A complete verbatim transcript or electronic recording adequate 
to record fully the proceedings of each Board meeting or portion of a 
meeting, except that in the case of a meeting or portion of a meeting 
closed to the public on the basis of exemptions (8), (9)(i) or (10) of 
Sec. 1409.4(a) of this part, the Secretary of the Board will maintain 
either a transcript, electronic recording, or a complete set of minutes. 
Such minutes shall fully and clearly describe all matters discussed and 
shall provide a full and accurate summary of actions taken and the 
reasons therefor, including a description of each of the views expressed 
on any item and the record of any roll-call vote reflecting the vote of 
each member on the question. All documents considered in connection with 
any action will be identified in such minutes.
    (b) The retention period for the records required by paragraph (a) 
of this section will be for a period of at least two years after the 
particular Board meeting, or until one year after the conclusion of any 
Board proceeding with respect to which the meeting or portion thereof 
was held, whichever occurs later.



Sec. 1409.8  Public inspection and copying of records; applicable fees.

    (a) The Secretary of the Board will make promptly available to the 
public the transcript, electronic recording, transcription of the 
recording, or minutes of the discussion of any item on the agenda of a 
Board meeting, or any item of the testimony of any witness received at 
the meeting except for such item or items of such discussion or 
testimony as the Secretary of the Board determines to contain 
information which may be withheld on the basis of one or more of the 
exemptions in Sec. 1409.4(a) of this part.
    (b) Requests for public inspection of electronic recording, 
transcripts or minutes of Board meetings shall be made to the Secretary 
of the Board of Directors of Commodity Credit Corporation, Room 218-W, 
Administration Building, United States Department of Agriculture, 14th 
Street and Independence Avenue, SW., Washington, DC 20250.
    (c) The transcripts, minutes, or transcriptions of electronic 
recordings of a Board meeting will disclose the identity of each 
speaker, and will be furnished to any person at the actual cost of 
transcription or duplication.



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

[[Page 464]]

Sunshine Act, including any costs assessed against Commodity Credit 
Corporation in such litigation.

[[Page 465]]



           SUBCHAPTER B_LOANS, PURCHASES, AND OTHER OPERATIONS



    Editorial Note: For Federal Register citations to regulations 
affecting 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 at www.fdsys.gov.



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 Emergency Forestry Program.
1410.13-1410.19 [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 Average 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.
1410.64 Transition Incentives Program.

    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

[[Page 466]]

in program benefits being withheld or denied.
    (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 National Institute of Food and 
Agriculture (NIFA) 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) Except as agreed by CCC and the participant together:
    (1) The regulations in this part and others governing CRP as of 
September 30, 2008, will 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, 2008); and
    (2) Except as specified in paragraph (j)(1) of this section, this 
part will apply to all CRP contracts.

[68 FR 24835, May 8, 2003, as amended at 74 FR 30911, June 29, 2009; 76 
FR 4805, Jan. 27, 2011]



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:
    (1) Any crop planted and produced by annual tilling of the soil or 
on an annual basis by one-trip planters,
    (2) Sugarcane planted or produced in a State, or
    (3) Alfalfa and other multi-year grasses and legumes grown in a 
rotation practice as approved by CCC.
    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 CRP, including any incentive 
payments that are not specifically cost-shares.
    Beginning farmer or rancher means, as determined by CCC, a person or 
entity who:
    (1) Has not been a farm or ranch operator or owner for more than 10 
years,
    (2) Materially and substantially participates in the operation of 
the farm or ranch involved in the CRP contract modification, and
    (3) If an entity, is an entity in which 50 percent of the members or 
stockholders of the entity meet the first two requirements of this 
definition.
    Commercial pond-raised aquaculture facility means, as determined by 
CCC, any earthen facility from which $1,000 or more of freshwater food 
fish were sold or normally would have been sold during a calendar year.
    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

[[Page 467]]

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 a use of land with any rotation requirements as 
may be specified by the Deputy Administrator: for alfalfa and other 
multi-year grasses and legumes planted during 2002 through 2007; as 
summer fallow during 2002 through 2007; and in which the land was 
previously enrolled in the program (for which the contract expired 
during the period 2002 through 2007) and where the grass cover required 
by the CRP contract continues to be maintained as though still enrolled. 
Where the land use for a year qualifies as a ``conserving use'' under 
this definition, then, the land for that year shall, for purposes of 
eligibility under Sec. 1410.6(a)(1) be considered to have been planted 
to an ``agricultural commodity.''
    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; cropland enrolled in 
CRP; or land for which the producer received 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

[[Page 468]]

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.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group, or community, including pueblos, rancherias, colonies 
and 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. 1601-1629h), which is recognized as eligible 
for the special programs and services provided by the United States to 
Indians because of their status as Indians.
    Landlord means a person who rents or leases acreage to another 
person.
    Limited resource farmer or rancher means:
    (1) A person with direct or indirect gross farm sales of not more 
than $155,200 in each of the previous two calendar years preceding the 
year of enrollment (adjusted for inflation using Prices Paid by Farmer 
Index as compiled by the USDA National Agricultural Statistics Service), 
and
    (2) 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 U.S. Department of Commerce data).
    Local FSA office means the FSA office serving the area in which the 
FSA records are located for the farm or ranch.
    Merchantable timber means timber grown for commercial purposes on 
private non-industrial forest land on which the average tree has a trunk 
diameter of at least 6 inches measured at a point no less than 4.5 feet 
above the ground.
    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 a crop 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.
    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.
    Pollinator means an insect or other animal that carries pollen from 
one flower to another.
    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.
    Present value means the value of a stream of future payments 
discounted by 5 percent in accordance with Office of Management and 
Budget Circular A-94 (revised January 2006), Discount Rates To Be Used 
in Evaluating Time-Distributed Costs and Benefits.
    Private non-industrial forest land means, for purposes of Sec. 
1410.12, lands with existing tree cover that are owned by a private non-
industrial forest landowner and which were damaged by hurricanes 
occurring in calendar year 2005.
    Private non-industrial forest landowner means, for purposes of Sec. 
1410.12, an individual, group, association, corporation, Indian Tribe, 
other legal private entity, or State School Trust, owning non-industrial 
private forest land or who

[[Page 469]]

receives concurrence from the landowner for making the claim in lieu of 
the owner, and for practice implementation and who holds a lease on the 
land for a minimum of 10 years. Corporations whose stocks are publicly 
traded or owners or lessees principally engaged in the primary 
processing of raw wood products are excluded from this definition. An 
owner of land leased to a lessee shall also be excluded who should be 
excluded under the previous sentence.
    Retired or retiring owner or operator means an owner or operator of 
land enrolled in a CRP contract who has ended active labor in farming 
operations as a producer of agricultural crops or expects to do so 
within 5 years of the CRP contract modification.
    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.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who is a member of a socially disadvantaged group whose members have 
been subjected to racial or ethnic prejudice because of their identity 
as members of a group without regard to their individual qualities. 
Gender is not included as a covered group. Socially disadvantaged groups 
include the following and no others unless approved in writing by the 
Deputy Administrator:
    (1) American Indians or Alaskan Natives,
    (2) Asians or Asian-Americans,
    (3) Blacks or African Americans,
    (4) Hispanics, and
    (5) Native Hawaiians or other Pacific Islanders.
    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 school trust land means land owned by a State with the 
explicit purpose of supporting public schools.
    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 assistance in regard to determining the 
eligibility of land and practices, implementing and certifying 
practices, ensuring contract performance, and providing annual rental 
rate surveys. The technical assistance provided in connection with CRP 
to owners or operators, as approved by CCC, includes technical 
expertise, information, and tools necessary for the conservation of 
natural resources on land; technical services provided directly to 
farmers, ranchers, and other eligible entities, such as conservation 
planning, technical consultation, and assistance with design and 
implementation of conservation practices; and, technical infrastructure, 
including activities, processes, tools, and agency functions needed to 
support delivery of technical services, such as technical standards, 
resource inventories, training, data, technology, monitoring, and 
effects analyses.

[[Page 470]]

    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.

[68 FR 24835, May 8, 2003, as amended at 69 FR 26763, May 14, 2004; 71 
FR 31917, June 2, 2006; 74 FR 30911, June 29, 2009; 75 FR 27168, May 14, 
2010; 75 FR 44071, July 28, 2010]



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, as 
appropriate, addressing issues raised by State, regional, and national 
conservation initiatives and encouraging more permanent conservation 
practices, such as, but not limited to, 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.

[68 FR 24835, May 8, 2003, as amended at 74 FR 30912, June 29, 2009]



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 as follows:
    (1) 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; or
    (2) Cropland in a county enrolled under continuous signup provisions 
as

[[Page 471]]

specified in Sec. 1410.30 or Sec. 1410.50 may be excluded from the 
restrictions in paragraph (a) of this section, as determined by CCC, 
provided that the county government concurs.
    (c) These restrictions on participation shall be in addition to any 
other restriction imposed by law.

[68 FR 24835, May 8, 2003, as amended at 75 FR 44071, July 28, 2010]



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.
    (c) The provisions of this section do not apply to beginning or 
socially disadvantaged farmers or ranchers who are eligible participants 
in the Transition Incentives Program as specified in Sec. 1410.64.

[68 FR 24835, May 8, 2003, as amended at 75 FR 27169, May 14, 2010]



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 2002 through 
2007, as determined by the CCC, 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 CCC; and 
is physically and legally capable of being planted in a normal manner to 
an agricultural commodity, as determined by the CCC; or
    (2) Marginal pasture land, as determined by the CCC, that:
    (i) Is determined to be suitable for use as a riparian buffer or is 
made eligible in a CREP for similar water quality purposes as determined 
by the CCC. 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 CCC, 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
    (ii) [Reserved]
    (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 CCC.

[[Page 472]]

    (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 CCC, 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 CCC, 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:
    (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 CCC, 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 CCC, 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 CCC;
    (7) Be non-irrigated or irrigated cropland that produces or serves 
as the recharge area, as determined by the CCC, 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 CCC;

[[Page 473]]

    (12) Be cropland that, as determined by the CCC, 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 CCC, 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) 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 CCC.

[68 FR 24835, May 8, 2003, as amended at 69 FR 26763, May 14, 2004; 75 
FR 44071, July 28, 2010; 78 FR 48037, Aug. 7, 2013]



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, 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

[[Page 474]]

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 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 (FWP) within the 
overall Conservation Reserve Program provided for in this part.
    (b) As determined by CCC, eligible owners and operators may enroll 
land in FWP provided that the land:
    (1) Is a wetland, including a converted wetland, as determined by 
CCC, that has been planted or considered planted to an agricultural 
commodity, as defined in Sec. 1410.2, in 3 of the 10 most recent crop 
years and that does not exceed the size limitations of this section;
    (2) Is enrolled to be a constructed wetland that is to be developed 
to receive flow from a row crop agriculture drainage system and is 
designed to provide nitrogen removal in addition to other wetland 
functions and that does not exceed the size limitations of this section;
    (3) Was a commercial pond-raised aquaculture facility in any year 
during the period of calendar years 2002 through 2007; or
    (4) Was cropped, after January 1, 1990, and before December 31, 
2002, at least 3 of 10 crop years, was subject to the natural overflow 
of a prairie wetland, and does not exceed the size limitations of this 
section.
    (c) In addition, land may be enrolled in FWP if the land is buffer 
acreage that provides protection for and is contiguous to land otherwise 
eligible under paragraphs (b)(1), (b)(2), or (b)(4) of this section, 
subject to other provisions of this section.
    (d) Total enrollment in CRP under this section may not exceed 1 
million acres. In addition, the maximum size of a land enrolled under 
this section may not exceed, as determined by CCC:
    (1) 40 contiguous acres for land made eligible by paragraph (b)(1) 
of this section;

[[Page 475]]

    (2) 40 contiguous acres for land made eligible by paragraph (b)(2) 
of this section;
    (3) 20 contiguous acres for land made eligible by paragraph (b)(4) 
of this section; or
    (4) A suitable buffer as determined by the Deputy Administrator for 
lands added under paragraph (c) of this section.
    (e) All participants subject to a CRP contract under this section 
must agree to establish and maintain, as appropriate, the practice 
described in paragraph (b) of this section to the maximum extent 
possible, as determined by CCC, in accordance with NRCS FOTG including, 
as appropriate, restoring the hydrology of the wetland and establishing 
vegetative cover (which may include emerging vegetation in water and 
bottomland hardwoods, cypress, and other appropriate tree species in 
shallow water areas), as determined by CCC.
    (f) Offers for contracts under this section must be submitted under 
continuous signup provisions as authorized in Sec. 1410.30.
    (g) Except as otherwise determined by CCC, all other requirements of 
this part apply to enrollments under this section, and CCC may add such 
other requirements or conditions as it deems 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.

[74 FR 30912, June 29, 2009]



Sec. 1410.12  Emergency Forestry Program.

    (a) In addition to other allowable enrollments, certain non-
industrial private forest land located in Presidential- or Secretarial-
declared primary disaster counties that suffered damage from hurricanes 
in calendar year 2005 may be enrolled through the Emergency Forestry 
Conservation Reserve Program (EFCRP) provided for in this section.
    (b) Owners and/or operators may enroll non-industrial private forest 
land, as defined in Sec. 1410.2, in the CRP provided that the private 
non-industrial forest land:
    (1) Has merchantable timber (timber on land on which the average 
tree has a trunk diameter of at least six inches measured at a point no 
less than four and one-half feet above the ground); and
    (2) Has experienced a loss of 35 percent or more of merchantable 
timber in a 2005 calendar year hurricane-affected county due to 2005 
hurricanes.
    (c) The provisions of Sec. 1410.4 do not apply to this section.
    (d) Any overall acreage enrollment limit imposed on CRP shall not 
apply to acreage enrolled under this section.
    (e) All participants subject to a CRP contract entered into pursuant 
to this section must agree:
    (1) To restore the land, through site preparation and planting of, 
to the maximum extent practicable, native species or similar species as 
existing prior to hurricane damages as may be specified in the contract, 
and comply with other requirements as may be specified in the contract;
    (2) To establish temporary vegetative cover; and
    (3) That the contract term shall be for a period of 10 years, during 
which time standing timber may not be harvested from the enrolled land 
except as may be approved by CCC in the conservation plan as part of the 
normal maintenance of the forest land.
    (f) Offers for contracts under this section shall be submitted under 
continuous signup provisions as authorized in Sec. 1410.30.
    (g) In evaluating contract offers to which this section applies, 
different factors, as determined by CCC, may be considered for priority 
purposes. These include but are not limited to soil erosion prevention, 
water quality improvement, wildlife habitat restoration, and mitigation 
of economic loss.
    (h) In return for a contract entered into under this paragraph, a 
participant may opt for:
    (1) Annual rental payments authorized by Sec. 1410.42, except that 
the payment rate shall be equal to:
    (i) The average rental rate for CRP contracts in the county in which 
the land is actually located; or
    (ii) In the case where no CRP contracts are enrolled in a county, 
the average rental rate will be the CRP rate

[[Page 476]]

applicable to a nearby similarly-situated county.
    (2) In lieu of the annual payments provided for in paragraph (h)(1) 
of this section, lump sum payment equal to the present value of the 
total amount of annual rental payments that would otherwise be paid 
under paragraph (h)(1) of this section.
    (i) Cost-share assistance authorized under Sec. 1410.40 may be 
reduced by the value of salvaged timber or timber products which are 
removed to prepare the site for replanting.
    (j) The provisions of Sec. 1410.7(c), which concern enrollment 
limits, do not apply to contracts to which this section applies.
    (k) To avoid duplicate payments, participants under this section are 
not eligible to receive EFCRP funding for land on which the participant 
has or will receive funding under any other program that covers the same 
expenses.
    (l) All other requirements of this part shall apply to enrollments 
under this section.

[71 FR 31917, June 2, 2006]



Sec. Sec. 1410.13-1410.19  [Reserved]



Sec. 1410.20  Obligations of participant.

    (a) All participants subject to a CRP contract must agree to:
    (1) Carry out the terms and conditions of such CRP contract;
    (2) Implement the conservation plan, which is part of such contract, 
in accordance with the schedule of dates included in such conservation 
plan unless the Deputy Administrator determines that the participant 
cannot fully implement the conservation plan for reasons beyond the 
participant's control, and CCC agrees to a modified plan. 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:

[[Page 477]]

    (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 and management activities 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. 
The producer must undertake management activities on the land as needed 
throughout the term of the CRP contract to implement the conservation 
plan.
    (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 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.

[68 FR 24835, May 8, 2003, as amended at 74 FR 30912, June 29, 2009]



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

[[Page 478]]

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) Notwithstanding paragraph (b) of this section, when all other 
appropriate factors are equivalent, CCC may give preference to offers 
from residents of the county or contiguous county where the offered land 
is located.
    (d) 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 to offer to enroll the acreage in the program or a lesser rate.

[68 FR 24835, May 8, 2003, as amended at 75 FR 44071, July 28, 2010]



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

[[Page 479]]

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;
    (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;
    (4) During the final year of the CRP contract's term, facilitate a 
transition of land subject to the contract from a retired or retiring 
owner or operator to a beginning or socially-disadvantaged farmer or 
rancher for the purpose of returning some or all of the land into 
production using sustainable grazing or crop production methods; 
provided that for this purpose ``sustainable grazing and crop production 
methods'' will be considered, as determined by the Deputy Administrator, 
to be methods that would be designed as part of an overall plan defined 
on an ecosystem level to be useful in the creation of integrated systems 
of plant and animal production practices that have a site specific 
application that would:

[[Page 480]]

    (i) Meet human needs for food and fiber;
    (ii) Enhance the environment and the natural resource base;
    (iii) Use nonrenewable resources efficiently; and
    (iv) Sustain the economic viability of farming operation; or
    (5) 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.

[68 FR 24835, May 8, 2003, as amended at 75 FR 27169, May 14, 2010]



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 assistance has been, or is 
being, made with respect to the establishment of the cover crop on land 
subject to such contract.
    (g) CCC may make cost-share payments for thinning of existing tree 
stands to benefit wildlife habitat and other resource conditions on 
enrolled land, as determined by CCC.

[68 FR 24835, May 8, 2003, as amended at 74 FR 30912, June 29, 2009]



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

[[Page 481]]

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 or legal 
entity may receive, directly or indirectly, under CRP for any fiscal 
year must not exceed $50,000. The regulations in part 1400 of this 
chapter will be applicable for determining whether the limit has been 
exceeded.
    (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
    (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.

[68 FR 24835, May 8, 2003, as amended at 74 FR 30912, June 29, 2009]



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  Average adjusted gross income.

    (a) Benefits under this part will not be available to persons or 
legal entities whose average adjusted gross income exceeds $1,000,000 or 
as further specified in part 1400 subpart F of this chapter.

[[Page 482]]

    (b) The limit specified in paragraph (a) of this section may be 
waived as specified in part 1400 subpart F of this chapter.

[74 FR 30912, June 29, 2009]



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 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

[[Page 483]]

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.
    (d) Crop insurance purchase requirements in part 1405 of this 
chapter apply to contracts executed in accordance with this part.

[68 FR 24835, May 8, 2003, as amended at 69 FR 26763, May 14, 2004]



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 found to contain material errors of fact or is not 
in conformity with this part, these regulations will 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.

[74 FR 30912, June 29, 2009]



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;
    (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

[[Page 484]]

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 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.

[[Page 485]]

    (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.
    (g) As determined by CCC, incentives may be authorized to foster 
opportunities for Indian tribes and beginning, limited resource, and 
socially disadvantaged farmers and ranchers and to enhance long-term 
environmental goals.
    (h) As determined by CCC, consistent with the purposes of CRP, the 
development of habitat for, and use of conservation practices for, 
native and managed pollinators may be authorized.

[68 FR 24835, May 8, 2003, as amended at 75 FR 27169, May 14, 2010; 75 
FR 44071, July 28, 2010]



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, as determined by CCC, 
on CRP enrolled land insofar as they are consistent with the 
conservation purposes of the program including timing, frequency, and 
duration as provided in an approved CRP conservation plan that 
identifies appropriate vegetative management requirements:
    (1) Managed harvesting, including harvest of biomass, but only in 
exchange for a payment reduction as determined by CCC and in accordance 
with harvest frequency and timing of harvesting activities outside the 
official nesting and broodrearing season only as identified in an 
approved CRP conservation plan;
    (2) Routine grazing, but only in exchange for a payment reduction as 
determined by CCC and in accordance with appropriate vegetative 
management requirements and stocking rates for the land, grazing 
frequency, and grazing periods outside the official nesting and 
broodrearing season only as identified in an approved CRP conservation 
plan;
    (3) Prescribed grazing to control invasive species, but only in 
exchange

[[Page 486]]

for a payment reduction as determined by CCC and in accordance with 
appropriate vegetative management requirements and stocking rates for 
the land, grazing frequency, and grazing periods outside the official 
nesting and broodrearing season only as identified in an approved CRP 
conservation plan;
    (4) Harvesting, grazing, or other commercial use of the forage on 
the land in response to a drought or other emergency, but only in 
exchange for a payment reduction as determined by CCC;
    (5) Wind turbines on CRP land installed in numbers and locations as 
determined appropriate by CCC considering the location, size, and other 
physical characteristics of the land, the extent to which the land 
contains wildlife and wildlife habitat, and the purposes of CRP, but 
only in exchange for a payment reduction as determined by CCC;
    (6) Spot grazing, if necessary for control of weed infestation, and 
not to exceed a 30-day period according to an approved conservation 
plan, but only in exchange for a payment reduction as determined by CCC;
    (7) Forestry maintenance such as pruning, thinning, and timber stand 
improvement on lands converted to forestry use, but only in accordance 
with a conservation plan, and only in exchange for a payment reduction 
as determined by CCC; and
    (8) The sale of carbon, water quality, or other environmental 
credits, as determined appropriate by CCC.

[68 FR 24835, May 8, 2003, as amended at 69 FR 26763, May 14, 2004; 75 
FR 44071, July 28, 2010]



Sec. 1410.64  Transition Incentives Program.

    (a) To be eligible for the Transition Incentives Program, the 
retired or retiring owner or operator must, except as specified in 
paragraph (f) of this section:
    (1) Have land that is expiring under an existing CRP contract with a 
50 percent or greater interest as provided at Sec. 1410.42 (c);
    (2) Sell or lease (under a qualifying nonrevocable lease of at least 
5 years in length) expiring CRP land to a beginning or socially 
disadvantaged farmer or rancher who will return some or all of the land 
to production using sustainable grazing or crop production methods;
    (3) Modify the CRP contract in accordance with Sec. 1410.33(a)(4);
    (4) Allow the beginning or socially disadvantaged farmer or rancher 
to begin the organic certification process under the Organic Foods 
Production Act of 1990 during the last year of the contract, if 
requested by that farmer or rancher;
    (5) Allow the beginning or socially disadvantaged farmer or rancher 
to develop a conservation plan for the land; and
    (6) Allow the beginning or socially disadvantaged farmer or rancher 
to install conservation practices and initiate land improvements that 
are consistent with the conservation plan during the last year of the 
contract.
    (b) To be eligible for participation in the Transition Incentives 
Program, the beginning or socially disadvantaged farmers or ranchers 
must:
    (1) Certify that they meet the definition in Sec. 1410.2 of either 
a beginning farmer or rancher or a socially disadvantaged farmer or 
rancher;
    (2) Obtain and implement a conservation plan; and
    (3) Implement sustainable grazing or crop production in compliance 
with the conservation plan by the time specified in the plan.
    (c) Eligible beginning or socially disadvantaged farmers or ranchers 
will be eligible immediately to reenroll partial field conservation 
practices in CRP, in accordance with the conservation plan and the 
provisions of this part, following the expiration of the CRP contract of 
the qualified retired or retiring owner or operator, provided that the 
beginning or socially disadvantaged farmer or rancher has control of the 
property and meets all other qualifying conditions of CRP, as specified 
in this part.
    (d) Eligible beginning or socially disadvantaged farmers or ranchers 
will be eligible to enroll land in the Conservation Stewardship Program 
or the Environmental Quality Incentives Program, as specified in parts 
1470 and 1466 of this chapter, provided that their offer to enroll 
otherwise meets all program conditions, and provided that the CRP

[[Page 487]]

contract of the retired or retiring owner or operator has expired and 
the beginning or socially disadvantaged farmer or rancher has sufficient 
control of the property.
    (e) As an incentive for selling or leasing land to a beginning or 
socially disadvantaged farmer or rancher who is not a family member, CCC 
will pay 2 years of additional CRP annual rental payments at the same 
contract rate to a retired or retiring owner or operator. The retired or 
retiring owner or operator must certify that the beginning or socially 
disadvantaged farmer or rancher is not a family member.
    (f) Subject to all other program conditions, incentive payments may 
be allowed for contracts that have already expired if:
    (1) The contract expired on or after June 18, 2008, and contract 
modification began on or before September 30, 2010;
    (2) The transfer to the beginning or socially disadvantaged farmer 
or rancher will occur after the contract modification; and
    (3) All other program conditions are otherwise met.
    (g) Eligible retired or retiring owner or operator and eligible 
beginning or socially disadvantaged farmer or rancher must agree to be 
jointly and severally responsible, if the participant has a share of the 
payment greater than zero, with the other Transition Incentive Program 
agreement participants in compliance with the provisions of such 
Transition Incentive Program agreement and the provisions of this part 
and for any payment adjustments that may be required for violations of 
any of the terms or conditions of the Transition Incentive Program 
agreement and this part.

[75 FR 27169, May 14, 2010]



PART 1412_DIRECT AND COUNTER-CYCLICAL PROGRAM AND AVERAGE CROP REVENUE 

ELECTION PROGRAM FOR THE 2008 AND SUBSEQUENT CROP YEARS--Table of Contents



                      Subpart A_General Provisions

Sec.
1412.1 Applicability, statutory changes, interest, and contract 
          provisions.
1412.2 Administration.
1412.3 Definitions.
1412.4 Appeals.

Subpart B_Establishment of Base Acres for a Farm for Covered Commodities

1412.21 Base acres.
1412.22 Failure to make pulse crop election.
1412.23 Base acres and Conservation Reserve Program.
1412.24 Limitation of total base acreage on a farm.

   Subpart C_Establishment of Yields for Direct and Counter-Cyclical 
                                Payments

1412.31 Direct payment yields for covered commodities, except pulse 
          crops.
1412.32 Direct payment yield for designated oilseed and pulse crops.
1412.33 Payment yield for counter-cyclical payments for covered 
          commodities.
1412.34 Submitting production evidence for establishing direct payment 
          yields for oilseeds and pulse crops.
1412.35 Incorrect or false production evidence of oilseeds and pulse 
          crops.

Subpart D_Direct and Counter-Cyclical Program and ACRE Program Contract 
Terms and Enrollment Provisions for Covered Commodities and Peanuts for 
                            2008 Through 2012

1412.41 Direct and counter-cyclical program contract or ACRE program 
          contract.
1412.42 Eligible producers.
1412.43 Reconstitutions.
1412.44 Notification of base acres.
1412.45 Reducing or terminating base acreage.
1412.46 Succession-in-interest.
1412.47 Planting flexibility.
1412.48 Planting Transferability Pilot Project.
1412.49 Apportionment of long and medium grain rice.
1412.50 Matters of general applicability.

[[Page 488]]

      Subpart E_Financial Considerations Including Sharing Payments

1412.51 Limitation of payments.
1412.52 Direct payment provisions.
1412.53 Counter-cyclical payment provisions.
1412.54 Sharing of contract payments.
1412.55 Provisions relating to tenants and sharecroppers.

         Subpart F_Contract Violations and Reduction in Payments

1412.61 Contract violations.
1412.62 Fruit, vegetable and wild rice acreage reporting violations.
1412.63 Contract liability.
1412.64 Inaccurate representation, misrepresentation, and scheme or 
          device.
1412.65 Offsets and assignments.
1412.66 Acreage and production reports.
1412.67 Notices of loss.
1412.68 Compliance with highly erodible land and wetland conservation 
          provisions.
1412.69 Controlled substance violations.

         Subpart G_Average Crop Revenue Election (ACRE) Program

1412.71 Administration.
1412.72 Availability and election of alternative approach.
1412.73 Sharing of ACRE payments.
1412.74 Prior Enrollment in DCP.
1412.75 Notice of election.
1412.76 Payments.
1412.77 Transfer of land and succession-in-interest.
1412.78 Violations.
1412.79 Executed ACRE contract not in conformity with regulations.
1412.80 Division of program payments and provisions relating to tenants 
          and sharecroppers.

    Authority: 7 U.S.C. 7911-7918, 7951-7956, 8711-8719, 8751-8756, and 
8781; and 15 U.S.C. 714b and 714c.

    Source: 73 FR 79289, Dec. 29, 2008, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1412.1  Applicability, statutory changes, interest, and contract 

provisions.

    This part governs: How base acres and farm program payment yields 
are established or adjusted 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, pulse 
crops, and other designated oilseeds as determined and announced by the 
Commodity Credit Corporation (CCC), for the years 2008 through 2012; the 
month when producers on a farm may enter into annual Direct and Counter-
cyclical Program (DCP) or Average Crop Revenue Election (ACRE) program 
contracts with CCC for each of the years 2008 through 2012, as 
applicable; and the peanut crop acreage bases and yields in order to 
receive 2008 through 2012 direct and counter-cyclical payments. Payments 
otherwise provided for in this part are subject to changes made by 
statute in rates, conditions, and eligibility notwithstanding any 
contract made under this part. However, any such modification may, as 
determined by the Deputy Administrator, allow producers the opportunity 
to withdraw from the contract. Also, if any refund comes due to CCC 
under this part, interest will be due from the date of the CCC 
disbursement except as determined by the Deputy Administrator. The 
provisions of this section will apply notwithstanding any other 
provision of this or any other part. In order to receive payment under 
this part a participant must comply with the regulations in this part 
and any additional requirements imposed by the program contract.



Sec. 1412.2  Administration.

    (a) The program is administered under the general supervision of the 
Executive Vice-President, CCC, and will 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 may take any action required by the 
regulations of this part that the county committee has not taken. The 
State committee will also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee that is not in

[[Page 489]]

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 will 
preclude the Executive Vice President, or the Deputy Administrator, 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 has the authority in individual cases 
to 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. Producers and participants 
have no right to seek an exception under this provision. The Deputy 
Administrator's refusal to consider cases or circumstances or decisions 
not to exercise this discretionary authority under this provision will 
not be considered an adverse decision and is not appealable.
    (f) A representative of CCC may execute the FSA forms entitled 
``Direct and Counter-Cyclical Program Contract'' and ``Average Crop 
Revenue Election 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 or after the 
dates authorized by the Executive Vice President, CCC, is null and void 
and will not be considered to be a contract between CCC and the operator 
or any other producer on the farm.



Sec. 1412.3  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of administering the DCP. The terms defined in part 718 of this 
title and part 1400 of this chapter are also applicable, except where 
those definitions conflict with the definitions set forth in this 
section.
    Where there is a conflict or a difference in definitions specified 
in this part and those that apply to the Average Crop Revenue Election 
(ACRE) program specified in subpart G of this part, the regulations of 
subpart G of this part will apply to the ACRE program.
    ACRE guarantee price means the simple average, as determined by CCC, 
of the national average market prices of the covered commodity or 
peanuts for the most recent two crop years preceding the relevant 
current crop year. For example, for the 2009 program the relevant crop 
year is the 2009 crop year. Therefore, for the 2009 program, the ACRE 
guarantee price for the covered commodity or peanuts is equal to the 
simple average of the national average market prices of the covered 
commodity or peanuts for the 2007 and 2008 crops.
    ACRE plug yield means the resulting yield determined by taking the 
applicable NASS county average yield for the covered commodity or 
peanuts, by practice if applicable, and multiplying it by 95 percent. 
The ACRE plug yield may be used by a farm in establishing an initial 
benchmark farm yield or reporting actual production in accordance with 
instructions issued by the Deputy Administrator. The ACRE plug yield is 
also used on a farm for a covered commodity or peanuts in a year where 
there are no acres of the covered commodity or peanuts planted. The ACRE 
plug yield may be found on the FSA Web site at: http://www.fsa.usda.gov/
dcp/ by clicking ``ACRE County Yields.'' ACRE plug yields are used in 
benchmark farm yields. If the National Agricultural Statistical Service 
(NASS) data is not available for a particular practice of a covered 
commodity or peanuts from which an ACRE plug yield can be established, 
the Deputy Administrator may establish an ACRE plug yield for the 
practice of the covered commodity or peanuts based a computation of 
multiplying 95 percent times the yield determined based on production 
data available from FSA farm records in the county, or in the event 
sufficient records do not exist, another data source determined 
appropriate by the Deputy Administrator.

[[Page 490]]

    ACRE price means the higher of the following, as determined by CCC, 
for the covered commodity or peanuts:
    (1) The national average price received by producers during the 12-
month marketing year (as defined in this part) for the relevant current 
crop of the covered commodity or peanuts (the relevant current crop for 
a program year is the corresponding crop for commodity for that year--
for example, the current crop for the 2009 program is the 2009 crop), or
    (2) 70 percent of the marketing assistance loan rate for the 
relevant current crop of the commodity under 7 U.S.C. 8731-8757.
    Actual farm production means all of a farm's harvested and appraised 
production, including grazed acres, of a covered commodity or peanuts. 
Appraisals must be performed by appraisers acceptable to FSA. Appraisals 
performed according to the Non-Insured Crop Disaster Assistance Program 
(NAP) or crop insurance guidelines are generally deemed acceptable to 
FSA for DCP and ACRE Program purposes.
    Actual farm revenue means the per acre amount computed by 
multiplying the actual farm yield, which is a per acre amount, of a 
covered commodity or peanuts times the ACRE price for the relevant 
current crop year. The relevant current crop year for these and other 
purposes is the crop year that corresponds to the calendar year in which 
the relevant program year ends. Therefore, for the 2009 contract or 2009 
program, the relevant crop year would be the 2009 crop (that is, the 
crop considered to be the crop for the 2009 crop year).
    Actual farm yield means for the relevant current crop year, the per 
acre amount determined by dividing the actual farm production of a 
covered commodity or peanuts by the farm's total planted and considered 
planted acres of the covered commodity or peanuts.
    Actual State yield means the State's per acre amount for the 
relevant current crop year for a commodity determined by dividing the 
actual production in the State of the covered commodity or peanuts by 
the total planted acres of the covered commodity or peanuts in the 
State.
    Actual State revenue means the per acre amount for a covered 
commodity or peanuts determined for the relevant current crop year by 
multiplying the actual State yield by the covered commodity or peanuts 
times the ACRE price.
    Average Crop Revenue Election (ACRE) means the program authorized by 
section 1105 of the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 
8715) according to subpart G of this part. Participation in the ACRE 
program requires a two-step process by the producer, specifically step 1 
an election according to subpart G of this part followed by step 2 
enrollment according to this part.
    Average yield per planted acre means the actual farm production of a 
covered commodity or peanuts for a year divided by the farm's planted 
acres.
    Base acres means the number of acres established with respect to a 
covered commodity and peanuts on a farm pursuant to sections 1101 and 
1302 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 
7911) as in effect on September 30, 2007, subject to any adjustment in 
accordance with subpart B of this part.
    Benchmark farm yield means, except as otherwise provided, a per acre 
yield for a covered commodity or peanuts computed using the Olympic 
average of the average yield per planted acre for the farm for the 
commodity for the 5 most recent crop years. The term ``Olympic average'' 
means that the highest and lowest per acre yields for the 5 years will 
be eliminated and the remaining annual entries will be averaged. CCC may 
make such adjustments as it deems necessary to create a fair yield for 
the farm so as to ensure the integrity of the ACRE Program. For purposes 
of determining a benchmark farm yield, yields on planted acres only will 
be considered except to the extent that the farm does not have a 
sufficient history to make a fair yield determination in which case a 
yield may be assigned by CCC.
    Benchmark State yield means for a covered commodity or peanuts a per 
acre yield computed using the Olympic average of the average yield per 
planted acre for the State for the commodity for the 5 most recent crop

[[Page 491]]

years. To the extent practicable, it will be calculated using data from 
NASS. The benchmark State yield is used in determining the State ACRE 
guarantee. CCC may make such adjustments in these yields as it deems 
necessary to provide for a fair yield and to ensure the integrity of the 
program.
    Commercial agricultural production means the propagation and raising 
of agricultural products for commercial sale or barter having gross 
receipts or sales annually in excess of $1,000. The term includes 
pastures and land devoted to approved conserving uses.
    Considered planted means acreage approved as prevented planted in 
accordance with Sec. 718.103 of this title or the acreage considered 
planted to a covered commodity pursuant to Sec. 1412.48.
    Contract means the CCC-approved standard, uniform forms and 
appendixes specified by CCC that constitute the agreement for 
participation in the Direct and Counter-Cyclical Program or ACRE 
program, as applicable.
    Contract period means the compliance period set out for the contract 
for the particular program year. The program year is designated in item 
1 of the contract. Contracts for different program years will be 
referenced by their program year. Thus, for example, a reference to the 
``2009 contract'' means the contract for the 2009 program year and the 
relevant current crop for a program year is the corresponding crop for 
that commodity. Therefore, the relevant current crop for the 2009 
program is, with respect to a particular commodity, the 2009 crop. 
References to the ``contract'' period refer to the compliance period for 
the particular program year. The compliance periods for the various 
program years are as follows:
    (1) For the 2009 contract (and therefore for the 2009 program), the 
period that begins on October 1, 2008 and ends on September 30, 2009;
    (2) For the 2010 contract, the period that begins on October 1, 2009 
and ends on September 30, 2010;
    (3) For the 2011 contract, the period that begins on October 1, 2010 
and ends on September 30, 2011;
    (4) For the 2012 contract, the period that begins on October 1, 2011 
and ends on September 30, 2012.
    Contract year means the particular year of the particular contract 
based on the compliance period for the contract. The compliance year 
will run from October 1 to the following September 30 and will have the 
same name as the corresponding fiscal year. For example, the 2009 
contract year will be October 1, 2008, through September 30, 2009, and 
that year will be considered, too, the 2009 crop year. The contract for 
the 2009 crop year will be considered the contract for the 2009 crop. 
The same references will apply to all other years.
    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.
    Covered commodity means wheat, corn, grain sorghum, barley, oats, 
upland cotton, long grain rice, medium grain rice, soybeans, sunflower 
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 
sesame seed, pulse crops, and other oilseeds as determined by the 
Secretary.
    Crop year means the relevant contract year. For example, the 2009 
crop year is the year that runs from October 1, 2008, through September 
30, 2009, and references to payments for that year refer to payments 
made under contracts with the compliance year that runs during those 
dates.
    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.
    Developed means:
    (1) Land has been approved by the local government for uses other 
than commercial agricultural uses; and
    (2) Construction activity has begun to install any aspect of the 
development, for example utilities or roadways.
    Direct payment means a payment made to eligible producers on a farm 
for peanuts and covered commodities in accordance with subpart E of this 
part.
    Double-cropping means for covered commodities and peanuts, 
notwithstanding the meaning in Sec. 1412.47(e) for fruits and 
vegetables, the planting of a

[[Page 492]]

covered commodity or peanuts for harvest in a crop year, in cycle with 
another covered commodity or peanuts on the same acres for harvest in 
the same crop year in counties that have been determined to be areas 
where there is determined to be substantial, successful and long-term 
double cropping of the crop and where the producer has followed 
customary production techniques and planting deadlines as determined by 
CCC (that is, using techniques and deadlines used by the majority of 
farmers in the region to double crop the particular crops involved). In 
a county determined capable of supporting such double-cropping the 
covered commodities or peanuts, as determined by CCC, both an initial 
crop and a subsequent crop will be considered planted or prevented 
planted acres for the purpose of Subpart G of this part. Notwithstanding 
any of the provisions of Sec. 718.103, in those instances where the 
subsequently planted or approved prevented planted covered commodity or 
peanuts cannot be recognized as double-cropped acreage under this 
definition, the subsequently planted covered commodity or peanuts will 
not be considered planted or prevented planted for any purpose.
    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. 1412.53 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 of covered 
commodities and peanuts on the farm that exceed the farm's total DCP 
cropland.
    Farm ACRE guarantee means, for a crop year of a covered commodity or 
peanuts, the per acre producer-paid crop insurance premium (if any) 
added to the result of multiplying the benchmark farm yield, which is a 
per acre amount, times the ACRE guarantee price. The farm ACRE guarantee 
is used in determining whether a farm is eligible for ACRE payments for 
a covered commodity or peanuts.
    Fiscal year means the year running from October 1 to the following 
September 30 and will be designated by the same calendar year in which 
it ends. For example, the 2009 fiscal year ends September 30, 2009.
    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 or on a truck 
or other conveyance or is consumed by livestock 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.
    Initial crop means acreage of a covered commodity or peanuts planted 
or approved as prevented planted for harvest as peanuts, grain, or lint. 
The initial crop includes reseeded or replanted crop acreage.
    Limited resource farmer means, as determined in accordance with 
Sec. 1412.51, a farmer or rancher who meets both of the following 
criteria:
    (1) The person did not have, counting both direct and indirect 
interests, total gross farm sales for all farms in which that person has 
an interest of not more than the triggering level in both of the two 
calendar years that precede the calendar year in which the contract year 
begins. The triggering level is an indexed number that was originally 
set at $100,000. Beginning in October 2004, that number has been 
adjusted for inflation using the Prices Paid by the Farmer Index 
compiled by NASS. The triggering level for the DCP or ACRE contract will 
be the indexed number (see http://www.lrftool.sc.egov.usda.gov/tool.asp) 
as adjusted for the fiscal year that begins on the first day of the 
contract period.
    (2) The person's total household income is at or below the national 
poverty level for a family of 4 or less than 50 percent of county median 
household income in each of the two most recent calendar years ending 
before the end of the program year, as CCC determines using U.S. 
Commerce Department Data.
    Marketing year means the 12-month period beginning in the calendar 
year

[[Page 493]]

the crop is normally harvested as follows:
    (1) Barley, oats, and wheat: June 1-May 31;
    (2) Canola, flax and rapeseed, lentils, and dry edible peas: July 1-
June 30;
    (3) Upland cotton, peanuts, and rice: August 1-July 31; and
    (4) Corn, grain sorghum, soybeans, sunflowers, safflower, mustard, 
crambe, sesame, and chickpeas: September 1-August 31.
    Medium grain rice means medium and short grain rice.
    Minimum and maximum guarantee means, with respect to the State ACRE 
guarantee for each of the 2010 through 2012 crop years, the adjusted 
amounts that assure that the State ACRE guarantee for a program year for 
a covered commodity or peanuts will not decrease or increase more than 
10 percent from the announced State ACRE guarantee for the preceding 
program year.
    National loan rate means the loan rate established as specified in 
Sec. 1421.9 of this chapter.
    Oilseeds means a crop of soybeans, sunflower seed, rapeseed, canola, 
crambe, safflower, flaxseed, mustard seed, sesame seed, or, if 
determined and announced by CCC, another oilseed.
    Payment acres means:
    (1) Except as provided for in paragraph (2) of this definition, 85 
percent of the base acres of a covered commodity or peanuts on a farm in 
accordance with Sec. 1412.71 or subpart B of this part, as applicable, 
for which direct or counter-cyclical or ACRE payments are made.
    (2) For each of the 2009 through 2011 crop years, 83.3 percent of 
the base acres for a covered commodity or peanuts on a farm in 
accordance with Sec. 1412.71 or subpart B of this part, as applicable, 
for which direct or ACRE payments are made.
    Payment yield means:
    (1) For peanuts, the yield established pursuant to section 1302 of 
the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911) as in 
effect on September 30, 2007.
    (2) For covered commodities, the yield established in accordance 
with subpart C of this part for a farm for a covered commodity.
    (3) For designated oilseeds or pulse crops, the yield established in 
accordance with subpart C of this part for a farm for a crop of a 
designated oilseed and pulse crop.
    Per acre producer-paid crop insurance premium means the insurance 
premiums paid by all producers of a farm for insurance on a covered 
commodity or peanuts, provided that at least some of the insured crop 
acreage is subject to a DCP contract and ACRE contract, divided by the 
total acres of the covered commodity or peanuts covered by the 
insurance; regardless of whether or not all of the acres insured are 
included on the farm's reported acreage for other programs, or are 
subject to a DCP contract and ACRE contract. Fees for catastrophic risk 
protection plan of insurance coverage or noninsured crop disaster 
assistance program coverage are not per acre producer-paid crop 
insurance premiums. Example: Producers A, B, and C have an interest in 
barley on a farm and the farm is enrolled in ACRE. Producers A and B 
paid crop insurance premiums totaling $800 on 100 insured barley acres. 
Regardless of how many acres of barley are planted, the per acre 
producer-paid crop insurance premium for barley is equal to $8.
    Planted acres for a State means for:
    (1) Corn, sorghum, barley, oats, and wheat, the sum of harvested 
acres in a State, as reported by NASS and the sum of failed acres in a 
State, as reported by producers to FSA.
    (2) All other crops, the sum of planted acres in a State, as 
reported by NASS.
    (3) Crops where NASS data is not available, the planted acres as 
determined by CCC using other sources.
    Planted and considered planted (P&CP) means, with respect to an 
acreage amount, the sum of the planted and prevented planted acres 
approved by the FSA county committee on the farm for a crop. For the 
purposes of this part, P&CP is limited to initially planted or prevented 
planted crop acreage, except for crops planted in an approved double-
cropping sequence. Replacement crop acreage is not included as P&CP.
    Processing means with respect to uses of a crop, non-fresh intended 
uses of crops enrolled in the project referred to

[[Page 494]]

in Sec. 1412.48 for crops being grown pursuant to a contract for 
canning, pickling, frozen, juice, dry edible bean or pea, or such other 
uses deemed by CCC not to be fresh intended uses of crops mentioned in 
Sec. 1412.48.
    Pulse crop means dry peas, lentils, small chickpeas, and large 
chickpeas. Pulse crop bases will not generate direct payments and may 
only create counter-cyclical payments for the 2009 and subsequent crop 
years.
    Replacement crop means the planting or approved prevented planting 
of any crop for harvest following the failed planting or prevented 
planted acreage of a covered commodity or peanuts not in a recognized 
double-cropping sequence (as specified in this section). Replacement 
crops that are covered commodities or peanuts are not eligible for 
planted and considered planted credit under this part and cannot 
generate payments under this part.
    Reseeded or replanted crop means the second planting of a covered 
commodity or peanut crop on the same acreage after the first planting of 
that same crop has failed.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who is a member of a socially disadvantaged group whose members have 
been subjected to racial or ethnic prejudice because of their identity 
as members of a group without regard to their individual qualities. 
Gender is not included as a covered group. Socially disadvantaged groups 
include the following and no others unless approved in writing by the 
Deputy Administrator:
    (1) American Indians or Alaskan Natives,
    (2) Asians or Asian-Americans,
    (3) Blacks or African-Americans,
    (4) Hispanics or Hispanic-Americans, and
    (5) Native Hawaiians or other Pacific Islanders.
    State ACRE guarantee means the per acre amount for the crop which is 
90 percent of the benchmark State yield times the ACRE guarantee price, 
subject to the minimum and maximum guarantee specified in these 
regulations.
    Subdivided means land has been approved or designated by the local 
government, or a unit thereof, for development or use as something other 
than commercial agricultural production or other non-agricultural use.
    Supportive and necessary contractual documents means those documents 
including, but not limited to, those items substantiating the DCP 
contract such as leases, deeds, signatures of contract participants, 
owners, operators, and other tenant signatures, as determined by the 
Secretary.
    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.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19191, Apr. 14, 2010]



Sec. 1412.4  Appeals.

    A participant 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



Sec. 1412.21  Election of base acres.

    (a) Subject to adjustments in paragraph (b) of this section, base 
acres for covered commodities and peanuts are as defined in Sec. 
1412.3.
    (b) No later than April 1, 2009, owners on a farm may establish base 
acres for pulse crops.
    (1) Subject to the limitations in accordance with paragraph (d) of 
this section and Sec. 1412.24, the base acres for pulse crops are equal 
to the sum of the following:
    (i) The 4-year average of the acreage planted or prevented planted 
to the pulse crops 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) The 4-year average of the acreage prevented from being planted 
to covered commodities during each of the

[[Page 495]]

1998 through 2001 crop years, for reasons beyond the control of the 
producer, as determined by the Deputy Administrator.
    (c) Subject to paragraph (d) of this section, the total acreage of a 
pulse crop on the farm calculated in accordance with paragraph (b) of 
this section must not exceed:
    (1) The total acreage of cropland on the farm minus
    (2) The total acreage for all covered commodities, peanut, and other 
pulse crops determined in accordance with paragraphs (a) and (b) of this 
section.
    (d) If the calculation in paragraph (c) of this section results in a 
negative number, the pulse crop acreage on the farm for that crop year 
will be zero for the purposes of determining the 4-year average, in 
accordance with paragraph (b) of this section. Further, no prevented 
planning credit or other base credit may be allowed for a pulse crop for 
any planting activity for which base credit was allowed or will be 
allowed for another commodity.
    (e) 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 or pulse crops 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 may not select both the initial commodity and subsequent 
commodity.
    (f)(1) An owner may increase the eligible acres of pulse crops on a 
farm by reducing the acreage of covered commodities and peanuts 
determined in accordance with paragraphs (a) and (b) of this section for 
one or more covered commodities on an acre-for-acre basis, except that 
the total base acres for pulse crops on the farm may not exceed the 
four-year average of pulse crops determined under paragraph (b) 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 pulse crop was not 
planted or prevented planted will be excluded.



Sec. 1412.22  Failure to make pulse crop election.

    If an owner fails to make an election for establishing pulse crop 
base acres on a farm by April 1, 2009, in accordance with Sec. 1412.21, 
that owner will be deemed to have made the election to determine all 
base acres for all covered commodities and peanuts on the farm as set 
forth in Sec. 1412.21.



Sec. 1412.23  Base acres and Conservation Reserve Program.

    (a) Subject to paragraphs (b) and (c) 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 production flexibility contract acres or base acres 
protected by a Conservation Reserve Program contract entered into under 
section 1231 of the Food Security Act of 1985 (1985 Farm Bill, Pub. L. 
99-198) that expired, was voluntarily terminated, or was early released 
on or after September 30, 2007.
    (b) The total base acreage on a farm must not exceed the limitation 
of Sec. 1412.24.
    (c) Adjustments to base acreage on a farm in accordance with this 
section must be completed by no later than June 1 of the fiscal year 
following the fiscal year the conservation reserve program contract 
expired or was voluntarily terminated.
    (d) For the fiscal year in which an adjustment to base acres under 
this section is made, the owner of the farm may elect to receive either 
direct payments and counter-cyclical payments or ACRE payments, as 
applicable, 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. 1412.24  Limitation of total base acreage on a farm.

    (a) The sum of the following must 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 part, plus
    (2) Any cropland acreage on the farm enrolled in a Conservation 
Reserve

[[Page 496]]

Program contract in accordance with part 1410 of this chapter, plus
    (3) Any cropland acreage on the farm enrolled in a wetland reserve 
program contract in accordance with part 1467 of this chapter, plus
    (4) Any other acreage on the farm enrolled in a Federal conservation 
program for which payments are made in exchange for not producing an 
agricultural commodity on the acreage.
    (b) The Deputy Administrator will 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



Sec. 1412.31  Direct payment yields for covered commodities, except pulse 

crops.

    (a) The direct payment yield for each covered commodity, except 
pulse crops, will be the payment yield established for the commodity for 
the farm in accordance with the regulations for covered commodities at 
part 1412 of this chapter in effect on January 1, 2008 (see 7 CFR part 
1412, revised as of January 1, 2008).
    (b) [Reserved]



Sec. 1412.32  Direct payment yield for designated oilseed and pulse crops.

    (a) The direct payment yield for designated oilseeds for which a 
yield was not established by September 30, 2007, and pulse crops for the 
farm will 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 such designated oilseed for 
which a yield was not established by September 30, 2007, and for pulse 
crops 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 will 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 will be zero:
    (i) The total production for the applicable year based on the 
production evidence submitted in accordance with Sec. 1412.34; 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 will 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 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 will assign a yield to be

[[Page 497]]

used in paragraph (b)(2)(ii)(B) of this section.



Sec. 1412.33  Payment yield for counter-cyclical payments for covered 

commodities.

    The counter-cyclical payment yield for covered commodities on the 
farm will be equal to the counter-cyclical payment yield established for 
the covered commodity on the farm that was effective September 30, 2007. 
Counter cyclical payment yields for designated oilseeds or eligible 
pulse crops for which direct payment yields were not established as of 
September 30, 2007, will be equal to the direct payment yield 
established in accordance with Sec. Sec. 1412.32 or 1412.34, as 
applicable.



Sec. 1412.34  Submitting production evidence for establishing direct payment 

yields for oilseeds and pulse crops.

    (a)(1) Reports of production evidence must be submitted when the 
owner elects to establish a direct payment yield for designated oilseeds 
for which a yield was not established by September 30, 2007, and pulse 
crops for the farm in accordance with Sec. 1412.32.
    (2) Producer or third-party certification will not be accepted as 
proof of production evidence.
    (3) Reports of production evidence for designated oilseeds for which 
a yield was not established by September 30, 2007, and for pulse crops 
must 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) Settlement sheets;
    (iv) Warehouse ledger sheets;
    (v) Elevator receipts or load summaries, supported by other evidence 
showing disposition, such as sales documents;
    (vi) Evidence from harvested or appraised acreage, approved for FCIC 
or multi-peril crop insurance loss adjustment settlement; or
    (vii) 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 designated oilseed for which a yield was 
not established by September 30, 2007, and pulse crops has been disposed 
of through non-commercial channels, then 75 percent of the county 
average yield as determined in accordance with Sec. 1412.32(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. 1412.35  Incorrect or false production evidence of oilseeds and pulse 

crops.

    (a) If production evidence submitted in accordance with Sec. 
1412.34 is false or incorrect, as determined by the county committee, 
the county committee will 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 
any action to defeat or undermine the purpose of the program, the county 
committee will:
    (i) Require a refund of all direct and counter-cyclical payments 
earned for the farm for the first year such payments were made;
    (ii) For designated oilseeds or pulse crops, reduce both the direct 
and counter-cyclical payment yields to 75

[[Page 498]]

percent of the county average yield as determined in accordance with 
Sec. 1412.32(b)(4). That yield will then be reduced by the applicable 
direct payment yield factor in accordance with Sec. 1412.32(a)(1); and
    (iii) Subject to paragraph (a)(2)(i) of this section, regarding the 
first year of payments, require a refund of an amount equal to the 
following for designated oilseeds or pulse crops 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 designated 
oilseeds or pulse crops 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 unless the 
Deputy Administrator determines otherwise; 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 will:
    (1) Correct the counter-cyclical yield for the applicable covered 
commodity or peanuts to equal the yield that would have been calculated 
in accordance with Sec. 1412.33 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 and ACRE Program Contract 

Terms and Enrollment Provisions for Covered Commodities and Peanuts 2008 

                              Through 2012



Sec. 1412.41  Direct and counter-cyclical program contract or ACRE program 

contract.

    (a) Except as specified in subpart G of this part, the following 
provisions apply to DCP and ACRE program contracts:
    (1) With respect to fiscal year 2008 payments, CCC will, through the 
date announced by CCC, entertain offers for DCP contracts by eligible 
producers of covered commodities and peanuts. With respect to fiscal 
year 2009 payments, CCC will entertain offers by eligible producers for 
an annual DCP or ACRE program contract through August 14, 2009. With 
respect to fiscal years 2010 through 2012 payments, CCC will annually 
allow offers for a DCP or ACRE program contract by eligible producers on 
a farm having base acres with respect to a covered commodity or peanuts, 
through June 1 of each such fiscal year.
    (2)(i) Eligible producers must execute and submit a DCP or ACRE 
program contract and furnish supportive and necessary contractual 
documents to the county FSA office where the records for the program 
farm are administratively maintained not later than August 14, 2009, for 
2009 fiscal year contracts and not later than June 1 of the applicable 
year for 2010 through 2012 fiscal year contracts.

[[Page 499]]

    (ii) Except as may otherwise be provided in statute for 2008, 
enrollment is not allowed after September 30 of the fiscal year in which 
the direct and counter-cyclical payments or ACRE program payments are 
requested.
    (3) Under no circumstances will enrollment be permitted except as 
specified in this section. Contracts will not be approved unless all 
producers sharing in contract acreage with more than a zero share have 
submitted all applicable contracts and documentation necessary to make 
such approval, as determined by the Deputy Administrator. For those 
producers with an interest but a zero share of contract acreage, the 
contract will not be approved before all producers have signed the 
contract or furnished supportive and necessary contractual documents 
(such as cash leases in lieu of signing for a zero share). A contract 
not having all requisite signatures of producers having more than a zero 
share of contract acreage on or before the enrollment deadline will not 
be considered submitted to CCC for any purpose and will not be acted on 
or approved. Those contracts enrolled by a producer by the date 
specified in paragraph (a)(2)(i) of this section that were not signed by 
other producers according to this section will be deemed withdrawn and 
will not be approved. Producers on a farm are solely responsible for 
ensuring that enrollment occurs.
    (4) 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 by 
the enrollment date specified in paragraph (a)(2)(i) of this section 
provided all signatories to the contract, including CCC, agree to the 
withdrawal in writing. DCP contracts enrolled prior to the decision of 
producers on a farm to elect the ACRE option for a fiscal year are 
considered withdrawn as specified in Sec. 1412.72. Producers electing 
the ACRE option according to Sec. 1412.72(d) must subsequently decide 
whether or not to enroll the farm in an ACRE program contract in 
accordance with the rules of this part.
    (c) All contracts 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 an owner or producer in 
the farm or in acreage on the farm subject to a contract will result in 
the termination of the contract and a refund of all direct and counter-
cyclical and ACRE payments issued for the farm. The contract termination 
will be effective on the date of the transfer or change. Successors to 
the interest in the farm or crops on the farm subject to the contract 
may enroll the farm in a new contract and assume all obligations under 
the contract, only after all payments previously issued for the farm 
have been refunded to CCC.
    (e) In the event a farm reconstitution is completed of a properly 
enrolled farm or farms in accordance with part 718 of this title, FSA 
will issue notices to the operator and owners of record on a farm that 
all producers with an interest in the base acres on the farm must sign a 
new DCP or ACRE program contract and provide supporting documentation 
such as leases and other contractual supportive documents not later than 
September 30 of the fiscal year direct and counter-cyclical or ACRE 
program payments are requested, after receiving written notification by 
the county committee indicating the reconstitution is completed. It is 
the responsibility of the operator and owners on a farm that producers 
with an interest in base acres are notified of the reconstitution and 
requirement for a new contract. If all producers have not signed the new 
contract by September 30, then no producers on the contract will be 
eligible for a direct or counter-cyclical payment or ACRE program 
payment for that farm for the year the contract was terminated.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19191, Apr. 14, 2010]

[[Page 500]]



Sec. 1412.42  Eligible producers.

    (a) Producers eligible to enter into a contract are:
    (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 a 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 will not begin under the contract until the lease held 
by the tenant ends.
    (b) A minor child will be eligible to enter into a contract only if 
one of the following conditions exist:
    (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.
    (c) The owner of the farm may be considered the ``producer'' if 
there is no other producer, but the owner could have shared in the crop 
had a crop been produced, but only if the farm otherwise meets all the 
requirements for payment.



Sec. 1412.43  Reconstitutions.

    Farms will only be reconstituted in accordance with part 718 of this 
title.



Sec. 1412.44  Notification of base acres.

    The operator and owners of record of a farm will be notified in 
writing of the number of base acres eligible for enrollment in a 
contract, unless such operator or owners of record of a farm requests in 
writing not to be furnished with the notice. The operator and owners of 
record are responsible for notifying all other producers of a farm of 
the notice.



Sec. 1412.45  Reducing or terminating base acreage.

    (a)(1) Subject to the limitation in paragraph (a)(2) of this 
section, a permanent reduction of all or a portion of a farm's base 
acreage will 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 acres 
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 acres on the farm will be 
reduced accordingly regardless of the submission of a request for such 
reduction.
    (c) The base acres of covered commodities and peanuts on a farm will 
be proportionately reduced when it is determined that the land has been 
subdivided and developed for multiple residential units or other 
nonfarming uses if, in the judgment of the county committee, the size of 
the tracts and the density of the subdivision is such that the land is 
unlikely to return to the previous agricultural use, unless either of 
the following applies:
    (1) The producers on the farm demonstrate that the land remains 
devoted to commercial agricultural production or is likely to be 
returned to the previous agricultural use and such land has not been 
divided from the farm with a farm reconstitution performed according to 
part 718 of this title or
    (2) A properly constituted or reconstituted farm contains sufficient 
land that has not yet been subdivided and developed for multiple 
residential units

[[Page 501]]

or other nonfarming uses, and the producers on the farm demonstrate that 
the land remains devoted to commercial agricultural production or is 
likely to be returned to the previous agricultural use.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19191, Apr. 14, 2010]



Sec. 1412.46  Succession-in-interest.

    (a) A succession in interest to a DCP or ACRE program contract is 
required if there has been a change in the operation of a farm, such as:
    (1) A sale of land;
    (2) A change of operator or producer, including a change in a 
partnership that increases or decreases the number of partners or 
changes who are 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) An other change determined by the Deputy Administrator to be a 
succession that 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 
specified in Sec. 1412.55; 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 of an enrolled farm 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) In any case in which either a direct or counter-cyclical payment 
has previously been made to a predecessor, such payment will not be paid 
to the successor, unless such payment has been refunded in full by the 
predecessor, in accordance with Sec. 1412.41(d).
    (f) The failure of the party eligible to succeed to the contract to 
do so will be considered a contract violation.



Sec. 1412.47  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 cropland in excess of the base acreage on a farm.
    (b) Base acreage may be hayed or grazed at any time.
    (c) Planting perennial fruits, vegetables (except mung beans, and 
pulse crops), or wild rice, as determined by the Deputy Administrator, 
is prohibited on base acreage of a farm enrolled in a DCP or ACRE 
program contract. Harvesting non-perennial fruits, vegetables (except 
mung beans and pulse crops), or wild rice, as determined by the Deputy 
Administrator, is prohibited on base acreage of a farm enrolled in a DCP 
or ACRE program 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 CCC, in which case the payment acres for the farm 
will 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

[[Page 502]]

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 must 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, as designated 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 will 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 peanuts, 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.

                                 Arizona

    Cochise, Graham, Greenlee, LaPaz, Maricopa, Mohave, Pima, Pinal, and 
Yuma.

                                Arkansas

    Ashley, Benton, Clay, Craighead, Crawford, Cross, Faulkner, 
Franklin, Greene, Independence, Jackson, Jefferson, Lee, Lincoln, Logan, 
Lonoke, Mississippi, Phillips, Pulaski, St. Francis, Sebastian, 
Woodruff, and Yell.

                               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.

                                Colorado

    Otero.

                               Connecticut

    None.

                                Delaware

    All counties.

                                 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, Randolph, St. Clair, Tazewell, Union, Vermilion, 
White, and Whiteside.

                                 Indiana

    Allen, Bartholemew, Daviess, Gibson, Hamilton, Jackson, Johnson, 
Knox, LaGrange, Lake, LaPorte, Madison, Marion, Martin, Miami, Posey, 
Ripley, Shelby, Sullivan, Vandenberg, and Warrick.

[[Page 503]]

                                  Iowa

    Kossuth, Mitchell, Palo Alto, and Winnebago.

                                 Kansas

    None.

                                Kentucky

    Daviess.

                                Louisiana

    Avoyelles, Franklin, Grant, Morehouse, Rapides, Richland, and West 
Carroll.

                                  Maine

    None.

                                Maryland

    Baltimore, Calvert, Caroline, Carroll, Dorchester, Harford, Kent, 
Queen Anne's, St. Mary's, Somerset, Talbot, Wicomico, and Worcester.

                              Massachusetts

    None.

                                Michigan

    None.

                                Minnesota

    Blue Earth, Brown, Carver, Chippewa, Cottonwood, Dakota, Dodge, 
Faribault, Fillmore, Freeborn, Goodhue, Houston, Kandiyohi, Le Sueur, 
Martin, McLeod, Meeker, Mower, Nicollet, Olmsted, Pope, Redwood, 
Renville, Rice, Scott, Sibley, Steele, Swift, Waseca, Wabasha, Watonwan, 
and Winona.

                               Mississippi

    Adams, 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, Pemiscot, Ripley, Scott, and Stoddard.

                                 Montana

    None.

                                Nebraska

    None.

                                 Nevada

    None.

                              New Hampshire

    None.

                               New Jersey

    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Salem, Somerset, 
Sussex, and Warren.

                               New Mexico

    Chaves, Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, Quay, Roosevelt, 
San Juan, and Sierra.

                                New York

    Cayuga, Genesee, Livingston, Monroe, Ontario, Orange, Orleans, 
Suffolk, Wayne, and Wyoming.

                             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.

                                  Ohio

    Champaign, Clermont, Fulton, Lucas, Miami, Morgan, Muskingum, 
Scioto, and Stark.

[[Page 504]]

                                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

    Morrow and Umatilla.

                              Pennsylvania

    Adams, Bucks, Centre, Chester, Clinton, Columbia, Cumberland, 
Delaware, Franklin, Indiana, Lancaster, Montgomery, Montour, 
Northumberland, Schuylkill, Synder, Union, and York.

                               Puerto Rico

    None.

                              Rhode Island

    None.

                             South Carolina

    All counties.

                              South Dakota

    None.

                                Tennessee

    Bledsoe, Cannon, Chester, Cocke, Coffee, Crockett, Dickson, Dyer, 
Fayette, Gibson, Giles, Greene, Grundy, Hardeman, Haywood, Jefferson, 
Knox, Lake, Lauderdale, Lawrence, Lincoln, Madison, Maury, McNairy, 
Obion, Overton, Pickett, Putnam, 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, Fond du Lac, Green, Green 
Lake, Iowa, Kenosha, Milwaukee, Ozaukee, Portage, Racine, Richland, 
Rock, Sauk, Trempealeau, Walworth,

[[Page 505]]

Washington, 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 or peanuts 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 and peanuts 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.
    (g) For the purposes of this part, fruits, vegetables, and wild rice 
planted on base acreage of a farm under a DCP or ACRE program contract:
    (1) Will 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, or
    (2) Will 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) Unless otherwise specifically included as a covered commodity in 
accordance with this part, 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, 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.



Sec. 1412.48  Planting Transferability Pilot Project.

    (a) Notwithstanding Sec. 1412.47, for each of the 2009 and 
subsequent crop years, the Planting Transferability Pilot Project 
(Project) will permit, in accordance with the limitations and provisions 
of this section only, the planting of certain crops in certain States on 
base acres without violating the DCP or ACRE contract. Base acres on

[[Page 506]]

farms participating in the Project will be reduced an acre (or portion 
thereof) for every acre (or portion thereof) planted in the Project, for 
the year in which the farm is participating in the Project.
    (b) Producers interested in participating in the Project must first 
be enrolled in either a DCP or ACRE program contract and submit an offer 
for participation in the Project accompanied by a copy of the contract 
mentioned in paragraph (f) of this section no later than March 1 of the 
fiscal year in which participation in the Project is desired. At the 
conclusion of the signup period, CCC will determine if it received more 
offers than the acreage limitation paragraph (e) of this section allows. 
If the offers exceed the acreage limitation in the State, CCC will 
conduct a lottery style selection process and approve offers for 
participation in the Project that will ensure that the number of base 
acres eligible for each year under the Project are not exceeded. In the 
event that CCC cannot approve an offer in its entirety, at CCC's 
discretion, CCC may give the producers the opportunity to enroll less 
acres in the Project. CCC will also notify producers of the results of 
the selection process. Under no circumstances can producers challenge 
either the selection process itself or the results via administrative 
appeal. Producers in each of the States mentioned in this section can 
elect to participate in the Project with their offer as accepted by CCC, 
or, if CCC elects to offer approval of part of an offer, participate 
with their offer as reduced by CCC, or the producers can elect not to 
participate in the Project.
    (c) Signup for the Project will be conducted as announced by the 
Deputy Administrator.
    (d) Under the Project, crops permitted on DCP base acres are 
cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, and 
tomatoes. These crops eligible for participation in this Project must be 
grown for processing.
    (e) The States and the number of base acres eligible during each 
crop year for the Project under paragraph (a) of this section are:
    (i) 9,000 acres in Illinois,
    (ii) 9,000 acres in Indiana,
    (iii) 1,000 acres in Iowa,
    (iv) 9,000 acres in Michigan,
    (v) 34,000 acres in Minnesota,
    (vi) 4,000 acres in Ohio, and
    (vii) 9,000 acres in Wisconsin.
    (f) To be eligible to participate in the Project, producers on a 
farm must do all of the following for the commodity specified in 
paragraph (d) of this section:
    (i) Enter into a contract to produce the commodity for processing;
    (ii) Agree to produce the crop as part of a program of crop rotation 
on the farm to achieve agronomic and pest and disease management 
benefits;
    (iii) Report acreage and production of the crop according to Sec. 
1412.66 and provide evidence of disposition of the crop; and
    (iv) File a notice of loss according to Sec. 1412.67, if the crop 
is either prevented from being planted or is impacted by disaster after 
planting.
    (g) If base acres are recalculated while a farm is participating in 
this Project, the planting and production of a crop of a commodity 
specified in paragraph (d) of this section on base acres for which a 
temporary reduction was made under this section will be considered to be 
the same as the planting and production of the covered commodity or 
peanuts that was reduced.
    (h) Reports will be prepared for Congress to periodically evaluate 
the supply and price of fresh and processed fruits and vegetables and 
evaluate if producers of fresh fruits and vegetables are being 
negatively impacted or existing production capacities are being 
supplanted.
    (i) If DCP payments were issued prior to enrollment in this Project, 
the participants acknowledge that for the particular year of 
participation in the Project according to this section, DCP payments 
will be based on temporarily reduced base acres.
    (j) In the event an ACRE program contract was approved either before 
or after enrollment in this Project according to this section, the ACRE 
program contract participants acknowledge that for the particular year 
of participation in the Project according to this section, ACRE payments 
will be

[[Page 507]]

based on the temporarily reduced base acres.



Sec. 1412.49  Apportionment of long and medium grain rice.

    (a) Rice base acres are established pursuant to section 1101 of the 
Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911) in effect 
on September 30, 2007, specified in Sec. 1412.3.
    (b) Owners will designate the rice base acres in paragraph (a) of 
this section into two categories:
    (i) Long grain rice, and
    (ii) Medium grain rice. Medium grain rice includes short grain rice.
    (c) Owners on a farm will elect rice base acres according to 
paragraph (b) of this section, based on the 4-year average of the 
percentages of:
    (i) Acreage planted on the farm to long grain rice and medium grain 
rice during the 2003 through 2006 crop years, plus
    (ii) Any acreage on the farm that producers were prevented from 
planting to long grain and medium grain rice during the 2003 through 
2006 crop years because of drought, flood, other natural disaster, or 
other condition beyond the control of the producers.
    (d) If long grain or medium grain rice was not planted on the farm 
in one or more years during the 2003 through 2006 crop years, the 
percentages of acreage planted in the applicable State to long grain and 
medium grain rice will be substituted for the ``not planted'' years on 
the farm in paragraph (c) of this section.
    (e) If an election is not made according to this section, the 
percentages of acreage planted in the applicable State to long grain and 
medium grain rice will be used in determining the base acres required in 
paragraph (b) of this section for the farm.
    (f) The purpose of this section is to determine long grain rice base 
and medium grain rice base on the farm. This section will not increase 
or decrease the:
    (i) Number of base acres on the farm;
    (ii) Number of payment acres on the farm; or
    (iii) Payment yield on the farm from that for rice under sections 
1101 and 1102 of the Farm Security and Rural Investment Act of 2002 (7 
U.S.C. 7911, 7912), as in effect on September 30, 2007, subject to any 
adjustment required in this part.



Sec. 1412.50  Matters of general applicability.

    These regulations and CCC's interpretation of the regulations and 
internal agency directives issued to State and county FSA offices are 
matters of general applicability and are not individually appealable in 
administrative appeals according to Sec. Sec. 11.3 and 780.5 of this 
title. Additionally, these rules and any decisions of CCC and FSA that 
are not based on facts derived from an individual participant's 
application, contract, or file, including but not limited to, decisions 
of whether or not to conduct a lottery, lottery selection process and 
results, signup deadlines, direct payment rates, counter-cyclical 
payment rates, or any other generally applicable payment rate or rates, 
national average market prices, determinations of production of crops 
produced in a State or States, actual State yields, benchmark State 
yields, program guarantee price or prices, or determinations of CCC 
regarding the percentage of acreage of a crop in State that is irrigated 
or non-irrigated, or any other similar determination that is made by CCC 
or FSA for use in all similarly situated applications, are not 
appealable under part 11 or part 780 of this title. The only extent by 
which the matters referenced in this section, and like similar generally 
applicable matters, are reviewable administratively in an appeal forum 
is whether FSA's or CCC's decision to apply the generally applicable 
matter is factually accurate and in conformance with the regulations in 
this part.



      Subpart E_Financial Considerations Including Sharing Payments



Sec. 1412.51  Limitation of payments.

    (a) The provisions of part 1400 of this chapter apply to this part. 
Payments under this part will not exceed the amounts specified in part 
1400 of this chapter. As determined under that part, no person may 
receive more than $40,000 in direct payments or $65,000 in counter-
cyclical payments with respect

[[Page 508]]

to any contract or crop year. For ACRE participants, no person may 
receive more than in ACRE and counter-cyclical payments and direct 
payments combined, more than the sum of:
    (1) $65,000 and
    (2) The amount of the reduction in direct payments required by the 
ACRE contract.
    (b) The amount of 2008 direct and counter-cyclical payments for a 
farm will 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 22, 2008.
    (c) Except as provided in this section, notwithstanding any other 
provision of this part, for the 2009 and subsequent crops, a producer on 
a farm will not receive direct payments, counter-cyclical payments, or 
ACRE payments if the sum of the base acres of covered commodities and 
peanuts on the farm is 10 acres or less. The 10-acre limitation of this 
subsection will not apply to a farm that is at least 50 percent owned by 
a socially disadvantaged farmer or rancher (as defined in section 355(e) 
of the Consolidated Farm and Rural Development Act (7 U.S.C. 2003 (e))) 
or a limited resource farmer or rancher, as defined by the Secretary. If 
such farm is owned by a legal entity, such as a corporation, at least 50 
percent of the ownership interest in the entity must be socially 
disadvantaged or limited resource farmers or ranchers.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19191, Apr. 14, 2010]



Sec. 1412.52  Direct payment provisions.

    (a) For 2008 through 2012 contracts, a final direct payment will 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 2008 through 2011 contracts, at the option of the producer, 
22 percent of the direct payment for the farm with respect to covered 
commodities and peanuts for which payment yields and base acres are 
established will 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. Advance direct payments are not available for 
the 2012 crop year. For any participant on the contract 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;
    (2) Sign the DCP or ACRE program contract designating payment shares 
and provide supporting and necessary contractual documentation. If all 
producers on the farm have not signed the contract designating payment 
shares in accordance with this paragraph, the contract will not be 
considered approved and no contract participant will be eligible for any 
payment for that farm for that contract. FSA has no obligation or 
responsibility to obtain signatures or requisite documents for DCP or 
ACRE program contract participants; and
    (3) Comply with the provisions of parts 12 and 1400 of this title.
    (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 will not become available to or 
for any other producer and
    (2) The producer must 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 is 
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 are:
    (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) Long grain rice--$2.35/cwt.
    (8) Medium grain rice--$2.35/cwt.
    (9) Soybeans--$0.44/bu.

[[Page 509]]

    (10) Other oilseeds--$0.80/cwt.
    (11) Peanuts--$36.00/ton.
    (e) For 2008 through 2012 contracts, subject to the limitations of 
Sec. 1412.51 and part 1400 of this chapter, the final direct payment 
amount to be paid to participants on a farm enrolled in a contract with 
respect to the covered commodities or peanuts for which payment yields 
and base acres are established is equal to the product of:
    (1) The payment rate specified in paragraph (d) of this section, 
multiplied by
    (2) The relevant payment acres of the covered commodity or peanuts 
on the farm enrolled in a contract, minus any acre reduction in 
accordance with Sec. 1412.76(g), multiplied by
    (3) The payment yield for the covered commodity or peanuts on the 
farm enrolled in a contract as determined in accordance with Sec. Sec. 
1412.31 and 1412.32, 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)(1) The payment of any amount due any participant on a farm 
enrolled in a contract will be made only after all participants subject 
to the contract are determined to be in full compliance with the 
contract and the requirements of this part.
    (2) A producer on a farm enrolled in a contract may receive a 
payment amount due without respect to the payment eligibility of other 
producers on the farm if all the following apply:
    (i) The contract participant is in compliance with all contractual 
provisions;
    (ii) The participant is in full compliance with the contract and the 
requirements in this part;
    (iii) The payment of such amount does not affect adversely nor 
defeat the purpose of the program, as determined by the Deputy 
Administrator; and
    (iv) The payment is approved by the Deputy Administrator.



Sec. 1412.53  Counter-cyclical payment provisions.

    (a) For the 2008 through 2012 contracts, except as provided in 
subpart G of this part, a counter-cyclical payment will be made to 
eligible participants on a farm enrolled in a DCP contract with respect 
to covered commodities and peanuts for which payment yield and base 
acres are established:
    (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 and
    (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 or 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 the 2008 and 2009 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.
    (G) Long grain rice--$6.50/cwt.
    (H) Medium grain rice--$6.50/cwt.
    (I) Soybeans--$5.00/bu.
    (J) Other oilseeds--$9.30/cwt.
    (K) Dry Peas--$5.40/cwt. (2009 crop only).
    (L) Lentils--$11.28/cwt. (2009 crop only).
    (M) Small Chickpeas--$7.43/cwt. (2009 crop only).
    (N) Large Chickpeas--$11.28/cwt. (2009 crop only).
    (O) Peanuts--$355.00/ton.
    (iii) For the 2010 through 2012 crop years the following rates:
    (A) Wheat--$2.94/bu.
    (B) Corn--$1.95/bu.
    (C) Grain sorghum--$1.95/bu.
    (D) Barley--$1.95/bu.
    (E) Oats--$1.39/bu.
    (F) Upland cotton--$0.52/lb.

[[Page 510]]

    (G) Long grain rice--$6.50/cwt.
    (H) Medium grain rice--$6.50/cwt.
    (I) Soybeans--$5.00/bu.
    (J) Other oilseeds--$10.09/cwt.
    (K) Dry Peas--$5.40/cwt.
    (L) Lentils--$11.28/cwt.
    (M) Small Chickpeas--$7.43/cwt.
    (N) Large Chickpeas--$11.28/cwt.
    (O) Peanuts--$355.00/ton.
    (2) The direct payment rate for the covered commodity as provided in 
Sec. 1412.52(d).
    (c) For the purposes of paragraphs (a) and (g) of this section, the 
target prices are as follows:
    (1) For the 2008 and 2009 crop years (except as indicated):
    (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--$0.7125/lb.
    (vii) Long grain rice--$10.50/cwt.
    (viii) Medium grain rice--$10.50/cwt.
    (ix) Soybeans--$5.80/bu.
    (x) Other oilseeds--$10.10/cwt.
    (xi) Peanuts--$495.00/ton.
    (xii) Dry peas--$8.32/cwt. (2009 crop only).
    (xiii) Lentils--$12.81/cwt. (2009 crop only).
    (xiv) Small chickpeas--$10.36/cwt. (2009 crop only).
    (xv) Large chickpeas--$12.81/cwt. (2009 crop only).
    (2) For each of the 2010 through 2012 crop years, the target prices 
are as follows:
    (i) Wheat--$4.17/bu.
    (ii) Corn-- $2.63/bu.
    (iii) Grain sorghum--$2.63/bu.
    (iv) Barley--$2.63/bu.
    (v) Oats--$1.79/bu.
    (vi) Upland cotton--$0.7125/lb.
    (vii) Long grain rice--$10.50/cwt.
    (viii) Medium grain rice--$10.50/cwt.
    (ix) Soybeans--$6.00/bu.
    (x) Other oilseeds--$12.68/cwt.
    (xi) Peanuts--$495.00/ton
    (xii) Dry peas--$8.32/cwt.
    (xiii) Lentils--$12.81/cwt.
    (xiv) Small chickpeas--$10.36/cwt.
    (xv) Large chickpeas--$12.81/cwt.
    (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 or peanuts as 
determined in accordance with paragraph (c) of this section, minus
    (2) The effective price of the covered commodity or peanuts as 
determined in accordance with paragraph (b) of this section.
    (e) For 2008 through 2012 DCP contracts, when counter-cyclical 
payments are required in accordance with paragraph (a) of this section, 
subject to the limitation in accordance with Sec. 1412.51 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 or peanuts for which payment yields and base acres are 
established is equal to the product of:
    (1) The payment rate determined in accordance with paragraph (d) of 
this section, multiplied by
    (2) The relevant payment acres of the covered commodity or peanuts, 
as applicable, minus any acre reduction in accordance with Sec. 
1412.47(g), multiplied by
    (3) The payment yield for the covered commodity or peanuts on the 
farm enrolled in a contract as determined in accordance with Sec. 
1412.33, 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. 1412.52(e), minus
    (5) Any partial payment received in accordance with paragraphs (f) 
or (g) of this section.
    (f) For 2008 through 2012 DCP contracts, partial counter-cyclical 
payments will 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. The first partial counter-cyclical payment will:
    (1) Be calculated in accordance with paragraphs (e)(1) through (4) 
of this section;
    (2) Be an amount determined by the Secretary not to exceed 40 
percent of the projected counter-cyclical payment

[[Page 511]]

for the covered commodity or peanuts, respectively; and
    (3) Be made after completion of the first 180 days of the marketing 
year for that crop;
    (g) To the extent practicable, the final partial payment will be 
made beginning on October 1 of the fiscal year starting in the same 
calendar year as the end of the marketing year for that crop.
    (1) 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:
    (i) The payment or portions thereof will not become available for 
any other producer and
    (ii) The producer will 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 is 
applicable to all unearned payments.
    (2)(i) The payment of any amount due any producer on a farm enrolled 
in a contract will 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.
    (ii) A participant on a farm enrolled in a contract may receive a 
payment amount due without regard to the eligibility of other 
participants on the enrolled and in compliance with contract farm if:
    (A) The participant is in full compliance with the contract and the 
requirements in this part;
    (B) The payment of such amount does not adversely affect or defeat 
the purpose of the program, as determined by the Deputy Administrator, 
or designee; and
    (C) The payment is approved by the Deputy Administrator, or 
designee.
    (h) The participants on a farm who receive any advance counter-
cyclical payment must refund the portion of such advance payments that 
exceeds the actual counter-cyclical payment actually earned for the 
covered commodity or peanuts, as applicable.

[68 FR 24835, May 8, 2003, as amended at 74 FR 6352, Feb. 9, 2009; 75 FR 
19192, Apr. 14, 2010]



Sec. 1412.54  Sharing of contract payments.

    (a) Each eligible producer on a farm will be given the opportunity 
to annually enroll in a DCP or ACRE program contract, as applicable, and 
receive payments determined to be fair and equitable as agreed to by all 
the producers on the farm and approved by the county committee.
    (b) Each producer leasing a farm 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. 
An owner's or landlord's signature, as applicable, affirming a zero 
share on a contract may be accepted as evidence of a cash lease between 
the owner or landlord and tenant, as applicable, as determined by CCC. 
Such signature or signatures, if entered on the contract to satisfy the 
requirement of furnishing a written lease, must be entered on the 
contract no later than as prescribed in Sec. 1412.41.
    (c) When base acres are leased on a share basis, neither the 
landlord nor the tenant will receive 100 percent of the contract payment 
for the farm.
    (d) 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 either the provisions of this part or the provisions of 
part 1400 of this chapter.
    (e) For the 2008 crop year only:
    (1) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed cash payment for a specified amount or a 
fixed quantity of the

[[Page 512]]

crop (for example, cash, pounds, or bushels per acre).
    (2) 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 will be considered 
to be a share lease.
    (3) If a lease provides for the greater of a determinable guaranteed 
amount or determinable share of the crop or crop proceeds, such 
agreement will be considered a share lease.
    (4) If the lease is a cash lease, the landlord is not eligible for 
direct or counter-cyclical payments. The leasing of grazing or haying 
privileges is not considered cash leasing.
    (f) For the 2009 through 2012 crop years:
    (1) A lease will be considered to be a cash lease if the lease 
provides for only a guaranteed cash payment for a specified amount, or a 
fixed quantity of the crop (for example, cash, pounds, or bushels per 
acre).
    (2) 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 will be considered 
to be a share lease.
    (3) If a lease provides for the greater of a determinable guaranteed 
amount or determinable share of the crop or crop proceeds, such 
agreement will be considered a cash lease.
    (4) If the lease is a cash lease, the landlord is not eligible for 
direct, counter-cyclical, or ACRE program payments. The leasing of 
grazing or haying privileges is not considered cash leasing.



Sec. 1412.55  Provisions relating to tenants and sharecroppers.

    (a) Neither direct nor counter-cyclical nor ACRE program payments 
will be made by CCC if:
    (1) The landlord or operator has adopted a scheme or device for the 
purpose of depriving any tenant or sharecropper of the payments to which 
such person would otherwise be entitled under the program. If any of 
such conditions occur or are discovered after payments have been made, 
all or any such part of the payments as the State committee may 
determine must be refunded to CCC; or
    (2) The landlord terminated a lease in violation of state law as 
determined by a state court.
    (b) [Reserved]



         Subpart F_Contract Violations and Reduction in Payments



Sec. 1412.61  Contract violations.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
violations of contract requirements will result in the termination of 
the contract. Upon such termination, all producers subject to the 
contract forfeit all rights to receive direct, counter-cyclical, and 
ACRE program payments on the farm for the contract and must refund all 
payments received, plus interest, to run from the date of the CCC 
disbursement, as determined in accordance with part 1403 of this 
chapter.
    (b)(1) If there is a violation of Sec. 1412.47 and CCC determines 
that a violation is not serious enough to warrant termination of the 
contract under paragraph (a) of this section, 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, counter-cyclical, and ACRE program 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

[[Page 513]]

times the cost of maintenance of the acreage, not to exceed the total 
direct payments for the farm. For the 2009 and subsequent crop years, a 
third violation of this provision will result in a complete reduction of 
all payments under the DCP or ACRE program contract.
    (c) If there is a violation of Sec. 1412.66 due to an inaccurate 
report of either acreage or production and CCC determines that the 
violation was not a knowing and willing falsification or 
misrepresentation by producers on the contract under paragraph (a) of 
this section, payments may be made to the producers specified on the 
contract based on determined acreage and production.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.62  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 or the ACRE program 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 must accept a 
reduction in the direct, counter-cyclical, and ACRE program 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 must accept a reduction in the 
direct, counter-cyclical, and ACRE program payments for the farm in an 
amount equal to the sum of:
    (i) The direct, counter-cyclical, and ACRE program payments in such 
year for each such acre, plus
    (ii) Twice the average dollar value of the direct payment for the 
covered commodity and peanut base acres reduced because of the fruit, 
vegetable, and wild rice plantings on such acre, multiplied by the total 
number of acres in violation.
    (3) The contract will be terminated if an acreage report of fruits, 
vegetables, or wild rice planted on base acres of a farm enrolled in DCP 
or ACRE program 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 must:
    (i) Forfeit all rights to receive direct, counter-cyclical, and ACRE 
program payments for the farm;
    (ii) Refund all direct, counter-cyclical, and ACRE program payments 
received for the farm under the contract, plus interest as determined in 
accordance with part 1403 of this chapter; and
    (iii) Be determined to 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. 1412.63  Contract liability.

    All signatories to a DCP or ACRE program contract are jointly and 
severally liable for contract violations and resulting repayments and 
penalties.



Sec. 1412.64  Inaccurate representation, misrepresentation, and scheme or 

device.

    (a) Producers must report and certify program matters accurately. 
Errors in reporting may impact eligibility or extent of eligibility. 
Benefits under this part will be based on the most correct information 
available. Producers are responsible for refunding, with interest from 
the date of the CCC disbursement, any program benefits that were paid 
based on incorrect program information.
    (b) For those cases in which FSA determines that an inaccurate 
representation or certification is a misrepresentation or scheme or 
device, such person will be ineligible to receive DCP or ACRE payments 
and will have the

[[Page 514]]

person's interest in all contracts terminated if it is determined that 
such person has done any of the following:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this part;
    (2) Made any fraudulent representation;
    (3) Misrepresented any fact affecting a DCP, ACRE program, or 
determination made pursuant to part 1400 of this chapter; or
    (4) Violated or been determined ineligible under Sec. 1400.5 of 
this chapter.
    (c) Any remedies taken by FSA or CCC in accordance with this section 
will be in addition to any other civil or other remedies that may be 
available, including, but not limited to, those provided in part 1400 of 
this chapter.



Sec. 1412.65  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person will 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 contract payments.
    (b) Any participant entitled to any payment may assign any payments 
in accordance with regulations governing the assignment of payments 
found at part 1404 of this chapter.



Sec. 1412.66  Acreage and production reports.

    (a) As a condition of eligibility for payments under this part, the 
operator or owner must accurately submit a report of all cropland 
acreage on the farm in accordance with part 718 of this title.
    (b) As a condition of eligibility for payments under this part, 
producers enrolled in the Project according to Sec. 1412.48 and those 
seeking payments under subpart G of this part, must accurately submit a 
report of production, no later than the acreage reporting date for the 
crop in the year immediately following the crop year of the reported 
crop acreage, for each crop either enrolled in the Project according to 
Sec. 1412.48 or for each covered commodity or peanuts on a farm 
enrolled in an ACRE program contract for which an acreage report greater 
than zero acres was filed according to paragraph (a) of this section. At 
the discretion of CCC, the report of production must be accompanied by 
documentation acceptable to CCC. The report must include the date 
harvest was completed. Records of production acceptable to CCC may 
include those specified in:
    (1) Commercial receipts, settlement sheets, warehouse ledger sheets, 
or load summaries of the crop that 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 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 crop acreage prior to harvest.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.67  Notices of loss.

    (a) If a notice of loss for prevented planting under a policy or 
plan of insurance or pursuant to part 1437 of this chapter has not 
already been filed, at least one producer having a share of a crop 
intended to be planted pursuant to Sec. 1412.48 or a having a share of 
a crop of a covered commodity or peanuts on a farm enrolled in the ACRE 
program must provide a notice of loss for prevented planting to CCC in 
the administrative FSA office for the farm, within 15 calendar days 
after the final planting date.
    (b) For a prevented planting notice filed in accordance with this 
section, the notice of loss must include:

[[Page 515]]

    (1) Total acreage intended to be planted to the crop in the 
administrative county;
    (2) Total acreage planted by the producer to the crop in the 
administrative county;
    (3) Whether a purchase, delivery, or arrangement for purchase or 
delivery was made for seed, chemicals, fertilizer, etc.; and
    (4) When land preparation measures, for example, cultivation, were 
completed, and what has been done or will be done with the acreage, for 
example, abandoned, replanted, etc.
    (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 prevented planting,.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.68  Compliance with highly erodible land and wetland conservation 

provisions.

    The provisions of part 12 of this title apply to this part.



Sec. 1412.69  Controlled substance violations.

    The provisions of part 718 of this title apply to this part.



         Subpart G_Average Crop Revenue Election (ACRE) Program



Sec. 1412.71  Administration.

    (a) All of the provisions of this part apply to this subpart. To the 
extent that there is a conflict with the provisions of this part and 
subpart G of this part, the provisions of subpart G of this part apply.
    (b) [Reserved]



Sec. 1412.72  Availability and election of alternative approach.

    (a) As an alternative to receiving counter-cyclical payments under 
Sec. 1412.53, and in exchange for a 20-percent reduction in direct 
payments under Sec. 1412.52, as well as 30-percent reduction in 
established marketing assistance loan rates with respect to all covered 
commodities and peanuts on a farm, during each of the 2009, 2010, 2011, 
and 2012 crop years, as applicable, depending on the year the producer 
initially elects the ACRE option, producers, including owners, on a farm 
will have until August 14, 2009 to make an irrevocable election to 
instead receive ACRE program payments, computed in accordance with the 
regulations of this part, for the 2009 crop year through and including 
the 2012 crop year. During each of the 2010, 2011, and 2012, crop years, 
as applicable, depending on the year the producer initially elects the 
ACRE option, producers, including owners, on a farm will have until June 
1, or such earlier date as may be determined and announced at the 
discretion of the Deputy Administrator, of 2010, 2011, and 2012, as 
applicable, to make an irrevocable election to instead receive ACRE 
program payments, computed in accordance with the regulations of this 
part, for the initial crop year for which the election is made through 
and including the 2012 crop year.
    (b) If producers elect the ACRE option for a farm in accordance with 
paragraphs (a) and (d) of this section, any DCP contract enrolled prior 
to a timely election in a fiscal year will be considered withdrawn 
according to Sec. 1412.41(b). The producers must still choose whether 
or not to enroll the ACRE elected farm in an ACRE program contract. DCP 
payments issued for the fiscal year of such election, including advance 
and partial program payments, must be refunded. No payments will be made 
available to participants under an ACRE program contract until such time 
as refunds have been remitted and enrollment has occurred as provided in 
this part, unless the Deputy Administrator determines to collect the 
refund instead by a setoff against the ACRE payment. Under no

[[Page 516]]

circumstances will election be construed to be an intent to enroll or an 
enrollment in the ACRE program.
    (c) If a marketing assistance loan (including marketing assistance 
loans that have been repaid or immediately repaid) or loan deficiency 
payment has been computed prior to election of the ACRE option, the 
persons electing the ACRE option:
    (1) Acknowledge that such marketing assistance loan (including any 
loan repayments) and loan deficiency payments will be recomputed based 
on reduced marketing assistance loan rates,
    (2) Agree to immediately refund to CCC the difference in the amount 
of marketing assistance loan (including loan repayments) and loan 
deficiency payments as a result of the ACRE election.
    (d) Eligible producers, including owners, on a farm electing ACRE 
participation by:
    (1) August 14, 2009, will be considered to have irrevocably elected 
the ACRE option for the 2009, 2010, 2011, and 2012 crop years and, if 
applicable, withdrew prior enrolled 2009 DCP contracts according to 
Sec. 1412.41(b);
    (2) June 1 of:
    (i) 2010, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2010, 2011, and 2012 crop 
years and, if applicable, withdrew prior enrolled 2010 DCP contracts 
according to Sec. 1412.41(b);
    (ii) 2011, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2011 and 2012 crop years 
and, if applicable, withdrew prior enrolled 2011 DCP contracts according 
to Sec. 1412.41(b); or
    (iii) 2012, or such earlier date determined and announced at the 
discretion of the Deputy Administrator, will be considered to have 
irrevocably elected the ACRE option for the 2012 crop year and, if 
applicable, withdrew prior enrolled 2012 DCP contracts according to 
Sec. 1412.41(b).
    (e) If all of the producers on a farm fail to make an election under 
paragraphs (a) and (d), make different elections under paragraph (a), or 
fail to timely elect as required by paragraph (d), all of the producers 
on the farm will be deemed to have not made the ACRE election option and 
instead, provided DCP contract enrollment was previously made pursuant 
to this part, receive counter-cyclical payments under Sec. 1412.53 for 
all covered commodities and peanuts on the farm, and to otherwise not 
have made the election described in paragraph (a), for the applicable 
crop years.
    (f) Eligible producers on a farm who elect the ACRE option according 
to this section are making the irrevocable election for all of the farm 
as constituted on the date of election irrespective of whether the same 
producers are present on the farm in subsequent years and irrespective 
of whether there is a change of ownership. That is, the producer 
election is binding on the farm, not just the producers on the farm at 
the time of the election. An election is for the entire farm and not for 
part of a farm. If the total number of planted and considered planted 
acres to all covered commodities and peanuts of the producers on the 
farm exceeds the total base acreage of the farm that is enrolled 
pursuant to this part, the producers on the farm may choose which 
commodity or commodities the ACRE option will apply to under this 
section. Although the election according to paragraph (b) of this 
section is irrevocable, for a farm enrolled as specified in this part, 
each year following the election by the final acreage reporting date for 
the crop the producers on a farm already having the ACRE option elected 
may choose the commodity or commodities the ACRE option will apply to 
under this section.
    (g) ``Timely elected'' under this section means all requisite 
signatures of eligible producers on a farm are entered on the election 
form and accompanied by supportive and necessary contractual documents 
according to Sec. 1412.3.
    (h) Unless an earlier date is determined and announced at the 
discretion of the Deputy Administrator, the election deadline for the 
ACRE option is August 14, 2009, for the 2009 election period and June 1 
in each of the 2010, 2011, and 2012 fiscal years as specified in

[[Page 517]]

Sec. 1412.72(d) and there is no late file election period. The 
enrollment deadlines specified in this part and Sec. 1412.41 apply to 
enrollments of farms under DCP contracts or ACRE program contracts. For 
election of ACRE in a fiscal year, all requisite signatures and 
supportive documentary evidence must be furnished by August 14, 2009, 
for the 2009 election period and June 1 in each of the 2010, 2011, and 
2012 fiscal years, or such earlier date determined and announced at the 
discretion of the Deputy Administrator. ACRE elections will not be 
construed to be ACRE contract enrollments. Participants must enroll in 
an ACRE contract to participate in ACRE following election.
    (i) Under no circumstances will the ACRE election option be 
permitted except as provided in this section. ACRE elections will not be 
approved unless all producers, including owners, on a farm at time of 
election have signed the form electing the option. The ACRE election 
will not be approved before all producers, including owners, on a farm 
have signed the ACRE election form. A producer's signature with other 
producers on a DCP contract enrolled prior to the submission of an 
election form will not be deemed evidence of the producer's agreement 
with those other producers with regard to election. An election of the 
ACRE option not having all requisite signatures of producers on a farm 
by the election deadline of the year in which election is made will not 
be considered submitted to CCC for the purpose of election in that 
fiscal year and will not be acted on or approved. In all cases, it is 
the responsibility of the operator and owners of a farm to submit all 
requisite signatures of producers necessary for election.
    (j) Except as provided in paragraph (k) of this section, electing 
the ACRE option is irrevocable. Eligible producers may not withdraw an 
ACRE election option at any time. The provisions of Sec. 1412.41(b) do 
not apply to ACRE elections.
    (k) Any producer with an interest in a farm having made the ACRE 
election according to this section may unilaterally revoke the election 
for all of the farm if the election and revocation are both filed by the 
producer prior to the election deadline established for the initial year 
of election. The revocation must be submitted in writing to CCC no later 
than close of business on the date of the election deadline of the 
initial year of election. There are no late file provisions available 
for revocation of the ACRE election. No other revocations of the ACRE 
election will be permitted under this part in order to comply with the 
irrevocability mandated in law. Accordingly, relief provisions in part 
718, subpart D, of this title are not applicable to revocation of the 
ACRE election.
    (l) In the event an ACRE election is revoked according to paragraph 
(k) of this section, the ACRE program contract, if enrolled, will be 
considered likewise withdrawn according to Sec. 1412.41(b) and any and 
all payments issued under such contract must be refunded according to 
part 1403 of this chapter.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.73  Sharing of ACRE payments.

    (a) Each eligible producer on a farm will be given the opportunity 
to elect the ACRE option and receive payments determined to be fair and 
equitable as agreed to by all producers on the farm and approved by the 
county committee.
    (b) The provisions of Sec. 1412.54(f) regarding the classification 
of leases apply to ACRE.
    (c) Shares of ACRE payments will be determined based on shares 
recorded on the report of acreage filed in accordance with Sec. 
1412.66. Each eligible producer having a share of covered commodities or 
peanuts planted or considered planted on a farm enrolled under an ACRE 
program contract must do both of the following to be eligible for their 
share of an ACRE payment:
    (1) Unless otherwise already enrolled on the ACRE program contract 
with a share of base acres on the farm, sign the ACRE program contract 
during the contract period.
    (2) Have the producer's share recorded on report of acreage filed in 
accordance with part 718 of this title and Sec. 1412.66 of this part.

[[Page 518]]

    (d) In a case where a producer has failed to sign an ACRE program 
contract for the producer's reported share of covered commodities or 
peanuts planted or considered planted on a farm enrolled in accordance 
with this subpart, that producer's share will not receive any 
consideration for payment and will not generate any payment to the 
producer or to any other producer on the farm.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.74  Prior enrollment in DCP.

    (a) If a farm was enrolled in a DCP contract according to subpart D 
of this part in a crop year prior to the time in which the producer 
elected the ACRE option according to Sec. 1412.72:
    (1) The ACRE election option in such crop year will be considered a 
request to have the DCP contract withdrawn for that crop year. To 
participate in an annual ACRE program contract following election, the 
farm must be enrolled under an ACRE program contract by the producers 
according to this part. The election will in no way be construed by CCC 
to be an enrollment.
    (2) All direct and counter-cyclical payments issued to any 
participant on that farm must be refunded to CCC.
    (b) [Reserved]



Sec. 1412.75  Notice of Election.

    (a) CCC will provide notice to operators and owners of record 
regarding the opportunity to make each of the elections described in 
Sec. 1412.72. The notice will include information:
    (1) On the opportunity of the producers on a farm to make the 
election and
    (2) Regarding the manner in which the election must be made and the 
time periods and manner in which notice of the election must be 
submitted to the CCC.
    (b) CCC will provide the notice mentioned in paragraph (a) of this 
section to the operator and owners of record. The operator and owners 
are responsible for notifying all producers on the farm of the 
information contained in the notice.



Sec. 1412.76  Payments.

    In the case of producers on a farm who make an election to receive 
ACRE payments for any of the 2009 through 2012 crop years for all 
covered commodities and peanuts and where enrollment according to this 
part has subsequently occurred, and where all other eligibility 
provisions have been satisfied, CCC will make ACRE payments available to 
the producers on a farm in accordance with this subpart. For each of the 
2009 through 2012 crop years, as applicable when enrollment has occurred 
following election, CCC will make ACRE payments beginning October 1, or 
as soon as practicable thereafter, after the end of the applicable 
marketing year for the covered commodity or peanuts.
    (a) CCC will make ACRE payments available to the producers on a farm 
for each crop year if the farm was enrolled according to this part 
following the election and:
    (1) The actual State revenue for the crop year for the covered 
commodity or peanuts in the State determined under paragraph (c) of this 
section is less than
    (2) The ACRE program guarantee for the crop year for the covered 
commodity or peanuts in the State determined under paragraph (d) of this 
section.
    (b) Provided that the farm is enrolled following election and all 
other eligibility provisions are met, CCC will make ACRE payments 
available to the producers on a farm in a State for a crop year only if 
(as determined by CCC):
    (1) The actual farm revenue for the crop year for the covered 
commodity or peanuts, as determined under paragraph (h) of this section 
is less than
    (2) The farm ACRE benchmark revenue for the crop year for the 
covered commodity or peanuts, as determined under paragraph (i) of this 
section.
    (c) The amount of the actual State revenue for a crop year of a 
covered commodity or peanuts will equal the product obtained by 
multiplying the average actual State yield for each planted acre for the 
crop year for the covered commodity or peanuts determined under 
paragraph (c)(1) of this

[[Page 519]]

section and the national average market price for the crop year for the 
covered commodity or peanuts determined under paragraph (c)(2) of this 
section.
    (1) The average actual State yield for each planted acre for a crop 
year for a covered commodity or peanuts in a State will equal, as 
determined by CCC,
    (i) The quantity of the covered commodity or peanuts that is 
produced in the State during the crop year, divided by
    (ii) The number of acres that are planted to the covered commodity 
or peanuts in the State during the crop year and
    (2) The national average market price for a crop year for a covered 
commodity or peanuts in a State will equal the greater of
    (i) The national average market price received by producers during 
the 12-month marketing year for the covered commodity or peanuts, as 
determined by the Secretary, or
    (ii) The established marketing assistance loan rate for the covered 
commodity or peanuts as reduced according to Sec. 1412.72.
    (d) The ACRE program guarantee for a crop year for a covered 
commodity or peanuts in a State will equal 90 percent of the product 
obtained by multiplying
    (1) The average benchmark State yield for each planted acre for the 
crop year for the covered commodity or peanuts in a State determined 
under paragraph (e) of this section and
    (2) The ACRE program guarantee price for the crop year for the 
covered commodity or peanuts determined under paragraph (f) of this 
section.
    (i) In the case of each of the 2010 through 2012 crop years, the 
ACRE program guarantee for a crop year for a covered commodity or 
peanuts in paragraph (d) of this section will not decrease or increase 
more than 10 percent from the guarantee for the preceding crop year. The 
increase or decrease in the state revenue guarantee for a covered 
commodity or peanuts will be applicable to all ACRE program participants 
in a State, regardless of the year the participant first elected ACRE or 
enrolled.
    (ii) [Reserved]
    (e) The average benchmark State yield for each planted acre for a 
crop year for a covered commodity or peanuts in a State is equal to the 
average yield per planted acre for the covered commodity or peanuts in 
the State for the most recent 5 crop year yields, excluding each of the 
crop years with the highest and lowest yields, using National 
Agricultural Statistics Service data to the extent possible.
    (1) If CCC cannot establish the average benchmark State yield for 
each planted acre for a crop year for a covered commodity or peanuts in 
a State in accordance with this paragraph or if the yield determined is 
an unrepresentative average yield for the State (as determined by the 
CCC), CCC will assign a benchmark State yield for each planted acre for 
the crop year for the covered commodity or peanuts in the State on the 
basis of:
    (i) Previous average yields for a period of 5 crop years, excluding 
each of the crop years with the highest and lowest yields or
    (ii) Average benchmark State yields for planted acres for the crop 
year for the covered commodity or peanuts in similar States.
    (2) [Reserved]
    (f) The ACRE program guarantee price for a crop year for a covered 
commodity or peanuts in a State is the simple average of the national 
average market price received by producers of the covered commodity or 
peanuts for the most recent 2 crop years, as determined by CCC.
    (g) In the case of a State in which at least 25 percent of the 
acreage planted to a covered commodity or peanuts in the State is 
irrigated and at least 25 percent of the acreage planted to the covered 
commodity or peanuts in the State is not irrigated, CCC will calculate a 
separate ACRE program guarantee for the irrigated and non-irrigated 
areas of the State for the covered commodity or peanuts.
    (h) The amount of the actual farm revenue for a crop year for a 
covered commodity or peanuts will equal the amount determined by 
multiplying:
    (1) The actual yield for the covered commodity or peanuts of the 
producers on the farm and
    (2) The national average market price for the crop year for the 
covered commodity or peanuts.

[[Page 520]]

    (i) The farm ACRE benchmark revenue for the crop year for a covered 
commodity or peanuts will equal the sum obtained by adding:
    (1) The amount determined by multiplying
    (i) The average yield per planted acre for the covered commodity or 
peanuts of the producers on the farm for the most recent 5 crop years, 
excluding each of the crop years with the highest and lowest yields and
    (ii) The ACRE program guarantee price for the applicable crop year 
for the covered commodity or peanuts in a State and
    (2) The amount of the per acre crop insurance premium required to be 
paid by the producers on the farm for the applicable crop year for the 
covered commodity or peanuts on the farm.
    (j) If ACRE payments are required to be paid for any of the 2009 
through 2012 crop years of a covered commodity or peanuts under this 
section, the amount of the ACRE payment to be paid to the producers on 
the farm for the crop year under this section will be equal to the 
product obtained by multiplying:
    (1) The lesser of--
    (i) The difference between--
    (A) The ACRE program guarantee for the crop year for the covered 
commodity or peanuts in the State and
    (B) The actual State revenue from the crop year for the covered 
commodity or peanuts in the State and
    (ii) 25 percent of the ACRE program guarantee for the crop year for 
the covered commodity or peanuts in the State;
    (2)(i) For each of the 2009 through 2011 crop years, 83.3 percent of 
the acreage planted or considered planted to the covered commodity or 
peanuts for harvest on the farm in the crop year and
    (ii) For the 2012 crop year, 85 percent of the acreage planted or 
considered planted to the covered commodity or peanuts for harvest on 
the farm in the crop year; and
    (3) The quotient obtained by dividing--
    (i) The average yield per planted acre for the covered commodity or 
peanuts of the producers on the farm for the most recent 5 crop years, 
excluding each of the crop years with the highest and lowest yields, by
    (ii) The benchmark State yield for the crop year.



Sec. 1412.77  Transfer of land and succession-in-interest.

    (a) Land subject to an ACRE election will continue to be subject to 
the election even if there is a transfer of land or change in interest 
of any producer on the farm. If a new owner or operator or producer 
purchases or obtains the right and interest in, or right to occupancy 
of, the land subject to an ACRE election option, such new owner or 
operator or producer, upon the approval of CCC, may choose to become a 
participant to a new ACRE program contract with CCC with respect to such 
transferred land in accordance with Sec. 1412.41.
    (b) A succession in interest to an ACRE program 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 or changes who are 
partners;
    (3) A foreclosure, bankruptcy, or involuntary loss of the farm;
    (4) A change in the producer shares to reflect changes in the 
producer's share of the crop(s) that were originally approved on the 
contract; or
    (5) Another change as otherwise determined by the Deputy 
Administrator by which the succession will not adversely affect nor 
defeat the purpose of the program.
    (c) A succession in interest to an ACRE program contract is not 
permitted if CCC determines that the change:
    (1) Is not for all the time remaining under the ACRE program 
contract;
    (2) Results in a violation of the landlord-tenant provisions 
specified in Sec. 1412.55; or
    (3) Adversely affects or otherwise defeats the purpose of the 
program.
    (d) The provisions of Sec. 1412.46(c) and (d) apply to ACRE 
participation.
    (e) In any case in which a payment or payments have previously been 
made to a predecessor, such payment will not be paid to the successor, 
unless such payment has been refunded in full by

[[Page 521]]

the predecessor, in accordance with Sec. 1412.41(d).
    (f) Producers who have reported a share interest on an acreage 
report of covered commodities and peanuts planted or prevented from 
being planted on a farm are not automatically considered successors. In 
accordance with Sec. 1412.73, such producers who have not already 
signed the ACRE program contract have until the end of the contract 
period to sign the ACRE program contract or that share will not receive 
payment consideration.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19192, Apr. 14, 2010]



Sec. 1412.78  Violations.

    (a)(1) If a participant fails to carry out the terms and conditions 
of an ACRE contract, CCC may terminate the ACRE contract.
    (2) If the ACRE contract is terminated by CCC in accordance with 
this paragraph:
    (i) The participant will forfeit all rights to further payments 
under such contract and refund all payments previously received together 
with interest;
    (ii) Pay liquidated damages to CCC in such amount as specified in 
such contract.
    (iii) The acreage is ineligible for further DCP and ACRE 
participation from the time of termination through the end of the 
contract period regardless of the reason or reasons for such 
termination; and
    (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. 
Participants are not entitled to either relief or even the consideration 
of relief under this paragraph. Relief under this paragraph is solely 
discretionary by the Deputy Administrator.
    (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.

[73 FR 79289, Dec. 29, 2008, as amended at 75 FR 19193, Apr. 14, 2010]



Sec. 1412.79  Executed ACRE contract not in conformity with regulations.

    If, after an ACRE contract is approved by CCC, it is discovered that 
such ACRE contract is not in conformity with the provisions of this 
part, the provisions of this part will prevail.



Sec. 1412.80  Division of program payments and provisions relating to tenants 

and sharecroppers.

    (a) Payments received under this subpart will be divided in the 
manner specified in the applicable contract or agreement and CCC will 
ensure that producers, who would have an interest in acreage being 
offered, receive treatment that CCC deems to be 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 ACRE.
    (b) CCC may remove an operator or tenant from an ACRE contract when 
the operator or tenant:
    (1) Requests, in writing to be removed from the ACRE contract;
    (2) Files for bankruptcy and the trustee or debtor in possession 
fails to affirm the contract, to the extent permitted by the provisions 
of applicable bankruptcy laws;
    (3) Dies during the contract period and the Administrator of the 
estate fails to succeed to the contract within a period of time 
determined by the Deputy Administrator; or
    (4) Is the subject of an order of a court of competent jurisdiction 
requiring the removal from the ACRE contract of the operator or tenant 
and such order is received by FSA, as determined by the Deputy 
Administrator.
    (c) In addition to the provisions in paragraph (b) of this section, 
tenants must 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

[[Page 522]]

comply with provisions under applicable State law, may be removed from a 
contract by CCC. CCC will assume the tenancy is being maintained unless 
notified otherwise by a ACRE participant specified in the applicable 
contract.



PART 1413_COMMODITY INCENTIVE PAYMENT PROGRAMS--Table of Contents



                  Subpart A_Durum Wheat Quality Program

Sec.
1413.101 Applicability.
1413.102 Definitions.
1413.103 Administration.
1413.104 Eligibility.
1413.105 [Reserved]
1413.106 Application process.
1413.107 Availability of funds.
1413.108 Payment calculation.
1413.109 Refunds, joint and several liability.
1413.110 Misrepresentation and scheme or device.
1413.111 Miscellaneous provisions.
1413.112 Appeals.
1413.113 Deceased individuals or dissolved entities.
1413.114 Records and inspections.

Subparts B-C [Reserved]

    Authority: 7 U.S.C. 8788 and 15 U.S.C. 714.

    Source: 75 FR 41965, July 20, 2010, unless otherwise noted.



                  Subpart A_Durum Wheat Quality Program



Sec. 1413.101  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Durum Wheat Quality Program (DWQP) as authorized by section 1613 of 
the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246) will be 
administered.
    (b) This program will operate only to the extent appropriated 
funding is available.
    (c) Subject to available funding, eligible producers of durum wheat 
will be partially compensated for the cost of purchasing and applying 
fungicides to a crop of durum wheat to control Fusarium head blight on 
acres accurately certified as planted to durum wheat. ``Available 
funding'' requires that there be a specific appropriation for the 
program that applies to a particular crop for which the producer seeks 
compensation under this program.



Sec. 1413.102  Definitions.

    The following definitions apply to this subpart. The definitions in 
parts 718 and 1400 of this title also apply, except where they conflict 
with the definitions in this section.
    Application period means the dates established by the Deputy 
Administrator for Farm Programs for producers to apply for program 
benefits.
    CCC means the Commodity Credit Corporation.
    Crop year means the calendar year in which the wheat was harvested 
or intended to be harvested. For example, a reference to the 2010 crop 
year of wheat means wheat that when planted was intended for harvest in 
calendar year 2010.
    Durum wheat means all varieties of white (amber) durum wheat as 
defined in the U.S. Standards for Wheat (7 CFR part 810, subpart M) 
including, but not limited to, hard amber durum wheat and amber durum 
wheat.
    Flowering stage means the period of time during the wheat growth 
stage, after the head emergence has completed and prior to milk 
development in the kernel.
    State committee, county committee or county office means the 
respective FSA committee or office.
    United States means all 50 States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, and any other territory or 
possession of the United States.
    USDA means the United States Department of Agriculture.



Sec. 1413.103  Administration.

    (a) DWQP will be administered under the general supervision of the 
Executive Vice President, CCC (Administrator, Farm Service Agency 
(FSA)), or a designee, and will be carried out in the field by FSA State 
and county committees and FSA employees.
    (b) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this subpart, except as 
specified in paragraph (e) of this section.

[[Page 523]]

    (c) The State FSA committee will take any action required by the 
provisions of this subpart that the county FSA committee has not taken. 
The State FSA committee will also:
    (1) Correct, or require a county FSA committee to correct, any 
action taken by such county FSA committee that is not in compliance with 
the provisions of this subpart.
    (2) Require a county FSA committee to not take an action that is not 
in compliance with the provisions of this subpart.
    (d) No provision or delegation to a State or county FSA committee 
will preclude the Administrator, Deputy Administrator, or a designee 
from determining any question arising under the program in this subpart, 
or from reversing or modifying any determination made by a State or 
county FSA committee.
    (e) The Deputy Administrator may authorize State and county FSA 
committees to waive or modify non-statutory program requirements of this 
subpart in cases where failure to meet such requirements does not 
adversely affect operation of the program in this subpart. Producers 
have no right to seek an exception under this provision. The Deputy 
Administrator's refusal to consider cases or circumstances or decision 
not to exercise this discretionary authority under this provision will 
not be considered an adverse decision and is not appealable.



Sec. 1413.104  Eligibility.

    (a) To be considered eligible for DWQP payments, the person or 
entity must have a share in the treated wheat crop on those acres 
planted to durum wheat on which an eligible fungicide was applied, as 
certified on the application, have incurred the cost of acquiring and 
applying eligible fungicide, and meet the requirements in paragraph (b) 
of this section.
    (b) To be eligible for benefits, a person or entity must be a:
    (1) Citizen of the United States;
    (2) ``Lawful alien'' as defined in Sec. 1400.3 of this chapter;
    (3) Partnership of citizens of the United States; or
    (4) Corporation, limited liability corporation, or other farm 
organizational structure organized under State law.
    (c) A minor child is eligible to apply for DWQP payments if all the 
eligibility requirements of this subpart are met and the requirements in 
part 1400 of this chapter that apply to minor children are met.
    (d) A person or entity determined to be a foreign person under part 
1400 of this title is not eligible to receive benefits under this 
subpart, unless that person provides land, capital, and a substantial 
amount of active personal labor in the production of crops on such farm.
    (e) State and local governments and their political subdivisions and 
related agencies are not eligible for DWQP payments.
    (f) To be considered an eligible fungicide under this subpart, the 
fungicide must be:
    (1) Registered with the U.S. Environmental Protection Agency, as 
required under the Federal Insecticide, Fungicide, and Rodenticide Act 
(FIFRA), unless exempt from FIFRA requirements;
    (2) In compliance with State pesticide regulations, if applicable, 
in the State in which benefits are being requested; and
    (3) Applied specifically to control Fusarium head blight on acres 
certified as planted by the producer to durum wheat for the applicable 
crop year.
    (g) CCC will provide program benefits to reimburse eligible costs 
for a maximum of one fungicide treatment, including application cost, 
during the flowering stage, to a crop of durum wheat per crop year. 
Multiple or additional fungicide treatments, beyond a single treatment, 
to the same crop of wheat are not eligible for benefits.



Sec. 1413.105  [Reserved]



Sec. 1413.106  Application process.

    (a) To apply for DWQP payment, the producer must submit, to the FSA 
county office that maintains the producer's farm records for the 
agricultural operation, a completed application as specified in 
paragraph (c) of this section, including any supporting

[[Page 524]]

documentation required by FSA, and a report of acreage.
    (b) The producer must submit a completed application for payment and 
required supporting documentation to the administrative FSA county 
office during the relevant, for the crop, application period announced 
by FSA which will end no later than September 15 of the crop year in 
which the fungicide was applied to a crop of durum wheat.
    (c) A complete application includes all of the following:
    (1) An application form provided by FSA;
    (2) Certification of the total number and location of acres planted 
to durum wheat on which an eligible fungicide was applied specifically 
to control Fusarium head blight;
    (3) Certification of the date durum wheat, on which an eligible 
fungicide was applied specifically to control Fusarium head blight, was 
planted;
    (4) Certification of the type of eligible fungicide applied to acres 
certified as planted to durum wheat;
    (5) Certification of the date eligible fungicide was applied to 
acres certified as planted to durum wheat;
    (6) Documentation providing adequate proof, as determined by FSA, of 
the producer's actual cost of purchasing and applying eligible fungicide 
to acres certified as planted to durum wheat for one treatment; and
    (7) Any other documentation as determined by FSA to be necessary to 
make a determination of eligibility of the producer.
    (d) The producer requesting benefits under this program certifies 
the accuracy and truthfulness of the information provided in the 
application as well as any documentation filed with or in support of the 
application. All information provided is subject to verification by FSA.
    (e) Data furnished by the producer will be used to determine 
eligibility for program benefits. Furnishing the data is voluntary; 
however, without all required data program benefits will not be approved 
or provided.



Sec. 1413.107  Availability of funds.

    (a) The 2008 Farm Bill authorizes up to $10 million to be 
appropriated for each of the 2009 through 2012 fiscal years for DWQP. 
Payments will not be made for claims for a particular crop year until 
after the application deadline, which is September 15 of that crop year, 
for the crop for which payment for the fungicide application is sought 
and only if funds are made available through an appropriation.
    (b) In the event that approval of all eligible applications for 
fungicide treatments for a particular crop would result in expenditures 
in excess of the amounts appropriated for that crop year, the FSA Deputy 
Administrator will prorate the funds by a national factor to reduce the 
total expected payments to the amount made available by the Secretary. 
FSA will prorate the payments in such manner as it determines 
appropriate and reasonable.
    (c) Claims that are unpaid or paid at a reduced rate for a crop year 
for any reason will not be carried forward for payment under other funds 
for later crop years, unless provided for by law and approved by the 
Deputy Administrator. Such unpaid claims will be considered, as to any 
unpaid amount, void and nonpayable.



Sec. 1413.108  Payment calculation.

    (a) Subject to the availability of DWQP funds, the payment to an 
eligible producer will be the result of adding (adjusted for the 
producer's share of the crop):
    (1) The lesser of:
    (i) The result of multiplying the number of acres certified by the 
producer as planted to durum wheat on which an eligible fungicide was 
applied, during the flowering stage, times the per acre national 
fungicide acquisition payment rate as set by the Deputy Administrator; 
or
    (ii) Fifty percent of the producer's actual cost of purchasing 
eligible fungicide for acres certified as planted to durum wheat and 
treated for the applicable crop year in a manner that would otherwise 
generate a payment under paragraph (a)(1)(i) of this section; plus
    (2) The result of multiplying the number of acres certified as 
planted to durum wheat on which an eligible fungicide was applied during 
the flowering stage, times the State application per-acre payment rate 
set by the State

[[Page 525]]

committee, with such application payment not to exceed 50 percent of the 
actual application cost certified to by the producer.
    (b) The national fungicide acquisition payment rate set by the 
Deputy Administrator will be based on 50 percent of the national average 
cost of eligible fungicide (only including the cost of the chemical 
itself), applied to one acre of durum wheat for the applicable crop 
year.
    (c) The State application payment rate set by the State committee 
will be based on 50 percent of the State average cost of applying an 
eligible fungicide to one acre of durum wheat for the applicable crop 
year.



Sec. 1413.109  Refunds, joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment in the 
application or this subpart, must be refunded to CCC.
    (b) A refund required as specified in this section will be due with 
interest from the date of CCC disbursement and otherwise determined in 
accordance with paragraph (d) of this section and late payment charges 
as provided in part 1403 of this chapter.
    (c) Persons signing an application for payment as having an interest 
in an operation will be jointly and severally liable for any refund and 
related charges found to be due as specified in this section.
    (d) Interest will be applicable to any refunds required as specified 
in parts 792 and 1403 of this title. Such interest will be charged at 
the rate that the U.S. Department of the Treasury charges CCC for funds, 
and will accrue from the date CCC made the erroneous payment to the date 
of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.



Sec. 1413.110  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions, or remedies as may 
apply, a producer will be ineligible for payment through the DWQP if the 
producer is determined by CCC to have:
    (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.
    (b) Any funds disbursed pursuant to this subpart to any producer 
engaged in a misrepresentation, scheme, or device, must be refunded with 
interest together with such other sums as may become due and all charges 
including interest will run from the date of disbursement of the CCC 
funds. Any producer engaged in acts prohibited by this section and any 
producer receiving payment as specified in this subpart will be jointly 
and severally liable with other persons or producers involved in such 
claim for payment for any refund due as specified in this section and 
for related charges. The remedies provided in this subpart will be in 
addition to other civil, criminal, or administrative remedies that may 
apply.



Sec. 1413.111  Miscellaneous provisions.

    (a) Other interests. Any payment to any producer under this part 
will be made without regard to questions of title under State law, and 
without regard to any claim or lien against the commodity, or proceeds, 
in favor of the owner or any other creditor except agencies of the U.S. 
Government.
    (b) Assignments. Any producer entitled to any payment may assign any 
payment(s) in accordance with regulations governing the assignment of 
payments in part 1404 of this chapter.
    (c) Offsets. CCC may offset or withhold any amount due to CCC from 
any benefit provided under this subpart in accordance with the 
provisions of part 1403 of this chapter and part 792 of this title.
    (d) Violations of highly erodible land and wetland conservation 
provisions. The provisions of part 12 of this title apply

[[Page 526]]

to this subpart. That part sets out certain conservation requirements as 
a general condition for farm benefits.
    (e) Violations regarding controlled substances. The provisions of 
Sec. 718.6 of this title, which generally limit program payment 
eligibility for persons who have engaged in certain offenses with 
respect to controlled substances, will apply to this part.



Sec. 1413.112  Appeals.

    (a) Appeals. Appeal regulations set forth at parts 11 and 780 of 
this title apply to determinations made under this subpart.
    (b) Determinations not eligible for administrative review or appeal. 
CCC determinations and policies that are not limited to a specific 
individual producer's application are not to be construed to be 
individual program eligibility determinations or adverse decisions and 
are, therefore, not subject to administrative review or appeal under 7 
CFR part 11 or part 780 of this title (but nothing in the regulations 
for this program will limit the ability of the National Appeals Division 
to decide its own jurisdiction under part 11). Such determinations 
include, but are not limited to, application periods, deadlines, crop 
years, prices, general statutory or regulatory provisions that apply to 
similarly situated producers, national average payment prices, and 
payment factors established by CCC for DWQP for which this subpart 
applies or similar matters requiring CCC determinations.



Sec. 1413.113  Deceased individuals or dissolved entities.

    (a) Payment may be made for an eligible application on behalf of an 
eligible producer who is now a deceased individual or is a dissolved 
entity if a representative who currently has authority to enter into a 
contract on behalf of the producer signs the application for payment.
    (b) Legal documents showing proof of authority to sign for the 
deceased individual or dissolved entity must be provided.
    (c) 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.



Sec. 1413.114  Records and inspections.

    (a) Any producer receiving DWQP payments, or any other legal entity 
or person who provides information for the purposes of enabling a 
producer to receive a DWQP payment, must:
    (1) Maintain any books, records, and accounts supporting the 
information for 3 years following the end of the year during which the 
request for payment was submitted, and
    (2) Allow authorized representatives of USDA and the U.S. Government 
Accountability Office, during regular business hours, to inspect, 
examine, and make copies of such books or records, and to enter the farm 
and to inspect and verify all applicable acreage in which the producer 
has an interest for the purpose of confirming the accuracy of 
information provided by or for the producer.
    (b) [Reserved]

Subparts B-C [Reserved]



PART 1415_GRASSLANDS RESERVE PROGRAM--Table of Contents



Sec.
1415.1 Purpose.
1415.2 Administration.
1415.3 Definitions.
1415.4 Program requirements.
1415.5 Land eligibility.
1415.6 Participant eligibility.
1415.7 Application procedures.
1415.8 Establishing priority for enrollment of properties.
1415.9 Enrollment of easements and rental contracts.
1415.10 Compensation for easements and rental contracts acquired by the 
          Secretary.
1415.11 Restoration agreements.
1415.12 Modifications to easements and rental contracts.
1415.13 Transfer of land.
1415.14 Misrepresentation and violations.
1415.15 Payments not subject to claims.
1415.16 Assignments.
1415.17 Cooperative agreements.
1415.18 Easement transfer to eligible entities.
1415.19 Appeals.
1415.20 Scheme or device.


    Authority: 16 U.S.C. 3838n-3838q.

[[Page 527]]


    Source: 75 FR 73925, Nov. 29, 2010, unless otherwise noted.



Sec. 1415.1  Purpose.

    (a) The purpose of the Grassland Reserve Program (GRP) is to assist 
landowners and operators in protecting grazing uses and related 
conservation values by conserving and restoring grassland resources on 
eligible private lands through rental contracts, easements, and 
restoration agreements.
    (b) GRP emphasizes:
    (1) Supporting grazing operations;
    (2) Maintaining and improving plant and animal biodiversity; and
    (3) Protecting grasslands and shrublands from the threat of 
conversion to uses other than grazing.



Sec. 1415.2  Administration.

    (a) The regulations in this part set forth policies, procedures, and 
requirements for program implementation of GRP, as administered by the 
Natural Resources Conservation Service (NRCS) and the Farm Service 
Agency (FSA). The regulations in this part are administered under the 
general supervision and direction of the NRCS Chief and the FSA 
Administrator. These two agency leaders:
    (1) Concur in the establishment of program policy and direction, 
development of the national allocation formula, and development of broad 
national ranking criteria;
    (2) Use a national allocation formula to provide GRP funds to NRCS 
State Conservationists and FSA State Executive Directors that emphasizes 
support for grazing operations, biodiversity of plants and animals, and 
grasslands under the greatest threat of conversion to uses other than 
grazing. The national allocation formula may also include additional 
factors related to improving program implementation, as determined by 
the NRCS Chief and the FSA Administrator. The allocation formula may be 
modified periodically to change the emphasis of any factor(s) in order 
to address a particular natural resource concern, such as the 
precipitous decline of a population of a grassland-dependent bird(s) or 
animal(s);
    (3) Ensure the national, State, and local-level information 
regarding program implementation is made available to the public;
    (4) Consult with USDA leaders at the State level and other Federal 
agencies with the appropriate expertise and information when evaluating 
program policies and direction; and
    (5) Authorize NRCS State Conservationists and FSA State Executive 
Directors to determine how funds will be used and how the program will 
be implemented at the State level.
    (b) At the State level, the NRCS State Conservationist and the FSA 
State Executive Director are jointly responsible for:
    (1) Determining how funds will be used and how the program will be 
implemented at the State level to achieve the program purposes;
    (2) Identifying State priorities for project selection based on 
input from the State Technical Committee;
    (3) Identifying Department of Agriculture (USDA) employees at the 
field level responsible for implementing the program by considering the 
nature and extent of natural resource concerns throughout the State and 
the availability of human resources to assist with activities related to 
program enrollment;
    (4) Developing, with advice from the State Technical Committee, 
program outreach materials at the State and local levels to help ensure 
landowners, operators, and tenants of eligible land are aware and 
informed that they may be eligible for the program;
    (5) Approving conservation practices eligible for cost-share and 
cost-share rates;
    (6) Developing GRP management plans and restoration agreements, when 
applicable;
    (7) Administering and enforcing the terms of easements and rental 
contracts unless this responsibility is transferred to an eligible 
entity as provided in Sec. 1415.17 and Sec. 1415.18; and
    (8) Developing, with advice from the State Technical Committee, 
criteria for ranking eligible land consistent with national criteria and 
program objectives and State priorities.
    (c) The funds, facilities, and authorities of the Commodity Credit 
Corporation (CCC) are available to NRCS and FSA to implement GRP.

[[Page 528]]

    (d) Subject to funding availability, the program may be implemented 
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.
    (e) The NRCS Chief or the FSA Administrator may modify or waive a 
provision of this part if he or she deems the application of that 
provision to a particular limited situation to be inappropriate and 
inconsistent with the conservation purposes and sound administration of 
GRP. This authority cannot be further delegated. No provision of this 
part, which is required by law, may be waived.
    (f) No delegation in this part to lower organizational levels will 
preclude the NRCS Chief or the FSA Administrator from determining any 
issue arising under this part or from reversing or modifying any 
determination arising from this part.
    (g) The USDA Forest Service may hold GRP easements on properties 
adjacent to USDA Forest Service land, with the consent of the landowner.
    (h) Program participation is voluntary.
    (i) Applications for participation will be accepted on a continual 
basis at local USDA Service Centers. Eligible entities wishing to enter 
into a cooperative agreement under Sec. 1415.17 in order to purchase, 
own, write, and hold easements may apply on a continuous basis to the 
NRCS State Conservationist. The NRCS State Conservationist and FSA State 
Executive Director will establish cut-off periods to rank and select 
applications for participation. These cut-off periods will be available 
in program outreach material provided by the local USDA Service Center. 
Once funding levels have been exhausted, unfunded eligible applications 
will remain on file until they are funded or the applicant chooses to be 
removed from consideration.
    (j) The services of third parties as provided for in part 652 of 
this title may be used to provide technical services to participants.



Sec. 1415.3  Definitions.

    Activity means an action other than a conservation practice that is 
included as a part of a GRP management or conservation plan that has the 
effect of alleviating problems or improving treatment of the resources, 
including ensuring proper management or maintenance of the functions and 
values restored, protected, or enhanced through an easement or rental 
contract.
    Administrator means the Administrator of FSA or the person delegated 
authority to act for the Administrator.
    Applicant means a person, legal entity, joint operator, or Indian 
Tribe who applies to participate in the program.
    Chief means the Chief of NRCS or designee.
    Biological diversity means the variety and variability among living 
organisms and the ecological complexes in which they live.
    Commodity Credit Corporation is a government-owned and operated 
entity that was created to stabilize, support, and protect farm income 
and prices. The 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. The CCC provides 
the funding for GRP, and FSA and NRCS administer GRP on its behalf.
    Common grazing practices means those grazing practices, including 
those related to forage and seed production, common to the area of the 
subject ranching or farming operation. Included are routine management 
activities necessary to maintain the viability of forage or browse 
resources that are common to the locale of the subject ranching or 
farming operation.
    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, natural 
resource district, land conservation committee, or similar name.

[[Page 529]]

    Conservation plan means a record of the GRP participants' decisions 
and supporting information that will be developed to address resource 
concerns in addition to grazing land uses. The conservation plan will 
describe the implementation and maintenance of GRP management and 
conservation practices directly related to any additional land 
eligibility criteria under which the land is enrolled. Additional land 
eligibility criteria may include, but is not limited to, significant 
animal or plant habitat and historical or archeological resources.
    Conservation practice means a specified treatment, such as a 
vegetative, structural, or land management practice, that is planned and 
applied according to NRCS Field Office Technical Guide (FOTG) standards 
and specifications.
    Conservation values means those natural resource attributes that 
sustain and enhance ecosystem functions and values of the grassland area 
including, but not limited to, habitat for grassland and shrubland 
dependent plants and animals, native plant and animal biodiversity, soil 
erosion control, forage production, and air and water quality 
protection.
    Cost-share payment means the payment made by USDA to a program 
participant or vendor to achieve the restoration, enhancement, and 
protection goals in accordance with the GRP restoration plan component 
of the restoration agreement.
    Dedicated account means a dedicated fund of the eligible entity held 
in a separate account for the management, monitoring, and enforcement of 
conservation easements and that cannot be used for other purposes.
    Easement means a conservation easement, which is an interest in land 
defined and delineated in a deed whereby the landowner conveys certain 
rights, title, and interests in a property to the United States, an 
eligible entity, or both for the purpose of protecting the grassland and 
other conservation values of the property. Under GRP, the property 
rights are conveyed by a conservation 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, an eligible entity, or both 
under GRP.
    Eligible entity means, for the purposes of entering into a 
cooperative agreement under 16 U.S.C. 3838q(d), an agency of State or 
local government, an Indian Tribe, or a nongovernmental organization 
that has the relevant experience necessary, as appropriate for the 
application, to administer an easement on grassland, land that contains 
forbs, or shrubland; has a charter that describes a commitment to 
conserving ranchland, agricultural land, or grassland for grazing and 
conservation purposes; and has the resources necessary to effectuate the 
purposes of the charter.
    Enhancement means to increase or improve the viability of grassland 
and grazing resources, including habitat for declining species of 
grassland dependent birds and animals.
    Farm Service Agency is an agency of the Department of Agriculture.
    FSA State Executive Director means the FSA employee authorized to 
implement GRP and direct and supervise FSA activities in a State, 
Caribbean Area, or the Pacific Islands Area.
    Field Office Technical Guide means the official local NRCS source of 
resource information and interpretations of guidelines, criteria, and 
requirements for planning and applying conservation practices 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.
    Fire pre-suppression means activities as outlined in a GRP 
management plan such as the establishment and maintenance of firebreaks 
and prescribed burning to prevent or limit the spread of fires.
    Forb means any herbaceous plant other than those in the grass 
family.
    Functions and values of grasslands and shrublands means ecosystem 
services provided, including domestic animal productivity, biological 
productivity, plant and animal richness and diversity, fish and wildlife 
habitat (including habitat for pollinators and native

[[Page 530]]

insects), water quality and quantity benefits, aesthetics, open space, 
and recreation.
    Grantor means the landowner who is transferring land rights to the 
United States or an eligible entity, or both through an easement.
    Grassland means land on which the vegetation is dominated by 
grasses, grass-like plants, shrubs, or forbs, including shrubland, land 
that contains forbs, pastureland, and rangeland, and improved 
pastureland and rangeland.
    GRP management plan means the document developed by NRCS that 
describes the implementation of the grazing management system consistent 
with the prescribed grazing standard contained in the FOTG. The GRP 
management plan will include a description of the grazing management 
system, permissible and prohibited activities, any associated 
restoration plan or conservation plan, if applicable, and a description 
of USDA's right of ingress and egress.
    Grazing value means the financial worth of the land as used for 
grazing or forage production. The term is used in the calculation of 
compensation for rental contracts and easements. For easements, this 
value is determined by NRCS through an appraisal process or a market 
survey process. For rental contracts, FSA determines the grazing value 
based upon an administrative process.
    Historical and archeological resources mean resources that are:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.);
    (2) Formally determined eligible for listing the National Register 
of Historic Places by the State Historic Preservation Officer (SHPO) or 
Tribal Historic Preservation Officer (THPO) and Keeper of the National 
Register in accordance with section 106 or the NHPA);
    (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 Tribal Register of Historic Places (designated under section 
101(d)(1)(C) of the NHPA); or
    (4) Included in the SPHO or THPO inventory with written 
justification as to why it meets National Register of Historic Places 
criteria.
    Improved rangeland or pastureland means grazing land permanently 
producing naturalized forage species that receives varying degrees of 
periodic cultural treatment to enhance forage quality and yields and is 
primarily harvested by grazing animals.
    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 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Landowner means a person, legal entity, or Indian Tribe having legal 
ownership of land and those who may be buying eligible land under a 
purchase agreement. The term landowner may include all forms of 
collective ownership including joint tenants, tenants-in-common, and 
life tenants. The term landowner includes Indian Tribes. State 
governments, local governments, and nongovernmental organizations that 
qualify as eligible entities are not eligible as landowners.
    Legal entity means an entity created under Federal or State law and 
that: (1) Owns land or an agricultural commodity, product, or livestock; 
or (2) produces an agricultural commodity, product, or livestock.
    Maintenance means work performed to keep the applied conservation 
practice functioning for the intended purpose during its life span. 
Maintenance includes work to manage and prevent deterioration, repair 
damage, or replace the practice to its original condition if one or more 
components fail.
    Native means a species that is indigenous and is a part of the 
original fauna or flora of the area.
    Natural Resources Conservation Service is an agency of the 
Department of Agriculture.
    NRCS State Conservationist means the NRCS employee authorized to 
implement GRP and direct and supervise

[[Page 531]]

NRCS activities in a State, Caribbean Area, or the Pacific Islands Area.
    Naturalized means an introduced, desirable forage species that is 
ecologically adapted to the site and can perpetuate itself in the 
community without cultural treatment. The term naturalized does not 
include noxious weeds.
    Nesting season means the time of year that grassland dependent birds 
in significant decline in the local area build nests or otherwise find a 
place of refuge for purposes of reproduction.
    Nongovernmental organization means any organization that:
    (1) Is organized for, and at all times since, the formation of the 
organization, and 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; and
    (3) Is described--
    (i) In section 509(a)(1) or 509(a)(2) of that Code, or
    (ii) 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.
    Participant means a person, legal entity, joint operation, or Indian 
Tribe who is accepted to participate in GRP through a rental contract or 
option agreement to purchase an easement.
    Pastureland means grazing lands comprised of introduced or 
domesticated native forage species that are used primarily for the 
production of livestock. These lands receive periodic renovation and 
cultural treatments, such as tillage, aeration, fertilization, mowing, 
and weed control, and may be irrigated. This term does not include lands 
that are in rotation with crops.
    Permanent easement means an easement that lasts in perpetuity or for 
the maximum duration allowed under the law of a State.
    Private land means land that is not owned by a governmental entity 
and includes Tribal lands.
    Purchase price means the amount paid to acquire an easement under a 
cooperative agreement between NRCS and an eligible entity. It is the 
fair market value of the easement.
    Rangeland means a land cover or use category with a climax or 
potential plant cover composed principally of native grasses, grass-like 
plants, forbs, or shrubs suitable for grazing and browsing, and 
introduced forage species that are managed like rangeland. Rangeland 
includes lands re-vegetated naturally or artificially when routine 
management of that vegetation is accomplished mainly through 
manipulation of grazing. This term includes areas where introduced hardy 
and persistent grasses are planted and such practices as deferred 
grazing, burning, chaining, and rotational grazing are used with little 
or no chemicals or fertilizer being applied. Grasslands, savannas, many 
wetlands, some deserts, and tundra are considered to be rangeland. 
Certain communities of low forbs and shrubs, such as mesquite, 
chaparral, mountain shrub, and pinyon juniper are also included as 
rangeland.
    Rental contract means the legal document that specifies the 
obligations and rights of a participant in GRP, including the annual 
rental payments to be provided to the participant for the length of the 
contract to maintain or restore grassland functions and values under 
GRP.
    Restoration means implementing any conservation practice, system of 
practices, or activities to restore functions and values of grasslands 
and shrublands. The restoration may re-establish grassland functions and 
values on degraded land, or on land that has been converted to another 
use.
    Restoration agreement means an agreement between the program 
participant and NRCS or eligible entity to carry out activities and 
conservation practices necessary to restore or improve the functions and 
values of that land. A restoration agreement will include a restoration 
plan.
    Restoration plan is the portion of the restoration agreement that 
includes the schedule and conservation practices and activities to 
restore the functions and values of grasslands and shrublands, including 
protection of associated streams, ponds, and wetlands. The restoration 
plan incorporates the requirement that program participants

[[Page 532]]

will maintain GRP-funded conservation practices and activities for their 
expected lifespan as described in the plan.
    Right of enforcement means a property interest in the easement the 
Chief may exercise on behalf of the United States under specific 
circumstances in order to enforce the terms of the conservation 
easement. The right of enforcement provides that the Chief has the right 
to inspect and enforce 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.
    Secretary means the Secretary of the Department of Agriculture.
    Shrubland means land where the dominant plant species is shrubs, 
which are plants that are persistent, have woody stems, and a relatively 
low growth habit.
    Significant decline means a decrease of a species population to such 
an extent that it merits conservation priority as determined by the 
State Conservationist, in consultation with the State Technical 
Committee.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Tribal land means:
    (1) Land held in trust by the United States for individual Indians 
or Indian Tribes; or
    (2) Land, the title to which is held by individual Indians or Indian 
Tribes subject to Federal restrictions against alienation or 
encumbrance; or
    (3) Land which is subject to rights of use, occupancy, and benefit 
of certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family, or Indian 
Tribe.
    USDA means the Department of Agriculture and its agencies and 
offices, as applicable.



Sec. 1415.4  Program requirements.

    (a) Except as provided for under Sec. 1415.17, only landowners may 
submit applications for easements. For rental contracts, applicants must 
own or provide written evidence of control of the property for the 
duration of the rental contract.
    (b) The easement or rental contract will require that the area be 
maintained in accordance with GRP goals and objectives for the term of 
the easement or rental contract, including the conservation, protection, 
enhancement, and if necessary, restoration of the grassland functions 
and values.
    (c) All participants in GRP are required to implement a GRP 
management plan approved by NRCS. When an eligible entity holds the GRP 
easement, NRCS will develop GRP management plans with eligible entities. 
In cases where a participant receives ranking points on the basis of 
resource concerns other than grazing land concerns, all such resource 
concerns will be addressed in an applicable conservation plan.
    (d) The easement or rental contract must grant USDA or its 
representatives a right of ingress and egress to the easement or rental 
contract area. For easements, this access is legally described by the 
conservation easement deed and the GRP management plan. Access to rental 
contract areas is identified in the GRP management plan.
    (e) Easement participants are required to convey unencumbered title 
that is acceptable to the United States and provide consent or 
subordination agreements from each holder of a security or other 
interest in the land. The landowner must warrant that the easement 
granted the United States or eligible entity is superior to the rights 
of all others, except for exceptions to the title that are deemed 
acceptable by USDA.
    (f) Landowners are required to use a standard GRP conservation 
easement deed developed by USDA or developed by an eligible entity and 
approved by USDA under Sec. 1415.17 of this part. The easement grants 
development rights, title, and interest in the easement area in order to 
protect grassland and other conservation values.
    (g) The program participant must comply with the terms of the 
easement or rental contract, and comply with all terms and conditions of 
the GRP management plan and any associated conservation plan or 
restoration agreement.

[[Page 533]]

    (h) Easements and rental contracts allow, consistent with their 
terms and the program purposes, the following activities as outlined in 
the GRP management plan:
    (1) Common grazing practices, including maintenance and necessary 
conservation practices and activities (e.g., prescribed grazing; upland 
wildlife habitat management; prescribed burning; fencing, watering, and 
feeding necessary for the raising of livestock; and related forage and 
seed production) on the land in a manner that is consistent with 
maintaining the viability of grassland, forb, and shrub species common 
to the locality;
    (2) Haying, mowing, or harvesting for seed production subject to 
appropriate restrictions, as determined by the State Conservationist, 
during the nesting season for birds in the local area that are in 
significant decline, or are conserved in accordance with Federal or 
State law;
    (3) Fire pre-suppression, rehabilitation, and construction of 
firebreaks;
    (4) Grazing related activities, such as fencing and livestock 
watering facilities;
    (5) Facilities for power generation through renewable sources of 
energy production provided the scope and scale of the footprint of the 
facility and associated infrastructure is consistent with program 
purposes as determined by USDA through analysis of the potential site-
specific environmental effects; and
    (6) Other activities that USDA determines the manner, number, 
intensity, location, operation, and other features associated with the 
activity will not adversely affect the grassland resources or related 
conservation values protected under an easement or rental contract. This 
includes infrastructure development along existing right-of-ways where 
the easement deed allows the landowner to grant right-of-ways when it is 
determined by NRCS that granting such right-of-ways are in the public 
interest, that grassland resources and related conservation values will 
not be adversely impacted, and the landowner agrees to a restoration 
plan for the disturbed area as developed by NRCS, but at no cost to 
NRCS. This also includes undeveloped, passive, recreational uses such as 
hiking, camping, bird watching, hunting, and fishing as long as such 
uses, as determined by the grantee, do not impair the grazing uses and 
other conservation values.
    (i) Easement and rental contracts prohibit the following activities:
    (1) The production of crops (other than hay), orchards, vineyards, 
or other agricultural commodity that is inconsistent with maintaining 
grazing land and related conservation values; and
    (2) Except as permitted under a restoration plan, the conduct of any 
other activity that would be inconsistent with maintaining grazing uses 
and related conservation values protected under an easement or rental 
contract.
    (j) Rental contracts may be terminated by USDA without penalty or 
refund if the original participant dies, is declared legally 
incompetent, or is otherwise unavailable during the contract period.
    (k) Participants, with the agreement of USDA, may convert a rental 
contract to an easement, provided that funds are available and the 
project meets conditions established by USDA. Land cannot be enrolled in 
both a rental contract option and an easement enrollment option at the 
same time. The rental contract will be terminated prior to the date the 
easement is recorded in the local land records office.
    (l) Rental contract participants are required to suspend any 
existing cropland base and allotment history for the land under another 
program administered by the Secretary.
    (m) Easement participants are required to eliminate any existing 
cropland base and allotment history for the land under another program 
administered by the Secretary.



Sec. 1415.5  Land eligibility.

    (a) GRP is available on privately owned lands, which include private 
and Tribal land. Publicly owned land is not eligible.
    (b) Land is eligible for funding consideration if the State 
Conservationist determines that the land is:
    (1) Grassland, land that contains forbs or shrubland (including 
improved

[[Page 534]]

rangeland and pastureland) for which grazing is the predominant use; or
    (2) Located in an area that has been historically dominated by 
grassland, forbs, or shrubland, and the State Conservationist, with 
advice from the State Technical Committee, determines that it is 
compatible with grazing uses and related conservation values, and
    (i) Could provide habitat for animal or plant populations of 
significant ecological value if the land is retained in its current use 
or is restored to a natural condition,
    (ii) Contains historical or archeological resources, or
    (iii) Would address issues raised by State, regional, and national 
conservation priorities.
    (c) Incidental lands, in conjunction with eligible land, may also be 
considered for enrollment to allow for the efficient administration of 
an easement or rental contract. Incidental lands may include relatively 
small areas that do not specifically meet the eligibility requirements, 
but as a part of the land unit, may contribute to grassland functions 
and values and related conservation values, or its inclusion may 
increase efficiencies in land surveying, easement management, and 
monitoring by reducing irregular boundaries.
    (d) Land will not be enrolled if the functions and values of the 
grassland are already protected under an existing contract, easement, or 
deed restriction, or if the land already is in ownership by an entity 
whose purpose is to protect and conserve grassland and related 
conservation values. This land becomes eligible for enrollment in GRP if 
the existing contract, easement, or deed restriction expires or is 
terminated, and the grassland values and functions are no longer 
protected.
    (e) Land on which gas, oil, earth, or other mineral rights 
exploration has been leased or is owned by someone other than the 
applicant may be offered for participation in the program. However, if 
an applicant submits an offer for an easement project, USDA will assess 
the potential impact that the third party rights may have upon the 
grassland resources. USDA reserves the right to deny funding for any 
application where there are exceptions to clear title on the property.



Sec. 1415.6  Participant eligibility.

    To be eligible to participate in GRP, an applicant, except as 
otherwise described in Sec. 1415.17:
    (a) Must be a landowner for easement participation or be a landowner 
or have control of the eligible acreage being offered for rental 
contract participation;
    (b) Agree to provide such information to USDA that is necessary or 
desirable to assist in its determination of eligibility for program 
benefits and for other program implementation purposes;
    (c) Meet the Adjusted Gross Income requirements in 7 CFR part 1400 
of this title, unless exempted under part 1400 of this title;
    (d) Meet the conservation compliance requirements found in part 12 
of this title; and
    (e) Comply with applicable registration and reporting requirements 
of the Federal Funding Accountability and Transparency Act of 2006 (Pub. 
L. 109-282, as amended) and 3 CFR parts 25 and 170.



Sec. 1415.7  Application procedures.

    (a) Applicants, except as otherwise described under Sec. 1415.17, 
may submit an application through a USDA Service Center for 
participation in GRP. Applications may be submitted throughout the year.
    (b) By filing an application for participation, the applicant 
consents to a USDA representative entering upon the land offered for 
enrollment for purposes of assessing the grassland functions and values 
and for other activities that are necessary for USDA to make an offer of 
enrollment. Generally, the applicant will be notified prior to a USDA 
representative entering upon their property.
    (c) Applicants submit applications that identify the duration of the 
easement or rental contract for which they seek to enroll their land. 
Rental contracts may be for the duration of 10-years, 15-years, or 20-
years; easements may be permanent in duration or for the maximum 
duration authorized by State law.

[[Page 535]]



Sec. 1415.8  Establishing priority for enrollment of properties.

    (a) USDA, at the national level, will provide to NRCS State 
Conservationists and FSA State Executive Directors, national guidelines 
for establishing State-specific ranking criteria for selection of 
applications for funding.
    (b) NRCS State Conservationists and FSA State Executive Directors, 
with advice from State Technical Committees, establish criteria to 
evaluate and rank applications for easement and rental contract 
enrollment, including applications from eligible entities under Sec. 
1415.17, following the guidance established in paragraph (a) of this 
section.
    (c) Ranking criteria will emphasize support for:
    (1) Grazing operations;
    (2) Protection of grassland, land that contains forbs, and shrubland 
at the greatest risk from the threat of conversion to uses other than 
grazing;
    (3) Plant and animal biodiversity; and
    (4) In ranking parcels offered by eligible entities, these 
additional criteria will also be considered--
    (i) Leveraging of non-Federal funds, and
    (ii) Entity contributions in excess of 50 percent of the purchase 
price, as defined in Sec. 1415.3.
    (d) When funding is available, NRCS State Conservationists and FSA 
State Executive Directors will periodically select for funding the 
highest ranked applications, including applications from entities under 
Sec. 1415.17, based on applicant and land eligibility and the State-
developed ranking criteria.
    (e) NRCS State Conservationists and FSA State Executive Directors 
may establish separate ranking pools to address, for example, specific 
conservation issues raised by State, regional, and national conservation 
priorities.
    (f) The NRCS State Conservationist and FSA State Executive Director, 
with advice from the State Technical Committee, may emphasize enrollment 
of unique grasslands or specific geographic areas of the State.
    (g) The NRCS State Conservationist and the FSA State Executive 
Director, with advice from the State Technical Committee, will select 
applications for funding.
    (h) If available funds are insufficient to accept the highest ranked 
application, and the applicant is not interested in reducing the acres 
offered to match available funding, the State Conservationist or State 
Executive Director may select a lower ranked application that can be 
fully funded.
    (i) Land enrolled in a Conservation Reserve Program (CRP) contract 
that is within one year of the scheduled expiration date will receive a 
priority for enrollment. To receive this priority, the following 
criteria must be met:
    (1) The land must be eligible as defined in Sec. 1415.5;
    (2) USDA, with advice from the State Technical Committee, must 
determine it is of high ecological value and under significant threat of 
conversion to uses other than grazing;
    (3) The land must be offered for easement or 20-year rental contract 
enrollment;
    (4) Expired CRP land enrolled under this priority will not exceed 10 
percent of the total number of acres accepted for national enrollment in 
GRP in any year; and
    (5) This priority applies only up to 12 months before the scheduled 
expiration of the CRP contract.
    (j) USDA will manage the program nationally to ensure that, to the 
extent practicable, 60 percent of funds are used for the purchase of 
easements, either directly or through cooperative agreements with 
eligible entities as set forth in Sec. 1415.17 and 40 percent of funds 
are used for rental contracts.



Sec. 1415.9  Enrollment of easements and rental contracts.

    (a) Based on the priority ranking, NRCS or FSA, as appropriate, will 
notify applicants in writing of their tentative acceptance into the 
program for either rental contract or conservation easement options. The 
letter notifies the applicant of the intent to continue the enrollment 
process unless otherwise notified by the applicant. Enrollment under 
cooperative agreements is described under Sec. 1415.17.
    (b) An offer of tentative acceptance into the program neither binds 
USDA to acquire an easement or enter into a

[[Page 536]]

rental contract, nor binds the applicant to convey an easement, enter 
into a rental contract, or agree to restoration activities.
    (c) Offer of enrollment will be through either:
    (1) An agreement to purchase an easement presented by NRCS to the 
applicant which will describe the easement, the easement terms and 
conditions, and other terms and conditions that may be required by NRCS; 
or
    (2) A rental contract will be presented by FSA to the applicant 
which will describe the contract area, the contract terms and 
conditions, and other terms and conditions that may be required by FSA.
    (d) For rental contracts, land will be considered to be enrolled in 
GRP once an FSA representative approves the GRP rental contract. FSA may 
withdraw the offer before approval of the contract due to lack of 
available funds or other reasons.
    (e) For easements, after the option agreement to purchase an 
easement is executed by NRCS and the participant, the land will be 
considered enrolled in GRP. NRCS will proceed with the development of 
the GRP management plan, conservation or restoration plan if applicable, 
and various easement acquisition activities, which may include 
conducting a legal survey of the easement area, securing necessary 
subordination agreements, procuring title insurance, and conducting 
other activities necessary to record the easement or implement GRP.
    (f) Prior to closing an easement, NRCS may withdraw the land from 
enrollment at any time due to lack of available funds, title concerns, 
or other reasons.



Sec. 1415.10  Compensation for easements and rental contracts acquired by the 

Secretary.

    (a) The Chief will not pay more than the fair market value of the 
land, less the grazing value of the land encumbered by the easement.
    (b) To determine this amount, the Chief will pay as compensation the 
lowest of:
    (1) The fair market value of the land encumbered by the easement as 
determined by the Chief using--
    (i) The Uniform Standards of Professional Appraisal Practice, or
    (ii) An area-wide market analysis or market survey;
    (2) The amount corresponding to a geographical cap, as determined by 
the State Conservationist, with advice from the State Technical 
Committee; or
    (3) An offer made by the landowner.
    (c) For 10-, 15-, and 20-year rental contracts, the participant will 
receive not more than 75 percent of the grazing value in an annual 
payment for the length of the contract, as determined by FSA. As 
provided by the regulations at part 1400 of this title, payments made 
under one or more rental contracts to a person or legal entity, directly 
or indirectly, may not exceed, in the aggregate, $50,000 per year.
    (d) In order to provide for better uniformity among States, the NRCS 
Chief and FSA Administrator may review and adjust, as appropriate, State 
or other geographically based payment rates for rental contracts.
    (e) Easement or rental contract payments received by a participant 
will be in addition to, and not affect, the total amount of payments 
that the participant is otherwise eligible to receive under other USDA 
programs.
    (f) Easement payments will be made in a single payment to the 
landowner unless otherwise requested by the landowner.
    (g) USDA may accept and use contributions of non-Federal funds to 
support the purposes of the program. These funds are available to USDA 
without further appropriation and until expended, to carry out the 
program.
    (h) USDA recognizes that environmental benefits will be achieved by 
implementing conservation practices and activities funded through GRP, 
and that ecosystem credits may be gained as a result of implementing 
activities compatible with the purposes of a GRP easement, rental 
contract, or associated restoration agreement. USDA asserts no direct or 
indirect interest in these credits except:
    (1) In the event the participant sells or trades credits arising 
from GRP

[[Page 537]]

funded activities, USDA retains the authority to ensure that the 
requirements for GRP rental contracts, easements, or restoration 
agreements are met and maintained consistent with this part; and
    (2) If activities required under an ecosystem credit agreement may 
affect land covered under a GRP rental contract, easement, or 
restoration agreement, participants are required to obtain an assessment 
from USDA about the compatibility of the activity prior to entering into 
such agreements.



Sec. 1415.11  Restoration agreements.

    (a) Restoration agreements are only authorized to be used in 
conjunction with easements and rental contracts. NRCS, in consultation 
with the program participant, determines if the grassland resources are 
adequate to meet the participant's objectives and the purposes of the 
program, or if a restoration agreement is needed. Such a determination 
is also subject to the availability of funding. USDA may condition 
participation in the program upon the execution of a restoration 
agreement depending on the condition of the grassland resources. When 
the functions and values of the grassland are determined adequate by 
NRCS, a restoration agreement is not required. However, if a restoration 
agreement is required, NRCS will set the terms of the restoration 
agreement. The restoration plan component of the restoration agreement 
identifies conservation practices and activities necessary to restore or 
improve the functions and values of the grassland to meet both USDA and 
the participant's objectives and purposes of the program. If the 
functions and values of the grassland decline while the land is subject 
to a GRP easement or rental contract through no fault of the 
participant, the participant may enter into a restoration agreement at 
that time to improve the functions and values with USDA approval and 
when funds are available.
    (b) The NRCS State Conservationist, with advice from the State 
Technical Committee and in consultation with FSA, determines the 
conservation practices and activities and the cost-share percentages, 
not to exceed statutory limits available under GRP. A list of 
conservation practices and activities approved for cost-share assistance 
under GRP restoration plans is available to the public through the local 
USDA Service Center. NRCS may work through the local conservation 
district with the program participant to determine the terms of the 
restoration plan. The conservation district may assist NRCS with 
determining eligible conservation practices and activities and approving 
restoration agreements.
    (c) Only approved conservation practices and activities are eligible 
for cost-sharing. Payments under the GRP restoration agreements may be 
made to the participant of not more than 50 percent for the cost of 
carrying out the conservation practices or activities. As provided by 
the regulations at part 1400 of this chapter, payments made under one or 
more restoration agreements to a person or legal entity, directly or 
indirectly, may not exceed, in the aggregate, $50,000 per year.
    (d) The participant is responsible for the operation and maintenance 
of conservation practices in accordance with the restoration agreement.
    (e) All conservation practices must be implemented in accordance 
with the FOTG.
    (f) Technical assistance is provided by NRCS, or an NRCS approved 
third party.
    (g) If the participant is receiving cost-share for the same 
conservation practice or activity from another conservation program, 
USDA will adjust the GRP cost-share rate proportionately so that the 
amount received by the participant does not exceed 100 percent of the 
costs of restoration.
    (h) The participant cannot receive cost-share from more than one 
USDA cost-share program for the same conservation practice or activity 
on the same land.
    (i) Cost-share payments may be made only upon a determination by a 
qualified individual approved by the NRCS State Conservationist that an 
eligible restoration practice has been established in compliance with 
appropriate standards and specifications.
    (j) Conservation practices and activities identified in the 
restoration plan

[[Page 538]]

may be implemented by the participant or other designee.
    (k) Cost-share payments will not be made for conservation practices 
or activities implemented or initiated prior to the approval of a rental 
contract or easement acquisition unless a written waiver is granted by 
the NRCS State Conservationist or FSA State Executive Director, as 
appropriate, prior to installation of the practice.
    (l) Upon transfer of an easement with a restoration agreement to an 
eligible entity as described in Sec. 1415.18, the entity will be 
responsible for administration of the agreement and providing funds for 
payment of any costs associated with the completion of the restoration 
agreement. The eligible entity may, with participant consent, revise an 
existing restoration agreement or develop a new restoration agreement. 
Restoration plans must be consistent with the GRP management plan or any 
associated conservation plan as described in Sec. 1415.4.
    (m) Cooperating entities under Sec. 1415.17 will be responsible for 
development, administration, and implementation costs of restoration 
plans.



Sec. 1415.12  Modifications to easements and rental contracts.

    (a) After an easement has been recorded, no substantive modification 
will be made to the easement. Modifications that would not result in 
acquisition or divestiture of additional property rights may be made.
    (b) State Conservationists may approve modifications for restoration 
agreements and GRP management plans or conservation plans where 
applicable, as long as the modifications do not affect the provisions of 
the easement and meet program objectives.
    (c) USDA may approve modifications to rental contracts, including 
corresponding changes to conservation plans, GRP management plans, and 
restoration plans to facilitate the practical administration and 
management of the enrolled area so long as the modification will not 
adversely affect the grassland functions and values for which the land 
was enrolled.



Sec. 1415.13  Transfer of land.

    (a) Any transfer of the property prior to an applicant's acceptance 
into the program will void the offer of enrollment, unless at the option 
of the State Conservationist or State Executive Director, as 
appropriate, an offer is extended to the new landowner and the new 
landowner agrees to the same easement or rental contract terms and 
conditions.
    (b) After acreage is accepted in the program, for easements with 
multiple payments, any remaining easement payments will be made to the 
original participant unless NRCS receives an assignment of proceeds.
    (c) Future annual rental payments will be made to the successor 
participant.
    (d) The new landowner is responsible for complying with the terms of 
the recorded easement, and the contract successor is responsible for 
complying with the terms of the rental contract and for assuring 
completion of all activities and practices required by any associated 
restoration agreement. Eligible cost-share payments will be made to the 
new participant upon presentation that the successor assumed the costs 
of establishing the practices.
    (e) With respect to any and all payments owed to participants, the 
United States bears no responsibility for any full payments or partial 
distributions of funds between the original participant and the 
participant's successor. In the event of a dispute or claim on the 
distribution of cost-share payments, USDA may withhold payments, without 
the accrual of interest, pending an agreement or adjudication on the 
rights to the funds.
    (f) The rights granted to the United States in an easement will 
apply to any of its agents or assigns. All obligations of the 
participant under the GRP conservation easement deed also bind the 
participant's heirs, successors, agents, assigns, lessees, and any other 
person claiming under them.
    (g) Rental contracts may be transferred to another landowner, 
operator, or tenant that acquires an interest in the land enrolled in 
GRP. The successor must be determined by FSA to be eligible to 
participate in GRP and must assume full responsibility under

[[Page 539]]

the contract. FSA may require a participant to refund all or a portion 
of any financial assistance awarded under GRP, plus interest, if the 
participant sells or loses control of the land under a GRP rental 
contract, and the new landowner, operator, or tenant is not eligible to 
participate in the program or declines to assume responsibility under 
the contract.



Sec. 1415.14  Misrepresentation and violations.

    (a) The following provisions apply to violations of rental 
contracts:
    (1) Rental contract violations, determinations, and appeals are 
handled in accordance with the terms of the rental contract;
    (2) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part may not be entitled to rental contract payments and must refund to 
CCC all payments, plus interest, in accordance with part 1403 of this 
title; and
    (3) In the event of a violation of a rental contract, the 
participant will be given notice and an opportunity to voluntarily 
correct the violation within 30 days of the date of the notice, or such 
additional time as CCC may allow. Failure to correct the violation may 
result in termination of the rental contract.
    (b) The following provisions apply to violations of easement deeds:
    (1) Easement violations are handled under the terms of the easement 
deed;
    (2) Upon notification of the participant, NRCS has the right to 
enter upon the easement area at any time to monitor compliance with the 
terms of the GRP conservation easement deed or remedy deficiencies or 
violations;
    (3) When NRCS believes there may be a violation of the terms of the 
GRP conservation easement deed, NRCS may enter the property without 
prior notice; and
    (4) The participant will be liable for any costs incurred by the 
United States as a result of the participant's negligence or failure to 
comply with the easement terms and conditions.
    (c) USDA may require the participant to refund all or part of any 
payments received by the participant under the program contract or 
agreement.
    (d) In addition to any and all legal and equitable remedies 
available to the United States under applicable law, USDA may withhold 
any easement payment, rental payment, or cost-share payments owing to 
the participant at any time there is a material breach of the easement 
covenants, rental contract, 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.
    (e) Under a GRP conservation easement, the United States will be 
entitled to recover any and all administrative and legal costs, 
including attorney's fees or expenses, associated with any enforcement 
or remedial action.



Sec. 1415.15  Payments not subject to claims.

    Any cost-share, rental, or easement payment or portion thereof due 
any person under this part will be allowed without regard to any claim 
or lien in favor of any creditor, except agencies of the United States 
Government.



Sec. 1415.16  Assignments.

    (a) Any person entitled to any cash payment under this program may 
assign the right to receive such cash payments, in whole or in part.
    (b) If a participant that is entitled to a payment dies, is declared 
legally incompetent, or is otherwise unable to receive the payment, or 
is succeeded by another person who renders or completes the required 
performance, such a participant may be eligible to receive payment in 
such a manner as USDA determines is fair and reasonable in light of all 
the circumstances.



Sec. 1415.17  Cooperative agreements.

    (a) NRCS may enter into cooperative agreements which establish terms 
and conditions under which an eligible entity will use funds provided by 
NRCS to own, write, and enforce a grassland protection easement.
    (b) To be eligible to receive GRP funding, an eligible entity must 
demonstrate:

[[Page 540]]

    (1) A commitment to long-term conservation of agricultural lands, 
ranch land, or grassland for grazing and conservation purposes;
    (2) A capability to acquire, manage, and enforce easements;
    (3) Sufficient number of staff dedicated to monitoring and easement 
stewardship;
    (4) The availability of funds; and
    (5) For nongovernmental organizations, the existence of a dedicated 
account and funds for the purposes of easement management, monitoring, 
and enforcement of each easement held by the eligible entity.
    (c) NRCS enters into a cooperative agreement with those eligible 
entities selected for funding. Once a proposal is selected by the State 
Conservationist, the eligible entity must work with the appropriate 
State Conservationist to finalize and sign the cooperative agreement, 
incorporating all necessary GRP requirements. The cooperative agreement 
addresses:
    (1) The interests in land to be acquired, including the form of the 
easement deeds to be used and terms and conditions;
    (2) The management and enforcement of the interests acquired;
    (3) The responsibilities of NRCS;
    (4) The responsibilities of the eligible entity on lands acquired 
with the assistance of GRP;
    (5) The parcels accepted by the State Conservationist, landowners' 
names, addresses, location map(s), and other relevant information in an 
a attachment to the cooperative agreement;
    (6) The allowance of parcel substitution upon mutual agreement of 
the parties;
    (7) The manner in which violations are addressed;
    (8) The right of the Secretary to conduct periodic inspections to 
verify the eligible entity's enforcement of the easements;
    (9) The manner in which the eligible entity will evaluate and report 
the use of funds to the Secretary;
    (10) The eligible entity's agreement to assume the costs incurred in 
administering and enforcing the easement, including the costs of 
restoration and rehabilitation of the land as specified by the owner and 
eligible entity. The entity will also assume the responsibility for 
enforcing the GRP management plan or conservation plan, as applicable. 
The eligible entity must incorporate any required plan into the 
conservation easement deed by reference or otherwise;
    (11) The source of funding. The eligible entity may include a 
charitable donation or qualified conservation contribution (as defined 
by section 170(h) of the Internal Revenue Code of 1986) from the 
landowner as part of the entity's share of the purchase price;
    (12) The schedule of payments to an eligible entity, as agreed to by 
NRCS and the eligible entity;
    (13) GRP 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;
    (14) NRCS may provide a share of the purchase price of an easement 
under the program. The eligible entity will be required to provide a 
share of the purchase price at least equivalent to that provided by 
NRCS. The Federal share will be no more than 50 percent of the purchase 
price, as defined in Sec. 1415.3;
    (15) The eligible entity's succession plan, which describes how its 
successors or assigns will hold, manage, and enforce the interests in 
land acquired in the event that the eligible entity is no longer able to 
fulfill its obligations under the cooperative agreement entered into 
with NRCS; and
    (16) Other requirements deemed necessary by NRCS to protect the 
interests of the United States.
    (d) Easements funded under the cooperative agreement option will be 
in perpetuity, except where State law prohibits a permanent easement, 
and will require that the easement area be maintained in accordance with 
GRP goals and objectives for the term of the easement.
    (e) The entity may use its own terms and conditions in the 
conservation easement deed, but a conservation easement deed template 
used by the eligible entity will be submitted to the Chief within 30 
days of the signing of the cooperative agreement. The conservation 
easement deed templates will be reviewed and approved by the Chief.

[[Page 541]]

NRCS reserves the right to require additional specific language or to 
remove language in the conservation easement deed to protect the 
interests of the United States.
    (1) In order to protect the public investment, the conveyance 
document must contain a right of enforcement. NRCS will specify the 
terms for the right of enforcement clause to read as set forth in the 
GRP cooperative agreement. This right is a vested property right and 
cannot be condemned or terminated by State or local government;
    (2) The eligible entity will acquire, hold, manage, and enforce the 
easement. The eligible 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;
    (3) Prior to closing, NRCS must sign an acceptance of the 
conservation easement, concurring with the terms of the conservation 
easement and accepting its interest in the conservation easement deed;
    (4) All conservation easement deeds acquired with GRP funds must be 
recorded in the appropriate land records. Proof of recordation will be 
provided to NRCS by the eligible entity; and
    (5) The conservation easement deed must include an indemnification 
clause requiring the participant (grantor) to indemnify and hold 
harmless the United States from any liability arising from or related to 
the property enrolled in GRP.



Sec. 1415.18  Easement transfer to eligible entities.

    (a) NRCS may transfer title of ownership to an easement to an 
eligible entity to hold and enforce an easement if:
    (1) The Chief determines that transfer will promote protection of 
grassland, land that contains forbs, or shrubland;
    (2) The owner authorizes the eligible entity to hold and enforce the 
easement; and
    (3) The eligible entity agrees to assume the costs incurred in 
administering and enforcing the easement, including the costs of 
restoration or rehabilitation of the land as specified by the owner and 
the eligible entity, and the entity assumes responsibility for enforcing 
the GRP management plan or conservation plan, as applicable, as approved 
by NRCS.
    (b) NRCS has the right to conduct periodic inspections to verify the 
eligible entities enforcement of the easement, which includes the terms 
and requirements set forth in the GRP management plan and any associated 
restoration or conservation plan for any easements transferred pursuant 
to this section.
    (c) An eligible entity that seeks to hold and enforce an easement 
will apply to the NRCS State Conservationist for approval.
    (d) The Chief may approve an application if the eligible entity:
    (1) Has relevant experience necessary, as appropriate for the 
application, to administer an easement on grassland, land that contains 
forbs, or shrublands;
    (2) Has a charter that describes the commitment of the eligible 
entity to conserving ranch land, agricultural land, or grassland for 
grazing and conservation purposes;
    (3) Possesses the human and financial resources necessary, as 
determined by the Chief, to effectuate the purposes of the charter;
    (4) Has sufficient financial resources to carry out easement 
administrative and enforcement activities;
    (5) Presents proof of a dedicated fund for enforcement as described 
in Sec. 1415.17(b)(5), if the entity is a nongovernmental organization; 
and
    (6) Presents documentation that the landowner has concurred in the 
transfer.
    (e) The Chief or his or her successors and assigns, will retain a 
right of enforcement in any transferred GRP funded easement, which 
provides the Secretary the right to inspect the easement for violations 
and enforce the terms of this easement through any and all authorities 
available under Federal or State law, in the event that the eligible 
entity fails to enforce the terms of the easement, as determined by 
NRCS.
    (f) Should an easement be transferred pursuant to this section, all 
warranties and indemnifications provided for in the deed will continue 
to apply to the United States. Upon transfer of the

[[Page 542]]

easement, the easement holder will be responsible for enforcement of the 
GRP management plan, as approved by NRCS, and implementation of any 
associated conservation or restoration plans and costs of such 
restoration as agreed to by the landowner and entity.
    (g) Due to the Federal interest in the GRP easement, GRP-funded 
easements cannot be condemned.



Sec. 1415.19  Appeals.

    (a) Applicants or participants may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in parts 614 
and 780 of this title.
    (b) Before a person may seek judicial review of any administrative 
action concerning eligibility for program participation 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 will be a final agency action except a decision of 
the NRCS Chief or the FSA Administrator, as applicable, under these 
procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by NRCS in determining property value are considered 
confidential information, and will only be disclosed as determined at 
the sole discretion of NRCS in accordance with applicable law.
    (d) Enforcement actions undertaken by NRCS in furtherance of its 
Federally held property rights are under the jurisdiction of the Federal 
District Courts and are not subject to review under administrative 
appeal regulations.



Sec. 1415.20  Scheme or device.

    (a) If it is determined by USDA that a participant has employed a 
scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid to such participant during the 
applicable period may be withheld or be required to be refunded with 
interest thereon, as determined appropriate by USDA.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices, rental contracts, or easements for the purpose of 
obtaining a payment to which a person would otherwise not be entitled.
    (c) A participant who succeeds to the responsibilities under this 
part will report in writing to USDA 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.



PART 1416_2006 EMERGENCY AGRICULTURAL DISASTER ASSISTANCE PROGRAMS--Table of 

Contents



 Subpart A_General Provisions for 2006 Emergency Agricultural Disaster 
                           Assistance Programs

Sec.
1416.1 Applicability.
1416.2 Eligible counties, hurricanes, and disaster periods.
1416.3 Administration.
1416.4 Definitions.
1416.5 Application for payment.
1416.6 Limitations on payments and other benefits.
1416.7 Insurance requirements.
1416.8 Appeals.
1416.9 Offsets, assignments, and debt settlement.
1416.10 Records and inspections thereof.
1416.11 Refunds; joint and several liability.

                Subpart B_Livestock Compensation Program

1416.100 Applicability.
1416.101 Definitions.
1416.102 Eligible livestock and producers.
1416.103 Application process.
1416.104 Payment calculation.
1416.105 Availability of funds.

                Subpart C_Livestock Indemnity Program II

1416.200 Applicability.
1416.201 Definitions.
1416.202 Eligible owners and contract growers.
1416.203 Eligible livestock.
1416.204 Application process.
1416.205 Payment calculation.
1416.206 Availability of funds.

                    Subpart D_Citrus Disaster Program

1416.300 Applicability.
1416.301 Definitions.
1416.302 Eligible crops and producers.
1416.303 Application process.
1416.304 Payment calculations.
1416.305 Availability of funds.

[[Page 543]]

             Subpart E_Fruit and Vegetable Disaster Program

1416.400 Applicability.
1416.401 Definitions.
1416.402 Eligible fruit and vegetable producers.
1416.403 Application process.
1416.404 Payment calculations.
1416.405 Availability of funds.

                Subpart F_Tropical Fruit Disaster Program

1416.500 Applicability.
1416.501 Definitions.
1416.502 Eligibility requirements.
1416.503 Application process.
1416.504 Payment calculation.
1416.505 Availability of funds.

                   Subpart G_Nursery Disaster Program

1416.600 Applicability.
1416.601 Eligibility requirements.
1416.602 Application process.
1416.603 Payment calculations.
1416.604 Availability of funds.

Subpart H [Reserved]

                  Subpart I_2005 Catfish Grant Program

1416.800 General.

    Authority: Title III, Pub. L. 109-234, 120 Stat. 474; 16 U.S.C. 
3801, note.

    Source: 72 FR 6437, Feb. 12, 2007, unless otherwise noted.



 Subpart A_General Provisions for 2006 Emergency Agricultural Disaster 

                           Assistance Programs



Sec. 1416.1  Applicability.

    (a) This part establishes the terms and conditions under which the 
following programs will be administered under Title III of the Emergency 
Supplemental Appropriations Act for Defense, the Global War on Terror, 
and Hurricane Recovery, 2006 for producers affected by the 2005 
hurricanes listed in Sec. 1416.2:
    (1) Livestock Compensation Program (LCP);
    (2) Livestock Indemnity Program II (LIP II);
    (3) Citrus Disaster Program (Citrus Disaster);
    (4) Fruit and Vegetable Disaster Program (Fruit and Vegetable 
Disaster);
    (5) Tropical Fruit Disaster Program (Tropical Fruit);
    (6) Nursery Disaster Program (Nursery);
    (7) 2005 Hurricane Tree Assistance Program (Hurricane TAP);
    (8) Catfish Grant Program (Catfish Grants).
    (b) The amount that may be expended for payments under subparts B 
through I of this part shall not exceed the amounts authorized in Title 
III of the Emergency Supplemental Appropriations Act for Defense, the 
Global War on Terror, and Hurricane Recovery, 2006.
    (c) To be eligible for payments under these programs, producers must 
comply with all applicable provisions under subparts B through I of this 
part.



Sec. 1416.2  Eligible counties, hurricanes, and disaster periods.

    (a) Except as provided in paragraph (c) of this section, the 
Commodity Credit Corporation (CCC) will provide assistance under the 
programs listed in Sec. 1416.1 to eligible producers who have suffered 
certain losses due to 2005 hurricanes Katrina, Ophelia, Rita, or Wilma, 
or a related condition, in the counties provided in paragraph (d) of 
this section. CCC funds for the programs in subparts B through I of this 
part are made available under the Emergency Supplemental Appropriations 
Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006.
    (b) The ``Disaster Period'' is the time period in which losses 
occurred that may be considered eligible for the programs under subparts 
B, C, H and I of this part.
    (c) The Emergency Supplemental Appropriations Act for Defense, the 
Global War on Terror, and Hurricane Recovery, 2006 provides that no 
producer receives duplicative payments under the programs in subparts B 
through I of this part and any other Federal program for the same loss. 
Under the regulations at 7 CFR part 760, Subpart E, eligible livestock 
owners and contract growers were provided benefits for certain livestock 
deaths that occurred as a result of 2005 hurricanes Dennis, Katrina, 
Ophelia, Rita, or Wilma in many of the same counties as provided in 
paragraph (d) of this section. The benefits provided under 7 CFR part 
760,

[[Page 544]]

Subpart E, are significantly greater than the benefits to be provided 
under Subpart C of this part. Accordingly, to ensure the statutory 
requirement that no producer receives duplicative payments under the 
program in Subpart C of this section and any other Federal program for 
the same loss, eligible livestock under the program in Subpart C of this 
section shall be limited to catfish and crawfish in any county listed in 
paragraph (d) of this section that was an eligible county under 7 CFR 
760.101.
    (d) Counties are eligible for emergency disaster assistance under 
this Act if they received a Presidential designation or Secretarial 
declaration or are counties contiguous to such counties. Accordingly, 
the following counties are eligible:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Disaster period
                    State                                 County             ---------------------------------------------------------------------------
                                                                                   Katrina            Ophelia              Rita              Wilma
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.....................................  Baldwin.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Bibb..........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Blount........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Butler........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Chilton.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Choctaw.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Clarke........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Colbert.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Conecuh.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Covington.....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Cullman.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Dallas........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Escambia......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Fayette.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Franklin......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Alabama.....................................  Geneva........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Greene........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Hale..........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Jefferson.....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Lamar.........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Lauderdale....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Lawrence......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Limestone.....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Lowndes.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Marengo.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Marion........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Marshall......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Mobile........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Monroe........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Morgan........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Perry.........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Pickens.......................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  St. Clair.....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Shelby........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Sumter........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Tuscaloosa....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Walker........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Washington....................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Wilcox........................   8/29/05-10/28/05  .................  .................  .................
Alabama.....................................  Winston.......................   8/29/05-10/28/05  .................  .................  .................
Arkansas....................................  Ashley........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Chicot........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Columbia......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Crittenden....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Desha.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Lafayette.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Lee...........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Miller........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Phillips......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  St. Francis...................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Arkansas....................................  Union.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Florida.....................................  Bay...........................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Brevard.......................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Broward.......................   8/24/05-10/23/05  .................  .................  10/23/05-12/22/05
Florida.....................................  Calhoun.......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Charlotte.....................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Collier.......................   8/24/05-10/23/05  .................  .................  10/23/05-12/22/05
Florida.....................................  De Soto.......................  .................  .................  .................  10/23/05-12/22/05

[[Page 545]]

 
Florida.....................................  Escambia......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Franklin......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Glades........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Gulf..........................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Hardee........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Hendry........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Highlands.....................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Hillsborough..................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Holmes........................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Indian River..................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Jackson.......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Lee...........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Liberty.......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Manatee.......................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Martin........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Miami-Dade....................   8/24/05-10/23/05  .................  .................  10/23/05-12/22/05
Florida.....................................  Monroe........................   8/24/05-10/23/05  .................  .................  10/23/05-12/22/05
Florida.....................................  Okaloosa......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Okeechobee....................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Orange........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Osceola.......................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Palm Beach....................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Polk..........................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  St. Lucie.....................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Santa Rosa....................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Sarasota......................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Volusia.......................  .................  .................  .................  10/23/05-12/22/05
Florida.....................................  Wakulla.......................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Walton........................   8/24/05-10/23/05  .................  .................  .................
Florida.....................................  Washington....................   8/24/05-10/23/05  .................  .................  .................
Louisiana...................................  Acadia........................   8/29/05-10/23/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Allen.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Ascension.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Assumption....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Avoyelles.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Beauregard....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Bienville.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Bossier.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Caddo.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Calcasieu.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Caldwell......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Cameron.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Catahoula.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Claiborne.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Concordia.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  De Soto.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  East Baton Rouge..............   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  East Carroll..................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  East Feliciana................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Evangeline....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Franklin......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Grant.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Iberia........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Iberville.....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Jackson.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Jefferson.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Jefferson Davis...............   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Lafayette.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Lafourche.....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  La Salle......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Lincoln.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Livingston....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Madison.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Morehouse.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Natchitoches..................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Orleans.......................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Ouachita......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Plaquemines...................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Pointe Coupee.................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Rapides.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Red River.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................

[[Page 546]]

 
Louisiana...................................  Richland......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Sabine........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  St. Bernard...................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  St. Charles...................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  St. Helena....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  St. James.....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  St. John the Baptist..........   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  St. Landry....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  St. Martin....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  St. Mary......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  St. Tammany...................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Tangipahoa....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Tensas........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Terrebonne....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Union.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Vermilion.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Vernon........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  Washington....................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Webster.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  West Baton Rouge..............   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  West Carroll..................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Louisiana...................................  West Feliciana................   8/29/05-10/28/05  .................  .................  .................
Louisiana...................................  Winn..........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Adams.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Alcorn........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Amite.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Attala........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Benton........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Bolivar.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Calhoun.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Carroll.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Chickasaw.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Choctaw.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Claiborne.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Clarke........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Clay..........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Coahoma.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Copiah........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Covington.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  De Soto.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Forrest.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Franklin......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  George........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Greene........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Grenada.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Hancock.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Harrison......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Hinds.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Holmes........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Humphreys.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Issaquena.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Itawamba......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Jackson.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Jasper........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Jefferson.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Jefferson Davis...............   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Jones.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Kemper........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lafayette.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lamar.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lauderdale....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lawrence......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Leake.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lee...........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Leflore.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lincoln.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Lowndes.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Madison.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Marion........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Marshall......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................

[[Page 547]]

 
Mississippi.................................  Monroe........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Montgomery....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Neshoba.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Newton........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Noxubee.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Oktibbeha.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Panola........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Pearl River...................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Perry.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Pike..........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Pontotoc......................   8/29/05-10/28/05  .................  .................  .................
Mississippi.................................  Prentiss......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Quitman.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Rankin........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Scott.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Sharkey.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Simpson.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Smith.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Stone.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Sunflower.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Tallahatchie..................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Tate..........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Tippah........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Tishomingo....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Tunica........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Union.........................   8/29/05-10/28/05  .................  .................  .................
Mississippi.................................  Walthall......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Warren........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Washington....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Wayne.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Webster.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Wilkinson.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Winston.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Yalobusha.....................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Mississippi.................................  Yazoo.........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
North Carolina..............................  Beaufort......................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Bladen........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Brunswick.....................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Carteret......................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Columbus......................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Craven........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Currituck.....................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Dare..........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Duplin........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Hyde..........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Jones.........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Lenoir........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  New Hanover...................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Onslow........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Pamlico.......................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Pender........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Pitt..........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Sampson.......................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Tyrell........................  .................   9/11/05-11/10/05  .................  .................
North Carolina..............................  Washington....................  .................   9/11/05-11/10/05  .................  .................
South Carolina..............................  Horry.........................  .................   9/11/05-11/10/05  .................  .................
Tennessee...................................  Fayette.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Tennessee...................................  Giles.........................   8/29/05-10/28/05  .................  .................  .................
Tennessee...................................  Hardeman......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Tennessee...................................  Hardin........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Tennessee...................................  Lawrence......................   8/29/05-10/28/05  .................  .................  .................
Tennessee...................................  McNairy.......................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Tennessee...................................  Shelby........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Tennessee...................................  Wayne.........................   8/29/05-10/28/05  .................  .................  .................
Texas.......................................  Anderson......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Angelina......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Austin........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Brazoria......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Cass..........................   8/29/05-10/28/05  .................   9/23/05-11/22/05  .................
Texas.......................................  Chambers......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Cherokee......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Fort Bend.....................  .................  .................   9/23/05-11/22/05  .................

[[Page 548]]

 
Texas.......................................  Galveston.....................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Gregg.........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Grimes........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Hardin........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Harris........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Harrison......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Henderson.....................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Houston.......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Jasper........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Jefferson.....................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Leon..........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Liberty.......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Madison.......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Marion........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Matagorda.....................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Montgomery....................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Morris........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Nacogdoches...................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Newton........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Orange........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Panola........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Polk..........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Rusk..........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Sabine........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  San Augustine.................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  San Jacinto...................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Shelby........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Smith.........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Trinity.......................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Tyler.........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Upshur........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Walker........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Waller........................  .................  .................   9/23/05-11/22/05  .................
Texas.......................................  Wharton.......................  .................  .................   9/23/05-11/22/05  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------



Sec. 1416.3  Administration.

    (a) These programs are administered under the general supervision of 
the Administrator, Farm Service Agency (FSA), or Executive Vice 
President of CCC.
    (b) CCC representatives do not have authority to modify or waive any 
of the provisions of the regulations of subparts B through I of this 
part.
    (c) The State FSA committee shall take any action required by the 
regulations of subparts B through H of this part that the county FSA 
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 subparts B through H of this part; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with subparts B through H of this part.
    (d) No provision or delegation to a State or county FSA committee 
shall preclude the Executive Vice President, CCC, FSA Deputy 
Administrator for Farm Programs (Deputy Administrator), or a designee of 
such, from determining any question arising under the program or from 
reversing or modifying any determination made by a State or county FSA 
committee.



Sec. 1416.4  Definitions.

    The following definitions apply to the programs in subparts B 
through H of this part. The definitions in parts 718 and 1400 of this 
chapter shall also apply, except where they conflict with the 
definitions in this section.
    Application period means the date established by the Deputy 
Administrator for producers to apply for program benefits.
    Bush means a thick densely branched woody shrub grown in the ground 
for the production of an annual crop for commercial market for human 
consumption.
    Commercial use means used in the operation of a business activity 
engaged

[[Page 549]]

in as a means of livelihood for profit by the eligible producer.
    Crop insurance means an insurance policy reinsured by the Federal 
Crop Insurance Corporation under the Federal Crop Insurance Act, as 
amended.
    Farming operation means a business enterprise engaged in producing 
agricultural products.
    Owner means one who had legal ownership of the trees, bushes, vines, 
or livestock for which benefits are being requested under subparts B 
through H, on the day such plant or livestock perished or suffered 
losses due to an eligible hurricane.
    Tier means the geographic bands of damage generally correlating to 
the severity of damage caused by the maximum sustained winds of the 
applicable hurricanes.
    Tree means a tree (including a Christmas tree, ornamental tree, 
nursery tree, and potted tree).
    Vine means a perennial plant grown under normal conditions from 
which an annual fruit crop is produced for commercial market for human 
consumption, such as grape, kiwi, or passion fruit that has a flexible 
stem supported by climbing, twining, or creeping along a surface.



Sec. 1416.5  Application for payment.

    (a) A producer who applies for any program under subparts B through 
H of this part shall submit an application and required supporting 
documentation to the county FSA office serving the county where the 
eligible loss occurred; or in the case of LCP, where the eligible 
livestock were physically located on the applicable date.
    (b) The application must be filed during the application period 
announced by the Deputy Administrator.
    (c) Payments may be made for eligible 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.
    (d) Data furnished by the applicant will be used to determine 
eligibility for program benefits. Furnishing the data is voluntary; 
however, without all required data program benefits will not be approved 
or provided.
    (e) A minor child shall be eligible to apply for program benefits so 
long as all eligibility requirements are met and one of the following 
conditions exists:
    (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. 1416.6  Limitations on payments and other benefits.

    (a) A producer may receive no more than $80,000 under LCP, subpart B 
of this part.
    (b) A producer may receive no more than $80,000 under LIP-II, 
subpart C of this part.
    (c) A single producer may receive no more than $80,000 total 
combined payments from subpart D of this part, the Citrus Disaster 
Program, subpart E of this part, the Fruit and Vegetable Program, 
subpart F of this part, the Tropical Fruit Program, and subpart G of 
this part, the Nursery Program.
    (d) Limits per person for payments made under subpart I of this part 
for Catfish Grants will be $80,000 per producer. This limit shall be 
enforced by the State administering the grant program.
    (e) An individual or entity whose adjusted gross income is in excess 
of $2.5 million, as determined under part 1400 of this title, shall not 
be eligible to receive benefits under this part, except for TAP and 
Catfish Grants.
    (f) As a condition to receive benefits under this part, a producer 
must have been in compliance with the provisions of parts 12 and 718 of 
this title for the 2005 crop year and must not otherwise

[[Page 550]]

be barred from receiving benefits under any law.
    (g) An individual or entity determined to be a foreign person under 
part 1400 of this title shall not be eligible to receive benefits under 
this part.
    (h) In addition to limitations provided in each subpart of this 
part, producers cannot receive duplicate benefits under this part and 
any other Federal programs for the same loss, including but not limited 
to the following:
    (1) Crop insurance indemnity payments under 7 CFR Part 400;
    (2) The Noninsured Crop Disaster Assistance Program, part 1437 of 
this chapter;
    (3) Part 701 of this title, the Emergency Conservation Program;
    (4) The Hurricane Indemnity Program, subpart C of part 760 of this 
title.
    (i) An applicant's actual loss or actual costs incurred because of 
losses due to an eligible hurricane must equal or exceed the benefit 
requested under this part.



Sec. 1416.7  Insurance requirements.

    For the Citrus, Fruit and Vegetable, Tropical Fruit and Nursery 
Disaster Programs:
    (a) Payment rates for producers who did not have crop insurance or 
coverage under the Noninsured Crop Disaster Assistance Program (NAP) 
will be 5 percent less than the rates received by producers who did have 
crop insurance or NAP coverage.
    (b) Eligible producers who elected to not purchase crop insurance on 
an insurable crop, or to sign up for NAP that was available on an 
uninsurable crop for which benefits are received under these programs, 
must purchase such coverage for the next available coverage period in 
the form of:
    (1) Crop insurance that is, at a minimum, at least at the 
catastrophic level on that crop, although producers required to purchase 
a citrus policy may purchase a fruit or tree policy; or
    (2) NAP coverage.
    (c) If a producer who is required to purchase crop insurance or NAP 
for the applicable year fails to do so, the producer must refund any 
disaster payment made under these programs. Required refunds will be 
serviced as a claim under part 1403 of this chapter.



Sec. 1416.8  Appeals.

    The appeal regulations set forth at parts 11 and 780 of this title 
apply to determinations made pursuant to subparts B through H of this 
part.



Sec. 1416.9  Offsets, assignments, and debt settlement.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any producer shall be made without regard to 
questions of title under State law and without regard to any claim or 
lien against the commodity, 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 parts 792 and 
1403 of this title apply to payments made under subparts B through H of 
this part.
    (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.



Sec. 1416.10  Records and inspections thereof.

    Producers receiving payments under the programs in subparts B 
through H or any other person who furnishes information for the purposes 
of enabling such producer to receive a payment under subparts B through 
H of this part shall maintain any books, records, and accounts 
supporting any information so furnished for 3 years following the end of 
the year during which the application for payment was filed. Producers 
receiving payments or any other person who furnishes such information to 
CCC shall permit authorized representatives of USDA and the General 
Accounting Office during regular business hours to inspect, examine, and 
to allow such persons to make copies of such books or records, and to 
enter upon, inspect and verify all applicable livestock and acreage in 
which the applicant has an interest for the purpose of confirming the 
accuracy of the information provided by the applicant.



Sec. 1416.11  Refunds; joint and several liability.

    In the event there is a failure to comply with any term, 
requirement, or

[[Page 551]]

condition for payment or assistance arising under subparts B through H 
of 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 and late-
payment charges as provided for in part 792 of this title.



                Subpart B_Livestock Compensation Program



Sec. 1416.100  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
Livestock Compensation Program (LCP).



Sec. 1416.101  Definitions.

    The following definitions apply to this subpart.
    Adult beef bulls means male bovine animals that were at least 2 
years old and used for breeding purposes on the beginning date of the 
applicable disaster period.
    Adult beef cows means female bovine animals that had delivered one 
or more offspring before the beginning date of the disaster period. A 
first-time bred beef heifer shall also be considered an adult beef cow 
if it was pregnant on the beginning date of the disaster period.
    Adult buffalo and beefalo bulls means male animals of those breeds 
that were at least 2 years old and used for breeding purposes on the 
beginning date of the disaster period.
    Adult buffalo and beefalo cows means female animals of those breeds 
that had delivered one or more offspring before the beginning date of 
the applicable disaster period. A first-time bred buffalo or beefalo 
heifer shall also be considered to be an adult buffalo or beefalo cow if 
it was pregnant on the beginning date of the disaster period.
    Adult dairy bulls means male bovine animals of a breed used for 
producing milk for human consumption that were at least 2 years old and 
used for breeding dairy cows on the beginning date of the disaster 
period.
    Adult dairy cows means female bovine animals used for the purpose of 
providing milk for human consumption that had delivered one or more 
offspring before the beginning date of the disaster period. A first-time 
bred dairy heifer shall also be considered an adult dairy cow if it was 
pregnant on the beginning date of the disaster period.
    Agricultural operation means a farming operation.
    Application means the ``2005 Hurricanes Livestock Compensation 
Program Application'' form.
    Disaster period means the applicable disaster period as set forth in 
Sec. 1416.2.
    Equine animal means a domesticated horse, mule or donkey.
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats.
    Non-adult beef cattle means male, female or neutered male bovine 
animals that weighed 500 pounds or more on the beginning date of the 
disaster period, but do not meet the definition of adult beef cows or 
bulls.
    Non-adult buffalo/beefalo means male, female or neutered male 
animals of those breeds that weighed 500 pounds or more on the beginning 
date of the disaster period, but do not meet the definition of an adult 
buffalo or beefalo cow or bull.
    Non-adult dairy cattle means male, female or neutered male bovine 
livestock, of a breed used for the purpose of providing milk for human 
consumption, that weighed 500 pounds or more on the beginning date of 
the disaster period, but do not meet the definition adult dairy cows or 
bulls.
    Poultry means domesticated chickens, turkeys, ducks and geese. 
Poultry will be further delineated by sex, age and purpose of 
production, as determined by CCC.
    Sheep means domesticated, ruminant mammals of the genus Ovis.
    Swine means domesticated omnivorous pigs, hogs, and boars. Swine 
will be further delineated by sex and weight as determined by CCC.



Sec. 1416.102  Eligible livestock and producers.

    (a) To be considered eligible, livestock must meet all the following 
conditions:
    (1) Be adult or non-adult dairy cattle, beef cattle, buffalo, 
beefalo, equine, poultry, elk, reindeer, sheep, goats, swine or deer;

[[Page 552]]

    (2) Been physically located in an eligible county on the beginning 
date of the disaster period;
    (3) Been maintained for commercial use as part of a farming 
operation on the beginning date of the disaster period; and
    (4) Not have been produced and maintained for reasons other than 
commercial use as part of a farming operation. Such excluded uses 
include, but are not limited to wild free roaming animals or animals 
used for recreational purposes, such as pleasure, hunting, pets, or for 
show.
    (b) To be considered an eligible livestock producer, a producer must 
have:
    (1) Owned or cash-leased, but not both for the same livestock, 
eligible livestock on the beginning date of the disaster period; and
    (2) Suffered a loss of feed:
    (i) From produced or purchased forage or feedstuffs which was:
    (A) Damaged or destroyed by an eligible hurricane; and
    (B) Physically located in an eligible county; and
    (C) Intended for use as feed for only the livestock found eligible 
under paragraph (a) of this section.
    (ii) The value of such loss, as determined by CCC, equals or exceeds 
the amount calculated according to Sec. 1416.104(a).



Sec. 1416.103  Application process.

    (a) Applicants must submit to CCC:
    (1) A completed application in accordance with Sec. 1416.5;
    (2) Adequate proof, as determined by CCC, that the feed lost:
    (i) Was for the claimed eligible livestock;
    (ii) Occurred as a direct result of the eligible hurricane during 
the disaster period; and
    (iii) Had a value, as determined by CCC, equal to or greater than 
the amount calculated in accordance with Sec. 1416.104(a); and
    (iv) Any other supporting documentation as determined by CCC to be 
necessary to make a determination of eligibility of the applicant. 
Supporting documents include, but are not limited to: verifiable 
purchase records; veterinarian records; bank or other loan papers; 
rendering truck receipts; Federal Emergency Management Agency records; 
National Guard records; written contracts; production records; Internal 
Revenue Service records; property tax records; private insurance 
documents; sales records, and similar documents.
    (b) [Reserved]



Sec. 1416.104  Payment calculation.

    (a) LCP payments are calculated by multiplying the national payment 
rate for each livestock category, as provided in paragraph (c) of this 
section, by the number of eligible livestock in each category. The 
national payment rate represents the cost of the amount of corn needed 
to maintain the specific livestock for 30 days, as determined by CCC. 
Adjustments shall be applied in accordance with paragraph (b) of this 
section and Sec. 1416.105;
    (b) The LCP payment calculated in accordance with paragraph (a) of 
this section shall be reduced by the amount the applicant received for 
the specific livestock under the Feed Indemnity Program in accordance 
with subpart D of part 760 of this title.
    (c) The eligible livestock categories are:
    (1) Adult beef cows or bulls;
    (2) Non-adult beef cattle;
    (3) Adult buffalo or beefalo cows or bulls;
    (4) Non-adult buffalo or beefalo;
    (5) Adult dairy cows or bulls;
    (6) Non-adult dairy cattle;
    (7) Goats;
    (8) Sheep;
    (9) Equine;
    (10) Reindeer;
    (11) Elk;
    (12) Poultry; and
    (13) Deer.



Sec. 1416.105  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
under this subpart and subpart I of this part exceeds $95 million, each 
payment shall be reduced by a uniform national percentage, as determined 
by CCC,
    (b) Such payment reduction shall be applied after the imposition of 
per-person payment limitations as provided in Sec. 1416.6.

[[Page 553]]



                Subpart C_Livestock Indemnity Program II



Sec. 1416.200  Applicability.

    (a) This subpart sets forth the terms and conditions applicable to 
the Livestock Indemnity Program II (LIP-II).
    (b) Eligible livestock owners and contract growers will be 
compensated in accordance with Sec. 1416.205 for eligible livestock 
deaths that occurred in eligible counties as a direct result of an 
eligible hurricane during the disaster period.



Sec. 1416.201  Definitions.

    The following definitions are applicable for all purposes of 
administering LIP-II.
    Adult beef bull means a male bovine animal that was at least 2 years 
old and used for breeding purposes before it died.
    Adult beef cow means a female bovine animal that had delivered one 
or more offspring before dying. A first-time bred beef heifer shall also 
be considered an adult beef cow if it was pregnant at the time it died.
    Adult buffalo and beefalo bull means a male animal of those breeds 
that were at least 2 years old and used for breeding purposes before it 
died.
    Adult buffalo and beefalo cow means a female animal of those breeds 
that had delivered one or more offspring before dying. A first-time bred 
buffalo or beefalo heifer shall also be considered an adult buffalo or 
beefalo cow if it was pregnant at the time it died.
    Adult dairy bull means a male bovine animal of a breed used for 
producing milk for human consumption that was at least 2 years old and 
used for breeding dairy cows before it died.
    Adult dairy cow means a female bovine animal used for the purpose of 
providing milk for human consumption that had delivered one or more 
offspring before dying. A first-time bred dairy heifer shall also be 
considered an adult dairy cow if it was pregnant at the time it died.
    Agricultural operation means a farming operation.
    Application means the ``2005 Hurricanes Livestock Indemnity Program 
II Application'' form.
    Buck means a male goat.
    Catfish means catfish grown as food for human consumption by a 
commercial operator on private property in water in a controlled 
environment.
    Contract means, with respect to contracts for the handling of 
livestock, a written agreement between a livestock owner and another 
individual or entity setting the specific terms, conditions and 
obligations of the parties involved regarding the production of 
livestock or livestock products.
    Controlled environment means an environment in which everything that 
can practicably be controlled with structures, facilities, growing media 
(including but not limited to water and nutrients) by the producer, is 
in fact controlled by the producer.
    Crawfish means crawfish grown as food for human consumption by a 
commercial operator on private property in water in a controlled 
environment.
    Disaster period means the applicable disaster period as set forth in 
Sec. 1416.2.
    Doe means a female goat.
    Equine animal means a domesticated horse, mule or donkey.
    Ewe means a female sheep.
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats. Goats will be further delineated by sex (bucks 
and does) and age (kids).
    Kid means a goat less than 1 year old.
    Lamb means a sheep less than 1 year old.
    Non-adult beef cattle means male, female or neutered male bovines 
that do not meet the definition of adult beef cows or bulls. Non-adult 
beef cattle is further delineated by weight categories of less than 400 
pounds, and 400 pounds or more at the time they died.
    Non-adult buffalo or beefalo means a male, female or neutered male 
animal of those breeds that do not meet the definition of adult buffalo/
beefalo cow or bull. Non-adult buffalo or beefalo is further delineated 
by weight categories of less than 400 pounds, and 400 pounds or more at 
the time of death.
    Non-adult dairy cattle means male, female, or neutered male bovine 
livestock, of a breed used for the purpose of providing milk for human 
consumption, that do not meet the definition of adult dairy cows or 
bulls. Non-adult dairy cattle is further delineated by

[[Page 554]]

weight categories of less than 400 pounds, and 400 pounds or more at the 
time they died.
    Poultry means domesticated chickens, turkeys, ducks and geese. 
Poultry will be further delineated by sex, age and purpose of 
production, as determined by CCC.
    Ram means a male sheep.
    Sheep means domesticated, ruminant mammals of the genus Ovis. Sheep 
will be further delineated by sex (rams and ewes) and age (lambs).
    Swine means domesticated omnivorous pigs, hogs, and boars. Swine 
will be further delineated by sex and weight as determined by CCC.



Sec. 1416.202  Eligible owners and contract growers.

    (a) To be considered eligible, a livestock owner must have had legal 
ownership of the eligible livestock, as provided in Sec. 1416.203(a), 
on the day the livestock died.
    (b) To be considered eligible, a contract grower on the day the 
livestock died must have had:
    (1) A written agreement with the owner of eligible livestock setting 
the specific terms, conditions and obligations of the parties involved 
regarding the production of livestock; and
    (2) Control of the eligible livestock, as provided in Sec. 
1416.203(b), on the day the livestock died.



Sec. 1416.203  Eligible livestock.

    (a) To be considered eligible livestock for eligible livestock 
owners, livestock:
    (1) In any county provided in Sec. 1416.2(d) that was an eligible 
county in accordance with 7 CFR 760.101, must meet all the following:
    (i) Be catfish or crawfish as defined in Sec. 1416.201;
    (ii) Died in an eligible county as a direct result of an applicable 
hurricane during the disaster period;
    (iii) Been maintained for commercial use as part of a farming 
operation on the day they died; and
    (iv) Before dying, not have been produced or maintained for reasons 
other than commercial use as part of a farming operation, including but 
not limited to wild free roaming animals or animals used for 
recreational purposes, such as pleasure, hunting, pets, or for show.
    (2) In any county provided in Sec. 1416.2(d) that was not an 
eligible county according to 7 CFR 760.101, must meet all the following:
    (i) Be adult or non-adult dairy cattle, beef cattle, buffalo, 
beefalo, catfish, crawfish, equine, sheep goats, swine, poultry or deer;
    (ii) Died in an eligible county as a direct result of an applicable 
hurricane during the disaster period;
    (iii) Been maintained for commercial use as part of a farming 
operation on the day they died; and
    (iv) Before dying, not have been produced or maintained for reasons 
other than commercial use as part of a farming operation, including but 
not limited to wild free roaming animals or animals used for 
recreational purposes, such as pleasure, hunting, pets, or for show.
    (b) To be considered eligible livestock for eligible contract 
growers, livestock must meet all the following:
    (1) Be poultry as defined in Sec. 1416.201;
    (2) Died in an eligible county provided in Sec. 1416.2(d) that was 
not an eligible county as provided in 7 CFR 760.101;
    (3) Died as a direct result of an eligible hurricane during the 
applicable disaster period as set forth in Sec. 1416.2;
    (4) Been maintained for commercial use as part of a farming 
operation on the day they died; and
    (5) Before dying, not have been produced or maintained for reasons 
other than commercial use as part of a farming operation, including but 
not limited to wild free roaming animals or animals used for 
recreational purposes, such as pleasure, hunting, pets, or for show.
    (c) No producer may receive duplicative payments under this subpart 
and any other Federal program for the same loss. Except catfish and 
crawfish, livestock that died in any county set forth in Sec. 1416.2(d) 
that was an eligible county under Sec. 760.101 of this title are not 
eligible livestock under this subpart.



Sec. 1416.204  Application process.

    (a) Applicants must submit to CCC a completed application in 
accordance

[[Page 555]]

with Sec. 1416.5, a copy of their grower contract if the applicant is a 
contract grower, and other supporting documents necessary for 
determining the eligibility of the applicant. Supporting documents must 
show: Evidence of loss; current physical location of livestock in 
inventory; and physical location of claimed livestock at the time of 
death.
    (b) Applicants must provide adequate proof that the death of the 
eligible livestock occurred in an eligible county as a direct result of 
an eligible hurricane during the disaster period. The quantity and kind 
of livestock that died as a direct result of the eligible hurricane may 
be documented by: Purchase records; veterinarian records; bank or other 
loan papers; rendering truck receipts; Federal Emergency Management 
Agency records; National Guard records; written contracts; production 
records, Internal Revenue Service records; property tax records; private 
insurance documents; and other similar verifiable documents, as 
determined by CCC.
    (c) Certifications of livestock deaths by third parties may be 
accepted only if both the following conditions are met:
    (1) The livestock owner or livestock contract grower, as applicable, 
certifies in writing:
    (i) That there is no other documentation of death available;
    (ii) The number of livestock, by category determined by the Deputy 
Administrator, were in inventory at the time the applicable hurricane 
occurred;
    (iii) Other details necessary for CCC to determine the certification 
acceptable; and
    (2) The third party provides their telephone number, address, and a 
written statement containing:
    (i) Specific details about their knowledge of the livestock deaths;
    (ii) Their affiliation with the livestock owner;
    (iii) The accuracy of the deaths claimed by the livestock owner; and
    (iv) Other details necessary for CCC to determine the certification 
acceptable.



Sec. 1416.205  Payment calculation.

    (a) Under this subpart, separate payment rates are established for 
eligible livestock owners and eligible livestock contract growers in 
accordance with paragraphs (b) and (c) of this section. LIP-II payments 
are calculated by multiplying the national payment rate for each 
livestock category, as determined in paragraphs (b) and (c) of this 
section, by the number of eligible livestock in each category, as 
provided in paragraphs (f), (g) and (h) of this section. Adjustments 
shall be applied in accordance with paragraphs (d) and (e) of this 
section and Sec. 1416.206.
    (b) The LIP-II national payment rate for eligible livestock owners 
is based on 30 percent of the average fair market value of the 
livestock.
    (c) The LIP-II national payment rate for eligible livestock contract 
growers is based on 30 percent of the average income loss sustained by 
the contract grower with respect to the dead livestock.
    (d) The payment calculated for eligible livestock owners shall be 
reduced by the amount the applicant received for the specific livestock 
under:
    (1) Subpart E of Part 760 of this title, the Livestock Indemnity 
Program;
    (2) Subpart G of Part 760 of this title, the Aquaculture Program; 
and
    (3) Part 1437 of this chapter, the Noninsured Crop Disaster 
Assistance Program.
    (e) The payment calculated for eligible livestock contract growers 
shall be reduced by the amount the applicant received for the specific 
livestock:
    (1) Under the Livestock Indemnity Program under Subpart E of Part 
760 of this title; and
    (2) From the party who contracted with the producer to grow the 
livestock for the loss of income from the dead livestock.
    (f) The categories of eligible livestock in any county provided in 
Sec. 1416.2(d) that was not an eligible county according to 7 CFR 
760.101 for eligible livestock contract growers are as follows:
    (1) Chickens, layers, roasters;
    (2) Chickens, broilers, pullets;
    (3) Chickens, chicks;
    (4) Turkeys, toms, fryers, roasters;
    (5) Turkeys, poults;

[[Page 556]]

    (6) Ducks;
    (7) Ducks, ducklings;
    (8) Geese, goose; and
    (9) Geese, gosling.
    (g) The categories of eligible livestock in any county provided in 
Sec. 1416.2(d) that was not an eligible county according to 7 CFR 
760.101 for eligible livestock owners are as follows:
    (1) Adult beef cows;
    (2) Adult beef bulls;
    (3) Non-adult beef cattle;
    (4) Adult buffalo or beefalo cows;
    (5) Adult buffalo or beefalo bulls;
    (6) Non-adult buffalo/beefalo;
    (7) Adult dairy cows;
    (8) Adult dairy bulls;
    (9) Non-adult dairy cattle;
    (10) Swine, sows, boars, barrows, gilts over 150 pounds;
    (11) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
    (12) Swine, feeder pigs under 50 pounds;
    (13) Goats, bucks;
    (14) Goats, does;
    (15) Goats, kids;
    (16) Sheep, rams;
    (17) Sheep, ewes;
    (18) Sheep, lambs;
    (19) Deer;
    (20) Chickens, layers, roasters;
    (21) Chickens, broilers, pullets;
    (22) Chickens, chicks;
    (23) Turkeys, toms, fryers, roasters;
    (24) Turkeys, poults;
    (25) Ducks;
    (26) Ducks, ducklings;
    (27) Geese, goose;
    (28) Geese, gosling;
    (29) Catfish;
    (30) Crawfish; and
    (31) Equine.
    (h) The categories of eligible livestock in any county provided in 
Sec. 1416.2(d) that was an eligible county according to 7 CFR 760.101 
for eligible livestock owners are as follows:
    (1) Catfish; and
    (2) Crawfish.



Sec. 1416.206  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
by eligible livestock owners under this subpart exceeds $30 million, 
each payment to eligible livestock owner shall be reduced by a uniform 
national percentage, as determined by CCC.
    (b) Such payment reduction shall be applied after the imposition of 
the applicable per-person payment limitations in Sec. 1416.6.



                    Subpart D_Citrus Disaster Program



Sec. 1416.300  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
Citrus Disaster Program.



Sec. 1416.301  Definitions.

    Citrus means eligible citrus types that are those listed within the 
Risk Management Agency (RMA) Florida Citrus Fruit Crop Provisions.
    Grove means contiguous acreage of the same citrus crop.



Sec. 1416.302  Eligible crops and producers.

    (a) A producer must be an owner, operator, landlord, tenant, or 
sharecropper who shares in the risk of producing the citrus crop and is 
entitled to share in the crop available for marketing from the farm or 
would have shared had the crop been produced. Producers that did not 
market citrus in both 2004 and 2005 are not eligible, except producers 
with groves that will be of fruit-bearing age for 2006, but were too 
immature to producer marketable fruit in 2004 or 2005.
    (b)(1) Citrus producers will be reimbursed on a per-acre basis for 
each eligible grove. Payment will be based on the severity of 
destruction as determined by the paths of the storms and damage 
estimates by CCC considering levels of loss correlating to the severity 
of damage caused by maximum sustained winds of the hurricane. The levels 
of damage that will determine payment rates are as follows:

Tier I--75 percent or greater crop loss and associated tree damage.
Tier II--50 to 74 percent crop loss and associated tree damage/loss.
Tier III--35 to 49 percent crop loss and associated tree damage/loss.
Tier IV --15 percent and greater associated tree damage only.

    (2) Citrus producers who suffered citrus crop production losses and 
associated fruit-bearing tree damage, including related cleanup and 
rehabilitation

[[Page 557]]

costs, must provide to CCC a certified statement on a CCC-approved form 
of the level of destruction, the number of acres in the disaster-
affected grove, and the geographic location of the losses.
    (c) If the actual level of loss is greater than the level of loss 
associated with the tier based on the location of the grove, the 
applicant may submit documentation to CCC to request the grove be placed 
in the next lower-numbered tier which represents a greater level of loss 
and a higher payment rate. Regardless of the level of loss incurred, the 
grove can only be placed in the next lower-numbered tier.
    (d) If the actual level of loss is less than the tier associated 
with the location band for the grove, the producer shall certify to the 
lower loss level, which must be 15 percent or more, on the application 
and a lower payment rate will be used by CCC based upon the tier rate 
associated with the lower loss level.



Sec. 1416.303  Application process.

    (a) Producers wishing to receive benefits must submit a completed 
application and report of acreage identifying the geographic location 
and number of acres in the disaster-affected area to their local FSA 
Service Center at the time an application for payment is being filed 
according to Sec. 1416.5.
    (b) Applicants must certify and provide adequate proof that the 
losses and expenses incurred to eligible citrus crops were a direct 
result of the hurricane, in accordance with Sec. 1416.2.



Sec. 1416.304  Payment calculations.

    (a) Payments will be calculated by multiplying the number of net 
acres in each tier times the applicable payment rate, as determined by 
CCC, times the producer's share of the loss. The number of net acres is 
determined by subtracting drainage ditches, canals, and other such land 
uses from the citrus acres planted in the grove. The following table 
provides the applicable payment rates for producers with crop insurance 
or NAP coverage and those without coverage:

------------------------------------------------------------------------
                                 Producers with       Producers without
                                insurance or NAP      insurance or NAP
                                    coverage              coverage
------------------------------------------------------------------------
Tier I......................                $1,500                $1,425
Tier II.....................                 1,000                   950
Tier III....................                   600                   570
Tier IV.....................                   100                    95
------------------------------------------------------------------------

    (b) The percentages of the payment for citrus crops that are subject 
to the payment limitation and AGI provisions are:

Tier I--55 percent
Tier II --60 percent
Tier III--64 percent
Tier IV--0 percent

    (c) The percentages of the payment for citrus crops that are not 
subject to the payment limitation and AGI provisions are:

Tier I--45 percent
Tier II--40 percent
Tier III--36 percent
Tier IV--100 percent



Sec. 1416.305  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
by eligible citrus producers under this subpart and subparts E, F, and G 
of this part exceeds $95 million, each payment to an eligible citrus 
producer shall be reduced by a uniform national percentage, as 
determined by CCC.
    (b) Such payment reduction shall be applied after imposition of 
applicable per person payment limitation as provided in Sec. 1416.6.

[[Page 558]]



             Subpart E_Fruit and Vegetable Disaster Program



Sec. 1416.400  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
Fruit and Vegetable Disaster Program.



Sec. 1416.401  Definitions.

    Other than plasticulture means conventional row-cropped fruits and 
vegetables, and those crops that are double cropped on a previous crop's 
or season's plastic.
    Plasticulture means production practices where the soil has been 
bedded, fumigated, fertilized, an irrigation system installed, and 
covered with plastic mulch.
    Specialty crop means any commercially grown fruit or vegetable 
eligible for crop insurance or NAP coverage.



Sec. 1416.402  Eligible fruit and vegetable producers.

    (a) Producers of fruits and vegetables utilizing ``plasticulture'', 
and ``other than plasticulture'' production practices are eligible for 
assistance. Producer must be an owner, operator, landlord, tenant, or 
sharecropper who shares in the risk of producing the crop and is 
entitled to share in the crop available for marketing from the farm or 
would have shared had the crop been produced. Payments will be made on a 
per-acre basis, and are based on tiers and the severity of destruction 
as specified for citrus crops and the type of production practice.
    (b) Producers must have at least a 35 percent loss in production, or 
a 15 percent or more associated crop damage. Producers must also 
document that the necessary materials and procedures were followed to 
produce vegetables using plasticulture or other than plasticulture.
    (c)(1) Fruit and vegetable producers will be reimbursed on a per-
acre basis for eligible acreage. Payment will be based on the severity 
of destruction as determined by the paths of the storms and damage 
estimates developed by CCC. Estimates take into account levels of loss 
generally correlating to the severity of damage caused by maximum 
sustained winds of the applicable hurricanes. The levels of damage that 
will determine payment rates are as follows:

Tier I--75 percent or greater crop and/or yield loss
Tier II--50 to 74 percent crop and/or yield loss
Tier III--35 to 49 percent crop and/or yield loss
Tier IV--15 percent or more crop and/or field damage

    (2) Fruit and vegetable producers who suffered crop production 
losses and associated crop damage, including related cleanup, must 
provide to CCC a certified statement on a CCC approved form of the level 
of destruction, the number of the disaster affected acres, and the 
geographic location of the losses.
    (d) If the actual level of loss is greater than the tier associated 
with the location of the acreage, the applicant may submit documentation 
to CCC to request the acreage be placed in the next lower-numbered tier 
which represents a greater level of loss and a higher payment rate.
    (e) If the actual level of loss is less than the tier associated 
with the location of the acreage, the producer shall certify to the 
lower loss level on the application and a lower payment rate will be 
used by CCC based upon the tier rate associated with the lower loss 
level.



Sec. 1416.403  Application process.

    (a) Producers wishing to receive benefits must submit a completed 
application and report of acreage identifying the geographic location 
and number of acres in the disaster-affected area to their local FSA 
Service Center at the time an application for payment is being filed 
according to Sec. 1416.5.
    (b) Applicants must certify and provide adequate proof that the 
losses and expenses incurred to eligible fruit and vegetable crops were 
a direct result of the applicable disaster, as set forth in Sec. 
1416.2.



Sec. 1416.404  Payment calculations.

    (a) Payments will be calculated by multiplying the number of net 
acres in each tier times the applicable payment rate, as determined by 
CCC, times the

[[Page 559]]

producer's share of the loss. The number of net acres is determined by 
subtracting drainage ditches, canals, and other such land uses from the 
planted fruit and vegetable acres. The following table provides the 
applicable payment rates for producers with crop insurance or NAP 
coverage and those without coverage:

----------------------------------------------------------------------------------------------------------------
                                            Producers with insurance or NAP   Producers without insurance or NAP
                                                       coverage                            coverage
                                         -----------------------------------------------------------------------
                                                               Other than                          Other than
                                            Plasticulture     plasticulture     Plasticulture     plasticulture
----------------------------------------------------------------------------------------------------------------
Tier I..................................            $3,750            $1,125            $3,560            $1,070
Tier II.................................             2,500               750             2,375               710
Tier III................................             1,500               450             1,425               425
Tier IV.................................               250                75               235                70
----------------------------------------------------------------------------------------------------------------

    (b) The percentage of the payment for fruit and vegetable crops that 
are subject to the payment limitation and AGI provisions are:

Tier I--94.6667 percent
Tier II--94 percent
Tier III--93.3333 percent
Tier IV--0 percent

    (c) The percentage of the payment for fruit and vegetable crops that 
are not subject to the payment limitation and AGI provisions are:

Tier I--5.3333 percent
Tier II--6 percent
Tier III--6.6667 percent
Tier IV--0 percent

    (d) In addition to the prohibition in Sec. 1416.6(g) a producer may 
not receive duplicate benefits under this subpart and subpart H of this 
part, the 2005 Hurricanes Tree Assistance Program.



Sec. 1416.405  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
by eligible fruit and vegetable producers under this subpart and 
subparts D, F, and G exceeds $95 million, each payment to an eligible 
fruit and vegetable producer shall be reduced by a uniform national 
percentage, as determined by CCC.
    (b) Such payment reduction shall be applied after imposition of 
applicable per person payment limitation as provided in Sec. 1416.6.



                Subpart F_Tropical Fruit Disaster Program



Sec. 1416.500  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
Tropical Fruit Disaster Program.



Sec. 1416.501  Definitions.

    Tropical Fruit means carambola, longan, lychee, and mangos for 
disaster program purposes.



Sec. 1416.502  Eligibility requirements.

    (a) Eligible Tropical Fruit producers must have incurred 50 percent 
or greater loss in commercial production.
    (b) Only those acres of the four eligible fruits located in Tier I 
or II as designated under Sec. 1416.2 shall be considered for payment 
under this subpart.



Sec. 1416.503  Application process.

    (a) Producers wishing to receive benefits must submit a completed 
application and report of acreage identifying the geographic location 
and number of acres in the disaster-affected area to their local FSA 
Service Center at the time an application for payment is being filed as 
provided in Sec. 1416.5. Applications will not be accepted after such 
date as announced by FSA. Applications for assistance are available at 
local FSA Service Centers.
    (b) Applicants must certify and provide adequate proof that the 
losses and expenses incurred to eligible tropical fruit crops were a 
direct result of the applicable disaster, as set forth in Sec. 1416.2.

[[Page 560]]



Sec. 1416.504  Payment calculation.

    (a) Payments are calculated by multiplying the number of affected 
acres by the payment rate times the producer's share of the crop. The 
payment rate for insured or NAP covered tropical fruit is a flat rate of 
$5000 per acre. The rate for uninsured or acreage without NAP coverage 
is $4750 per acre. The total payment is subject to the limitations in 
Sec. 1416.6.
    (b) In addition to the prohibition in Sec. 1416.6(g), producers 
cannot receive duplicate benefits under this subpart and subpart H of 
this part, Hurricane TAP, for the same loss.



Sec. 1416.505  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
by eligible tropical fruit producers under this subpart and subparts D, 
E, and G exceeds $95 million, each payment to an eligible tropical fruit 
producer shall be reduced by a uniform national percentage, as 
determined by CCC.
    (b) Such payment reduction shall be applied after imposition of 
applicable per person payment limitation as provided in Sec. 1416.6.



                   Subpart G_Nursery Disaster Program



Sec. 1416.600  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
Nursery Disaster Program.



Sec. 1416.601  Eligibility requirements.

    (a) Commercial ornamental nursery and fernery producers are eligible 
for assistance for inventory losses for each nursery or fernery 
operation and clean-up costs. For a nursery to be considered a 
commercial nursery, it must be certified by the appropriate state 
agency. Eligible producers include producers of the following types of 
nursery stock and such stock as announced by CCC:
    (1) Deciduous shrubs, broadleaf evergreens, coniferous evergreens, 
shade and flowering trees.
    (2) Stock for use as propagation in a commercial ornamental nursery 
operation.
    (3) Fruit or nut seedlings grown for sale as seed stock for 
commercial orchard operations growing fruit or nuts.
    (b) Eligible nursery inventory does not include:
    (1) Edible varieties.
    (2) Plants produced for reforestation purposes or for the purpose of 
producing a crop for which RMA does not provide insurance, or for which 
CCC does not provide assistance under NAP.
    (c) Losses will be determined on an individual-nursery basis. 
Production loss from one nursery will not be offset by production from 
another nursery operated by the same applicant.



Sec. 1416.602  Application process.

    (a) Producers wishing to receive benefits must submit a completed 
application and report of acreage identifying the geographic location, 
number of acres in the disaster-affected area, the inventory value 
before the hurricane, and the inventory value after the hurricane to 
their local FSA Service Center at the time an application for payment is 
being filed as provided in Sec. 1416.5. The value of the inventory is 
the producer's wholesale price list, less the maximum customer discount 
they provide, not to exceed the prices in RMA's ``Eligible Plant List 
and Price Schedule.''
    (b) Applicants must certify and provide adequate proof that the 
losses and expenses incurred to eligible nursery crops were a direct 
result of the applicable hurricane during the disaster period.



Sec. 1416.603  Payment calculations.

    (a) Payments are calculated by multiplying the difference between 
the beginning and ending inventory value times 25 percent times the 
producer's share of the loss. The payment for production loss is subject 
to the payment limitation and AGI provisions.
    (b) Producers are also eligible for a payment of $250 per acre for 
debris removal and associated costs from hurricane damage if they can 
document that these costs were equal to or greater than $250 per acre. 
None of the payment for cleanup is subject to the payment limitation and 
AGI provisions.

[[Page 561]]

    (c) In addition to the prohibition of Sec. 1416.6(g), producers 
cannot receive duplicate benefits under this subpart and subpart H of 
this part, the Hurricane TAP, for the same loss.



Sec. 1416.604  Availability of funds.

    (a) In the event that the total amount of eligible claims submitted 
by eligible nursery producers under this subpart and subparts D, E, and 
F exceeds $95 million, each payment to an eligible nursery producer 
shall be reduced by a uniform national percentage, as determined by CCC.
    (b) Such payment reduction shall be applied after imposition of 
applicable per person payment limitation as provided in Sec. 1416.6.

Subpart H [Reserved]



                  Subpart I_2005 Catfish Grant Program



Sec. 1416.800  General.

    (a) CCC will administer a limited program to provide assistance to 
catfish producers in eligible counties. Under the Catfish Grant Program, 
CCC will provide grants to the State governments of States where 
eligible counties are located. The amount of each grant will be based on 
the total value of the catfish feed loss suffered in every eligible 
county in the subject state as determined by CCC. Available grant funds 
under this subpart and funds under subpart B of this part will be 
uniformly prorated to ensure that available funding is not exceeded. 
Catfish producers in eligible counties who suffered at least a 30-day 
catfish feed loss may be eligible for these funds. Among other 
conditions of these grants, assistance provided by a State under such a 
grant to an applicant shall not exceed $80,000, except for general 
partnerships and joint ventures, in which case assistance shall not 
exceed $80,000 times the number of members that constitute the general 
partnership or joint venture.
    (b) No producer may receive duplicate payments under this subpart 
and any other Federal programs for the same loss.



PART 1421_GRAINS AND SIMILARLY HANDLED COMMODITIES_MARKETING ASSISTANCE LOANS 

AND LOAN DEFICIENCY PAYMENTS FOR 2008 THROUGH 2012--Table of Contents



                            Subpart A_General

Sec.
1421.1 Applicability and interest.
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 Loan repayment rates.
1421.11 Spot checks.
1421.12 Production evidence.
1421.13 Special loan deficiency payments.
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 Authorized storage.
1421.104 Marketing assistance loan making.
1421.105 Farm-stored marketing assistance loans.
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 Commodity certificate exchanges.
1421.111 Loan settlement.
1421.112 Foreclosure.
1421.113 Recourse marketing assistance 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 the 2008 Through 2012 Crop of Wheat, 
                       Barley, Oats, and Triticale

1421.300 Applicability.
1421.301 Administration.
1421.302 Eligible producer and eligible land.
1421.303 Time and method for application.
1421.304 Payment amount.
1421.305 Misrepresentation and scheme or device.
1421.306 Refunds; joint and several liability.

[[Page 562]]

         Subpart E_Designated Marketing Associations for Peanuts

1421.400 Applicability and abbreviations.
1421.401 DMA responsibilities.
1421.402 DMA eligibility to process loans and loan deficiency payments.
1421.403 DMA approval.
1421.404 Financial security.
1421.405 Liability.
1421.406 Reporting requirements.
1421.407 Suspension and termination.
1421.408 Prohibited activity.
1421.409 Monitoring payment limitations.
1421.410 Recordkeeping requirements.
1421.411 Forms.
1421.412 Powers of attorney.
1421.413 Liens and waivers.
1421.414 Producer request to a DMA for an MAL or LDP.
1421.415 Processing marketing assistance loans.
1421.416 Processing loan deficiency payments.
1421.417 Disbursing MAL and LDP proceeds.
1421.418 Submitting MAL and LDP documentation to FSA.
1421.419 MAL or LDP servicing.
1421.420 Inspections and reviews.
1421.421 Appeals.

    Authority: 7 U.S.C. 7231-7237 and 7931-7936; 15 U.S.C. 714b and 
714c, and Public Law 110-246.



                            Subpart A_General

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.



Sec. 1421.1  Applicability and interest.

    (a) The regulations of this subpart are applicable to the 2008 
through 2012 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). 
Additionally, large chickpeas are authorized for coverage for the 2009 
through 2012 crop years. These regulations specify the general 
provisions under which marketing assistance loans (MAL) and loan 
deficiency payments (LDP) will be administered by 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 LDPs. In any case in which money 
must be refunded to CCC in connection with this part, interest will be 
due to run from the date of disbursement of the sum to be refunded. This 
will apply, unless waived by the Deputy Administrator, irrespective of 
any other rule.
    (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.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32422, June 6, 2006; 74 
FR 15649, Apr. 7, 2009]



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) Correct or require correction of an action taken by a county 
committee that is not in compliance with this part; or
    (2) Require a county committee to not take an action or implement a 
decision that is not under the regulations of this part.

[[Page 563]]

    (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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15650, Apr. 7, 2009]



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.
    Administrative County Office is the FSA County Office where a 
producer's FSA records are maintained.
    Basic loan rate means the loan rate established by CCC for a 
commodity before any adjustment for premiums and discounts.
    CCC means the Commodity Credit Corporation.
    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.
    Chickpeas 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).
    (1) Small chickpea falls below a 20/64th sieve.
    (2) Large chickpea stays above a 20/64th sieve.
    CMA means a cooperative marketing association that is subject to 
regulations in Part 1425 of this chapter.
    COC means the FSA county committee.
    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.
    Control or Recording FSA County Office is the FSA County Office that 
controls subsidiary files for producers designated as multi-county 
producers.
    Crop means with respect to a year, commodities harvested in that 
year. That is, a reference to the 2009 crop of a commodity means 
commodities that when planted were intended for harvest in calendar year 
2009.
    Crop year means any time relevant to the relevant crop for that 
year. Thus references to the 2009 crop year are used to include any 
activities relevant to the 2009 crop.
    Current net worth ratio means current assets minus current 
liabilities, divided by current liabilities, based on the financial 
statement provided in connection with a DMA application or a 
recertification for DMA status.
    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.
    DMA Service County Office is an FSA County Office designated by CCC 
to accept, process, and disburse bundled peanut MALs and LDPs to a DMA. 
In the absence of a centralized MAL and LDP processing system for 
peanuts, a service county FSA office is necessary for entering MALs and 
LDPs made by DMAs into CCC accounting systems.
    Designated Marketing Association (DMA) means an entity, or a 
subsidiary thereof, that performs marketing functions for peanut 
producers and is designated to handle marketing assistance

[[Page 564]]

loans and loan deficiency payments for them. A DMA is eligible to 
perform those functions only if the DMA meets the eligibility criteria 
set out elsewhere in this part.
    Drawdown account is an account titled to the DMA at a financial 
institution and funded at the discretion of CCC for the purpose of 
allowing the DMA to advance funds to producers who have applied for MALs 
and LDPs before a subsequent MAL or LDP is made to the DMA by an 
assigned FSA county office.
    Electronic warehouse receipt (EWR) means a receipt electronically 
filed in a central filing system by an approved provider as provided in 
an executed, ``Farm Service Agency Provider Agreement to Electronically 
File and Maintain Warehouse Receipts.''
    FSA means the Farm Service Agency of the United States Department of 
Agriculture.
    High moisture state means corn or grain sorghum having a moisture 
content in excess of CCC standards used to determine eligibility for 
marketing assistance loans made by the Secretary.
    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, barley, oats, 
rice, soybeans, other oilseeds, peanuts, wool, mohair, dry peas, 
lentils, chickpeas, and other crops designated by CCC.
    Loan deficiency payment (LDP) means a payment received in lieu of a 
loan when the CCC-determined value is below the applicable county loan 
rate.
    Loan settlement means farm stored commodities delivered to CCC and 
warehouse stored commodities forfeited to CCC, effective with the 2009 
through 2012 crop years.
    MAL means marketing assistance loan.
    Medium grain rice for the purposes of this part includes both short 
and medium grain rice as defined by the U.S. Standards for Rice.
    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 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, 
haylage, earlage;
    (2) Specific crops designated for grazing; or
    (3) As otherwise designated by CCC.
    Pulse crops means any crop of dry peas, lentils, and chickpeas as 
defined by CCC.
    Rice means, unless otherwise noted, long grain rice and medium grain 
rice.
    Secretary means the Secretary of the United States Department of 
Agriculture, or the Secretary's delegate.
    Security for DMAs means a certified or cashier's check payable to 
CCC, an irrevocable commercial letter of credit in a form acceptable to 
CCC, a performance or surety bond conditioned on the DMA fully 
discharging all of its obligations under this part, or other form of 
financial security as CCC may deem appropriate.
    Servicing agent bank means the bank designated as the financial 
institution for a CMA or a designated marketing association.
    STC means the FSA State committee.
    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.

[[Page 565]]

    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 and includes, unless 
noted otherwise, graded and nongraded wool.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 37940, June 26, 2003; 
70 FR 33799, June 10, 2005; 74 FR 15650, Apr. 7, 2009]



Sec. 1421.4  Eligible producers.

    (a) To be an eligible producer, the producer must:
    (1) Be a person, partnership, association, corporation, estate, 
trust, 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 provisions of this part and, as applicable:
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation;
    (ii) 7 CFR part 707--Payments Due Persons Who Have Died, 
Disappeared, or Have Been Declared Incompetent;
    (iii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iv) 7 CFR part 996--Minimum Quality and Handling Standards for 
Domestic and Imported Peanuts Marketed in the United States;
    (v) 7 CFR part 1400--Payment Limitation & Payment Eligibility for 
2009 and Subsequent Crops, Programs, or Fiscal Years;
    (vi) 7 CFR part 1402--Policy for Certain Commodities Available for 
Sale;
    (vii) 7 CFR part 1403--Debt Settlement Policies and Procedures;
    (viii) 7 CFR part 1405--Loans, Purchases, and Other Operations;
    (ix) 7 CFR part 1412--Direct and Counter-Cyclical Program and 
Average Crop Revenue Election Program for the 2008 and Subsequent Crop 
Years; and
    (x) 7 CFR part 1423--Commodity Credit Corporation Approved 
Warehouses.
    (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 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 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

[[Page 566]]

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 cooperate 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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15650, Apr. 7, 2009; 75 
FR 19193, Apr. 14, 2010]



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, peanuts, soybeans, oilseeds, 
wheat, dry peas, lentils, 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 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 eligibility for rice includes class, grade, 
grading factor, milling yields, and other quality factors and will be 
based upon the U.S. Standards for Rice as applied to rough rice whether 
or not such determinations are made on the basis of an official 
inspection.
    (3) The determination of eligibility for peanuts includes type, 
quality, and quantity.
    (4) With regard to barley, canola, corn, flaxseed, grain sorghum, 
oats,

[[Page 567]]

rice, soybeans, sunflower seed for extraction of oil, wheat, and other 
commodities designated by CCC, the determination of eligibility will be 
based upon the Official U.S. Standards for Grain: U.S. Standards for 
Whole Dry Peas, Split Peas, and Lentils for dry peas and lentils; and 
the U.S. Standards for Beans for chickpeas, whether or not such 
determinations are made on the basis of an official inspection.
    (5) With regard to hull-less barley, hull-less oats, mustard seed, 
rapeseed, safflower seed, and sunflower seed used for a purpose other 
than to extract oil, the determination of eligibility will 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.
    (6) With regard to farm-stored peanuts, the determination of 
eligibility will 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.
    (f) A commodity that is purchased, substituted, or acquired by sale, 
gift or, exchange of an existing harvested, sheared, or slaughtered 
commodity, or through any other transaction is ineligible to be pledged 
as collateral for a marketing assistance loan; in addition a loan 
deficiency payment shall not be made with respect to such commodities.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32422, June 6, 2006; 74 
FR 15651, Apr. 7, 2009; 75 FR 19193, Apr. 14, 2010]



Sec. 1421.6  Beneficial interest.

    (a) To be eligible to receive marketing assistance loans and loan 
deficiency payments, a producer must have beneficial interest in the 
commodity that is tendered to CCC for a marketing assistance loan or is 
requested for a loan deficiency payment. For the purposes of this part, 
the term ``beneficial interest'' refers to a determination by CCC that a 
person has title to and control of the commodity that is tendered to CCC 
as collateral for a marketing assistance loan or of the commodity that 
will be used to determine a loan deficiency payment.. A determination of 
whether a person has beneficial interest in a commodity is made by CCC 
in accordance with this part and is not based upon a determination under 
any State law or any other regulation of a Federal agency.
    (b) Except as provided in paragraph (e) of this section, when 
requesting a marketing assistance loan for a loan commodity, in order to 
have beneficial interest in the commodity tendered as collateral for the 
loan, a person must:
    (1) Be the producer of the commodity as determined in accordance 
with Sec. 1421.4;
    (2) Have had ownership of the commodity from the time it was planted 
(with respect to wool and mohair from time of shearing) through the 
earlier the date the loan was repaid or the maturity date of the loan;
    (3) Have control of the commodity from the time of planting (for 
wool and mohair from the time of shearing) through the maturity date of 
the loan. To have control of the commodity, such person must have 
complete decision-making authority regarding

[[Page 568]]

whether the commodity will be tendered as collateral for a loan, when 
the loan will be repaid, or if the collateral will be forfeited to CCC 
in satisfaction of the loan obligations of such person, and where the 
commodity will be maintained during the term of the loan;
    (4) Not have received any payment from any party with respect to the 
commodity; and
    (5) If the commodity has been physically delivered to a location 
other than a location owned or under the total control of the producer, 
have delivered the commodity to a warehouse authorized in accordance 
with Sec. 1421.103(c). Delivery of the commodity to a location other 
than to such an authorized warehouse will result in the loss of 
beneficial interest in the commodity on the date of physical delivery 
and the producer will be considered to have lost beneficial interest as 
of 11:59 p.m. of such day. Accordingly, delivery of a commodity to 
entities such as a dairy, feedlot, ethanol plant, wool pool, feed mill, 
feed or grain bank, or other facilities as determined by CCC will result 
in the loss of beneficial interest as of the date of delivery, 
regardless of any other action or agreement between such an entity and 
the producer unless such an entity has been authorized by CCC under 
Sec. 1421.103(c).
    (c) Except as provided in paragraph (e) of this section, when 
requesting a loan deficiency payment for a loan commodity, in order to 
have beneficial interest in the commodity a person must:
    (1) Be the producer of the commodity as determined in accordance 
with Sec. 1421.4;
    (2) Have had ownership of the commodity from the time it was 
planted, with respect to wool and mohair from the time of shearing, or 
from the time of slaughter for unshorn pelts, through the date the 
producer has elected to determine the loan deficiency payment rate;
    (3) Have control of the commodity. For control such person must have 
complete decisionmaking authority regarding whether a loan deficiency 
payment will be requested with respect to the commodity; when the loan 
deficiency rate will be selected; and where the commodity will be 
maintained prior to the date on which the loan deficiency payment rate 
will be determined;
    (4) Not have received any payment from any party with respect to the 
commodity; and
    (5) If the commodity has been physically delivered to a location 
other than a location owned or under the total control of the producer, 
have delivered the commodity to a warehouse authorized in accordance 
with Sec. 1421.103(c). Delivery of the commodity to a location other 
than to an authorized warehouse will result in the loss of beneficial 
interest in the commodity on the date of physical delivery and the 
producer will be considered to have lost beneficial interest as of 11:59 
p.m. of such day. Accordingly, delivery of a commodity to entities such 
as a dairy, feedlot, ethanol plant, wool pool, feed mill, feed or grain 
bank, or unauthorized storage facility, will result in the loss of 
beneficial interest as of the date of delivery, regardless of any other 
action or agreement between such an entity and the producer unless such 
an entity has been authorized by CCC under Sec. 1421.103(c).
    (d) Notwithstanding any provision of paragraphs (b) and (c) of this 
section and Sec. 1421.5(f), in order to facilitate handling situations 
involving the death of a producer, CCC will consider an estate, heirs of 
the deceased producer, and a person to whom title to a commodity has 
passed by virtue of State law upon the death of the producer to have 
beneficial interest in a commodity produced by the producer under the 
same terms and conditions that would otherwise be applicable to such 
producer;
    (e) Notwithstanding any provision of paragraphs (b) and (c) of this 
section and Sec. 1421.5(f), a person who purchases or otherwise 
acquires a commodity from a producer under any circumstances does not 
obtain beneficial interest to the commodity whether such purchase or 
acquisition is made prior to the harvest of the crop or after harvest; 
however, CCC will consider a person to have beneficial interest in a 
commodity if, prior to harvest, such person has obtained title to the 
growing commodity at the same time that

[[Page 569]]

such person obtained full title to the land on which such crop was 
growing;
    (f) If marketing assistance loans and loan deficiency payments are 
made available to producers through an approved cooperative marketing 
association in accordance with part 1425 of this chapter, the beneficial 
interest in the commodity must always have been in the producer-member 
who delivered the commodity to the approved cooperative marketing 
association or its member approved cooperative marketing association, 
except as otherwise provided in this section. 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, commodities delivered to an approved cooperative marketing 
association shall not be eligible to be pledged as collateral for a 
marketing assistance loan or be taken into consideration when a loan 
deficiency payment is made.
    (g) A producer will lose beneficial interest in a commodity if the 
producer receives any payment from any person under any contractual 
arrangement with respect to a commodity if the person who is making the 
payment, or any person otherwise associated with the person making the 
payment, will at any time have title to the commodity or control of the 
commodity prior to or after harvest, shearing, or slaughter unless:
    (1) Such payment is authorized in accordance with part 1425 of this 
chapter; or
    (2) The payment is made as consideration for an option to purchase 
the commodity and such option contains the following language:

    Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the commodity 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.

    (h) Inclusion in a contract of one or more of the following types of 
provisions will not result in the loss of beneficial interest in a 
commodity:
    (1) A provision that allows the producer to select the sales price 
of the commodity at a time the contract is entered into or at a later 
date, for example, a contract normally referred to as a deferred-price, 
forward or price later contract. The following conditions apply:
    (i) Producers under a deferred-price, forward, or price later 
contract will lose beneficial interest in the commodity the earlier of 
receipt of any payment or once the commodity is applied in fulfillment 
of the delivery requirements of such a contract.
    (ii) Beneficial interest in the commodity is retained by the 
producer if the contract has no restrictive or contradictory clauses 
within the contract that may cause the producer to lose beneficial 
interest in the commodity.
    (2) A provision between the producer and a warehouse authorized in 
accordance with Sec. 1421.103(c) for the storage of CCC loan collateral 
that provides the producer a period of time following the date of 
physical delivery of the commodity to elect whether the commodity is to 
be stored and receipted on behalf of the producer or is to be considered 
transferred to the warehouse if CCC determines such a provision is 
required.
    (i) Commodities produced under a contract in which the title to the 
seed remains with the entity providing the seed to the producer, 
including contracts for the production of hybrid seed, genetically 
modified commodities, and other specialty seeds as approved in writing 
by CCC, are eligible to be pledged as collateral for a marketing 
assistance loan or a loan deficiency payment may be made with respect to 
such production if, at the time of the request for such a loan or LDP, 
the producer has not:
    (1) Received a payment under the contract; or

[[Page 570]]

    (2) Delivered the commodity to another person.

[71 FR 32422, June 2, 2006, as amended at 71 FR 51426, Aug. 30, 2006; 71 
FR 60413, Oct. 13, 2006; 74 FR 15651, Apr. 7, 2009]



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 an eligible 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, 
crambe, sesame seed, 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 chickpeas.
    (3) January 31 of the year following the year in which peanuts are 
normally harvested or wool and mohair are normally sheared.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009]



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, 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. Sec. 1421.9, 1421.106, and 
1421.107 as applicable'' 1421.9, 1421.106, and 1421.107 as applicable , 
accompanies the loan or LDP request.
    (b)(1) A producer may, before the final loan availability 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 authorized farm or warehouse storage, as determined by CCC. If 
the commodity was not either an eligible commodity, in existence, or in 
authorized 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) 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

[[Page 571]]

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 otherwise eligible.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009]



Sec. 1421.9  Basic loan rates.

    (a) Basic marketing assistance loan rates for a commodity may be 
established on a National, State, regional, county basis or other basis, 
will be at rates that comply with applicable statutes, and may be 
adjusted by CCC to reflect grade, type, quality, 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, 
chickpeas, crambe, sesame seed, wool, mohair and other crops designated 
by CCC will be determined by CCC and made available to State and county 
offices.
    (c)(1) Subject to adjustment under paragraph (g) of this section in 
case of forfeiture, for all 2009 through 2012 crop year commodities, 
except rice and peanuts, warehouse-stored loans will be disbursed at 
levels based on the basic county marketing assistance loan rate for the 
county where the commodity is stored. For the 2008 crop year only, 
warehouse-stored loans will 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 grade, type, and quality 
factors set forth on warehouse receipts or supplemental certificates and 
for other factors, as determined and announced by CCC.
    (2) Subject to adjustment under paragraph (g) of this section in 
case of forfeiture, for 2009 through 2012 crop years rice, warehouse-
stored loans will be disbursed at levels based on the milling yields 
times the whole and broken kernel marketing assistance loan rates. For 
the 2008 crop year of rice only, warehouse-stored loans will 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 grade and quality factors set forth on 
warehouse receipts or supplemental certificates and for other factors, 
as determined and announced by CCC.
    (3) For peanuts, warehouse-stored loans will be disbursed at levels 
based on National loan rates by peanut type, adjusted for the schedule 
of premiums and discounts on the basis of grade, quality, and other 
factors set forth on warehouse receipts.
    (d) The Secretary will establish a single loan rate in each county 
for each kind of other oilseeds, such as but not limited to, sunflower, 
rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame 
seed, and other oilseeds as designated by the Secretary.
    (e) Adjustments by the Secretary to establish loan rates for loan 
commodities, except rice, on a county basis will not be lower than 95 
percent of the national average loan rate, if those loan rates do not 
result in an increase in outlays. Adjustments in this section will not 
result in an increase in the national average loan rate for any year.
    (f) For the 2009 through 2012 crops, producers on farms in the 
Acreage Crop Revenue Election program under part 1400 of this title will 
receive a 30 percent reduction in loan rate as established under this 
section for all loan commodities from the farm, except honey, wool, and 
mohair.
    (g) For the 2009 through 2012 crop years, premiums and discounts 
will not be applicable for all eligible loan commodities, except for 
peanuts, at loan disbursement; however, premiums and discounts will 
apply if the eligible loan commodities are forfeited and delivered to 
CCC and any deficiency must be repaid to CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15651, Apr. 7, 2009]

[[Page 572]]



Sec. 1421.10  Loan repayment rates.

    (a) For the 2008 through 2012 crops of barley, corn, grain sorghum, 
oats, wheat, dry peas, lentils, chickpeas, oilseeds, wool, mohair, and 
other crops as designated by CCC (other than peanuts, long grain rice, 
medium grain rice, and confectionery and each other kind of sunflower 
seed (other than oil sunflower seed)), a producer may repay a 
nonrecourse marketing assistance loan at a rate that is the lesser of:
    (1) The loan rate established for the commodity under Sec. 1421.9, 
plus interest;
    (2) A rate (as determined by the Secretary) that is calculated based 
on average market prices for the loan commodity during a preceding 30-
day period and that the Secretary has determined will minimize 
discrepancies in marketing loan benefits across State boundaries and 
across county boundaries; or
    (3) A rate that the Secretary may develop using alternative methods 
for calculating a repayment rate for a loan commodity that the Secretary 
determines will: Minimize potential loan forfeitures; minimize the 
accumulation of stocks of the commodity by the Federal Government; 
minimize the cost incurred by the Federal Government in storing the 
commodity; allow the commodity produced in the U.S. to be marketed 
freely and competitively, both domestically and internationally; and 
minimize discrepancies in marketing loan benefits across State 
boundaries and across county boundaries.
    (b) To the extent practicable, CCC will determine and announce 
repayment rates under paragraphs (a)(2) and (a)(3) of this section based 
upon market prices at appropriate U.S. markets as determined by CCC and 
these repayment rates may be adjusted to reflect grade, type, quality, 
location, and other factors for each crop of a commodity as follows:
    (1) On a weekly basis in each county for oilseeds, except canola, 
flaxseed, soybeans, and sunflower seed;
    (2) On a daily basis in each county for barley, canola, corn, 
flaxseed, grain sorghum, oats, soybeans, sunflower seed and wheat; and
    (3) On a weekly basis regionally for dry peas, lentils, chickpeas, 
wool and mohair.
    (c)(1) For the 2008 through 2012 crops of peanuts, a producer may 
repay a nonrecourse loan at a rate that is the lesser of:
    (i) The loan rate established for the commodity under Sec. 1421.9, 
plus interest; or
    (ii) A rate that the Secretary determines will: Minimize potential 
loan forfeitures; minimize the accumulation of stocks of the commodity 
by the Federal Government; minimize the cost incurred by the Federal 
Government in storing the commodity; and allow the commodity produced in 
the United States to be marketed freely and competitively, both 
domestically and internationally.
    (2) To the extent practicable, CCC will determine and announce 
weekly alternative repayment rates for peanuts.
    (d) For the 2008 through 2012 crop of peanuts, the Secretary will 
require the repayment of handling and other associated costs paid under 
Sec. 1421.104 for all peanuts pledged as collateral for a loan that are 
redeemed under this section.
    (e) The Secretary will permit producers to repay a marketing 
assistance loan for long grain rice and medium grain rice at a rate that 
is the lesser of:
    (1) The loan rate established for the commodity under Sec. 1421.9, 
plus interest; or
    (2) The prevailing world market price for the commodity, as 
determined and adjusted by the Secretary in accordance with this 
section.
    (f) For purposes of this section, the Secretary will prescribe--
    (1) A formula to determine the prevailing world market price for 
long grain rice and medium grain rice and
    (2) A mechanism by which the Secretary will announce periodically 
those prevailing world market prices.
    (g) Adjustments will be made to the prevailing world market price 
for long grain rice and medium grain rice.
    (1) The prevailing world market price for long grain and medium rice 
determined under paragraph (f) of this section will be adjusted to U.S. 
quality and location.
    (2) In making adjustments under this subsection, the Secretary will 
establish a mechanism for determining and announcing the adjustments in 
order to

[[Page 573]]

avoid undue disruption in the U.S. market.
    (h)(1) The prevailing world market price for a class of rice will 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 will be expressed in U.S. equivalent values F.O.B. 
(free on board) 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 (h)(5) of this section, will apply to this 
section.
    (4) The adjusted world price for each class of rice will equal the 
prevailing world market price for a class of rice (U.S. equivalent 
value) as determined under paragraphs (h)(1) and (h)(2) of this section 
and adjusted to U.S. quality and location as follows:
    (i) The prevailing world market price for a class of rice will be 
adjusted to reflect an F.O.B. mill position by deducting from such 
calculated price an amount that is equal to the estimated national 
average costs associated with:
    (A) The use of bags for the export of U.S. rice, and
    (B) The transfer of such rice from a mill location to F.O.B. vessel 
at the U.S. port of export with such costs including, but not limited 
to, freight, unloading, wharfage, insurance, inspection, fumigation, 
stevedoring, interest, banking charges, storage, and administrative 
costs.
    (ii) The price determined under paragraph (h)(4)(i) of this section 
will 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 a formulaic quantity of broken kernels (4 
percent per hundredweight) by the world market value of broken kernels. 
The world market value of broken kernels will 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 (h)(4)(ii) of this 
section will 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 (h)(4)(iii) of this 
section will 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 (h)(4)(iv) of this section 
will 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 an estimated cost of milling rough 
rice; and an estimated cost of transporting rough rice from farm to mill 
locations.

[[Page 574]]

    (5) The adjusted world price for each class of rice, loan rate 
basis, will be determined by CCC and announced, to the extent 
practicable, on or after 7 a.m. Eastern Standard Time each Wednesday or 
more frequently as determined necessary by CCC, continuing through the 
later of:
    (i) The last Wednesday of July in the year in which the crop rice 
loan matures;
    (ii) The last Wednesday of the latest month the crop rice loans 
mature, or
    (iii) In the event that Tuesday is not a normal business day, the 
determination may be made on the next work day, on or after 7 a.m. 
Eastern Standard Time.
    (i) The producer may repay a marketing assistance loan under this 
section for confectionery and each other kind of sunflower seed (other 
than oil sunflower seed) at a rate that is the lesser of:
    (1) The loan rate established for the commodity under Sec. 1421.9, 
plus interest, or
    (2) The repayment rate established for oil sunflower seed.
    (j)(1) On a form prescribed by CCC, a producer may request to lock 
in the applicable repayment rate for a period of 60 calendar days or for 
the remaining life of the loan term, whichever is less, provided that no 
request may be granted within 14 calendar days of the end of the loan.
    (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 will be 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 as provided in 
paragraph (j)(1) of this section.
    (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.
    (k) 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; or
    (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.
    (l) 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, as specified in 
Sec. 1421.109.
    (m) 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.

[[Page 575]]

    (n) 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 must 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.
    (o) The note and security agreement will not be released until the 
marketing assistance loan has been satisfied in full.
    (p)(1) If the commodity is moved from storage without obtaining 
prior approval to move such commodity, such removal will 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).
    (q) In the event of a severe disruption to marketing, 
transportation, or related infrastructure, the Secretary may modify the 
repayment rate otherwise applicable under this section for marketing 
assistance loans. Any adjustment made to the repayment rate for 
marketing assistance loans for a loan commodity under Sec. 1421.5 will 
be in effect on a short-term and temporary basis, as determined by the 
Secretary.

[74 FR 15652, Apr. 7, 2009]



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.
    (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  Special loan deficiency payments.

    (a)(1) Eligible producers of unshorn pelts produced from live sheep 
and hay and silage derived from an eligible loan commodity as provided 
in Sec. 1421.5 are eligible to request unshorn pelt, hay,

[[Page 576]]

and silage quantities for a loan deficiency payment under subpart C of 
this part.
    (2) Unshorn pelts, hay, and silage derived from an eligible loan 
commodity are not eligible to be pledged as collateral to obtain a 
marketing assistance loan under subpart B of this part.

[71 FR 32424, June 6, 2006, as amended at 74 FR 15654, Apr. 7, 2009]



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 disbursed 
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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009]



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:
    (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 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 county loan rate.
    (4) With respect to farm-stored wheat, the basic county 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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009]



Sec. 1421.103  Authorized storage.

    (a) Authorized 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

[[Page 577]]

ground storage and other temporary storage structures approved by CCC.
    (3) As determined by CCC, temporary authorized 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)(1) Authorized warehouse storage consists of warehouses that:
    (i) If Federally licensed, are in compliance with 7 CFR part 735 or
    (ii) If not Federally licensed, are in compliance with State laws 
and that issue warehouse receipts that meet the criteria specified in 
Sec. 1421.107.
    (iii) If not Federally licensed or in compliance with State Laws and 
issue warehouse receipts that meet the criteria specified in Sec. 
1421.107, have entered into a storage agreement with CCC.
    (2) Notwithstanding paragraph (c)(1) of this section, if storing 
peanuts, the warehouse must in all cases have entered into a storage 
agreement with CCC. For storing other crops, notwithstanding paragraph 
(c)(1) of this section, CCC may, on a case-by-case basis, still require 
a warehouse operator that would qualify under paragraphs (c)(1)(i) or 
(ii) of this section to enter into a storage agreement if deemed 
necessary by the Deputy Administrator to be needed to protect CCC's 
interests.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009]



Sec. 1421.104  Marketing assistance loan making.

    (a)(1) CCC may conduct such lien searches, and may perfect its 
interest in loan commodities under State law, as it deems to be in its 
interest.
    (2) The cost for terminating the financing statement for marketing 
assistance loans disbursed under this part before the end of the term 
shall be paid by the producer.
    (3) If there are any liens or encumbrances on the commodity pledged 
as collateral for a marketing assistance loan made under this part, 
waivers that fully protect CCC's interest must be obtained even though 
the liens or encumbrances are satisfied from loan proceeds disbursed 
under this part. No additional liens or encumbrances shall be placed on 
the commodity after such a loan is approved.
    (b) Fees, charges, interest, and all applicable approved commodity 
assessment collections must be paid by the producer to CCC at a rate CCC 
determines or, in the case of assessments, at a rate approved by the 
assessment authority. 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.
    (c) For the 2008 through 2012 crop years, to ensure proper storage 
of peanuts for which a loan is made under this section, the Secretary 
will pay reasonable handling and other associated costs (other than 
storage) incurred at the time at which the peanuts are placed in a 
warehouse stored loan. Such rates will be available in the State and 
county FSA offices.
    (d) The cost of terminating a financing statement shall be paid by 
the producer.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32424, June 6, 2006; 74 
FR 15654, Apr. 7, 2009; 75 FR 19193, Apr. 14, 2010]



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

[[Page 578]]

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 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

[[Page 579]]

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) 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;
    (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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009]



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

[[Page 580]]

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 
authorized 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 authorized warehouse must indicate 
that the commodity is insured. 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 by an authorized warehouse as specified in Sec. 1421.103(c)(1), 
as applicable, and must indicate:
    (i) The name and location of the storing warehouse;
    (ii) The warehouse code assigned by licensing authority;
    (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 (KC-385), the location and county to which the producer 
delivered the commodity.
    (2) In addition to the information specified in paragraph (g)(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 
(h)(2)(iv) of this section.
    (ii) When a supplemental certificate is issued under paragraphs 
(g)(1) and (h)(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.

[[Page 581]]

    (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 (h)(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 percent; 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 may be subject to a lien for warehouse charges. 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 (g) of this section.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009; 75 
FR 19193, Apr. 14, 2010]



Sec. 1421.108  Transfers and reconcentrations.

    (a) Upon request by the producer before transfer, the county 
committee may approve the transfer of a quantity of a commodity that is 
pledged as collateral for a farm-stored loan to a warehouse-stored loan 
at any time during the loan period.
    (1) Liquidation of the farm-stored loan or part thereof shall be 
made through the pledge of warehouse receipts for the commodity placed 
under warehouse-stored loan and the immediate payment by the producer of 
the amount by which the warehouse-stored loan is less than the farm-
stored loan or part thereof and charges plus interest. The loan quantity 
for the warehouse-stored loan cannot exceed 110 percent of the loan 
quantity transferred from the farm-stored loan.
    (2) Any amounts due the producer shall be disbursed by the 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

[[Page 582]]

operator, CCC may, during the marketing assistance loan period, approve 
the reconcentration in another authorized 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 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.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15654, Apr. 7, 2009]



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 in 
accordance with Sec. 1421.10.
    (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. If CCC determines that the producer has violated the terms and 
conditions of the applicable forms prescribed by CCC, liquidated damages 
will be assessed on the quantity of the commodity that is involved in 
the violation.
    (b) Such violations as referred to in paragraph (a)(3) of this 
section may include, but are not limited to:
    (1) Incorrect certification;
    (2) Unauthorized removal; and
    (3) Unauthorized disposition.
    (c) 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) Liquidated damages assessed in accordance with this section will 
be determined by multiplying the quantity involved in the violation by 
10 percent of the marketing assistance loan rate applicable to the loan 
note.
    (e) When it has been determined that a violation of the terms and 
conditions of the note and security agreement has occurred as a result 
of unauthorized removal or disposition, CCC will determine the quantity 
of the commodity involved with respect to such violation and require the 
repayment of that portion of the marketing assistance loan which is 
equivalent to such quantity of the commodity. In the case of these 
violations, if CCC determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages shall be assessed according to paragraph (d) of this section and 
the commodity involved in the violation must be redeemed at the lesser 
of:
    (i) The rate at which the loan was disbursed, plus interest and any 
other charges assessed under the note and security agreement; or
    (ii) The alternative repayment rate in effect on the date of the 
determination is issued by CCC that a violation has occurred, plus 15 
percent of the original loan rate as provided on the note and security 
agreement.
    (2) Did not act in good faith when the violation was committed, 
liquidated damages shall be assessed in accordance with paragraph (d) of 
this section, and administrative actions shall be taken in accordance 
with paragraph (h) of this section. The loan must be redeemed at the 
rate at which the loan was disbursed, plus interest and any other 
charges assessed under the note and security agreement.
    (f) When it has been determined that a violation of the terms and 
conditions of the note and security agreement has occurred as result of 
an incorrect certification, CCC will determine the quantity of the 
commodity involved

[[Page 583]]

with respect to such violation and require the repayment of that portion 
of the marketing assistance loan which is equivalent to such quantity of 
the commodity. In the case of an incorrect certification, if CCC 
determines the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages shall be assessed according to paragraph (d) of this section, 
and the commodity involved in the violation must be redeemed at the rate 
at which the loan was disbursed, plus interest and any other charges 
assessed under the note and security agreement.
    (2) Did not act in good faith about the violation, liquidated 
damages shall be assessed in accordance with paragraph (d) of this 
section and administrative actions shall be taken in accordance with 
paragraph (h) of this section. The loan must be redeemed at the rate at 
which the loan was disbursed, plus interest and any other charges 
assessed under the note and security agreement.
    (g) If the producer fails to pay such amount within 30 days from the 
date of notification of violations as provided in paragraphs (e)(1) and 
(f)(1) of this section, the producer must immediately repay the 
marketing assistance loan at the rate at which the loan was disbursed 
plus interest, and any other charges assessed under the note and 
security agreement.
    (h) For violations subject to paragraphs (e)(2) and (f)(2) of this 
section, the producer must immediately repay the marketing assistance 
loan at the rate at which the loan was disbursed plus interest, and any 
other charges assessed under the note and security agreement. If the 
loan has already been repaid, any market gain previously realized on the 
loan, plus interest, must be refunded to CCC. CCC will demand delivery 
of any remaining loan collateral if not repaid within the 30 calendar 
day notification period.
    (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 sufficient 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 alternative loan repayment rate and may not utilize commodity 
certificate exchanges, unless authorized by CCC.
    (k) Producers denied or rejected for a farm-stored loan for any 
reason 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 , the personal liability for the 
amounts specified in this section shall be joint and several on the part 
of each producer signing the note.
    (q) Any or all of the liquidated damages assessed under this section 
may be waived if the CCC determines that the violation occurred 
inadvertently, accidentally, or unintentionally.

[67 FR 63511, Oct. 11, 2002, as amended at 68 FR 67939, Dec. 5, 2003; 71 
FR 32424, June 6, 2006; 74 FR 15655, Apr. 7, 2009]

[[Page 584]]



Sec. 1421.110  Commodity certificate exchanges.

    (a) For any outstanding marketing assistance loan for the 2008 and 
2009 crop years, 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;
    (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. 1421.10.
    (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.
    (e) The authority to make commodity certificates available to the 
producer will terminate effective the ending of the 2009 crop year.

[67 FR 63511, Oct. 11, 2002. Redesignated and amended at 74 FR 15655, 
Apr. 7, 2009]



Sec. 1421.111  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 paragraph (a)(1) and 
(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 and CCC will deduct the amount of these costs 
from the sales proceeds. If CCC sells any commodity obtained by delivery 
or forfeiture under a non-recourse marketing assistance loan, CCC will, 
in all instances, retain all proceeds obtained from the sale of the 
commodity and will not make any payment of any amount of such proceeds 
to any party, including the producer who had satisfied their obligation 
under the loan through forfeiture of the commodity to CCC.
    (b) Settlements made by CCC for eligible commodities that are 
acquired by CCC and that are stored in an authorized warehouse will be 
made on the basis of the entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (1) All eligible commodities that are stored in other than 
authorized warehouses must be delivered to CCC as CCC instructs. 
Settlement will be based on entries in the applicable warehouse receipt, 
supplemental certificate, and accompanying documents.
    (2) For eligible loan commodities that are delivered from other than 
an authorized warehouse, settlement will 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.

[[Page 585]]

    (c) Settlements made by CCC for peanuts acquired by CCC and stored 
in an authorized 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 
authorized warehouses shall be delivered to CCC as CCC instructs. 
Settlement shall be based on entries in the applicable warehouse 
receipt, supplemental certificate, and accompanying documents.
    (2) For eligible loan commodities that are delivered from other than 
an authorized 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) For peanuts forfeited to CCC, the Secretary will pay reasonable 
storage, handling, and other associated costs for all peanuts pledged as 
collateral that are forfeited under this section.
    (e) In all cases, settlements may be adjusted for changes in quality 
and other factors affecting the value of the commodity.
    (f) Beginning with the 2009 through 2012 crop years, premiums and 
discounts will apply to all eligible loan commodities forfeited and 
delivered to CCC. This will not require any additional adjustment for 
peanuts to the extent that such premiums and discounts were accounted 
for when the loan was made.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006. 
Redesignated and amended at 74 FR 15655, Apr. 7, 2009]



Sec. 1421.112  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. 1421.111.
    (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.

[67 FR 63511, Oct. 11, 2002. Redesignated and amended at 74 FR 15655, 
Apr. 7, 2009]



Sec. 1421.113  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 at principal plus interest 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.

[67 FR 63511, Oct. 11, 2002. Redesignated at 70 FR 33799, June 10, 2005. 
Redesignated and amended at 74 FR 15655, Apr. 7, 2009]



                   Subpart C_Loan Deficiency Payments

    Source: 67 FR 63511, Oct. 11, 2002, unless otherwise noted.

[[Page 586]]



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)(1) A producer must submit to the FSA Service Center a completed 
request for a loan deficiency payment on forms prescribed by CCC. This 
submission must be received on or before the date beneficial interest is 
lost in the commodity and before the final loan availability date for 
the commodity. Such completed and submitted forms indicate the 
producer's intentions and further provide the terms and conditions of 
the loan deficiency payment program. If all or any of the provisions of 
this paragraph are not met by the producer, the producer may not obtain 
the loan deficiency payment benefit.
    (2) With respect to a request for a loan deficiency payment for 
unshorn pelts, a completed request for such a payment must be submitted 
on or before the earlier of the date of slaughter of the lamb or the 
loss of beneficial interest in the lamb or the unshorn pelt produced 
from the lamb. In addition, the lamb must have been owned for not less 
than 30 days prior to the date such application is filed with CCC and 
must have been slaughtered for personal use, or sold for slaughter and 
slaughtered within 10 calendar days after the sale.
    (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.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 74 
FR 15655, Apr. 7, 2009]



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) The loan deficiency payment rate will be the rate in effect in 
the county where the commodity was marketed or stored on the date:
    (1) The request for benefits is received in the FSA Service Center, 
if the producer retains beneficial interest in the quantity on that 
date.
    (2) Beneficial interest was lost, as determined by CCC and as 
provided in Sec. Sec. 1421.6 and 1421.13, if on the date the request 
for benefits was received in the FSA Service Center the producer no 
longer has beneficial interest in the requested quantity.
    (3) The commodity is delivered, if the producer elects to receive 
the LDP rate based on the date of delivery.
    (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.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 71 
FR 51426, Aug. 30, 2006; 74 FR 15655, Apr. 7, 2009]



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

[[Page 587]]

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 authorized or unauthorized 
warehouse if the acceptable documentation representing an eligible 
commodity for which a loan deficiency payment is requested is completed 
jointly for such producers.

[67 FR 63511, Oct. 11, 2002, as amended at 74 FR 15656, Apr. 7, 2009]



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 Agreement and Request, 
as applicable, that the producer will not provide an incorrect 
certification of the quantity or make any fraudulent representation, 
that CCC will rely upon when determining eligibility for a loan 
deficiency payment; 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 
CCC, liquidated damages shall be assessed on the quantity of the 
commodity that is involved in the violation.
    (b) Liquidated damages assessed in accordance with this section will 
be determined by multiplying the quantity involved in the violation by 
10 percent of the loan deficiency payment.
    (c) If CCC determines that the producer:
    (1) Acted in good faith when the violation occurred, liquidated 
damages will be assessed according to paragraph (b) of this section and 
the producer must repay the loan deficiency payment applicable to the 
loan deficiency quantity involved in the violation and charges, plus 
interest applicable to the amount repaid. If the producer fails to pay 
such amount within 30 days from the date of notification the producer 
must repay the entire loan deficiency payment and any other charges plus 
interest.
    (2) Did not act in good faith when the violation was committed, 
liquidated damages will be assessed in accordance with paragraph (b) of 
this section and the producer shall repay the entire loan deficiency 
payment and any other charges plus interest.
    (d) CCC may waive the liquidated damages assessed according to 
paragraph (b) of this section if the CCC determines that the violation 
occurred inadvertently, accidentally, or unintentionally.
    (e) 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.
    (f) 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 sufficient evidence 
and information regarding the circumstances that caused the violation, 
to the county committee; and
    (2) Administrative action will be taken under this section.
    (g) If the amount disbursed under loan deficiency payments exceeds 
the amount authorized by this part, the producer shall be liable for 
repayment

[[Page 588]]

of such excess and liquidated damages, plus interest.
    (h) 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.
    (i) Any or all of the liquidated damages assessed under the 
provisions of paragraph (b) of this section may be waived as determined 
by CCC.

[67 FR 63511, Oct. 11, 2002, as amended at 71 FR 32425, June 6, 2006; 74 
FR 15656, Apr. 7, 2009]



  Subpart D_Grazing Payments for the 2008 Through 2012 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 2008 
through 2012 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; 74 FR 15656, Apr. 7, 2009]



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  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 
2008 through 2012 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 control and 
title of the crop at all times, including, at the time of planting and 
the time of the request for a payment under, this subpart.

[[Page 589]]

    (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 
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 and title of 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 2008 through 2012 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. Redesignated and amended at 74 FR 15656, Apr. 7, 
2009]



Sec. 1421.303  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

[[Page 590]]

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. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.304  Payment amount.

    (a) The grazing payment rate shall be the loan deficiency payment in 
effect for the farm on the date which the producer submits a complete 
program application to CCC. For triticale, the grazing rate will be 
equal to the loan deficiency payment rate in effect for the predominant 
class of wheat in the county where the farm is located as of the date 
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. 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 calendar 
year following the year the crop is normally harvested.
    (g) The producer will be 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 CCC.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 67 FR 63511, 
63524, Oct. 11, 2002. Redesignated and amended at 74 FR 15656, Apr. 7, 
2009]



Sec. 1421.305  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

[[Page 591]]

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.

[66 FR 13404, Mar. 6, 2001. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.306  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, of 
this subpart, and if any refund of a payment to CCC shall become due for 
that or other reason in connection with the application, of 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-payment 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 from 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 part 1403 of this 
chapter.
    (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.

[66 FR 13404, Mar. 6, 2001. Redesignated and amended at 74 FR 15656, 
Apr. 7, 2009]



         Subpart E_Designated Marketing Associations for Peanuts

    Source: 70 FR 33799, June 10, 2005, unless otherwise noted.

    Editorial Note: Nomenclature changes to subpart E of part 1421 
appear at 74 FR 15656, Apr. 7, 2009.



Sec. 1421.400  Applicability and abbreviations.

    (a) This subpart sets forth the terms and conditions under which an 
entity which is a marketing association of peanut producers, or a 
subsidiary of such an entity, may qualify to become an eligible 
``designated marketing association'' or ``DMA'' qualified to process 
peanut marketing assistance loans and peanut loan deficiency payments 
for peanut producers. This subpart only applies with respect to peanut 
loans and peanut loan deficiency payments.
    (b) [Reserved]

[70 FR 33799, June 10, 2005, as amended at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.401  DMA responsibilities.

    (a) DMAs are eligible to process the marketing loans and loan 
deficiency payments provided for in this part only for peanut producers 
and only if the DMA and the producers and peanuts meet all eligibility 
criteria set out in this part, including, but not limited to, the DMA 
eligibility provisions of this subpart. In carrying out those functions, 
DMAs must:
    (1) Prepare and execute the appropriate CCC peanut MAL and LDP 
application documents;
    (2) Determine whether producers and the commodity are eligible for 
MALs and LDPs, including whether the otherwise eligible peanuts are free 
and

[[Page 592]]

clear of all liens which DMAs shall determine by performing lien 
searches at DMAs expense;
    (3) Instruct the holder of EWRs, if applicable, to notify the EWR 
provider to amend the EWR to show CCC is the holder;
    (4) Receive MAL and LDP documents from a DMA Service County Office;
    (5) Disburse peanut MALs and LDP proceeds to eligible producers;
    (6) Prepare and execute documents for MAL repayments;
    (7) Collect loan repayments from producers or buyers and 
transmitting these funds to CCC;
    (8) Transmit documents to render forfeited collateral to CCC; and
    (9) Collect data for reporting to CCC as required by CCC;
    (b) As part of performing the responsibilities in paragraph (a) of 
this section, DMAs shall:
    (1) Become knowledgeable of and follow the procedures in CCC and FSA 
peanut program regulations, applicable notices published in the Federal 
Register, applicable FSA peanut program handbooks and amendments 
thereto, and any applicable notices or instructions issued by FSA and 
the Agricultural Marketing Service.
    (2) Make and service CCC peanut MALs and LDPs, only upon the 
presenting by producers or their agents of the warehouse receipts, 
unless otherwise directed by CCC.
    (3) Attend, at the DMAs expense, DMA peanut MAL, and LDP program 
training offered by CCC.
    (4) Provide sufficient personnel, computer hardware, computer 
communications systems, and software, as determined necessary by CCC, to 
administer the peanut MAL and LDP program.

[70 FR 33799, June 10, 2005. Redesignated and amended at 74 FR 15656, 
Apr. 7, 2009]



Sec. 1421.402  DMA eligibility to process loans and loan deficiency payments.

    (a) A DMA is eligible to process any marketing assistance loan or 
loan deficiency payments only if approved in advance to handle such 
matters by the Farm Service Agency pursuant to this part; and:
    (1) The DMA meets the financial requirements and other requirements 
in this subpart and part;
    (2) The DMA is comprised solely of peanut producers or is a 
subsidiary of an organization of peanut producers;
    (3) The DMA is not controlled directly or indirectly by a person or 
entity that acquires peanuts for processing or crushing through a 
business involved in buying and selling peanuts or peanut products;
    (4) The DMA does not take title at any time to any peanuts for which 
it processes loans or loan deficiency payments, irrespective of whether 
such title is taken before or after those activities are performed. If 
such title or interest is taken, the DMA shall be responsible to return 
to CCC the full amount of the CCC proceeds disbursed with respect to the 
peanuts; and
    (5) The DMA meets any additional requirements imposed by CCC or FSA.
    (b) The DMAs activities under this part shall be conducted only with 
respect to peanuts and only for producers and peanuts that meet all the 
eligibility requirements of this part. Such requirements include, but 
are not limited to, the requirement of Sec. 1421.6 that the producer 
must have the beneficial interest in the peanuts while the peanuts are 
under loan or when the loan deficiency payment is received and must be 
the only person that has had such an interest in the peanuts prior to 
that time except as allowed by Sec. 1421.6.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.403  DMA approval.

    (a) Entities wishing to apply to be a DMA enabled to perform loan 
and loan deficiency functions under this part for peanuts must submit an 
application for such approval to FSA in a form approved by CCC. That 
application shall include the following:
    (1) Two originals of a properly executed Designated Marketing 
Association agreement containing the terms and conditions prescribed by 
CCC.
    (2) A financial statement of not less than 1 year old on the date 
submitted, including accompanying notes, schedules, or exhibits, 
certified by a certified public accountant as fairly representing the 
entity's financial condition.
    (3) The entity's tax identification number.

[[Page 593]]

    (4) A copy of any applicable incorporating or partnership documents.
    (5) The applicant entity's mailing address, electronic mail address, 
and telephone number and facsimile number.
    (6) Any and all information requested by CCC regarding the DMAs 
materials, and equipment as CCC determines is necessary for the 
applicant to perform the services for which the approval to perform is 
sought.
    (7) A narrative explaining how the proposed DMA entity or parent 
entity provides marketing services to peanut producers.
    (8) Any additional information or financial security requested by 
the Agency.
    (b) Applicants are responsible for notifying FSA when any changes 
occur to their operations requiring amendments to their application or 
supporting documents.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.404  Financial security.

    In order to be approved to handle loans and loan deficiency 
payments, the DMA must:
    (a) Have a current net worth ratio of at least 1:1.
    (b) Provide security equal to $100,000 or a greater amount as 
determined by CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.405  Liability.

    (a) DMAs shall indemnify CCC against any claim or loss by CCC in 
connection with the processing of any MALs or LDPs or other activity 
carried out by the DMA. If CCC pays any claim or suffers a loss as a 
result of the actions of DMA, or if a refund otherwise becomes due to 
CCC, payment in the amount of such losses or refund, plus interest, may 
be set-off by CCC from the financial security provided by DMA as 
required by this subpart. If the amount of the loss exceeds the amount 
of the financial security, such amount shall be paid to CCC by DMA with 
interest. Interest and other charges may be assessed consistent with 
Sec. 1403.9 of this chapter. Remedies provided in this section or part 
are in addition to other remedies or penalties, whether civil, criminal 
or otherwise, as may apply.
    (b) If a DMA becomes liable to CCC under paragraph (a) of this 
section or otherwise in connection with this subpart, such DMA shall not 
be eligible to process a LDP or MAL until the claim amount owed CCC is 
paid in full, and the full amount of financial security required by this 
subpart has been restored.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.406  Reporting requirements.

    (a) Report of changes. A DMA shall furnish information to CCC within 
thirty calendar days relating to any substantial change in the DMA 
operations including but not limited to the following:
    (1) A change in its articles of incorporation;
    (2) A resolution affecting loan or LDP operations.
    (3) A change to the DMAs name, address, phone number, or related 
information on the DMA agreement.
    (b) Other Information. The DMA shall supply such additional 
information as CCC may request related to the DMAs continued approval by 
CCC to process loans and LDPs under the authority provided in this 
subpart.
    (c) CCC request for information. CCC may require a DMA to submit 
updated information, a new application, or a request for recertification 
whenever CCC becomes aware of any changes or has any reason to be 
uncertain that the DMA is operating in a manner that is consistent with 
the information already submitted, or consistent with this part.
    (d) Annual recertification. Within 4 months after the end of the 
DMAs fiscal year, a DMA must submit the following information to CCC:
    (1) A current financial statement prepared according to generally 
accepted accounting principles;
    (2) A report of audit or review of the financial statement conducted 
by an independent Certified Public Accountant. The accountant's report 
of audit or review shall include the accountant's certifications, 
assurances, opinions, comments, and notes with respect to such financial 
statements.

[[Page 594]]

    (3) Additional financial security as determined by CCC, if the 
financial security on file with CCC does not meet current requirements 
or has expired.
    (4) A report of changes as required under paragraph (a) of this 
section.
    (e) Activity report. DMAs shall provide CCC reports of MAL and LDP 
volume and benefit earnings made by the DMA for individual producers, 
and gains received on behalf of each peanut producer, in a format as 
directed by CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.407  Suspension and termination.

    (a) Suspension. If CCC determines that a DMA is not in compliance 
with the DMA agreement CCC may suspend the DMA from making peanut MALs 
and LDPs until the DMA corrects the violation, or longer.
    (b) Termination. The DMA agreement may be terminated by the DMA upon 
30-calendar day's written notice to CCC. CCC may cancel the agreement at 
any time. Upon termination DMA shall immediately cease processing MAL or 
LDP requests and documents except as needed to preserve CCC's position 
with respect to existing loans or LDPs.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.408  Prohibited activity.

    (a) DMAs approved to handle loans under this subpart may not:
    (1) Discriminate against or deny any producer from receiving MALs or 
LDPs because of race, color, national origin, gender, religion, age, 
disability, political beliefs, sexual orientation, and marital or family 
status for which they would otherwise be eligible under the statutes 
regulating the MAL and LDP program.
    (2) Pool peanuts for the purpose of obtaining peanut MALs or LDPs 
from CCC.
    (3) Pool the proceeds obtained from peanut MALs or LDPs made by CCC.
    (4) Process farm-stored certified or measured MALs or LDPs unless 
authorized by CCC.
    (5) Take title to any peanuts.
    (6) Operate the DMA under the same entity and tax identification 
number of a CCC-approved CMA.
    (7) Refuse services to producers because the DMA was not granted a 
power of attorney for purposes of executing MAL documents to obtain MALs 
for the producer, repaying the MAL for the producer, obtaining LDPs for 
the producer, or marketing the producer's peanuts.
    (8) Adopt any scheme or device to circumvent the purpose of the 
peanuts MAL and LDP program regulations, the regulation governing DMAs, 
or the DMAs agreement with CCC.
    (9) Process MALs or LDPs for producers involved in a bankruptcy 
proceeding unless authorized by CCC.
    (10) Process MALs or LDPs on ineligible peanuts.
    (b) If the prohibitions of this section are violated FSA or CCC may 
take one or more of the actions authorized in this part or otherwise 
authorized.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.409  Monitoring payment limitations.

    DMAs shall monitor potential gains for producers and not disburse 
proceeds or permit loan repayments in lieu of forfeitures of the peanuts 
that would produce a gain over the per person per year limit allowed to 
the producer by this part and part 1400 of this chapter or which would 
otherwise be prohibited. Payment limitations are not applicable for the 
2009 through 2012 crop years.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.410  Recordkeeping requirements.

    A DMA shall maintain producer MAL and LDP paper documents and 
electronic records for an indefinite period unless otherwise notified by 
CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.411  Forms.

    For purposes of conducting business related to this part, a DMA 
shall use either current CCC forms or other forms approved by CCC. A DMA 
may perform functions under this part only

[[Page 595]]

when approval has been obtained by CCC.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.412  Powers of attorney.

    DMAs may hold a power of attorney from a producer allowing the DMA 
to sign MAL and LDP documents for the producer, but DMAs may obtain and 
hold such powers only in accordance with the requirements of CCC 
governing such powers.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.413  Liens and waivers.

    DMAs performing loan-related functions pursuant to the authority in 
this subpart shall determine, to the same extent as required for loans 
handled by FSA county offices, whether a lien on the peanuts exists by 
performing or obtaining a lien search for all peanuts to be pledged for 
each MAL, except that the cost associated with such lien search and any 
necessary lien waivers shall be borne by the DMA. If a lien exists, the 
DMA shall obtain, on an approved CCC form, a signed waiver from each 
lienholder with an interest in any such lien.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.414  Producer request to a DMA for an MAL or LDP.

    Peanut producers or their authorized agent may request that an MAL 
or LDP be processed by a DMA only if the DMA is approved under this 
subpart to process such a request and only if the producer supplies to 
the DMA:
    (a) Beneficial interest information. Beneficial interest must be 
maintained by the producer according to Sec. 1421.6 for the peanuts to 
be eligible for MAL or LDP; accordingly, the producer must supply to the 
DMA such information as it needed to make that determination.
    (b) Warehouse receipts and lien information. Producers must supply 
for all peanuts either individual paper warehouse receipts in the 
producer's name or an electronic warehouse receipt (EWR) number and 
provider's name. Producers must supply relevant lien information 
regarding the peanuts; however, the producer's obligation in this regard 
does not relieve the DMA from making the appropriate lien search.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.415  Processing marketing assistance loans.

    DMAs shall take the following actions in the following order when an 
application for an MAL is filed:
    (a) Make all the determinations that are a precondition for a loan, 
including lien determinations and if requested by the producer, enter 
into a power of attorney agreement with the producer.
    (b) If there is an EWR for the peanuts, instruct the current holder 
to notify the electronic warehouse receipt provider to amend the 
electronic warehouse receipt to show the DMA as holder. If a paper 
receipt is involved, the DMA must obtain the receipt (and later, at the 
appropriate time include the receipt in the documents delivered to the 
CCC).
    (c) Complete all MAL forms.
    (d) After the producer or the person holding the power of attorney 
for the producer signs MAL document, provide the signatory with copies 
of the documents.
    (e) Where there is an EWR for the peanuts notify the EWR provider to 
make CCC the holder of the EWR and secure an affirmation verifying that 
CCC has been made the holder of the EWR.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.416  Processing loan deficiency payments.

    (a) DMAs shall take the following actions in the following order 
when an application for an LDP is filed:
    (1) In addition to other determinations as must be made, the DMA 
shall determined whether the producer has sufficient remaining 
eligibility under the applicable payment limit to allow the receipt of 
the LDP. If there is not sufficient eligibility, the DMA must refuse to 
process the request;
    (2) If EWRs are applicable for the peanuts for which the LDP is 
sought, the DMA must instruct the current holder to notify the EWR 
provider to

[[Page 596]]

amend the EWR to show that the peanuts were used to obtain an LDP;
    (3) The DMA must insure that the producer or the person holding the 
power of attorney for the producer signs the LDP documents; and
    (4) If the peanuts and the producer are eligible for the loan and 
all other conditions have been met, the DMA may disburse funds to the 
producer subject to the time limits set out elsewhere in this part.
    (b) The LDP rate applicable to the LDP request will be the rate in 
effect on the date the DMA receives the request except as may otherwise 
be provided for in this part.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.417  Disbursing MAL and LDP proceeds.

    (a) A DMA may request that CCC establish a drawdown account from 
which to disburse MAL and LDP amounts to producers, and designate the 
financial institution they wish to use.
    (b) CCC will determine whether a drawdown account is justified and 
the amount of the account.
    (c) If there is no drawdown account, MAL and LDP proceeds shall be 
distributed to the producer within 3 work days from the date the DMA 
receives MAL or LDP proceeds from CCC, after deduction of authorized 
charges or fees for services. If there is a drawdown account, the MAL 
and LDP proceeds shall be distributed to the producer within 3 days of 
the completion of the application.
    (d) The DMA shall assess charges and fees at the same rate for each 
producer that it serves.
    (e) If a drawdown account is used, CCC shall replenish the amount as 
necessary as it is drawn down.
    (f) The DMA must notify CCC of the actual date on which the MAL is 
disbursed.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.418  Submitting MAL and LDP documentation to FSA.

    (a) Until such time as an alternative FSA loan or LDP making system 
is made available to DMAs, within 3 business days of any DMA prepared 
disbursement, the DMA shall group separately and submit to FSA:
    (1) MALs with the same disbursement date, peanut type, warehouse 
code, and State where peanuts were inspected; and
    (2) LDPs with the same LDP rate, approval date, and peanut type.
    (b) Each of the groups identified in paragraph (a) of this section 
shall be submitted to FSA with the following documents:
    (1) Individual paper warehouse receipts or EWR numbers, and the EWR 
provider's name representing the bundled MALs or LDPs.
    (2) A form to itemize receipts, and other data, as required, or a 
pre-processed electronic file containing data required by FSA.
    (c) FSA may process each DMA prepared MAL or LDP group for the 
volume of peanuts on multiple receipts as one MAL or LDP, waive the 
service fee to the DMA, and either hold MAL paper warehouse receipts, or 
verify that CCC is holder of the EWRs as of the date of disbursement.
    (d) In the case of an MAL, if CCC was not the holder of the EWR on 
or before the date the DMA prepared MAL was disbursed, the applicable 
receipts shall be rejected, and funds shall not be distributed to the 
DMA drawdown account until CCC becomes the holder of the EWR.
    (e) If MAL and LDP documentation is acceptable, FSA will disburse 
MAL or LDP funds to the DMA, with appropriate supporting documentation.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.419  MAL or LDP servicing.

    (a) The DMA shall be responsible for servicing MALs and are required 
to take the following actions:
    (1) Send the producer a maturity notice letter before MAL maturity.
    (2) Maintain the MAL or LDP documents according to FSA requirements.
    (3) Transmit the necessary funds to repay the MAL to FSA.
    (b) FSA shall process the CCC release of paper receipts or EWRs 
where such a release is appropriate.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]

[[Page 597]]



Sec. 1421.420  Inspections and reviews.

    The books, documents, papers, and records of the DMA and parent 
company shall be maintained for six years after the applicable crop year 
and shall be made available to CCC for inspection and examination at all 
reasonable times. At any time after an application is received, CCC 
shall have the right to examine all books, documents, papers, and 
determine whether the DMA is operating or has operated in accordance 
with the regulations in this part, any articles of incorporation, 
articles of association, partnership documents, agreements with 
producers, the representations made by the DMA in its application for 
approval, and, where applicable, its agreements with CCC. If the DMA is 
determined to be not complying with this part or any of its agreements, 
CCC will take appropriate action as provided in elsewhere in this 
subpart or other action CCC determines appropriate.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



Sec. 1421.421  Appeals.

    Parts 11 and 780 of this title apply to this subpart.

[70 FR 33799, June 10, 2005. Redesignated at 74 FR 15656, Apr. 7, 2009]



PART 1423_COMMODITY CREDIT CORPORATION APPROVED WAREHOUSES--Table of Contents



Sec.
1423.1 Applicability.
1423.2 Administration.
1423.3 Definitions.
1423.4 General requirements.
1423.5 Application requirements.
1423.6 Financial information documentation requirements.
1423.7 Net worth alternatives.
1423.8 Approval or rejection.
1423.9 Examination of warehouses.
1423.10 Exceptions for United States Warehouse Act licensed warehouses.
1423.11 Delivery and shipping standards for cotton warehouses.
1423.12 Application, inspection, and annual agreement fees.
1423.13 Appeals, suspensions, and debarment.

    Authority: 15 U.S.C. 714b and 714c.

    Source: 71 FR 35773, June 22, 2006, unless otherwise noted.



Sec. 1423.1  Applicability.

    (a) This part sets forth the terms and conditions for approval of a 
warehouse operator by the Commodity Credit Corporation (CCC) to store 
and handle CCC interest commodities, which are owned by CCC and, as may 
be required under parts 1421, 1427 and 1435 of this title, with respect 
to commodities pledged as security for a loan made by CCC. CCC may 
require that a warehouse enter into a storage agreement under this part 
to store such commodities. The execution of such a storage agreement by 
CCC does not constitute a commitment that CCC will use the warehouse.
    (b) By entering into a storage agreement with CCC, the warehouse 
operator agrees to comply with the terms and conditions of the storage 
agreement.



Sec. 1423.2  Administration.

    On behalf of CCC, the Farm Service Agency (FSA) will administer this 
part under the supervision of the Deputy Administrator for Commodity 
Operations (Deputy Administrator), FSA.



Sec. 1423.3  Definitions.

    Active shipping order means an early shipping order or shipping 
order, as defined in this section, scheduled for a current cotton 
warehouse reporting week or for a prior reporting week, but not picked 
up.
    Agreement means agreements covering storage and handling of any such 
commodity CCC may determine appropriate for storage.
    Early shipping order means a list of bale tag numbers sent to a 
cotton warehouse operator without transfer of warehouse receipts.
    KCCO means the FSA, Kansas City Commodity Office.
    Shipping order means a list of bale tag numbers sent to a cotton 
warehouse operator accompanied by transfer of warehouse receipts.
    Warehouse means a building, structure, or other protected enclosure, 
in good state of repair, and adequately equipped to receive, handle, 
store, preserve, and deliver the applicable commodity.

[[Page 598]]

    Warehouse operator means an individual, partnership, corporation, 
association, or other legal entity engaged in the business of storing or 
handling for hire, or both, the applicable commodity.

[71 FR 35773, June 22, 2006, as amended at 75 FR 50849, Aug. 18, 2010]



Sec. 1423.4  General requirements.

    (a) Unless otherwise provided in this part, approved warehouse 
operators must maintain a current and valid license for the kind of 
storage operation for which the warehouse operator seeks approval if 
such a license is required by State or local laws or regulations and 
maintain accurate and complete inventory and operating records.
    (b) Approved warehouse operators may only use pre-numbered warehouse 
receipts, or pre-assigned ranges of numbers for electronic warehouse 
receipts as set forth in the agreement, and may only use pre-numbered 
scale tickets, if applicable, as CCC may approve.
    (c) In addition, the warehouse operator must:
    (1) Be in compliance with state and local laws regarding fire 
safety;
    (2) Furnish a copy of any written lease agreement to CCC with the 
application. All leases are subject to CCC approval; and
    (3) Have sufficient employees and management with technical 
qualifications and skills in the warehousing business regarding the 
commodities subject to the agreement.
    (d) Unless otherwise provided in this part, each approved warehouse 
shall:
    (1) Be maintained under the control of the warehouse operator;
    (2) Be maintained in a good state of repair; and
    (3) Maintain adequate equipment to receive, handle, store, preserve 
and deliver the applicable commodity.



Sec. 1423.5  Application requirements.

    To apply for approval under this part, a warehouse operator shall 
submit to CCC the following:
    (a) An application as prescribed by CCC for the applicable commodity 
storage agreement;
    (b) Evidence of compliance with Sec. 1423.4;
    (c) Current financial information sufficient to meet the 
requirements of Sec. 1423.6;
    (d) For State licensed or non-licensed warehouse operators, a sample 
copy of the warehouse operator's warehouse receipts or electronic 
warehouse receipt record descriptor when applicable; and
    (e) Such other documents or information as CCC may require to make a 
determination that the warehouse operator can comply with the provisions 
of this part.



Sec. 1423.6  Financial information documentation requirements.

    To be approved under this part, a warehouse operator shall submit a 
current financial statement at the time of application, and annually 
thereafter, as provided for in the applicable storage agreement.



Sec. 1423.7  Net worth alternatives.

    Warehouse operators with net worth equal to or greater than the 
minimum net worth required, but less than the total net worth for the 
commodity involved in the particular agreement, may satisfy the net 
worth deficiency by furnishing one of the following:
    (a) A bond which:
    (1) Is executed by a surety approved by the U.S. Department of the 
Treasury so long as the surety maintains someone authorized to accept 
service of legal process in the State where the warehouse is located.
    (2) Is executed on either a bond form obtained from CCC, or which is 
furnished under State law or operational rules for non-governmental 
supervisory agencies, if approved by CCC, so long as CCC determines that 
such alternative bond:
    (i) Provides adequate protection to CCC;
    (ii) Has been executed by a surety approved by the U.S. Department 
of the Treasury or has an acceptable 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
    (iii) Is effective for at least 1 year and cannot be canceled 
without 120 days notice to CCC. Excess coverage on a bond for one 
warehouse will not be

[[Page 599]]

accepted by CCC against insufficient bond coverage on other warehouses;
    (b) Cash and negotiable securities. Any such cash or negotiable 
securities accepted by CCC will be returned to the warehouse operator 
when the period for which coverage was required has ended and CCC 
determines there is no liability under the storage agreement;
    (c) An irrevocable letter of credit meeting CCC requirements that is 
effective for at least 1 year and cannot be canceled without 120 days 
notice to CCC. The issuing bank must be a commercial bank insured by the 
Federal Deposit Insurance Corporation or a financial institution subject 
to the Farm Credit Act, or
    (d) Other alternative instruments and forms of financial assurance 
as the Deputy Administrator determines appropriate to secure the 
warehouse operator's compliance with this section.



Sec. 1423.8  Approval or rejection.

    (a) CCC will notify warehouse operators approved under this part in 
writing. Such approval does not relieve the warehouse operator of any 
obligation under any agreement to CCC or any other agency of the United 
States, and does not obligate CCC to use the warehouse.
    (b) CCC will notify the warehouse operator of rejection under this 
part in writing. The notification will state the cause(s) for rejection. 
CCC will reconsider a warehouse for approval when the warehouse operator 
establishes that the reasons for rejection have been remedied or 
requests reconsideration of the action and presents to the Director, 
KCCO, in writing, information in support of such request. The warehouse 
operator may, if dissatisfied with the Director's determination, obtain 
a review of the determination and an informal hearing by submitting a 
request with the Deputy Administrator. Appeals shall be as prescribed in 
part 780 of this title.

[71 FR 35773, June 22, 2006, as amended at 71 FR 42017, July 25, 2006]



Sec. 1423.9  Examination of warehouses.

    Before approval, and while a storage agreement is in effect, a 
warehouse must be examined by a person designated by CCC periodically to 
determine compliance with this part. CCC or any other agency of USDA 
shall, at any time, have the right to inspect the warehouse storage 
facilities and any applicable records. Inspection or examination by CCC 
does not absolve the warehouse operator of any failure to comply with 
this part that CCC does not discover. Failure to allow access to 
facilities as required under this paragraph will result in rejection or 
revocation of approval.



Sec. 1423.10  Exceptions for United States Warehouse Act licensed warehouses.

    The financial requirements, net worth alternatives and examination 
provisions of this part do not apply if the warehouse operator is 
licensed under the U.S. Warehouse Act (USWA) for such commodities, but 
an examination under this part will be made of such a warehouse whenever 
CCC determines such action is necessary to protect its interests.



Sec. 1423.11  Delivery and shipping standards for cotton warehouses.

    (a) Unless prevented from doing so by severe weather conditions, 
fire, explosion, flood, earthquake, insurrection, riot, strike, labor 
dispute, acts of civil or military authority, non-availability of 
transportation facilities or any cause beyond the control of the 
warehouse operator that renders performance impossible, the warehouse 
operator will:
    (1) Deliver stored cotton without unnecessary delay.
    (2) Be considered to have delivered cotton without unnecessary delay 
if, for the week in question, the warehouse operator has made available 
for shipment at least 4.5 percent of their applicable storage capacity 
in effect during the relevant week of shipment.
    (b) The warehouse operator shall provide a written report to CCC on 
a weekly basis. The reporting week shall be the seven day period 
starting at midnight following the close of business on each Saturday 
and ending at midnight after close of business of the following 
Saturday. Before close of business of the first business day of the 
following week, the warehouse operator will provide following 
information to CCC:

[[Page 600]]

    (1) Bales made available for shipment (BMAS) during such week. BMAS 
is defined as any cotton bales that:
    (i) Have been delivered, or are scheduled and ready for delivery 
during such week; and
    (ii) Were scheduled and ready for delivery in a previous week, but 
were not picked up by the shipper and remain available for immediate 
loading and another shipping date has not been established, or such 
bales are not subject to a restocking fee as provided in the warehouse 
operator's public tariff.
    (2) Active shipping orders, by week; and
    (3) Applicable storage capacity that is the higher of CCC approved 
capacity or the maximum number of bales stored at any time during the 
applicable crop year.
    (c) The warehouse operator may resolve any claim for noncompliance 
from any entity other than CCC with the cotton shipping standard in a 
court of competent jurisdiction or through mutually agreed upon 
arbitration procedures. In no case will CCC provide assistance or 
representation to parties involved in arbitration proceedings arising 
with respect to activities authorized under the Cotton Storage 
Agreement.

[71 FR 51426, Aug. 30, 2006]



Sec. 1423.12  Application, inspection, and annual agreement fees.

    Each warehouse operator not licensed under USWA shall pay to CCC a 
fee or fees, including an application fee, inspection fee, and an annual 
agreement fee for each warehouse approved by CCC or for which approval 
is sought. The terms and conditions of such fees will be set forth in 
the applicable agreement.



Sec. 1423.13  Appeals, suspensions, and debarment.

    (a) After initial approval, warehouse operators may request that CCC 
reconsider adverse actions when the warehouse operator establishes that 
the reasons for the action have been remedied or requests 
reconsideration of the action and presents to the Director, KCCO, in 
writing, information in support of such request. The warehouse operator 
may, if dissatisfied with the Director's determination, obtain a review 
of the determination and an informal hearing by submitting a request to 
the Deputy Administrator. Appeals shall be as prescribed in part 780 of 
this title, and under such regulations the warehouse operator shall be 
considered as a ``participant.''
    (b) Suspension and debarment actions taken under this part shall be 
conducted in accordance with part 1407 of this chapter. After expiration 
of the suspension or debarment period, a warehouse operator may, at any 
time, apply for approval under this part.



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.

[[Page 601]]



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.
    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.

[[Page 602]]

    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 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

[[Page 603]]

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 
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

[[Page 604]]

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 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

[[Page 605]]

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.



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

[[Page 606]]

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 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.

[[Page 607]]



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.
    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;

[[Page 608]]

    (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]



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

[[Page 609]]

not made by the date specified, title to the commodity shall vest in CCC 
and CCC shall have no obligation to pay the commodity's market value 
above the principal amount of such loans.



Sec. 1425.8  Ownership and control.

    (a) CMA's must be owned and controlled by active members of the CMA.
    (b) The CMA must provide evidence that:
    (1) Active members own more than 50 percent of its allocated equity; 
and
    (2) A majority of directors are active members of the CMA or 
authorized representatives of active members.
    (c) An applicant cooperative or a CMA, not under the ownership or 
control, of its active members, may be approved by CCC if it is able to 
establish that, by retiring the equity of its inactive members or by 
obtaining new members, it can vest ownership and control in its active 
members, as required by this section, by a date specified by CCC.



Sec. 1425.9  Open membership.

    (a) The CMA shall provide CCC documented proof that the CMA admits 
every membership applicant who is eligible under the statute regulating 
the CMA.
    (b) Notwithstanding paragraph (a) of this section, a CMA may refuse 
membership to an applicant whose admission would prejudice, hinder, or 
otherwise obstruct the interests or purposes of the CMA.



Sec. 1425.10  Financial ratio requirement.

    To be financially able to make advances to their members and to 
market their commodities, CMA's shall have a current ratio of at least 1 
dollar of current assets for each 1 dollar of current liabilities 
(current ratio of 1:1 or better) on the balance sheet it submits to 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

[[Page 610]]

and the beneficial interest provisions of parts 1421 and 1427 of this 
chapter.
    (c) A pool shall be eligible for loans and LDP's if:
    (1) All of the commodity in the pool is eligible for loans or LDP's, 
except as provided in paragraphs (d) and (e) of this section;
    (2) The commodity was delivered by members to the CMA for their 
benefit;
    (3) The commodity was delivered and the members are eligible for 
loans and LDP's;
    (4) Members retain the right to share in marketing proceeds from the 
commodity in accordance with Sec. 1425.18; and
    (5) Members agreed to accept a payment of initial advances from the 
CMA in accordance with Sec. 1425.18(a).
    (d) Ineligible commodities may be included in eligible pools when:
    (1) The CMA inadvertently included ineligible quantities based on 
grade, quality, bale weight or repacking in the case of cotton, or other 
factors; or
    (2) There are eligibility discrepancies within FSA records, the 
producer has certified to the CMA that the commodity is eligible for 
loan, and there is no market gain or LDP involved in the loan pool for 
the crop year.
    (e) A CMA may, for a period of time as specified in Handbook 1-CMA, 
include a commodity that is ineligible based on FSA records when the 
producer has certified to the CMA the commodity is eligible. In these 
instances, CCC specifies a time period during which CMA's may obtain 
loan or LDP's on the applicable quantity while the eligibility status is 
resolved. If the final resolution is that the commodity was ineligible, 
the CMA must repay any loans outstanding with principal plus interest 
and any market gains obtained plus interest from the date of receiving 
the market gain through the repayment date.
    (f) The CMA must have in inventory a quantity of commodity delivered 
by 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 or otherwise made available to 
the members account:

[[Page 611]]

    (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 or otherwise make the commodity eligible 
for loans or LDP's, according to the marketing agreement provided for in 
Sec. 1425.13;
    (iii) Within 15 work days from the date the CMA receives loan or LDP 
proceeds from CCC, or held according to the terms of a deferred payment 
agreement if requested by the member.
    (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.

[63 FR 17312, Apr. 9, 1998, as amended at 71 FR 42750, July 28, 2006]



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.

[[Page 612]]



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 Movement and protection of warehouse-stored cotton.
1427.17 [Reserved]
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]
1427.25 Determination of the prevailing world market price and the 
          adjusted world price for upland cotton.

Subpart B [Reserved]

   Subpart C_Economic Adjustment Assistance to Users of Upland Cotton

1427.100 Applicability.
1427.101 Eligible upland cotton.
1427.102 Eligible domestic users.
1427.103 Upland cotton Domestic User Agreement.
1427.104 Payment rate.
1427.105 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 [Reserved]

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. 7231-7236 and 8737; and 15 U.S.C. 714b, and 
714c.

[[Page 613]]



     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 2008 
through 2012 crops of upland cotton and extra long staple cotton. Rules 
codified in this part which are issued after October 1, 2008, will not 
affect the 2007 and prior crops except that changes in the calculation 
of loan repayment rates that apply to the 2008 crop also apply to 2007 
crop loans outstanding at the time of the changes in 2008 crop 
calculations. Other adjustments for the 2008 crop, such as storage rate 
adjustments will not apply. 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 rate, 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.
    (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 2008 through 2012 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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5, 2008]



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) Correct, or require a correction of an action that is not in 
compliance with this part; or
    (2) 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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5, 2008]

[[Page 614]]



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, 1423, 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, 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.
    Classification means the measurement results provided by the 
Agricultural Marketing Service (AMS) of color grade, leaf, staple, 
strength, extraneous matter and micronaire, and for upland cotton, 
length uniformity.
    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.
    Cotton storage deficit area means a State, County, or group of 
contiguous counties within a State, where the production of cotton for 
the area based on the most recent estimate from the USDA, National 
Agricultural Statistics Service exceeds the combined approved inside 
storage capacity less carry-in stocks, of warehouses that have entered 
into a Cotton Storage Agreement with CCC.
    Current Far East 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, CFR (cost and freight) Far East, 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:

[[Page 615]]

    (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 indication 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.
    Good condition means a bale of cotton that, by comparison with the 
photographic standards of ``A Guide for Cotton Bale Standards'' of the 
Joint Cotton Industry Bale Packaging Committee, is determined to be a 
Grade A or Grade B bale.
    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 applicableloan rate.
    Loan rate is the national loan rate for base quality upland cotton 
and the national average rate for ELS cotton adjusted by any premiums 
and discounts determined by CCC.
    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;
    (2) Disbursing loan and loan deficiency payment proceeds;
    (3) Accepting loan repayments;
    (4) Handling documents involved with forfeiture of loan collateral 
to CCC; and
    (5) Providing loan, loan deficiency payment, and accounting data to 
CCC for statistical purposes.
    Transfer means, depending on the context, the process for a producer 
or an authorized agent of the producer to:
    (1) Physically relocate cotton loan collateral from one CCC-approved 
warehouse to another CCC-approved warehouse,
    (2) Exchange an electronic warehouse receipt for a receipt 
certificated by a warehouse for delivery under a futures contract 
without physically relocating the cotton, or
    (3) Do both of the above.
    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 in which one 
or more of these varieties predominate.
    Warehouse receipt means a receipt containing the required 
information prescribed in this part that may or may not be certificated 
for delivery for a futures-pricing contract, and is:
    (1) For 2008-crop cotton only, 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; or
    (2) For 2008 through 2012-crop cotton, 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.
    Wet cotton means a bale of cotton that, at a gin, has 7.5 percent or 
more moisture, wet basis, at any point in the bale.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51427, Aug. 30, 2006; 
73 FR 30275, May 27, 2008; 73 FR 65719, Nov. 5, 2008;75 FR 50849, Aug. 
18, 2010]

[[Page 616]]



Sec. 1427.4  Eligible producer.

    (a) To be an eligible producer, the producer must:
    (1) Be an individual, partnership, association, corporation, estate, 
trust,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 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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65719, Nov. 5,2008]



Sec. 1427.5  General eligibility requirements.

    (a) To receive loans or loan deficiency payments for a crop of 
cotton, a

[[Page 617]]

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.
    (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 and be covered by fire 
insurance. Bales pledged as collateral for a CCC loan, must be stored 
inside an approved storage warehouse unless, as determined under Sec. 
1427.10, CCC has approved the warehouse to use outside storage for 
cotton loan collateral for the period of the loan. Bales submitted to 
CCC for a loan deficiency payment are not subject to the approved 
storage requirements contained in Sec. 1423.10.
    (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, wet cotton, water-packed, mixed-packed, re-
ginned, or repacked;
    (5) Not be compressed to universal density at a warehouse where side 
pressure has been applied and effective for the 2009 crop, not be a flat 
or modified flat bale;
    (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 net weight may be pledged for loan at 600 pounds net weight.
    (10) Be packaged in materials that 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 that 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 storageof 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 that:
    (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 of a grade, strength, staple length, and other factors 
specified in

[[Page 618]]

the schedule of loan rates 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.
    (e) To be eligible to receive marketing assistance loans and loan 
deficiency payments, a producer must have beneficial interest in the 
cotton that is tendered to CCC for a marketing assistance loan or loan 
deficiency payment. For the purposes of this part, the term ``beneficial 
interest'' refers to a determination by CCC that a person has the 
requisite title to and control of cotton that is tendered to CCC as 
collateral for a marketing assistance loan or is the cotton that will be 
used to determine a loan deficiency payment. A determination of whether 
a person has beneficial interest in cotton is made by CCC in accordance 
with this part and is not based upon a determination under any State law 
or any other regulation of a Federal agency.
    (f) Except as provided in paragraph (h) of this section, when 
requesting a marketing assistance loan, in order to have beneficial 
interest in the cotton tendered as collateral for the loan, a person 
must:
    (1) Be the producer of the cotton as determined in accordance with 
Sec. 1427.4;
    (2) Have had ownership of the cotton from the time it was planted 
through the earlier the date the loan was repaid or the maturity date of 
the loan;
    (3) Have control of the cotton from the time of planting through the 
maturity date of the loan. To have control of the cotton, such person 
must have complete decision making authority regarding whether the 
cotton will be tendered as collateral for a loan, when the loan will be 
repaid or if the collateral will be forfeited to CCC in satisfaction of 
the loan obligations of such person, and where the cotton will be 
maintained during the term of the loan; and
    (g) Except as provided in paragraph (h) of this section, when 
requesting a loan deficiency payment, in order to have beneficial 
interest in the cotton a person must:
    (1) Be the producer of the cotton as determined in accordance with 
Sec. 1427.4;
    (2) Have had ownership of the cotton from the time it was planted 
through the date the producer has elected to determine the loan 
deficiency payment rate; and
    (3) Have control of the cotton from the time of planting through the 
date the producer has elected to determine the loan deficiency payment 
rate. To have control of the cotton, such person must have complete 
decision making authority regarding whether a loan deficiency payment 
will be requested with respect to the cotton; when the loan deficiency 
rate will be selected; and where the cotton will be maintained prior to 
the date on which the loan deficiency payment rate will be determined;
    (4) If the cotton has been physically delivered to a location other 
than a location owned or under the total control of the producer, have 
delivered the cotton to a warehouse approved in accordance with Sec. 
1427.10. Delivery of the cotton to a location other than to such an 
approved warehouse will result in the loss of beneficial interest in the 
cotton on the date of physical delivery and the producer will be 
considered to have lost beneficial interest as of 11:59 p.m. of such day 
regardless of any other action or agreement between the entity where the 
cotton was delivered and the producer, unless such an entity has been 
approved by CCC under Sec. 1427.10.

[[Page 619]]

    (h) Notwithstanding paragraphs (f) and (g) of this section, in order 
to facilitate the handling of situations involving the death of a 
producer, CCC will consider an estate and a person to whom title to 
cotton has passed by virtue of State law upon the death of the producer 
to have beneficial interest in the cotton produced by the producer under 
the same terms and conditions that would otherwise be applicable to such 
producer;
    (i) Notwithstanding paragraphs (f) and (g) of this section, a person 
who purchases or otherwise acquires cotton from a producer under any 
circumstances does not obtain beneficial interest to the cotton whether 
such purchase or acquisition is made prior to the harvest of the crop or 
after harvest except in one instance. CCC will consider a person to have 
beneficial interest in cotton if, prior to harvest, such person has 
obtained title to the growing cotton at the same time that such person 
obtained full title to the land on which such crop was growing;
    (j) A producer will lose beneficial interest in cotton if the 
producer receives any payment from any person under any contractual 
arrangement with respect to cotton if the person who is making the 
payment, or any person otherwise associated with the person making the 
payment, will at any time have title to the cotton or control of the 
cotton prior to or after harvest unless:
    (1) Such payment is authorized in accordance with part 1425 of this 
chapter; or
    (2) The payment is made as consideration for an option to purchase 
the cotton and such option contains the following provision:

    Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the cotton and beneficial 
interest in the cotton as specified in 7 CFR 1427.5 shall remain with 
the producer until the buyer exercises this option to purchase the 
cotton. 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 cotton;
    (2) The date CCC claims title to such cotton; or
    (3) Such other date as provided in this option.

    (k) Absent other provisions causing the producer to lose beneficial 
interest in the cotton, inclusion in a contract of a provision that 
allows the producer to select the sales price of the cotton at the time 
the contract is entered into or at a later date, a contract normally 
referred to as a deferred price contract or a price later contract, will 
not result in the loss of beneficial interest in the cotton.
    (l) Commodities produced under a contract in which the title to the 
seed remains with the entity providing the seed to the producer, 
including contracts for the production of hybrid seed, genetically 
modified commodities and other specialty seeds as approved in writing by 
CCC, are eligible to be pledged as collateral for a marketing assistance 
loan and a loan deficiency payment may be made with respect to such 
production if at the time of the request for such a loan or payment the 
producer has not:
    (1) Received a payment under the contract; or
    (2) Delivered the commodity to another person.
    (m) 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.
    (n) Marketing assistance loans may be disbursed to eligible 
producers who store upland cotton in unapproved 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.
    (o) If marketing assistance loans or loan deficiency payments are 
made

[[Page 620]]

available to producers through a CMA under part 1425 of this chapter, 
the beneficial interest in the cotton must always have been held by 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 share in the proceeds from the marketing of 
the cotton as provided in part 1425 of this chapter.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 32426, June 6, 2006; 71 FR 51427, Aug. 
30, 2006; 71 FR 60413, Oct. 13, 2006; 73 FR 65719, Nov. 5, 2008]



Sec. 1427.6  Disbursement of loans.

    (a) Individual producers may request loans from:
    (1) FSA County Service Centers;
    (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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



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.
    (c) Following written notice by CCC to the producer and warehouse 
operator, CCC may advance the maturity date of cotton pledged as 
collateral for a marketing assistance loan if:
    (1) CCC determines such loan cotton collateral is improperly 
warehoused and subject to damage,
    (2) Any term of the producer's loan agreement is violated, or
    (3) Carrying charges are substantially in excess of the average of 
carrying charges available elsewhere and the storing warehouse, after 
notice, declines to reduce such charges.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



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.
    (e) The loan rate as determined under paragraph (a) of this section 
adjusted for applicable premiums and discounts will be reduced by 30 
percent during

[[Page 621]]

each of the 2009 through 2012 crop years for producers who make an 
irrevocable election to receive ``Average Crop Revenue Election'' 
program payments as provided in Sec. 1412 of this title or elsewhere in 
this title.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



Sec. 1427.9  Classification of cotton.

    (a) All cotton tendered for loan and loan deficiency payment must be 
classed by an AMS Cotton Classing Office or other entity approved by 
AMS.
    (b) An AMS cotton classification must be based upon a representative 
sample drawn from the bale by samplers under AMS procedures and 
instructions.
    (c) If the producer's cotton has not been classed or sampled in a 
manner acceptable by CCC, the warehouse must sample such cotton and 
forward the samples to the AMS Cotton Classing Office or other entity 
approved by AMS. Such warehouse must be licensed by AMS or be approved 
by CCC to draw samples for submission to the AMS Cotton Classing Office.
    (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:
    (1) If through error or otherwise two or more samples from the same 
bale are submitted for classification, the loan rate will be based on 
the classification having the lower loan value;
    (2) CCC will use classification information received directly from 
AMS rather than AMS classification information received from the 
producer.
    (f) CCC will base any cotton loan rate or loan deficiency payment 
rate on the most recent classification information available before the 
loan or loan deficiency payment has been calculated. CCC will not adjust 
such rates based on review classification information submitted 
subsequent to the original benefit calculation.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



Sec. 1427.10  Approved storage.

    (a) Eligible cotton may be pledged as collateral for loans only if 
stored at warehouses approved by CCC, unless the producer agrees to 
provisions of 1427.5(n).
    (1) Persons desiring approval of their facilities should contact the 
Kansas City Commodity Office Beacon Facility-Mail Stop 8748, 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 on a bale of cotton, the operator shall, if such 
cotton is not stored within the warehouse, as directed by CCC place such 
cotton within such warehouse.
    (c) An approved cotton storage warehouse may temporarily store 
cotton pledged as collateral for a CCC loan outside, subject to the 
following conditions:
    (1) The warehouse submits a request for approval of outside storage 
in a format prescribed by CCC.
    (2) The warehouse is located in a storage deficit area as determined 
by CCC.
    (3) The warehouse complies with all outside storage requirements 
established by CCC including but not limited to the duration of such 
outside storage as granted by CCC for the individual application, all-
risk insurance for the loan value of the cotton with CCC as loss payee, 
and use of additional protective coverings and materials that elevate 
the entire bottom surface of the bale to protect such cotton from damage 
by water or airborne contaminants.
    (4) The electronic warehouse receipt for any bale or bales of cotton 
pledged as collateral for a CCC loan must include the dates that the 
bale was initially stored outside, and the date that outside storage 
stopped.
    (5) The warehouse operator provides CCC:
    (i) A weekly report in a format prescribed by CCC identifying 
individual bales of cotton pledged as collateral for a CCC loan that are 
stored outside, and

[[Page 622]]

    (ii) Through their electronic warehouse receipt provider, on a 
current basis, location indicators and effective dates for any loan bale 
stored outside.
    (d) Warehouse charges paid by a producer will not be refunded by 
CCC.
    (e) 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.
    (f) With respect tocrops 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 or area determined and announced by CCC as 
approved for outside storage of ELS loan collateral; and
    (2) The site is constructed so as to prevent the accumulation of 
water under such cotton.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 51427, Aug. 30, 2006; 73 FR 65720, 
Nov. 5, 2008]



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.
    (c)(1) Each receipt must set out in its terms the tare and the net 
weight of the bale represented by the receipt. The net weight shown on 
the warehouse receipt must 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 
gin weights are permitted by the licensing authority for the warehouse.
    (2) The tare weight shown on the receipt must be the tare weight 
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 weight, 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.
    (f) 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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65720, Nov. 5, 2008]



Sec. 1427.12  Liens.

    (a) Waivers that fully protect the interest of CCC must be obtained 
before loan disbursement, notwithstanding provisions in Sec. 
1427.19(h), if there are any liens or encumbrances on the cotton 
tendered as collateral for a loan,

[[Page 623]]

even though the liens or encumbrances are satisfied from the loan 
proceeds, except that CCC may elect to waive such lien requirements for 
loans having a principal value of less than $50,000.
    (b) CCC may elect to accept cotton as loan collateral that has 
warehouse receiving, compression, or other charges without a lien waiver 
if the producer at the time of loan application agrees to reimburse CCC 
for any such charges that CCC may pay on behalf of the producer or that 
reduce the value of the cotton delivered to CCC.

[71 FR 51427, Aug. 30, 2006, as amended at 73 FR 65721, Nov. 5, 2008]



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.
    (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.
    (3) Any warehouse storage charges associated with the forfeited 
cotton that accrued during the period of the loan and paid by CCC to the 
warehouse that:
    (i) Exceed CCC's maximum storage credit rate for the warehouse 
established in Sec. 1427.19 and
    (ii) Were paid by CCC for periods subject to denied storage credits 
due to the cotton being stored outside as specified in Sec. 
1427.19(h)(2)(ii).
    (4) Unpaid warehouse compression charges.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51427, Aug. 30, 2006; 
73 FR 65721, Nov. 5, 2008]



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

[[Page 624]]

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.
    (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  Movement and protection of warehouse-stored cotton.

    (a) CCC may insure or reinsure stored cotton against any risk, or 
otherwise take an action it deems necessary to protect the interest 
therein of CCC.
    (b) A producer may transfer cotton loan collateral subject to the 
following conditions:
    (1) The cotton is represented by an electronic warehouse receipt;
    (2) The request is submitted by a producer or a properly designated 
agent of the producer;
    (3) The transfer is agreed to by the receiving warehouse operator;
    (4) The CCC marketing assistance loan that is secured by such cotton 
matures at least 30 days after the date on which the request for the 
transfer is submitted to CCC; and

[[Page 625]]

    (5) Any charges, fees, costs, or expenses incident to the transfer 
of cotton loan collateral under this paragraph must be paid by the 
requestor of the transfer.
    (c) CCC will exclude from the calculation of any storage credits 
payable under Sec. 1427.19 the following periods:
    (1) The period during which the cotton is in transit between 
warehouses; and
    (2) Any period beyond 75 days starting from the date of transfer 
from the shipping warehouse, unless the shipping warehouse is:
    (i) Not in compliance with any of the terms of its Cotton Storage 
Agreement, (ii) Storing cotton loan collateral outside, or
    (iii) Under common ownership with the receiving warehouse.

[71 FR 51427, Aug. 30, 2006, as amended at 73 FR 65721, Nov. 5,2008]



Sec. 1427.17  [Reserved]



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 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 will be equal to 
its loan value, plus accrued interest, plus warehouse charges, and 
liquidated damages, as determined by CCC.
    (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

[[Page 626]]

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 
involved in the violation. Liquidated damages assessed in accordance 
with this section will be determined by multiplying the quantity 
involved in the violation by 10 percent of the marketing assistance loan 
rate applicable to the loan note.
    (f) When it has been determined that a violation of the terms and 
conditions of a loan deficiency application has occurred, CCC will 
determine the quantity of the cotton involved with respect to such 
violation and assess liquidated damages by multiplying the quantity of 
cotton involved in the violation by 10 percent of the marketing 
assistance loan rate.
    (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 CCC accelerates the maturity date for a loan 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(f), 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(f).
    (2) The producer of ELS cotton which is stored as provided in Sec. 
1427.10(f) shall:
    (i) Certify the quantity of such cotton on the loan application; 
certify the cotton is packaged in a hermetically sealed bag with an 
internal humidity level established by the gin as appropriate to 
safeguard the cotton; certify that packaging materials meet or exceed 
industry minimum standards; certify that the storage area is suitable 
for cotton storage and is in an area approved by CCC; certify that the 
storage area is constructed to prevent water accumulation under the 
cotton and is outside a 100-year floodplain; and certify that the 
storage area is serviced by bale handling and transport equipment that 
will not damage the sealed bag or degrade the storage area;
    (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

[[Page 627]]

subject the producer to administrative actions.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49328, Aug. 18, 2003; 
69 FR 12056, Mar. 15, 2004; 71 FR 32427, June 6, 2006; 73 FR 65721, Nov. 
5, 2008]



Sec. 1427.19  Repayment of loans.

    (a) Warehouse receipts pledged as collateral for a CCC loan 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.
    (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) For purposes of calculating loan-period accrued storage charges 
that CCC may credit to the loan repayment amount under paragraph (i) of 
this section:
    (1) The warehouse storage rates to be used for the 2008 through 2011 
crops will be the lower of:
    (i) The tariff storage rate for the warehouse for the 2005 crop or, 
for any warehouse not in existence in 2005, a CCC-assigned average 2005 
crop tariff rate for the county or area; or
    (ii) For warehouses located in Arizona and California $3.93 per bale 
per month and for warehouses located in all States other than Arizona 
and California $2.39 per bale per month.
    (2) The warehouse storage rates to be used for the 2012 and 
subsequent crops will be the lower of:
    (i) The tariff storage rate for the warehouse for the 2005 crop or, 
for any warehouse not in existence in 2005, a CCC-assigned average 2005 
crop tariff rate for the county or area; or
    (ii) For warehouses located in Arizona and California $3.50 per bale 
per month and for warehouses located in all States other than Arizona 
and California $2.13 per bale per month.
    (3) CCC will not credit the loan repayment amount for a bale for any 
storage charges that accrued while the cotton was stored outside, except 
that storage may be credited for up to 15-days of outside storage 
beginning on the day the warehouse was notified that the bale is under 
loan if the bale was inside on the 15th day from the date of 
notification.
    (4) The loan period will be determined by CCC to begin:
    (i) For loan disbursed by the Farm Service Agency, on the date all 
loan documents, as determined and announced by CCC, have been received 
or
    (ii) For a loan disbursed by a Cooperative Marketing Association or 
an authorized loan servicing agent, on the date the loan was disbursed 
by CCC.
    (i)(1) An upland cotton loan repayment rate will not exceed the loan

[[Page 628]]

principal plus accrued interest for the period provided in Sec. 
1427.19(j).
    (2) When the prevailing adjusted world price of upland cotton, as 
determined under Sec. 1427.25, is less than the combined value of the 
loan principal, accrued interest, and warehouse storage that accrued 
during the period of the loan, CCC will permit the loan to be repaid at 
the adjusted world price less the storage charges that accrued during 
the period of the loan.
    (j) For purposes of calculating interest charges on upland and extra 
long staple cotton loan principal, the loan period will be the period 
starting the date after the disbursement of the loan amount to, and 
including, the loan repayment date, except that interest is not charged 
for a loan that is disbursed and repaid on the same date.
    (k) Repayment of loans will not be accepted after CCC acquires title 
to the cotton in accordance with Sec. 1427.7.

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 51428, Aug. 30, 2006; 
73 FR 65721, Nov. 5, 2008]



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 cotton loans will 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 subject to the producer being responsible 
for, if applicable, warehouse receiving charges, new bale ties, unpaid 
warehouse compression, charges for and related to the certification of a 
bale and for any subsequent exchange of certificated receipts, storage 
charges for any period of yard storage, and storage charges in excess of 
any maximum storage credit rates as determined and announced by CCC.
    (b) For purposes of settlements for cotton delivered to CCC in 
satisfaction of a loan obligation, CCC may elect to calculate such 
settlement values based on the net weight, condition, and classification 
as reflected on the warehouse receipt delivered to CCC, whether such 
receipt is the receipt issued by the original storing warehouse and 
presented for calculating the loan amount or a receipt issued by a 
subsequent warehouse due to the transfer of such bale while pledged as 
collateral for a CCC loan.
    (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(f), 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).
    (e) If CCC sells the commodity described in paragraph (a) of this 
section in settlement of the recourse 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 and CCC 
will deduct the amount of these costs from the sales proceeds. When CCC 
sells any cotton obtained by forfeiture under a marketing assistance 
loan, CCC will, in all instances, retain all proceeds obtained from the 
sale of the cotton and will not make any payment of any amount of such 
proceeds to any party, including the producer who had satisfied their 
obligation under the loan through forfeiture of the cotton to CCC.
    (f) CCC will pay to the warehouse any unpaid storage or receiving 
charges for forfeited loan collateral, not to exceed the amount that 
accrued from the date that all necessary documents were received by CCC 
to the loan maturity date, as soon as practicable after the cotton is 
forfeited.

[67 FR 64459, Oct. 18, 2002, as amended at 68 FR 49329, Aug. 18, 2003; 
71 FR 32427, June 6, 2006; 73 FR 65721, Nov. 5, 2008]



Sec. 1427.22  Commodity certificate exchanges.

    (a) For any outstanding marketing assistance loan provided for 
upland cotton, a producer may purchase a commodity certificate and 
exchange that commodity certificate for the marketing assistance loan 
collateral.

[[Page 629]]

This provision terminates effective ending with the 2009 crop and will 
not be available for subsequent crops.
    (b) The exchange rate is the lesser of:
    (1) The loan rate and charges, plus interest applicable to the loan, 
or
    (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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65722, Nov. 5, 2008]



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) Submit, on a form prescribed by CCC, to the FSA Service Center 
on or before beneficial interest is lost in such quantity and before the 
final loan availability date for the commodity:
    (i) An indication of their intentions to receive a loan deficiency 
payment on the identified commodity or
    (ii) A completed request for a loan deficiency payment for a 
quantity of eligible cotton under Sec. 1427.5(a).
    (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, which CCC will consider 
to be the date of the LDP request, if payment application is made in the 
manner prescribed by CCC for obtaining such rate;
    (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.

[[Page 630]]

    (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 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).

[67 FR 64459, Oct. 18, 2002, as amended at 71 FR 32427, June 6, 2006; 73 
FR 65722, Nov. 5, 2008]



Sec. 1427.24  [Reserved]



Sec. 1427.25  Determination of the prevailing world market price and the 

adjusted world price for upland cotton.

    (a) CCC will 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, CFR (cost and freight) Far East, 
the prevailing world market price for upland cotton will be based on 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, CFR Far East.
    (2) During the period when both a price quotation for cotton for 
shipment no later than August/September of the current calendar year 
(current Far East shipment price) and a price quotation for cotton for 
shipment no earlier than October/November of the current calendar year 
(forward Far East shipment price) are available for growths quoted for M 
1\3/32\-inch cotton, CFR Far East, the prevailing world market price for 
upland cotton will be based on the average of the current Far East 
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, 
CFR Far East, except as may be determined by the Secretary as specified 
in paragraph (c)(3)(iv) of this section.
    (3) The upland cotton prevailing world market price determined as 
specified in paragraphs (a)(1) or (a)(2) of this section is referred to 
as the ``Far East price'' (FE).
    (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 will be based on the best available world 
price information, as CCC determines.
    (b) The upland cotton prevailing world market price, adjusted as 
specified in paragraph (c) of this section (adjusted world price (AWP)), 
will apply to the 2008 through 2012 crops of upland cotton and to the 
2007 crop to the extent provided in Sec. 1427.1.
    (c) The upland cotton AWP will equal the FE determined as specified 
in paragraph (a) of this section, adjusted as follows:
    (1) FE will be adjusted to U.S. location by deducting the average 
costs to market, including average transportation costs, as determined 
by the Secretary.
    (2) The price determined as specified in paragraph (c)(1) of this 
section will be adjusted to reflect the price of base quality upland 
cotton by deducting the difference, as CCC announces, between the 
applicable loan rate for an upland cotton crop for base quality M 1\3/
32\-inch, leaf 3 cotton and the loan rate for base quality SLM 1\1/16\-
inch, leaf 4 cotton.
    (3) The prevailing world market price, adjusted as specified in 
paragraphs (c)(1) and (c)(2) of this section, may be further adjusted if 
it is determined that the adjustment is necessary to:
    (i) Minimize potential loan forfeitures;
    (ii) Minimize the accumulation of stocks of upland cotton by the 
Federal Government;
    (iii) Ensure that upland cotton produced in the United States can be 
marketed freely and competitively, both domestically and 
internationally; and
    (iv) Ensure an appropriate transition between current-crop and 
forward-crop price quotations, except that forward-crop price quotations 
may be used prior to July 31 of a marketing year only if there are 
insufficient current crop quotations and the forward-crop price 
quotation is the lowest such quotation available.

[[Page 631]]

    (d) The upland cotton AWP, determined as specified in paragraph (c) 
of this section, and the amount of the additional adjustment determined 
as specified in paragraphs (e) and (f) of this section, will be 
announced, to the extent practicable, at 4 p.m. eastern time each 
Thursday continuing through the last Thursday of March 2014 (March 27, 
2014). In the event that Thursday is a non-workday, the determination 
will be announced, to the extent practicable, at 8 a.m. eastern time the 
next work day.
    (e)(1)(i) AWP, determined as specified in paragraph (c) of this 
section, will be subject to a further coarse count adjustment 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, leaf, and staple length must be determined as specified 
in Sec. 1427.9. If no such official classification is presented, the 
coarse count adjustment will not be made.
    (2) The adjustment for upland cotton specified in paragraph (e)(1) 
of this section will be determined by deducting from AWP:
    (i) The difference between FE, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``coarse count'' cotton, CFR Far East, 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, CFR Far East (Far East coarse count price); or
    (B) During the period when both current Far East shipment prices and 
forward Far East shipment prices are available for the growths quoted 
for ``coarse count'' cotton, CFR Far East, the result calculated by the 
average of the current Far East shipment prices for the preceding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``coarse count'' cotton, CFR Far East (Far East coarse count 
price) minus
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SLM 1\1/32\-inch, leaf 4 
cotton.
    (3) Regarding the determination of the Far East coarse count price 
specified in paragraph (e)(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 as specified in paragraph (e)(2) of this 
section for the latest available week will continue to be applicable.
    (f)(1)(i) AWP, determined as specified in paragraph (c) of this 
section, will be subject to a further fine count adjustment as provided 
in this section regarding all upland cotton having a loan schedule 
premium or discount exceeding that for Middling, leaf 3, staple length 
1\3/32\-inch upland cotton, and
    (ii) Grade, staple length, and leaf must be determined as specified 
in Sec. 1427.9. If no such official classification is presented, the 
fine count adjustment will not be made.
    (2) The adjustment for upland cotton specified in paragraph (f)(1) 
of this section will be determined by deducting from AWP:
    (i) The difference between FE, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``fine count'' cotton, CFR Far East, is available the 
average of the quotations for the corresponding Friday through Thursday 
for the three lowest-priced growths of the growths quoted for ``fine 
count'' cotton, CFR Far East (Far East fine count price) or

[[Page 632]]

    (B) During the period when both current Far East shipment prices and 
forward Far East shipment prices are available for the growths quoted 
for ``fine count'' cotton, CFR Far East, the result calculated by the 
average of the current Far East shipment prices for the preceding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``fine count'' cotton, CFR Far East (Far East fine count 
price) minus
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SM 1\1/8\-inch, leaf 2 
cotton.
    (3) Regarding the determination of the Far East fine 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 as specified in paragraph (f)(2) of this 
section for the latest available week will continue to be applicable.
    (g) In the determination of FE as specified in paragraph (a)(2) of 
this section, the Far East coarse count price specified in paragraph 
(e)(2)(i)(B) of this section, and the Far East fine count price as 
specified in paragraph (f)(2)(i)(B) of this section, CCC will use either 
current Far East shipment prices, forward Far East shipment prices, or 
any combination thereof to determine FE or the Far East coarse count 
price or the Far East fine count price used in the determination of the 
adjustment for upland cotton specified in paragraphs (e)(1) and (f)(1) 
of this section and determined as specified in paragraphs (e)(2) and 
(f)(2) of this section to prevent distortions in such adjustment.
    (h) For particular bales, the AWP determined as specified in 
paragraph (c) of this section, will be subject to further adjustments to 
a value no less than zero, as CCC determines, based on the Schedule of 
Premiums and Discounts as announced for the loan program for an upland 
cotton crop.

[73 FR 65722, Nov. 5, 2008, as amended at 77 FR 19927, Apr. 3, 2012]

Subpart B [Reserved]



   Subpart C_Economic Adjustment Assistance to Users of Upland Cotton

    Source: 73 FR 65723, Nov. 5, 2008, unless otherwise noted.



Sec. 1427.100  Applicability.

    (a) Regulations in this subpart are applicable beginning August 1, 
2008. These regulations specify the terms and conditions under which CCC 
will make payments to eligible domestic users who entered into an Upland 
Cotton Domestic User Agreement with CCC to participate in the upland 
cotton domestic user program under section 1207 of the Food, 
Conservation, and Energy Act of 2008 (Pub. L. 110-246, referred to 
commonly as the ``2008 Farm Bill'').
    (b) CCC will prescribe forms used in administering Economic 
Adjustment Assistance to Users of Upland Cotton.



Sec. 1427.101  Eligible upland cotton.

    (a) For purposes of this subpart, eligible upland cotton is baled 
upland cotton, regardless of origin, that is opened by an eligible 
domestic user on or after August 1, 2008, and is either:
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade;
    (2) Loose samples removed from upland cotton bales for 
classification purposes that have been rebaled;
    (3) Semi-processed motes that are of a quality suitable, without 
further processing, for spinning, papermaking, or production of non-
woven fabric; or
    (4) Re-ginned (processed) motes.
    (b) Eligible upland cotton must not be:
    (1) Cotton for which a payment, under the provisions of this 
subpart, has been made available;

[[Page 633]]

    (2) Raw (unprocessed) motes, pills, linters, or other derivatives of 
the lint cleaning process; or
    (3) Textile mill wastes.



Sec. 1427.102  Eligible domestic users.

    (a) For purposes of this subpart, a person regularly engaged in the 
business of opening bales of eligible upland cotton for the purpose of 
spinning, papermaking, or processing of non-woven cotton fabric in the 
United States, who has entered into an agreement with CCC to participate 
in the upland cotton user program, will be considered an eligible 
domestic user.
    (b) Applications for payment under this subpart must contain 
documentation required by the provisions of the Upland Cotton Domestic 
User Agreement and other instructions that CCC issues.



Sec. 1427.103  Upland cotton Domestic User Agreement.

    (a) Payments specified in this subpart will be made available to 
eligible domestic users who have entered into an Upland Cotton Domestic 
User Agreement with CCC and who have complied with the terms and 
conditions in this subpart, the Upland Cotton Domestic User Agreement, 
and instructions issued by CCC.
    (b) Upland Cotton Domestic User Agreements may be obtained from 
Contract Reconciliation Division, Kansas City Commodity Office (KCCO), 
P.O. Box 419205, Stop 8758, Kansas City, Missouri 64141-6205. In order 
to participate in the program authorized by this subpart, domestic users 
must execute the Upland Cotton Domestic User Agreement and forward the 
original and one copy to KCCO.



Sec. 1427.104  Payment rate.

    (a) Beginning August 1, 2008 and ending July 31, 2012, the payment 
rate for purposes of calculating payments as specified in this subpart 
will be 4 cents per pound.
    (b) Beginning August 1, 2012, the payment rate for purposes of 
calculating payments as specified in this subpart will be 3 cents per 
pound.



Sec. 1427.105  Payment.

    (a) Payments specified in this subpart will be determined by 
multiplying the payment rate, as specified in Sec. 1427.104, by
    (1) In the case of baled upland cotton, whether lint, loose samples 
or reginned motes, but not semi-processed motes, the net weight of the 
cotton used (gross weight minus the weight of bagging and ties);
    (2) In the case of unbaled reginned motes consumed, without 
rebaling, for an end use in a continuous manufacturing process, the 
weight of the reginned motes after final cleaning; and
    (3) In the case of semi-processed motes which are of a quality 
suitable, without further processing, for spinning, papermaking, or 
manufacture of non-woven cotton fabric, 25 percent of the weight (gross 
weight minus the weight of bagging and ties, if baled) of the semi-
processed motes; provided further, that with respect to semi-processed 
motes that are used prior to August 18, 2010, payment may be allowed by 
CCC in its sole discretion at 100 percent of the weight as determined 
appropriate for a transition of the program to the 25 percent factor.
    (b) In all cases, the payment will be determined based on the amount 
of eligible upland cotton that an eligible domestic user consumed during 
the immediately preceding calendar month. For the purposes of this 
subpart, eligible upland cotton will be considered consumed by the 
domestic user on the date the bale is opened for consumption, or if not 
baled, the date consumed, without further processing, in a continuous 
manufacturing process.
    (c) Payments specified in this subpart will be made available upon 
application for payment and submission of supporting documentation, as 
required by the CCC-issued provisions of the Upland Cotton Domestic User 
Agreement.
    (d) All payments received by the agreement holder must be used for 
purposes as specified in section 1207 of the Food, Conservation, and 
Energy Act of 2008 (Pub. L. 110-246, referred to commonly as the 2008 
Farm Bill). Authorized expenditures include acquisition,

[[Page 634]]

construction, installation, modernization, development, conversion, or 
expansion of land, plant, buildings, equipment, facilities, or 
machinery. Such capital expenditures must be directly attributable and 
certified as such by the user for the purpose of manufacturing upland 
cotton into eligible cotton products in the United States.

[73 FR 65723, Nov. 5, 2008, as amended at 75 FR 50849, Aug. 18, 2010]



                  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 2008 through 2012 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 that 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 will be based on the base 
quality loan rate for upland cotton and the national average loan rate 
for extra long staple cotton.
    (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.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.

[67 FR 64459, Oct. 18, 2002, as amended at 73 FR 65724, Nov. 5, 2008]



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 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

[[Page 635]]

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 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.

[[Page 636]]

    (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 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.

[[Page 637]]

    (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 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.

[[Page 638]]



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:
    (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

[[Page 639]]

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. 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

[[Page 640]]

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]



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.

[[Page 641]]

    (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 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

[[Page 642]]

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 warehouseman's administrative 
appeal rights with respect to suspension and debarment shall be in 
accordance with applicable CCC regulations. After expiration of a period 
of suspension or debarment, a warehouseman may, at any time, apply for 
approval under this subpart.

[Amdt. 3, 50 FR 16455, Apr. 26, 1985]



Sec. 1427.1087  Exemption from requirements.

    (a) If warehousing services in any area cannot be secured under the 
provisions of this subpart and no reasonable and economical alternative 
is available for securing such services for commodities under CCC 
programs, the President or Executive Vice President, CCC may exempt, in 
writing, applicants in such area from one or more of the standards of 
this subpart and may establish such other standards as are considered 
necessary to safeguard satisfactorily the interests of CCC.
    (b) Warehousemen who are currently under contract with CCC will be 
required to meet the terms and conditions of these regulations at the 
time of renewal of their contract.

[44 FR 67085, Nov. 23, 1979, as amended at 44 FR 74797, Dec. 18, 1979]



Sec. 1427.1088  Contract fees.

    (a) Each warehouseman who has a non-federally licensed cotton 
warehouse must pay an annual contract fee for each such warehouse for 
which the warehouseman requests renewal of an existing Cotton Storage 
Agreement or approval of a new Cotton Storage Agreement as follows:
    (1) A warehouseman who has an existing Cotton Storage Agreement with 
CCC for the storage and handling of CCC-owned cotton or cotton pledged 
to CCC as loan collateral must pay an annual contract fee for each 
warehouse approved under such agreement in advance of the renewal date 
of such agreement.
    (2) A warehouseman who does not have an existing Cotton Storage 
Agreement with CCC for the storage and handling of CCC-owned cotton or 
cotton pledged to CCC as loan collateral but who desires such an 
agreement must pay a contract fee for each warehouse for which CCC 
approval is sought prior to the time that the agreement is approved by 
CCC.

[[Page 643]]

    (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 [Reserved]



Subpart G_Extra Long Staple (ELS) Cotton Competitiveness Payment Program

    Source: 70 FR 67343, Nov. 7, 2005, unless otherwise noted.



Sec. 1427.1200  Applicability.

    (a) These regulations set forth the terms and conditions under which 
CCC shall make payments to eligible domestic users and exporters of 
extra long staple cotton who have entered into an ELS Cotton Domestic 
User/Exporter Agreement with CCC.
    (b) CCC will issue payments to domestic users and exporters in any 
week following a consecutive 4-week period in which:
    (1) The LFQ is less than the USPFE; and
    (2) Adjusted LFQ is less than 134 percent of the current crop year 
loan level for the base quality U.S. Pima cotton.
    (c) CCC shall prescribe the forms and information collections 
necessary in administering the ELS cotton competitiveness payment 
program. Additional terms and conditions for the program are set forth 
in the ELS Cotton Domestic User/Exporter Agreement.



Sec. 1427.1201  [Reserved]



Sec. 1427.1202  Definitions.

    The following definitions apply as used in this subpart:
    Consumption means the use of eligible ELS cotton by a domestic user 
in the manufacture in the United States of cotton products.
    Cotton product means any product containing cotton fibers that 
result from the use of 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/F Far East, the price quotation for cotton for shipment no 
later than August/September of the current calendar year.
    ELS means Extra Long Staple.
    Forward shipment price means, during the period in which two daily 
price quotations are available for the LFQ for foreign growths, quoted 
C/F Far East, 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 and freight (C/F) Far East, after each respective 
average is adjusted for quality differences between the respective 
foreign growth and U.S. Pima, of the base quality.
    (1) Adjusted LFQ means the LFQ adjusted to reflect the estimated 
cost of transportation between an average U.S. location and destination 
ports in the Far East.
    (2) LFQc means the preceding Friday through Thursday average of the 
current shipment prices for the lowest adjusted foreign growth, C/F Far 
East.
    (3) LFQf means the preceding Friday through Thursday average of the 
forward shipment prices for the lowest adjusted foreign growth, quoted 
C/F Far East.
    USPFE means the Friday through Thursday weekly average of the price 
quotation for base quality U.S. Pima cotton, as determined by CCC for 
purposes of administering this subpart, C/F Far East.
    (1) USPFEc means the preceding Friday through Thursday average of 
the current shipment prices for U.S. Pima cotton, C/F Far East.

[[Page 644]]

    (2) USPFEf means the preceding Friday through Thursday average of 
the forward shipment prices for U.S. Pima cotton, C/F Far East.



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 June 18, 2008, 
or
    (2) Exported by an eligible exporter on or after June 18, 2008, 
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 re-ginned, processed motes.

[70 FR 67343, Nov. 7, 2005, as amended at 73 FR 65724, Nov. 5, 2008]



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 (a domestic user), 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 
(an exporter), who has entered into an agreement with CCC to participate 
in the ELS Cotton Competitiveness Payment Program.
    (b) Payment applications must contain the documentation required by 
this subpart, an ELS Cotton Domestic User/Exporter Agreement and 
additional information that may be requested by CCC.



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 Friday on or following August 1 and ending the 
week in which the LFQc, the LFQf, the USPFEc, and the USPFEf prices 
first become available, the payment rate shall be the difference between 
the USPFE and the LFQ in the fourth week of a consecutive 4-week period 
in which the USPFE exceeded the LFQ each week, and the adjusted 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 LFQc, the LFQf, the USPFEc, and the USFEf prices first become 
available and ending the Thursday following July 31, the payment rate 
shall be the

[[Page 645]]

difference between the USPFEc and the LFQc in the fourth week of a 
consecutive 4-week period in which the USPFEc exceeded the LFQc each 
week, and the adjusted LFQc was less than 134 percent of the current 
crop year loan level for base quality U.S. Pima in all weeks of the 4-
week period. If either or both the USPFEc and the LFQc are not 
available, the payment rate may be the difference between the USPFEf and 
the LFQf.
    (b) Whenever a 4-week period under paragraph (a) of this section 
contains a combination of LFQ, LFQc, and LFQf for only one to three 
weeks, such as may occur in the spring when the LFQ is succeeded by the 
LFQc and the LFQf (spring transition), and at the start of a new 
marketing year when the LFQc and the LFQf 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, the LFQc and USPFEc, in combination with the LFQ and 
USPFE, shall, to the extent practicable, 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 
either or both USPFEc price and the LFQc are not available, the USPFEf 
and the LFQf in combination with the USPFE price and 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 
USPFE, USPFEc, USPFEf, the LFQ, the LFQc, and the LFQf:
    (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 none of the USPFE, USPFEc, or USPFEf prices is available, or 
if none of the LFQ, LFQc, or LFQf is available, the payment rate shall 
be zero and shall remain zero unless and until sufficient USPFE prices 
or the LFQ again becomes available, the USPFE, USPFEc, or USPFEf price 
exceeds the LFQ, the LFQc, or the LFQf, as the case may be, and the LFQ, 
the LFQc, or the LFQf, as the case may be, adjusted for transportation, 
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 lint that is of a suitable quality, 
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 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 re-weighed by a licensed weigher and furnishes a copy of 
the certified weights.
    (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 this subpart, CCC instructions, and the ELS Cotton Domestic 
User/Exporter Agreement.

[[Page 646]]



PART 1429_ASPARAGUS REVENUE MARKET LOSS ASSISTANCE PAYMENT PROGRAM--Table of 

Contents



Sec.
1429.101 Applicability.
1429.102 Administration.
1429.103 Definitions.
1429.104 Application requirements.
1429.105 Producer eligibility requirements.
1429.106 Proof of production.
1429.107 Maximum and final payment rates.
1429.108 Calculation of individual payments.
1429.109 Availability of funds.
1429.111 Misrepresentation and scheme or device.
1429.112 Death, incompetence, or disappearance.
1429.113 Maintaining records.
1429.114 Refunds; joint and several liability.
1429.115 Miscellaneous provisions and appeals.

    Authority: 15 U.S.C. 714b and 714c, and Sec. 10404, Pub. L. 110-246, 
122 Stat. 2111.

    Source: 76 FR 6316, Feb. 4, 2011, unless otherwise noted.



Sec. 1429.101  Applicability.

    (a) The regulations in this part are applicable to program 
applicants who produced both 2003- and 2007-crop asparagus. Asparagus 
producers may apply to the Commodity Credit Corporation (CCC) for a 
payment based on the actual quantity of their 2003 asparagus production 
and their share of that production.
    (b) Total payments made through the Asparagus Revenue Marketing Loss 
Assistance Payment Program will not exceed $15 million, allocated as 
$7.5 million for fresh asparagus and $7.5 million for processed 
asparagus, less any reserve allocated for disputed claims.



Sec. 1429.102  Administration.

    (a) The Asparagus Revenue Market Loss Assistance Payment Program 
will be administered under the general supervision of the Executive Vice 
President, CCC (Administrator, Farm Service Administration (FSA)), or a 
designee, and will be carried out in the field by FSA State and county 
committees and FSA employees.
    (b) FSA State and county committees, and representatives and 
employees of those committees, do not have the authority to modify or 
waive any of the provisions of this part, except as provided in 
paragraph (e) of this section.
    (c) The FSA State committee will take any action required by this 
part that has not been taken by the FSA county committee. The FSA State 
committee will also:
    (1) Correct or require correction of an action taken by an FSA 
county committee that is not in compliance with this part; and
    (2) Require an FSA county committee to not take an action or 
implement a decision that is not in compliance with the regulations of 
this part.
    (d) No delegation in this part to an FSA State or county committee 
will preclude the Executive Vice President, CCC, or a designee, from 
determining any question for the Asparagus Revenue Marketing Loss 
Assistance Payment 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 
FSA State and county committees to waive or modify program requirements 
that are not statutory in cases where failure to meet such requirements 
does not adversely affect the operation of the Asparagus Revenue Market 
Loss Assistance Payment Program.



Sec. 1429.103  Definitions.

    The following definitions apply to this part. The definitions in 
parts 718 and 1400 of this title also apply, except where they conflict 
with the definitions in this section.
    Application means the Asparagus Revenue Market Loss Assistance 
Payment Program application form approved for use in this program by CCC 
and any required accompanying information or documentation.
    Application period means the 60-day period established by the Deputy 
Administrator for producers to apply for the Asparagus Revenue Marketing 
Loss Assistance Payment Program.
    Asparagus producer means any individual, group of individuals, 
partnership, corporation, estate, trust, association, cooperative, or 
other business enterprise or other legal entity, as defined in Sec. 
1400.3 of this chapter, who is an owner, operator, landlord, tenant,

[[Page 647]]

or sharecropper, who directly or indirectly, as determined by the 
Secretary, shares in the risk of producing asparagus and who is entitled 
to ownership share in the asparagus crop available for marketing from 
the farm operation. Growers producing asparagus under contract for crop 
owners are not considered asparagus producers unless the grower can be 
determined to have an ownership share of the crop.
    Base period means the 2003 crop year of asparagus.
    County office means the FSA office responsible for administering CCC 
programs located in a specific area in a State.
    Crop year means the marketing season or year as defined by the 
National Agricultural Statistics Service (NASS).
    Department or USDA means the U.S. Department of Agriculture.
    Determined production means, with respect to the base period, the 
total amount of fresh and processed asparagus specified on the 
application for payment verified by CCC as having been produced and 
marketed by the producer in the base period.
    Farm Service Agency or FSA means the Farm Service Agency of the U.S. 
Department of Agriculture.
    Fresh asparagus means domestically-produced asparagus that, 
regardless of intended use, was marketed as a fresh product without any 
processing other than cleaning, grading, sorting, trimming, drying, 
cooling, and packing.
    Hundredweight or cwt. means 100 pounds.
    Processed asparagus means domestically-produced asparagus that, 
regardless of intended use, was marketed as frozen, canned, pickled, or 
otherwise treated or handled in such fashion that the buyer would not 
consider the asparagus to be consumed as fresh, as determined by CCC.
    Reliable production records means evidence provided by the producer 
to the FSA county office that FSA determines is adequate to substantiate 
the amount of production reported when verifiable records are not 
available, including copies of receipts, ledgers of income, income 
statements, deposit slips, register tapes, invoices for custom 
harvesting, records to verify production costs, contemporaneous 
measurements, truck scale tickets, and contemporaneous diaries. When the 
term ``acceptable production records'' is used in this rule, it may be 
either reliable or verifiable production records, as defined in this 
section.
    Reported production means the total amount of fresh and processed 
asparagus produced and marketed by a producer, as specified by a 
producer on the application for payment.
    United States means the 50 States of the United States, the District 
of Columbia, and Puerto Rico.
    Verifiable production records means evidence that is used to 
substantiate the amount of production reported and that can be verified 
by FSA through an independent source.



Sec. 1429.104  Application requirements.

    (a) To be eligible for payment, asparagus producers must submit a 
completed application for payment and meet other eligibility 
requirements as specified in this part. Asparagus producers may obtain 
an application in person, by mail, by telephone, or by facsimile from 
any FSA county office. In addition, applicants may download a copy of 
the application from http://www.sc.egov.usda.gov.
    (b) An application for payment must be submitted on a completed 
application form. Applications and any other supporting documentation 
must be submitted to the FSA county office serving the county in which 
the producer produced asparagus in 2003 unless the producer now resides 
in a different county than the county in which asparagus was produced in 
the base period.
    (c) Asparagus producers who apply for payment must certify the 
information on the application before the application will be considered 
complete. Applications may be accompanied by acceptable production 
records for all fresh and processed asparagus produced and marketed from 
the farm in the 2003 crop year. Producers must certify they had a share 
interest in both 2003 and 2007 crop asparagus. To be eligible for 
payment on asparagus produced in the base period, the producer must have 
produced asparagus in 2007 for the commercial market in commercial 
quantities as determined for this purpose by

[[Page 648]]

the Deputy Administrator. At any time CCC deems appropriate, either 
before or after payment issuance, CCC may, at its discretion, require a 
producer to provide documentation to support:
    (1) Reported production of 2003 crop fresh or processed asparagus 
production or both entered on the application accompanied by acceptable 
production record,
    (2) Share percentage of 2003 crop production by marketing category 
for each producer in the asparagus farm operation, or
    (3) Any other eligibility requirement specified in this part 
including commercial quantities of 2007 production to meet the 2007 
production requirement.
    (d) Each asparagus producer who signs the application must certify 
the accuracy and truthfulness of the information in the application and 
any supporting documentation. All information provided is subject to 
verification by CCC. Refusal to allow CCC or any other agency of USDA to 
verify any information provided will result in a denial of eligibility. 
Furnishing the information is voluntary; however, without it program 
payments will not be approved. Providing a false certification may be 
punishable by imprisonment, fines, and other penalties or sanctions.
    (e) Data furnished by the applicants will be used to determine 
eligibility for program payments. Although participation in the 
Asparagus Revenue Market Loss Assistance Payment Program is voluntary, 
program payments will not be provided unless the participant furnishes a 
complete application by the end of the application period with all 
requested data.
    (f) Individuals or entities who submit applications after the 
application period are not entitled to any payment consideration or 
determination of eligibility. Regardless of the reason why an 
application is not submitted to or received by the FSA county office, 
any late application will be considered as not having been timely filed 
and the applicants on that application will not be eligible for the 
Asparagus Revenue Marketing Loss Assistance Payment Program.



Sec. 1429.105  Producer eligibility requirements.

    (a) To be eligible to receive the Asparagus Revenue Marketing Loss 
Assistance Payment Program payments, asparagus producers must submit an 
application during the application period and must:
    (1) Have produced and marketed asparagus in commercial quantities in 
commercial markets in the United States during both of the 2003 and 2007 
crop years;
    (2) Be an asparagus producer, as defined in Sec. 1429.103, for the 
2003 and 2007 crop years;
    (3) Certify their shares and the pounds of fresh and processed 
asparagus produced and marketed from the farm operation during the 2003 
crop year as reflected on the application;
    (4) If the total value of payments claimed exceeds the available 
funding, have an average adjusted gross income (AGI) of less than $2.5 
million for the 3 tax years of 2003 through 2005; and
    (5) Be in compliance with the requirements in 7 CFR part 12 
regarding highly erodible cropland and wetlands and meet any general 
farm program eligibility requirements that apply under 7 CFR part 1400 
or other regulations as applicable.
    (b) Asparagus producers must sign an application to be considered 
for payment eligibility. Asparagus producers who do not sign an 
application will not receive payment or a determination of eligibility, 
even if other producers in the asparagus farm operation sign an 
application and receive payment.
    (c) Each applicant determined by spot check or other information to 
not have an interest as an asparagus producer in 2003 and 2007 who meets 
the other qualifications of this part will be ineligible for payment and 
such applicant's claimed share shown on the application will not be 
paid.



Sec. 1429.106  Proof of production.

    (a) Producers selected for spot check by CCC must, in accordance 
with instructions issued by the Deputy Administrator or a designee, 
provide adequate proof of the fresh and processed asparagus produced and 
marketed during the 2003 and 2007 crop years.

[[Page 649]]

    (b) If adequate proof of marketed production and supporting 
documentation in support of any application for payment is not presented 
to the satisfaction of CCC or the FSA county office requesting 
information, the application and the producers on that application will 
be determined ineligible for payment.



Sec. 1429.107  Maximum and final payment rates.

    (a) Subject to the funding limits that may apply to the program, the 
estimated maximum per pound payment rates for fresh market asparagus and 
for processed market asparagus are:
    (1) $1.06 per pound ($106.00 per hundredweight) for 2003 crop 
quantities of asparagus marketed to fresh markets; and
    (2) $1.08 per pound ($108.00 per hundredweight) for 2003 crop 
quantities of asparagus marketed for processing.
    (b) This program will be administered to assure that total payments 
do not exceed the available funding. If the total value of payments 
claimed calculated using the maximum payment rates specified in 
paragraph (a) of this section exceeds the funding available for each 
marketing category, less any reserve that may be created as specified in 
Sec. 1429.109, the payment quantities will be paid at a lower rate 
determined by dividing the funds available in each marketing category of 
asparagus, by the payment quantity from applications received by the end 
of the application period in each marketing category.
    (c) In no event will the payment rate exceed the maximum payment 
rate for each marketing category of asparagus determined in paragraph 
(a) of this section.



Sec. 1429.108  Calculation of individual payments.

    (a) Producers will be eligible for payment for both fresh and 
processed asparagus. CCC will calculate the payment quantity of 2003 
fresh and processed asparagus for an asparagus farm operation based on 
the lower of:
    (1) Reported production reflected on the application, or
    (2) If applicable, determined production.
    (b) The payment quantity will be multiplied by the following:
    (1) Each asparagus producer's share, and
    (2) The payment rate for the fresh or processed asparagus determined 
as specified in Sec. 1429.107.
    (c) If the total value of payments claimed exceeds the available 
funding, payments to producers are subject to a $100,000 cap per each of 
the two program marketing categories (fresh and processed) per asparagus 
producer as defined in this part, not per ``person'' or ``legal entity'' 
as those terms might be defined in part 1400 of this title.



Sec. 1429.109  Availability of funds.

    (a) Payments specified in this part are subject to the availability 
of funds. The total available program funds will be $15,000,000 as 
provided by section 10404 of Public Law 110-246.
    (b) Of the available funds, $7,500,000 are allocated for fresh 
market asparagus production and $7,500,000 are allocated to processed 
market asparagus.
    (c) CCC will prorate the available funds by a national factor to 
ensure that payments do not exceed $15,000,000. CCC will prorate the 
payments in such manner as it, in its sole discretion, finds fair and 
reasonable.
    (d) A reserve will be created to handle appeals and errors. Claims 
will not be payable once the available funding is expended. Any amount 
of funds reserved for such purposes that are not disbursed for the 
purpose of correcting errors or omissions, or for the payment of 
appeals, will not otherwise be distributed to any payment applicants and 
will be refunded to the U.S. Department of Treasury.



Sec. 1429.111  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions, or remedies as may 
apply, an asparagus producer will be ineligible to receive assistance 
through the Asparagus Revenue Market Loss Assistance Payment Program if 
the asparagus producer is determined by CCC to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program;

[[Page 650]]

    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, must be 
refunded with interest together with such other sums as may become due 
and all charges including interest will run from the date of the 
disbursement of the CCC funds. Any asparagus farm operation, asparagus 
producer, or person engaged in acts prohibited by this section and any 
asparagus farm operation, asparagus producer, or person receiving 
payment as specified in this part will be jointly and severally liable 
with other persons or operations involved in such claim for payment for 
any refund due as specified in this section and for related charges. The 
remedies provided in this part will be in addition to other civil, 
criminal, or administrative remedies that may apply.



Sec. 1429.112  Death, incompetence, or disappearance.

    (a) In the case of death, incompetency, disappearance, or 
dissolution of a person or an entity that is eligible to receive payment 
as specified in this part, an alternate person or persons as specified 
in part 707 of this title may receive such payment, as determined 
appropriate by CCC.
    (b) Payment may be made for asparagus market losses suffered by an 
otherwise eligible asparagus producer who is now deceased or is a 
dissolved entity if a representative who currently has authority to 
enter into an application for the producer or the producer's estate 
signs the application for payment. Proof of authority to sign for the 
deceased producer's estate or a dissolved entity must be provided. If an 
asparagus 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.



Sec. 1429.113  Maintaining records.

    Producers applying for payment through the Asparagus Revenue Market 
Loss Assistance Payment Program must maintain records and accounts to 
document all eligibility requirements specified in this part. Such 
records and accounts must be retained for 3 years after the date of 
payment.



Sec. 1429.114  Refunds; joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment in the 
application or this part, must be refunded to CCC.
    (b) A refund required as specified in this section will be due with 
interest from the date of CCC disbursement and determined in accordance 
with paragraph (d) of this section and late payment charges as provided 
in part 1403 of this chapter.
    (c) Persons signing an ALAP Program application as having an 
interest in the asparagus farm operation will be jointly and severally 
liable for any refund and related charges found to be due as specified 
in this section.
    (d) Interest will be applicable to any refunds required as specified 
in parts 792 and 1403 of this title. Such interest will be charged at 
the rate that the U.S. Department of the Treasury charges CCC for funds, 
and will accrue from the date CCC made the erroneous payment to the date 
of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.



Sec. 1429.115  Miscellaneous provisions and appeals.

    (a) Offset. CCC may offset or withhold any amount due CCC as 
specified in this part in accordance with the provisions of part 1403 of 
this chapter.
    (b) Claims. Claims or debts will be settled in accordance with the 
provisions of part 1403 of this chapter.
    (c) Other interests. Payments or any portion thereof due under this 
part will be made without regard to questions of title under State law 
and without regard to any claim or lien against the

[[Page 651]]

asparagus crop, or proceeds thereof, in favor of the owner or any other 
creditor except agencies and instrumentalities of the U.S. Government.
    (d) Assignments. Any asparagus producer entitled to any payment as 
specified in this part may assign any payment in accordance with the 
provisions of part 1404 of this chapter.
    (e) Appeals. Appeals will be handled as specified in parts 11 and 
780 of this title.



PART 1430_DAIRY PRODUCTS--Table of Contents



              Subpart A_Dairy Product Price Support Program

Sec.
1430.100 Applicability.
1430.101 Definitions.
1430.102 Eligible products.
1430.103 Purchase prices.
1430.104 Sales from inventories.

               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 [Reserved]
1430.207 Dairy operation payment quantity.
1430.208 Payment rate and dairy operation payment.
1430.209 Proof of market loss production.
1430.210 MILC agents.
1430.211 Duration of contracts.
1430.212 Contract modifications and statutory changes in program.
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_2004 Dairy Disaster Assistance Payment Program

1430.300 Applicability.
1430.301 Administration.
1430.302 Definitions.
1430.303 Time and method of application.
1430.304 Eligibility.
1430.305 Proof of production.
1430.306 Determination of losses incurred.
1430.307 Rate of payment and limitations on funding.
1430.308 Availability of funds.
1430.309 Appeals.
1430.310 Misrepresentation and scheme or device.
1430.311 Death, incompetence, or disappearance.
1430.312 Maintaining records.
1430.313 Refunds; joint and several liability.
1430.314 Miscellaneous provisions.
1430.315 Termination of program.

             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.

   Subpart E_ 2005 Dairy Disaster Assistance Payment Program (DDAP	II)

1430.600 Applicability.
1430.601 Administration.
1430.602 Definitions.
1430.603 Time and method of application.
1430.604 Eligibility.
1430.605 Proof of production.
1430.606 Determination of losses incurred.
1430.607 Rate of payment and limitations on funding.
1430.608 Availability of funds.
1430.609 Appeals.
1430.610 Misrepresentation and scheme or device.
1430.611 Death, incompetence, or disappearance.
1430.612 Maintaining records.
1430.613 Refunds; joint and several liability.
1430.614 Miscellaneous provisions.

    Authority: 7 U.S.C. 7982, 8771, and 8773; and 15 U.S.C. 714b and 
714c.

[[Page 652]]



              Subpart A_Dairy Product Price Support Program

    Source: 75 FR 41367, July 16, 2010, unless otherwise noted.



Sec. 1430.100  Applicability.

    During the period beginning on January 1, 2008, and ending December 
31, 2012, the Secretary of Agriculture will support the price of cheddar 
cheese, butter, and nonfat dry milk by providing a standing offer to 
purchase those products from eligible offerors. The products must be 
made from cow's milk produced in the United States. Purchases are 
subject to the terms and conditions in CCC's purchase announcements.



Sec. 1430.101  Definitions.

    For purposes of this subpart, the following definitions apply:
    CCC means the Commodity Credit Corporation, USDA.
    Eligible offeror means the person, firm, corporation, or other legal 
entity obligated by the purchase agreement with CCC. The product must 
not have been sold before to another party and the offeror must be the 
manufacturer of the dairy product offered or a marketing cooperative for 
the manufacturer.
    Net removals means, for a given period of time, the total dairy 
product purchased by CCC through the program in this subpart plus the 
quantity of the product exported through the Dairy Export Incentive 
Program (as authorized in 15 U.S.C. 713a-14), less the quantity sold by 
CCC for unrestricted use.



Sec. 1430.102  Eligible products.

    (a) To be eligible for the program in this subpart, the products 
must be manufactured from dairy cow's milk produced in the United 
States, and must not have been previously owned by CCC. Dairy cow in 
this instance means an animal of the kind that produces the majority of 
dairy products in the United States and not, for example, cows of other 
species of animals such as yaks or oxen.
    (b) Products will be purchased only from eligible offerors of the 
product, and only in carlot weights.
    (c) The products purchased must be of the following grades and 
moisture content, as evidenced by USDA-issued inspection certificates:
    (1) Block cheddar cheese must be U.S. Grade A or higher, and the 
moisture content must not exceed 38.5 percent;
    (2) Barrel cheddar cheese must be U.S. Extra Grade, and the moisture 
content must not exceed 36.5 percent;
    (3) Butter must be U.S. Grade A or higher;
    (4) Nonfat dry milk must be U.S. Extra Grade, and the moisture 
content must not exceed 3.5 percent.
    (d) CCC may require other terms and conditions of purchase, as 
specified in CCC's purchase announcement.



Sec. 1430.103  Purchase prices.

    (a) CCC will offer to purchase products at the following prices for 
all regions of the United States:
    (1) Cheddar cheese in blocks for not less than $1.13 per pound; 
unless
    (i) Net removals of cheese for a period of 12 consecutive months 
exceed 200,000,000 pounds, but do not exceed 400,000,000 pounds, in 
which case the CCC block cheese purchase price will be not less than 
$1.03 per pound, during the immediately following month, or
    (ii) Net removals of cheese for a period of 12 consecutive months 
exceed 400,000,000 pounds, in which case the CCC block cheese purchase 
price will be not less than $0.93 per pound during the immediately 
following month;
    (2) Cheddar cheese in barrels for $0.03 per pound less than the 
cheddar cheese block price;
    (3) Butter for not less than $1.05 per pound; unless
    (i) Net removals of butter for a period of 12 consecutive months 
exceed 450,000,000 pounds, but do not exceed 650,000,000 pounds, in 
which case the CCC butter purchase price will be not less than $0.95 per 
pound during the immediately following month, or
    (ii) Net removals of butter for a period of 12 consecutive months 
exceed 650,000,000 pounds, in which case the CCC butter purchase price 
will be not less than $0.85 per pound during the immediately following 
month; and
    (4) Nonfat dry milk for not less than $0.80 per pound, unless

[[Page 653]]

    (i) Net removals of nonfat dry milk for a period of 12 consecutive 
months exceed 600,000,000 pounds, but do not exceed 800,000,000 pounds, 
in which case the CCC nonfat dry milk purchase price will be not less 
than $0.75 per pound during the immediately following month, or,
    (ii) Net removals of nonfat dry milk for a period of 12 consecutive 
months exceed 800,000,000 pounds, in which case the CCC nonfat dry milk 
purchase price will be not less than $0.70 per pound during the 
immediately following month.
    (b) CCC may offer to purchase cheddar cheese, butter, fortified 
nonfat dry milk, or fortified instant nonfat dry milk in consumer-sized 
ready-to-consume packages at a premium to the purchase prices for 
cheddar cheese, butter and nonfat dry milk specified in paragraph (a) of 
this section. Any such offers will be made through CCC's purchase 
announcements, and such offers may be limited by quantity and to a 
specific time period.
    (c) CCC may offer to purchase cheddar cheese with a lower moisture 
content than is specified in Sec. 1430.102(c) at a premium to the 
prices specified in paragraph (a) of this section. Any such offers will 
be made through CCC's purchase announcements, and such offers may be 
limited by quantity and to a specific time period.



Sec. 1430.104  Sales from inventories.

    (a) CCC may sell any dairy product purchased as specified in this 
subpart for unrestricted use at the market price prevailing for that 
product at the time of sale, except that the sale price will not be less 
than 110 percent of the purchase price specified in Sec. 1430.103(a), 
before any price reduction for the amount of CCC net removals of the 
dairy products.
    (b) CCC may sell or distribute dairy products purchased under this 
section for restricted use when such sale is determined to maximize the 
return to CCC on its purchases.



               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.

[[Page 654]]

    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. In administering this program, for purposes of determining what 
is a ``dairy operation'' and its eligibility under this program, those 
determinations will be made in the same manner as was done for the Dairy 
Market Loss Assistance (DMLA) contracts in the State in which the dairy 
is located. New MILC operations, which is to say those operations that 
did not participate in the MILC program for marketings prior to FY 2008, 
must be unaffiliated with any other DMLA or MILC operations.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs (DAFP), FSA or a designee.
    Eligible production means milk that was produced at a time relevant 
to this program by cows in the United States and marketed commercially 
by a producer in a participating State.
    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.
    Fiscal Year or FY means the year beginning October 1 and ending the 
following September 30. Fiscal years will be designated for this part by 
year by reference to the calendar year in which it ends. For example, FY 
2009 is from October 1, 2008, through September 30, 2009 (inclusive).
    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, the District of Columbia, and the Commonwealth of Puerto 
Rico, or any other 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.
    United States means the 50 States of the United Sates of America, 
the District of Columbia, and the Commonwealth of Puerto Rico, or any 
other 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.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19622, Apr. 17, 2006; 
73 FR 73776, Dec. 4, 2008]

[[Page 655]]



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 October 1, 2007, 
through September 30, 2012;
    (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 anytime during the period of October 1, 2007, 
through September 30, 2012;
    (g) Meet all adjusted gross income eligibility requirements of part 
1400 of this chapter as regards any person or entity seeking to receive 
payment under this part. No person or entity may, generally, receive any 
payment for FY 2009 marketings and subsequent marketings if their 
nonfarm yearly income for the relevant base period for the relevant 
marketings as determined under the adjusted gross income rules (as in 
effect when the payment is sought) is over $500,000 as determined under 
this subpart. Further, for entities an otherwise due payment will be 
reduced commensurately to the extent that any person with an interest in 
the entity, as determined under the adjusted gross income rules had such 
income over that limit for the relevant period;
    (h) Have submitted a contract during the applicable contract period 
for FYs 2008 through 2012:
    (1) Except for 2009, and subject to the start month provision of 
Sec. 1430.205, must have for any fiscal year or month for which payment 
is sought to be paid submitted the FY 2008 through 2012 contract before 
the end of that fiscal year or month or
    (2) For FY 2008 payments, if payments are generated under this part 
for that fiscal year, must have submitted a contract for the FY 2008 
through 2012 program by October 1, 2009 and for FY 2009 the contract 
must have been submitted by the month for which payment is first sought 
except to the extent that Sec. 1430.205 explicitly permits the 
operation to pick a start month in advance of the month in which the 
contract is submitted; and
    (i) Must not, if it did not participate in the preceding MILC 
program for fiscal years prior to FY 2008, be affiliated with any other 
dairy operation.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19622, Apr. 17, 2006; 
73 FR 73766, Dec. 4, 2008]



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 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) A dairy operation that enters into a MILC contract with CCC must 
designate the starting month for each fiscal year for the calculation of 
payments and pound limits for the operation. Once a start month is 
chosen for a fiscal year the corresponding month

[[Page 656]]

will be the start month for each subsequent fiscal year unless changed 
by an affirmative request in writing on a form approved by CCC. The 
production start month must be selected on or before the 14th of the 
month before the month for which payment is sought. If such date falls 
on a weekend, the start month selection must be made on the last 
business day preceding the weekend. A dairy operation cannot select as 
the start month for payment a month which:
    (1) Has already begun, except as provided in paragraph (c)(1) of 
this section;
    (2) Has already passed; or
    (3) During which no milk production was produced by the dairy 
operation.
    (b) For FY 2009, if the operation signs its FY 2008 through 2012 
MILC contract within 30 days of the beginning of the application period 
it can pick any preceding FY 2009 month as its start month for that 
period or can use the normal rule of paragraph (c) of this section to 
pick the start month.
    (c) Except as provided in paragraph (b) of this section, the start 
month for a fiscal year may only be
    (1) For the fiscal year in which the contract is submitted, the 
month the contract is submitted or
    (2) For a fiscal year that has not yet begun, any month, provided 
that a month may not be selected after the 14th of the preceding month.
    (d) Dairy operations may change the production start month on or 
before the 14th day of the month previously selected.
    (e) If a change of the production starting month is not made by the 
dates required by paragraph (d) of this section, the MILC production 
starting month cannot be changed until the next fiscal year. If the 
selected MILC production starting month is never modified, it will 
remain the same throughout the duration of the contract.
    (f) MILC payments will be made consecutively to the dairy operation 
on a monthly basis after the production starting month has been 
designated until the earlier of the following:
    (1) Payment quantity is reached in accordance with Sec. 1430.207; 
or
    (2) The end of the applicable fiscal year.
    (g)(1) MILC production start month selections made during the signup 
period designated by CCC may be made as provided in paragraph (b) of 
this section, otherwise MILC production start month selections must be 
made in accordance with paragraph (c) of this section. If a payment rate 
is not in effect during the production start month selected by the dairy 
operation, payments to the dairy operation will be issued based on the 
next consecutive month with a payment rate in effect following the MILC 
production start month selected by the dairy operation. Production in 
months in which the pay formula does not produce a payment will not 
count against the fiscal year's poundage limit for the operation.
    (2) Dairy operations with MILC production start months that begin 
with the month a MILC contract is submitted to FSA or that begin with 
the first month of the fiscal year with an effective payment rate will 
receive payments made by CCC consecutively on a monthly basis, if 
otherwise provided for in this part, until the earlier of the following:
    (i) The maximum payment quantity for the fiscal year or month is 
reached as determined in accordance with Sec. 1430.207 or
    (ii) The end of the applicable fiscal year.
    (h) 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.

[71 FR 19622, Apr. 17, 2006, as amended at 73 FR 73766, Dec. 4, 2008]



Sec. 1430.206  [Reserved]



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.

[[Page 657]]

    (b) The maximum quantity of eligible production for which dairy 
operations, per separate and distinct operation, are eligible for 
payment per fiscal year under this subpart will be:
    (1) 2,400,000 pounds (24,000 cwt.) for FY 2008 (October 1, 2007, 
through September 30, 2008);
    (2) 2,985,000 pounds (29,850 cwt.) for FY 2009 (October 1, 2008 
through September 30, 2009), FY 2010 (October 1, 2009, through September 
30, 2010), FY 2011 (October 1, 2010, through September 30, 2011) and FY 
2012 (October 1, 2011, through September 30, 2012), provided further an 
operation may receive payment for September, 2012, marketings only if 
its pre-September FY 2012 marketings did not exceed 2,400,000 pounds in 
which case new marketings that would not put the operation's FY 2012 
marketings over 2,400,000 pounds will be eligible for payments otherwise 
permitted in this rule.
    (c) In accordance with these regulations, the Deputy Administrator 
will determine what is a separate and distinct operation. That decision 
will be final

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73767, Dec. 4, 2008]



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 is equal to or 
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;
    (2) Multiplying the difference by 34 percent for marketings during 
the period beginning on October 1, 2007, and ending on September 30, 
2008;
    (3) Multiplying the difference by 45 percent for marketings during 
the period beginning on October 1, 2008, and ending on August 31, 2012; 
and
    (4) Multiplying the difference by 34 percent for marketings in 
September 2012.
    (c) The payment rate as calculated as specified in paragraph (b) of 
this section, will be adjusted to compensate for feed prices when the 
National Average Dairy Feed Ration Cost for a month is greater than the 
levels set in paragraphs (c)(1) and (c)(2) of this section. The National 
Average Dairy Feed Ration Cost per cwt. for each month will be 
calculated using the same procedures used to calculate the feed 
components of the estimated price of 16 percent Mixed Dairy Feed per 
pound noted on page 33 of the USDA monthly Agricultural Prices 
publication (including the data and factors noted in footnote 4). The 
payment rate adjustment for Entire Month feed prices will be determined 
by increasing $16.94 by the percentage that is 45 percent of the 
percentage by which the National Average Dairy Feed Ration Cost exceeds 
$7.35 per cwt. (except that $7.35 will be $9.50 for September 2012 
marketings.)
    (d) 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 paragraphs (b) and 
(c) 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 this subpart.
    (3) Payments to dairy operations will be based on calculated payment 
rates rounded seven places to the right of the decimal.
    (e) Payments under this subpart may be made to a dairy operation 
only up to the maximum production limitations set in Sec. 1430.207(b) 
of eligible production per applicable fiscal year.
    (f) Dairy operations receiving benefits under this subpart, will 
receive earned payments on a monthly basis according to the MILC 
contract, to the extent practicable, not later than 60 days after the 
later of production evidence and all supporting documents for the 
applicable month are received by CCC or the entire month National 
Average Dairy Feed Ration Cost is made

[[Page 658]]

available by USDA, as applicable. Payments issued by CCC more than 60 
days after the later of all production evidence and supporting 
documentation are received by CCC or the entire month National Average 
Dairy Feed Ration Cost is made available by USDA, whichever is later, 
will be subject to prompt payment interest as allowed by law. However, 
CCC will endeavor where possible to make payments within 60 days of the 
end of the marketing month.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
72 FR 48231, Aug. 23, 2007; 73 FR 73767, Dec. 4, 2008]



Sec. 1430.209  Proof of market loss production.

    (a) A dairy operation entering into a 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 October 1, 2007, and ending September 30, 
2012. 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 a 
representative of CCC 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 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.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
73 FR 73767, Dec. 4, 2008]



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. 1430.205, or elsewhere in this 
subpart, a MILC 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 an MILC and ending on 
September 30, 2012.

[[Page 659]]

    (b) If a dairy goes out of business during the contract period, the 
MILC will be terminated immediately, except as applicable to earned 
payments.

[67 FR 64476, Oct. 18, 2002, as amended at 71 FR 19623, Apr. 17, 2006; 
73 FR 73768, Dec. 4, 2008]



Sec. 1430.212  Contract modifications and statutory changes in program.

    (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.
    (c) Payments otherwise due under this subpart or the program will be 
adjusted or denied to the extent provided for by a statutory change in 
program eligibilities or requirements of any kind irrespective of 
whether the program contract preceded the statutory change. Operations 
will be given the option of accepting the changes or terminating the 
contract.

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73768, Dec. 4, 2008]



Sec. 1430.213  Reconstitutions.

    (a) A dairy operation receiving MILC benefits may reorganize or 
restructure such that the constitution or makeup of its operation is 
reconstituted in another organizational framework. However, any 
operation that reorganizes or restructures after October 1, 2007, is 
subject to a review by FSA to determine if the operation was reorganized 
or restructured for the sole purpose of receiving multiple or additional 
MILC 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.
    (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.

[67 FR 64476, Oct. 18, 2002, as amended at 73 FR 73768, Dec. 4, 2008]



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;

[[Page 660]]

    (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:
    (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

[[Page 661]]

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_2004 Dairy Disaster Assistance Payment Program

    Source: 70 FR 56115, Sept. 26, 2005, unless otherwise noted.



Sec. 1430.300  Applicability.

    (a) Subject to the availability of funds, this subpart sets forth 
the terms and conditions applicable to the 2004 Dairy Disaster 
Assistance Payment Program authorized by section 103 of Division B of 
Public Law 108-324. Benefits are available to eligible United States 
producers who have suffered dairy production losses and dairy spoilage 
losses in eligible counties as a result of a hurricane disaster in 2004.
    (b) To be eligible for this program, a producer must have been a 
milk producer in 2004 in a county declared a disaster by the President 
of the United States due to a 2004 hurricane. Only losses occurring in 
those counties are eligible for payment in this program. Producers in 
contiguous counties that were not designated by the President as a 
disaster county due to a hurricane in 2004 are not eligible.
    (c) Subject to the availability of funds, benefits shall be provided 
by the Commodity Credit Corporation (CCC) to eligible dairy producers. 
Additional terms and conditions may be set forth in the payment 
application that must be executed by participants to receive a disaster 
assistance payment for dairy production losses and dairy spoilage 
losses.
    (d) To be eligible for payments, producers must comply with the 
provisions of, and their losses must meet the conditions of, this 
subpart and any other conditions imposed by CCC.

[[Page 662]]



Sec. 1430.301  Administration.

    (a) The 2004 Dairy Disaster Assistance Payment Program shall be 
administered under the general supervision of the Executive Vice 
President, CCC (Administrator, FSA), or a designee, and shall be carried 
out in the field by FSA 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 of 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 the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or modify deadlines in cases where 
lateness or failure to meet such requirements do not adversely affect 
the operation of the 2004 Dairy Disaster Assistance Payment Program and 
does not violate statutory limitations on the program.
    (f) Data furnished by the applicants is used to determine 
eligibility for program benefits. Although participation in the 2004 
Dairy Disaster Assistance Payment Program is voluntary, program benefits 
are not to be provided unless the participant furnishes all requested 
data.



Sec. 1430.302  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the 2004 Dairy Disaster Assistance Payment 
Program established by this subpart.
    Application means the 2004 Dairy Disaster Assistance Payment Program 
Application.
    Application period means the time period established by the Deputy 
Administrator for producers to apply for program benefits.
    CCC means the Commodity Credit Corporation of the Department.
    County committee means the FSA county committee.
    County office means the FSA office responsible for administering FSA 
programs for 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, produces and markets milk 
commercially 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.
    Disaster county means a county declared a disaster by the President 
of the United States due to a hurricane in 2004, and is only the county 
so declared, not a contiguous county.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Hundredweight or cwt. means 100 pounds.
    Milk handler or cooperative means the marketing agency to, or 
through which, the producer commercially markets whole milk.
    Milk marketings means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial use. 
In counting milk toward production amounts, dumped milk will not be 
considered as marketed for commercial use. Such dumped milk shall be 
counted toward production but will be accounted for separately from milk 
that is marketed for normal commercial use as determined by the Deputy 
Administrator. All production in the months for which loss coverage is 
available will be counted in making determinations under

[[Page 663]]

this part, as determined by the Deputy Administrator, with care to avoid 
double counting, and with care to avoid a calculated loss that 
overstates the actual losses.
    Payment pounds means the pounds of milk production from a dairy 
operation for which the dairy producer 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 of the proceeds of this operation.
    Starting base production means actual commercial production marketed 
by the dairy operation during the month of July 2004, or alternative 
period established by the Deputy Administrator.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed, including any dumped 
production, and that can be verified by CCC through an independent 
source.



Sec. 1430.303  Time and method of application.

    (a) Dairy 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. 1430.302. Applications and any 
other supporting documentation shall be submitted to the FSA county 
office serving the county where the dairy 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. The 
closing date shall be no sooner than October 11, 2005. Applications not 
received by the close of business on such date will be disapproved as 
not having been timely filed and the dairy producer will not be eligible 
for benefits under this program.
    (c) All persons who share in the risk of a dairy operation's total 
production must certify to the information on the Application before the 
Application is considered complete.
    (d) Each dairy producer requesting benefits under this subpart must 
certify to the accuracy and truthfulness of the information provided in 
their application and any supporting documentation. 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 may be 
punishable by imprisonment, fines and other penalties or sanctions.



Sec. 1430.304  Eligibility.

    (a) Producers in the United States are eligible to receive 
hurricane-related dairy disaster benefits under this part only if they 
have suffered dairy production or dairy spoilage losses in counties 
declared a disaster by the President due to any hurricane in 2004. To be 
eligible to receive payments under this subpart, producers in a dairy 
operation must:
    (1) Have produced and commercially marketed milk in the United 
States and commercially marketed the milk produced during the 2004 
calendar year;
    (2) Be a producer on a dairy farm operation physically located in a 
disaster county where production and milk spoilage losses were incurred 
as a result of 2004 hurricanes, and limiting their claims to losses 
occurring in those counties;
    (3) Provide proof of monthly milk production dumped and commercially 
marketed by all persons in the eligible dairy operation during the third 
quarter of the 2004 milk marketing year, or other period as determined 
by FSA, to determine the total pounds of eligible losses that will be 
used for payment; and

[[Page 664]]

    (4) Apply for payments during the application period established by 
the Deputy Administrator.
    (b) Payments may be made for losses suffered by an otherwise 
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 or the producer's estate signs the application for payment. 
Proof of authority to sign for the deceased producer's estate or a 
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) Producers associated with a dairy operation must submit a timely 
application and comply with terms and conditions of this subpart, 
instructions issued by CCC and instructions contained in the Application 
to be eligible for benefits under this subpart.
    (d) 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 2004 
calendar year, as applicable, and must not otherwise be barred from 
receiving benefits under 7 CFR part 12 or any other law or regulation.
    (e) Payments are limited to losses in eligible counties in eligible 
months.
    (f) All payments under this part are subject to the availability of 
funds.



Sec. 1430.305  Proof of production.

    (a) Evidence of production is required to establish the commercial 
marketing and production history of the dairy operation so that 
production and spoilage losses can be computed in accordance with Sec. 
1430.306.
    (b) A dairy producer must, based on the instructions issued by the 
Deputy Administrator, provide adequate proof of the dairy operation's 
commercial production, including any dumped production and dairy cow 
purchases, for each month of the period July 2004 through October 2004, 
and must specifically identify any dumped production for August through 
October 2004. If a month other than July 2004 is used for base creation 
purposes records for that month must be provided.
    (1) A producer must certify and provide such proof as requested that 
losses for which compensation is claimed were hurricane-related and 
occurred in an eligible county in an eligible month.
    (2) Additional supporting documentation may be requested by FSA as 
necessary to verify production or spoilage losses and dairy herd 
increases or decreases to the satisfaction of FSA.
    (c) Adequate proof of production history of the dairy operation 
under paragraph (b) of this section must be based on milk marketing 
statements obtained from the dairy operation's milk handler or marketing 
cooperative. Supporting documents may include, but are not limited to: 
tank records, milk handler records, daily milk marketings, copies of any 
payments received from other sources for production or spoilage losses, 
or any other documents available to confirm the production history and 
losses incurred by the dairy operation.
    (d) Adequate proof of dairy cow additions to the milking herd during 
the eligible months can include, but are not limited to sales receipts, 
invoices, State health certificates, or any other documents available to 
confirm the cow purchases.
    (e) All information provided to FSA by a producer is subject to 
verification, spot-check and audit by FSA. Also, FSA or another CCC 
representative may examine the dairy operation's production or spoilage 
claims.
    (f) If adequate proof of commercially-marketed production and 
supporting documentation is not presented to the satisfaction of CCC or 
FSA, the request for benefits will be rejected. In the case of a new 
producer that had no verifiable, actual, commercial production marketed 
by the dairy operation during the month of July 2004, but which suffered 
eligible losses, an alternate base period may be established by the 
Deputy Administrator.



Sec. 1430.306  Determination of losses incurred.

    (a) Eligible payable losses are calculated on a dairy operation by 
dairy operation basis and are limited to

[[Page 665]]

those occurring in August through October 2004. Specifically, dairy 
production and spoilage losses incurred by producers under this subpart 
are determined on the established history of the dairy operation's 
actual commercial production marketed from August through October 2004, 
and actual production dumped or otherwise not marketed from August 
through October 2004, as provided by the dairy operation consistent with 
Sec. 1430.305. Except as otherwise provided in these regulations, the 
starting base production, as defined in Sec. 1430.302, is adjusted 
downward by a percentage determined by CCC to determine the base 
production for the months of August through October 2004. These 
adjustments are made to account for the seasonal declines that can occur 
during those months. The base production for each of the months August 
through October 2004 is calculated by reducing the starting base 
production (July 2004, or alternate month approved by the Deputy 
Administrator for new producers) as follows:
    (1) August 2004 base production is the starting base production 
reduced by 9 percent;
    (2) September 2004 base production is the starting base production 
reduced by 15 percent;
    (3) October 2004 base production is the starting base production 
reduced by 11 percent.
    (b) The eligible dairy production losses for a dairy operation for 
each of the months of August through October 2004 will be:
    (1) The new base production for the dairy operation calculated under 
paragraph (a) of this section less,
    (2) For each such month for each dairy operation, the total of:
    (i) Actual commercially-marketed production (not counting dumped 
production counted under paragraph (b)(1)(ii) of this section); plus
    (ii) The pounds of milk production dumped (whether related to the 
hurricane or not), or otherwise not commercially marketed (whether 
related to the hurricane or not). For dumping losses to be eligible, 
they must, as with other program losses, be hurricane related, as 
described under paragraphs (c) and (d) of this section.
    (c) Actual production losses may be adjusted to the extent the 
reduction in production is not certified by the producer to be the 
result of the hurricane or is determined by FSA not to be hurricane-
related. Actual production, as adjusted, that exceeds the adjusted base 
production will mean that the dairy operation incurred no eligible 
production losses for the corresponding month as a result of the 
hurricane disaster, and that the production level for that month does 
not qualify for a payment under this program.
    (d) Eligible dairy spoilage losses incurred by producers under this 
subpart for each of the months August through October 2004 will be 
determined based on actual milk produced in those months that was dumped 
on the farm as a result of the 2004 hurricanes. Proper documentation of 
milk dumped on the farm as a result of spoilage due to a hurricane must 
be provided to CCC as provided in Sec. 1430.305.
    (e) Calculated production losses may be adjusted by FSA based on the 
monthly average of daily dairy cow additions or reductions to the 
milking herd during the period of July 1, 2004 through October 31, 2004, 
to account for production adjustments as a result of dairy cow 
purchases, sales, or death losses. Production adjustments can be 
calculated using the average number of dairy cows in a dairy operation's 
milking herd and the average production per cow during each applicable 
month. Per-cow production averages during the months of August through 
October will be determined based on the actual per-cow production 
average during the month of July 2004 and reduced downward according to 
the seasonal decline percentages provided in paragraph (a) of this 
section, to determine the total production that may be credited back to 
the dairy operation's total production losses. To qualify for the 
production adjustment:
    (1) Producers in eligible dairy operations must report any increases 
or decreases to the dairy cow milking herd during the period of July 1, 
2004 through October 31, 2004.
    (2) Adequate supporting documentation according to Sec. 1430.305 
must be provided to the satisfaction of the COC to

[[Page 666]]

verify any claims of herd increases or decreases during the eligible 
period.
    (3) Any cows purchased during the eligible period that would 
increase the dairy cow milking herd must have been to offset production 
losses as a result of the 2004 hurricanes.
    (f) Eligible production and spoilage losses as otherwise determined 
under paragraphs (a) through (e) of this section are added together to 
determine total eligible losses incurred by the dairy operation subject 
to all other eligibility requirements as may be included in this part or 
elsewhere.
    (g) Payment on eligible dairy operation losses is calculated using 
whole pounds of milk. No double counting is permitted, and only one 
payment will be made for each pound of milk calculated as an eligible 
loss after the distribution of the operation's eligible production loss 
among the producers of the dairy operation according to Sec. 
1420.307(b). Payments under this part will not be affected by any 
payments for dumped or spoiled milk that the dairy operation may have 
received from its milk handler, or marketing cooperative, or any other 
private party.
    (h) If a producer is eligible to receive payments under this part 
and benefits under any other program administered by the Secretary for 
the same losses, 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 losses. 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. 1430.307  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, the payment rate for 
eligible production and spoilage losses determined according to Sec. 
1430.306 is, depending on the State, the average monthly Mailbox milk 
price for the Florida, the Southeast, or the Appalachian States 
Marketing Orders as reported by the Agricultural Marketing Service 
during the months of August, September, and October of 2004. Maximum 
payment rates for eligible losses for dairy operations located in 
specific states are as follows:
    (1) Florida--$17.62 per hundredweight ($0.1762 per pound).
    (2) Alabama, Georgia, Louisiana, and Mississippi--$16.26 per 
hundredweight ($0.1626 per pound).
    (3) North Carolina and South Carolina--$15.59 per hundredweight 
($0.1559 per pound).
    (b) Subject to the availability of funds, each eligible dairy 
operation's payment is calculated by multiplying the applicable payment 
rate under paragraph (a) of this section by the operation's total 
eligible losses. Where there are multiple producers in the dairy 
operation, individual producers' payments are disbursed according to 
each producer's share of the dairy operation's production as specified 
in the Application.
    (c) If the total value of losses claimed under paragraph (b) of this 
section exceeds the $10 million available for the 2004 Dairy Disaster 
Assistance Payment Program, less any reserve that may be created under 
paragraph (e) of this section, total eligible losses of individual dairy 
operations that, as calculated as an overall percentage for the full 
three month period, August-October 2004 (not a monthly average for any 
one month), are greater than 20 percent of the total base production for 
those three months will be paid at the maximum rate under paragraph (a) 
of this section to the extent available funding allows. A loss of over 
20 percent in only one or two of the eligible months does not itself 
qualify for the maximum per-pound payment. Total eligible losses for a 
producer, as calculated under Sec. 1430.306, of less than or equal to 
20 percent during the eligibility period of August to October 2004 will 
be paid at a rate determined by dividing the eligible losses of less 
than 20 percent by the funds remaining after making payments for all 
eligible losses above the 20 percent threshold.

[[Page 667]]

    (d) In no event shall the payment exceed the value determined by 
multiplying the producer's total eligible loss times the average price 
received for commercial milk production in their area as defined in 
paragraph (a) of this section.
    (e) A reserve may be created to handle claims that extend beyond the 
conclusion of the application period, but claims shall not be payable 
once the available funding is expended.



Sec. 1430.308  Availability of funds.

    The total available program funds shall be $10 million as provided 
by section 103 of Division B of Public Law 108-324.



Sec. 1430.309  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination in accordance with the appeal regulations set forth at 7 
CFR parts 11 and 780. Appeals of determinations of ineligibility or 
payment amounts are subject to the limitations in Sec. Sec. 1430.307 
and 1430.308.



Sec. 1430.310  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, a dairy producer shall be ineligible to receive assistance under 
this program if the producer is determined by FSA or CCC to have:
    (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 program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded with interest together with such other sums as may become due. 
Any 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 with other persons or operations 
involved in such claim for benefits for any refund due under this 
section and for related charges. The remedies provided in this subpart 
shall be in addition to other civil, criminal, or administrative 
remedies that may apply.



Sec. 1430.311  Death, incompetence, 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 alternate person or persons specified in 7 CFR part 707 
may receive such benefits, as determined appropriate by FSA.



Sec. 1430.312  Maintaining records.

    Persons applying for benefits under this program must maintain 
records and accounts to document all eligibility requirements specified 
herein. Such records and accounts must be retained for 3 years after the 
date of payment to the dairy operations under this program. Destruction 
of the records after such date shall be at the risk of the party 
undertaking the destruction.



Sec. 1430.313  Refunds; joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment under the 
application or this subpart, must be refunded to CCC.
    (b) A refund required under this section shall be due with interest 
determined in accordance with paragraph (d) of this section and late 
payment charges as provided in 7 CFR part 1403.
    (c) Persons signing a dairy operation's application as having an 
interest in the operation shall be jointly and severally liable for any 
refund and related charges found to be due under this section.
    (d) Interest shall be applicable to any refunds required in 
accordance with 7 CFR parts 792 and 1403. Such interest shall be charged 
at the rate the United States Department of the Treasury charges CCC for 
funds, and shall accrue from the date FSA or CCC made the erroneous 
payment to the date of repayment.
    (e) FSA may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not

[[Page 668]]

due to any action of the person, or was beyond the control of the person 
committing the violation. Any waiver is at the discretion of FSA alone.



Sec. 1430.314  Miscellaneous provisions.

    (a) Offset. CCC may offset or withhold any amount due CCC under this 
subpart in accordance with 7 CFR part 1403.
    (b) Claims. Claims or debts are settled in accordance with 7 CFR 
part 1403.
    (c) Other interests. Payments or any portion thereof due 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 and instrumentalities of the U.S. Government.
    (d) Assignments. Any producer entitled to any payment under this 
part may assign any payments in accordance with the provisions of 7 CFR 
part 1404.



Sec. 1430.315  Termination of program.

    This program ends after payment has been made to those applicants 
certified as eligible pursuant to the application period established in 
Sec. 1430.304. All eligibility determinations shall be final except as 
otherwise determined by the Deputy Administrator.



             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

[[Page 669]]

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 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.

[[Page 670]]

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 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

[[Page 671]]

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 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

[[Page 672]]

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]



  Subpart E_2005 Dairy Disaster Assistance Payment Program II (DDAP	II)

    Source: 71 FR 63670, Oct. 31, 2006, 71 FR 65711, Nov. 9, 2006, 
unless otherwise noted.



Sec. 1430.600  Applicability.

    (a) Subject to the availability of funds, this subpart sets forth 
the terms and conditions applicable to DDAP-II authorized by section 
3014 of Public Law 109-234. Benefits are available to eligible United 
States producers who have suffered in 2005 dairy production losses and 
dairy spoilage losses in eligible counties as a result of Hurricanes 
Katrina, Ophelia, Rita, and Wilma or conditions related to those 
hurricanes.
    (b) To be eligible for this program, a producer must have been a 
milk producer in 2005 in a county declared a natural disaster by the 
Secretary of Agriculture or declared a major disaster or emergency 
designated by the President of the United States due to a 2005 hurricane 
or related condition thereof, or in a contiguous county to a county that 
is directly eligible by way of a natural disaster declaration. Only 
losses occurring in these counties are eligible for payment under this 
program.
    (c) Subject to the availability of funds, benefits shall be provided 
by the Commodity Credit Corporation (CCC) to eligible dairy producers. 
Additional terms and conditions may be set forth in the payment 
application that must be executed by participants to receive a disaster 
assistance payment for dairy production losses and dairy spoilage 
losses.
    (d) To be eligible for payments, producers must comply with the 
provisions of, and their losses must meet the conditions of, this 
subpart and any other conditions imposed by CCC.



Sec. 1430.601  Administration.

    (a) DDAP-II 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 of 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 the State or 
county committee.
    (e) The Deputy Administrator, Farm Programs, FSA, may authorize 
State and county committees to waive or

[[Page 673]]

modify deadlines in cases where lateness or failure to meet such 
requirements do not adversely affect the operation of the 2005 Dairy 
Disaster Assistance Payment Program II and does not violate statutory 
limitations on the program.
    (f) Data furnished by the applicants is used to determine 
eligibility for program benefits. Although participation in DDAP-II is 
voluntary, program benefits are not provided unless the participant 
furnishes all requested data.



Sec. 1430.602  Definitions.

    The definitions in 7 CFR part 718 shall apply to this subpart except 
to the extent they are inconsistent with the provisions of this subpart. 
In addition, for the purpose of this subpart, the following definitions 
shall apply.
    Application means DDAP-II Application.
    Application period means the time period established by the Deputy 
Administrator for producers to apply for program benefits.
    Base month means the base month for the particular 2005 hurricane 
assigned in Sec. 1430.604.
    CCC means the Commodity Credit Corporation of the Department.
    Claim period means as assigned in this subpart the qualifying months 
of calendar year 2005, following the base month, in which the loss 
occurred.
    County committee means the FSA county committee.
    County office means the FSA office responsible for administering FSA 
programs for 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, produces and markets milk 
commercially 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.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Hundredweight or cwt. means 100 pounds.
    Hurricane-affected county means a county included in the geographic 
area covered by a natural disaster declaration related to Hurricane 
Katrina, Hurricane Ophelia, Hurricane Rita, Hurricane Wilma or 
conditions related to those hurricanes, and includes counties which 
qualify because they are contiguous to a county that qualifies by a 
natural disaster declaration.
    Milk handler or cooperative means the marketing agency to, or 
through which, the producer commercially markets whole milk.
    Milk marketings means a marketing of milk for which there is a 
verifiable sales or delivery record of milk marketed for commercial use. 
In counting milk toward production amounts, dumped milk will not be 
considered as marketed for commercial use. Such dumped milk shall be 
counted toward production but will be accounted for separately from milk 
that is marketed for normal commercial use as determined by the Deputy 
Administrator. All production in the months for which loss coverage is 
available will be counted in making determinations under this part, as 
determined by the Deputy Administrator, with care to avoid double 
counting, and with care to avoid a calculated loss that overstates the 
actual losses. Adjustments may be made as appropriate to accomplish 
these objectives.
    Natural disaster declaration means a natural disaster declaration 
issued by the Secretary of Agriculture during calendar year 2005 under 
section 321(a) of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1961 (a)), or a major disaster or emergency designation by the 
President of the United States during calendar year 2005 under the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act, 
including declarations and designations by both the President and 
Secretary made during calendar year 2006 for which a request was pending 
as of December 31, 2005.
    Payment pounds means the pounds of milk production from a dairy 
operation for which the dairy producer is eligible to be paid under this 
subpart.

[[Page 674]]

    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, citizens 
of, or legal resident aliens in the United States, and who directly or 
indirectly, as determined by the Secretary, share in the risk of 
producing milk, and make contributions (including land, labor, 
management, equipment, or capital) to the dairy farming operation of the 
individual or entity.
    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, 
and records to verify production costs, contemporaneous measurements, 
and contemporaneous diaries that are determined acceptable by the county 
committee.
    Starting base production means actual commercial production marketed 
by the dairy operation during the base month applicable to the 2005 
hurricane disaster, or alternative period established by the Deputy 
Administrator.
    Verifiable production records means evidence that is used to 
substantiate the amount of production including any part marketed 
normally, dumped, or otherwise disposed of, and that can be verified by 
CCC through an independent source.



Sec. 1430.603  Time and method of application.

    (a) Dairy 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. 1430.602. Applications and any 
other supporting documentation shall be submitted to the FSA county 
office serving the county where the dairy 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. The 
closing date shall be no sooner than November 30, 2006. Applications not 
received by the close of business on such date will be disapproved as 
not having been timely filed and the dairy producer will not be eligible 
for benefits under this program.
    (c) All persons who share in the risk of a dairy operation's total 
production must certify to the information on the Application before the 
Application is considered complete.
    (d) Each dairy producer requesting benefits under this subpart must 
certify to the accuracy and truthfulness of the information provided in 
their application and any supporting documentation. 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.



Sec. 1430.604  Eligibility.

    (a) Producers in the United States are eligible to receive 
hurricane-related dairy disaster benefits under this part only if they 
have suffered dairy production or dairy spoilage losses in 2005 as a 
result of a hurricane disaster or related condition, in a hurricane-
affected county. To be eligible to receive payments under this subpart, 
producers in a dairy operation must:
    (1) Have produced and commercially marketed milk in the United 
States and commercially marketed the milk produced during the 2005 
calendar year;
    (2) Be a producer on a dairy farm operation physically located in an 
eligible county where dairy production and milk spoilage losses were 
incurred as a result of 2005 hurricanes, or a related condition, in and 
limiting their claims to losses occurring in those counties and 
contiguous counties;
    (3) Provide adequate proof, to the satisfaction of the County 
Committee, of monthly milk production dumped and commercially marketed 
by all persons in the eligible dairy operation during the base month and 
claim period that corresponds with the applicable hurricane-related 
disaster during the 2005 milk marketing year, or other

[[Page 675]]

period as determined by CCC, to determine the total pounds of eligible 
losses that will be used for payment; and
    (4) Apply for payments during the application period established by 
the Deputy Administrator.
    (b) Payments may be made for losses suffered by an otherwise 
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 or the producer's estate signs the application for payment. 
Proof of authority to sign for the deceased producer's estate or a 
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) Producers associated with a dairy operation must submit a timely 
application and comply with terms and conditions of this subpart, 
instructions issued by CCC and instructions contained in the Application 
to be eligible for benefits under this subpart.
    (d) 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 2005 
calendar year, as applicable, and must not otherwise be barred from 
receiving benefits under 7 CFR part 12 or any other law or regulation.
    (e) Payments are limited to losses in eligible counties, in eligible 
months.
    (f) All payments under this part are subject to the availability of 
funds.
    (g) Eligible losses are determined from the applicable base month 
that corresponds to the hurricane disaster or related condition and must 
have occurred during the claim periods applicable to the disaster as 
follows:
    (1) For Hurricane Katrina and Hurricane Rita the base month is July 
2005 and the corresponding claim period are the 2005 calendar months of 
August through December; and
    (2) For Hurricane Ophelia and Hurricane Wilma the base month is 
September 2005 and the corresponding claim period are the 2005 calendar 
months of October through December.



Sec. 1430.605  Proof of production.

    (a) Evidence of production is required to establish the commercial 
marketing and production history of the dairy operation so that dairy 
production and spoilage losses can be computed in accordance with Sec. 
1430.606.
    (b) A dairy producer must, based on the instructions issued by the 
Deputy Administrator, provide adequate proof of the dairy operation's 
commercial production, including any dumped production and dairy cow 
purchases, for each month of the applicable base month and claim period 
that corresponds with the applicable 2005 hurricane disaster or related 
condition, and must specifically identify any production during the 
applicable claim period that is dumped. If a month other than the 
applicable base month is used for base creation purposes, records for 
that month must be provided.
    (1) A producer must certify and provide such proof as requested that 
losses for which compensation is claimed were hurricane-related and 
occurred in an eligible county in an eligible month.
    (2) Additional supporting documentation may be requested by CCC as 
necessary to verify production or spoilage losses and dairy herd 
increases or decreases to the satisfaction of CCC.
    (c) Adequate proof of production history of the dairy operation 
under paragraph (b) of this section must be based on milk marketing 
statements obtained from the dairy operation's milk handler or marketing 
cooperative. Supporting documents may include, but are not limited to: 
Tank records, milk handler records, daily milk marketings, copies of any 
payments received from other sources for production or spoilage losses, 
or any other documents available to confirm or adjust the production 
history and losses incurred by the dairy operation.
    (d) Adequate proof of dairy cow additions to the milking herd during 
the eligible months can include, but is not limited to sales receipts, 
invoices, State health certificates, or any other documents available to 
confirm the cow purchases.
    (e) If adequate proof of normally marketed production, dumped 
production, and any other production for relevant periods is not 
presented to the

[[Page 676]]

satisfaction of CCC, the request for benefits will be rejected. In the 
case of a new producer that had no verifiable, actual, commercial 
production marketed by the dairy operation during the applicable base 
month, but which suffered eligible losses, an alternate base period may 
be established by the Deputy Administrator.



Sec. 1430.606  Determination of losses incurred.

    (a) Eligible payable losses are calculated on a dairy operation by 
dairy operation basis and are limited to those occurring during the 
applicable claim period, as provided by Sec. 1430.604(g), that 
corresponds with the hurricane-related disaster. Specifically, dairy 
production and spoilage losses incurred by producers under this subpart 
are determined on the established history of the dairy operation's 
actual commercial production marketed during the applicable claim period 
that corresponds with the hurricane-related disaster, and actual 
production dumped or otherwise not marketed during that same claim 
period, as provided by the dairy operation consistent with Sec. 
1430.605. Except as otherwise provided in these regulations, the 
starting base production, as defined in Sec. 1430.602 and established 
in Sec. 1430.604(g), is adjusted downward by a percentage determined by 
CCC to determine the base production for the applicable claim period 
that corresponds to the hurricane-related disaster. These adjustments 
are made to account for the seasonal declines that can occur during the 
months within the claim period. The base production for each of the 
applicable claim period months is calculated by reducing the starting 
base production of the applicable base month, or alternate month 
approved by the Deputy Administrator for new producers, as follows:
    (1) August 2005 base production is the starting base production 
reduced by 8 percent;
    (2) September 2005 base production is the starting base production 
reduced by 17 percent;
    (3) October 2005 base production is the starting base production 
reduced by 11 percent. However, if losses occurred only as a result of 
Hurricanes Ophelia and Wilma, for October 2005, base production is not 
reduced.
    (4) November 2005 base production is the starting base production 
reduced by 6 percent, unless eligible losses occurred only as a result 
of Hurricanes Ophelia and Wilma, in which case, for November 2005, base 
production is not reduced.
    (5) December 2005 base production is not reduced by a downward 
adjustment percentage.
    (b) The eligible dairy production losses for a dairy operation for 
each of the claim period months of August through December 2005, as 
applicable, will be:
    (1) The new base production for the dairy operation calculated under 
paragraph (a) of this section less,
    (2) For each such month for each dairy operation, the total of:
    (i) Actual commercially-marketed production (not counting dumped 
production counted under paragraph (b)(1)(ii) of this section); plus
    (ii) The pounds of milk production dumped (whether related to the 
hurricane or not), or otherwise not commercially marketed (whether 
related to the hurricane or not). For dumping losses to be eligible for 
payment, however, they must, as with other program losses, be hurricane 
related, as described under paragraphs (c) and (d) of this section.
    (c) Actual production losses may be adjusted to the extent the 
reduction in production is not certified by the producer to be the 
result of the hurricane or is determined by CCC not to be hurricane-
related. Actual production, as adjusted, that exceeds the adjusted base 
production will mean that the dairy operation incurred no eligible 
production losses for the corresponding month as a result of the 
hurricane disaster, and that the production level for that month does 
not qualify for a production loss payment under this program.
    (d) Eligible dairy spoilage losses incurred by producers under this 
subpart for each of the months August through December 2005, as 
applicable to the claim period that corresponds with the hurricane-
related disaster, will be determined based on actual milk produced in 
those months that was

[[Page 677]]

dumped on the farm as a result of the 2005 hurricanes, or other related 
condition. Proper documentation of milk dumped on the farm as a result 
of spoilage due to a hurricane must be provided to CCC as provided in 
Sec. 1430.605.
    (e) Calculated production losses may be adjusted by CCC based on the 
monthly average of daily dairy cow additions or reductions to the 
milking herd during the applicable claim period that corresponds with 
the hurricane-related disaster, to account for production adjustments as 
a result of dairy cow purchases, sales, or death losses. Production 
adjustments can be calculated using the average number of dairy cows in 
a dairy operation's milking herd and the average production per cow 
during each applicable month. Per-cow production averages during the 
applicable claim period months will be determined based on the actual 
per-cow production average during the base month applicable to the 
hurricane-related disaster and reduced downward according to the 
seasonal decline percentages provided in paragraph (a) of this section, 
to determine the total production that may be credited back to the dairy 
operation's total production losses. To qualify for the production 
adjustment credit:
    (1) Producers in eligible dairy operations must report any increases 
to the dairy cow milking herd during the applicable base month and claim 
period that corresponds to the hurricane disaster condition to the 
eligible hurricane.
    (2) Adequate supporting documentation according to Sec. 1430.605 
must be provided to the satisfaction of the COC to verify any claims of 
herd increases during the eligible period.
    (3) Any cows purchased during the eligible period that would 
increase the dairy cow milking herd must have been to offset production 
losses as a result of the 2005 hurricanes, or other related condition.
    (f) Eligible production and spoilage losses as otherwise determined 
under paragraphs (a) through (e) of this section are added together to 
determine total eligible losses incurred by the dairy operation subject 
to all other eligibility requirements as may be included in this part or 
elsewhere.
    (g) Payment on eligible dairy operation losses is calculated using 
whole pounds of milk. No double counting is permitted, and only one 
payment will be made for each pound of milk calculated as an eligible 
loss after the distribution of the operation's eligible production loss 
among the producers of the dairy operation according to Sec. 
1420.307(b). Payments under this part will not be affected by any 
payments for dumped or spoiled milk that the dairy operation may have 
received from its milk handler, or marketing cooperative, or any other 
private party.
    (h) If a producer is eligible to receive payments under this part 
and benefits under any other program administered by the Department of 
Agriculture (USDA) for the same losses, 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 
losses. 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 FSA administrative office from which the 
payment was received.

    Editorial Note: At 71 FR 65711, Nov. 9, 2006, Sec. 1430.606(g) was 
amended by revising the reference to ``Sec. 1420.305'' to read ``Sec. 
1430.605''. However, because of inaccuarate amendatory language, this 
amendment could not be incorporated.



Sec. 1430.607  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, the payment rate for 
eligible production and spoilage losses determined according to Sec. 
1430.606 is, depending on the State, the amount set forth below which is 
derived from the monthly Mailbox milk price for the Florida, the 
Southeast, Western Texas or the Appalachian States Marketing Orders as 
reported by the Agricultural Marketing Service. Maximum payment

[[Page 678]]

rates for eligible losses for dairy operations located in specific 
states are as follows:
    (1) Florida--$18.19 per hundredweight ($0.1819 per pound), which is 
averaged to account for the mailbox price during the months of August 
2005 and October 2005 when the hurricane disasters occurred.
    (2) Louisiana--$16.47 per hundredweight ($0.1647 per pound), which 
is averaged to account for the mailbox price during the months of August 
2005 and September 2005 when the hurricane disasters occurred.
    (3) Alabama, Arkansas, Georgia and Mississippi--$16.49 per 
hundredweight ($0.1649 per pound).
    (4) North Carolina--$15.39 per hundredweight ($0.1539 per pound).
    (5) Texas--$14.19 per hundredweight ($0.1419 per pound).
    (6) Tennessee--$15.38 per hundredweight ($0.1538 per pound).
    (b) Subject to the availability of funds, each eligible dairy 
operation's payment is calculated by multiplying the applicable payment 
rate under paragraph (a) of this section by the operation's total 
eligible losses. Where there are multiple producers in the dairy 
operation, individual producers' payments are disbursed according to 
each producer's share of the dairy operation's production as specified 
in the Application.
    (c) If the total value of losses claimed under paragraph (b) of this 
section exceeds the $17 million available for DDAP-II, less any reserve 
that may be created under paragraph (e) of this section, total eligible 
losses of individual dairy operations that, as calculated as an overall 
percentage for the full disaster claim period that corresponds with the 
applicable hurricane-related disaster (not a monthly average for any one 
month), are greater than 20 percent of the total base production for 
those applicable claim period months will be paid at the maximum rate 
under paragraph (a) of this section to the extent available funding 
allows. A loss of over 20 percent in only one or two of the eligible 
months does not itself qualify for the maximum per-pound payment. Total 
eligible losses for a producer, as calculated under Sec. 1430.606, of 
less than or equal to 20 percent during the eligible claim period will 
then be paid at a rate determined by dividing the eligible losses of 
less than 20 percent by the funds remaining after making payments for 
all eligible losses above the 20-percent threshold.
    (d) In no event shall the payment exceed the value determined by 
multiplying the producer's total eligible loss times the average price 
received for commercial milk production in their area as defined in 
paragraph (a) of this section.
    (e) A reserve may be created to handle pending or disputed claims, 
but claims shall not be payable once the available funding is expended.



Sec. 1430.608  Availability of funds.

    The total available program funds shall be $17 million as provided 
by section 3014 of Title III of Public Law 109-234.



Sec. 1430.609  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this subpart may request reconsideration or appeal of such 
determination in accordance with the appeal regulations set forth at 7 
CFR parts 11 and 780. Appeals of determinations of ineligibility or 
payment amounts are subject to the limitations in Sec. Sec. 1430.607 
and 1430.608 and other limitations as may apply.



Sec. 1430.610  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, a dairy producer shall be ineligible to receive assistance under 
this program if the producer is determined by CCC to have:
    (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 program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, must 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

[[Page 679]]

person receiving payment under this subpart shall be jointly and 
severally liable with other persons or operations involved in such claim 
for benefits for any refund due under this section and for related 
charges. The remedies provided in this subpart shall be in addition to 
other civil, criminal, or administrative remedies that may apply.



Sec. 1430.611  Death, incompetence, 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 alternate person or persons specified in 7 CFR part 707 
may receive such benefits, as determined appropriate by CCC.



Sec. 1430.612  Maintaining records.

    Persons applying for benefits under this program must maintain 
records and accounts to document all eligibility requirements specified 
herein. Such records and accounts must be retained for 3 years after the 
date of payment to the dairy operations under this program. Destruction 
of the records after such date shall be at the risk of the party imposed 
with the recordkeeping requirements by this subpart.



Sec. 1430.613  Refunds; joint and several liability.

    (a) Excess payments, payments provided as the result of erroneous 
information provided by any person, or payments resulting from a failure 
to comply with any requirement or condition for payment under the 
application or this subpart, must be refunded to CCC.
    (b) A refund required under this section shall be due with interest 
determined in accordance with paragraph (d) of this section and late 
payment charges as provided in 7 CFR part 1403.
    (c) Persons signing a dairy operation's application as having an 
interest in the operation shall be jointly and severally liable for any 
refund and related charges found to be due under this section.
    (d) In accord with parts 792 and 1403 of this title, interest shall 
be applicable to any refunds required under this subpart. Such interest 
shall be charged at the rate the United States Department of the 
Treasury charges CCC for funds, and shall accrue from the date FSA or 
CCC made the erroneous payment to the date of repayment.
    (e) CCC may waive the accrual of interest if it determines that the 
cause of the erroneous determination was not due to any action of the 
person, or was beyond the control of the person committing the 
violation. Any waiver is at the discretion of CCC alone.



Sec. 1430.614  Miscellaneous provisions.

    (a) CCC may offset or withhold any amount due CCC under this subpart 
in accordance with 7 CFR part 1403.
    (b) Payments or any portion thereof due 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 property of any 
kind, or proceeds thereof, in favor of the owner or any other creditor 
except agencies and instrumentalities of the U.S. Government.
    (c) Any producer entitled to any payment under this part may assign 
any payments in accordance with the provisions of 7 CFR part 1404.



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.
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..
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 Death, incompetency, or disappearance; appeals; other loan 
          provisions.


[[Page 680]]


    Authority: 7 U.S.C. 7931 and Public Law 110-246.

    Source: 66 FR 15177, Mar. 15, 2001, unless otherwise noted.



Sec. 1434.1  Applicability.

    (a) This part provides the terms and conditions of Commodity Credit 
Corporation (CCC) nonrecourse marketing assistance loans or loan 
deficiency payments for honey for the 2008 through 2012 crop years. 
Marketing loan gains and loan deficiency payments for the 2008 crop will 
be limited to the payment limitation rules applicable to the 2008 crop. 
Beginning with the 2009 crop year, there will not be payment limits on 
marketing loan gains and loan deficiency payments.
    (b) Producers must comply with all provisions of this part and part 
1421 of this chapter.

[74 FR 15656, Apr. 7, 2009]



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.
    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.

[[Page 681]]

    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
    (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:

[[Page 682]]

    (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) A producer shall not be considered to have divested the 
beneficial interest in the honey if the producer retains title and 
control of 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:

    ``Notwithstanding any other provision of this option to purchase or 
any other contract, title and control of the honey and beneficial 
interest in the honey, as specified in 7 CFR 1434.6, must remain with 
the producer until the buyer exercises this option to purchase the 
honey. This option to purchase will 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 honey;
    (2) The date the CCC claims title to such honey; or
    (3) Such other date as provided in this option.''

    (2) Enters into a contract to sell the honey if the producer retains 
title, 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.

[[Page 683]]

    (c) 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.
    (d) 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; 
74 FR 15656, Apr. 7, 2009]



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) To be eligible for assistance under this part, honey must be 
packed in:
    (i) CCC-approved, 5-gallon plastic containers;
    (ii) 5-gallon metal containers;
    (iii) Steel drums with a capacity not less than 5 gallons nor 
greater than 70 gallons, or
    (iv) Plastic Intermediate Bulk Containers (IBC's).
    (2) Honey stored in plastic containers must be determined safe and 
secure from all possibility of contamination.
    (3) Honey storage containers used for these purposes must meet 
requirements of the Federal Food, Drug and Cosmetic Act, as amended and 
other specified requirements, as determined by CCC and must be generally 
fit for the purpose for which they are to be used.
    (4) CCC-approved 5-gallon plastic containers must hold approximately 
60 pounds of honey. The containers must be free and clear of leakage and 
punctures and of suitable purity for food contact use and meet food 
storage standards as provided by CCC. Plastic containers must be new or 
previously used only to store honey. Plastic containers previously used 
to store chemicals, pesticides, or any other product or substance other 
than honey are ineligible for honey storage. The handle of each 
container must be firm and strong enough to permit carrying the filled 
container. The cover opening must not be damaged in any way that will 
prevent a tight seal. Containers that have been punctured and resealed 
will not be acceptable;
    (5) The 5-gallon metal containers must hold approximately 60 pounds 
of honey, and must be new, clean, sound, uncased, and free from 
appreciable dents and rusts. The handle of each container must be firm 
and strong enough to permit carrying the filled container. The cover and 
container opening must not be damaged in any way that will prevent a 
tight seal. Containers that are punctured or have been punctured and 
resealed by soldering will not be acceptable; and
    (6) The steel drums must be an open type and filled no closer than 2 
inches from the top of the drums. Drums must

[[Page 684]]

be new or must be used drums that have been reconditioned inside and 
outside. Drums must be clean, treated inside and outside to prevent 
rusting, fitted with gaskets that provide a tight seal and have an 
inside coating suitable for honey storage.
    (7) IBC's are bulk containers with a polyethylene inner bottle and a 
galvanized steel protective cage, a capacity of either 275 or 330 
gallons, and are reusable. IBC's must be clean, sound and provide a 
tight seal.
    (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) Containers that do not meet the specified requirements of 
paragraph (a) of this section or other CCC specifications or 
requirements.
    (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.

[66 FR 15177, Mar. 15, 2001, as amended at 69 FR 52169, Aug. 25, 2004]



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

[[Page 685]]

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]



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..

    (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;

[[Page 686]]

    (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 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 10 percent of the loan rate applicable to the loan note for 
each offense.
    (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 10 
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

[[Page 687]]

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.
    (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.

[66 FR 15177, Mar. 15, 2001, as amended at 74 FR 15657, Apr. 7, 2009]



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

[[Page 688]]

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.



Sec. 1434.18  Loan repayments.

    (a) A honey producer may repay a nonrecourse marketing assistance 
loan during the loan period 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.
    (3) In the event of a severe disruption to marketing, 
transportation, or related infrastructure, the Secretary may modify the 
repayment rate otherwise applicable under this section for marketing 
assistance loans. Any adjustment made to the repayment rate for 
marketing assistance loans for honey under this part will be in effect 
on a short-term and temporary basis, 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; 
74 FR 15657, Apr. 7, 2009]



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 2008 through 
2012 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.

[[Page 689]]

    (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.
    (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; 
74 FR 15657, Apr. 7, 2009]



Sec. 1434.22  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. 
Redesignated at 74 FR 15657, Apr. 7, 2009]



PART 1435_SUGAR PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1435.1 Applicability.
1435.2 Definitions.
1435.3 Maintenance of records.
1435.4 Administration.
1435.5 Other regulations.

                      Subpart B_Sugar 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 of allotments.
1435.303 Adjustment of the overall allotment quantity.
1435.304 Beet and cane allotments.
1435.305 State cane sugar allotments.

[[Page 690]]

1435.306 Allocation of marketing allotments to processors.
1435.307 Transfer of allocation.
1435.308 New entrants.
1435.309 Reassignment of deficits.
1435.310 Sharing processors' allocations with producers.
1435.311 Proportionate shares for sugarcane producers.
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_Disposition of CCC Inventory

1435.400 General statement.
1435.401 CCC sugar inventory disposition.

         Subpart F_Processor Sugar Payment-In-Kind (PIK) Program

1435.500 General statement.
1435.501 Bid submission procedures.
1435.502 Bid selection procedures.
1435.503 In-kind payments.
1435.504 Timing of distribution of CCC-owned sugar.
1435.505 Miscellaneous provisions.

                 Subpart G_Feedstock Flexibility Program

1435.600 General statement.
1435.601 Sugar surplus determination and public announcement.
1435.602 Eligible sugar to be purchased by CCC.
1435.603 Eligible sugar seller.
1435.604 Eligible sugar buyer.
1435.605 Competitive procedures.
1435.606 Miscellaneous.
1435.607 Appeals.

    Authority: 7 U.S.C. 1359aa-1359jj, 7272, and 8110; 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 2008 
through 2012 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 sell CCC 
inventory to bioenergy producers and exchange CCC inventory for 
processor reductions in production or certificates of quota entry.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15363, Apr. 6, 2009]



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, for purposes of determining the State cane 
sugar allotments and sugarcane processor allocations for Hawaii and 
Puerto Rico, 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; for 
determining the remaining State cane sugar allotments, the highest 
single year of sugar production for the State during the 1999 through 
2003 crop years; for determining the sugarcane processor allocations for 
mainland cane States other than Louisiana, the highest single year of 
sugar production for the processor during the 1999 through 2003 crop 
years; and, for determining the sugarcane processor allocations for 
Louisiana, the simple average of two amounts for each processor, 
including:
    (1) The production of sugar for the processor, stated in short tons, 
raw value, during Crop Year 2003, as determined by CCC; and
    (2) The simple average of 3 years of the processor's production of 
sugar, stated in short tons, raw value, from among the 1999 through 2003 
crop years, excluding the year in which the production was the highest 
and the year in which the production was the lowest. With respect to the 
2003 crop year, each processor's production shall be the

[[Page 691]]

same as determined under paragraph (1).
    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, sugar beet molasses, or in-process beet sugar, whether 
produced domestically or imported.
    Beet sugar allotment means that portion of the overall allotment 
quantity allocated to sugar beet processors.
    CCC means the Commodity Credit Corporation.
    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 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.
    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 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.
    Facility means a factory, mill, or plant.
    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.
    Human consumption means sugar for use in human food, beverages, or 
similar products.
    Imports means sugar originating in foreign countries or areas and 
entered, or to be entered, into the United States customs territory.
    In-process beet sugar means the intermediate sugar-containing 
product, as CCC determines, produced from processing sugar beets. Like 
sugar beets, it is considered an input into the production of sugar 
regardless of whether it is produced domestically or imported.
    In-process cane sugar means the intermediate sugar-containing 
product, as CCC determines, produced from the processing of sugarcane. 
It is not raw sugar, nor is it suitable for direct human consumption.
    Market or marketing means the transfer of title associated with the 
sale or other disposition of sugar for human consumption in United 
States commerce. A marketing also includes a sale of sugar under the 
Feedstock Flexibility Program, the forfeiture of sugar loan collateral 
under the Sugar Loan Program, exportation of sugar

[[Page 692]]

from the United States Customs Territory eligible to receive credits 
under reexport programs for refined sugar or sugar-containing products 
administered by the Foreign Agricultural Service, or the sale of sugar 
eligible to receive credit for the production of polyhydric alcohol 
under the Polyhydric Alcohol program (see part 1530 of this title) 
administered by the Foreign Agricultural Service, and for any integrated 
processor and refiner, the movement of raw cane sugar into the refining 
process.
    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 domestically produced sugar, raw value, processed from 
sugarcane, sugar beets or in-process beet sugar (whether the sugar beets 
or in-process beet sugar are produced domestically or imported), 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.
    Proportionate share State means a State with an established 
allotment and more than 250 sugarcane producers in the State, other than 
Puerto Rico.
    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 number of pounds of such sugar by 1.07. Sugar derived from 
sugarcane and testing 92 sugar degrees or more by the polariscope shall 
be translated into terms of raw value in the following manner: raw value 
= {[(actual degree of polarization - 92) x 0.0175] + 0.93{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.

[[Page 693]]

    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane, sugar beets, sugarcane molasses, 
sugar beet molasses or in-process beet sugar whether domestically 
produced or imported and consisting of, or containing, sucrose or invert 
sugar, including raw sugar, refined crystalline sugar, edible molasses, 
edible cane syrup, liquid sugar, and in-process cane sugar.
    Sugar beet processor means a person who commercially produces sugar, 
directly or indirectly, from sugar beets, sugar beet molasses, or in-
process beet sugar.
    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.

[67 FR 54928, Aug. 26, 2002, as amended at 69 FR 55062, Sept. 13, 2004; 
74 FR 15363, Apr. 6, 2009]



Sec. 1435.3  Maintenance of records.

    (a) Each sugar beet processor, sugarcane processor, importer of 
sugars, syrups and molasses, and cane sugar refiner or any person having 
custody of records required by CCC to operate the sugar program must 
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.
    (b) [Reserved]

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



Sec. 1435.4  Administration.

    (a) This program shall be administered under the general supervision 
of the Executive Vice President, CCC, and 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:

[[Page 694]]

    (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_Sugar 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 for the 2008 crop 
year; 18.25 cents per pound for the 2009 crop year; 18.50 cents per 
pound for the 2010 crop year; 18.75 cents per pound for the 2011 crop 
year; and 18.75 cents per pound for the 2012 crop year.
    (b) The national average loan rate for refined beet sugar from 
domestically grown sugar beets is: 22.90 cents per pound for the 2008 
crop year; and a rate equal to 128.5 percent of the loan rate per pound 
of raw cane sugar for each of the crop years 2009 through 2012.
    (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.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



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 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 
in-process sugars, 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

[[Page 695]]

    (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.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



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.
    (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 must:
    (1) Be requested by the processor during the following October;

[[Page 696]]

    (2) Be made at the loan rate in effect at the time the first loan 
was made; and
    (3) Mature in 9 months less the number of months that the first loan 
was in effect.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



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) In the case of sugarcane, CCC will annually determine and 
announce the annual grower minimum payment.
    (3) 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 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.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



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, 
subject to applicable premiums and discounts based on the difference 
between specifications reported on the sugar loan certification report 
and actual loadout characteristics.
    (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.

[[Page 697]]

    (2) The in-process sugar must be fully processed into raw cane sugar 
or refined beet sugar, before 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 next business 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.
    (j) The CCC rates for the storage of forfeited sugar to approved 
warehouses for each crop year of 2008 through 2011 will be at least:
    (1) For refined sugar, 15 cents per hundredweight of refined sugar 
per month; and
    (2) For raw cane sugar, 10 cents per hundredweight of raw cane sugar 
per month.
    (3) For 2012 and subsequent crop years, rates for the storage of 
forfeited sugar will revert to those used before June 18, 2008.
    (4) For sugar located in space not approved by CCC for storage, the 
payment rate will be zero until such time as the processor delivers such 
sugar to a CCC-approved warehouse.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15364, Apr. 6, 2009]



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.

[[Page 698]]

    (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, by the 
20th of each month, on CCC-required forms, its imports and receipts, 
processing inputs, production, distribution, stocks, and other 
information necessary to administer the sugar programs. If the 20th of 
the month falls on a weekend or a Federal holiday, the report shall be 
due the next business day.
    (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 must report such information as CCC requires, 
including the quantities of the products imported and the sugar content 
or equivalent of the products.
    (f) The Secretary will collect information on the production, 
consumption, stocks and trade of sugar in Mexico and publish the data in 
each edition of the World Agricultural Supply and Demand Estimates 
report.
    (g) The Secretary will collect publicly available information on the 
production, consumption, and trade of high fructose corn syrup in Mexico 
and publish the data in each edition of the World Agricultural Supply 
and Demand Estimates report.
    (h) 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.
    (i) By November 20 of each year, sugar beet processors, sugarcane 
processors, sugarcane refiners, and importers of sugars, syrups, and 
molasses, as selected by CCC, will submit to CCC a report, as specified 
by CCC, from an independent Certified Public Accountant that reviews its 
information submitted to CCC during the previous October 1 through 
September 30 period.
    (j) The sugar information reporting and recordkeeping requirements 
of this subpart are administered under the general supervision of the 
Executive Vice President, CCC.

[67 FR 54928, Aug. 26, 2002, as amended at 71 FR 16200, Mar. 31, 2006; 
74 FR 15365, Apr. 6, 2009]



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(a) 
through (e), is subject to a civil penalty of no more than the amount 
specified at Sec. 3.91(b)(10)(ii) of this title 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

[[Page 699]]

civil penalties, with the National Appeals Division under part 780 of 
this title.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15635, Apr. 6, 2009; 75 
FR 17561, Apr. 7, 2010]



            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 or in-process beet sugar, whether such sugar beets or in-process 
beet sugar were produced domestically or imported,
    (2) Processor marketings of sugar processed from sugarcane,
    (3) Distribution of a processor's allocation to producers in 
proportionate share States, and
    (4) Harvesting sugarcane by producers subject to proportionate 
shares.
    (b) This subpart does not apply to marketing imported raw or refined 
sugar.
    (c) This subpart applies throughout the United States and Puerto 
Rico.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15365, Apr. 6, 2009]



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 subject to human consumption in 
the United States during the crop year;
    (2) Quantity of sugar that will provide for reasonable carryover 
stocks;
    (3) Quantity of sugar that will be used for human consumption in the 
United States from carry-in stocks;
    (4) Quantity of sugar that will be available from domestically 
processed sugarcane, sugar beets, and in-process beet sugar; 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.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15365, Apr. 6, 2009]



Sec. 1435.302  Establishment 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 sugarcane, sugar beets, or in-process beet 
sugar, whether the sugar beets or in-process beet sugar is domestically 
produced or imported at a level:
    (1) That is sufficient to maintain raw and refined sugar prices 
above minimum prices to avoid forfeiture of loans to the CCC, but
    (2) Not less that 85 percent of estimated quantity of sugar for 
domestic human consumption for the crop year.
    (b) Determinations under this section to establish marketing 
allotments will be published in the Federal Register and accompanied by 
a statement of the reasons for the determination.

[74 FR 15365, Apr. 6, 2009]



Sec. 1435.303  Adjustment of the overall allotment quantity.

    (a) The overall allotment quantity may be adjusted, as CCC 
determines appropriate, but never to a quantity less than 85 percent of 
the estimated quantity of sugar for domestic human consumption for the 
crop year:
    (1) To avoid forfeiture of sugar loan collateral to CCC,
    (2) Ensure adequate supplies of raw and refined sugar in the 
domestic market, and,

[[Page 700]]

    (3) To reflect changes in estimated sugar consumption, stocks, 
production, or imports based on re-estimates under Sec. 1435.301.
    (b) Determinations to adjust the overall allotment quantity will be 
published in the Federal Register and accompanied by a statement of the 
reasons for the determination.
    (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.

[67 FR 54928, Aug. 26, 2002. Redesignated and amended at 74 FR 15365, 
Apr. 6, 2009]



Sec. 1435.304  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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15365, Apr. 6, 2009]



Sec. 1435.305  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.
    (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.

[67 FR 54928, Aug. 26, 2002. Redesignated and amended at 74 FR 15365, 
Apr. 6, 2009]



Sec. 1435.306  Allocation of marketing allotments to processors.

    (a) Each sugar beet processor's allocation, other than a new 
entrant's, 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 beet processing 
factory during the 1996 through 2000 crop years;
    (ii) Decreased 1.25 percent of the sum of beet processors' weighted 
average

[[Page 701]]

sugar production for closing a sugar beet processing factory during the 
1998 through 2000 crop 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 processor's, other than a new entrant's, 
allocation from a State cane sugar allotment will be calculated as the 
cane processor's share times the State cane sector allotment.
    (1) Each cane processor's share 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 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.
    (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 will not apply to:
    (1) Any sugar marketings to facilitate the export of sugar or sugar-
containing products as long as such exports are not eligible to receive 
credits under reexport programs administered by the Foreign Agricultural 
Service for refined sugar or sugar-containing products;
    (2) Any sugar marketings for nonhuman consumption, except for the 
sale of sugar for the production of ethanol or other bioenergy under the 
Feedstock Flexibility program or the sale of sugar for the production of 
polyhydric alcohol under the Polyhydric Alcohol program administered by 
the Foreign Agricultural Service; 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 51 days of the date of sale.
    (f) Paragraph (d) of this section also shall not apply to marketings 
of purchased sugar marketed in the crop year of the purchase, but does 
apply to marketings of sugar purchased as part of a transaction pursuant 
to paragraph (e)(3) of this section.
    (g) Paragraph (d) of this section also will not apply to the 
marketing of beet sugar processed from purchased in-process beet sugar 
if the processor purchased the in-process beet sugar before October 1, 
2008.
    (h) 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 only use 
cane sugar to fill such allocation.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39813, July 1, 2004. 
Redesignated and amended at 74 FR 15365, Apr. 6, 2009]



Sec. 1435.307  Transfer of allocation.

    (a) If a sugarcane processing facility is sold or transferred to 
another owner or is closed as part of a corporate consolidation CCC will 
transfer the allotment allocation to the purchaser or successor.
    (b) In proportionate share States, allocations, based on the number 
of acres of sugarcane base being transferred and the pro rata amount 
reflecting the grower's contribution to allocation of the processor for 
the sugarcane base being transferred, will be transferred between 
facilities if the transfers are based on:
    (1) Written consent of the crop-share owners, or their 
representatives,

[[Page 702]]

    (2) Written certification from the processor that will accept the 
additional sugarcane deliveries that its processing capacity will not be 
exceeded,
    (3) CCC will only consider requests for transfer of allocation 
submitted during the month of May. The request must include the grower's 
sugar production history for crop years 1997 through 2003. The facility 
with the grower's history will be required to certify the history when 
requested by the grower, and
    (4) Allocation transfers will be effective for the next fiscal year 
after the request is submitted to CCC, that is beginning October 1.
    (c) If a sugar beet processing facility or a sugarcane processing 
facility located in a non-proportionate share State 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 their share of the allocation 
from the processor that closed the facility to their new processor. If 
CCC approves transfer of the allocations, it will distribute the closed 
facility's allocation based on the contribution of the growers' 
production history to the closed facility's allocation. CCC may grant 
the allocation transfer upon:
    (1) Written request by a grower to transfer allocation,
    (2) Written approval of the processor that will accept the 
additional deliveries,
    (3) Evidence satisfactory to CCC that the new processor has the 
capacity to accommodate the production of petitioning growers, and
    (4) Determinations by the CCC will be made within 60 days after the 
filing of the petition.
    (d) Subject to a transfer of allocation, if any, described in 
paragraph (c) of this section being completed, CCC will consider a 
processor to be permanently terminated and eliminate the processor's 
remaining allocation and distribute it to all other processors on a pro-
rata basis when the processor:
    (1) Has been dissolved,
    (2) Has been liquidated in a bankruptcy proceeding,
    (3) Has not processed sugarcane or sugar beets for 2 consecutive 
crop years,
    (4) Has notified CCC that the processor has permanently terminated 
operations, or
    (5) Has been determined by CCC to have permanently terminated 
operations.
    (e) If a processor of beet sugar purchases all the assets of another 
processor, then CCC will immediately transfer allocation commensurate 
with the purchased facilities' production history, unless the allocation 
has already been transferred under paragraph (d) of this section.
    (f) If a processor of beet sugar purchases some, but not all, of the 
assets of another processor, then CCC will assign a pro rata portion of 
the allocation to the buyer to reflect the historical contribution of 
the sold facilities, unless the buyer and seller have agreed upon a 
different allocation amount.
    (1) The assignment of the allocation will apply to the crop year in 
which the sale occurs and for each subsequent year.
    (2) The buyer of the facilities as specified in paragraph (e) of 
this section may fill the assigned allocation with production from other 
facilities it owns if the purchased facilities lack the production to 
fill the assigned allocation.

[74 FR 15366, Apr. 6, 2009]



Sec. 1435.308  New entrants.

    (a) The Secretary may assign a new entrant sugarcane processor an 
allocation that provides a fair, efficient, and equitable distribution 
of allocations:
    (1) Applicants must demonstrate their ability to process, produce, 
and market sugar for the applicable crop year,
    (2) CCC will consider any adverse effects of the allocation upon 
existing processors and producers,
    (3) CCC will conduct a hearing on a new entrant application if an 
interested processor or grower requests a hearing,
    (4) A new entrant's allocation is limited to no more than 50,000 
short tons, raw value, for the first crop year, and
    (5) A new entrant will be provided, as determined by CCC:

[[Page 703]]

    (i) A share of its State's cane allotment if the processor is 
located in Hawaii, Florida, Louisiana, or Texas or
    (ii) A share of the overall mainland cane allotment if the processor 
is located in any mainland State not listed in paragraph (a)(5)(i) of 
this section.
    (b) For proportionate share States, CCC will establish proportionate 
shares for the sugarcane required to fill the allocation.
    (c) If a new entrant beet processor constructs a new facility or 
reopens a facility that currently has no allocation, but last produced 
beet sugar from sugar beets and sugar beet molasses prior to the 1998 
crop year, CCC will:
    (1) Assign an allocation to the new entrant to enable it to achieve 
a facility utilization rate comparable to other similarly-situated sugar 
beet processors and
    (2) Reduce all other beet processor allocations by a like amount on 
a pro rata basis.
    (d) If a new entrant acquires an existing facility with production 
history that processed sugar beets for the 1998 or subsequent crop year, 
CCC will:
    (1) Assign the allocation to the buyer to reflect the historical 
contribution of the sold facilities, unless the buyer and seller have 
agreed upon a different allocation amount, or
    (2) If the new entrant and the processor holding the allocation of 
the existing facility cannot agree on an allocation amount, the new 
entrant will be denied a beet sugar allocation.

[74 FR 15366, Apr. 6, 2009]



Sec. 1435.309  Reassignment of deficits.

    (a) CCC will determine, from time to time, whether sugar beet or 
sugarcane processors will be unable to market their allocations.
    (b) Sugar beet and sugar cane processors will report to CCC current 
inventories, estimated production, expected marketings, and any other 
pertinent factors CCC deems appropriate to determine a processor's 
ability to market their 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 be reassigned as follows:
    (1) First, to allocations of other sugarcane processors within that 
State based on each processor's initial allocation share of the State's 
allotment, but no processor may receive reassigned allocation such that 
its allocation exceeds its estimated total sugar supply.
    (2) If the deficit cannot be eliminated after reassignment within 
the same State, be reassigned to the other cane States based on each 
State's initial share of the cane sugar allotment, but no State may 
receive reassigned State allotment such that its allocation exceeds its 
estimated total sugar supply, with the reassigned quantity to each State 
being allocated according to paragraph (c)(1) of this section.
    (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 of raw cane sugar.
    (d) The initial estimate of the sugarcane deficit will be reassigned 
by June 1. CCC will conduct later reassignments if CCC determines, after 
June 1, that a sugarcane processor will be unable to market its full 
allocation.
    (e) 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 (e)(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.
    (3) If any portion of the deficit remains after paragraphs (e)(1) 
and (e)(2) of this section have been implemented,

[[Page 704]]

be reassigned to imports of raw cane sugar.
    (f) The crop year allocation of each sugar beet or sugarcane 
processor who receives a reassignment will be increased accordingly for 
that year.

[67 FR 54928, Aug. 26, 2002, as amended at 69 FR 55063, Sept. 13, 2004; 
69 FR 58037, Sept. 29, 2004; 70 FR 28181, May 17, 2005; 74 FR 15366, 
Apr. 6, 2009]



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) CCC will determine that a processor in a proportionate share 
state has met the conditions of paragraph (a) of this section if the 
processor establishes a grower payment plan that incorporates the 
following provisions:
    (1) Pays growers for sugar from their delivered sugarcane in the 
following priority:
    (i) Sugar production from proportionate share acreage; as 
established under Sec. 1435.311, for producers determined by CCC, who;
    (A) Delivered to the mill in at least one of the crop years 1999, 
2000, or 2001, or
    (B) Obtained an allocation transfer from a predecessor mill,
    (ii) Sugar production from base acreage, as established under Sec. 
1435.312, but exclusive of the acreage described in paragraph (b)(1)(i) 
of this section, for producers who meet the requirements of paragraph 
(b)(1)(i) of this section, then
    (iii) All other sugar production.
    (2) In determining the payment priority, a processor may aggregate 
the acreage of an operator (producer making the crop production 
decisions) across all the operator's farms delivering cane to the 
processor.
    (c) CCC will determine that a processor not in a proportionate share 
state, which is cooperatively owned by producers, has met the conditions 
of paragraph (a) of this section if the processor shares its allocation 
with its producers according to its cooperative membership agreement.
    (d) CCC will disclose farm base and reported acres data in a 
proportionate share state to processors upon their request for growers 
delivering to their mill. In the case of multiple producers on a farm or 
growers delivering to more than one mill, subject mills will be 
responsible for coordinating proportionate share data.
    (e) 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.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39813, July 1, 2004; 74 
FR 15366, Apr. 6, 2009]



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:

[[Page 705]]

    (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 (meaning 
only those varieties dedicated to the production of sugarcane to produce 
sugar for human consumption) 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 reconstitution of farms with a sugar crop acreage base 
shall not be allowed across State lines.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009]



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.
    (1) All farm owners must agree in writing to the transfer.
    (2) Producers may transfer sugarcane acreage base histories under 
this section by the date the State FSA committee establishes annually.
    (b) Sugarcane acreage base that has been converted to 
nonagricultural use on or before May 13, 2002, may be transferred to 
other land suitable for the production of sugarcane under the following 
terms:
    (1) CCC must notify 1 or more affected landowners within 90 days of 
becoming aware of the conversion, of their rights to transfer the base 
to 1 or more farms owned by the landowner;
    (2) The landowner has 90 days from the date the landowner was 
notified to transfer the base;
    (3) If the landowner does not exercise this transfer right, the 
grower of record will have 90 days after being notified by CCC to 
transfer the base to 1 or more farms owned by the grower;
    (4) If the transfers as specified under paragraphs (b)(2) or (3) of 
this section are not accomplished during the specified periods, FSA 
county committee will place the base into a pool for possible 
reassignment to other farms;
    (5) After providing notice to farm owners, operators and growers of 
record in the county, the committee will accept requests from farm 
owners, operators, and growers in the county;
    (6) The county committee will assign the base to other sugarcane 
farms in

[[Page 706]]

the county that are eligible and capable of accepting the acreage base, 
based on a random drawing among requests received under paragraph (b)(5) 
of this section;
    (7) Any unassigned base will be made available to the State FSA 
committee and be allocated to remaining FSA county committees in the 
State representing counties with farms eligible for assignment of the 
base, based on a random drawing; and
    (8) After the acreage base has been reassigned, the acreage base 
will remain on the farm and subject to the transfer provisions of 
paragraph (a) of this section.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009]



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.
    (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:

[[Page 707]]

    (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) Any sugar beet or sugarcane processor who knowingly markets 
sugar or sugar products in excess of the processor's allocation will 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) CCC may assess liquidated damages, as specified in a surplus 
allocation survey and agreement, with respect to a surplus allocation 
still existing after the end of a crop year if the processor had a 
surplus allocation because the processor provided incomplete or 
erroneous information to CCC.
    (c) 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.
    (d) 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.
    (e) Any person filing a false acreage report that exceeds tolerance 
will be subject to an assessment not to exceed the amount specified at 
Sec. 3.91(b)(10)(iii) of this title. 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.
    (f) 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 the amount specified at Sec. 
3.91(b)(10)(iv) of this title for each violation.

[67 FR 54928, Aug. 26, 2002, as amended at 74 FR 15367, Apr. 6, 2009; 75 
FR 17561, Apr. 7, 2010]



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.

[[Page 708]]

    (b) For issues arising under section 359d establishing allocations 
for marketing allotments, and sections 359f(b) and (c), and section 359i 
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 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, 
Room 1081, South Building, 1400 Independence Ave., SW., Washington, DC 
20250-9200. Any hearing conducted under this paragraph shall be in 
accordance with instructions issued by USDA's 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.

[67 FR 54926, Aug. 26, 2002, as amended at 69 FR 39814, July 1, 2004]



                 Subpart E_Disposition of CCC Inventory

    Source: 78 FR 45446, July 29, 2013, unless otherwise noted.



Sec. 1435.400  General statement.

    This subpart will be applicable in the event that raw, refined, or 
in-process sugar is owned and held in CCC inventory (accumulated under 
the program authorized by section 156 of the Federal Agriculture 
Improvement and Reform Act, as amended) as specified in subpart B of 
this part.



Sec. 1435.401  CCC sugar inventory disposition.

    (a) CCC will dispose of inventory in the following manner, if CCC 
has not determined there is an emergency shortage of sugar for human 
consumption in the domestic market:
    (1) By sale to bioenergy producers under the Feedstock Flexibility 
Program as specified in subpart G of this part,
    (2) By transfer to sugarcane and sugar beet processors under the 
Processor Sugar Payment-In-Kind Program as specified in subpart F of 
this part,
    (3) By the buyback of certificates of quota eligibility (CQEs), or
    (4) By the use of any other authority for the disposition of CCC-
owned sugar for nonfood use or otherwise in a manner that does not 
increase the net quantity of sugar available for human consumption in 
the United States.
    (b) CCC may use any of its authority for the disposition of CCC-
owned sugar, if CCC has determined there is an emergency shortage of 
sugar for human consumption in the domestic market caused by war, flood, 
hurricane, or other natural disaster, or similar event, as determined by 
CCC.



         Subpart F_Processor Sugar Payment-In-Kind (PIK) Program

    Source: 67 FR 54928, Aug. 26, 2002, unless otherwise noted. 
Redesignated at 74 FR 15367, Apr. 6, 2009.



Sec. 1435.500  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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec. 1435.501  Bid submission procedures.

    (a) After announcement by CCC that a program authorized by this 
subpart is

[[Page 709]]

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 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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec. 1435.502  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

[[Page 710]]

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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec. 1435.503  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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec. 1435.504  Timing of distribution of CCC-owned sugar.

    Distribution of sugar from CCC inventory will occur in such manner 
as CCC determines appropriate.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



Sec. 1435.505  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.

[67 FR 54928, Aug. 26, 2002. Redesignated at 74 FR 15367, Apr. 6, 2009]



                 Subpart G_Feedstock Flexibility Program

    Source: 78 FR 45446, July 29, 2013, unless otherwise noted.



Sec. 1435.600  General statement.

    (a) The provisions of this subpart will be applied when CCC 
determines that buying sugar is necessary to avoid forfeitures of sugar 
pledged as collateral for CCC sugar loans.
    (b) This subpart will be applicable to:
    (1) Any sugar seller who contractts with CCC to sell sugar, an
    (2) Any bioenergy producer who contracts with CCC to purchase sugar 
for the production of bioenergy.



Sec. 1435.601  Sugar surplus determination and public announcement.

    (a) CCC will estimate by September 1 the quantity of sugar that will 
be made available for purchase and sale under FFP for the following crop 
year.

[[Page 711]]

    (b) Not later than January 1, April 1, and July 1 of the fiscal 
year, CCC will re-estimate the quantity of sugar that will be made 
available for purchase and sale under the FFP for the crop year.
    (c) CCC will announce by press release the estimates in paragraphs 
(a) and (b) of this section, which will reflect CCC's forecast of sugar 
likely to be forfeited to CCC and any uncertainty surrounding that 
forecast.



Sec. 1435.602  Eligible sugar to be purchased by CCC.

    (a) CCC will only purchase raw sugar, refined sugar, or in-process 
sugar for FFP that is eligible to be used as collateral under the CCC 
Sugar Loan Program, as specified in Sec. 1435.102.
    (b) Raw sugar, refined sugar, or in-process sugar purchased directly 
from any domestic sugar beet or sugarcane processor that made the raw 
sugar, refined sugar, or in-process sugar will be credited against the 
processor's sugar marketing allocation. (The definition for 
``marketing'' in Sec. 1435.2 applies to this subpart.)
    (c) CCC will only purchase sugar located in the United States.
    (d) CCC will evaluate an offer to sell sugar to CCC based upon CCC's 
estimate of the reduction in refined sugar supply available for human 
consumption due to the purchase. For example, if processing thick juice 
(an in-process sugar) would yield 70 percent sugar for human 
consumption, then CCC will only consider 70 percent of the volume of the 
thick juice in evaluating the per unit sales price.
    (e) CCC will only purchase the sugar if such purchase would reduce 
the likelihood of forfeitures of CCC sugar loans, as determined by CCC.



Sec. 1435.603  Eligible sugar seller.

    (a) To be considered an eligible sugar seller, the sugar seller must 
be located in the United States.
    (b) [Reserved]



Sec. 1435.604  Eligible sugar buyer.

    (a) To be considered an eligible sugar buyer, the bioenergy producer 
must produce bioenergy products, including fuel grade ethanol or other 
biofuels.
    (b) [Reserved]



Sec. 1435.605  Competitive procedures.

    (a) CCC will generally issue tenders for bids, before entering into 
contracts with any eligible sugar seller or buyer, with the intent of 
selecting the bid(s) that represents the least cost to CCC of removing 
sugar from the market.
    (b) CCC may, at times, negotiate contracts directly with sellers or 
buyers, if CCC determines that such negotiation will result in either 
reduced likelihood of forfeited sugar under the CCC sugar loan program 
or reduced costs of removing sugar from the market, which will reduce 
the likelihood of forfeitures of sugar to CCC.



Sec. 1435.606  Miscellaneous.

    (a) As a sugar buyer, a bioenergy producer must take possession of 
the sugar no more than 30 days from the date of CCC's purchase.
    (b) CCC, to the maximum extent practicable, will not pay storage 
fees for the sugar purchased under this program. A bioenergy producer 
must assume any storage costs accrued from date of contract to date of 
taking possession of the sugar.
    (c) Each bioenergy producer that purchases sugar through FFP must 
provide proof as specified by CCC that the sugar has been used in the 
bioenergy factory for the production of bioenergy and permit access for 
USDA to verify compliance.



Sec. 1435.607  Appeals.

    (a) The administrative appeal regulations of parts 11 and 780 of 
this title apply to this part.
    (b) [Reserved]



PART 1436_FARM STORAGE FACILITY LOAN PROGRAM REGULATIONS--Table of Contents



Sec.
1436.1 Applicability.
1436.2 Administration.
1436.3 Definitions.
1436.4 Application for 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.

[[Page 712]]

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, sales or conveyance, or 
          bankruptcy.
1436.17 Environmental compliance.
1436.18 Appeals.
1436.19 Equal Opportunity and Non-discrimination requirements.

    Authority: 7 U.S.C. 7971 and 8789; and 15 U.S.C. 714-714p.

    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.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41587, Aug. 18, 2009]



Sec. 1436.2  Administration.

    (a) The Farm Storage Facility Loan Program will be administered 
under the general supervision of the Executive Vice President, CCC or 
designee and will 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 will take any action required by these 
regulations that has not been taken by the county committee. The FSA 
State committee will 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 will 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, will be void.
    (g) The purpose of the Farm Storage Facility Loan program is to 
provide CCC funded loans for producers of grains, oilseeds, pulse crops, 
sugar, hay, renewable biomass, fruits and vegetables (including nuts), 
and other storable commodities, as determined by the Secretary, to 
construct or upgrade storage and handling facilities for the eligible 
facility loan commodities they produce.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41587, Aug. 18, 2009]



Sec. 1436.3  Definitions.

    The following definitions will 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.
    Cold storage facility means a facility or rooms within a facility 
that are specifically designed and constructed for

[[Page 713]]

the cold temperature storage of perishable commodities. The temperature 
and humidity in these facilities must be able to be regulated to 
specified conditions required for the commodity requiring storage.
    Collateral means the storage structure; the drying, handling, and 
cold storage equipment; and any other equipment securing the loan.
    Commercial facility means any structure, used in connection with or 
by any commercial operation including, but not limited to, grain 
elevators, warehouses, dryers, processing plants, or cold storage 
facilities used for the storage and handling of any agricultural 
product, whether paid or unpaid. Any structure suitable for the storage 
of an agricultural product that is in working proximity to any 
commercial storage operation will be considered to be part of a 
commercial storage operation.
    Commercial storage means the storing of any agricultural product, 
whether paid or unpaid, for persons other than the owner of the 
structure, except for family members and tenants or landlords with a 
share in the eligible facility loan commodity requiring storage.
    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 corn, grain sorghum, oats, wheat, 
barley, rice, raw or refined sugar, soybeans, sunflower seed, canola, 
rapeseed, safflower, flaxseed, mustard seed, crambe, sesame seed, other 
oilseeds as determined and announced by CCC, dry peas, lentils, or 
chickpeas harvested as whole grain, peanuts, hay, renewable biomass, and 
fruits and vegetables (including nuts). Corn, grain sorghum, wheat, and 
barley are 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.
    Hay means a grass or legume that has been cut and stored. Commonly 
used grass mixtures include rye grass, timothy, brome, fescue, coastal 
Bermuda, orchard grass, and other native species, depending on the 
region. Forage legumes include alfalfa and clovers.
    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.
    Renewable biomass means any organic matter that is available on a 
renewable or recurring basis including renewable plant material such as 
feed grains or other agricultural commodities (including, but not 
limited to, soybeans and switchgrass), other plants and trees (excluding 
old-growth timber), algae, crop residue (including, but not limited to, 
corn stover, various straws and hulls, and orchard prunings), other 
vegetative waste material (including, but not limited to, wood waste, 
wood residues, and food and yard waste) used for the production of 
energy in the form of heat, electricity, and liquid, solid, or gaseous 
fuels. Manure from any source is not included.
    Resale collateral value means collateral that can be sold and moved 
to a new location for which compensation equal to the outstanding loan 
value can be expected.
    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.
    Subordination agreement means any agreement under which a party may 
subordinate a security interest in property to the interest of another 
party.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002; 74 
FR 41587, Aug. 18, 2009]

[[Page 714]]



Sec. 1436.4  Application for loans.

    (a) An application for a loan must be submitted:
    (1) For all loans, except loans for renewable biomass storage 
facilities and cold storage facilities for fruits and vegetables, 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.
    (2) For loans for renewable biomass storage facilities and cold 
storage facilities for fruits and vegetables, to the administrative 
county FSA office that maintains the records of the farm or farms to 
which the application applies, if the facility will be located on land 
that has farm records established at the county office. If the 
commodities will be produced on land that does not have farm records 
established at the county office, the application must be submitted to 
the county FSA office that services the county where the facility will 
be located.
    (b) Upon request, the applicant must furnish information and 
documents as the State or county committee deems reasonably necessary to 
support the application. This may include financial statements, 
receipts, bills, invoices, purchase orders, specifications, drawings, 
plats, or written authorization of access.
    (c) For sugar storage facility loans, a loan application must be 
submitted to the county FSA office that maintains the applicant's 
records. If no such records exist, loan applications must be submitted 
to the county office serving the headquarters location of the sugar 
processor.
    (d) Submitting an application does not ensure loan approval nor 
create any liability on behalf of CCC. Borrowers who authorize delivery, 
site preparation, or construction actions without an approved loan, do 
so at their own risk.

[74 FR 41587, Aug. 18, 2009]



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 as determined 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. 
The Deputy Administrator, Farm Programs, may issue a waiver, if 
requested, on a case by case basis if a crop share landlord or tenant 
requests to construct a structure to store commodities produced on the 
farm but only one of the two wishes to accept loan liability;
    (6) Annually 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. Crop insurance or Noninsured Crop 
Disaster Assistance Program (NAP) coverage, if available, is required on 
all the commodities stored in the FSFL-funded facility, whether 
economically significant or not; crop insurance under the Federal Crop 
Insurance Program may not be available for certain renewable biomass 
commodities;
    (7) Is in compliance with the U.S. Department of Agriculture (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;

[[Page 715]]

    (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 or a crop insurance 
violation under 7 CFR part 718.
    (b) For sugar 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; 74 FR 41588, Aug. 18, 2008]



Sec. 1436.6  Eligible storage or handling equipment.

    (a) For all eligible facility loan commodities, except sugar and 
fruits and vegetables, loans may be made only for the purchase and 
installation of eligible storage facilities, and permanently affixed 
drying and handling equipment, or for the remodeling of existing storage 
facilities or permanently affixed drying and handling equipment as 
provided in this section. The loan collateral must be used for the 
purpose for which it was delivered, erected, constructed, assembled, or 
installed for the entire term of the loan. Eligible storage and handling 
facilities 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 15 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 or kits from a 
supplier approved by the Deputy Administrator, Farm Programs, and other 
upright silo-type structures designed for whole grain storage or other 
than whole grain storage and with a useful life of at least 15 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 15 years;
    (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 15 years;
    (5) New structures suitable for storing hay that are built according 
to acceptable design guidelines from the National Institute of Food and 
Agriculture (NIFA) or land-grant universities and with a useful life of 
at least 15 years; and
    (6) New structures suitable for storing renewable biomass that are 
built according to acceptable industry guidelines and with a useful life 
of at least 15 years.
    (b) For all eligible facility loan commodities, except sugar and 
fruits and vegetables, 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 
eligible facility loan commodity, 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 eligible facility loan commodity storage and 
handling equipment;
    (5) Concrete foundations, aprons, pits, and pads (including site 
preparation, labor and materials) essential to

[[Page 716]]

the proper operation of the eligible facility loan commodity storage and 
handling equipment; and
    (6) Flooring appropriate for storing hay and renewable biomass 
suitable for the region where the facility is located and designed 
according to acceptable guidelines from NIFA or land-grant universities.
    (c) For all eligible facility loan commodities, except sugar and 
fruits and vegetables, no loans will be made for installation or related 
costs of:
    (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, not including 
remanufactured oxygen-limiting storage structures built to the 
manufacturer's original design specifications as specified in paragraph 
(a)(2) of this section;
    (4) Structures that are not suitable for storing the facility loan 
commodities for which a need is determined;
    (5) Storage structures to be used as a commercial facility. Any 
facility that is in working proximity to any commercial storage 
operation will be considered to be part of a commercial storage 
operation; and
    (6) Portable or permanent weigh scales.
    (d) Loans for all eligible facility loan commodities, except sugar 
and fruits and vegetables, 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 the county committee determines there is a 
need for the capacity of the structure, but loans will not be approved 
solely for the replacement of worn out items such as motors, fans, or 
wiring.
    (e) Loans for all eligible facility loan commodities except sugar 
and fruits and vegetables 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 15 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) The provisions of this paragraph apply only to sugar storage 
facility loans.
    (1) 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.
    (2) Sugar storage facility, 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.

[[Page 717]]

    (3) No sugar storage facility loans will be made for:
    (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.
    (g) The provisions of this paragraph apply only to fruit and 
vegetable cold storage facility loans.
    (1) For cold storage facility loans, the loan amount may include 
costs associated with the purchase, installation, building, improving, 
remodeling, or renovating an eligible storage or handling facility. 
Costs associated with the construction of a permanently installed cold 
storage facility include, but are not limited to, the following: An 
insulated cement slab floor, insulation for walls and ceiling 
(including, but not limited to, loose fill cellulose, foam insulation 
sheets, sprayed-on and foam-in-place materials), and a vapor barrier.
    (2) Eligible facilities include, but are not limited to, the 
following:
    (i) A new cold storage facility of wood pole and post construction, 
steel, or concrete, that is suitable for storing the fruits and 
vegetables produced by the borrower and with a useful life of at least 
15 years;
    (ii) New walk-in prefabricated permanently installed cold storage 
coolers that are suitable for storing the producer's fruits and 
vegetables and with a useful life of at least 15 years;
    (iii) Permanently affixed equipment necessary for a cold storage 
facility such as refrigeration units or system and circulation fans;
    (iv) Permanently installed equipment to maintain or monitor the 
quality of produce stored in a cold storage facility;
    (v) Electrical equipment, including labor and materials for 
installation, such as lighting, motors, and wiring integral to the 
proper operation of a cold storage facility.
    (3) For cold storage facility loans, loans may be approved for 
financing additions or modifications to 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.
    (4) No cold storage facility loans will be made for:
    (i) Portable structures;
    (ii) Portable handling and cooling equipment;
    (iii) Used or pre-owned structures, or cooling and handling 
equipment; or
    (iv) Structures that are not suitable for a fruit or vegetable cold 
storage facility.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54938, Aug. 26, 2002; 74 
FR 41588, Aug. 18, 2009; 76 FR 4805, Jan. 27, 2011]



Sec. 1436.7  Loan term.

    (a) For eligible facility loan commodities other than sugar, the 
term of the loan will be 7, 10, or 12 years, based on the total loan 
principal, from the date a promissory note and security agreement is 
completed on both the partial and final loan disbursements. The 
applicant will choose, if applicable, a loan term when submitting the 
loan application and total cost estimates.
    (1) For a loan with the principal of $100,000 or less, the term is 7 
years.
    (2) For loans from $100,000.01 through $250,000, the borrower will 
choose a term of 7 or 10 years.
    (3) For loans from $250,000.01 through $500,000, the borrower will 
choose a loan term of 7, 10, or 12 years.
    (b) No extensions of the loan term will be granted. The loan balance 
and all related costs are due at the end of the loan term.
    (c) For a sugar-related loan:
    (1) CCC, at its discretion, may authorize a maximum loan term of 15 
years. The minimum loan term of a sugar-related loan is 7 years.
    (2) The loan balance and costs are due at the end of the loan term, 
which will be established on the date the promissory note and security 
agreement is executed.

[74 FR 41589, Aug. 18, 2009]



Sec. 1436.8  Security for loan.

    (a) Except as agreed to by CCC, all loans must be secured by a 
promissory note and security agreement covering

[[Page 718]]

the farm storage facility and such other assurances as CCC may demand, 
subject to the following:
    (1) The promissory note and security agreement must grant CCC a 
security interest in the collateral and must be perfected in the manner 
specified in the laws of the State where the collateral is located.
    (2) CCC's security interest in the collateral must be the sole 
security interest in such collateral except for prior liens on the 
underlying real estate that by operation of law attach to the collateral 
if it is or will become a fixture. If any such prior lien on the real 
estate 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 any loan amounts of $50,000 or less, CCC will not require a 
severance agreement from the holder of any prior lien on the real estate 
parcel on which the storage facility is located, if the borrower:
    (1) Agrees to increase the down payment on the storage facility loan 
from 15 percent to 20 percent; or
    (2) Provides other security such as an irrevocable letter of credit, 
bond, or other form of security, as approved by CCC.
    (c) For loan amounts exceeding $50,000, or when the aggregate 
outstanding balance will exceed $50,000 or for loans in which the 
approving county or State 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 is required 
in the form of a real estate mortgage, deed of trust, or other security 
instrument approved by USDA's Office of the General Counsel, provided 
further that:
    (1) CCC's interest in the real estate must be superior to all other 
liens, except a loan 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.
    (2) 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.
    (3) 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 the General Counsel. CCC will not require 
such an agreement from any agency of USDA.
    (d) Title insurance or a title opinion is required for loans secured 
by real estate.
    (e) Real estate liens, with prior CCC approval, 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 the acreage is not 
subject to any other liens or mortgages that are superior to CCC's lien 
interest and
    (2) The acreage is of adequate size and value at the time of the 
application as determined by the county committee to adequately secure 
and insure repayment of the loan.
    (f) A borrower, in lieu of such liens required by this section, may 
provide an irrevocable letter of credit, bond, or other form of 
security, as approved by CCC.
    (g) If an existing structure is remodeled and an addition becomes an 
attached, integral part of the existing storage structure, CCC's 
security interest will include the remodeled addition as well as the 
existing storage structure.
    (h) For all farm storage facility loans, except sugar loans, the 
borrower must pay the cost of loan closings by attorneys, title 
opinions, title insurance, title searches, filing, and recording all 
real estate liens, fixture filings, appraisals if requested by the 
borrower, and all subordinations. CCC will pay costs relating to credit 
reports, collateral lien searches, and filing and recording financing 
statements for the collateral.
    (i) All loans of $50,000 or less that are secured with collateral 
with no resale value, as determined by CCC, may require additional 
security.
    (j) For sugar storage facility loans, in addition to other 
requirements in this section, additional security, including real 
estate, chattels, crops in storage,

[[Page 719]]

and other assets owned by the applicant, is required if deemed necessary 
by CCC to adequately secure the loan. A sugar storage facility loan will 
generally be considered to be adequately secured when the CCC-determined 
value of security for the loan is equal to at least 125 percent of the 
loan amount.
    (k) For sugar storage facility loans, paragraph (h) of this section 
is not applicable. However, the borrower must 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, 
and filing and recording all real estate liens, fixture filings, 
subordinations, credit reports, collateral lien searches, and filing and 
recording financing statements for the collateral.

[74 FR 41589, Aug. 18, 2009]



Sec. 1436.9  Loan amount and loan application approvals.

    (a) The cost on which the loan will 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, -ton or, -
cubic foot cost established by the FSA State committee.
    (b) The net cost for all storage facilities and handling equipment:
    (1) 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-farm material approved by the county 
committee.
    (2) May not include secondhand material or any other item determined 
by the approving authority to be ineligible for loan.
    (c) The maximum total principal amount of the farm storage facility 
loan is 85 percent of the net cost of the applicant's needed storage or 
handling facility, including equipment, not to exceed $500,000 per loan.
    (d) The storage need requirement for eligible facility loan 
commodities will be determined as follows:
    (1) For facility loan commodities, except sugar and fruits and 
vegetables:
    (i) Multiply the average of the applicant's share of the acres 
farmed for the most recent three years for each type of facility loan 
commodity requiring suitable storage at the proposed facility;
    (ii) By a yield determined reasonable by the county committee;
    (iii) Multiply by two (for 2 years production); and
    (iv) Subtract existing storage capacity in the units of measurement, 
such as bushels, tons, or cubic feet, for the type of storage needed to 
determine remaining storage need.
    (v) Compare capacity of proposed facility with storage need 
(calculated as specified in paragraphs (d)(1)(i)-(iv) of this section) 
to determine if applicant is eligible for additional storage.
    (2) For sugar storage facility loans,
    (i) Identify past processing volume and marketing allotments;
    (ii) Use the processor's projection of processing volume, available 
storage capacity, volume not to be marketed due to marketing allotment, 
and other appropriate factors affecting the processor's storage need to 
estimate the storage need requirement, and
    (iii) Compare capacity of proposed facility with storage need 
(estimated as specified in paragraphs (d)(2)(i)-(ii) of this section) to 
determine if additional storage is required.
    (3) For cold storage facilities for fruits and vegetables:
    (i) Multiply the average of the applicant's share of the acres 
farmed for the most recent three years for each eligible fruit and 
vegetable commodity requiring cold storage at the proposed facility;
    (ii) By a yield determined reasonable by the county committee;
    (iii) Determine cold storage needed (calculated as specified in 
paragraphs

[[Page 720]]

(d)(3)(i)-(ii) of this section) with the assistance of NIFA, land-grant 
university, or ARS publications; and
    (iv) Subtract existing cold storage capacity to determine remaining 
storage need.
    (v) Compare capacity of proposed cold storage facility with cold 
storage need (calculated as specified in paragraphs (d)(3)(i)-(iv) of 
this section) to determine if applicant is eligible for additional cold 
storage.
    (4) For all eligible facility loan commodities, except sugar, if 
acreage data is not available, including prevented planted acres, or 
data is not applicable to the storage need, a reasonable acreage 
projection may be made for newly acquired farms, changes in cropping 
operations, or in facility loan commodity crops being grown for the 
first time.
    (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 will be prorated. Only costs associated with the applicant's 
needed storage capacity will be considered eligible for loan under this 
part.
    (f) Any borrower with an outstanding loan must use the financed 
structure only for the storage of eligible facility loan commodities. If 
a borrower uses such structure for other purposes such as office space 
or display area, the loan amount will 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 Deputy 
Administrator, Farm Programs, or the FSA State committee establishes a 
lower limit for county committee approval authority.
    (h) Farm storage facility loan approvals, for all eligible facility 
loan commodities except sugar, will expire 4 months after the date of 
approval unless extended in writing for an additional 4 months by the 
FSA State Committee. A second 4 month extension, for a total of 12 
months from the original approval date, may be approved by the FSA State 
Committee. This authority will not be re-delegated. Sugar storage 
facility loan approvals will expire 8 months after the date of approval 
unless extended in writing for an additional 4 months by the FSA State 
Committee.
    (i) For sugar storage facility loans, paragraphs (c) and (g) of this 
section do not apply.
    (j) For sugar storage facility loans, the agency approval officials 
may only approve loans, subject to available funds.

[74 FR 41590, Aug. 18, 2009, as amended at 76 FR 4805, Jan. 27, 2011]



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 will be made by the loan applicant to 
the supplier or contractor before either the partial or final loan 
disbursements.
    (b) The down payment must 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.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41590, Aug. 18, 2009]



Sec. 1436.11  Disbursements and assignments.

    (a) At the request of the borrower, one partial disbursement of loan 
principal and one final loan disbursement will be available. The partial 
loan disbursement will be made to facilitate the purchase and 
construction of an eligible facility and will be made after the approved 
applicant has completed construction on part of the structure. County 
FSA personnel will inspect and verify the amount of construction 
completed.
    (1) The amount of the partial loan disbursement will be determined 
by CCC and made after the borrower provides acceptable documentation for 
that portion of the completed construction to the County Committee.
    (2) Security required for the amount of the partial loan 
disbursement will be required before the partial loan disbursement is 
finalized.

[[Page 721]]

    (3) The final disbursement of the loan by CCC will be made after the 
farm storage facility has been completely and fully delivered, erected, 
constructed, assembled, or installed and a CCC representative has 
inspected and approved such facility.
    (4) All additional security needed to fully secure both the partial 
and final loan disbursements must be received before the final loan 
disbursement.
    (b) Both the partial and final loan disbursements 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. If deemed appropriate by CCC, the partial and final 
disbursement may have separate notes and separate security instruments.
    (c) Both the partial and final loan disbursement will be made 
jointly to the borrower and the contractor or supplier, except 
disbursement may be made to the borrower solely where CCC determines, 
based upon information made available to CCC by the borrower, that 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 all contractors and 
suppliers providing goods and services to the loan applicant.
    (e) Loan proceeds cannot be assigned.
    (f) For sugar storage facility loans, only one disbursement will be 
made and such disbursement will be regarded as a final disbursement.

[74 FR 41591, Aug. 18, 2009]



Sec. 1436.12  Interest and fees.

    (a) Loans will bear interest at the rate equivalent, as determined 
by CCC, to the rate of interest charged on Treasury securities of 
comparable term and maturity on the date the loan is initially approved.
    (b) The interest rate for each loan will remain in effect for the 
term of the loan.
    (c) Each borrower on a loan application must pay a non-refundable 
application fee in such amount determined appropriate by CCC; the fee 
will be not less than $100 per borrower. The loan application fee is 
determined based on the cost of the fees associated with the loan, 
including, but not limited to, the cost to CCC for lien searches, 
security filings, and credit reports.
    (d) For sugar storage facility loans, paragraph (c) of this section 
does not apply.

[73 FR 41591, Aug. 18, 2009]



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 each of the partial and final loan disbursements, 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. Each payment 
will be applied first to accrued interest and then to principal.
    (c) When installments are not paid on the due date:
    (1) CCC will generally mail a demand for payment to the debtor after 
the due date has passed.
    (2) If the installment is not paid within 30 calendar 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, CCC may send two 
subsequent written demands at approximately 30 calendar day intervals 
unless CCC needs to take other action to protect the interests of CCC.
    (3) If the debtor files an appeal according to Sec. 1436.18, CCC 
will generally cease collection action until the appeal process is 
complete, however, CCC may withhold any payments due the debtor and, 
depending on the outcome of the appeal, any payments due the debtor may 
later be offset and applied to reduce the indebtedness.
    (4) In lieu of a foreclosure on the collateral or the land securing 
a loan 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 of this chapter. Any

[[Page 722]]

rescheduling or alternate repayment arrangements will be permitted only 
with prior approval from the Deputy Administrator, Farm Programs. 
Alternately, CCC may implement such other collection procedures as it 
deems appropriate.
    (d) A claim will 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 facility including, 
but not limited to, elevators, warehouses, dryers, processing plants, or 
retail or wholesale cold storage facilities.
    (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 
debtor's, 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 will release CCC's security interest 
in the collateral.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009]



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 or land 
securing the note evidencing the loan. To protect its interests, CCC may 
pay any unpaid taxes with respect to the collateral or land securing a 
loan made in accordance with this part, and if CCC does so, the borrower 
will reimburse CCC for such payment, and if unpaid by the borrower, such 
debt will become due immediately.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009]



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'' 
will 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 will be liable for 
all damages to or destruction of the loan collateral. CCC will 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 will 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 will 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 
will constitute a loan default for which the remaining balance of the 
loan willbecome immediately due and payable.
    (f) For sugar storage facility loans, in addition to the 
requirements of paragraph (d) of this section, sugar processors must 
also insure the contents of storage structures used as collateral for a 
sugar storage facility loan against all perils.

[66 FR 4612, Jan. 18, 2001, as amended at 67 FR 54939, Aug. 26, 2002; 74 
FR 41591, Aug. 18, 2009]

[[Page 723]]



Sec. 1436.16  Foreclosure, liquidation, assumptions, sales or conveyance, or 

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 
will 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 non-movable or non-salable 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 will 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.
    (1) Requests for approval of assumptions must 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 must 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 will 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 must obtain approval for the sale or conveyance from the FSA 
county committee with the understanding that sale proceeds must be paid 
to satisfy the borrower's indebtedness to CCC.
    (d) If any significant changes are made to the legal or operating 
status of the farming operation with an outstanding Farm Storage 
Facility Loan, the borrower must do one of the following:
    (1) Find an eligible borrower or entity to assume the loan as 
specified in paragraph (b) of this section,
    (2) Repay the loan, or
    (3) Undergo new financial analysis, as approved and determined by 
CCC, to ensure CCC's interests are protected and that the current 
borrower is in a position to continue making the scheduled loan 
payments.
    (e) Remedies provided for in this section will, 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.

[66 FR 4612, Jan. 18, 2001, as amended at 74 FR 41591, Aug. 18, 2009]

[[Page 724]]



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 will 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. 
FSFL borrowers are subject to the nondiscrimination provisions 
applicable to Federally assisted programs contained in 7 CFR parts 15 
and 15b.
    (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, disability, sex, marital status, familial 
status, parental status, sexual orientation, genetic information, 
political beliefs, reprisal, or age, provided the applicant can execute 
a legal contract. FSFL is subject to the nondiscrimination provisions 
applicable to Federally conducted programs contained in 7 CFR parts 15d 
and 15e. 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 any rights under the 
Consumer Protection Act.

[67 FR 54939, Aug. 26, 2002. Redesignated at 67 FR 65690, Oct. 28, 2002; 
74 FR 41592, Aug. 18, 2009]



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, appraisal requirements, and application for 
          payment.
1437.11 Average market price and payment factors.
1437.12 Crop definition.

[[Page 725]]

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 Late-planted acreage.
1437.104 Assigned production.
1437.105 Determining payments for low yield.
1437.106 Honey.
1437.107 Maple sap.
1437.108-1437.200 [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.

          Subpart F_Determining Coverage in the Tropical Region

1437.501 Applicability; definition of ``tropical region'' and additional 
          definitions
1437.502 Coverage periods and fees for covered tropical crops.
1437.503 Covered losses and recordkeeping requirements for covered 
          tropical crops.
1437.504 Notice of loss for covered tropical crops.
1437.505 Application for payment for the tropical region.

    Authority: 7 U.S.C. 1501-1508 and 7333; 15 U.S.C. 714-714m; 19 
U.S.C. 2497, and 48 U.S.C. 1469a.

    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 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.

[[Page 726]]

    (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.
    (f) Items including, but not limited to, application periods, 
coverage periods, application deadlines, fees, prices, yields, and 
payment factors established for NAP in accordance with this part that 
are used for similarly situated participants and eligible crops are not 
to be construed to be individual program eligibility determinations or 
extent of eligibility determinations and are, therefore, not subject to 
administrative review.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006]



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.
    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.
    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.
    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 the National Institute of Food and Agriculture 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

[[Page 727]]

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.
    Native sod means land on which the plant cover is composed 
principally of native grasses, grasslike plants, forbs, or shrubs 
suitable for grazing and browsing; and that has not been tilled for the 
production of an annual crop as of June 18, 2008.
    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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006; 
76 FR 4805, Jan. 27, 2011; 78 FR 21018, Apr. 9, 2013]



Sec. 1437.4  Eligibility.

    (a) Noninsured crop disaster assistance is available for loss of 
production or prevented planting of eligible commercial crops or other 
agricultural commodities:
    (1) Planted during the planting period, which means the time during 
which a majority of the crop is normally planted in the area, as 
determined by CCC, and is considered timely-planted for NAP purposes;
    (2) Prevented from being planted during the planting period;
    (3) Planted during the late planting period, which means the time 
after the planting period, during which certain crops, as determined by 
CCC, may be planted and remain eligible for reduced NAP coverage; and
    (4) Determined by CCC to be eligible crops:
    (i) For which catastrophic coverage is not available; or
    (ii) For specific perils not included under available catastrophic 
coverage.
    (b) 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, including propagation stock such as non-ornamental

[[Page 728]]

seedlings, sets, cuttings, rootstock, and others, as determined by CCC; 
and
    (viii) Sea grass and sea oats.
    (c) Except as specified in paragraph (d) of this section, the 
Governor of a State in the Prairie Pothole National Priority Area (Iowa, 
Minnesota, Montana, North Dakota, and South Dakota) may specify that 
native sod acreage that is tilled for the production of an annual crop 
will be ineligible for NAP benefits during the first 5 crop years of 
planting.
    (d) If the producer's total native sod acreage is 5 acres or less, 
the eligibility restrictions for native sod specified in paragraph (c) 
of this section will not apply.
    (e) Wheat, barley, oats, or triticale crop acreage subject to an 
application for grazing payments under the program specified in part 
1421, subpart D of this chapter, or successor program, is ineligible for 
NAP payments.

[67 FR 12448, Mar. 19, 2002, as amended at 67 FR 62324, Oct. 7, 2002; 71 
FR 13742, Mar. 17, 2006; 78 FR 21018, Apr. 9, 2013]



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 late planting period; 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006]



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 in the administrative 
county FSA office no later than the application closing date.
    (b) The service fee must be paid at the time of the application. The 
service fee is $250 per crop per administrative county, up to $750 per 
producer per administrative county, but not to exceed $1875 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006; 
78 FR 21018, Apr. 9, 2013]



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

[[Page 729]]

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 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 harvested crop for which 
producers file an application for payment in accordance with Sec. 
1437.10, producers must provide documentary evidence acceptable to CCC 
of production and the date harvest was completed, including production 
of crops planted after the planting period or late planting period. Such 
documentary evidence must be provided no later than the acreage 
reporting 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 acreage 
reporting date for the crop in the current crop year. Production data 
provided after the acreage reporting 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.
    (b) During any crop year that a notice of loss is filed according to 
this part:
    (1) Producers of hand-harvested crops shall, in addition to 
providing acceptable production records according to this part, notify 
the administrative county office that harvest is complete. This 
notification must be made before deterioration or destruction of the 
crop residue and within 15 days after harvest is completed. If an 
appraisal of the crop acreage is determined necessary by CCC, the 
producer shall not destroy the crop residue until the crop acreage is 
released by an FCIC- or CCC-qualified loss adjustor. Producers may, at 
their expense, request that an appraisal by certified FCIC or CCC loss 
adjusters of hand-harvested crop acreage be completed during non-loss 
crop years in order to maintain accurate actual production history.
    (2) Producers shall not allow the gathering (gleaning) of any 
produce left in the field following normal harvest of the crop acreage 
until the crop acreage is released by a qualified CCC or FCIC loss 
adjustor, as determined by CCC. Except, crop acreage may be released by 
an authorized CCC representative for acceptable gleaning operations, as 
determined by CCC, when producers and gleaners agree to provide 
acceptable records, as determined by CCC, of the quantity of the crop 
gleaned.
    (c) 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.
    (d) 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

[[Page 730]]

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.
    (e) 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 determined by CCC, may be 
adjusted upward by the amount of production corresponding to the amount 
of the contract payment received.
    (f) 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.
    (g) 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.
    (h) 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13742, Mar. 17, 2006]



Sec. 1437.8  Unit definition.

    (a) The unit identifies the interest of the producer in the 
administrative county on the basis of the unique relationship of the 
owner to one or more operators. The unit is the foundation for all 
determinations of acreage, production, value, AUD, approved yields, 
requisite losses, payments, and other program requirements.
    (b) Separate and distinct units are:
    (1) One-hundred percent interest as owner/operator;
    (2) Less than one-hundred percent interest as owner or operator; or
    (3) Less than one-hundred percent interest, as owner or operator in 
an inverse relationship.

[71 FR 13743, Mar. 17, 2006]



Sec. 1437.9  Causes of loss.

    (a) To be eligible for benefits under this part, an eligible cause 
of loss must result in:
    (1) A loss of production greater than 50 percent of the approved 
yield in accordance with subpart B of this part;
    (2) Prevented planting of greater than 35 percent of the intended 
crop acreage according to subpart C of this part;
    (3) A value loss of greater than 50 percent of the pre-disaster 
value according to subpart D of this part, or
    (4) An AUD loss of greater than 50 percent of the expected AUD 
according to subpart E of this part.
    (b) The quantity of the crop or commodity will not be reduced for 
any quality consideration unless a zero value is established.
    (c) Eligible causes of loss include:
    (1) Damaging weather occurring before or during harvest, including 
but not limited to drought, hail, excessive moisture, freeze, tornado, 
hurricane, excessive wind, or any combination thereof;

[[Page 731]]

    (2) Adverse natural occurrence before 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 before or during harvest that 
directly causes, accelerates, or exacerbates the destruction or 
deterioration of an eligible crop, as determined by CCC.
    (d) Due to the unique requirements, such as controlled environments, 
necessary for successful production of some crops and commodities; not 
all eligible causes of loss will apply to all crops and commodities.
    (e) Ineligible causes of loss include but are not limited to:
    (1) Negligence or malfeasance of the producer;
    (2) Failure of the producer to reseed to the same crop during the 
same planting period in those areas and under such circumstances where 
it is customary;
    (3) Failure of the producer to follow good farming practices, as 
determined by CCC;
    (4) Water contained or released by any governmental, public, or 
private dam or reservoir project, if an easement exists on the acreage 
affected for the containment or release of the water;
    (5) Failure or breakdown of irrigation equipment or facilities;
    (6) Except for tree crops and perennials and as provided for in 
Sec. 1437.201, inadequate irrigation resources at time of planting;
    (7) Except as specified in Sec. 1437.303, a loss of inventory or 
yield of aquaculture (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; or
    (8) Any failure to provide a controlled environment or exercise good 
nursery practices when such controlled environment or practices are a 
condition of eligibility under this part.

[71 FR 13743, Mar. 17, 2006, as amended at 78 FR 21018, Apr. 9, 2013]



Sec. 1437.10  Notice of loss, appraisal requirements, and application for 

payment.

    (a) When an eligible crop is damaged by an eligible cause of loss, 
at least one producer having a share in the unit must provide a notice 
of loss to CCC in the administrative FSA county 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
    (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;

[[Page 732]]

    (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) Producers who file a notice of loss, using the appropriate CCC 
form, for crop acreage that will not be harvested as intended, such as 
abandoned, put to another use, replanted to the same or a different 
crop, or in the case of forage, acreage intended to be mechanically 
harvested that will be both mechanically harvested and grazed, must:
    (1) Not put the crop to another use or prepare the acreage for 
replanting or otherwise change any conditions of the crop or acreage 
until written notification of release of the crop or acreage is received 
from CCC;
    (2) Request, using the appropriate FSA form, an appraisal of the un-
harvested acreage for potential production and release of the crop or 
acreage:
    (i) No less than 15 calendar days before replanting or in the case 
of forage intended to be mechanically harvested, grazing of the crop 
acreage.
    (ii) Within 15 calendar days after the acreage is abandoned, for 
example, discontinued care for the crop or provided care so 
insignificant as to provide no benefit to the crop, as determined by 
CCC.
    (iii) No later than the normal harvest date of the crop, as 
determined by CCC.
    (3) Request the loss adjustor on the day the initial appraisal is 
completed, or request in any manner of written correspondence received 
in the FSA administrative county office no later than 15 calendar days 
after the request for initial appraisal is submitted, that the appraisal 
be deferred until the end of the growing season, the producer be 
permitted to establish representative sample areas according to 
paragraph (d)(4) of this section, and that the acreage be released 
immediately when:
    (i) Time is critical for replanting, or other urgent reasons; and
    (ii) Producers and loss adjustors cannot resolve disagreement with 
the initial appraisal of the acreage to be released.
    (4) Establish representative sample areas of the acreage according 
to the loss adjustor's instructions received on the day the initial 
appraisal is completed or, if the loss adjustor is not available, 
according to the FCIC Loss Adjustment Manual (LAM) and applicable FCIC 
crop handbooks. Report the size, number, and location of the areas in 
any manner of written correspondence received in the FSA administrative 
county office, no later than 15 calendar days after requesting a 
deferred appraisal and before the acreage is put to another use or 
replanted. Representative sample areas must be of adequate construction 
and numbers to provide acceptable sampling results and maintained in 
sound condition, as determined by CCC, until released by CCC.
    (5) If possible, be present for the appraisal involving un-harvested 
crop acreage and accept or contest the results of the loss adjustor's 
appraisal. Producers unable to be present for the appraisal may contest 
the results of the appraisal in the FSA administrative county office.
    (e) For the 2005 and subsequent crop years, crop acreage for which 
an application for coverage has been filed, that is intended for 
production of forage seed and for which a notice of loss is filed 
indicating the crop acreage will not be harvested as seed, will be 
appraised for potential production of seed when producers provide CCC 
acceptable evidence of a contract to produce seed

[[Page 733]]

for the current crop year or acceptable records of acreage and seed 
production for three or more of the last 5 consecutive crop years, as 
determined by CCC.
    (f) Forage acreage for which a notice of loss is filed that was 
intended to be mechanically harvested but will be grazed and not 
mechanically harvested, or that was intended to be grazed but will be 
mechanically harvested and not grazed, does not require an appraisal or 
release of crop acreage.
    (g) 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13743, Mar. 17, 2006]



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 type 
within a State, as determined by CCC, 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 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13744, Mar. 17, 2006]



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

[[Page 734]]

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 specified in paragraph (a) 
of this section will not apply to:
    (1) Emergency Loans made under subtitle C of the Consolidated Farm 
and Rural Development Act (7 U.S.C. 1961-1970).
    (2) Supplemental Revenue Assistance Payments Program (SURE) payments 
as specified in part 760 of this title,
    (3) Livestock Forage Disaster Program (LFP) payments as specified in 
part 760 of this title,
    (4) Tree Assistance Program (TAP) payments as specified in part 760 
of this title, or
    (5) Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
Fish Program (ELAP) payments as specified in part 760 of this title.
    (c) The restriction on multiple benefits does not relieve the 
producer from the requirements of making a production and acreage 
report.
    (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.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21018, Apr. 9, 2013]



Sec. 1437.14  Payment and income limitations.

    (a) The provisions of part 1400 of this title apply to NAP.
    (b) For the 2008 and earlier crop years for which NAP was 
authorized, NAP payments will 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

[[Page 735]]

necessary for the computation of payment, or there was a genuine dispute 
concerning eligibility for payment.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013]



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.
    (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 (APH) is the unit's record of crop yield 
by crop year for the APH base period. The APH base period consists of 
ten crop years of actual yield, T-yield, assigned yield, and zero 
credited yield, immediately preceding the crop year for which an 
approved yield is calculated in accordance with this part. APH will be 
used, except as otherwise indicated in this part, as the basis for 
providing noninsured crop disaster assistance.

[71 FR 13744, Mar. 17, 2006]



Sec. 1437.102  Yield determinations.

    (a) An actual yield is the total amount of harvested and appraised 
production from unit acreage for the crop year on a per-acre, or other 
basis, as applicable.
    (b) A T-yield (county expected yield):
    (1) Is the Olympic average (disregarding the high and low yields) of 
historical yields of the crop in the county for the five consecutive 
crop

[[Page 736]]

years immediately preceding the previous crop year. For example, for the 
2005 crop year, the five consecutive crop years immediately preceding 
the previous crop year would be 1999 through 2003.
    (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.
    (4) Will be based on the most representative available historical 
information, as determined by CCC, from such sources as, but not limited 
to, actual acreage and production data of participating producers in the 
county; or in similar areas; National Agricultural Statistics Service 
data; National Institute of Food and Agriculture records, Federal Crop 
Insurance data, and credible non-government studies. Such data is based 
on the acreage intended for harvest.
    (5) May be adjusted on an administrative county-wide basis for:
    (i) Yield variations due to different farming practices in the 
administrative county such as irrigated, non-irrigated, and organic 
practices; and
    (ii) Cultural practices when such practices in the administrative 
county are different from those used on acreage to establish the yield.
    (6) Will, for all land for those producers who have land physically 
located in multiple counties and administered in one county office, be 
based on the administrative county's expected yield for the crop.
    (7) May be reduced, on a specific APH basis, when, as determined by 
CCC, it does not accurately reflect the productive capability of 
specific crop acreage.
    (8) Will be used in the actual production history base period when 
less than four consecutive crop years of actual, assigned, or zero-
credited yields, as applicable, are available.
    (c) An assigned yield is:
    (1) Equal to 75 percent of the approved yield calculated for the 
most recent crop year for which the producer did not certify a report of 
production.
    (2) Used, after the first crop year an approved yield for the crop 
is calculated, in the actual production history base period when the 
producer reports acreage for the crop but fails to certify a report of 
production. Producers may have only one assigned yield in the actual 
production history base period.
    (3) May be replaced with an actual yield when the producers provide 
a certification of production and acceptable production records for the 
applicable crop year in accordance with Sec. 1437.7.
    (4) May not be used 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, 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 the documentation is inadequate, proof that 
the eligible crop, had it been harvested, could have been marketed at a 
reasonable price.
    (5) May be used, notwithstanding paragraph (c)(4) of this section, 
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 CCC approves such recommendation.
    (d) A zero-credited yield:
    (1) Will be used in the applicable crop year of the actual 
production history base period for each crop year following the crop 
year containing an assigned yield, for which producers do not certify a 
report of acreage or production, as determined by CCC.
    (2) May be replaced with an actual yield when the producer provides 
a certification of production and acceptable production records for the 
applicable crop year in accordance with Sec. 1437.7.

[[Page 737]]

    (e) An approved yield:
    (1) Is used in the calculation of the requisite loss and payment.
    (2) Is a simple average of a minimum of four base period crop year 
yields, i.e., actual yield, T-yield, assigned yield, or zero-credited 
yield. The base period is 10 crop years, except 5 crop years for apples 
and peaches, immediately preceding the crop year for which an approved 
yield is calculated, not including any crop year the crop was out of 
rotation, not planted, or prevented from being planted.
    (3) Shall be calculated according to the following criteria when the 
producer does not have at least four consecutive crop years of actual, 
assigned, or zero credited yields beginning with the most recent crop 
year.
    (i) If there are no certified acceptable production records of 
actual production for the most recent crop year, or zero credited or 
assigned yields in the producer's APH base period, and no formula 
provided for the producer under paragraphs (e)(3)(ii) through (iv) 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 minimum four APH crop years.
    (ii) If certified acceptable production records of actual production 
are available for only the most recent crop year and there are no zero 
credited or assigned yields in the producer's APH base period, 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 remaining three of the minimum four APH crop years.
    (iii) If certified acceptable production records of actual 
production are available for only the two most recent crop years and 
there are no zero credited or assigned yields in the producer's APH base 
period, 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 remaining two of the minimum four APH crop 
years.
    (iv) If certified acceptable production records of actual production 
are available for only the three most recent crop years and there are no 
zero credited or assigned yields in the producer's APH base period, the 
approved yield for the current crop year will be calculated on the 
simple average of the three actual yields plus 100 percent of the 
applicable T-yield for the remaining crop year of the minimum four APH 
crop years.
    (f) 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.
    (g) 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.
    (h) 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.
    (i) 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.
    (j) A producer who has not shared in the risk of the production of 
the crop for more than two crop years during the base period, as 
determined by CCC,

[[Page 738]]

will have an approved yield calculated based on a combination of 100 
percent of the applicable T-yield and any actual yield for the minimum 
crop years of the producer's APH base period. Producers who have 
produced the crop for one or two crop years must provide CCC, at the 
administrative FSA office serving the area in which the crop is located, 
a certification of production and production records for the applicable 
crop years in accordance with Sec. 1437.7.
    (k) Further adjustments may be made as necessary to accomplish the 
purposes of this program.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13744, Mar. 17, 2006; 
76 FR 4805, Jan. 27, 2011]



Sec. 1437.103  Late-planted acreage.

    (a) Producers planting crop acreage after the final planting date 
and during the late planting period, as determined by CCC, may be 
eligible for reduced coverage.
    (b) Multiple-planted crops, crops with a growing period of 60 
calendar days or less, value-loss crops, and fall season small grain 
crops intended only for grain are not eligible for reduced coverage 
under late planting provisions.
    (c) For crops with a growing period of:
    (1) 61 to 120 calendar days and planted:
    (i) One to five calendar days after the final planting date, 
production will be assigned equal to 5 percent of expected production of 
the applicable late-planted crop acreage regardless of the day planted.
    (ii) Six to twenty calendar days after the final planting date, 
production will be assigned equal to 5 percent of expected production of 
the applicable late-planted crop acreage plus an additional one percent 
of the expected production of the applicable late-planted crop acreage 
for each day beyond five days.
    (iii) 21 or more calendar days after the final planting date, 
production will be assigned equal to 50 percent of the producer's 
expected production of the applicable late-planted crop acreage.
    (2) 121 days and up and planted:
    (i) One to five calendar days after the final planting date, 
production will be assigned equal to 5 percent of expected production of 
the applicable late-planted crop acreage regardless of the day planted.
    (ii) Six to 25 days after the final planting date, production will 
be assigned equal to 5 percent of expected production of the applicable 
late-planted crop acreage plus an additional one percent of the 
applicable late-planted crop acreage for each day beyond five days.
    (iii) 26 or more calendar days after the final planting date, 
production will be assigned equal to 50 percent of the producer's 
expected production of the applicable late-planted crop acreage.

[71 FR 13745, Mar. 17, 2006]



Sec. 1437.104  Assigned production.

    (a) When determining losses under this section, assigned production 
will be used to offset the loss of production when, as determined by 
CCC, any of the following has occurred:
    (1) The loss is a result of an ineligible cause of loss and the loss 
has not been otherwise accounted for.
    (2) The unit acreage was destroyed without consent notwithstanding 
Sec. 1437.10(d).
    (3) The producer has a contract to receive a guaranteed payment for 
all or a portion of the production, as opposed to or regardless of 
delivery of such production.
    (4) The crop is planted after the STC-established final planting 
date according to Sec. 1437.103.
    (5) Irrigation equipment is not capable of supplying adequate water 
to sustain the expected production of a normal irrigated crop.
    (6) For normal irrigated annual, biennial, and perennial crops, the 
irrigation practice is not used.
    (7) For normal irrigated annual and biennial crops, the supply of 
available water at the beginning of the crop year is not adequate.
    (8) For normal irrigated perennial crops, the supply of available 
water at the beginning of the crop year is not adequate as a result of 
an ineligible cause of loss.

[71 FR 13745, Mar. 17, 2006]

[[Page 739]]



Sec. 1437.105  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) Multiplying the net production of the total eligible acreage by 
the producer's share;
    (4) Subtracting the product of paragraph (a)(3) of this section from 
the product of paragraph (a)(2) of this section;
    (5) Multiplying the difference calculated under paragraph (a)(4) of 
this section by the final payment price calculated under Sec. 1437.11; 
and
    (6) Adding the producer's share of any salvage value and secondary 
use and subtracting the result from the result of paragraph (a)(5) of 
this section.
    (b) Further adjustments may be made as needed to accomplish the 
purposes and goals of the program.

[67 FR 12448, Mar. 19, 2002. Redesignated and amended at 71 FR 13745, 
13746, Mar. 17, 2006; 78 FR 21019, Apr. 9, 2013]



Sec. 1437.106  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;
    (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.

[67 FR 12448, Mar. 19, 2002. Redesignated at 71 FR 13745, Mar. 17, 2006]



Sec. 1437.107  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;

[[Page 740]]

    (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.

[67 FR 12448, Mar. 19, 2002. Redesignated at 71 FR 13745, Mar. 17, 2006]



Sec. Sec. 1437.108-1437.200  [Reserved]



      Subpart C_Determining Coverage for Prevented Planted Acreage



Sec. 1437.201  Prevented planting acreage.

    (a) In addition to the provisions of this section, the provisions of 
Sec. 718.103 of this title shall apply.
    (b) When determining losses under this section:
    (1) 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.
    (2) Prevented planted acreage will be considered separately from 
low-yield losses of planted acreage of the same crop.
    (c) Acreage and units ineligible for prevented planting coverage 
includes, but is not limited to:
    (1) Value-loss crops, including, but not limited to, Christmas 
trees, aquaculture, and ornamental nursery;
    (2) Tree crops and other perennials, unless:
    (i) The producer can prove resources unique to the planting of tree 
crops and other perennials were available to plant, grow, and harvest 
the crop, as determined by CCC; and
    (ii) CCC has approved the planting period for the crop;
    (3) Uninsured crop acreage that is unclassified for insurance 
purposes;
    (4) Any acreage on which a crop was harvested, hayed, or grazed 
during the crop year;
    (5) Acreage of which the producer or any other person received a 
prevented planted payment for any crop for the same acreage, excluding 
share arrangements; and
    (6) Acreage planted during the late-planting period.

[71 FR 13746, Mar. 17, 2006]



Sec. 1437.202  Determining payments for prevented planting.

    (a) Subject to limitations, availability of funds, and specific 
provisions dealing with specific crops, a payment

[[Page 741]]

for prevented planting will be determined by:
    (1) Adding the total planted and prevented-planted acres;
    (2) Multiplying the sum of paragraph (a)(1) of this section by .35;
    (3) Subtracting the product of paragraph (a)(2) of this section from 
the total prevented planted acres;
    (4) Multiplying the producer's share by the approved yield by the 
positive result of paragraph (a)(3) of this section;
    (5) Multiplying the producer's share by the assigned production;
    (6) Subtracting the product of paragraph (a)(5) of this section from 
the product of paragraph (a)(4) of this section; and
    (7) Multiplying the result of paragraph (a)(6) of this section by 
the final payment price calculated 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.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13746, Mar. 17, 2006]



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, except ornamental 
nursery as specified in Sec. 1437.305, 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
    (3) Provide an accurate accounting of the inventory, as required by 
CCC.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013]



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) of this section;
    (c) Multiplying the result from paragraph (b) of this section by the 
producer's share;
    (d) Multiplying the result from paragraph (c) 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) Subtracting the result from paragraph (d) of this section from 
the producer's share of any salvage value, if applicable.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013]



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;

[[Page 742]]

    (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.
    (f) If all other eligibility provisions of this part are determined 
by FSA to be satisfied, assistance will be provided to producers for 
eligible NAP aquaculture crop losses that are the direct result of 
drought.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013]



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 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,

[[Page 743]]

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 
an 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.
    (g) For the 2010 and subsequent crops, the crop year for ornamental 
nursery is June 1 through May 31.

[67 FR 12448, Mar. 19, 2002, as amended at 78 FR 21019, Apr. 9, 2013]



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.



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;

[[Page 744]]

    (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 license 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 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

[[Page 745]]

    (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 for benefits under this part is limited to 
mature vegetation, as determined by CCC, produced in a commercial 
operation in three or more of the last five crop years, except producers 
who have not produced forage for the minimum period in order to preserve 
vegetation and prevent erosion, or otherwise mitigate the impact of 
disaster conditions, as determined by CCC, shall not be penalized. 
Benefits are not available for first-year seeding of alfalfa and similar 
vegetation when production is not produced in the seeding year, as 
determined by CCC. The commercial operation must use 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 as hay or seed. 
Forage to be mechanically harvested shall be treated under the rules for 
low-yield crops as calculated under Sec. 1437.103, except claims on 
forage for grazing benefits will be determined according to paragraph 
(f) of this section. The provisions in this subpart, however, 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 CCC as intended to be mechanically 
harvested, but which is, instead, subsequently 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. The loss of such grazed forage shall be 
determined according to paragraph (f) of this section. Except, beginning 
with the 2005 crop year, for acreage intended to be mechanically 
harvested which is instead, subsequently grazed, the loss of intended 
mechanically harvested forage may alternatively be determined based on a 
review of acceptable production evidence or appraisal of the specific 
crop acreage. As part of the payment computation for this loss, intended 
mechanically harvested forage crop acreage that is not mechanically 
harvested, but instead grazed, shall be deemed to be un-harvested for 
the purposes of determining a payment factor.
    (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 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,

[[Page 746]]

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 including, in some cases, acreage intended to be mechanically 
harvested but instead subsequently grazed, on the basis of:
    (1) The percentages of loss of similar mechanically-harvested forage 
acreage on the farm, or on similar farms in the area when approved 
yields have been calculated to determine loss, or
    (2) Where there is no similar mechanically-harvested forage acreage 
on the farm or similar farms in the area, the collective percentage of 
loss as determined by CCC for the geographical region after 
consideration of at least two independent assessments of grazed forage 
acreage conditions. The assessments shall be completed by forage or 
range specialists in Federal, State, and local government agencies, 
educational institutions, and private companies not having a financial 
interest in the outcome of the assessment. Neither the assessments 
themselves, nor collective loss percentages established pursuant thereto 
are subject to appeal. CCC's determinations of geographical area for 
assessments and collective grazing loss are generally applicable to all 
similarly situated participants farming in such defined geographical 
region.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13746, Mar. 17, 2006]



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 assigned AUD, as determined by CCC, by 
the producer's share;

[[Page 747]]

    (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 
final payment price established in accordance with Sec. 1437.11.

[67 FR 12448, Mar. 19, 2002, as amended at 71 FR 13747, Mar. 17, 2006]



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.



          Subpart F_Determining Coverage in the Tropical Region

    Source: 71 FR 52739, Sept. 7, 2006, unless otherwise noted.



Sec. 1437.501  Applicability; definition of ``tropical region'' and additional 

definitions.

    (a) This subpart shall only apply to covered tropical crops in the 
tropical region for the 2006 and subsequent crops years, as those terms 
are defined in this subpart. Benefits under this part may be extended to 
those crops only to the extent that they are otherwise eligible for 
assistance under this part. Covered crops shall not apply to ``value 
loss'' crops, as defined elsewhere in this part. For those crops that 
are covered by this subpart, loss and payment determinations for the 
program covered in this part shall be determined by the rules that 
otherwise apply to the program subject to the modifications provided by 
this subpart. The rules that otherwise apply include, but are not 
limited to, limitations on payments that appear elsewhere in this part.
    (b) For purposes of this subpart:
    (1) Tropical region includes, as may be further limited by the 
Deputy Administrator: Hawaii, American Samoa, Guam, the U.S. Virgin 
Islands, Puerto Rico, and the territories and possessions of the United 
States. Other areas may be included as determined by the Deputy 
Administrator to be required by law. References to specific areas 
elsewhere in this subpart will not limit the ability of the Deputy 
Administrator to limit the geographic scope of this subpart.
    (2) 2006 and subsequent crops means those crops in the ground on or 
after January 1, 2006.
    (3) Covered tropical crops means those crops and commodities in the 
tropical region governed by this subpart, those being all crops and 
commodities in the tropical region that are otherwise eligible for 
generating a benefit claim under this part, except for value-loss crops 
as defined elsewhere in this part.
    (c) The Deputy Administrator may adjust requirements for assistance 
so as to provide a fair transition from previous rules for crop covered 
by this subpart to those provisions which are provided for in this 
subpart.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013]



Sec. 1437.502  Coverage periods and fees for covered tropical crops.

    (a) The crop year for all covered tropical crops is the calendar 
year (January 1 through December 31 beginning in 2006 through subsequent 
years).
    (b) The application closing date for all covered tropical crops is 
December 1 of the calendar year before the applicable crop year.
    (c) For covered tropical crops, per county per crop year, a maximum 
service fee of $250 is required of the producer for coverage of:
    (1) With respect to annual and biennial crops, all plantings of the 
same crop planted during the crop year, as determined by CCC.
    (2) With respect to perennial crops, all acreage of the crop 
existing during the crop year, as determined by CCC.
    (d)(1) Multiple planting periods and final planting dates are not 
applicable for covered tropical crops. However, nothing in this section 
shall prohibit

[[Page 748]]

assigning different production expectations to different fields.
    (2) The coverage period for perennial and other crops covered by 
this subpart begins on January 1 of the relevant crop year and ends on 
December 31 of that year.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013]



Sec. 1437.503  Covered losses and recordkeeping requirements for covered 

tropical crops.

    (a) Prevented planting coverage is not available for covered 
tropical crops, other than in Hawaii, Puerto Rico, and other areas 
approved by the Deputy Administrator, except as approved by the Deputy 
Administrator in special cases.
    (b) Except in Hawaii, Puerto Rico, and other areas approved by the 
Deputy Administrator, or as otherwise approved by the Deputy 
Administrator in individual cases, eligible causes of loss for covered 
tropical crops will only include hurricanes, typhoons, and named 
tropical storms.
    (c) Producers who have applied for coverage on covered tropical 
crops must maintain for the full coverage period contemporaneous 
records. Contemporaneous records are those created at the time of 
planting and harvesting of the crop for which the application for 
coverage is filed. In this regard:
    (1) Producers may be selected on a random or targeted basis for 
compliance review with this requirement and any other requirements that 
may apply to this program.
    (2) A failure to maintain acceptable contemporaneous records 
throughout the crop year may be treated by CCC as grounds of 
ineligibility for benefits under this part.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013]



Sec. 1437.504  Notice of loss for covered tropical crops.

    (a) The provisions of Sec. 1437.10(c) regarding late filed notice 
of loss do not apply to covered tropical crops.
    (b) Where a notice of loss for covered tropical crops is provided 
according to Sec. 1437.10, producers must provide records maintained 
according to Sec. 1437.503(c) of the:
    (1) Number of acres or other basis of measurement, as applicable, of 
the crop from which production could be achieved existing on the day the 
eligible natural disaster occurred or, for prolonged natural disasters, 
such as a drought and similar damage where applicable, existing on the 
day the notice of loss is filed.
    (2) Amount, including zero, as applicable, of production harvested, 
before or after the disaster, from those crop plantings (damaged or 
undamaged) which were in existence on the farm at the time of the 
disaster including production from the covered plantings (in existence 
at the time of the loss event) that may occur after the loss event even 
when, to the extent provided for in paragraph (c) of this section, the 
harvest occurs after the end of the crop year. Crop acreage of the 
covered crop that is in existence at the time of the loss event that can 
be harvested after the eligible natural disaster must be harvested, or 
continue to be harvested, and the harvested acres and production 
reported to FSA according to this subpart, except that for perennial 
crops the requirement ends with the end of the crop year. For non-
perennial crops the obligation to harvest ends with the end of the life-
cycle for the plantings that were in existence at the time of the loss 
event. In this regard:
    (i) Except as otherwise determined by FSA, such production, before 
or after the loss event, will be taken into account in computing 
eligibilities.
    (ii) Production that must be reported under paragraph (b)(2)(i) of 
this section includes, except in the case of perennial plants, all 
production irrespective of whether the production occurs in the same 
crop year.
    (iii) For perennial plants, only production in the same crop year 
must be reported.
    (iv) All production that must be reported for covered tropical crops 
will, except as specified by the Deputy Administrator, be taken into 
account in the loss determinations made under this part. The producer is 
obligated to maximize that production. That is, harvesting and other 
production activities for the plants in the ground at the

[[Page 749]]

time of the disaster must be undertaken or continue to be undertaken, to 
the maximum extent possible, for the full reporting period, that being 
the period for which production could count against a loss as indicated 
in this subpart.
    (3) Failure to keep sufficient records to allow the computations 
provided for in this subpart is grounds for denial of the claim.
    (c) Producers with coverage of a covered tropical crop for a crop 
year must, by the earlier of 90 calendar days after the crop year ends 
or the date a notice of loss is filed, file a certified report setting 
out the:
    (1) Collective acres of the crop acreage planted or in the ground 
during the crop year.
    (2) Total production harvested from the crop acreage for the full 
crop year in the case of a perennial plant and for the full life of the 
plants for other crops.
    (d) With respect to the report required in paragraph (c) of this 
section:
    (1) If a report is filed before the end of the crop year, an updated 
crop report must be filed within 90 calendar days from the end of the 
crop year to supplement the original report;
    (2) If the report is for any annual or biennial crops where 
production continued or could have continued beyond the period covered 
in the reports otherwise filed under this section, an additional report 
of production must be filed within 30 days of the end of the last 
countable production for the covered crop or 30 days after the last date 
on which such production could have been obtained, whichever is later.
    (3) A failure to file an adequate report where a report is required 
by this section may result in the producer being treated as having a 
zero yield capability for the crop year involved for purposes of 
constructing a crop history. Alternatively, the Deputy Administrator may 
assign another sanction for that failure. In addition to other sanctions 
as may apply, a failure to file such reports may be grounds for denial 
of a claim. The Deputy Administrator may adjust crop histories as 
determined appropriate to create, to the extent practicable, an 
appropriate crop history for loss computation purposes.
    (4) Such reports as are provided for in this subsection must be 
filed for every crop year for which there is coverage, irrespective of 
whether a claim is filed for that year.
    (e) Unless otherwise specified by the Deputy Administrator, 
appraisals are not required of crop acreage for covered tropical crops 
on Guam, Virgin Islands, American Samoa, and the Commonwealth of the 
Northern Mariana Islands.
    (f) All crop acreage for covered tropical crops for which a notice 
of loss is filed must not be destroyed until authorized by CCC.

[71 FR 52739, Sept. 7, 2006, as amended at 78 FR 21019, Apr. 9, 2013]



Sec. 1437.505  Application for payment for the tropical region.

    (a) For producers of covered tropical crops, except as specified in 
paragraph (b) of this section or approved in individual cases by the 
Deputy Administrator, an application for payment must be filed at the 
same time as the filing of the notice of loss required under Sec. Sec. 
1437.10 and 1437.504.
    (b) For producers in Puerto Rico, Hawaii, Guam, American Samoa, and 
the Northern Marianna Islands, an application for payment for such crops 
must be filed by the later of:
    (1) The date on which the notice of loss is filed in accordance with 
Sec. Sec. 1437.10 and 1437.504, or
    (2) The date of the completion of harvest for the specific crop 
acreage that existed at the time of loss for which the notice of loss 
was filed.

[78 FR 21019, Apr. 9, 2013]



PART 1450_BIOMASS CROP ASSISTANCE PROGRAM (BCAP)--Table of Contents



                       Subpart A_Common Provisions

Sec.
1450.1 Administration.
1450.2 Definitions.
1450.3 General.
1450.4 Violations.
1450.5 Performance based on advice or action of USDA.
1450.6 Access to land.
1450.7 Division of payments and provisions about tenants and 
          sharecroppers.
1450.8 Payments not subject to claims.
1450.9 Assignments.

[[Page 750]]

1450.10 Appeals.
1450.11 Scheme or device.
1450.12 Filing of false claims.
1450.13 Miscellaneous.

                       Subpart B_Matching Payments

1450.100 General.
1450.101 Qualified biomass conversion facility.
1450.102 Eligible material owner.
1450.103 Eligible material.
1450.104 Signup.
1450.105 Obligations of participant.
1450.106 Payments.

          Subpart C_Establishment Payments and Annual Payments

1450.200 General.
1450.201 Project area proposal submission requirements.
1450.202 Project area selection criteria.
1450.203 Eligible persons and legal entities.
1450.204 Eligible land.
1450.205 Duration of contracts.
1450.206 Obligations of participant.
1450.207 Conservation plan, forest stewardship plan, or equivalent plan.
1450.208 Eligible practices.
1450.209 Signup.
1450.210 Acceptability of offers.
1450.211 BCAP contract.
1450.212 Establishment payments.
1450.213 Levels and rates for establishment payments.
1450.214 Annual payments.
1450.215 Transfer of land.

    Authority: 7 U.S.C. 8111.

    Source: 75 FR 66234, Oct. 27, 2010, unless otherwise noted.



                       Subpart A_Common Provisions



Sec. 1450.1  Administration.

    (a) The regulations in this part are administered under the general 
supervision and direction of the Executive Vice President, Commodity 
Credit Corporation (CCC), or a designee. In the field, the regulations 
in this part will be implemented by the Farm Service Agency (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 FSA 
Deputy Administrator for Farm Program (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 to a State or county committee will 
preclude the Executive Vice President, CCC, or a designee, from 
determining any question arising under this part or from reversing or 
modifying any determination made by a State or county committee.
    (e) Data furnished by 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.
    (f) Subject to the availability of funds and all other eligibility 
provisions of this part, this part provides the terms, conditions and 
requirements of BCAP. In the event that CCC determines that available 
funds are insufficient to accommodate the demand for establishment and 
annual payments as well as all potential applications for matching 
payments for collection, harvest, storage, and transportation of 
eligible material, without any advance notice other than that stated 
here, CCC may prioritize the expenditure of program funds in favor of 
funding for the selection of BCAP project areas and the establishment 
and annual payments related to those project areas, and may make such 
other priorities in approvals that will, in the determination of the 
Deputy Administrator, advance the purposes of BCAP.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec. 1450.2  Definitions.

    (a) The definitions in part 718 of this title apply to this part and 
all documents issued in accordance with this part, except as otherwise 
provided in this section.
    (b) The following definitions apply to this part:

[[Page 751]]

    Advanced biofuel means fuel derived from renewable biomass other 
than corn kernel starch, including biofuels derived from cellulose, 
hemicellulose, or lignin; biofuels derived from sugar and starch (other 
than ethanol derived from corn kernel starch); biofuel derived from 
waste material, including crop residue, other vegetative waste material, 
animal waste, food waste, and yard waste; diesel-equivalent fuel derived 
from renewable biomass including vegetable oil and animal fat; biogas 
(including landfill gas and sewage waste treatment gas) produced through 
the conversion of organic matter from renewable biomass; and butanol or 
other alcohols produced through the conversion of organic matter from 
renewable biomass; and other fuel derived from cellulosic biomass.
    Agricultural land means cropland, grassland, pastureland, rangeland, 
hayland, and other land on which food, fiber, or other agricultural 
products are produced or capable of being produced.
    Animal waste means the organic animal waste of animal operations 
such as confined beef or dairy, poultry, or swine operations including 
manure, contaminated runoff, milking house waste, dead poultry, bedding, 
and spilled feed. Depending on the poultry system, animal waste can also 
include litter, wash-flush water, and waste feed.
    Annual payment means the annual payment specified in the BCAP 
contract for BCAP project areas that is issued to a participant for 
placing eligible land in BCAP.
    Beginning farmer or rancher means, as determined by CCC, a person or 
entity who:
    (1) Has not been a farm or ranch operator or owner for more than 10 
years,
    (2) Materially and substantially participates in the operation of 
the farm or ranch, and
    (3) If an entity, is an entity in which at least 50 percent of the 
members or stockholders of the entity meet the first two requirements of 
this definition.
    Biobased product means a product determined by CCC to be a 
commercial or industrial product (other than food or feed) that is:
    (1) Composed, in whole or in significant part, of biological 
products, including renewable domestic agricultural materials and 
forestry materials; or
    (2) An intermediate ingredient or feedstock.
    Bioenergy means renewable energy produced from organic matter. 
Organic matter may be used directly as a fuel, be processed into liquids 
and gases, or be a residual of processing and conversion.
    Biofuel means a fuel derived from renewable biomass.
    Biomass conversion facility means a facility that converts or 
proposes to convert renewable biomass into heat, power, biobased 
products, or advanced biofuels.
    Conservation district is as defined in part 1410 of this chapter.
    Conservation plan means a schedule and 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 for eligible crops and the collection or harvesting of 
eligible material, as appropriate, and addresses natural resource 
concerns including the sustainable harvesting of biomass, when 
appropriate, by addressing the site-specific needs of the landowner.
    Contract acreage means eligible land that is covered by a BCAP 
contract between the producer and CCC.
    Delivery means the point of delivery of an eligible crop or eligible 
material, as determined by the CCC.
    Deputy Administrator means the FSA Deputy Administrator for Farm 
Programs, or a designee.
    Dry ton means one U.S. ton measuring 2,000 pounds. One dry ton is 
the amount of renewable biomass that would weigh one U.S. ton at zero 
percent moisture content.
    Eligible crop means a crop of renewable biomass as defined in this 
section excluding:
    (1) Any crop that is eligible to receive payments under Title I, 
``Commodity Programs,'' of the Food, Conservation, and Energy Act of 
2008 (Pub. L. 110-246) or an amendment made by that title, including, 
but not limited to, barley, corn, grain sorghum, oats,

[[Page 752]]

rice, or wheat; honey; mohair; certain oilseeds such as canola, crambe, 
flaxseed, mustard seed, rapeseed, safflower seed, soybeans, sesame seed, 
and sunflower seeds; peanuts; pulse crops such as small chickpeas, 
lentils, and dry peas; dairy products; sugar; wool; and cotton boll 
fiber; and
    (2) Any plant that CCC has determined to be either a noxious weed or 
an invasive species. With respect to noxious weeds and invasive species, 
a list of such plants will be available in the FSA county office.
    Eligible material is renewable biomass as defined in this section 
excluding:
    (1) Material that is whole grain from any crop that is eligible to 
receive payments under Title I of the Food, Conservation, and Energy Act 
of 2008 or an amendment made by that title, including, but not limited 
to, barley, corn, grain sorghum, oats, rice, or wheat; honey; or 
material that is mohair; certain oilseeds such as canola, crambe, 
flaxseed, mustard seed, rapeseed, safflower seed, soybeans, sesame seed, 
and sunflower seeds; peanuts; pulse crops such as small chickpeas, 
lentils, and dry peas; dairy products; sugar; wool; and cotton boll 
fiber;
    (2) Animal waste and by-products of animal waste including fats, 
oils, greases, and manure;
    (3) Food waste and yard waste; and
    (4) Algae.
    Eligible material owner, for purposes of the matching payment, means 
a person or entity having the right to collect or harvest eligible 
material, who has the risk of loss in the material that is delivered to 
an eligible facility and who has directly or by agent delivered or 
intends to deliver the eligible material to a qualified biomass 
conversion facility, including:
    (1) For eligible material harvested or collected from private lands, 
including cropland, the owner of the land, the operator or producer 
conducting farming operations on the land, or any other person 
designated by the owner of the land; and
    (2) For eligible material harvested or collected from public lands, 
a person having the right to harvest or collect eligible material 
pursuant to a contract or permit with the US Forest Service or other 
appropriate Federal agency, such as a timber sale contract, stewardship 
contract or agreement, service contract or permit, or related applicable 
Federal land permit or contract, and who has submitted a copy of the 
permit or contract authorizing such collection to CCC.
    Equivalent plan means a plan approved by a State or other State 
agency or government entity that is similar to and serves the same 
purpose as a forest stewardship plan and has similar goals, objectives, 
and terms. These plans generally address natural resource concerns 
including the sustainable harvesting of biomass, when appropriate, by 
addressing the site-specific needs of the landowner.
    Establishment payment means the payment made by CCC to assist 
program participants in establishing the practices required for non-
woody perennial crops and woody perennial crops, as specified in a 
producer contract under the project portion of BCAP.
    Food waste means, as determined by CCC, a material composed 
primarily of food items, or originating from food items, or compounds 
from domestic, municipal, food service operations, or commercial 
sources, including food processing wastes, residues, or scraps.
    Forest stewardship plan means a long-term, comprehensive, multi-
resource forest management plan that is prepared by a professional 
resource manager and approved by the State Forester or equivalent State 
official. Forest stewardship plans address the following resource 
elements wherever present, in a manner that is compatible with landowner 
objectives concerning:
    (1) Soil and water;
    (2) Biological diversity;
    (3) Range;
    (4) Aesthetic quality;
    (5) Recreation;
    (6) Timber;
    (7) Fish and wildlife;
    (8) Threatened and endangered species;
    (9) Forest health;
    (10) Archeological, cultural and historic sites;
    (11) Wetlands;
    (12) Fire; and
    (13) Carbon cycle.
    Higher-value product means an existing market product that is 
comprised

[[Page 753]]

principally of an eligible material or materials and, in some distinct 
local regions, as determined by the CCC, has an existing market as of 
October 27, 2010. Higher-value products may include, but are not limited 
to, products such as mulch, fiberboard, nursery media, lumber, or paper.
    Highly erodible land means land as determined as specified in part 
12 of this title.
    Indian tribe has the same meaning as in 25 U.S.C. 450b (section 4 of 
the Indian Self-Determination and Education Assistance Act).
    Institution of higher education has the same meaning as in 20 U.S.C. 
1002(a) (section 102(a) of the Higher Education Act of 1965).
    Intermediate ingredient or feedstock means an ingredient or compound 
made in whole or in significant part from biological products, including 
renewable agricultural material (including plant, animal, and marine 
material), or forestry material that is subsequently used to make a more 
complex compound or product.
    Legal entity has the same meaning as in the regulations in Sec. 
1400.3 of this chapter.
    Matching payments means those CCC payments provided for eligible 
material delivered to a qualified biomass conversion facility.
    Native sod means land:
    (1) On which the plant cover is composed principally of native 
grasses, grasslike plants, forbs, or shrubs suitable for grazing and 
browsing; and
    (2) That had never been tilled for the production of an annual crop 
as of June 18, 2008.
    Nonindustrial private forest land means, as defined in 16 U.S.C. 
2103a (the Cooperative Forestry Assistance Act of 1978, as amended), 
rural lands with existing tree cover, or suitable for growing trees, 
where the land is owned by any private individual, group, association, 
corporation, Indian tribe, or other private legal entity.
    Offer means, unless otherwise indicated, the per-acre rental payment 
requested by the owner or operator in such owner's or operator's request 
to participate in the establishment payment and annual payment component 
of BCAP.
    Operator means a person who is in general control of the land 
enrolled in BCAP, as determined by CCC.
    Participant means a person who is participating in BCAP--either as a 
person who has applied for and is eligible to receive payments, has a 
BCAP contract, or is a project sponsor.
    Payment period means a contract period of either up to 5 years for 
annual and non-woody perennial crops, or up to 15 years for woody 
perennial crops, during which the participant receives an annual payment 
under the establishment payment and annual payment component of BCAP.
    Person has the same meaning as in the regulations in Sec. 1400.3 of 
this chapter. In addition, for BCAP, the term ``producer'' means either 
an owner or operator of BCAP project acreage that is physically located 
in a BCAP project area, or a producer of an eligible crop produced on 
that acreage.
    Producer means, with respect to subpart B of this part, a person who 
had the risk of loss in the production of the material that is the 
subject of the BCAP payment; and with respect to subpart C of this part, 
an owner or operator of contract acreage that is physically located 
within a BCAP project area or a producer of an eligible crop produced on 
that acreage and who has the risk of loss in the relevant crop at the 
relevant period of time or who will have the risk of loss in crops 
required to be produced.
    Project area means a geographic area with specified boundaries 
submitted by a project sponsor and approved by CCC under the 
establishment payment and annual payment component of BCAP.
    Project sponsor means a group of producers or a biomass conversion 
facility who proposes a project area.
    Qualified biomass conversion facility means a biomass conversion 
facility that meets all the requirements for BCAP qualification, and 
whose facility representatives enter into a BCAP agreement with CCC.
    Renewable biomass means:
    (1) Appropriate materials, pre-commercial thinnings, or invasive 
species from National Forest System land and U.S. Department of the 
Interior, Bureau of Land Management land that:

[[Page 754]]

    (i) Are by-products of preventive treatments that are removed to 
reduce hazardous fuels, to reduce or contain disease or insect 
infestation, or to restore ecosystem health;
    (ii) Would not otherwise be used for higher-value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of 16 U.S.C. 6512 (specifically, 
sections 102(e)(2), (3), and (4) of the Healthy Forests Restoration Act 
of 2003 and large-tree retention provisions of subsection (f)); or
    (2) Any organic matter that is available on a renewable or recurring 
basis from non-Federal land or land belonging to an Indian or Indian 
Tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including:
    (A) Feed grains;
    (B) Other agricultural commodities;
    (C) Other plants and trees; or
    (D) Algae;
    (ii) Waste material, including:
    (A) Crop residue;
    (B) Other vegetative waste material (including wood waste and wood 
residues);
    (C) Animal waste and byproducts (including fats, oils, greases, and 
manure); and
    (D) Food waste and yard waste.
    Socially disadvantaged farmer or rancher means, unless other classes 
of persons are approved by CCC in writing, a farmer or rancher who is a 
member of a group whose members have been subject to racial or ethnic 
prejudice because of their identity as members of a group without regard 
to their individual qualities. Groups include:
    (1) American Indians or Alaskan Natives;
    (2) Asians or Asian Americans;
    (3) Blacks or African Americans;
    (4) Native Hawaiians or other Pacific Islanders; and
    (5) Hispanics.
    Technical assistance means assistance in determining the eligibility 
of land and practices for BCAP, implementing and certifying practices, 
ensuring contract performance, and providing annual rental rate surveys. 
The technical assistance provided in connection with BCAP to owners or 
operators, as approved by CCC, includes, but is not limited to: 
Technical expertise, information, and tools necessary for the 
conservation of natural resources on land; technical services provided 
directly to farmers, ranchers, and other eligible entities, such as 
conservation planning, technical consultation, and assistance with 
design and implementation of eligible practices; and technical 
infrastructure, including activities, processes, tools, and functions 
needed to support delivery of technical services, such as technical 
standards, resource inventories, training, data, technology, monitoring, 
and effects analyses.
    Tribal government means any Indian tribe, band, nation, or other 
organized group, or community, including pueblos, rancherias, colonies 
and any Alaska Native Village, or regional or village corporation as 
defined in or established pursuant to 43 U.S.C. 1601-1629h (the Alaska 
Native Claims Settlement Act), that is recognized as eligible for the 
special programs and services provided by the United States to Indians 
because of their status as Indians.
    Violation means an act by the participant, either intentional or 
unintentional, that would cause the participant to no longer be eligible 
to receive or retain all or a portion of BCAP payments.
    Yard waste means any renewable biomass generated from municipal or 
residential land, such as urban forestry materials, construction or 
demolition materials, trimmings from grasses and trees, or biomass 
removed due to invasive species or weather-related disaster, that can be 
separated from and has low potential (such as contamination with 
plastics, metals, chemicals, or other toxic compounds that cannot be 
removed) for the generation of toxic byproducts resulting from 
conversion, and that otherwise cannot be recycled for other purposes 
(such as post-consumer waste paper).

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]

[[Page 755]]



Sec. 1450.3  General.

    (a) The objectives of BCAP are to:
    (1) Support the establishment and production of eligible crops for 
conversion to bioenergy and biobased products in selected project areas; 
and
    (2) Assist agricultural and forest landowners and operators with 
matching payments to support the collection, harvest, storage, and 
transportation costs of eligible material for use in a biomass 
conversion facility.
    (b) A participant must implement and adhere to a conservation plan, 
forest stewardship plan, or equivalent plan prepared in accordance with 
BCAP guidelines, as established and determined by CCC. A conservation 
plan, forest stewardship plan, or equivalent plan for contract acreage 
must be implemented by a participant and must be approved by the 
conservation district in which the lands are located, or, in the case of 
Federal lands, the appropriate approval authority of jurisdiction. If 
the conservation district declines to review the conservation plan, 
forest stewardship plan, or equivalent plan, the provider of technical 
assistance may take such further action as is needed to account for lack 
of such review.
    (c) Agricultural and forest landowners and operators must comply 
with any applicable existing conservation plan, forest stewardship plan, 
or equivalent plan and all other applicable laws, regulations, or 
Executive Orders for any removal of eligible material for use in a 
biomass conversion facility to receive matching payments.
    (d) Except as otherwise provided in this part, a participant may 
receive, in addition to any payments under this part, financial 
assistance, rental or easement payments, tax benefits, or other payments 
from a State or a private organization in return for enrolling lands in 
BCAP, without any commensurate reduction in BCAP payments.



Sec. 1450.4  Violations.

    (a)(1) If a participant fails to carry out the terms and conditions 
of a BCAP contract, CCC may terminate the BCAP contract.
    (2) If the BCAP contract is terminated by CCC in accordance with 
this paragraph:
    (i) The participant will forfeit all rights to further payments 
under the contract and must refund all payments previously received, 
plus interest; and
    (ii) The participant must pay liquidated damages to CCC in an amount 
as specified in the contract.
    (b) CCC may reduce a demand for a refund under this section to the 
extent CCC determines that such relief would be appropriate and would 
not deter the accomplishment of the purposes of BCAP.



Sec. 1450.5  Performance based on advice or action of USDA.

    (a) The provisions of Sec. 718.303 of this title relating to 
performance based on the action or advice of an authorized 
representative of USDA apply 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 permitted by this part.
    (b) [Reserved]

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec. 1450.6  Access to land.

    (a) For purposes related to this program, the participant must upon 
request provide any representative of USDA, or designee thereof, 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 must provide such representatives or designees with access 
to examine records for the land to determine land classification, 
eligibility, or for other purposes, and to determine whether the 
participant is in compliance with the terms and conditions of the BCAP 
contract.



Sec. 1450.7  Division of payments and provisions about tenants and 

sharecroppers.

    (a) Payments received under this part will be divided as specified 
in the applicable contract. CCC may refuse to

[[Page 756]]

enter into a contract when there is a disagreement among persons or 
legal entities seeking enrollment as to a person's or legal entity's 
eligibility to participate in the contract as a tenant or sharecropper, 
and there is insufficient evidence, as determined by CCC, to indicate 
whether the person or legal entity seeking participation as a tenant or 
sharecropper has an interest in the acreage offered for enrollment in 
the BCAP.
    (b) CCC may remove an operator or tenant from a BCAP contract when:
    (1) The operator or tenant requests in writing to be removed from 
the BCAP 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;
    (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 appropriate by CCC; or
    (4) A court of competent jurisdiction orders the removal of the 
operator or tenant from the BCAP contract and such order is received by 
CCC.
    (c) Tenants who fail to maintain tenancy on the acreage under 
contract for any reason may be removed from a contract by CCC.



Sec. 1450.8  Payments not subject to claims.

    (a) Subject to part 1403 of this chapter, any payment or portion of 
the payment due any person or legal entity under this part will 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 U.S. Government.
    (b) [Reserved]



Sec. 1450.9  Assignments.

    (a) Participants may assign the right to receive cash payments under 
BCAP, in whole or in part, as provided in part 1404 of this chapter.
    (b) [Reserved]



Sec. 1450.10  Appeals.

    (a) Except as provided in paragraph (b) of this section, a person or 
legal entity applying for 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 the Natural Resources Conservation Service may 
be appealed in accordance with procedures established under part 614 of 
this title or otherwise established by the Natural Resources 
Conservation Service.



Sec. 1450.11  Scheme or device.

    (a) If CCC determines that a person or legal entity has employed a 
scheme or device to defeat the purposes of this part, or any part, of 
any USDA program, payment otherwise due or paid such person or legal 
entity during the applicable period may be required to be refunded, with 
interest calculated from the date of disbursement of the funds by CCC, 
as determined appropriate by CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person or legal entity of 
any 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 must 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 may 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 will be 
considered a scheme or device under this section.



Sec. 1450.12  Filing of false claims.

    (a) If CCC determines that any participant has knowingly supplied 
false information or has knowingly filed a false claim, such participant 
will be ineligible for payments under this part with respect to the 
fiscal year in which the false information or claim was filed and the 
contract may be terminated, in

[[Page 757]]

which case CCC may demand a full refund of all prior payments.
    (b) False information or false claims include, but are not limited 
to, claims for payment for practices that do not comply with the 
conservation plan, forest stewardship plan, or equivalent plan. Any 
amounts paid under these circumstances must be refunded to CCC, together 
with interest as determined by CCC, and any amounts otherwise due the 
participant will be withheld.
    (c) The remedies provided for in this section will be in addition to 
any other remedy available to CCC and in addition to any criminal 
penalty or any other remedy available to the United States.



Sec. 1450.13  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 may be paid to the participant's successor(s) in 
accordance with part 707 of this title.
    (b) Unless otherwise specified in this part, payments under this 
part will be subject to the compliance requirements of part 12 of this 
title concerning highly erodible land and wetland conservation and 
payments.
    (c) Any remedies permitted CCC under this part will 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.
    (d) Absent a scheme or device to defeat the purposes of BCAP, when 
an owner loses control of BCAP acreage enrolled under subpart C of this 
part due to foreclosure and the new owner chooses not to continue the 
contract in accordance with Sec. 1450.215 refunds will 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.



                       Subpart B_Matching Payments



Sec. 1450.100  General.

    (a) A person or legal entity with the right to collect or harvest 
eligible material for the sale and delivery of such eligible material to 
a qualified biomass conversion facility, may be eligible for payment 
under the provisions of this subpart.
    (b) [Reserved]



Sec. 1450.101  Qualified biomass conversion facility.

    (a) To be considered a qualified biomass conversion facility, a 
biomass conversion facility must enter into an agreement with CCC and 
must:
    (1) Meet all applicable regulatory and permitting requirements by 
applicable Federal, State, or local authorities;
    (2) Agree in writing to:
    (i) Maintain accurate records of all eligible material purchases and 
related documents regardless of whether matching payments will be sought 
by the seller; and
    (ii) Make available at one place and 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 BCAP for not less than 3 years 
after the date that eligible material was delivered to the qualified 
biomass conversion facility;
    (iii) Clearly indicate the actual tonnage delivered on the scale 
ticket or equivalent to be provided to the eligible material owner;
    (iv) Calculate a total dry ton weight equivalent of the actual 
tonnage delivered and provide that measurement to the eligible material 
owner;
    (v) Use commercial weight scales that are certified for accuracy by 
applicable State or local authorities and accurate moisture measurement 
equipment to determine the dry ton weight equivalent of actual tonnage 
delivered;
    (vi) Pay fair market value for eligible material regardless of 
whether the seller has applied for or receives a matching payment 
authorized by this subpart.
    (b) For a qualified biomass conversion facility, CCC can:

[[Page 758]]

    (1) Periodically inform the public that payments may be available 
for deliveries of eligible material to such qualified biomass conversion 
facility;
    (2) Maintain a listing of qualified biomass conversion facilities 
for general public access and distribution that may include general 
information about the facility and its eligible material needs; and
    (3) Suspend, terminate, or take other actions as appropriate when 
CCC determines a qualified biomass conversion facility fails to comply 
with the agreement.



Sec. 1450.102  Eligible material owner.

    (a) In order to be eligible for a payment under this subpart, a 
person or legal entity must:
    (1) Be a producer of an eligible crop that is produced on contract 
acreage authorized by subpart C of this part; or
    (2) Have the right to collect or harvest eligible material and such 
person may only receive payment if the risk of loss for the material 
transferred to that person occurred prior to the time the payment is 
made that will be used to determine the matching payment that is 
requested under this subpart; and
    (3) Certify that the eligible material for which a payment may be 
issued according to Sec. 1450.106 has been harvested according to a 
conservation plan, forest stewardship plan, or equivalent plan, and, if 
woody eligible material collected and harvested on land other than 
contract acreage, are byproducts of preventative treatments that are 
removed to reduce hazardous fuels, to reduce or contain disease or 
insect infestation, or to restore ecosystem health.
    (b) A qualified biomass conversion facility that meets the 
requirements of paragraph (a) of this section may be considered an 
eligible material owner if it otherwise meets the definition in this 
part.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec. 1450.103  Eligible material that qualifies for payment.

    (a) Except for paragraph (b) of this section, in order to qualify, 
as determined by CCC, for a payment under this subpart:
    (1) Eligible material must be renewable biomass that, at a minimum, 
meets the definition in Sec. 1450.2 and is listed on the official Web 
site for BCAP as an eligible material at http://www.fsa.usda.gov/energy;
    (2) Eligible material must be collected or harvested by the eligible 
material owner:
    (i) Directly from:
    (A) National Forest System land, Bureau of Land Management land;
    (B) Non-Federal land; or
    (C) Land belonging to an Indian or Indian tribe that is held in 
trust by the United States or subject to a restriction against 
alienation imposed by the United States;
    (ii) Consistent with a conservation plan, forest stewardship plan, 
or plan that CCC determined to be an equivalent plan, that provides the 
following:
    (A) The purpose of the harvest of the eligible material;
    (B) The expected volume of the harvest;
    (C) The total number of acres to be harvested;
    (D) The name of the eligible material owner(s); and
    (E) Any additional information, as determined by CCC; and
    (iii) Consistent with Executive Order 13112, ``Invasive Species. ''
    (3) Woody eligible material produced on land other than contract 
acreage must be:
    (i) Byproducts of preventative treatments that are removed to reduce 
hazardous fuels, to reduce or contain disease or insect infestation, or 
to restore ecosystem health; and
    (ii) If harvested from Federal lands then done so in accordance with 
the requirements for old-growth maintenance, restoration, and management 
direction provided by 16 U.S.C. 6512 for Federal lands; and
    (4) Eligible material must be delivered to a qualified biomass 
conversion facility (as specified in Sec. 1450.101 and other provisions 
of these regulations).
    (b) Notwithstanding paragraph (a) of this section, payments under 
this subpart are not authorized for:
    (1) Any eligible material delivered before October 27, 2010;

[[Page 759]]

    (2) Any eligible material for which payment from a biomass 
conversion facility was received before the application for payment 
under this subpart is received and approved by the FSA county office, as 
specified in Sec. 1450.104;
    (3) Any woody eligible material collected or harvested outside 
contract acreage that would otherwise be used for higher-value products; 
or
    (4) Any otherwise eligible material collected or harvested outside 
contract acreage that, after delivery to a biomass conversion facility, 
its campus, or its affiliated facilities, must be separated from an 
eligible material used for a higher-value market product in order to be 
used for heat, power, biobased products, or advanced biofuels.



Sec. 1450.104  Signup.

    (a) Applications for participation and requests for payments under 
this subpart will be accepted on a continuous basis.
    (b) An eligible material owner must apply to participate in the 
matching payments component of BCAP before payment for the eligible 
material is received from a qualified biomass conversion facility. The 
application must be submitted to the FSA county office and approved by 
CCC before any payment is made by the qualified biomass conversion 
facility for the eligible material.
    (c) Applications must include the following:
    (1) Based on information obtained from contracts, agreements, or 
binding letters of intent:
    (i) An estimate of the total dry tons of eligible material expected 
to be sold to the qualified biomass conversion facility;
    (ii) The type(s) of eligible material that is expected to be sold;
    (iii) The name of the qualified biomass conversion facility that 
will purchase the eligible material;
    (iv) The expected, fair market, per dry ton payment rate the owner 
plans to receive for the delivery of the eligible material; and
    (v) The date or dates the eligible material is expected to be 
delivered to the qualified biomass conversion facility.
    (2) A new or amended conservation plan, forest stewardship plan, or 
equivalent plan, as specified in Sec. 1450.103.
    (d) Eligible material owners who deliver eligible material to more 
than one qualified biomass conversion facility must submit separate 
applications for each facility to which eligible material will be 
delivered.
    (e) After delivery, eligible material owners must notify CCC and 
request the payment. Payments will be disbursed only after delivery is 
verified by CCC.
    (f) Information that must be submitted to CCC in order to request 
payments includes settlement, summary, or other acceptable data that 
provide:
    (1) Total actual tonnage delivered and a total dry weight tonnage 
equivalent amount determined by the qualified biomass conversion 
facility using standard moisture determinations applicable to the 
eligible material;
    (2) Total payment received, including the per dry-ton payment 
rate(s) matched with actual and dry weight tonnage delivered; and
    (3) The qualified biomass conversion facility's certification as to 
the authenticity of the information.



Sec. 1450.105  Obligations of participant.

    (a) All participants whose payment application was approved must 
agree to:
    (1) Carry out and certify compliance with the terms and conditions 
of the payment application including adherence to a conservation plan, 
forest stewardship plan, or equivalent plan, as appropriate; and
    (2) Be jointly and severally responsible, if the participant has a 
share of the payment greater than zero, with other contract participants 
for 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 BCAP 
contract and this part.
    (b) [Reserved]



Sec. 1450.106  Payments.

    (a) Payments under this subpart will be for a term not to exceed 2 
years beginning the date that CCC issues the

[[Page 760]]

first payment, under this subpart to the participant and for each 
participant runs from the date that the participant receives a matching 
payment from CCC even though the participant may over time change 
facilities. The Deputy Administrator may further limit the period to 
reflect participation in BCAP for any time prior to October 27, 2010 as 
the Deputy Administrator deems appropriate. In addition, where ownership 
of a source of material has changed, or where it is deemed that other 
circumstances warrant, the Deputy Administrator may apply the time limit 
applicable to a person or entity or to another person or entity to 
assure that the 2-year limit is not avoided by private arrangement or 
other circumstance.
    (b) Payments under this subpart will be paid at a rate of $1 for 
each $1 per dry ton provided by the qualified biomass conversion 
facility for the market-based sale of eligible material in an amount up 
to $45 per dry ton.



          Subpart C_Establishment Payments and Annual Payments



Sec. 1450.200  General.

    (a) As provided in this subpart, establishment payments and annual 
payments may be provided by CCC to producers of eligible crops within a 
project area.
    (b) [Reserved]



Sec. 1450.201  Project area proposal submission requirements.

    (a) To be considered for selection as a project area, a project 
sponsor must submit a proposal to CCC that includes, at a minimum:
    (1) A description of the sources of renewable biomass, eligible 
land, and eligible crops that may be enrolled within the proposed 
project area;
    (2) A letter of commitment from a biomass conversion facility 
stating that the facility will use, for BCAP purposes, eligible crops 
intended to be produced in the proposed project area;
    (3) Information demonstrating that the biomass conversion facility 
will have sufficient equity available to operate if the facility is not 
operational at the time the project area proposal is submitted; and
    (4) Other information that gives CCC a reasonable assurance that the 
biomass conversion facility will be in operation in a timely manner so 
that it will utilize the eligible crops, as determined by CCC.
    (b) The project area description required in paragraph (a) of this 
section needs to specify geographic boundaries and be described in 
definite terms such as acres, watershed boundaries, mapped longitude and 
latitude coordinates, or counties.
    (c) The project area needs to be physically located near a biomass 
conversion facility or facilities, as determined by CCC.
    (d) Project area proposals may limit the nature and types of 
eligible crops to be established within a project area.



Sec. 1450.202  Project area selection criteria.

    (a) In selecting project areas, CCC will consider:
    (1) The dry tons of the eligible crops proposed to be produced in 
the proposed project area and the probability that such crops will be 
used for BCAP purposes;
    (2) The dry tons of renewable biomass projected to be available from 
sources other than the eligible crops grown on contract acres;
    (3) The anticipated economic impact in the proposed project area;
    (4) The opportunity for producers and local investors to participate 
in the ownership of the biomass conversion facility in the proposed 
project area;
    (5) The participation rate by beginning or socially disadvantaged 
farmers or ranchers;
    (6) The impact on soil, water, and related resources;
    (7) The variety in biomass production approaches within a project 
area, including agronomic conditions, harvest and postharvest practices, 
and monoculture and polyculture crop mixes;
    (8) The range of eligible crops among project areas; and
    (9) Any other additional criteria, as determined by CCC.
    (b) [Reserved]

[[Page 761]]



Sec. 1450.203  Eligible persons and legal entities.

    (a) In order to be eligible to enter into a BCAP contract for this 
subpart, a person or legal entity must be an owner, operator, or tenant 
of eligible land within a project area, as defined in Sec. 1450.204 and 
be the person or entity with the ability to perform under the terms of 
the contract.
    (b) [Reserved]



Sec. 1450.204  Eligible land.

    (a) For the purposes of this subpart, eligible land must be 
physically and legally capable of producing an eligible crop and must 
be:
    (1) Agricultural land; or
    (2) Nonindustrial private forest land.
    (b) For the purposes of this subpart, eligible land is not:
    (1) Federal- or State-owned land, including land owned by local 
governments or municipalities;
    (2) Land that is native sod;
    (3) Land enrolled in the Conservation Reserve Program operated under 
part 1410 of this chapter;
    (4) Land enrolled in the Wetlands Reserve Program operated under 
part 1467 of this chapter; or
    (5) Land enrolled in the Grassland Reserve Program operated under 
part 1415 of this chapter.



Sec. 1450.205  Duration of contracts.

    (a) Contracts under this subpart will be for a term of up to:
    (1) 5 years for annual and non-woody perennial crops; and
    (2) 15 years for woody perennial crops.
    (b) The establishment time period may vary due to: Type of crop, 
agronomic conditions (for example, establishment time frame, winter 
hardiness), and other factors.



Sec. 1450.206  Obligations of participant.

    (a) All participants subject to a BCAP contract must:
    (1) Carry out the terms and conditions of the contract;
    (2) Make available to CCC or to an institution of higher education 
or other entity designated by CCC, such information as CCC determines to 
be appropriate to promote the production of eligible crops and the 
development of renewable biomass conversion technology;
    (3) Comply with the highly erodible land and wetland conservation 
requirements of part 12 of this title;
    (4) Implement a:
    (i) Conservation plan,
    (ii) Forest stewardship plan, or
    (iii) Equivalent plan.
    (5) Implement the conservation plan, forest stewardship plan, or 
equivalent plan which is part of such contract, in accordance with the 
schedule of dates included in such conservation plan, forest stewardship 
plan, or equivalent plan, unless CCC determines that the participant 
cannot fully implement the conservation plan, forest stewardship plan, 
or equivalent plan for reasons beyond the producer's control and CCC and 
the participant agree to a modified plan.
    (6) Demonstrate compliance with the conservation plan, forest 
stewardship plan, or equivalent plan through required self-certification 
subject to compliance spot checks, as determined by CCC.
    (7) Establish temporary vegetative cover either within the 
timeframes required by the conservation plan, forest stewardship plan, 
or equivalent plan or as determined by the Deputy Administrator, if the 
eligible crops cannot be timely established; and
    (8) If the participant has a share of the payment greater than zero, 
be jointly and severally responsible with the other contract 
participants for 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 
contract and this part.
    (b) Payments may cease and producers may be subject to contract 
termination for failure to establish eligible crops.
    (c) A contract will not be terminated for failure by the participant 
to establish an approved cover on the land if, as determined by CCC:
    (1) The failure to plant or establish such cover was due to a 
natural disaster such as excessive rainfall, flooding, or drought; and
    (2) The participant establishes the approved cover as soon as 
practicable

[[Page 762]]

after the wet or drought conditions that prevented the establishment of 
such cover subside.

[75 FR 66234, Oct. 27, 2010, as amended at 76 FR 56951, Sept. 15, 2011]



Sec. 1450.207  Conservation plan, forest stewardship plan, or equivalent plan.

    (a) The producer must implement a conservation plan, forest 
stewardship plan, or equivalent plan that complies with CCC guidelines 
and is approved by the appropriate conservation district for the land to 
be entered in BCAP. If the conservation district declines to review the 
conservation plan, forest stewardship plan, or equivalent plan, or 
disapproves the conservation plan, forest stewardship plan, or 
equivalent plan, such approval may be waived by CCC.
    (b) The practices and management activities included in a 
conservation plan, forest stewardship plan, or equivalent plan, and 
agreed to by the producer, must be implemented in a cost-effective 
manner that meets BCAP purposes as determined by CCC.
    (c) If applicable, a tree planting plan must be developed and 
included in the conservation plan, forest stewardship plan, or 
equivalent plan. Such tree planting plan may allow a reasonable time to 
complete plantings, as determined by CCC.
    (d) Each conservation plan, forest stewardship plan, or equivalent 
plan, and any revision of the plan, will be subject to approval by CCC.



1450.208  Eligible practices.

    (a) Eligible practices are those practices specified in the 
conservation plan, forest stewardship plan, or equivalent plan that meet 
all standards needed to cost-effectively establish:
    (1) Annual crops;
    (2) Non-woody perennial crops; and
    (3) Woody perennial crops.
    (b) [Reserved]



Sec. 1450.209  Signup.

    (a) Offers for contracts may be submitted on a continuous basis to 
CCC as determined by the Deputy Administrator.
    (b) [Reserved]



Sec. 1450.210  Acceptability of offers.

    (a) Acceptance or rejection of any contract offered will be at the 
sole discretion of CCC, and offers may be rejected for any reason as 
determined appropriate to accomplish the purposes of BCAP.
    (b) An offer to enroll land in BCAP will be irrevocable for such 
period as is determined and announced by CCC. The producer will 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 
CCC. 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 BCAP.



Sec. 1450.211  BCAP contract.

    (a) In order to enroll land in BCAP, the participant must enter into 
a contract with CCC.
    (b) The contract is comprised of:
    (1) The terms and conditions for participation in BCAP;
    (2) The conservation plan, forest stewardship plan, or equivalent 
plan; and
    (3) Any other materials or agreements determined necessary by CCC.
    (c) In order to enter into a contract, the producer must submit an 
offer to participate as specified in Sec. 1450.209;
    (d) The contract must, within the dates established by CCC, be 
signed by:
    (1) The producer; and
    (2) The owners of the eligible land to be placed in the BCAP and 
other eligible participants, if applicable.
    (e) The Deputy Administrator is authorized to approve contracts on 
behalf of CCC.
    (f) CCC will honor contracts even in the event that a project area 
biomass conversion facility does not become fully or partially 
operational.
    (g) 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

[[Page 763]]

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) The BCAP practice fails or is not established after a certain 
time period, as determined CCC, and the cost of restoring or 
establishing the practice outweighs the benefits received from the 
restoration or establishment;
    (5) The contract was approved based on erroneous eligibility 
determinations; or
    (6) CCC determines that such a termination is needed in the public 
interest.
    (h) Except as allowed and approved by CCC where the new owner of 
land enrolled in BCAP 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, as determined 
by CCC, and must pay liquidated damages as provided for in the contract 
and this part. CCC may permit the amount(s) to be repaid to be reduced 
to the extent that such a reduction will not impair the purposes of 
BCAP. Further, a refund of all payments need not be required from a 
participant who is otherwise in full compliance with the contract when 
the land is purchased by or for the United States, as determined 
appropriate by CCC.



Sec. 1450.212  Establishment payments.

    (a) Establishment payments will be made available upon a 
determination by CCC that an eligible practice, or an identifiable 
portion of a practice, has been established in compliance with the 
appropriate standards and specifications.
    (b) Except as otherwise provided for in this part, such payments 
will 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, such 
payments will 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 
establishment assistance from any Federal agency.
    (d) Establishment payments may be authorized for the replacement or 
restoration of practices on land for which assistance has been 
previously allowed under BCAP, only if the failure of the original 
practice was due to reasons beyond the control of the participant, as 
agreed to by CCC.
    (e) In addition, CCC may make partial payments when the participant 
completes identifiable components of the contract. CCC may make 
supplemental establishment payments, if necessary.



Sec. 1450.213  Levels and rates for establishment payments.

    (a) CCC will pay not more than 75 percent of the actual or average 
cost (whichever is lower) of establishing non-woody perennial crops and 
woody perennial crops specified in the conservation plan, forest 
stewardship plan, or equivalent plan.
    (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 CCC. This means that the calculated 75 
percent of the average cost may represent less than 75 percent of the 
actual cost for an individual participant.
    (c) Except as otherwise provided for in this part, a participant may 
receive, in addition to any payment under this part, establishment 
assistance, rental payments, or tax benefits from a State or a private 
organization in return for enrolling lands in BCAP without a 
commensurate reduction in BCAP establishment payments.



Sec. 1450.214  Annual payments.

    (a) Annual payments will be made in such amount and in accordance 
with such time schedule as may be agreed upon and specified in the BCAP 
contract.
    (b) Based on the regulations in Sec. 1410.42 of this chapter and as 
determined by CCC, annual payments include a payment based on all or a 
percentage of:

[[Page 764]]

    (1) A weighted average soil rental rate for cropland;
    (2) The applicable marginal pastureland rental rate for all other 
land except for nonindustrial private forest land;
    (3) For forest land, the average county rental rate for cropland as 
adjusted for forest land productivity for nonindustrial private forest 
land; and
    (4) Any incentive payment as determined by CCC.
    (c) The annual payment will be divided among the participants on a 
single contract as agreed to in such contract, as determined by CCC.
    (d) A participant that has an established eligible crop and is 
therefore not eligible for establishment payments under Sec. 1450.212 
may be eligible for annual payments under the provisions of this 
section.
    (e) In the case of a contract succession, annual payments will 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 payments will 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) Annual payments will be reduced, as determined by CCC:
    (1) By a percentage of the sum of the sale price and payments under 
subpart B of this part for the crop collected or harvested from the 
contract acreage as follows:
    (i) By 1 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to cellulosic biofuels as defined by 
40 CFR 80.1401;
    (ii) By 10 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to advanced biofuels;
    (iii) By 25 percent if the eligible crop is delivered to a biomass 
conversion facility for conversion to heat, power, or biobased products;
    (iv) By 100 percent if the eligible crop is used for a purpose other 
than conversion to heat, power, biobased products, or advanced biofuels;
    (2) If the producer violates a term of the contract; or
    (3) In other circumstances deemed necessary or appropriate to carry 
out BCAP.



Sec. 1450.215  Transfer of land.

    (a)(1) If a new owner or operator purchases or obtains the right and 
interest in, or right to occupancy of, land subject to a BCAP contract, 
such new owner or operator, upon the approval of CCC, may become a 
participant to a new BCAP contract with CCC for the transferred land.
    (2) For the transferred land, if the new owner or operator becomes a 
successor to the existing BCAP contract, the new owner or operator will 
assume all obligations of the BCAP contract of the previous participant.
    (3) If the new owner or operator is approved as a successor to a 
BCAP contract with CCC, then, except as otherwise determined by the 
Deputy Administrator:
    (i) Establishment payments will be made to the past or present 
participant who established the practice; and
    (ii) Annual payments to be paid during the fiscal year when the land 
was transferred will be divided between the new participant and the 
previous participant in the manner specified in Sec. 1450.214(c).
    (b) If a participant transfers all or part of the right and interest 
in, or right to occupancy of, land subject to a BCAP contract and the 
new owner or operator does not become a successor to such contract 
within 60 days of such transfer, or such other time as CCC determines to 
be appropriate, such contract will 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) Must refund all previous payments received under the contract by 
the participant or prior participants, plus interest, except as 
otherwise specified by CCC. The provisions of Sec. 1450.211(g) will 
apply.
    (c) Federal agencies acquiring property, by foreclosure or 
otherwise, that

[[Page 765]]

contains BCAP contract acreage cannot be a party to the contract by 
succession. However, through an addendum to the contract, if the current 
operator of the property is one of the contract participants, the 
contract may remain in effect and, as permitted by CCC, such operator 
may continue to receive payments under such contract if CCC determines 
that such allowance is in the public interest and:
    (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.



PART 1455_VOLUNTARY PUBLIC ACCESS AND HABITAT INCENTIVE PROGRAM--Table of 

Contents



Sec.
1455.1 Purpose and administration.
1455.2 Definitions.
1455.10 Eligible grant applicants.
1455.11 Application procedure.
1455.20 Criteria for grant selection.
1455.21 Additional responsibilities of grantee.
1455.30 Reporting requirements.
1455.31 Miscellaneous.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839.

    Source: 75 FR 39140, July 8, 2010, unless otherwise noted.



Sec. 1455.1  Purpose and administration.

    (a) The purpose of this part is to specify requirements and 
definitions for the Voluntary Public Access and Habitat Incentive 
Program (VPA-HIP).
    (b) VPA-HIP provides, within funding limits, grants to State and 
tribal governments to encourage owners and operators of privately-held 
farm, ranch, and forest land to voluntarily make that land available for 
access by the public for wildlife-dependent recreation, including 
hunting and fishing under programs administered by State and tribal 
governments. VPA-HIP is not an entitlement program and no grant will be 
made unless the application is acceptable to the Commodity Credit 
Corporation (CCC). CCC may reject a application for any reason deemed 
sufficient by CCC.
    (c) The regulations in this part are administered under the general 
supervision and direction of the Executive Vice President, CCC, or a 
designee, or the Deputy Administrator, Farm Programs (Deputy 
Administrator), Farm Service Agency (FSA).



Sec. 1455.2  Definitions.

    (a) The definitions in part 718 of this chapter apply to this part 
and all documents issued in accordance with this part, except as 
otherwise provided in this section.
    (b) The following definitions apply to this part:
    Appropriate wildlife habitat means habitat that is suitable or 
proper, as determined by the applicable State or tribal government, to 
support fish and wildlife populations in the area.
    Farm land means the land that meets definition of ``farmland'' in 
Sec. 718.2 of this title.
    Forest land means land at least 120 feet wide and 1 acre in size 
with at least 10 percent cover (or equivalent stocking) by live trees of 
any size, including land that formerly had such tree cover and that will 
be naturally or artificially regenerated. Forest land includes 
transition zones, such as areas between forest and nonforest lands that 
have at least 10 percent cover (or equivalent stocking) with live trees 
and forest areas adjacent to urban and built-up lands. Roadside, 
streamside, and shelterbelt strips of trees must have a crown width of 
at least 120 feet and continuous length of at least 363 feet to qualify 
as forest land. Unimproved roads and trails, streams, and clearings in 
forest areas are classified as forest if they are less than 120 feet 
wide or an acre in size. Tree-covered areas in agricultural production 
settings, such as fruit orchards, or tree-covered areas in urban 
settings, such as city parks, are not considered forest land.
    Privately-held land means farm, ranch, or forest land that is owned 
or operated by an individual or entity that is not an entity of any 
government unit or Tribe.
    Ranch land means land that meets the definition of ``farmland.''
    State or State government means any State or local government, 
including

[[Page 766]]

State, city, town, or county government.
    Tribal government means any Federally-recognized Indian tribe, band, 
nation, or other organized group, or community, including pueblos, 
rancherias, colonies and 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. 1601-1629h), which is recognized 
as eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Wildlife-dependent recreation means a land use involving hunting, 
fishing, wildlife-observation, photography, environmental education and 
interpretation, or other activities as determined by CCC.



Sec. 1455.10  Eligible grant applicants.

    (a) A State or Tribal government may apply for a VPA-HIP grant.
    (b) Any applications received by an individual or entity that is not 
a State or tribal government will not be considered.



Sec. 1455.11  Application procedure.

    (a) Request for applications (RFA). CCC will issue periodic RFAs for 
VPA-HIP on www.grants.gov, subject to available funding. Unless 
otherwise specified in the applicable RFA, applicants must file an 
original and one hard copy of the required forms and an application.
    (b) Single application. A State or tribal government must include 
all proposed activity under a single application per RFA review period. 
Multiple applications from an applicant during a single RFA period will 
not be considered. The applicant is the individual State or Tribe; any 
application from any unit of the State or tribal government must be 
coordinated for a single submission of one application from the State or 
Tribe.
    (c) Incomplete applications. Incomplete applications will not be 
considered for funding. However, incomplete applications may be 
returned, and may be resubmitted, if time permits.
    (d) Providing data. Data furnished by grant applicants will be used 
to determine eligibility for the VPA-HIP benefits. Furnishing the data 
is voluntary; however, the failure to provide data could result in 
program benefits being withheld or denied.
    (e) Required forms. The following forms must be completed, signed, 
and submitted as part of the application; other forms may be required, 
as specified in the applicable RFA:
    (1) Application for Federal Assistance;
    (2) Budget Information--Non-Construction Programs; and
    (3) Assurances--Non-Construction Programs.
    (f) Application. Each application must contain the following 
elements; additional required elements may be specified in the 
applicable RFA:
    (1) Title page;
    (2) Table of contents;
    (3) Executive summary, which includes;
    (i) Activities. Provide a summary of the application that briefly 
describes activities proposed to be funded under the grant.
    (ii) Objectives, funding, performance, and other resources. Include 
objectives and tasks to be accomplished, the amount of funding 
requested, how the work will be performed, whether organizational staff, 
consultants or contractors will be used, and whether other resources 
will be used;
    (4) Eligibility certification that certifies that the applicant is a 
State or tribal government and the individual submitting the application 
is acting in a representative capacity on behalf of the State or tribal 
government;
    (5) Application narrative that must include, but is not limited to, 
the following:
    (i) Project title. The title of the proposed project must be brief 
(not to exceed 75 characters) yet describe the essentials of the 
project.
    (ii) Information sheet. A separate one-page information sheet 
listing each of the evaluation criteria referenced in the RFA, followed 
by the page numbers of all relevant material and documentation contained 
in the application that address or support the criteria.
    (iii) Objectives of the project. This section must include the 
following:
    (A) A description of how the VPA-HIP funding will be used to 
encourage public access to private farm, ranch,

[[Page 767]]

and forest land for hunting, fishing, and other recreational purposes;
    (B) A description of the methods that will be used to achieve the 
provisions of paragraph (f)(5)(iii)(A) of this section;
    (C) A description of how and to what extent the proposed program 
will meet with widespread acceptance among landowners;
    (D) A detailed description of how and to what extent the land 
enrolled will have appropriate wildlife habitat and how program funds 
may be used to improve those habitats;
    (E) A detailed description of how and to what extent public hunting 
and other recreational access will be increased on land enrolled under a 
Conservation Reserve Enhancement Program as specified under Sec. 
1410.50 of this chapter, or if Conservation Reserve Enhancement Program 
land is not available, specify that there is no impact;
    (F) A detailed description of how any additional Federal, State, 
tribal government, or private resources will be used to carry out grant 
activities; and
    (G) A detailed description of how the public will be made aware of 
the location of the land enrolled.
    (iv) Work plan. Applications must discuss the specific tasks to be 
completed using grant and matching funds. The work plan should show how 
customers will be identified, key personnel to be involved with 
administration of the grant, and the evaluation methods to be used to 
determine the success of specific tasks and overall objectives of a VPA-
HIP grant. The budget must present a breakdown of the estimated costs 
associated with VPA-HIP activities and allocate these costs to each of 
the tasks to be undertaken. Additional funds from Federal, State, tribal 
government, or private resources as well as grant funds and resources 
provided in kind must be accounted for in the budget.
    (v) Performance evaluation criteria. Applications should discuss how 
the State or tribal government will evaluate whether the program for 
which the grant is being sought will meet the stated goals for the State 
or tribal program, including but not limited to landowner and 
recreationist participation, outreach, and cost-effectiveness.
    (vii) Other similar efforts. The applicant must describe its 
previous accomplishments and outcomes in public access activities, if 
any.
    (viii) Qualifications of personnel. Applicants must describe the 
qualifications of personnel expected to perform key tasks, and whether 
these personnel are to be full- or part-time employees or contract 
personnel.



Sec. 1455.20  Criteria for grant selection.

    (a) Incomplete or non-responsive applications will not be evaluated. 
Applicants may revise their applications and re-submit them prior to the 
published deadline if there is sufficient time to do so.
    (b) After all applications have been evaluated using the evaluation 
criteria and scored in accordance with the point allocation specified in 
the RFA, a list of all applications in ranked order, together with 
funding level recommendations, will be submitted to the Deputy 
Administrator, FSA.
    (c) Unless supplemented in a RFA, applications for grants for VPA-
HIP will be evaluated using the criteria listed in this section. The 
distribution of points to be awarded per criterion will be identified in 
the RFA.
    (1) Benefits. The application will be evaluated to determine whether 
and to what extent the project's anticipated outcomes promote 
improvement of public access for wildlife-dependent recreation and 
intended environmental benefits.
    (2) Project description and feasibility. The application will be 
evaluated on the extent and quality to which the applicant demonstrates 
a reasonable approach to the project, sufficient resources to complete 
the project, and a capability to complete the project in a timely 
manner.
    (3) Widespread acceptance and maximizing participation of 
landowners. The application will be evaluated based on the applicant's 
plan for encouraging the participation of owners and operators of 
privately-held farm, ranch, and forest land, and for engaging the public 
users. Additionally, the extent to which the applicant has identified 
and established relationships with the partners necessary to achieve the 
project's goals will be evaluated.

[[Page 768]]

    (4) Appropriate wildlife habitat. The application will be evaluated 
to determine whether the applicant demonstrates expertise in providing 
technical assistance with respect to establishing and maintaining 
appropriate wildlife habitat on public access land.
    (5) Strengthening wildlife habitat for lands under the Conservation 
Reserve Enhancement Program (CREP). The application will be evaluated to 
determine whether the project proposes to provide incentives to increase 
public hunting and other recreational access on land enrolled under CREP 
as authorized by Sec. 1410.50.
    (6) Additional private, Federal, State, or tribal government 
resources. The application will be evaluated to determine the extent to 
which the support letters provided by other organizations involved with 
the project demonstrate specific and quantified commitments to the 
project. Applications that demonstrate additional resources will receive 
more points, all else being equal, than those that do not.
    (7) Making available the location of enrolled land. The application 
will be evaluated to determine how the project proposes to make 
available to the public the location of the land enrolled.
    (8) Performance evaluation criteria. The application will be 
evaluated to determine whether the applicant has included outcome-based 
performance measures.
    (9) Administrative capabilities. The application will be evaluated 
to determine whether the grant applicant has a track record of 
administering the project or, in the absence of a track record, the 
capacity to administer the project. Applicants that have demonstrated 
capable financial systems and audit controls, personnel and program 
administration performance measures, and clear rules of governance will 
receive more points than those not evidencing this capacity.
    (10) Delivery. The application will be evaluated to determine 
whether the applicant has a track record in implementing public access 
or similar programs or, in the absence of an actual track record, the 
capacity to implement a public access program. The applicant's potential 
for delivering an effective public access program and the expected 
effects of that program will also be assessed.
    (11) Work plan and budget. The work plan will be reviewed for 
detailed actions and an accompanying timetable for implementing the 
components of the application. Clear, logical, realistic, and efficient 
plans will result in a higher score. Budgets will be reviewed for 
completeness and whether and to what extent additional resources were 
committed by Federal, State, or tribal government, and private 
resources.
    (12) Qualifications of those performing the tasks. The application 
will be reviewed to determine if key personnel have appropriate 
knowledge, skills, and abilities with respect to wildlife-dependent 
recreation including hunting or fishing on privately-held farm, ranch, 
and forest land, funds control, grants management, performance 
monitoring and evaluation, or other activities relevant to the success 
of the proposed public access program.



Sec. 1455.21  Additional responsibilities of grantee.

    (a) Before receiving grant funding, the grantee will be required to 
sign an agreement similar in form and substance to the form of agreement 
published within or as an appendix to the RFA. The agreement will 
require the grantee to commit to do all of the following:
    (1) Take all practicable steps to develop continuing sources of 
financial support from other Federal, State, tribal government, or 
private resources;
    (2) Make arrangements for the monitoring and evaluation of the 
activities related to implementation of the public access program of the 
owners or operators that enroll farm, ranch, and forest land; and
    (3) Provide an accounting for the money received by the grantee 
under this subpart.
    (b) Grantees will be required to monitor funds or services as 
specified in paragraph (c) of this section, and must agree to that 
monitoring before grant funds are awarded.
    (c) The grantee must certify that the grant funds and services will 
not be

[[Page 769]]

used for ineligible purposes. Specifically, grant funds and services may 
not be used to:
    (1) Duplicate or replace current services; however, grant funds may 
be used to expand the level of effort or service beyond what is 
currently being provided;
    (2) Pay costs of preparing the application for funding under VPA-
HIP;
    (3) Pay costs of the project incurred prior to the date of grant 
approval;
    (4) Fund political activities;
    (5) Pay any judgment or debt owed to the United States;
    (6) Pay for the design, repair, rehabilitation, acquisition, or 
construction of a building or facility (including a processing 
facility);
    (7) Purchase, rent or pay for the installation of fixed equipment, 
other than property identification signs;
    (8) Pay for the repair of privately owned vehicles; or
    (9) Pay for research and development not directly related to 
quantifying the performance of VPA-HIP lands enrolled with funding from 
VPA-HIP.
    (d) Grant agreements under this part will be for a term of up to 3 
years.
    (e) Grantees that are States will have the grant amount reduced by 
25 percent if opening dates for migratory bird hunting in the State are 
not consistent for residents and non-residents. This paragraph does not 
apply to grantees that are Tribal governments.
    (f) Failure of the grantee to execute a grant agreement in a timely 
fashion, as determined by the CCC, will be construed to be a withdrawal 
from VPA-HIP.



Sec. 1455.30  Reporting requirements.

    (a) Grantees must provide the following to FSA:
    (1) A ``Financial Status Report'' listing expenditures according to 
agreed upon budget categories, on a periodic basis as specified in the 
grant document.
    (2) Annual performance reports that compare accomplishments to the 
objectives stated in the application, and that also:
    (i) Identify all tasks completed to date and provide documentation 
supporting the reported results;
    (ii) If the original schedule provided in the work plan is not being 
met, the report must discuss the problems or delays that may affect 
completion of the project;
    (iii) List objectives for the next reporting period; and
    (iv) Discuss compliance with any special conditions on the use of 
award funds. Reports are due as provided in paragraph (a)(1) of this 
section.
    (3) Final project performance reports, inclusive of supporting 
documentation. The final performance report is due within 90 days of the 
completion of the project.
    (b) All reports submitted to the Agency will be held in confidence 
to the extent permitted by law.



Sec. 1455.31  Miscellaneous.

    (a) Inspection. Grantees must permit periodic inspection of the 
program operations by a CCC representative, as determined by CCC.
    (b) Performance evaluation. CCC will incorporate performance 
criteria in grant award documentation and will regularly evaluate the 
progress and performance of grant awardees.
    (c) Suspend, terminate, or require refund. CCC may elect to suspend 
or terminate a grant in all or part, or funding of a particular workplan 
activity, and require refund of part or all of the grant, with interest, 
where CCC has determined:
    (1) That the grantee or subrecipient of grant funds has demonstrated 
insufficient progress in complying with the terms of the grant 
agreement;
    (2) The opening dates for migratory bird hunting in a State have 
been changed so as to be not consistent for residents and non-residents 
during the term of the grant;
    (3) There is reasonable evidence that shows joint funding has not 
been or will not be forthcoming on a timely basis; or
    (4) Such other cause as CCC identifies in writing to the grantee 
based on reasonable evidence (including but not limited to the use of 
Federal grant funds for ineligible purposes).
    (d) Advance or reimbursement. Grantees must use the request for 
advance or reimbursement form, which will be

[[Page 770]]

provided by CCC, to request advances or reimbursements;
    (e) Appeals. Appeals will be handled according to 7 CFR parts 11 and 
780.
    (f) Environmental review. All grants made under this subpart are 
subject to the requirements of 7 CFR part 799.
    Applicants for grant funds must consider and document within their 
plans the important environmental factors within the planning area and 
the potential environmental impacts of the plan on the planning area, as 
well as the alternative planning strategies that were reviewed.
    (g) Civil rights. CCC prohibits discrimination in all its programs 
and activities on the basis of race, color, national origin, age, 
disability, and where applicable, sex, marital status, familial status, 
parental status, religion, sexual orientation, genetic information, 
political beliefs, reprisal, or because all or a part of an individual's 
income is derived from any public assistance program. VPA-HIP will also 
be administered in accordance with all other applicable civil rights 
law.
    (h) Other USDA regulations. The grant program under this part is 
subject to the provisions of the following regulations, as applicable:
    (1) 7 CFR part 3015, Uniform Federal Assistance Regulations;
    (2) 7 CFR part 3016, Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments;
    (3) 7 CFR part 3017, Governmentwide Debarment and Suspension 
(nonprocurement) and Governmentwide Requirements for Drug-Free Workplace 
(Grants);
    (4) 7 CFR part 3018, New Restrictions on Lobbying;
    (5) 7 CFR part 3019, Uniform Administrative Requirements for Grants 
and Agreements with Institutions of Higher Education, Hospitals and 
Other Non-profit Organizations; and
    (6) 7 CFR part 3052, Audits of States, Local Governments and Non-
profit Organizations.
    (i) Audit. Grantees must comply with the audit requirements of 7 CFR 
part 3052. The audit requirements apply to the years in which grant 
funds are received and years in which work is accomplished using grant 
funds.
    (j) Change in scope or objectives. The Grantee must obtain prior 
approval from FSA for any change to the scope or objectives of the 
approved project. Failure to obtain prior approval of changes to the 
scope of work or budget may result in suspension, termination, or 
recovery of grant funds.
    (k) Exceptions. CCC may, in individual cases, make an exception to 
any requirement or provision of this part, provided that any such 
exception is not inconsistent with any applicable law or opinion of the 
Comptroller General, and provided further, that CCC determines that the 
application of the requirement or provision would adversely affect the 
Federal Government's interest.
    (l) Enforcement and refunds; liens and schemes or devices. Grantees 
must comply with all conditions of the grant and any monies not spent or 
improperly spent must be returned immediately with interest to run at 
the normal rate for CCC obligations. Interest charges will be computed 
from the date of the CCC disbursement. Grantees must insure that parties 
that receive funds from the grantee comply with the grantee's 
application and return funds made available by the grantee where there 
is no such compliance. Any scheme or device to avoid any limits of this 
part will be considered to be a program violation with respect to any 
grant to which that scheme or device is related. Grant funds will be 
made available to the States or Tribes that are grantees under this part 
without regard to the claims of others, unless CCC determines otherwise.



PART 1463_2005	2014 TOBACCO TRANSITION PROGRAM--Table of Contents



                Subpart A_Tobacco Transition Assessments

Sec.
1463.1 General.
1463.2 Administration.
1463.3 Definitions.
1463.4 National assessment.
1463.5 Division of national assessment among classes of tobacco.
1463.6 Determination of persons liable for payment of assessments.
1463.7 Division of class assessment to individual entities.
1463.8 Notification of assessments.

[[Page 771]]

1463.9 Payment of assessments.
1463.10 Civil penalties and criminal penalties.
1463.11 Appeals and judicial review.

              Subpart B_Tobacco Transition Payment Program

1463.100 General.
1463.101 Administration.
1463.102 Definitions.
1463.103 Eligible quota holder.
1463.104 Eligible tobacco producer.
1463.105 Base quota levels for eligible quota holders.
1463.106 Base quota levels for eligible tobacco producers.
1463.107 Payment to eligible quota holders.
1463.108 Payment to eligible tobacco producers.
1463.109 Contracts.
1463.110 Misrepresentation and scheme or device.
1463.111 Offsets and assignments.
1463.112 Successor in interest contracts.
1463.113 Issuance of payments in event of death.
1463.114 Appeals.

                   Subpart C_Miscellaneous Provisions

1463.201 Refunds of importer assessments.

    Authority: 7 U.S.C. 518-519a, 714b, and 714c.

    Source: 70 FR 7011, Feb. 10, 2005, unless otherwise noted.



                Subpart A_Tobacco Transition Assessments



Sec. 1463.1  General.

    The Commodity Credit Corporation (CCC) will levy assessments from 
January 1, 2005 through September 30, 2014 on certain domestic 
manufacturers and importers of tobacco products as provided for in this 
subpart in order to fund the issuance of payments made under subpart B 
of this part and to fund other activities authorized by Title VI of the 
American Jobs Creation Act of 2004. The total amount of assessments that 
may be collected under this part shall not exceed $10.140 billion.



Sec. 1463.2  Administration.

    The provisions of this subpart will be administered under the 
general supervision of the Executive Vice President, CCC.



Sec. 1463.3  Definitions.

    The definitions in this section shall apply for all purposes of 
administering the provisions of this subpart:
    Act means Title VI of the America Jobs Creation Act of 2004 (Public 
Law 108-357).
    Adjusted market share means the market share of a manufacturer of 
tobacco products or an importer of tobacco products adjusted to reflect 
such entity's share of a class of tobacco during the immediately 
preceding calendar year quarter. With respect to the 39th and 40th 
quarterly payments due on September 30, 2014, the adjusted market share 
will be the entity's share of a class of tobacco during the April 1-June 
30, 2014 quarter.
    Base period means the period July 1 through June 30 immediately 
preceding the beginning of a fiscal year.
    CCC's point of contact means, for items physically sent to CCC, 
``Fibers, Peanuts, and Tobacco Analysis Group, Economic and Policy 
Analysis Staff, Farm Service Agency, United States Department of 
Agriculture (USDA), STOP 0515, Room 3720-S, 1400 Independence Avenue, 
SW., Washington, DC 20250-0515'' unless otherwise specified by CCC 
through actual notice.
    Calendar year means the period January 1 through December 31.
    Class of tobacco means each of the following types of tobacco and 
tobacco products for which taxes are required to be paid for the removal 
of such into domestic commerce: cigarettes; cigars; snuff; roll-your-own 
tobacco; chewing tobacco; and pipe tobacco.
    Domestic manufacturer of tobacco products means an entity that is 
required to obtain a permit from the Alcohol and Tobacco Tax and Trade 
Bureau of the Department of the Treasury with respect to the production 
of tobacco products under title 27 of the Code of Federal Regulations.
    Fiscal year means the period October 1 through September 30.
    Gross domestic volume means the volume of tobacco products removed, 
as defined by section 5702 of the Revenue Code, and not exempt from tax 
under chapter 52 of such code at the time of their removal under that 
chapter or the Harmonized Tariff Schedule of the United States.

[[Page 772]]

    Importer of tobacco products means an entity that is required to 
obtain a permit from the Alcohol and Tobacco Tax and Trade Bureau of the 
Department of the Treasury with respect to the importation of tobacco 
products under title 27 of the Code of Federal Regulations.
    Market share means the share of each domestic manufacturer and 
importer of a class of tobacco product, to the fourth decimal place, of 
the total volume of domestic sales of the class of tobacco product in 
the base period. Such sales shall be determined by CCC by using the 
total volume of such class of tobacco product that is removed into 
domestic commerce in the base period.
    National assessment means the total amount of funding that CCC has 
determined to be necessary to collect in a year from domestic 
manufacturer and importer of tobacco products in order to reimburse CCC 
for expenditures that it will incur in the year for expenses incurred 
under sections 622 and 623 of the Act in making payments under subpart B 
of this part; losses sustained by CCC in the disposition of tobacco 
acquired under price support loan agreements as provided in section 
641(c) of the Act; and costs incurred by CCC in the utilization of 
financial institutions in administering sections 622 and 623 of the Act.
    Revenue Code means the Internal Revenue Code of 1986.
    Tobacco Trust Fund means an account established for deposit of 
assessments collected under this subpart, plus interest that accrues on 
such assessments, to be used to implement this subpart.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005; 73 
FR 23066, Apr. 29, 2008]



Sec. 1463.4  National assessment.

    Annually, CCC will make a determination of a national assessment in 
as far in advance of when the first assessment is due as CCC determines 
to be practicable. Based upon the amount of assessments received and 
expenditures incurred in a calendar year quarter, CCC may adjust the 
national assessment for one or more classes of tobacco established for a 
particular year with respect to succeeding calendar year quarters.



Sec. 1463.5  Division of national assessment among classes of tobacco.

    (a) Except as provided in paragraph (b) of this section, the 
national assessment will be divided by CCC among each class of tobacco 
based upon CCC's determination of each class's share of the excise taxes 
paid using for all years the tax rates that applied in fiscal year 2005. 
The value of the excise taxes paid for each class of tobacco will be 
based upon the reports filed by domestic manufacturers and importers of 
tobacco products with the Department of the Treasury and the Department 
of Homeland Security:
    (b) For fiscal year 2005, the national assessment will be divided as 
follows:
    (1) Cigarettes, 96.331 percent;
    (2) Cigars, 2.783 percent;
    (3) Snuff, 0.539 percent;
    (4) Roll-your-own tobacco products, 0.171 percent;
    (5) Chewing tobacco, 0.111 percent; and
    (6) Pipe tobacco, 0.066 percent.
    (c) For fiscal years 2006 through 2014, the division of the national 
assessment for each class of tobacco will be adjusted annually.

[70 FR 7011, Feb. 10, 2005, as amended at 75 FR 76923, Dec. 10, 2010]



Sec. 1463.6  Determination of persons liable for payment of assessments.

    (a) All domestic manufacturers and importers of tobacco products are 
required to pay to CCC their proportionate share of a calendar year's 
national assessment. Such entities are those that import or manufacture 
tobacco products in a calendar year and are required to report to the 
United States Department of the Treasury or to the Department of 
Homeland Security the removal of tobacco products into domestic commerce 
under the Revenue Code or are required to pay taxes under chapter 52 of 
such code.
    (b)(1) Such entities must provide to CCC's point of contact:
    (i) Entity name; mailing address of the entity's principal place of 
business; an office or individual that CCC may contact for further 
information; an e-mail address and postal address at

[[Page 773]]

which they wish to receive notifications required by the Act to be made 
to them by CCC; and
    (ii) On a monthly basis for each class of tobacco, the total amount 
of tobacco products, summarized by employer identification number or 
such other method as may be prescribed by CCC, that are required to be 
reported to the United States Department of the Treasury or to the 
Department of Homeland Security in each month beginning October 1, 2004, 
and ending September 30, 2014.
    (2) The information required to be submitted to CCC under paragraph 
(b)(1) of this section must be submitted by:
    (i) With respect to fiscal year 2005 activities occurring prior to 
February 10, 2005, by February 25, 2005; and
    (ii) With respect to all other activities, on the same date the 
information was required to be submitted to the United States Department 
of the Treasury or to the Department of Homeland Security.



Sec. 1463.7  Division of class assessment to individual entities.

    (a) In order to determine the assessment owed by an entity, that 
portion of the national assessment assigned to each class of tobacco 
will be further divided at the entity level. The amount of the 
assessment for each class of tobacco to be paid by each domestic 
manufacturer and importer of tobacco products will be determined by 
multiplying:
    (1) With respect to each class of tobacco, the adjusted market share 
of such manufacturer or importer; by
    (2) The total amount of the assessment for that class of tobacco for 
the calendar year quarter.
    (b) For purposes of determining the volume of domestic sales of each 
class of tobacco products and for each entity, such sales shall be based 
upon the reports filed by domestic manufacturers and importers of 
tobacco with the Department of Treasury and the Department of Homeland 
Security and shall correspond to the quantity of the tobacco product 
that is removed into domestic commerce by each such entity:
    (1) For cigarettes and cigars, on the number of cigarettes and 
cigars reported on such reports;
    (2) For all other classes of tobacco, on the number of pounds of 
those products.
    (c) In determining the adjusted market share of each manufacturer or 
importer of a class of tobacco products, except for cigars, CCC will 
determine to the fourth decimal place an entity's share of excise taxes 
paid of that class of tobacco product during the immediately prior 
calendar year quarter. With respect to cigars, CCC will determine the 
adjusted market share for each manufacturer or importer of a class of 
tobacco products based on the number of such products removed into 
domestic commerce.
    (d) The amount of a quarterly assessment owed by a domestic 
manufacturer or importer of tobacco products that must be remitted to 
CCC by the end of a calendar year quarter is based upon the application 
of the manufacturer's or importer's adjusted market share to the amount 
of the national assessment that has been allocated to one of the six 
specified tobacco product sectors under Sec. 1463.5. As provided in 
Sec. 1463.3, this adjusted market share is determined by the actions of 
such manufacturer or importer in a prior calendar year quarter. 
Accordingly, this amount must be remitted to CCC whether or not the 
manufacturer or importer is engaged in the removal of tobacco or tobacco 
products into commerce in the calendar year quarter in which it receives 
notification of the amount of assessment owed to CCC.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005]



Sec. 1463.8  Notification of assessments.

    (a) Once CCC has determined a national assessment, CCC will collect 
that amount on a quarterly basis from all domestic manufacturers and 
importers of tobacco products subject to Sec. 1463.5.
    (b) 30 calendar days prior to the end of each calendar year quarter 
domestic manufacturers and importers of tobacco products will receive 
notification of:
    (1) The national assessment;

[[Page 774]]

    (2) The percentage of the national assessment that has been 
allocated to each class of tobacco product and the total amount of 
assessments due from each such class;
    (3) Any adjustments that have been from the prior fiscal year with 
respect to the allocation of the gross domestic volume determined for 
use in a fiscal year among the classes of tobacco products;
    (4) An adjustment in the national assessment if CCC determines that 
the assessments imposed will result in insufficient funds due to changes 
in the amount of expenditures that CCC has determined will be made in a 
calendar year;
    (5) The volume of gross sales of each class of tobacco that CCC has 
allocated to the domestic manufacturer or importer of tobacco products 
for the purposes of determining such entity's adjusted market share. The 
volume of gross sales of each class of tobacco allocated to such an 
entity shall correspond to the quantity of the tobacco product that is 
removed into domestic commerce by each such entity;
    (6) The total volume of gross sales of each class of tobacco that 
CCC has allocated to a class of tobacco, within the gross domestic 
volume determined for use in a fiscal year, that was used for the 
purpose of determining a tobacco manufacturer's or tobacco importer's 
adjusted market share. The total volume of gross sales of each such 
class of tobacco shall correspond to the total quantity of the tobacco 
product that is removed into domestic commerce.
    (7) For that quarter, the adjusted market share of the domestic 
manufacturer or importer of tobacco products;
    (8) Beginning with the 2nd quarter of 2008, or as soon as 
practicable thereafter, the applied market share for that quarter of 
each other manufacturer and importer, for the applicable class of 
tobacco product of those manufacturers and importers that have provided 
such information to CCC in accordance with the provisions of Sec. 
1463.6, as determined by the Deputy Administrator, Farm Service Agency.
    (9) The manner in which assessments are to be remitted to CCC; and
    (10) Identification of those Department of the Treasury and 
Department of Homeland Security forms filed by the domestic manufacturer 
or importer of tobacco products that are used to calculate assessments.

[70 FR 7011, Feb. 10, 2005, as amended at 70 FR 17158, Apr. 4, 2005; 73 
FR 23066, Apr. 29, 2008]



Sec. 1463.9  Payment of assessments.

    (a) Assessments under this subpart are imposed for the expenditures 
CCC has determined it will incur in the 2005 through 2014 calendar 
years. Except as provided in paragraph (c) of this section, payment of 
such assessments are due to CCC no later than the end of each calendar 
year quarter. If prior to 30 calendar days before the end of a calendar 
year quarter CCC has not notified an entity of the amount that is 
required to be remitted in that quarter, no interest will be assessed by 
CCC under paragraph (d) of this section until 30 calendar days have 
elapsed from the date CCC provided notification of the amount owed.
    (b) Payments due under this subpart must be submitted to CCC by 
electronic fund transfer unless prior written approval has been obtained 
from CCC.
    (c) The final two calendar year quarterly payments due to CCC under 
this part shall be due to CCC on September 30, 2014.
    (d) Notwithstanding any other provision of this chapter, if CCC has 
not received payment of assessments determined to be owed at the end of 
a calendar year quarter, CCC will assess interest on such unpaid amount 
beginning on the first day of the calendar year quarter immediately 
following the end of such prior quarter. Such interest will be at the 
rate CCC assesses on delinquent debts in accordance with part 1403 of 
this title.
    (e) With respect to funds placed in escrow that are refunded to the 
domestic manufacturer or importer of tobacco products due to the 
resolution of an appeal, interest will be paid on such amount from the 
date of receipt by CCC until the date of the refund. Such interest rate 
will be at the rate charged by the U.S. Treasury for CCC's

[[Page 775]]

borrowing that is in effect on the date of receipt by CCC of such funds.



Sec. 1463.10  Civil penalties and criminal penalties.

    (a) Any person who knowingly fails to provide information required 
to be filed under this subpart, or provides false information under this 
subpart, may be subject to the penalties prescribed in 15 U.S.C. 714m, 
18 U.S.C. 1003, and such other civil and criminal statutes as the United 
States determines to be appropriate.
    (b) In addition to an action that may be taken under paragraph (a) 
of this section, with respect to any person who knowingly fails to 
provide information required to be filed under this subpart, or that 
provides false information under this subpart, a person may be subject 
to assessment of a civil penalty by CCC. Such civil penalty will be 
imposed by CCC taking into account the severity of the action; whether 
the action is of a repetitive nature; and the disruption the action has 
caused with respect to other parties subject to this subpart. Any such 
civil penalty will not exceed two percent of the value of the kind of 
tobacco products manufactured or imported by such entity in the fiscal 
year in which the violation occurred.



Sec. 1463.11  Appeals and judicial review.

    (a) An entity may appeal any adverse determination made under this 
subpart, including with respect to the amount of the assessment, by 
submitting a written statement that sets forth the basis of the dispute 
by submitting such a request to the Executive Vice President, CCC, at 
1400 Independence Avenue, SW., Room 4080-S, Washington DC 20250-0514, 
within 30 business days of the date of receipt of the notification by 
CCC of its determination.
    (b) The Executive Vice President shall assign a person to act as the 
hearing officer on behalf of CCC. The duty of the hearing officer will 
be to develop an administrative record that will provide the Executive 
Vice President, or a designee, with sufficient information to render a 
final determination on the matter in dispute. The hearing to be 
conducted by the hearing officer will be an informal hearing at which 
the appellant may present oral and written evidence in support of the 
appellant's position. A copy of the rules of conduct that will be 
applicable to the proceeding will be provided to the appellant upon 
receipt of the appeal by CCC.
    (c) With respect to any appeal filed under this section regarding an 
assessment imposed on a domestic manufacturer or importer of tobacco 
products, the rules of conduct will provide that within 30 calendar days 
of receiving the final submission of material by the appellant, CCC will 
render a final administrative decision. In the event CCC has not 
rendered a decision by such date, all administrative remedies available 
to the appellant shall be deemed to be exhausted.
    (d) Any domestic manufacturer or importer of tobacco products 
aggrieved by a determination made by CCC under this subpart may seek 
review of the determination upon the exhaustion of the administrative 
remedies provided by this part in the United States District Court for 
the District of Columbia, or for the district in which such importer or 
manufacturer has its principal place of business.



              Subpart B_Tobacco Transition Payment Program

    Source: 70 FR 17159, Apr. 4, 2005, unless otherwise noted.



Sec. 1463.100  General.

    (a) The Commodity Credit Corporation (CCC) will make payments to 
tobacco quota holders and tobacco producers as provided in this subpart 
with respect to farms for which a tobacco marketing quota had been 
established by the Farm Service Agency (FSA). To be eligible for a 
payment, such person must meet all provisions of this part; submit to 
CCC an application provided by CCC to enter into a contract for payment; 
and submit other information as may be required by CCC. Payments will be 
made by CCC annually over a 10-year period.
    (b) As provided in this part, a tobacco quota holder or tobacco 
producer who is not the subject of an outstanding claim established by 
the United States may, under the terms and conditions

[[Page 776]]

established by CCC and with the prior approval of CCC, enter into a 
successor in interest contract with another person or entity. Upon 
approval by CCC, all rights and obligations of the quota holder or 
producer, with respect to payments made by CCC under this part, will be 
terminated and transferred to the successor party.
    (c) As provided in this part, a tobacco quota holder or tobacco 
producer who may, under the terms and conditions established by CCC, and 
with the prior approval of CCC, may assign the right to receive a 
payment to be made under this part by executing an assignment as 
provided in Sec. 1463.111.
    (d) Notwithstanding any other provision of this chapter, the 
provisions of 7 CFR parts 723 and 1464 shall not be applicable to the 
2005 and subsequent crops and the 2005 and subsequent marketing years.



Sec. 1463.101  Administration.

    (a) The program will be administered under the general supervision 
of the Executive Vice President, CCC, and shall be carried out by FSA 
State and county committees (State and county committees).
    (b) State and county committees and their representatives and 
employees have no authority to modify or waive provisions 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 a county committee to correct, any action 
taken by such county committee that is not in accordance with this 
subpart; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this subpart.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, or designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee. 
Further, the Executive Vice-President, CCC, or designee, may modify any 
deadline in this subpart to the extent doing so is determined to be 
appropriate and consistent with the purposes of the program.
    (e) A representative of CCC may execute a contract for a transition 
payment 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. 1463.102  Definitions.

    The definitions in this section shall apply for all purposes of 
administering the Tobacco Transition Payment Program (TTPP) authorized 
by this subpart.
    Act means the Fair and Equitable Tobacco Reform Act of 2004.
    Actual marketings means tobacco that was disposed of in raw or 
processed form by voluntary or involuntary sale, barter, or exchange, or 
by gift between living persons.
    Actual undermarketings means the amount by which the effective quota 
is more than the amount of tobacco marketed.
    Assignee means the person designated by a tobacco quota holder or 
tobacco producer on the correct CCC form to receive a payment to be made 
by CCC under this subpart.
    Assignor means the owner of a farm, or a producer on a farm, who has 
been determined by CCC to be eligible for a payment under this subpart 
and who has elected to assign to another person on the correct CCC form, 
the payment to be made by CCC under this subpart.
    Average production yield means, for each kind of tobacco, other than 
burley (type 31) and flue-cured (types 11-14), the average of the 
production of a kind of tobacco in a county, on a per-acre basis, for 
the 2001, 2002, and 2003 crop years. For quota holders only, if no 
records are available to provide the average production of a kind of 
tobacco in a county, the average yield will be the production yield 
established by the National Agricultural Statistical Service of the 
Department of Agriculture

[[Page 777]]

(NASS) for the 2002 marketing year for the applicable kind of tobacco.
    Basic allotment means the factored allotment plus and minus 
permanent adjustments.
    Basic quota means the factored quota plus permanent adjustments.
    Base Quota Level (BQL) means the payment pounds as determined under 
this subpart.
    Calendar year means the twelve-months from January 1 through 
December 31.
    Claim means any amount of money determined by any Federal agency to 
be owed by a tobacco quota holder or a tobacco producer to the United 
States, or any agency or instrumentality thereof, that has been the 
subject of a completed debt collection activity that is in compliance 
with the Debt Collection Improvement Act of 1996.
    Considered planted means tobacco that was planted but failed to be 
produced as a result of a natural disaster, as determined by CCC.
    Contract means a Tobacco Transition Payment Quota Holder Contract, a 
Tobacco Transition Payment Producer Contract, a Tobacco Transition 
Payment Quota Holder Successor In Interest Contract, or a Tobacco 
Transition Payment Producer Successor In Interest Contract.
    Contract payment means a payment made under a contract entered into 
under this subpart.
    Dependent means an offspring child who is under 18 years of age.
    Disaster lease means, as approved by FSA, a written transfer by 
lease under certain natural disaster conditions of flue-cured or burley 
tobacco when the transferring farm has suffered a loss of production due 
to drought, excessive rain, hail, wind, tornado, or other natural 
disasters. A disaster transfer of flue-cured tobacco must have occurred 
after June 30 and on or before November 15. A disaster transfer of 
burley tobacco must have occurred after July 1 and on or before February 
16 of the following calendar year.
    Effective allotment means the basic farm allotment plus or minus 
temporary adjustments.
    Effective quota means the current year farm marketing quota plus or 
minus any temporary quota adjustments.
    Effective undermarketings means the smaller of the actual 
undermarketings or the sum of the previous year's basic quota plus 
pounds of quota temporarily transferred to the farm for the previous 
year.
    Eligible quota holder means only a person who, as of October 22, 
2004, has either a fee simple interest or life estate interest in the 
farm for which FSA established a farm basic marketing quota for the 2004 
marketing year. An eligible quota holder does not include any other 
person who: claims a lien, security interest or other similar equitable 
interest in the farm or in any personal asset of the owner of the farm 
or a producer on the farm; has a remainder interest or any other 
contingent interest in the farm or in any personal asset of the owner of 
the farm or a producer on the farm; or who may have caused any such 
marketing quota to have been transferred to the farm.
    Eligible tobacco producer means an owner, operator, landlord, 
tenant, or sharecropper who shared in the risk of producing tobacco on a 
farm where tobacco was produced, or considered planted, pursuant to a 
tobacco poundage quota or acreage allotment assigned to the farm for the 
2002, 2003 or 2004 marketing years and who otherwise meets the 
requirements in Sec. 1463.104.
    Experimental tobacco means tobacco grown by or under the direction 
of a publicly-owned agricultural experiment station for experimental 
purposes.
    Factored allotment means allotment that has been factored to equate 
it to the 2002 basic allotment level.
    Factored quota means quota that has been factored to equate it to 
the 2002 basic quota level.
    Family member means a parent; grandparent or other direct lineal 
ancestor; child or other direct lineal descendent; spouse; or sibling of 
a tobacco quota holder or tobacco producer.
    Farm means a farm as defined in part 718 of this title.
    Fiscal year means the twelve-month period from October 1 through 
September 30.

[[Page 778]]

    Marketing year means, for flue-cured tobacco, the period beginning 
July 1 of the current year and ending June 30 of the following year. For 
kinds of tobacco other than flue-cured, the period beginning October 1 
of the current year and ending September 30 of the following year.
    NASS means the National Agricultural Statistics Service of USDA.
    New farm means a farm for which a basic marketing quota was 
established for the 2003 or 2004 year from the national reserve that is 
set aside for such purposes from the national marketing quota 
established for the applicable year for the kind of tobacco.
    Overmarketings means the pounds by which the pounds marketed exceed 
the effective farm marketing quota.
    Permanent quota adjustments means adjustments made by FSA under part 
723 of this title for:
    (1) Old farm adjustments from reserve;
    (2) Pounds of quota transferred to the farm from the eminent domain 
pool;
    (3) Pounds of quota transferred to or from the farm by sale; or
    (4) Pounds of forfeited quota.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    Share in the risk of production means having a direct financial 
interest in the successful production of a crop of tobacco through 
ownership of a direct share in the actual proceeds derived from the 
marketing of the crop, which share is conditional upon the success of 
that marketing.
    Successor party means the means the person who has assumed all 
rights and obligations of a quota holder or tobacco producer arising 
under this part by executing a TTPP contract.
    Temporary quota adjustments means adjustments made by FSA under part 
723 of this title for:
    (1) Effective undermarketings;
    (2) Overmarketings from any prior year;
    (3) Reapportioned quota from quota released from farms in the 
eminent domain pool;
    (4) Quota transferred by lease or by owner, for all kinds of tobacco 
except flue-cured and cigar tobacco; except for flue-cured disaster 
lease;
    (5) Violations of the provisions of part 723 of this title and part 
1464 of this chapter.
    Tobacco means the following kinds of tobacco: Burley tobacco (type 
31); cigar-filler and cigar binder tobacco (types 42, 43, 44, 53, 54, 
and 55); dark air-cured tobacco (types 35 and 36), fire-cured tobacco 
(types 21, 22 and 23); flue-cured tobacco (types 11, 12, 13 and 14); and 
Virginia sun-cured tobacco (type 37).
    TTPP effective quota means effective quota plus or minus temporary 
adjustments because of disaster lease and transfer and before adjustment 
to the 2002 level for establishment of BQL.
    United States includes any agency and instrumentality thereof.



Sec. 1463.103  Eligible quota holder.

    (a) CCC will make a payment under this subpart to a person 
determined by CCC to be an eligible quota holder, as defined in Sec. 
1463.102.
    (b) The wetlands and highly erodible land 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 part to an 
eligible quota holder.



Sec. 1463.104  Eligible tobacco producer.

    (a) CCC will make a payment under this subpart to a person 
determined by CCC to be an eligible tobacco producer, as defined in 
Sec. 1463.102.
    (b) The wetlands and highly erodible land provisions of part 12 of 
this title and the controlled substance provisions of part 718 of this 
title shall be applicable to payments made under this part to an 
eligible tobacco producer. However, the payment limitation provisions of 
part 1400 of this chapter shall not be applicable to payments made under 
this part to an eligible tobacco producer.
    (c) For purposes of determining if an eligible tobacco producer has 
shared in the risk of producing a crop in the 2002, 2003, or 2004 crop 
years, CCC will consider evidence presented by a producer that includes, 
but is not limited to: written leases; contracts for the purchase of 
tobacco; crop insurance documents; or receipts for the purchase of

[[Page 779]]

items used in the production of tobacco.



Sec. 1463.105  Base quota levels for eligible quota holders.

    (a) The BQL is determined separately for each kind of tobacco for 
each farm for which a 2004 basic marketing year quota was established 
under part 723 of this title. Any marketing quota assigned by FSA to a 
new farm in 2003 or 2004, other than through transfer from another farm, 
shall not be considered when determining the BQL.
    (b) For burley tobacco quota holders BQL is established according to 
the following table, except as adjusted under paragraph (e) of this 
section:
    (1) Farm BQL. The 2004 basic quota, multiplied by the BQL adjustment 
factor 1.071295. (Note: The factor adjusts the 2004 basic quota to the 
2002 basic quota level.)
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owners.)
    (c) For flue-cured tobacco quota holders the BQL is established 
according to the following table, except as adjusted under paragraph (e) 
of this section:
    (1) Farm BQL. The 2004 basic quota, multiplied by the BQL adjustment 
factor 1.23457. (Note: The factor adjusts the 2004 basic quota to the 
2002 level.)
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owner.)
    (d) For quota holders of all other kinds of tobacco the BQL is 
established according to the following table, except as adjusted under 
paragraph (e) of this section:
    (1) Farm BQL. The basic allotment established for the farm in 2002 
multiplied by the county average production yield. The following NASS 
yields are to be used for any county without production:
    (i) Fire-cured (type 21)--1746 lbs.
    (ii) Fire-cured (types 22-23)--2676 lbs.
    (iii) Dark Air-cured (types 35-36)--2475 lbs.
    (iv) Virginia Sun-cured (type 37)--1502 lbs.
    (v) Cigar Filler/Binder (types 42-44, 54, 55)--2230 lbs.
    (2) Quota holder BQL. The farm BQL multiplied by the quota holder's 
ownership share in the farm. (Note: In the case of undivided tract 
ownership, BQL must be distributed among the tract quota holders by the 
tract owner.)
    (e)(1) CCC will divide the BQL for the farm between the parties to 
the agreement as CCC determines to be fair and equitable, taking into 
consideration the proportionate amounts of cropland sold, if:
    (i) On or before October 22, 2004, the owner of a farm had entered 
into an agreement for the sale of all or a portion of a farm for which a 
farm marketing quota was established for the 2004 marketing year; and
    (ii) Such agreement had not been fulfilled or terminated prior to 
that date; and
    (iii) The parties to the agreement are unable to agree to the 
disposition of the contract payment to be made with respect to the farm.
    (2) If, on or before October 22, 2004, the owner of a farm had 
entered into an agreement for the permanent transfer of all or a portion 
of a tobacco marketing quota and the transfer had not been completed by 
such date, the owner of the farm to which such quota was to be 
transferred shall be considered to be the owner of the marketing quota 
for the purposes of this subpart. The BQL's for the transferring farm 
and the receiving farm will be adjusted to reflect this transfer.
    (f) Any tobacco marketing quota preserved under part 1410 of this 
chapter as the result of the enrollment of a farm in the Conservation 
Reserve Program shall be included in the determination of the BQL of the 
farm.



Sec. 1463.106  Base quota levels for eligible tobacco producers.

    (a) BQL is determined separately, for each of the years 2002, 2003 
and 2004, for each kind of tobacco and for each farm for which a 2002 
farm marketing quota had been established under part 723 of this title.
    (b) The BQL for producers of burley tobacco is established as 
follows:

[[Page 780]]

    (1) The 2002-crop year BQL for burley producers is the 2002 
effective quota pounds actually marketed, adjusted for disaster lease 
and transfer, and considered-planted undermarketings and overmarketings. 
The BQL is then multiplied by the producer's share in the 2002 crop to 
determine the producer's 2002 BQL. The adjustments for disaster lease 
and transfer and considered-planted undermarketings and overmarketings 
are made as follows:
    (i) Disaster-leased pounds are added to the marketings of the 
transferring farm and deducted from the marketings of the receiving 
farm;
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were not part of the 
farm's 2003 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.12486 has been applied to the overmarketed pounds.
    (2) The 2003-crop year BQL for burley producers is the 2003 
effective quota pounds actually marketed, adjusted for disaster lease 
and transfer and considered-planted undermarketings and overmarketings, 
as follows:
    (i) Disaster leases are added to the marketings of the transferring 
farm and deducted from the marketings of receiving farm.
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were not part of the 
farm's 2004 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.071295 has been applied to the overmarketed pounds.
    (iv) After these adjustments the BQL is calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2002 undermarketings from the 2003
                      marketings, including undermarketings from the
                      parent farm in any special tobacco combinations.
                      Leased pounds are apportioned undermarketing
                      history by dividing the transferring farm's
                      undermarketings by the transferring farm's
                      effective quota, before any temporary transfers,
                      resulting in the percentage of undermarketings
                      that were leased.
2..................  Multiply the 2003 marketings remaining after Step 1
                      times 1.12486 (the 2003-BQL adjustment factor).
3..................  Add the undermarketings that were subtracted in
                      Step 1 to the sum of Step 2 to determine the farm
                      2003 BQL.
4..................  Multiply the sum from Step 3 times the producer's
                      share in the 2003 crop to determine the producer's
                      2003 BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for burley producers is the 2004 
effective quota before disaster lease and transfer is calculated as 
follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2003 undermarketings from the 2004
                      effective quota, including undermarketings from
                      the parent farm in any special tobacco
                      combinations. Leased pounds are apportioned
                      undermarketing history by dividing the
                      transferring farm's undermarketings by the
                      transferring farm's effective quota, before any
                      temporary transfers, resulting in the percentage
                      of undermarketings that were leased.
2..................  Multiply the 2004 effective quota remaining after
                      Step 1 times 1.071295 (the 2004 BQL adjustment
                      factor).
3..................  Multiply the undermarketings that were subtracted
                      in Step 1 times 1.12486 (the 2003 BQL adjustment
                      factor).
4..................  Add the effective quota from Step 2 to the
                      undermarketings in Step 3 to determine the farm
                      2004 BQL.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to determine the producer's
                      2004 BQL.
------------------------------------------------------------------------

    (c) The BQL for producers of flue-cured tobacco is established by 
year, as follows:
    (1) The 2002-crop year BQL for flue-cured producers is the effective 
2002 quota actually marketed, adjusted for disaster lease and transfer 
and considered-planted undermarketings and overmarketings. The BQL is 
then multiplied by the producer's share in the 2002 crop to determine 
the producer's 2002 BQL. Adjustments for disaster lease and transfer and 
considered-planted undermarketings and overmarketings are calculated as 
follows:
    (i) Disaster-leased pounds are added to the marketings of the 
transferring farm and deducted from the marketings of the receiving 
farm;
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and include only undermarketings that

[[Page 781]]

were not part of the farm's 2003 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.10497 has been applied to the overmarketed pounds.
    (2) The 2003-crop year BQL for flue-cured producers is the 2003 
effective quota actually marketed, adjusted for disaster lease and 
transfer and considered-planted undermarketings and overmarketings, as 
follows:
    (i) Disaster leases are added to the marketings of the transferring 
farm and deducted from the marketings of the receiving farm.
    (ii) Considered-planted pounds are added to the farm's actual 
marketings, and includes only undermarketings that were in not part of 
the farm's 2004 effective quota.
    (iii) Pounds actually marketed as overmarketings and sold penalty-
free are added to the farm BQL after the BQL adjustment factor of 
1.23457 has been applied to the overmarketed pounds.
    (iv) After these adjustments the BQL is calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2002 undermarketings from the 2003
                      marketings, including undermarketings from the
                      parent farm in any special tobacco combinations.
2..................  Multiply the 2003 marketings remaining after Step 1
                      times 1.10497 (the 2003 BQL adjustment factor).
3..................  Add the undermarketings that were subtracted in
                      Step 1 to the sum of Step 2 to determine the farm
                      2003 BQL.
4..................  Multiply the sum from step 3 times the producer's
                      share in the 2003 crop to determine the producer's
                      2003 BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for flue-cured producers is the 2004 
effective quota before disaster lease and transfer. The 2004 BQL is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Subtract all 2003 undermarketings from the 2004
                      effective quota, including undermarketings from
                      the parent farm in any special tobacco
                      combinations.
2..................  Multiply the 2004 effective quota remaining after
                      Step 1 times 1.23457 (the 2004 BQL adjustment
                      factor).
3..................  Multiply the undermarketings that were subtracted
                      in Step 1 times 1.10497 (the 2003 BQL adjustment
                      factor).
4..................  Add the effective quota from Step 2 to the
                      undermarketings in Step 3 to determine the farm
                      2004 BQL.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to determine the producer's
                      2004 BQL.
------------------------------------------------------------------------

    (d) The BQL for producers of cigar filler and binder tobacco is 
established by years, as follows:
    (1) The 2002-crop year BQL for cigar filler and binder tobaccos is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2002 special tobacco combination acres
                      times the 2002-equivalence factor of 1.000.
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2002 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2004 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2002 crop to get the producer 2002
                      BQL.
------------------------------------------------------------------------

    (2) The 2003-crop year BQL for cigar filler and binder tobaccos is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2003 farm base pounds total.
2..................  Multiply any 2003 special tobacco combination acres
                      times the 2003 BQL adjustment factor of 0.8929.

[[Page 782]]

 
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2003 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2003 crop to get the producer 2003
                      BQL.
------------------------------------------------------------------------

    (3) The 2004-crop year BQL for cigar-filler and binder tobaccos is 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2004 special tobacco combination acres
                      times the 2004 BQL adjustment factor of 0.9398.
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2004 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3 to
                      get the 2004 farm BQL total.
5..................  Multiply the sum from Step 4 times the producer's
                      share in the 2004 crop to get the producer 2004
                      BQL.
------------------------------------------------------------------------

    (e) The BQL's for producers of all kinds of tobacco other than 
burley, flue-cured and cigar filler and binder, are established by year, 
as follows.
    (1) The 2002-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2002 farm base pounds total.
2..................  Multiply any 2002 special tobacco combination acres
                      times the farm's average yield for 2001, 2002, and
                      2003 to get the 2002 special tobacco combinations
                      pounds total.
3..................  Add the sum from Step 1 to the sum from Step 2.
4..................  Multiply any 2002 acres leased to or from the farm
                      times the farm's average yield for 2001, 2002, and
                      2003 to get the 2002 lease pounds total. Then, to
                      the sum from either:
                       (i) Step 3, add pounds leased to the farm to get
                        the farm 2002 BQL total
                       (ii)Step 3, subtract pounds leased from the farm
                        to get the farm 2002 BQL total.
5..................  Multiply the result from Step 4 times the
                      producer's share in the 2002 crop to get the
                      producer 2002 BQL.
------------------------------------------------------------------------

    (2) The 2003-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2003 farm base pounds total.
2..................  Multiply any 2003 special tobacco combinations
                      acres times the applicable 2003 BQL adjustment
                      factor:
                       (i) Fire-cured (type 21)--1.0000
                       (ii) Fire-cured (types 22-23)--.980392
                       (iii) Dark Air-cured (35-36)--.952381
                       (iv) Virginia Sun-cured (type 37) 1.0000
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3.
5..................  Multiply any 2003 acres leased times the applicable
                      2003 BQL adjustment factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.980392
                       (iii) Dark Air-cured (35-36)--.952381
                       (iv) Virginia Sun-cured (type 37) 1.0000
6..................  Multiply the sum from Step 5 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2003 lease pounds total.
7..................  To the sum from Step 4 either:
                       (i) Add pounds from Step 6 leased to the farm to
                        get the farm 2003 BQL total
                       (ii) Subtract pounds from Step 6 leased from the
                        farm to get the farm 2003 BQL total.
8..................  Multiply the sum from Step 7 times the producer's
                      share in the 2003 crop to get the producer 2003
                      BQL total.
------------------------------------------------------------------------


[[Page 783]]

    (3) The 2004-crop year BQL's for these kinds of tobaccos are 
calculated as follows:

------------------------------------------------------------------------
        Step                             Calculation
------------------------------------------------------------------------
1..................  Multiply the 2002 farm's basic allotment times the
                      farm's average yield for 2001, 2002, and 2003 to
                      get the 2004 farm base pounds total.
2..................  Multiply any 2004 special tobacco combinations
                      acres times the applicable 2004 BQL adjustment
                      factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.951837
                       (iii) Dark Air-cured (35-36)--.94264
                       (iv) Virginia Sun-cured (type 37) 1.0000
3..................  Multiply the sum from Step 2 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2004 farm special tobacco combination pounds
                      total.
4..................  Add the sum from Step 1 to the sum from Step 3.
5..................  Multiply any 2004 acres leased times the applicable
                      2004 BQL adjustment factor:
                       (i) Fire-cured (type 21) 1.0000
                       (ii) Fire-cured (types 22-23)--.951837
                       (iii) Dark Air-cured (35-36)--.92464
                       (iv) Virginia Sun-cured (type 37) 1.0000
6..................  Multiply the sum from Step 5 times the farm's
                      average yield for 2001, 2002, and 2003 to get the
                      2004 lease pounds total.
7..................  To the sum from Step 4 either:
                       (i) Add pounds from Step 6 leased to the farm to
                        get the farm 2004 BQL total
                       (ii) Subtract pounds from Step 6 leased from the
                        farm to get the farm 2004 BQL total.
8..................  Multiply the sum from Step 7 times the producer's
                      share in the 2004 crop to get the producer 2004
                      BQL total.
------------------------------------------------------------------------



Sec. 1463.107  Payment to eligible quota holders.

    (a) The total amount of contract payments that may be made to an 
eligible quota holder shall be the product obtained by multiplying:


$7.00 per pound x the BQL for the quota holder as determined under Sec. 
1463.105 for each kind of tobacco

    (b) During each of the fiscal years 2005 through 2014, CCC will make 
a payment to each eligible quota holder in an amount equal to 10 percent 
of the total amount due under a contract entered into under this 
subpart, except that in the case an application was filed after June 17, 
2005, the applicant will receive only the TTPP payments that have not 
been made as of the date the contract is approved. However, in order for 
the contract participant to receive the 2005 TTPP payment an application 
to enter into a TTPP contract must be filed no later than June 17, 2005. 
CCC may, in its discretion, extend any deadline set forth in this 
paragraph. However, CCC will make the FY 2005 payment between June and 
September of 2005, and subsequent payments will be made in January, to 
the extent practicable, of each FY.



Sec. 1463.108  Payment to eligible tobacco producers.

    (a) Subject to paragraph (b) of this section, the total amount of 
contract payments that may be made to an eligible tobacco producer shall 
be the product obtained by multiplying:


$3.00 per pound x the BQL for the producer determined under Sec. 
1463.106 for each kind of tobacco

    (b) Payments to an eligible producer shall be equal to:
    (1) For an eligible producer that produced tobacco that was marketed 
or considered by CCC as planted under a marketing quota in all of the 
2002, 2003, and 2004 marketing years, 100 percent of the rate specified 
in paragraph (a) of this section;
    (2) For an eligible producer that produced tobacco that was marketed 
or considered by CCC as planted under a marketing quota in any two of 
the 2002, 2003, and 2004 marketing years, \2/3\ of the rate specified in 
paragraph (a) of this section; and
    (3) For an eligible producer that produced tobacco that was 
marketed, or considered by CCC as planted under a marketing quota in any 
one of the 2002, 2003, and 2004 marketing years, \1/3\ of the rate 
specified in paragraph (a) of this section.

[[Page 784]]

    (c) During each of the fiscal years 2005 through 2014, CCC will make 
a payment to each eligible producer in an amount equal to 10 percent of 
the total amount due under a contract entered into under this subpart 
except that in the case an application was filed after June 17, 2005, 
the applicant will receive only the TTPP payments that have not been 
made as of the date the contract is approved. However, in order for the 
contract participant to receive the 2005 TTPP payment, an application to 
enter into a TTPP contract must be filed no later than June 17, 2005. 
CCC may, in its discretion, extend any deadline set forth in this 
paragraph. However, CCC will make the FY 2005 payment between June and 
September of 2005, and subsequent payments will be made in January, to 
the extent practical, of each FY.



Sec. 1463.109  Contracts.

    (a) CCC will enter into a contract with eligible tobacco quota 
holders and producers. To the extent a person has filed such a contract 
with CCC, but a final administrative decision has not been made with 
respect to such person's status as an eligible quota holder or tobacco 
producer prior to the final enrollment date, CCC will enter into such a 
contract only upon the issuance of a final determination of eligibility 
and the passing of any deadline for any administrative appeal under 
parts 780 and 11 of this title.
    (b)(1) If contracts or other written claims are provided to CCC by 
June 3, 2005, by two or more persons with respect to the same tobacco 
BQL used to calculate a program payment, CCC will not issue such payment 
until CCC has determined the eligibility status of each claimant.
    (2) If CCC has made a payment to a person after June 3, 2005, a 
person who is not an eligible holder or producer, as identified on FSA 
records, for such farm, or claims to be an eligible tobacco holder or 
producer and 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 submitted a contract or other written claim for 
such farm and the occurrence of the repayment of the initial payment 
made by CCC.



Sec. 1463.110  Misrepresentation and scheme or device.

    A person 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, if CCC determines the person has:
    (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.



Sec. 1463.111  Offsets and assignments.

    (a) TTPP payments 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 tobacco quota, tobacco marketing 
allotment, or the farm for which a tobacco quota had been established 
under part 723 of this title by any creditor or any other person.
    (b) The provisions of part 1404 of this title shall not apply to 
this part.
    (c) A quota holder or tobacco producer who is eligible to receive a 
payment under this part may assign a payment, or a portion thereof, to 
be made under this part to another person using the correct CCC form. 
Such an assignment will become effective upon approval by CCC. In order 
to provide for the orderly issuance of payments under this part, CCC may 
limit, in its sole discretion, the number of assignments that may be 
made with respect to a contract.
    (d)(1) CCC will establish, after consultation with the Department of 
the Treasury, a discount rate that reflects the value of any remaining 
payments due under this part if such payments were to be made as a lump 
sum payment in the current year. Unless there is consideration for such 
contract in an amount equal to or greater than the

[[Page 785]]

discounted value of the payments, subject to the assignment, based on 
the discount rate established for such payments by CCC, CCC will not 
approve any assignment other than to:
    (i) A family member; or
    (ii) A party who had purchased a tobacco marketing quota prior to 
October 22, 2004 and had placed the quota on a farm with the owner's 
consent prior to that date in the manner that had been prescribed by FSA 
under part 723 of this chapter.
    (2) The discount rate established by CCC will be determined by 
adding 200 basis points to the prime lending rate, as determined by CCC. 
If this sum is a fraction of a number, CCC will round the discount rate 
to the nearest whole number. Rounding of a half percent will be to the 
next higher whole number.
    (e) CCC will issue a payment to an assignee only to the extent and 
amount of payment that CCC would otherwise have issued to the quota 
holder or producer in the absence of the assignment. In accordance with 
part 1403 of this title, any claim owed by the assignor to the United 
States will be deducted from any payment made under this part prior to 
the issuance of the payment to the assignee.
    (f) CCC will report to the Internal Revenue Service any payment 
assigned under this section as income earned by the assignor.



Sec. 1463.112  Successor in interest contracts.

    (a) A quota holder or tobacco producer who is eligible to receive a 
payment under this part, and for whom a claim has not been established 
by the United States, may enter into a successor in interest contract 
with another party using the correct CCC form. Such successor in 
interest contract will become effective upon approval by CCC, and will 
not include the 2005 payment. Only one such successor in interest 
contract may be entered into by a quota holder or tobacco producer with 
respect to a farm for each kind of tobacco.
    (b) Annually, CCC will establish, after consultation with the 
Department of the Treasury, a discount rate that reflects the value of 
any remaining payments due under this part if such payments were to be 
made as a lump sum payment in the current year. This discount rate will 
be determined as provided in Sec. 1463.111(d)(2). Unless there is 
consideration for such contract in an amount equal to or greater than 
the discounted value of the payments, subject to the successor in 
interest or contract, based on the discount rate established for such 
payments by CCC, CCC will not approve any succession in interest 
contract other than to:
    (1) A family member; or
    (2) A party who had purchased a tobacco marketing quota prior to 
October 22, 2004 and had placed the quota on a farm with the owner's 
consent prior to that date in the manner that had been prescribed by FSA 
under part 723 of this chapter.
    (c) CCC will issue a payment, except the 2005 payment, to a 
successor party only if such party is otherwise in compliance with all 
other applicable regulations, which includes for successors to producer 
contracts only the wetlands and highly erodible land provisions of part 
12 of this chapter. In accordance with part 1403 of this title, any 
claim owed by the successor party to the United States will be deducted 
from any payment made under this part prior to the issuance of the 
payment to the successor party.
    (d) CCC will report to the Internal Revenue Service any payment made 
under a successor in interest contract as income earned by the successor 
party.



Sec. 1463.113  Issuance of payments in event of death.

    If a quota holder or tobacco producer who is eligible to receive a 
payment under this subpart dies, the right to receive payments shall be 
transferred to the estate of the quota holder or tobacco producer unless 
such person is survived by a spouse or one or more dependents, in which 
case the right to receive the payments shall be transferred to the 
surviving spouse.

[[Page 786]]



Sec. 1463.114  Appeals.

    A person may obtain reconsideration and review of any adverse 
determination made under this subpart in accordance with the appeal 
regulations found at parts 11 and 780 of this title.



                   Subpart C_Miscellaneous Provisions



Sec. 1463.201  Refunds of importer assessments.

    Assessments paid on imported flue-cured or burley tobacco under 
sections 106A and 106B of the Agricultural Act of 1949 with respect to 
imports in the 2004 and prior marketing years may be refunded by CCC in 
accordance with the provisions of 7 CFR 1464.105 that were in effect 
prior to March 30, 2005, so long as such request for refunds are filed 
in accordance with such part no later than:
    (a) August 1, 2005 for flue-cured tobacco; and
    (b) November 1, 2005 for burley tobacco.

[70 FR 17159, Apr. 4, 2005]



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 National priorities.
1465.5 Program requirements.
1465.6 AMA plan of operations.
1465.7 Conservation practices.
1465.8 Technical services provided by qualified personnel not affiliated 
          with USDA.

                           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 Payments.
1465.24 Contract modifications, extensions, and transfers of land.
1465.25 Contract violations and terminations.

                    Subpart C_General Administration

1465.30 Appeals.
1465.31 Compliance with regulatory measures.
1465.32 Access to operating unit.
1465.33 Equitable relief.
1465.34 Offsets and assignments.
1465.35 Misrepresentation and scheme or device.
1465.36 Environmental services credits for conservation improvements.

    Authority: 7 U.S.C. 1524(b).

    Source: 74 FR 64595, Dec. 8, 2009, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1465.1  Purposes and applicability.

    Through the Agricultural Management Assistance program (AMA), the 
Natural Resources Conservation Service (NRCS) provides financial 
assistance funds annually to producers in 16 statutorily designated 
States to: Construct or improve water management structures or 
irrigation structures; plant trees to form windbreaks or to improve 
water quality; and mitigate risk through production diversification or 
resource conservation practices including soil erosion control, 
integrated pest management, or the transition to organic farming. AMA is 
applicable in Connecticut, Delaware, Hawaii, Maine, Maryland, 
Massachusetts, 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 AMA's conservation 
provisions for the Commodity Credit Corporation (CCC) is assigned to 
NRCS, using the funds, facilities, and authorities of the CCC. 
Accordingly, where NRCS is mentioned in this part, it also refers to the 
CCC's funds, facilities, and authorities, where applicable.
    (b) NRCS will:
    (1) Provide overall management and implementation leadership for 
AMA;
    (2) Establish policies, procedures, priorities, and guidance for 
implementation;
    (3) Establish payment limits;
    (4) Determine eligible practices;
    (5) Develop and approve AMA plans of operation and contracts with 
selected participants;

[[Page 787]]

    (6) Provide technical leadership for implementation, quality 
assurance, and evaluation of performance;
    (7) Make AMA allocation and contract funding decisions; and
    (8) Issue payments for completed conservation practices.
    (c) No delegation in this part to lower organizational levels will 
preclude the Chief of NRCS from determining any issues arising under 
this part or from reversing or modifying any determination made under 
this part.



Sec. 1465.3  Definitions.

    The following definitions apply to this part and all documents used 
in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, grassland, rangeland, pasture, and 
other agricultural land on which agricultural or forest-related products 
or livestock are produced. Other agricultural lands may include cropped 
woodland, marshes, incidental areas included in the agricultural 
operation, and other types of agricultural land used for production of 
livestock.
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, which the producer is listed as the 
operator or owner/operator in the Farm Service Agency (FSA) record 
system, which is under the effective control of the producer at the time 
the producer applies for a contract, and which is operated by the 
producer with equipment, labor, management and production, forestry, or 
cultivation practices that are substantially separate from other 
operations.
    AMA plan of operations (APO) means the document that identifies the 
location and timing of conservation practices that the participant 
agrees to implement on eligible land in order to address the resource 
concerns and program purposes. The APO is part of the AMA contract.
    Applicant means a person, legal entity, joint operation, or Indian 
Tribe that has an interest in an agricultural operation, as defined in 7 
CFR part 1400, who has requested in writing to participate in AMA.
    Beginning farmer or rancher means a person or legal 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 who will materially and substantially 
participate in the operation of the farm or ranch.
    (2) 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 or ranch is located.
    (3) 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, United States Department of 
Agriculture (USDA), or designee.
    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,'' ``natural resource district,'' ``land 
conservation committee,'' or similar name.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management, and other 
improvements that achieve program purposes.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into the program. An AMA 
contract is an agreement for the transfer of assistance from USDA to the 
participant to share

[[Page 788]]

in the costs of applying conservation practices.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for AMA administration in 
a specific area.
    Historically underserved producer means an eligible person, joint 
operation, or legal entity who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, limited resource farmer or 
rancher, or nonindustrial private forest landowner who meets the 
beginning, socially disadvantaged, or limited resource qualifications 
set forth in this section.
    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 
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 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 United States Government-owned land under the Bureau of Indian 
Affairs (BIA) jurisdiction.
    Joint operation means, as defined in 7 CFR part 1400, a general 
partnership, joint venture, or other similar business arrangement in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity created 
under Federal or State law that: (1) Owns land or an agricultural 
commodity, product, or livestock; or (2) produces an agricultural 
commodity, product, or livestock.
    Lifespan means the period of time in which a conservation practice 
should be operated and maintained and used for the intended purpose.
    Limited resource farmer or rancher means:
    (1) A person with direct or indirect gross farm sales of not more 
than $155,200 in each of the previous 2 years (adjusted for inflation 
using the Prices Paid by Farmer Index as compiled by the National 
Agricultural Statistics Service), 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 2 years (to be determined 
annually using Commerce Department data).
    Liquidated damages means a sum of money stipulated in the AMA 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the technical assistance expenses incurred to 
service the contract and reflects the difficulties of proof of loss and 
the inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Livestock means all animals produced on farms and ranches, as 
determined by the Chief.
    Natural Resources Conservation Service is an agency of USDA which 
has responsibility for administering AMA using the funds, facilities, 
and authorities of the CCC.
    Nonindustrial private forest land means rural land that has existing 
tree cover or is suitable for growing trees and is owned by any 
nonindustrial private individual, group, association, corporation, 
Indian Tribe, or other private legal entity that has definitive 
decision-making authority over the land.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during the conservation practice lifespan. 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

[[Page 789]]

original condition if one or more components fail.
    Operation and maintenance (O&M) agreement means the document that, 
in conjunction with the APO, specifies the operation and maintenance 
responsibilities of the participants for conservation practices 
installed with AMA assistance.
    Participant means a person, legal entity, joint operation, or Indian 
Tribe that is receiving payment or is responsible for implementing the 
terms and conditions of an AMA contract.
    Payment means the financial assistance provided to the participant 
based on the estimated costs incurred in performing or implementing 
conservation practices, including costs for planning, design, materials, 
equipment, installation, labor, maintenance, management, or training, as 
well as the estimated income foregone by the producer for the designated 
conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person and does not include a legal entity.
    Producer means a person, legal entity, joint operation, or Indian 
Tribe that has an interest in the agricultural operation, according to 7 
CFR part 1400, or who is engaged in agricultural production or forestry 
management.
    Resource concern means a specific natural resource problem that 
represents a significant concern in a State or region and is likely to 
be addressed successfully through the implementation of the conservation 
practices by participants.
    Secretary means the Secretary of USDA.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, Caribbean Area, or Pacific 
Islands Area.
    Structural practice means a conservation practice, including a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
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 plantings, 
establishment or improvement of wildlife habitat, and capping of 
abandoned wells.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land active 
in agricultural, forestry, or related uses. The term includes the 
following:
    (1) Technical services provided directly to farmers, ranchers, and 
other eligible entities, such as conservation planning, technical 
consultation, and assistance with design and implementation of 
conservation practices; and
    (2) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, such as technical standards, resource inventories, training, 
data, technology, monitoring, and effects analyses.
    Technical Service Provider (TSP) means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical services 
to program participants or in lieu of, or on behalf of NRCS.



Sec. 1465.4  National priorities.

    (a) The Chief, with advice from State Conservationists, will 
identify national priorities to achieve the conservation objectives of 
AMA.
    (b) National priorities will be used to guide annual funding 
allocations to States. (c) State Conservationists will use national 
priorities in conjunction with State and local priorities to prioritize 
and select AMA applications for funding.
    (d) NRCS will undertake periodic reviews of the national priorities 
and the effects of program delivery at the State and local levels to 
adapt the program to address emerging resource issues.



Sec. 1465.5  Program requirements.

    (a) Participation in AMA is voluntary. The participant, in 
cooperation

[[Page 790]]

with the local conservation district, applies for practice installation 
for the agricultural operation. NRCS provides payments through contracts 
to apply needed conservation practices within a time schedule specified 
in the APO.
    (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 AMA in consideration of national 
priorities established under Sec. 1465.4.
    (c) To be eligible to participate in AMA, an applicant must:
    (1) Own or operate an agricultural operation within an applicable 
State, as listed in 1465.1;
    (2) Provide NRCS with written evidence of ownership or legal control 
for the life of the proposed contract, including the O&M agreement. An 
exception may be made by the Chief:
    (i) In the case of land allotted by the 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 will provide NRCS with the 
written concurrence of the landowner in order to apply a structural 
practice(s);
    (3) Submit an application form NRCS-CPA-1200;
    (4) Agree to provide all information to NRCS determined to be 
necessary to assess the merits of a proposed project and to monitor 
contract compliance;
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment;
    (6) With regard to contracts with Indian Tribes or Indians 
represented by the BIA, payments if a BIA or Tribal official certify in 
writing that no one individual, directly or indirectly, will receive 
more than the payment limitation. The Tribal entity must also provide, 
annually, a listing of individuals and payments made by social security 
or tax identification number or other unique identification number, 
during the previous year for calculation of overall payment limitations. 
The BIA or Tribal entity must also provide, at the request of NRCS, 
proof of payments made to the person or legal entity that incurred costs 
or sacrificed income related to conservation practice implementation.
    (7) Supply other information, as required by NRCS, to determine 
payment eligibility as established by 7 CFR part 1400, Adjusted Gross 
Income;
    (8) With regard to any participant that utilizes a unique 
identification number as an alternative to a tax identification number, 
the participant will utilize only that identifier for any and all other 
AMA contracts to which the participant is a party. Violators will be 
considered to have provided fraudulent representation and be subject to 
full penalties of Sec. 1465.25;
    (9) States, political subdivisions, and entities thereof will not be 
persons eligible for payment. Any cooperative association of producers 
that markets commodities for producers will not be considered to be a 
person eligible for payment;
    (10) Be in compliance with the terms of all other USDA-administered 
conservation program agreements to which the participant is a party;
    (11) Develop and agree to comply with an APO and O&M agreement, as 
described in Sec. 1465.3; and
    (12) Comply with applicable registration and reporting requirements 
of the Federal Funding Accountability and Transparency Act of 2006 (Pub. 
L. 109-282, as amended), and 2 CFR parts 25 and 170.
    (d) Land may only be considered for enrollment in AMA if NRCS 
determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation; and
    (ii) The participant has control of the land for the term of the 
contract; and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or

[[Page 791]]

    (3) The land is Indian land.

[74 FR 64595, Dec. 8, 2009, as amended at 76 FR 19684, Apr. 8, 2011]



Sec. 1465.6  AMA plan of operations.

    (a) All conservation practices in the APO must be approved by NRCS 
and developed and carried out in accordance with the applicable NRCS 
technical guidance.
    (b) The participant is responsible for implementing the APO.
    (c) The APO 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 system, including conservation planning, design, or 
installation activities to be implemented to achieve the conservation 
and environmental objectives;
    (4) A description of the schedule for implementing the conservation 
practices, including timing, sequence, operation, and maintenance; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan in achieving the environmental objectives.
    (d) An APO may be modified in accordance with Sec. 1465.24.



Sec. 1465.7  Conservation practices.

    (a) The State Conservationist will determine the conservation 
practices eligible for AMA payments. To be considered eligible 
conservation practices, the practices must meet the purposes of the AMA 
as set out in Sec. 1465.1. A list of eligible practices will be 
available to the public.
    (b) The APO includes the schedule of operations, activities, and 
payment rates of the practices needed to solve identified natural 
resource concerns.



Sec. 1465.8  Technical services provided by qualified personnel not affiliated 

with USDA.

    (a) NRCS may use the services of qualified TSPs in performing its 
responsibilities for technical assistance.
    (b) Participants may use technical services from qualified personnel 
of other Federal, State, local agencies, Indian Tribes, or individuals 
who are certified as TSPs by NRCS.
    (c) Technical services provided by qualified personnel not 
affiliated with USDA may include, but are not limited to: conservation 
planning; conservation practice survey, layout, design, installation, 
and certification; and information, education, and training for 
producers, and related technical services as defined in 7 CFR part 652.
    (d) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving AMA payments.



                           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 AMA at a USDA service center. Producers who are members 
of a joint operation will 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, national priorities, and the State-specific goals. 
Information will be provided that explains the process to request 
assistance.
    (c) The State Conservationist will develop ranking criteria and a 
ranking process to select applications, taking into account national, 
State, Tribal, and local priorities.
    (d) The State Conservationist, or designated conservationist, using 
a locally-led process will evaluate, 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 payments, the participant 
will

[[Page 792]]

enter into a contract agreeing to implement one or more eligible 
conservation practices. Costs for technical services may be included in 
the contract.
    (b) An AMA contract will:
    (1) Encompass all portions of an agricultural operation receiving 
AMA assistance;
    (2) Have a minimum duration of one year after completion of the last 
practice, but not more than 10 years;
    (3) Incorporate all provisions required by law or statute, including 
participant requirements to:
    (i) Not conduct any practices on the agricultural operation that 
would tend to defeat the purposes of the contract according to Sec. 
1465.25;
    (ii) Refund any AMA payments received with interest, and forfeit any 
future payments under AMA, on the violation of a term or condition of 
the contract, consistent with the provisions of Sec. 1465.25;
    (iii) Refund all AMA 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, 
including operation and maintenance of the AMA contract's conservation 
practices, 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 AMA.
    (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) Specify 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 APO.



Sec. 1465.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the O&M agreement that addresses 
the operation and maintenance of the conservation practices applied 
under the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) NRCS may periodically inspect the conservation practice(s) 
during the contract duration to ensure that operation and maintenance 
requirements are being carried out, and that the conservation practice 
is fulfilling its intended objectives.
    (d) Conservation practices installed before the contract execution, 
but included in the contract to obtain the environmental benefits agreed 
upon, must be operated and maintained as specified in the contract and 
O&M agreement.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate and request a refund of payments made for that conservation 
practice under the contract.
    (f) In the event a conservation practice fails through no fault of 
the participant, the State Conservationist may issue payments to re-
establish the conservation practice, at the rates established in 
accordance with Sec. 1465.23, provided such payments do not exceed the 
payment limitation requirements as set forth in Sec. 1465.23.



Sec. 1465.23  Payments.

    (a) The Federal share of payments to a participant will be:
    (1) Up to 75 percent of the estimated incurred cost or 100 percent 
of the estimated income foregone of an eligible practice, except as 
provided in (a)(2) of this section.
    (2) In the case of historically underserved producers, the payment 
rate will be the applicable rate and an additional rate that is not less 
than 25 percent above the applicable rate, provided that this increase 
does not exceed 90 percent of the estimated incurred costs or estimated 
income foregone.
    (3) In no instance will the total financial contributions for an 
eligible practice from other sources exceed 100 percent of the estimated 
incurred cost of the practice.

[[Page 793]]

    (b) Participants may contribute their portion of the estimated costs 
of practices through in-kind contributions, including labor and 
materials, providing the materials contributed meet the NRCS standard 
and specifications for the practice being installed.
    (c) Payments for practices applied prior to application or contract 
approval--
    (1) Payments will not be made to a participant for a conservation 
practice that was applied prior to application for the program.
    (2) Payments will not be made to a participant for a conservation 
practice that was initiated or implemented prior to contract approval, 
unless the participant obtained a waiver from the State Conservationist, 
or designated conservationist, prior to practice implementation.
    (d) The total amount of payments paid to a person or legal entity 
under this part may not exceed $50,000 for any fiscal year.
    (e) For purposes of applying the payment limitations provided for in 
this section, NRCS will use the provisions in 7 CFR part 1400, Payment 
Limitation and Payment Eligibility.
    (f) A participant will not be eligible for payments for conservation 
practices on eligible land if the participant receives payments or other 
benefits for the same practice on the same land under any other 
conservation program administered by USDA.
    (g) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before NRCS will 
approve any payment.
    (h) Subject to fund availability, the payment rates for conservation 
practices scheduled after the year of contract obligation may be 
adjusted to reflect increased costs.



Sec. 1465.24  Contract modifications, extensions, and transfers of land.

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the APO is revised in accordance 
with NRCS requirements, and the designated conservationist approves the 
modified contract.
    (b) It is the participant's responsibility to notify NRCS when he or 
she either anticipates the voluntary or involuntary loss of control of 
the land.
    (c) The participant and NRCS may mutually agree to transfer a 
contract to another party.
    (1) To receive an AMA payment, the transferee must be determined by 
NRCS to be eligible to participate in AMA and will assume full 
responsibility under the contract, including the O&M agreement for those 
conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) With respect to any and all payment owed to participants who 
wish to transfer ownership or control of land subject to a contract, the 
division of payment will be determined by the original party and the 
party's successor. In the event of a dispute or claim on the 
distribution of payments, NRCS may withhold payments without the accrual 
of interest pending a settlement or adjudication on the rights to the 
funds.
    (d) NRCS may require a participant to refund all or a portion of any 
assistance earned under AMA if the participant sells or loses control of 
the land under an AMA contract, and the successor in interest is not 
eligible or refuses to accept future payments to participate in the AMA 
or refuses to assume responsibility under the contract.
    (e) The contract participants will be jointly and severally 
responsible for refunding the payments with applicable interest pursuant 
to paragraph (d) of this section.



Sec. 1465.25  Contract violations and termination.

    (a) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or other documents incorporated into 
the contract, NRCS will give the participant notice and 60 days, unless 
otherwise 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 contract.

[[Page 794]]

    (b) Notwithstanding the provisions of (a) of this section, a 
contract termination will 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, scheme, or 
device 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.
    (c) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract and refund all or part of 
the payments received, plus interest. Participants violating AMA 
contracts may be determined ineligible for future NRCS-administered 
conservation program funding.
    (1) The State Conservationist may require only a partial refund of 
the payments received if the State Conservationist determines that a 
previously installed conservation practice can function independently 
and is not affected by the violation or the absence of other 
conservation practices that would have been installed under the 
contract.
    (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 will forfeit all rights for 
further payments under the contract and will pay such liquidated damages 
as prescribed in the contract. The State Conservationist will have the 
option to waive the liquidated damages depending upon the circumstances 
of the case.
    (i) When making all 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 existence of hardships beyond the participant's control 
that have prevented compliance with the contract. If the participant 
claims hardship, that claim must be well documented and cannot have 
existed when the applicant applied for participation in the program.
    (ii) The participant may voluntarily terminate a contract if NRCS 
agrees based on NRCS' determination that termination is in the public 
interest.
    (iii) In carrying out NRCS' 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 AMA in accordance with 7 CFR parts 11 and 614, except as 
provided in paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) Payment rates, payment limits;
    (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, permits, 
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 will have the right to enter an 
operating unit or tract for the purpose of determining eligibility and 
for ascertaining the accuracy of any representations related to 
contracts and performance. Access will include the right to provide 
technical assistance; determine eligibility; inspect any work undertaken 
under the contracts, including the APO and O&M agreement; and collect 
information necessary to evaluate the conservation practice performance 
as specified in the contracts.

[[Page 795]]

The NRCS representative will make an effort to contact the participant 
prior to exercising this provision.



Sec. 1465.33  Equitable relief.

    (a) If a participant relied upon the advice or action of any 
authorized NRCS representative and did not know, or have reason to know, 
that the action or advice was improper or erroneous, the participant may 
be eligible for equitable relief under 7 CFR part 635, section 635.3. 
The financial or technical liability for any action by a participant 
that was taken based on the advice of an NRCS certified TSP is the 
responsibility of the certified TSP and will not be assumed by NRCS when 
NRCS authorizes payment.
    (b) If a participant has been found in violation of a provision of 
the AMA contract or any document incorporated by reference through 
failure to comply fully with that provision, the participant may be 
eligible for equitable relief under 7 CFR part 635, section 635.4.



Sec. 1465.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any participant will 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 at 7 CFR part 1403 
will be applicable to contract payments.
    (b) AMA participants may assign any payments in accordance with 7 
CFR part 1404.



Sec. 1465.35  Misrepresentation and scheme or device.

    (a) A participant who is determined to have erroneously represented 
any fact affecting an AMA determination made in accordance with this 
part will not be entitled to contract payments and must refund to NRCS 
all payments plus interest, as determined in accordance with 7 CFR part 
1403.
    (b) A participant will refund to NRCS all payments, plus interest, 
as determined by NRCS with respect to all NRCS contracts to which they 
are a party if they are determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
AMA;
    (2) Made any fraudulent representation;
    (3) Adopted any 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; or
    (4) Misrepresented any fact affecting an AMA determination.
    (c) Where paragraph (a) or (b) of this section applies, the 
participant's interest in all contracts will be terminated. In 
accordance with Sec. 1465.25(c), NRCS may determine the producer 
ineligible for future funding from any NRCS conservation programs.



Sec. 1465.36  Environmental services credits for conservation improvements.

    NRCS recognizes that environmental benefits will be achieved by 
implementing conservation practices funded through AMA, and that 
environmental credits may be gained as a result of implementing 
activities compatible with the purposes of an AMA contract. NRCS asserts 
no direct or indirect interest on these credits. However, NRCS retains 
the authority to ensure that operation and maintenance requirements for 
AMA-funded improvements are met, consistent with Sec. 1465.21 and Sec. 
1465.22. Where activities may impact the land under an AMA contract, 
participants are highly encouraged to request an operation and 
maintenance compatibility determination prior to entering into any 
credit agreements. The AMA conservation program contract may be modified 
in accordance with policies outlined in Sec. 1465.24 provided the 
modifications meet AMA purposes and are in compliance with this part.



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.

[[Page 796]]

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.

                    Subpart B_Contracts and Payments

1466.10 Conservation practices.
1466.11 Technical services provided by qualified personnel not 
          affiliated with USDA.
1466.20 Application for contracts and selecting applications.
1466.21 Contracts requirements.
1466.22 Conservation practice operation and maintenance.
1466.23 Payment rates.
1466.24 EQIP payments.
1466.25 Contract modifications and transfers of land.
1466.26 Contract violations and terminations.
1466.27 Conservation Innovation Grants (CIG).

                    Subpart C_General Administration

1466.30 Appeals.
1466.31 Compliance with regulatory measures.
1466.32 Access to operating unit.
1466.33 Equitable relief.
1466.34 Offsets and assignments.
1466.35 Misrepresentation and scheme and device.
1466.36 Environmental credits for conservation improvements.

    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

    Source: 74 FR 2308, Jan. 15, 2009, unless otherwise noted.



Sec. 1466.1  Applicability.

    (a) The purposes of the Environmental Quality Incentives Program 
(EQIP) are to promote agricultural production, forest management, and 
environmental quality as compatible goals, and to optimize environmental 
benefits. Through EQIP, the Natural Resources Conservation Service 
(NRCS) provides assistance to eligible farmers and ranchers to address 
soil, water, and air quality, wildlife habitat, surface and groundwater 
conservation, energy conservation, and related natural resource 
concerns. EQIP's financial and technical assistance helps producers 
comply with environmental regulations and enhance agricultural and 
forested lands in a cost-effective and environmentally beneficial 
manner. The purposes of the program are achieved by planning and 
implementing conservation practices on eligible land.
    (b) EQIP is available 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. 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 supports ``locally led conservation'' by using State 
Technical Committees at the State level and local working groups at the 
county or parish level to advise NRCS on issues relating to the EQIP 
implementation such as:
    (1) Identification of priority resource concerns;
    (2) Identification of which conservation practices should be 
eligible for financial assistance; and
    (3) Establishment of payment rates.
    (c) No delegation in this Part to lower organizational levels shall 
preclude the Chief from making any determinations under this Part, or 
from reversing or modifying any determination made under this Part.
    (d) 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:
    Agricultural land means cropland, grassland, rangeland, pasture, and 
other agricultural land, on which agricultural and forest-related 
products, or

[[Page 797]]

livestock are produced and resource concerns may be addressed. Other 
agricultural lands include cropped woodland, marshes, incidental areas 
included in the agricultural operation, and other types of agricultural 
land used for production of livestock.
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, which the producer is listed as the 
operator or owner/operator in the Farm Service Agency (FSA) record 
system, which is under the effective control of the producer at the time 
the producer applies for a contract, and which is operated by the 
producer with equipment, labor, management, and production, forestry, or 
cultivation practices that are substantially separate from other 
operations.
    Animal waste management facility means a structural conservation 
practice, implemented in the context of a Comprehensive Nutrient 
Management Plan and consistent with the Field Office Technical Guide, 
which is used for storing, treating, or handling animal waste or 
byproducts, such as animal carcasses.
    Applicant means a person, legal entity, joint operation, or tribe 
that has an interest in an agricultural operation, as defined in part 
1400 of this chapter, who has requested in writing to participate in 
EQIP.
    At-risk species means any plant or animal species as determined by 
the State Conservationist, with advice from the State Technical 
Committee, to need direct intervention to halt its population decline.
    Beginning Farmer or Rancher means a person or legal 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, who will materially and substantially 
participate in the operation of the farm or ranch.
    (2) 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.
    (3) 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, United States Department of 
Agriculture (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 byproducts 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,'' ``natural 
resource district,'' or similar name.

[[Page 798]]

    Conservation Innovation Grants means competitive grants made under 
EQIP to individuals and governmental and non-governmental organizations 
to stimulate and transfer innovative technologies and approaches, to 
leverage Federal funds, and to enhance and protect the environment, in 
conjunction with agricultural production and forest management.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management practices, and other 
improvements that achieve the program purposes, including such items as 
CNMPs, agricultural energy management plans, dryland transition plans, 
forest management plans, integrated pest management, and other plans 
determined acceptable by the Chief.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into 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.
    Cost-effectiveness means the least costly option for achieving a 
given set of conservation objectives.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for EQIP administration in 
a specific area.
    EQIP plan of operations means the document that identifies the 
location and timing of conservation practices that the participant 
agrees to implement on eligible land in order to address the priority 
resource concerns, optimize environmental benefits, and address program 
purposes as defined in Sec. 1466.1. The EQIP plan of operations is part 
of the EQIP contract.
    Estimated income foregone means an estimate of the net income loss 
associated with the adoption of a conservation practice, including from 
a change in land use or land taken out of production or the opportunity 
cost associated with the adoption of a conservation practice. This shall 
not include losses of income due to disaster or other events unrelated 
to the conservation practice.
    Field office technical guide (FOTG) means the official local NRCS 
source of resource information and interpretations of guidelines, 
criteria, and requirements for planning and applying conservation 
practices 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.
    Forest management plan means a site-specific plan that is prepared 
by a professional resource manager, in consultation with the 
participant, and is approved by the State Conservationist. Forest 
management plans may include a forest stewardship plan, as specified in 
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 
2103a); another practice plan approved by the State Forester; or another 
plan determined appropriate by the State Conservationist. The plan is 
intended to comply with Federal, State, tribal, and local laws, 
regulations, and permit requirements.
    Historically underserved producer means an eligible person, joint 
operation, or legal entity who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, or limited resource farmer or 
rancher.
    Indian land means:
    (1) Land held in trust by the United States for individual Indians 
or Indian tribes; or
    (2) Land, the title to which is held by individual Indians or Indian 
Tribes subject to Federal restrictions against alienation or 
encumbrance; or
    (3) Land which is subject to rights of use, occupancy and/or benefit 
of certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family or Indian 
Tribe.
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.

[[Page 799]]

    Integrated Pest Management means a sustainable approach to managing 
pests by combining biological, cultural, physical, and chemical tools in 
a way that minimizes economic, health, and environmental risks.
    Joint operation means, as defined in part 1400 of this chapter, a 
general partnership, joint venture, or other similar business 
organization in which the members are jointly and severally liable for 
the obligations of the organization.
    Legal entity means, as defined in part 1400 of this chapter, an 
entity created under Federal or State law that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Lifespan means the period of time during which a conservation 
practice should 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 
$155,200 in each of the previous two years (adjusted for inflation using 
Prices Paid by Farmer Index as compiled by National Agricultural 
Statistical Service), 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).
    Liquidated damages means a sum of money stipulated in the EQIP 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the technical assistance expenses incurred to 
service the contract, and reflects the difficulties of proof of loss and 
the inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Livestock means all animals produced on farms or ranches, as 
determined by the Chief.
    Livestock production means farm or ranch operations involving the 
production, growing, raising, or reproduction of livestock or livestock 
products.
    Local Working Group means the advisory body as defined in part 610 
of this title.
    National measures mean measurable criteria identified by the Chief, 
with the advice of other Federal agencies and State Conservationists, to 
help EQIP achieve the national priorities and statutory requirements.
    National Organic Program means the national program, administered by 
the Agricultural Marketing Service, which regulates the standards for 
any farm, wild crop harvesting, or handling operation that wants to sell 
an agricultural product as organically produced.
    National priorities means resource issues identified by the Chief, 
with advice from other Federal agencies and State Conservationists, 
which will be used to determine the distribution of EQIP funds and guide 
local EQIP implementation.
    Natural Resources Conservation Service is an agency of the USDA, 
which has responsibility for administering EQIP using the funds, 
facilities, and authorities of the CCC.
    Nonindustrial private forest land means rural land, as determined by 
the Secretary, that has existing tree cover or is suitable for growing 
trees; and is owned by any nonindustrial private individual, group, 
association, corporation, Indian Tribe, or other private legal entity 
that has definitive decision-making authority over the land.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during the conservation practice lifespan. Operation includes 
the administration, management, and performance of non-maintenance 
actions needed to keep the completed practice 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.
    Operation and maintenance (O&M) agreement means the document that, 
in conjunction with the EQIP plan of operations, specifies the operation 
and maintenance responsibilities of the participant for conservation 
practices installed with EQIP assistance.

[[Page 800]]

    Organic System Plan means a management plan for organic production 
or for an organic handling operation that has been agreed to by the 
producer or handler and the certifying agent. The Organic System Plan 
includes all written plans that govern all aspects of agricultural 
production or handling.
    Participant means a person, legal entity, joint operation, or tribe 
that is receiving payment or is responsible for implementing the terms 
and conditions of an EQIP contract.
    Payment means financial assistance provided to the participant based 
on the estimated costs incurred in performing or implementing 
conservation practices, including costs for: planning, design, 
materials, equipment, installation, labor, maintenance, management, or 
training, as well as the estimated income foregone by the producer for 
designated conservation practices.
    Person means, as defined in part 1400 of this chapter, an 
individual, natural person, and does not include a legal entity.
    Priority resource concern(s) means a resource concern that is 
identified by the State Conservationist, in consultation with the State 
Technical Committee, as a priority for a State, geographic area, or 
watershed level.
    Producer means a person, legal entity, or joint operation who has an 
interest in the agricultural operation, according to part 1400 of this 
chapter, or who is engaged in agricultural production or forestry 
management.
    Regional Assistant Chief means the NRCS employee authorized to 
direct and supervise NRCS activities in an NRCS region.
    Resource Concern means a specific natural resource problem that 
represents a significant concern in a State or region, and is likely to 
be addressed successfully through the implementation of the conservation 
activities by producers.
    Secretary means the Secretary of the USDA.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    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 Island 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 a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
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 plantings, 
establishment or improvement of wildlife habitat, and capping of 
abandoned wells.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land active 
in agricultural, forestry, or related uses. The term includes the 
following:
    (1) Technical services provided directly to farmers, ranchers, and 
other eligible entities, such as conservation planning, technical 
consultation, and assistance with design and implementation of 
conservation practices; and
    (2) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, such as technical standards, resource inventories, training, 
data, technology, monitoring, and effects analyses.
    Technical Service Provider (TSP) means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical services 
to program participants, in lieu of or on behalf of NRCS.
    Wildlife means non-domesticated birds, fishes, reptiles, amphibians, 
invertebrates, and mammals.



Sec. 1466.4  National priorities.

    (a) The following national priorities, consistent with statutory 
resource concerns that include soil, water, wildlife,

[[Page 801]]

air quality, and related resource concerns, will be used in EQIP 
implementation:
    (1) Reductions of nonpoint source pollution, such as nutrients, 
sediment, pesticides, or excess salinity in impaired watersheds 
consistent with total maximum daily loads (TMDLs) where available; the 
reduction of surface and groundwater contamination; and the reduction of 
contamination from agricultural point sources, such as concentrated 
animal feeding operations;
    (2) Conservation of ground and surface water resources;
    (3) Reduction of emissions, such as particulate matter, nitrogen 
oxides, volatile organic compounds, and ozone precursors and depleters 
that contribute to air quality impairment violations of National Ambient 
Air Quality Standards;
    (4) Reduction in soil erosion and sedimentation from unacceptable 
levels on agricultural land; and
    (5) Promotion of at-risk species habitat conservation.
    (b) In consultation with other Federal agencies, NRCS will undertake 
periodic reviews of the national priorities and the effects of program 
delivery at the State and local level 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 NRCS State 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 priority resource concerns.



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 program duration, the Chief 
will:
    (a) Use an EQIP fund allocation formula that reflects national 
priorities 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 
they become available.
    (b) Provide a performance incentive to NRCS in States that 
demonstrate a high level of program accomplishment in implementing EQIP. 
The Chief shall consider factors such as strategically planning EQIP 
implementation, effectively addressing national priorities and measures, 
State and local resource concerns, the program delivery effectiveness, 
the use of TSPs, and the number of contracts with historically 
underserved producers.
    (c) Establish State level EQIP performance goals based on national, 
regional, and State priorities.
    (d) Ensure that national, State and local level information 
regarding program implementation such as resource priorities, eligible 
practices, ranking processes, payment schedules, fund allocation, and 
program achievements are made available to the public.
    (e) Consult with 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 working groups, to determine how funds 
will be used and how the program will be administered to achieve 
national priorities in each State.
    (g) Utilize assessment, evaluation, and accountability procedures 
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 resource concerns, with the advice of 
the State Technical Committee, which directly contribute toward meeting 
national priorities and measures, and will use NRCS's accountability 
system and other accountability tools to establish local level goals and 
treatment objectives;

[[Page 802]]

    (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 EQIP and how to 
allocate funds within a State:
    (1) The nature and extent of priority resource concerns at the State 
and local level;
    (2) The availability of human resources, incentive programs, 
educational programs, and on-farm research programs from public, 
private, and Tribal sources, to assist with the activities related to 
the priority resource concerns;
    (3) The existence of multi-county and/or multi-State collaborative 
efforts to address regional priority resource concerns;
    (4) Program performance and results;
    (5) The degree of difficulty that producers face in complying with 
environmental laws; and
    (6) The presence of additional priority resource concerns and 
specialized farming operations, including but not limited to, specialty 
crop producers, organic producers, and small-scale farms.



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 resource concerns are aware and 
informed 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, socially disadvantaged, small-scale, or beginning farmers or 
ranchers, Indian Tribes, Alaska Natives, and Pacific Islanders.



Sec. 1466.8  Program requirements.

    (a) Program participation is voluntary. The applicant must develop 
an EQIP plan of operations for the agricultural or nonindustrial private 
forest land to be treated that serves as the basis for the EQIP 
contract. NRCS provides participants with technical assistance and 
payments to plan and apply needed conservation practices.
    (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 part 12 of this title;
    (2) Have an interest in the agricultural operation as defined in 
part 1400 of this chapter;
    (3) Have control of the land for the term of the proposed contract 
period;
    (i) The Chief may determine that land administered by the Bureau of 
Indian Affairs (BIA), Indian land, or other such circumstances provides 
sufficient assurance of control,
    (ii) If the applicant is a tenant of the land involved in 
agricultural production or forestry management, the applicant shall 
provide the Chief with the written concurrence of the landowner in order 
to apply a structural conservation practice,
    (4) Submit an EQIP plan of operations or plan developed for the 
purposes of acquiring an air or water quality permit, provided these 
plans contain elements equivalent to those elements required by an EQIP 
plan of operations and are acceptable to the State Conservationist as 
being consistent with the purposes of the program;
    (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, beginning farmer 
or rancher, and payment eligibility as established by part 1400 of this 
chapter; and
    (6) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment.
    (c) Eligible land includes agricultural land and nonindustrial 
private forest land, and other land on which agricultural products, 
livestock, or forest-related products are produced and resource concerns 
may be addressed. Other agricultural lands include cropped woodland, 
marshes, incidental

[[Page 803]]

areas included in the agricultural operation, and other types of 
agricultural land used for production of livestock. However, land may be 
considered for enrollment in EQIP only if NRCS determines that the land 
is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation, and
    (ii) The participant has control of the land for the term of the 
contract, and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or
    (3) Indian 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.
    (e) NRCS will establish a national target to set aside five percent 
of EQIP funds for socially disadvantaged farmers or ranchers and an 
additional five percent of EQIP funds for beginning farmers or ranchers.

[68 FR 32348, May 30, 2003, as amended at 74 FR 25617, May 29, 2009]



Sec. 1466.9  EQIP plan of operations.

    (a) All conservation practices in the EQIP plan of operations must 
be approved by NRCS and developed and carried out in accordance with the 
applicable NRCS technical guidance.
    (b) The participant is responsible for implementing the EQIP plan of 
operations.
    (c) 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, natural resource, and 
environmental objectives;
    (3) A description of one or more conservation practices in the 
conservation management system, including conservation planning, design, 
or installation activities, to be implemented to achieve the 
conservation and environmental objectives;
    (4) A description of the schedule for implementing the conservation 
practices, including timing, sequence, operation, and maintenance; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan in achieving the environmental objectives.
    (d) If an EQIP plan of operations includes an animal waste storage 
or treatment facility, the participant must agree to develop and 
implement a CNMP or demonstrate to the satisfaction of the designated 
conservationist that a CNMP has been implemented.
    (e) If an EQIP plan of operations addresses forestland, the 
participant must develop and implement a forest management plan.
    (f) A participant may receive assistance to implement an EQIP plan 
of operations for water conservation only if the assistance will 
facilitate a reduction in ground and surface water use on the 
agricultural operation, unless the producer is participating in a 
watershed-wide project, as approved by the State Conservationist, which 
will effectively conserve water in accordance with Sec. 1466.20.



                    Subpart B_Contracts and Payments



Sec. 1466.10  Conservation practices.

    (a) NRCS will determine the conservation practices for which 
participants may receive program payments. A list of eligible practices 
will be available to the public.
    (b) Payments will not be made to a participant for a conservation 
practice that either the applicant or another producer has applied prior 
to application for the program. Payments will not be made for a 
conservation practice that has been initiated or implemented prior to 
contract approval, unless a waiver was granted by the State 
Conservationist or designated conservationist prior to the practice 
implementation.
    (c) A participant will be eligible for payments for water 
conservation and

[[Page 804]]

irrigation related conservation practices only on land that has been 
irrigated for two of the last five years prior to application for 
assistance.
    (d) Where new technologies or management approaches that provide a 
high potential for optimizing environmental benefits have been 
developed, NRCS may approve interim conservation practice standards that 
incorporate the new technologies and provide financial assistance for 
pilot work to evaluate and assess the performance, efficiency, and 
effectiveness of the new technology or management approach.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.11  Technical services provided by qualified personnel not 

affiliated with USDA.

    (a) NRCS may use the services of qualified TSPs in performing its 
responsibilities for technical assistance.
    (b) Participants may use technical services from qualified personnel 
of other Federal, State, and local agencies, Indian Tribes, or 
individuals who are certified as TSPs by NRCS.
    (c) Technical services provided by qualified personnel not 
affiliated with USDA may include, but are not limited to: conservation 
planning; conservation practice survey, layout, design, installation, 
and certification; and information; education; and training for 
producers.
    (d) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving EQIP payments.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.20  Application for contracts and selecting applications.

    (a) In evaluating EQIP applications, the State Conservationist or 
designated conservationist, with advice from the State Technical 
Committee or local working group, takes into account the following 
guidelines:
    (1) Any producer who has eligible land may submit an application for 
participation in EQIP. Applications are accepted throughout the year. 
Producers who are members of a joint operation may file a single 
application for the joint operation.
    (2) The State Conservationist, to the greatest extent practicable, 
will group applications of similar crop, forestry, and livestock 
operations for evaluation purposes.
    (3) The State Conservationist will evaluate applications within each 
established grouping.
    (b) In selecting EQIP applications, the State Conservationist or 
designated conservationist, with advice from the State Technical 
Committee or local working group, may establish ranking pools to address 
a specific resource concern, geographic area, or agricultural operation 
type or develop a ranking process to prioritize applications for funding 
that address national, State, and local priority resource concerns, 
taking into account the following guidelines:
    (1) The State Conservationist or designated conservationist will 
periodically select the highest ranked applications for funding based on 
applicant eligibility, fund availability, and the NRCS ranking process. 
The State Conservationist or designated conservationist will rank all 
applications according to the following factors:
    (i) The degree of cost-effectiveness of the proposed conservation 
practices;
    (ii) The magnitude of the expected environmental benefits resulting 
from the conservation treatment and the priority of the resource 
concerns that have been identified at the local, State, and national 
levels;
    (iii) How effectively and comprehensively the project addresses the 
designated resource concern or resource concerns;
    (iv) Use of conservation practices that provide long-term 
environmental enhancements;
    (v) Compliance with Federal, State, Tribal, or local regulatory 
requirements concerning soil, water and air quality; wildlife habitat; 
and ground and surface water conservation;
    (vi) Willingness of the applicant to complete all conservation 
practices in an expedited manner;
    (vii) The ability to improve existing conservation practices or 
systems, which are in place at the time the application is accepted, or 
that complete a conservation system;

[[Page 805]]

    (viii) 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.
    (2) For applications that include water conservation or irrigation 
efficiency practices, the State Conservationist will give priority to 
those applications where:
    (i) Consistent with State law in which the producer's eligible land 
is located, there is a reduction in water use in the agricultural 
operation, or where the producer agrees not to use any associated water 
savings to bring new land under irrigation production, other than 
incidental land needed for efficient operations.
    (ii) A producer who brings new land under irrigated production may 
be excluded from this latter condition if the producer is participating 
in a watershed-wide project that will effectively conserve water. The 
State Conservationist will designate eligible watershed-wide projects 
that effectively conserve water, using the following criteria:
    (A) The project area has a current, comprehensive water resource 
assessment;
    (B) The project plan has demonstrated effective water conservation 
management strategies; and
    (C) The project sponsors have consulted relevant State and local 
agencies.
    (3) If the State Conservationist determines that the environmental 
values of two or more applications for 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.
    (4) The ranking will not give preferential treatment to applications 
based on size of the operation.
    (5) The ranking process will determine the order in which 
applications will be selected for funding. The approving authority for 
EQIP contracts will be the State Conservationist or designee, except 
that the approving authority for any EQIP contract greater than $150,000 
and up to $300,000 will be the appropriate NRCS Regional Assistant 
Chief.
    (6) The State Conservationist will make available to the public all 
information regarding priority resource concerns, the list of eligible 
practices, payment rates, and how the EQIP program is implemented in the 
State.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.21  Contract requirements.

    (a) In order for a participant to receive payments, the participant 
must enter into a contract agreeing to implement one or more 
conservation practices. Technical services may be included in the 
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 payments allocated to the 
practices under the contract;
    (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 within the agricultural or forestry 
operation that would defeat the program's purposes;
    (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, including operation and maintenance of the EQIP contract's 
conservation practices, consistent with the provisions of Sec. 1466.25;
    (iv) Implement a comprehensive nutrient management plan when the 
EQIP contract includes an animal waste management facility;
    (v) Implement a forest management plan when the EQIP plan of 
operations addresses nonindustrial private forest land;

[[Page 806]]

    (vi) Supply information as may be required by NRCS to determine 
compliance with the contract and program requirements;
    (vii) Specify the participant's responsibilities for operation and 
maintenance of the applied conservation practices, consistent with the 
provisions of Sec. 1466.22; and
    (4) 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 
conservation practice within the first year of the contract, the 
participant can request a waiver from the State Conservationist.
    (d) Each contract will be limited to no more than $300,000. The 
Chief may waive this contract limitation to allow up to $450,000 for 
projects of special environmental significance that include methane 
digesters, other innovative technologies, and projects that will result 
in significant environmental improvements. Projects of special 
environmental significance must meet the following criteria, as 
determined by the Chief:
    (1) Site-specific evaluation documents have been completed, 
documenting that the project will have substantial positive impacts on 
critical resources in or near the project area (e.g., impaired water 
bodies, at-risk species, drinking water supplies, or air quality 
attainment);
    (2) The project clearly addresses a national priority and State, 
Tribal, or local priority resource concerns, as applicable; and
    (3) The project assists the participant in complying with Federal, 
State, and local regulatory requirements.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the O&M agreement that addresses 
the operation and maintenance of conservation practices applied under 
the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) Conservation practices installed before the contract execution, 
but included in the contract to obtain the environmental benefits agreed 
upon, must be operated and maintained as specified in the contract and 
O&M agreement.
    (d) NRCS may periodically inspect the conservation practice during 
the contract duration as specified in the O&M agreement to ensure that 
operation and maintenance requirements are being carried out, and that 
the conservation practice is fulfilling its intended objectives.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate and request a refund of payments made for that conservation 
practice under the contract.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.23  Payment rates.

    (a) The State Conservationist or designated conservationist will 
develop a list of conservation practices, eligible for payment under the 
program, which considers:
    (1) The conservation practice cost-effectiveness, implementation 
efficiency, and innovation,
    (2) The degree and effectiveness in treating priority resource 
concerns,
    (3) The number of resource concerns the practice will address,
    (4) The longevity of the practice's environmental benefits,
    (5) The conservation practice's ability to assist producers in 
meeting regulatory requirements, and
    (6) Other pertinent local considerations.
    (b) Payment rates will be established by the State Conservationist 
or designated conservationist, with advice from the State Technical 
Committee and local working groups.
    (c) Determining payment rates. (1) A payment to a producer for 
performing a practice may not exceed, as determined by the State or 
designated conservationist:

[[Page 807]]

    (i) 75 percent of the estimated costs incurred by implementing the 
conservation practice;
    (ii) 100 percent of the estimated income foregone; or
    (iii) Both conditions in paragraphs (c)(1)(i) and (ii) of this 
section, where a producer incurs costs in implementing a conservation 
practice and foregoes income related to that practice implementation.
    (iv) When determining payments for income foregone, the State 
Conservationist may give higher priority to the following conservation 
practices:
    (A) Residue management;
    (B) Nutrient management;
    (C) Air quality management;
    (D) Invasive species management;
    (E) Pollinator habitat development or improvement;
    (F) Animal carcass management technology; or
    (G) Pest management.
    (2) Notwithstanding paragraph (c)(1)(ii) of this section, a farmer 
or rancher meeting the historically underserved producer designation in 
Sec. 1466.3 may be awarded the applicable payment rate and an 
additional rate that is not less than 25 percent above the applicable 
rate, provided this increase does not exceed 90 percent of the incurred 
costs estimated for the conservation practice.
    (3) The payments to a participant will be reduced proportionately 
below the rate established by the State Conservationist or designated 
conservationist, to the extent that total financial contributions for a 
conservation practice from other sources exceed 100 percent of the 
estimated costs incurred for implementing or performing the conservation 
practice.
    (4) The State Conservationist shall provide payments for 
conservation practices on some or all of the operations of a producer 
related to organic production and the transition to organic production. 
Payments may not be made to cover the costs associated with organic 
certification or for practices that are eligible for cost-share payments 
under the National Organic Program (7 U.S.C. 6523).
    (d) Practice payment rates greater than 50 percent for estimated 
costs incurred, excluding those described in paragraph (c)(2) of this 
section, are to be approved by the Chief.
    (e) Subject to fund availability, the payment rates for conservation 
practices scheduled after the year of contract obligation may be 
adjusted to reflect increased costs.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.24  EQIP payments.

    (a) Except for contracts entered into prior to October 1, 2008, or 
as provided in paragraph (b) of this section, the total amount of 
payments paid to a person or legal entity under this Part may not exceed 
an aggregate of $300,000, directly or indirectly, for all contracts, 
including prior year contracts, entered into during any 6-year period. 
For the purpose of applying this requirement, the 6-year period will 
include those payments made in fiscal years 2009-2014. Payments received 
for technical assistance shall be excluded from this limitation.
    (b) The Chief may waive the $300,000 payment limitation, allowing up 
to $450,000 per person or legal entity for projects of special 
environmental significance, as defined in Sec. 1466.21(d).
    (c) Payments for conservation practices related to organic 
production to a person or legal entity, directly or indirectly, may not 
exceed in aggregate $20,000 per year or $80,000 during any 6-year 
period.
    (d) To determine eligibility for payments, NRCS will use the 
following criteria:
    (1) The provisions in part 1400 of this chapter, Payment Limitation 
and Payment Eligibility, subparts A and G.
    (2) States, political subdivisions, and entities thereof will not be 
considered to be persons or legal entities eligible for payment.
    (3) To be eligible to receive an EQIP payment, all legal entities or 
persons applying, either alone or as part of a joint operation, must 
provide a tax identification number and percentage interest in the legal 
entity. In accordance with 7 CFR 1400, an applicant applying as a joint 
operation or legal entity must provide a list of all members of the 
legal entity and joint operation and associated embedded entities, along 
with the members' social security numbers and percentage interest

[[Page 808]]

in the joint operation or legal entity. Where applicable, American 
Indians, Alaska Natives, and Pacific Islanders may use another unique 
identification number for each individual eligible for payment.
    (4) With regard to contracts with Indian tribes or Indians 
represented by BIA, payments exceeding the payment limitation may be 
made to the Tribal participant if a BIA or Tribal official certifies in 
writing that no one individual, directly or indirectly, will receive 
more than the payment limitation. The Tribal entity must also provide, 
annually, a listing of individuals and payments made, by social security 
or tax identification number or other unique identification number, 
during the previous year for calculation of overall payment limitations. 
The BIA or Tribal entity must also produce, at the request of NRCS, 
proof of payments made to the person or legal entity that incurred costs 
or sacrificed income related to conservation practice implementation.
    (5) Any cooperative association of producers that markets 
commodities for producers will not be considered to be a person eligible 
for payment.
    (6) Eligibility for payments in accordance with part 1400, subpart G 
of this chapter, average adjusted gross income limitation, will be 
determined prior to contract approval.
    (7) To be eligible for payments for conservation practices related 
to organic production or the transition to organic production, a 
participant will develop and implement an organic system plan as defined 
in Sec. 1466.3.
    (8) Eligibility for higher payments in accordance with paragraph (b) 
of this section will be determined at the time of contract approval.
    (9) Any participant that utilizes a unique identification number as 
an alternative to a tax identification number will utilize only that 
identifier for any and all other EQIP contracts to which the participant 
is a party. Violators will be considered to have provided fraudulent 
representation and be subject to full penalties of Sec. 1466.35.
    (10) A participant will not be eligible for payments for 
conservation practices on eligible land if the participant receives 
payments or other benefits for the same practice on the same land under 
any other conservation program administered by USDA.
    (11) The State Conservationist may issue advance payments to 
historically underserved producers up to 30 percent of the anticipated 
amount of the costs incurred for the purpose of purchasing materials or 
services to implement a conservation practice.
    (12) Before NRCS will approve and issue final payment, the 
participant must certify that the conservation practice has been 
completed in accordance with the contract, and NRCS, or an approved TSP, 
must certify that the practice has been carried out in accordance with 
the applicable NRCS technical guidance.

[68 FR 32348, May 30, 2003, as amended at 74 FR 10675, Mar. 12, 2009]



Sec. 1466.25  Contract modifications and transfers of land.

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the EQIP plan of operations is 
revised in accordance with NRCS requirements, and the contract is 
approved by the designated conservationist.
    (b) It is the participant's responsibility to notify NRCS when he/
she either anticipates the voluntary or involuntary loss of control of 
the land covered by an EQIP contract.
    (c) The participant and NRCS may agree to transfer a contract to 
another party.
    (1) To receive an EQIP payment, the transferee must be determined by 
NRCS to be eligible to participate in EQIP and must assume full 
responsibility under the contract, including the O&M agreement for those 
conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) If the transferee is ineligible or refuses to accept future 
payments, NRCS will terminate the contract and may require the 
transferor to refund and/or forfeit all payments received.
    (d) 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 covered by an EQIP contract and the new owner or 
controller is not

[[Page 809]]

eligible to participate in the program or refuses to assume 
responsibility under the contract.
    (e) In the event a conservation practice fails through no fault of 
the participant, the State Conservationist may issue payments to re-
establish the practice, at the rates established in accordance with 
Sec. 1466.23, provided such payments do not exceed the payment 
limitation requirements as set forth Sec. 1466.24.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.26  Contract violations and terminations.

    (a) The State Conservationist may terminate, or by mutual consent 
with the parties, terminate the contract where:
    (1) The parties to the contract are unable to comply with the terms 
of the contract as the result of conditions beyond their control;
    (2) Termination of the contract would, as determined by the State 
Conservationist, be in the public interest; or
    (3) A participant fails to correct a contract violation within the 
time period defined by NRCS.
    (b) If a contract is terminated in accordance with the provisions of 
paragraphs (a)(1) and (a)(2) of this section, the State Conservationist 
may allow the participant to retain a portion of any payments received 
appropriate to the effort the participant has made to comply with the 
contract, or, in cases of hardship, where forces beyond the 
participant's control prevented compliance with the contract. If a 
participant claims hardship, such claims must be clearly documented and 
cannot have existed when the applicant applied for participation in the 
program.
    (c) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or documents incorporated by 
reference into the contract, NRCS shall give the participant a period of 
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 in 
accordance with Sec. 1466.26(e).
    (d) Notwithstanding the provisions of paragraph (c) 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.
    (e) If NRCS terminates a contract due to breach of contract, the 
participant will forfeit all rights to future payments under the 
contract, pay liquidated damages, and refund all or part of the payments 
received, plus interest. Participants violating EQIP contracts may be 
determined ineligible for future NRCS-administered conservation program 
funding.
    (1) NRCS may require a participant to provide only a 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.
    (2) The State Conservationist will have the option to reduce or 
waive the liquidated damages, depending upon the circumstances of the 
case.
    (i) When terminating a contract, 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 existence 
of hardships beyond the participant's control that have prevented 
compliance with the contract. If a participant claims hardship, that 
claim must be well documented and cannot have existed when the applicant 
applied for participation in the program.
    (ii) In carrying out its role in this section, NRCS may consult with 
the local conservation district.
    (f) The State Conservationist, in consultation with the State 
Technical Committee, may terminate a contract

[[Page 810]]

whereby a producer is receiving payments for conservation practices 
related to organic production, if the designated conservationist 
determines that the producer is not pursuing organic certification, or 
has been decertified.

[74 FR 2313, Jan. 15, 2009]



Sec. 1466.27  Conservation Innovation Grants (CIG).

    (a) Definitions. In addition to the terms defined in Sec. 1466.3 of 
this part, the following definitions shall be applicable to this 
section:
    (1) EQIP eligible means any farming entity, land, and practice that 
meets the definitions of EQIP as defined in 7 CFR 1466.
    (2) Grant agreement means a document describing a relationship 
between NRCS and a State or local government, or other recipient 
whenever the principal purpose of the relationship is the transfer of a 
thing of value to a recipient in order to accomplish a public purpose of 
support or stimulation authorized by Federal law, and substantial 
Federal involvement is not anticipated.
    (3) Grant Review Board consists of the NRCS Deputy Chief for 
Programs, Deputy Chief for Science and Technology, Deputy Chief for Soil 
Survey and Resource Assessment, one Regional Assistant Chief, and one 
State Conservationist. The Review Board makes recommendations for grant 
awards to the Chief.
    (4) Peer Review Panel means a panel consisting of Federal and non-
Federal technical advisors who possess expertise in a discipline or 
disciplines deemed important to provide a technical evaluation of 
project proposals submitted under this notice.
    (5) Project means the activities as defined within the scope of the 
grant agreement.
    (6) Project Director means the individual responsible for the 
technical direction and management of the project as designated in the 
application.
    (b) Purpose and scope--(1) Purpose. The purpose of CIG is to 
stimulate the development and adoption of innovative conservation 
approaches and technologies while leveraging Federal investment in 
environmental enhancement and protection, in conjunction with 
agricultural production. Notwithstanding any limitation of this part, 
NRCS will administer CIG in accordance with this section. Unless 
otherwise provided for in this section, the provisions of 7 CFR 3015 and 
related Departmental regulations will be used to administer grants under 
CIG.
    (2) Geographic scope. Applications for CIG are accepted from the 
fifty 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.
    (3) Program scope. Grants will be awarded using a two-tiered 
process. A nationwide grants competition will be announced in the 
Federal Register. In addition, at the Chief's discretion, each State 
Conservationist may implement a separate State-level component of CIG.
    (4) Program focus. Applications for CIG should demonstrate the use 
of innovative approaches and technologies to leverage Federal investment 
in environmental enhancement and protection, in conjunction with 
agricultural production. CIG will fund projects that promote innovative 
on-the-ground conservation, including pilot projects and field 
demonstrations of promising approaches or technologies. CIG projects are 
expected to lead to the transfer of conservation technologies, 
management systems, and innovative approaches (such as market-based 
systems) into NRCS technical manuals and guides, or to the private 
sector. Technologies and approaches eligible for funding in a project's 
geographic area through EQIP are not eligible for CIG funding except 
where the use of those technologies and approaches demonstrates clear 
innovation. The burden falls on the applicant to sufficiently describe 
the innovative features of the proposed technology or approach.
    (5) Innovative conservation projects or activities. For the purposes 
of CIG, the proposed innovative project or activity must encompass the 
development and field testing, evaluation, and implementation of:

[[Page 811]]

    (i) Conservation adoption incentive systems, including market-based 
systems; or,
    (ii) Promising conservation technologies, practices, systems, 
procedures, and approaches.
    To be given priority consideration, the innovative project or 
activity:
    (iii) Will have been studied sufficiently to indicate a good 
probability for success;
    (iv) Demonstrates, tests, evaluates, or verifies environmental 
(soil, water, air, plants, and animal) effectiveness, utility, 
affordability, and usability in the field;
    (v) Adapts conservation technologies, practices, systems, 
procedures, approaches, and incentive systems to improve performance, 
and encourage adoption;
    (vi) Introduces conservation systems, approaches, and procedures 
from another geographic area or agricultural sector; and
    (vii) Adapts conservation technology, management, or incentive 
systems to improve performance.
    (c) Availability of funding. (1) CIG funding will be available for 
single-or multi-year projects. Funding for CIG will be announced in the 
Federal Register through a Request for Proposals (RFP). The Chief will 
determine the funding level for CIG on an annual basis. Funds for CIG 
are derived from funds made available for EQIP. The Chief may establish 
funding limits for individual grants.
    (2) Selected applicants may receive grants of up to 50 percent of 
the total project cost. Applicants must provide non-Federal funding for 
at least 50 percent of the project cost, of which up to one-half (25 
percent of total project cost) may be from in-kind contributions. An 
exception regarding matching funds may be made for grants that are 
awarded to either a Beginning or Limited Resource Farmer or Rancher, or 
Indian Tribe, or a community-based organization comprised of or 
representing these entities. Up to 75 percent of the required matching 
funds for these projects may derive from in-kind contributions.
    (3) CIG is designed to provide financial assistance to grantees. 
Procurement of any technical assistance required to carry out a project 
is the responsibility of the grantee. Technical oversight for grant 
projects will be provided by a Federal grant representative, who will be 
designated by NRCS.
    (4) There are some costs that grantees may not cover using CIG 
funds, such as costs incurred prior to the effective date of the grant, 
entertainment costs, any indirect cost exceeding fifteen percent, or 
renovation or refurbishment of facilities. A detailed list of costs not 
allowed will be published in the Request for Proposals.
    (d) Natural resource conservation concerns. CIG applications must 
describe the use of innovative approaches or technologies to address a 
natural resource conservation concern or concerns. The natural resource 
concerns for CIG will be identified by the Chief, and may change each 
year. The natural resource concerns will be published in the RFP.
    (e) Eligibility information--(1) Organization or individual 
eligibility. To be eligible, CIG applicants must be an Indian Tribe; 
State or local unit of government; non-governmental organization; or 
individual.
    (2) Project eligibility. To be eligible, projects must involve 
landowners who meet the eligibility requirements of Sec. 1466.8(b)(1) 
through (3) of this part. Further, all agricultural producers receiving 
a direct or indirect payment through participation in a CIG project must 
meet those eligibility requirements.
    (3) Beginning and Limited Resource Farmers and Ranchers, and Indian 
Tribes. Up to 10 percent of the total funds available for CIG may be 
set-aside for applications from either a Beginning or Limited Resource 
Farmer or Rancher, or Indian Tribe, or a community-based organization 
comprised of or representing these entities. Funds not awarded from the 
set-aside pool will revert back into the general CIG funding pool.
    (f) Application and submission information. The CIG RFP will contain 
guidance on how to apply for the grants competition. CIG will be 
advertised through the Federal Register, the NRCS Web site, and 
grants.gov. Grant applications will be available on the NRCS Web site, 
or by contacting NRCS

[[Page 812]]

at the address provided in the RFP. CIG grant applications will consist 
of standard cover sheet and budget forms, in addition to a narrative 
project description and required legal declarations and certifications.
    (g) Application review and grant awards. Complete applications will 
be evaluated by a peer review panel and scored based on the Criteria for 
Proposal Evaluation identified in the RFP. Scored applications will be 
forwarded to a Grant Review Board. The Grant Review Board will make 
recommendations for awards to the Chief. Final award selections will be 
made by the Chief. Grant awards will be made by the NRCS National Office 
after selection of the grantees is made and after the grantee agrees to 
the terms and conditions of the NRCS Grant document.
    (h) State component. (1) At the discretion of the Chief, each State 
Conservationist has the option of implementing a State-level CIG 
component. A State program will follow the requirements of this section, 
except for those features described in this paragraph (h).
    (2) Funding availability, application, and submission information 
for State competitions will be announced through public notices (and on 
the State NRCS Web site), separately from the national program. The 
State component will emphasize projects that cover limited geographic 
areas, including individual farms, multi-county areas, or small 
watersheds.
    (3) The State Conservationist will determine the funding level for 
the grants competition, with individual grants not to exceed $75,000.
    (4) The State Conservationist may choose to adhere to the CIG 
national natural resource concerns, or may select a subset of those 
concerns that more closely match the natural resource concerns in his or 
her State.
    (5) Applications will be scored by the State Technical Committee, or 
a sub-committee thereof, based on the national Criteria for Proposal 
Evaluation published in the CIG RFP. Scored applications will be 
forwarded to the State Conservationist, who will make the award 
selections.
    (6) In addition to abiding by the in-kind contribution exception for 
Limited Resource and Beginning Farmers and Ranchers, and Indian Tribes 
in paragraph (c)(2) of this section, the State Conservationist in each 
participating State will determine if and how to provide additional 
special consideration to underserved groups.
    (i) Grant agreement. The CCC, through NRCS, will use a grant 
agreement with selected grantees to document participation in CIG.
    (j) Patents and inventions. Allocation of rights to patents and 
inventions shall be in accordance with USDA regulation 7 CFR 3019.36. 
This regulation provides that small businesses normally may retain the 
principal worldwide patent rights to any invention developed with USDA 
support. In accordance with 7 CFR 3019.2, this provision will also apply 
to commercial organizations for the purposes of CIG. USDA receives a 
royalty-free license for Federal Government use, reserves the right to 
require the patentee to license others in certain circumstances, and 
requires that anyone exclusively licensed to sell the invention in the 
United States must normally manufacture it domestically.
    (k) Violations. A person found in violation of this section is 
subject to the provisions contained in 7 CFR part 3015 and related 
Departmental regulations.

[69 FR 16397, Mar. 29, 2004; 70 FR 1791, Jan. 11, 2005; 74 FR 2316, Jan. 
15, 2009]



                    Subpart C_General Administration

    Source: 74 2316, Jan. 15, 2009, unless otherwise noted.



Sec. 1466.30  Appeals.

    A participant may obtain administrative review of an adverse 
decision under EQIP in accordance with parts 11 and 614 of this title. 
Determination in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation practices are not subject to appeal.

[[Page 813]]



Sec. 1466.31  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. 1466.32  Access to operating unit.

    Any authorized NRCS representative shall have the right to enter an 
agricultural operation or tract for the purposes of determining 
eligibility and for ascertaining the accuracy of any representations 
related to contract performance. Access shall include the right to 
provide technical assistance, determine eligibility, inspect any work 
undertaken under the contract, and collect information necessary to 
evaluate the conservation practice performance, specified in the 
contract. The NRCS representative shall make an effort to contact the 
participant prior to the exercising this provision.



Sec. 1466.33  Equitable relief.

    (a) If a participant relied upon the advice or action of any 
authorized NRCS representative 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 program requirements 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 TSP is the responsibility of the certified TSP and will not be 
assumed by NRCS when NRCS authorizes payment. Where a participant 
believes that detrimental reliance on the advice or action of a NRCS 
representative resulted in an ineligibility or program violation, but 
the participant believes that a good faith effort to comply was made, 
the participant may request equitable relief under Sec. 635.3 in 
chapter VI of this title.
    (b) If, during the term of an EQIP contract, a participant has been 
found in violation of a provision of the EQIP contract, the O&M 
agreement, or any document incorporated by reference through failure to 
fully comply with that provision, the participant may be eligible for 
equitable relief under Sec. 635.4 in chapter VI of this title.



Sec. 1466.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any person, joint venture, legal entity or tribe 
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) EQIP participants may assign any payments in accordance with 
part 1404 of this chapter.



Sec. 1466.35  Misrepresentation and scheme or device.

    (a) A person, joint venture, legal entity or tribe that 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 part 1403 of this chapter.
    (b) A producer who is determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation;
    (3) Adopted any 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; or
    (4) Misrepresented any fact affecting a program determination, shall 
refund to NRCS all payments, plus interest determined in accordance with 
7 CFR

[[Page 814]]

1403, received by such producer with respect to all contracts. The 
producer's interest in all contracts shall be terminated.
    (c) In accordance with Sec. 1466.26(e), NRCS may determine the 
producer ineligible for future conservation programs funding.



Sec. 1466.36  Environmental credits for conservation improvements.

    NRCS recognizes that environmental benefits will be achieved by 
implementing conservation practices funded through EQIP, and 
environmental credits may be gained as a result of implementing 
activities compatible with the purposes of an EQIP contract. NRCS 
asserts no direct or indirect interest on these credits. However, NRCS 
retains the authority to ensure that operation and maintenance (O&M) 
requirements for EQIP-funded improvements are met, consistent with 
Sec. Sec. 1466.21 and 1466.22. Where activities may impact the land 
under an EQIP contract, participants are highly encouraged to request an 
O&M compatibility determination from NRCS prior to entering into any 
credit agreements.



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 process.
1467.8 Compensation for easements and 30-year contracts.
1467.9 Wetlands Reserve Enhancement Program.
1467.10 Cost-share payments.
1467.11 Easement participation requirements.
1467.12 The WRPO development.
1467.13 Modifications.
1467.14 Transfer of land.
1467.15 Violations and remedies.
1467.16 Payments not subject to claims.
1467.17 Assignments.
1467.18 Appeals.
1467.19 Scheme and device.
1467.20 Market-based conservation initiatives.

    Authority: 16 U.S.C. 3837 et seq.

    Source: 74 FR 2328, Jan. 15, 2009, unless otherwise noted.



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 (NRCS) for program 
implementation.
    (b) The Chief, NRCS, 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, and the Commonwealth of 
the Northern Mariana Islands.



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 that is required by applicable law.
    (c) The State Conservationist will seek advice from the State 
Technical Committee on the development of the geographic area rate caps 
of compensation for an easement, a priority ranking process, and related 
policy matters.
    (d) NRCS may delegate at any time easement management, monitoring, 
and enforcement responsibilities to other Federal or State agencies that 
have the appropriate authority, expertise, and technical and financial 
resources, as determined by NRCS to carry out such delegated 
responsibilities.
    (e) NRCS may enter into cooperative agreements with Federal or State 
agencies, conservation districts, and private conservation organizations 
to assist NRCS with program implementation, including the provision of 
technical assistance.
    (f) NRCS shall consult with the U.S. Department of the Interior's 
Fish and Wildlife Service (FWS) at the local

[[Page 815]]

level in determinations of land eligibility and as appropriate 
throughout the program implementation process. NRCS may consult Federal 
or State agencies, conservation districts, or other organizations in 
program administration. No determination by these agencies or 
organizations shall compel NRCS to take any action which NRCS determines 
will not serve the purposes of the program established by this part.
    (g) The Chief may allocate funds for purposes related to: 
Encouraging enrollment by historically underserved producers as 
authorized by 16 U.S.C. 3844; 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. NRCS 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.



Sec. 1467.3  Definitions.

    The following definitions are applicable to this part:
    30-year Contract means a contract that is for a duration of 30 years 
and is limited to acreage owned by Indian Tribes.
    Acreage Owned by Indian Tribes means lands held in private ownership 
by an Indian Tribe or individual Tribal member and lands held in trust 
by a native corporation, Tribe or the Bureau of Indian Affairs (BIA).
    Activity means an action other than a conservation practice that is 
included in the WRPO or restoration cost-share agreement, as applicable, 
and that has the effect of alleviating problems or improving treatment 
of the resources, including ensuring proper management or maintenance of 
the wetland functions and values restored, protected, or enhanced 
through an easement, contract, or restoration cost-share agreement.
    Agreement means the document that specifies the obligations and 
rights of NRCS and any person or legal entity who is participating in 
the program.
    Agricultural commodity means any agricultural commodity planted and 
produced in a State by annual tilling of the soil, including tilling by 
one-trip planters; or sugarcane planted and produced in a State.
    Beginning Farmer or Rancher means an individual or legal entity who 
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 a legal entity, and who will materially and substantially 
participate in the operation of the farm or ranch. In the case of 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. In the case of a legal entity or joint operation, 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 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 means any district or unit of State or local 
government formed under State 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

[[Page 816]]

conservation district,'' ``natural resource district,'' ``land 
conservation committee,'' or a similar name.
    Conservation practice means a specified treatment, such as a 
vegetative, structural, or land management practice, that is planned and 
applied according to NRCS standards and specifications.
    Conservation Reserve Program (CRP) means the program administered by 
the Commodity Credit Corporation pursuant to 16 U.S.C. 3831-3836.
    Contract means the legal document that specifies the obligations and 
rights of NRCS and any person or legal entity accepted to participate in 
the program. A WRP contract is an agreement for the transfer of 
assistance from NRCS to the participant for conducting the prescribed 
program implementation actions.
    Converted wetland means a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including any activity that 
results in impairing or reducing the flow, circulation, or reach of 
water) for the purpose, or to have the effect of, making the production 
of an agricultural commodity possible if such production would not have 
been possible but for such action; and before such action such land was 
wetland; and such land was neither highly erodible land nor highly 
erodible cropland.
    Cost-share payment means the payment made by NRCS to a participant 
to carry out conservation practices and to achieve the protection of 
wetland functions and values, including necessary activities, as set 
forth in the Wetlands Reserve Plan of Operations (WRPO).
    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, or the 
consideration paid to an Indian Tribe or tribal members for entering 
into 30-year contracts.
    Easement Restoration Agreement means the agreement used to implement 
the Wetland Restoration Plan of Operations for projects enrolled through 
the permanent easement, 30-year easement, or 30-year contract enrollment 
options.
    Farm Service Agency (FSA) is an agency of the United States 
Department of Agriculture.
    Fish and Wildlife Service (FWS) is an agency of the United States 
Department of the Interior.
    Historically Underserved Producer means a beginning, limited 
resource, or socially disadvantaged farmer or rancher.
    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 (85 Stat. 688, 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.
    Landowner means a person or legal entity having legal ownership of 
eligible land. Landowner may include all forms of collective ownership 
including joint tenants, tenants in common, and life tenants. The term 
landowner includes trust holders of acreage owned by Indian Tribes.
    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.
    Legal entity means an entity that is created under Federal or State 
law and that owns land or an agricultural commodity; or produces an 
agricultural commodity.
    Limited Resource Farmer or Rancher means a person with direct or 
indirect gross farm sales not more than $100,000 in each of the previous 
two years (to be increased to adjust for inflation using

[[Page 817]]

Prices Paid by Farmer Index as compiled by National Agricultural 
Statistical Service (NASS)), and who 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 U.S. Department of Commerce 
data).
    Maintenance means work performed to keep the enrolled area 
functioning for program purposes for the duration of the enrollment 
period. Maintenance includes actions and work to manage, prevent 
deterioration, repair damage, or replace conservation practices on 
enrolled lands, as approved by NRCS.
    Natural Resources Conservation Service (NRCS) is an agency of the 
United States Department of Agriculture, including when NRCS carries out 
program implementation using the funds, facilities, or authorities of 
the Commodity Credit Corporation (CCC).
    Option agreement to purchase means the legal document that is the 
equivalent of a real estate option contract for purchasing land. The 
landowner signs the option agreement to purchase, which is authorization 
for NRCS to proceed with the easement acquisition process, and to incur 
costs for surveys, where applicable, title clearance and closing 
procedures on the easement. The option becomes a contract for sale and 
obligates CCC funding after it is executed by NRCS and transmitted to 
the landowner.
    Participant means a person or legal entity who has been accepted 
into the program and who is receiving payment or who is responsible for 
implementing the terms and conditions of an option to purchase 
agreement, 30-year contract, or restoration cost-share agreement, and 
the associated WRPO.
    Permanent easement means an easement that lasts in perpetuity.
    Person means a natural person, a legal entity, or an Indian Tribe, 
but does not include governments or their political subdivisions.
    Prairie Pothole Region means the counties designated as part of the 
Prairie Pothole National Priority Area for the Conservation Reserve 
Program (CRP) as of June 18, 2008.
    Private land means land that is not owned by a governmental entity, 
and includes acreage owned by Indian Tribes, as defined in this Part.
    Restoration Cost-Share Agreement means the legal document that 
describes the rights and obligations of participants who have been 
accepted to participate in WRP restoration cost-share enrollment option 
that is used to implement conservation practices and activities to 
protect, restore, or enhance wetlands values and functions to achieve 
the purposes of the program. The restoration cost-share agreement is an 
agreement between NRCS and the participant to share in the costs of 
implementing the Wetland Restoration Plan of Operations.
    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 
vegetative communities that are reflective of soil conditions normally 
wetter than adjacent soils, and generally provide a corridor for the 
movement of wildlife.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    State Technical Committee means a committee established by the 
Secretary of the United States Department of Agriculture (USDA) in a 
State pursuant to 16 U.S.C. 3861.
    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) Supports a prevalence of such vegetation under normal 
circumstances.
    Wetland functions and values means the hydrological and biological 
characteristics of wetlands and the socioeconomic value placed upon 
these characteristics, including:

[[Page 818]]

    (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 and does not involve more than 30 
percent of the wetland restoration area.
    Wetlands Reserve Plan of Operations (WRPO) means the conservation 
plan that identifies how the wetland functions and values will be 
restored, improved, and protected and which is approved by NRCS.



Sec. 1467.4  Program requirements.

    (a) General. (1) Under the WRP, NRCS may purchase conservation 
easements from, or enter into 30-year contracts or restoration cost-
share agreements with, eligible landowners who voluntarily cooperate to 
restore, protect, or enhance wetlands on eligible private and Tribal 
lands. The 30-year contract enrollment option is only available to 
acreage owned by Indian Tribes.
    (2) To participate in WRP, a landowner must agree to the 
implementation of a 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. NRCS may provide cost-share assistance through a 
restoration cost-share agreement or an easement restoration agreement 
for the conservation practices and activities that promote the 
restoration, protection, enhancement, maintenance, and management of 
wetland functions and values. For easement transactions, NRCS may 
implement such conservation practices and activities through an 
agreement with the landowner, a contract with a vendor, or a cooperative 
agreement with a cooperating entity. Specific restoration, protection, 
enhancement, maintenance, and management actions may be undertaken by 
the landowner, NRCS, or other 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 FSA, 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 through 
the WRP.
    (2) NRCS and FSA shall concur before a waiver of the 25 percent 
limit of this paragraph can be approved for an easement proposed for 
enrollment in the WRP. Such a waiver will only be approved if the waiver 
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. To be eligible to enroll in the WRP, a 
person, legal entity, or Indian Tribe must be in compliance with the 
highly erodible land and wetland conservation provisions in 7 CFR part 
12. Persons or legal entities must be in compliance with the Adjusted 
Gross Income Limitation provisions at Subpart G of 7 CFR part 1400, and:
    (1) Be the landowner of eligible land for which enrollment is 
sought;
    (2) For easement applications, have been the landowner of such land 
for the 7-year period prior to the time the land is determined eligible 
for enrollment unless it is determined by the State Conservationist 
that:
    (i) The land was acquired by will or succession as a result of the 
death of the previous landowner;
    (ii) The ownership change occurred due to foreclosure on the land 
and the

[[Page 819]]

owner of the land immediately before the foreclosure exercises a right 
of redemption from the mortgage holder in accordance with State law; or
    (iii) The land was acquired under circumstances that give adequate 
assurances, as determined by NRCS, that such land was not acquired for 
the purposes of placing it in the program, such as demonstration of 
status as a beginning farmer or rancher.
    (3) Agree to provide such information to NRCS as the agency deems 
necessary or desirable to assist in its determination of eligibility for 
program benefits and for other program implementation purposes.
    (d) When a parcel of land that has been accepted for enrollment into 
the WRP is sold or transferred prior to the easement being perfected, 
the application or option agreement to purchase will be cancelled and 
acres will be removed from enrollment. If the new landowner wishes to 
continue enrollment, a new application must be filed so that all 
eligibility criteria may be examined and documented.
    (e) Land eligibility. (1) Only private land or land owned by Indian 
Tribes may be considered for enrollment into WRP.
    (2) NRCS 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 the 
cost of the restoration, protection, enhancement, maintenance, and 
management.
    (3) Land shall only be considered eligible for enrollment in the WRP 
if NRCS determines, in consultation with the FWS, that:
    (i) The enrollment of such land maximizes wildlife benefits and 
wetland values and functions;
    (ii) Such land is--
    (A) Farmed wetland or converted wetland, together with adjacent 
lands that are functionally dependent on the wetlands; or
    (B) Cropland or grassland that was used for agricultural production 
prior to flooding from the natural overflow of a closed basin lake or 
pothole, together with the adjacent land, where practicable, that is 
functionally dependent on the cropland or grassland; and
    (iii) 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.
    (4) Land may be considered farmed wetland or converted wetland under 
paragraph (3)(ii)(A) of this section if such land is identified by NRCS 
as:
    (i) Wetlands farmed under natural conditions, farmed wetlands, prior 
converted cropland, commenced conversion wetlands, farmed wetland 
pastures, and lands substantially altered by flooding so as to develop 
wetland functions and values; or
    (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.
    (5) Land under paragraph (e)(3)(ii)(B) of this section may be 
considered for enrollment into 30-year easements if it meets the 
criteria under paragraph (e)(3) of this section, it is located in the 
Prairie Pothole Region as defined under Sec. 1467.3 of this part, and 
the size of the parcel offered for enrollment is a minimum of 20 
contiguous acres. Such land meets the requirement of likelihood of 
successful restoration only if the soils are hydric and the depth of 
water is 6.5 feet or less.
    (6) If land offered for enrollment is determined eligible under 
paragraph (e)(3) and (e)(5) of this section, then NRCS may also enroll 
land adjacent or contiguous to such eligible land together with the 
eligible land, if such land maximizes wildlife benefits and:
    (i) Is farmed wetland and adjoining lands enrolled in CRP, with the 
highest wetland functions and values, and is likely to return to 
production after it leaves CRP;
    (ii) Is a riparian area along streams or other waterways that links 
or, after restoring the riparian area, will link wetlands which are 
protected by an

[[Page 820]]

easement or other device or circumstance that achieves the same 
objectives as an easement; or
    (iii) Land adjacent to the eligible land that would contribute 
significantly to wetland functions and values, such as buffer areas, 
wetland creations, non-cropped natural wetlands, and restored wetlands, 
but not more than the State Conservationist, in consultation with the 
State Technical Committee, determines is necessary for such 
contribution.
    (7) 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 program purposes and otherwise promote and enhance program 
objectives, as determined by NRCS.
    (f) Enrollment of CRP lands. Land subject to an existing CRP 
contract may be enrolled in 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 NRCS. To enroll in WRP, the CRP contract for 
the property must be terminated or otherwise modified subject to such 
terms and conditions as are mutually agreed upon by FSA and the 
landowner.
    (g) Ineligible land. The following land is not eligible for 
enrollment in the WRP:
    (1) Converted wetlands if the conversion was commenced after 
December 23, 1985;
    (2) Land that contains timber stands established under a CRP 
contract or pastureland established to trees under a CRP contract;
    (3) Lands owned by an agency of the United States, other than held 
in trust for Indian Tribes;
    (4) Lands owned in fee title by a State, including an agency or a 
subdivision of a State, or a unit of local government;
    (5) Land subject to an easement or deed restriction which, as 
determined by NRCS, provides similar restoration and protection of 
wetland functions and values as would be provided by enrollment in WRP; 
and
    (6) Lands where implementation of restoration practices would be 
undermined due to on-site or off-site conditions, such as risk of 
hazardous substances either on-site or off-site, proposed or existing 
rights of way, either on-site or off-site, for infrastructure 
development, or adjacent land uses, such as airports, that would either 
impede complete restoration or prevent wetland functions and values from 
being fully restored.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec. 1467.5  Application procedures.

    (a) Application for participation. To apply for enrollment, a 
landowner must submit an Application for Participation in the WRP.
    (b) Preliminary agency actions. By filing an Application for 
Participation, the landowner consents to an NRCS 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 NRCS to evaluate 
applications. The landowner is entitled to accompany an NRCS 
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 NRCS.



Sec. 1467.6  Establishing priority for enrollment of properties in WRP.

    (a) When evaluating easement, 30-year contract, or restoration cost-
share agreement offers from landowners, the NRCS, with advice from the 
State Technical Committee, may consider:
    (1) The conservation benefits of obtaining an easement, or other 
interest in the land;
    (2) The cost effectiveness of each easement or other interest in 
eligible land, so as to maximize the environmental benefits per dollar 
expended;
    (3) Whether the landowner or another person is offering to 
contribute financially to the cost of the easement or other interest in 
the land to leverage Federal funds;
    (4) The extent to which the purposes of the easement program would 
be achieved on the land;
    (5) The productivity of the land; and

[[Page 821]]

    (6) The on-farm and off-farm environmental threats if the land is 
used for the production of agricultural commodities.
    (b) To the extent practicable, taking into consideration costs and 
future agricultural and food needs, NRCS shall give priority to:
    (1) Obtaining permanent easements over shorter term easements; and
    (2) Acquiring easements based on the value of the easement for 
protecting and enhancing habitat for migratory birds and other wildlife, 
in consultation with FWS.
    (c) NRCS, in consultation with the State Technical Committee, may 
place higher priority on certain geographic regions of the State where 
restoration of wetlands may better achieve State and regional goals and 
objectives.
    (d) Notwithstanding any limitation of this part, the State 
Conservationist may, at any time, exclude enrollment of 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 or ineligible to participate. The 
State Conservationist may coordinate with other Federal, State, and 
nonprofit organizations to encourage the restoration of wetlands on 
adjacent ineligible lands, especially in priority geographic areas.
    (e)(1) The Chief will conduct an assessment during fiscal year 2008 
and each subsequent fiscal year for the purpose of determining the 
interest and allocations for the Prairie Pothole Region to enroll land 
determined eligible under Sec. 1467.4(d)(5) of this part into 30-year 
easements. Annually, the Chief will provide specific instructions for 
the assessment in writing to the applicable State Conservationists.
    (2) The Chief will make an adjustment to the allocation for an 
applicable State for a fiscal year, based on the results of the 
assessment conducted under paragraph (e)(1) of this section for the 
State during the previous fiscal year.



Sec. 1467.7  Enrollment process.

    (a) Tentative Selection. Based on the priority ranking, NRCS will 
notify an affected landowner of tentative acceptance into the program.
    (b) Effect of notice of tentative selection. The notice of tentative 
acceptance into the program does not bind NRCS or the United States to 
enroll the proposed project in WRP, nor does it bind the landowner to 
continue with enrollment in the program. The notice informs the 
landowner of NRCS' intent to continue the enrollment process on their 
land unless otherwise notified by the landowner.
    (c) Acceptance and effect of offer of enrollment--(1) Easement. For 
applications requesting enrollment through an easement, an option 
agreement to purchase will be presented by NRCS to the landowner, which 
will describe the easement area; the easement compensation amount; the 
easement terms and conditions; and other terms and conditions for 
participation that may be required by NRCS as appropriate. The landowner 
accepts enrollment in the WRP by signing the option agreement to 
purchase. NRCS will continue with easement acquisition activities after 
the property has been enrolled.
    (2) Restoration cost-share agreement. For applications requesting 
enrollment through the restoration cost-share agreement option, a 
restoration cost-share agreement shall be presented by NRCS to the 
landowner, which will describe the enrolled area, the agreement terms 
and conditions, and other terms and conditions for participation that 
may be required by NRCS as appropriate. The landowner accepts enrollment 
in the WRP by signing the restoration cost-share agreement. NRCS will 
proceed with implementation of the WRPO after the property has been 
enrolled.
    (3) 30-year contract. For applications requesting enrollment through 
the 30-year contract option, a 30-year contract shall be presented by 
NRCS to the landowner, which will describe the contract area, the 
contract terms and conditions, and other terms and conditions for 
participation that may be required by NRCS as appropriate. The landowner 
accepts enrollment in the WRP by signing the 30-year contract. NRCS will 
proceed with implementation of the WRPO after the property has been 
enrolled.
    (d) Restoration responsibility and the scope of enrollment. (1) The 
enrollment

[[Page 822]]

document establishes the terms of enrollment consistent with the terms 
and conditions of this part, and identifies the:
    (i) Scope of the agreement between NRCS and the landowner;
    (ii) Basis for NRCS to obligate funds; and
    (iii) Nature and method through which NRCS will provide WRP 
technical and financial assistance to the landowner.
    (2) The option agreement to purchase between NRCS and the landowner 
under the easement option constitutes the agreement for:
    (i) Granting an easement on the enrolled land as set forth under 
Sec. 1467.11;
    (ii) Implementing a WRPO which provides for the restoration and 
protection of the functions and values of wetlands;
    (iii) Recording the easement in accordance with applicable State 
law; and
    (iv) Ensuring the title to the easement is superior to the rights of 
all others, except for exceptions to the title that are deemed 
acceptable by NRCS.
    (3) The terms of the easement identified in paragraph (d)(2)(i) of 
this section includes the landowner's agreement to the implementation of 
a WRPO identified in paragraph (d)(2)(ii) of this section. In 
particular, the easement deed identifies that NRCS has the right to 
enter the easement area to undertake, on a cost-share basis with the 
landowner or other entity, any activities to restore, protect, manage, 
maintain, enhance, and monitor the wetland and other natural values of 
the easement area.
    (4) At the time NRCS enters into an agreement to purchase, NRCS 
agrees, subject to paragraph (e) of this section, to acquire and provide 
for restoration of the land enrolled into the program.
    (e) Withdrawal of offer of enrollment Prior to execution of the 
easement deed by the United States and the landowner, NRCS may withdraw 
the land from enrollment at any time due to lack of availability of 
funds, inability to clear title, sale of the land, risk of hazardous 
substance contamination, or other reasons. The offer of enrollment to 
the landowner shall be void if not executed by the landowner within the 
time specified.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec. 1467.8  Compensation for easements and 30-year contracts.

    (a) Determination of easement payment rates. (1) Compensation for an 
easement under this part shall be made in cash in such amount as is 
agreed to and specified in the option agreement to purchase or 30-year 
contract.
    (2) Payments for non-permanent easements or 30-year contracts shall 
be not more than 75 percent of that which would have been paid for a 
permanent easement as determined by the methods listed in paragraph 
(a)(3) of this section.
    (3) NRCS shall pay as compensation the lowest of the following:
    (i) The fair market value of the land using the Uniform Standards 
for Professional Appraisal Practices, or based on an area-wide market 
analysis or survey;
    (ii) The geographic area rate cap determined under paragraph (a)(4) 
of this section; or
    (iii) The landowner offer.
    (4) The State Conservationist, in consultation with the State 
Technical Committee, shall establish one or more geographic area rate 
caps within a state. The State Conservationist shall submit geographic 
area rate caps and supporting documentation to the Chief for approval. 
Each State Conservationist will determine the geographic area rate cap 
using the best information which is readily available in that State. 
Such information may include: Soil types, type(s) of crops capable of 
being grown, production history, location, real estate market values, 
and tax rates and assessments.
    (b) Acceptance of offered easement compensation. (1) NRCS will not 
acquire any easement unless the landowner accepts the amount of the 
easement payment offered by NRCS. 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

[[Page 823]]

compensation based on fair market value.
    (2)(i) For easements or 30-year contracts valued at $500,000 or 
less, NRCS will provide compensation in up to 30 annual payments, as 
requested by the participant, as specified in the option agreement to 
purchase or 30-year contract between NRCS and the participant.
    (ii) For easements or 30-year contracts valued at more than 
$500,000, the Secretary may provide compensation in at least 5, but not 
more than 30 annual payments. NRCS may provide compensation in a single 
payment for such easements or 30-year contracts when, as determined by 
the Chief, it would further the purposes of the program. The applicable 
payment schedule will be specified in the option agreement to purchase, 
warranty easement deed, or 30-year contract between NRCS and the 
participant.
    (c) Reimbursement of a landowner's expenses. For completed easement 
conveyances, NRCS will reimburse participants for their fair and 
reasonable expenses, if any, incurred for legal boundary surveys and 
other related costs, as determined by NRCS. The State Conservationist, 
in consultation with the State Technical Committee, may establish 
maximum payments to reimburse participants for reasonable expenses, if 
incurred.
    (d) Tax implications of easement conveyances. Subject to applicable 
regulations of the Internal Revenue Service, a participant 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 participant. NRCS disclaims 
any representations concerning the tax implications of any easement or 
cost-share transaction.
    (e) Per acre basis calculations. If easement payments are calculated 
on a per acre basis, adjustment to stated easement payment will be made 
based on final determination of acreage.



Sec. 1467.9  Wetlands Reserve Enhancement Program.

    (a) Wetlands Reserve Enhancement Program (WREP). (1) The purpose of 
WREP is to target and leverage resources to address high priority 
wetlands protection, restoration, and enhancement objectives through 
agreements with States (including a political subdivision or agency of a 
State), nongovernmental organizations, and Indian Tribes.
    (2) Funding for WREP agreements will be announced in the Federal 
Register.
    (i) The announcement will provide details on the priorities for 
funding, required level of partner matching funds, ranking criteria, 
level of available funding, and additional criteria as determined by the 
Chief.
    (ii) The Chief will determine the funding level for WREP on an 
annual basis. Funds for WREP are derived from funds available for WRP.
    (3) Proposals will be submitted to the State Conservationist of the 
State in which the majority of the project area resides.
    (i) State Conservationists will evaluate proposals based on the 
ranking criteria established in the announcement and provide proposals 
recommended for funding to the Chief.
    (ii) The Chief will evaluate proposals recommended for funding and 
make final funding selections, in accordance with ranking factors 
identified in the announcement.
    (4) Selected proposals and associated funding will be provided to 
the State Conservationist to enter into WREP agreements with the 
eligible partner to carry out the project.
    (b) Reserved Rights Pilot. (1) The Chief shall carry out a reserved 
rights pilot subject to the requirements established in this part.
    (2) Under the reserved rights pilot, a landowner may reserve grazing 
rights in the warranty easement deed or 30-year contract, if the State 
Conservationist determines that the reservation and use of the grazing 
rights:
    (i) Is compatible with the land subject to the easement or 30-year 
contract; and
    (ii) Is consistent with the long-term wetland protection and 
enhancement goals for which the easement or 30-year contract was 
established; and
    (iii) Complies with a WRPO developed with NRCS.

[[Page 824]]

    (3) The State Conservationist will provide public notice of the 
availability of the reserved rights pilot and the reserved rights 
template deed or 30-year contract, approved by the Chief, to be used in 
the pilot.
    (4) Compensation for easements or 30-year contracts entered into 
under the reserved rights pilot will be based on the method described in 
Sec. 1467.8 with the following exceptions:
    (i) Section 1467.8(a)(3)(i) is adjusted to reduce the fair market 
value of the land by an amount equal to the value of the retained 
grazing rights as determined by a Uniform Standards for Professional 
Appraisal Practices appraisal or a market survey; and
    (ii) Section 1467.8(a)(3)(ii) is adjusted to reduce the geographic 
area rate cap determined as described in Sec. 1467.8(a)(4) by an amount 
equal to the value of the retained grazing rights.



Sec. 1467.10  Cost-share payments.

    (a) NRCS may share the cost with participants of implementing the 
WRPO on the enrolled land. 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 conservation practices or 
activities specified in the WRPO:
    (1) On enrolled land subject to a permanent easement, NRCS will 
offer to pay at least 75 percent but not more than 100 percent of such 
costs; and
    (2) On enrolled land subject to a non-permanent easement, 30-year 
contract, or restoration cost-share agreement, NRCS will offer to pay at 
least 50 percent but not more than 75 percent of such costs.
    (3) The total amount of payments that a person or legal entity may 
receive, directly or indirectly, for one or more restoration cost-share 
agreements, for any year, may not exceed $50,000.
    (b) Cost-share payments may be made only upon a determination by 
NRCS that an eligible conservation practice or component of the 
conservation practice has been implemented in compliance with 
appropriate NRCS standards and specifications; or an eligible activity 
has been implemented in compliance with the appropriate requirements 
detailed in the WRPO. Identified conservation practices or activities 
may be implemented by the participant, NRCS, or other NRCS designee.
    (c) Cost-share payments may be made for replacement of an eligible 
conservation practice, if NRCS determines that the practice is still 
needed and that the failure of the original conservation practice was 
due to reasons beyond the control of the participant.
    (d) A participant may seek additional cost-share assistance from 
other public or private organizations as long as the conservation 
practices or activities funded are in compliance with this part. In no 
event shall the participant receive an amount that exceeds 100 percent 
of the total actual cost of the restoration.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec. 1467.11  Easement and 30-year contract participation requirements.

    (a) Easement requirements. (1) To enroll land in WRP through the 
permanent or non-permanent easement option, 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.
    (2) For the duration of its term, the easement shall require, at a 
minimum, that the participant, and the participant's heirs, successors 
and assigns, shall, consistent with the terms of this part, cooperate in 
the restoration, protection, enhancement, maintenance, and management of 
the land in accordance with the warranty easement deed and with the 
terms of the WRPO. In addition, the easement shall grant to the United 
States, through NRCS:
    (i) A right of access to the easement area;
    (ii) 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

[[Page 825]]

and enhancement of the wetland resources for which the easement was 
established;
    (iii) All rights, title and interest in the easement area; and
    (iv) The right to restore, protect, enhance, maintain, and manage 
activities on the easement area.
    (3) The participant shall convey title to the easement in a manner 
that is acceptable to NRCS. The participant shall warrant that the 
easement granted to the United States is superior to the rights of all 
others, except for exceptions to the title that are deemed acceptable by 
NRCS.
    (4) The participant shall:
    (i) Comply with the terms of the easement;
    (ii) Comply with all terms and conditions of any associated contract 
or agreement;
    (iii) 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 FSA;
    (iv) 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;
    (v) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any participant 
responsibilities on the easement area; and
    (vi) Agree that each person or legal entity that 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.
    (b) 30-year contract requirements. (1) To enroll land in WRP through 
the 30-year contract option, a landowner shall enter into a contract 
with NRCS. The contract shall require that the enrolled area be 
maintained in accordance with WRP goals and objectives for the duration 
of the contract, including the restoration, protection, enhancement, 
maintenance, and management of wetland and other land functions and 
values.
    (2) For the 30-year duration, the contract shall require, at a 
minimum, that the participant, and the participant's heirs, successors 
and assigns, shall, consistent with the terms of this part, cooperate in 
the restoration, protection, enhancement, maintenance, and management of 
the land in accordance with the contract and with the terms of the WRPO. 
In addition, the contract shall grant to NRCS:
    (i) A right of access to the contract area;
    (ii) The right to permit compatible uses of the contract area, 
including such activities as a traditional Tribal use of the land, 
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 contract was 
established; and
    (iii) The right to restore, protect, enhance, maintain, and manage 
activities on the enrolled area.
    (3) The participant shall:
    (i) Comply with the terms of the contract;
    (ii) Comply with all terms and conditions of any associated 
agreement;
    (iii) Agree to the long-term restoration, protection, enhancement, 
maintenance, and management of the enrolled area in accordance with the 
terms of the contract and related agreements;
    (iv) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any participant 
responsibilities on the enrolled area;
    (v) Agree that each person or legal entity that is subject to the 
contract shall be jointly and severally responsible for compliance with 
the contract 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 contract or the provisions of this part.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26284, June 2, 2009]



Sec. 1467.12  The WRPO development.

    (a) The development of the WRPO will be made through the local NRCS 
representative, in consultation with the State Technical Committee, with 
consideration of site-specific technical

[[Page 826]]

input from FWS and the Conservation District.
    (b) The WRPO will 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 will be developed to 
ensure that cost-effective restoration and maximization of wildlife 
benefits and wetland functions and values will result. Specifically, the 
WRPO will consider and address, to the extent practicable, the on-site 
alternations and the off-site watershed conditions that adversely impact 
the hydrology and associated wildlife and wetland functions and values. 
NRCS will review, revise, and supplement the WRPO as needed throughout 
the duration of the enrollment to ensure that program goals are fully 
and effectively achieved.

[74 FR 2328, Jan. 15, 2009, as amended at 74 FR 26285, June 2, 2009]



Sec. 1467.13  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 participant. The Chief will consult with FWS 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 or when adverse impacts 
will be mitigated by enrollment and restoration of other lands that 
provide greater wetland functions and values at no additional cost to 
the government.
    (4) Modifications must result in equal or greater environmental and 
economic values to the United States and address a compelling public 
need, as determined by the Chief.
    (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 
participant and with consideration of site specific technical input from 
the FWS and the Conservation District. Any WRPO modification must meet 
WRP regulations and program objectives, comply with the definition of 
wetland restoration as defined in Sec. 1467.3, must result in equal or 
greater wildlife benefits, wetland functions and values, and ecological 
and economic values to the United States.



Sec. 1467.14  Transfer of land.

    (a) Offers voided. Any transfer of the property prior to the 
enrollment of the easement, 30-year contract, or restoration cost-share 
agreement contract, including the landowner entering into a contract or 
purchase agreement to sell the land subject to offer, shall void the 
offer of enrollment.
    (b) Payments to landowners. For easements with multiple annual 
payments, any remaining easement payments will be made to the original 
participant unless NRCS receives an assignment of proceeds.
    (c) Claims to payments. With respect to any and all payments owed to 
participants, NRCS shall bear no responsibility for any full payments or 
partial distributions of funds between the original participant and the 
participant's successor. In the event of a dispute or claim on the 
distribution of cost-share payments, NRCS may withhold payments without 
the accrual of interest pending an agreement or adjudication on the 
rights to the funds.



Sec. 1467.15  Violations and remedies.

    (a) Easement violations. (1) In the event of a violation of the 
easement, 30-year contract, or any restoration cost-share agreement 
involving the participant, the participant 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 determines is necessary to correct the violation at the 
landowner's expense.

[[Page 827]]

    (2) Notwithstanding paragraph (a)(1) of this section, NRCS 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 NRCS when such actions are deemed necessary to protect 
important wetland functions and values or other rights of the United 
States under the easement. The participant shall be liable for any costs 
incurred by the United States as a result of the participant's 
negligence or failure to comply with easement or contractual 
obligations.
    (3) At any time there is a material breach of the easement covenants 
or any associated agreement, the easement shall remain in force and NRCS 
may withhold or require the refund of any easement and cost-share 
payments owed or paid to participants. Such withheld or refunded 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. This remedy is in addition to any and all legal or 
equitable remedies available to the United States under applicable 
Federal or State law.
    (4) 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.
    (b) 30-year Contract and Restoration Cost-Share Agreement 
violations. (1) If the NRCS determines that a participant is in 
violation of the terms of a 30-year contract, or restoration cost-share 
agreement, or documents incorporated by reference into the 30-year 
contract or restoration cost-share agreement, the participant 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 determines is necessary to correct the 
violation. If the violation continues, the State Conservationist may 
terminate the 30-year contract or restoration cost-share agreement.
    (2) Notwithstanding the provisions of paragraph (b)(1) of this 
section, a restoration cost-share agreement or 30-year contract 
termination is effective immediately upon a determination by the State 
Conservationist that the participant has:
    (i) Submitted false information;
    (ii) Filed a false claim;
    (iii) Engaged in any act for which a finding of ineligibility for 
payments is permitted under this part; or
    (iv) Taken actions NRCS deems to be sufficiently purposeful or 
negligent to warrant a termination without delay.
    (3) If NRCS terminates a restoration cost-share agreement or 30-year 
contract, the participant will forfeit all rights for future payments 
under the restoration cost-share agreement or 30-year contract, and must 
refund all or part, as determined by NRCS, of the payments received, 
plus interest.



Sec. 1467.16  Payments not subject to claims.

    Any cost-share, contract, 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. 1467.17  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. 1467.18  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 administrative 
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 the NRCS under these procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by the NRCS in determining

[[Page 828]]

property value are considered confidential information, and shall only 
be disclosed as determined at the sole discretion of the NRCS in 
accordance with applicable law.
    (d) Enforcement actions undertaken by the NRCS in furtherance of its 
federally held property rights are under the jurisdiction of the federal 
courts and not subject to review under administrative appeal 
regulations.



Sec. 1467.19  Scheme and device.

    (a) If it is determined by the NRCS that a participant has employed 
a scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid such participant during the 
applicable period may be withheld or be required to be refunded with 
interest thereon, as determined appropriate by NRCS.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices, contracts, or easements for the purpose of 
obtaining a payment to which a person would otherwise not be entitled.
    (c) A participant who succeeds to the responsibilities under this 
part shall report in writing to the NRCS 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.



Sec. 1467.20  Market-based conservation initiatives.

    (a) Acceptance and use of contributions. Section 1241(e) of the Food 
Security Act of 1985, as amended, (16 U.S.C. 3841(e)), allows the Chief 
to accept and use contributions of non-Federal funds to support the 
purposes of the program. These funds shall be available without further 
appropriation and until expended, to carry out the program.
    (b) Ecosystem Services Credits for Conservation Improvements. (1) 
USDA recognizes that environmental benefits will be achieved by 
implementing conservation practices and activities funded through WRP, 
and that environmental credits may be gained as a result of implementing 
activities compatible with the purposes of a WRP easement, 30-year 
contract, or restoration cost-share agreement. NRCS asserts no direct or 
indirect interest in these credits. However, NRCS retains the authority 
to ensure that the requirements of the WRPO, contract, and easement deed 
are met. Where activities required under an environmental credit 
agreement may affect land covered under a WRP easement, 30-year 
contract, or restoration cost-share agreement, participants are highly 
encouraged to request a compatibility assessment from NRCS prior to 
entering into such agreements.
    (2) Section 1222(f)(2) of the Food Security Act of 1985 as amended, 
does not allow wetlands restored with Federal funds to be utilized for 
Food Security Act wetland mitigation purposes.



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.

[[Page 829]]


    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;
    (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

[[Page 830]]

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 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 National 
Institute of Food and Agriculture (NIFA), 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

[[Page 831]]

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.

[63 FR 51786, Sept. 29, 1998, as amended at 76 FR 4806, Jan. 27, 2011]



Sec. 1468.4  Establishing Conservation Farm Option (CFO) pilot project areas.

    (a) CCC may periodically solicit proposals from the public to 
establish pilot project areas in the Federal Register.
    (b) Pilot projects may involve one or more participants. Each owner 
or producer within an approved pilot project area must submit an 
application in order to be considered for enrollment in the CFO. This 
pilot project area may be a watershed, a subwatershed, an area, or an 
individual farm that can be geographically described and has specific 
environmental sensitivities or significant soil, water, and related 
natural resource concerns. The pilot project area must have acreage 
enrolled in a production flexibility contract, which is authorized by 
the Agricultural Marketing and Transition Act of 1996. After these pilot 
project area proposals are received, the Chief, with FSA concurrence, 
will select proposals for funding.
    (c) CCC will select pilot project areas based on the extent the 
individual proposal:
    (1) Demonstrates innovative approaches to conservation program 
delivery and administration;
    (2) Proposes innovative conservation technologies and system;
    (3) Provides assurances that the greatest amount of environmental 
benefits will be delivered in a cost effective manner;
    (4) Ensures effective monitoring and evaluation of the pilot effort;
    (5) Considers multiple stakeholder participation (partnerships) 
within the pilot area;
    (6) Provides additional non-Federal funding; and
    (7) Addresses the following:
    (i) Conservation of soil, water, and related natural resources,
    (ii) Water quality protection or improvement,
    (iii) Wetland restoration and protection, and
    (iv) Wildlife habitat development and protection,
    (v) Or other similar conservation purposes.



Sec. 1468.5  General provisions.

    (a) Program participation is voluntary.
    (b) Participation in the CFO is limited to producers of wheat, feed 
grains, cotton, or rice who have a production flexibility contract, in 
accordance with part 1412 of this chapter, on the farm enrolling in CFO 
and who are eligible for either CRP (7 CFR part 1410), EQIP (7 CFR part 
1466), or WRP (7 CFR part 1467).
    (c) The participant is responsible for the development of a 
conservation farm plan for the farm or ranch and may request assistance 
from NRCS or a third party in writing both the conservation farm plan 
and installing the

[[Page 832]]

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, 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

[[Page 833]]

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 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.

[[Page 834]]

    (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 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

[[Page 835]]

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 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);

[[Page 836]]

    (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.
    (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,

[[Page 837]]

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 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.

[[Page 838]]



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 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 1469_CONSERVATION SECURITY PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1469.1 Applicability.
1469.2 Administration.
1469.3 Definitions.
1469.4 Significant resource concerns.
1469.5 Eligibility requirements.
1469.6 Enrollment criteria and selection process.
1469.7 Benchmark condition inventory and conservation stewardship plan.
1469.8 Conservation practices and activities.
1469.9 Technical assistance.

                    Subpart B_Contracts and Payments

1469.20 Application for contracts.
1469.21 Contract requirements.
1469.22 Conservation practice operation and maintenance.
1469.23 Program payments.
1469.24 Contract modifications and transfers of land.
1469.25 Contract violations and termination.

                    Subpart C_General Administration

1469.30 Fair treatment of tenants and sharecroppers.
1469.31 Appeals.
1469.32 Compliance with regulatory measures.
1469.33 Access to agricultural operation.
1469.34 Performance based on advice or action of representatives of 
          NRCS.
1469.35 Offsets and assignments.
1469.36 Misrepresentation and scheme or device.

    Authority: 16 U.S.C. 3830 et seq.

    Source: 70 FR 15212, Mar. 25, 2005, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1469.1  Applicability.

    (a) This part sets forth the policies, procedures, and requirements 
for the Conservation Security Program (CSP) as administered by the 
Natural Resources Conservation Service (NRCS) for enrollment during 
calendar year 2004 and thereafter.
    (b) CSP is applicable only on privately owned or Tribal lands in any 
of the 50 States, the District of Columbia, the Commonwealth of Puerto 
Rico,

[[Page 839]]

Guam, the Virgin Islands of the United States, American Samoa, and the 
Commonwealth of the Northern Marianna Islands.
    (c) The Commodity Credit Corporation (CCC), by and through the NRCS, 
provides financial assistance and technical assistance to participants 
for the conservation, protection, and improvement of soil, water, and 
other related resources, and for any similar conservation purpose as 
determined by the Secretary.



Sec. 1469.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief, Natural Resources 
Conservation Service (NRCS), who is a Vice President of the CCC.
    (b) The Chief may modify or waive a provision of this part if the 
Chief determines that the application of such provision to a particular 
limited situation is inappropriate and inconsistent with the goals of 
the program.
    (c) The Chief determines fund availability to provide financial and 
technical assistance to participants according to the purpose and 
projected cost of contracts in a fiscal year. The Chief allocates the 
funds available to carry out CSP to the NRCS State Conservationist. 
Contract obligations will not exceed the funding available to the 
Agency.
    (d) The State Conservationist may obtain advice from the State 
Technical Committee and local workgroups on the development of State 
program technical policies, payment related matters, outreach efforts, 
and other program issues.
    (e) NRCS may enter into agreements with Federal agencies, State and 
local agencies, conservation districts, Indian Tribes, private entities, 
and individuals to assist NRCS with educational efforts, outreach 
efforts, and program implementation assistance.
    (f) For lands under the jurisdiction of an Indian Tribe or Tribal 
Nation, certain items identified in paragraph (d) of this section may be 
determined by the Indian Tribe or Tribal Nation and the NRCS Chief.



Sec. 1469.3  Definitions.

    The following definitions apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Activity means an action other than a conservation practice that is 
included as a part of a conservation stewardship contract; such as a 
measure, incremental movement on a conservation index or scale, or an 
on-farm demonstration, pilot, or assessment.
    Agricultural land means cropland, rangeland, pastureland, hayland, 
private non-industrial forest land if it is an incidental part of the 
agricultural operation, and other land on which food, fiber, and other 
agricultural products are produced. Areas used for strip-cropping or 
alley-cropping and silvopasture practices will be included as 
agricultural land. This includes land of varying cover types, primarily 
managed through a low input system, for the production of food, fiber or 
other agricultural products.
    Agricultural operation means all agricultural land and other lands 
determined by the Chief, whether contiguous or noncontiguous, under the 
control of the applicant and constituting a cohesive management unit, 
that is operated with equipment, labor, accounting system, and 
management that is substantially separate from any other. The minimum 
size of an agricultural operation is a field.
    Applicant means a producer as defined in this rule who has requested 
in writing to participate in CSP.
    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, as defined in 7 U.S.C. 
1991(a). 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, solely, 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

[[Page 840]]

the county or State where the farm is located.
    (ii) In the case of a contract with an entity, 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.
    Benchmark condition inventory means the documentation of the 
resource condition or situation pursuant to Sec. 1469.7(a) that NRCS 
uses to measure an applicant's existing level of conservation activities 
in order to determine program eligibility, to design a conservation 
stewardship contract, and to measure the change in resource conditions 
resulting from conservation treatment.
    Certified Conservation Planner means an individual certified by NRCS 
who possesses the necessary skills, training, and experience to 
implement the NRCS nine-step planning process to meet client objectives 
in solving natural resource problems. The certified conservation planner 
has demonstrated skill in assisting producers to identify resource 
problems, to express the client's objectives, to propose feasible 
solutions to resource problems, and assists the producers select and 
implement an effective alternative that treats resource concerns and 
consistent with client's objectives.
    Chief means the Chief of NRCS, USDA or designee.
    Conservation district means any district or unit of State or local 
government formed under State, territorial, or Tribal law for the 
express purpose of developing and carrying out a local soil and water 
conservation program. Such a 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 practice means a specified treatment, such as a 
structural or land management practice, that is planned and applied 
according to NRCS standards and specifications.
    Conservation Reserve Program (CRP) means the Commodity Credit 
Corporation program administered by the Farm Service Agency pursuant to 
16 U.S.C. 3831-3836.
    Conservation stewardship contract means a legal document that 
specifies the rights and obligations of any participant who has been 
accepted to receive assistance through participation in CSP.
    Conservation stewardship plan means the conservation planning 
document that builds on the inventory of the benchmark condition 
documenting the conservation practices currently being applied; those 
practices needing to be maintained; and those practices, treatments, or 
activities to be supported under the provisions of the conservation 
stewardship contract.
    Conservation system means a combination of conservation practices, 
measures and treatments for the treatment of soil, water, air, plant, or 
animal resource concerns.
    Conservation treatment means any and all conservation practices, 
measures, and works of improvement that have the purpose of alleviating 
resource concerns, solving or reducing the severity of natural resource 
use problems, or taking advantage of resource opportunities.
    Considered to be planted means a long term rotation of alfalfa or 
multi-year grasses and legumes; summer fallow; typically cropped wet 
areas, such as rice fields, rotated to wildlife habitat; or crops 
planted to provide an adequate seedbed for re-seeding.
    Cropland means a land cover/use category that includes areas used 
for the production of adapted crops for harvest, including but not 
limited to land in row crops or close-grown crops, forage crops that are 
in a rotation with row or close-grown crops, permanent hayland, 
horticultural cropland, orchards, and vineyards.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for administration of CSP 
in a specific area.

[[Page 841]]

    Enhancement payment means CSP payments available to all tiers as 
described in Sec. 1469.23(d).
    Enrollment categories means a classification system used to sort out 
applications for payment. The enrollment category mechanism will create 
distinct classes for funding defined by resource concerns, levels of 
treatment, and willingness to achieve additional environmental 
performance.
    Existing practice component of CSP payments means the component of a 
CSP payment as described in Sec. 1469.23(b).
    Field means a part of an agricultural operation which is separated 
from the balance of the agricultural operation by permanent boundaries, 
such as fences, permanent waterways, woodlands, and crop-lines in cases 
where farming practices make it probable that such crop-line is not 
subject to change, or other similar features.
    Field Office Technical Guide (FOTG) means the official local NRCS 
source of resource information and the 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. Guides 
can be reviewed at the local USDA Service Center or online athttp://
www.nrcs.usda.gov/technical/efotg.
    Forage and animal balance means that the total amount of available 
grazing forage and the addition of any roughage supply (hay, silage, or 
green chop) is balanced with the amount consumed by the total number of 
livestock and wildlife to meet their daily consumption needs.
    Forest land means a land cover/use category that is at least 10 
percent stocked by single-stemmed woody species of any size that will be 
at least 4 meters (13 feet) tall at maturity. Also included is land 
bearing evidence of natural regeneration of tree cover (cut over forest 
or abandoned farmland) that is not currently developed for nonforest 
use. Ten percent stocked, when viewed from a vertical direction, equates 
to an aerial canopy cover of leaves and branches of 25 percent or 
greater. The minimum area for classification as forest land is 1 acre, 
and the area must be at least 100 feet wide. Exceptions may be made by 
the Chief for land primarily managed through a low-input system for 
food, fiber or other agricultural products.
    Hayland means a subcategory of ``cropland'' managed for the 
production of forage crops that are machine harvested. The crop may be 
grasses, legumes, or a combination of both.
    Incidental forest land means forested land that includes all 
nonlinear forested riparian areas (i.e., bottomland forests), and small 
associated woodlots located within the bounds of working agricultural 
land or small adjacent areas and that are managed to maximize wildlife 
habitat values and are within the NRCS FOTG standards for a wildlife 
practice. However, silvopasture that meets NRCS practice standards will 
be considered as pasture or range land and not incidental forestland 
since silvopasture is one type of intense grazing system. Areas of 
incidental forest land that are not part of a linear conservation 
practice are limited individually in size to 10 acres or less and 
limited to 10 percent in congregate of the total offered acres.
    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 
recognized as eligible for the special programs and services provided by 
the United States to Indians because of their status as Indians.
    Indian trust lands means real property in which:
    (1) The United States holds title as trustee for an Indian or Tribal 
beneficiary; or
    (2) An Indian or Tribal beneficiary holds title and the United 
States maintains a trust relationship.
    Joint operation means a general partnership, joint venture, or other 
similar business arrangement as defined in 7 CFR 718.2.
    Land cover/use means a term that includes categories of land cover 
and categories of land use. Land cover is the vegetation or other kind 
of material

[[Page 842]]

that covers the land surface. Land use is the purpose of human activity 
on the land; it is usually, but not always, related to land cover. The 
National Resources Inventory uses the term land cover/use to identify 
categories that account for all the surface area of the United States.
    Land management practice means conservation practices and measures 
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, energy management, manure management, integrated pest 
management, integrated crop management, resource conserving crop 
rotations, irrigation water management, tillage or residue management, 
stripcropping, contour farming, grazing management, and wildlife habitat 
management.
    Limited resource producer means a producer:
    (1) 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) Who 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 2 years (to be 
determined annually using Commerce Department Data).
    Liquidated damages means a sum of money stipulated in the 
conservation stewardship 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.
    Local work group means representatives of local offices of FSA, the 
National Institute of Food and Agriculture, the conservation district, 
and other Federal, State, and local government agencies, including 
Indian Tribes, with expertise in natural resources who advise NRCS on 
decisions related to implementation of USDA conservation programs.
    Maintenance means work performed to keep the applied conservation 
practice functioning for the intended purpose during its life span. 
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.
    Management intensity means the degree and scope of practices or 
measures taken by a producer which are beyond the quality criteria for a 
given resource concern or beyond the minimum requirements of a 
management practice, and which may qualify as additional effort 
necessary to receive an enhancement payment.
    Measure means one or more specific actions that is not a 
conservation practice, but has the effect of alleviating problems or 
improving the treatment of the resources.
    Minimum level of treatment means the specific conservation treatment 
NRCS requires that addresses a resource concern to a level that meets or 
exceeds the quality criteria according to NRCS technical guides or the 
minimum tier requirements to address resource concerns as defined in 
Sec. 1469.5(e).
    Nationally significant resource concerns means the significant 
resource concerns identified by NRCS in this rule and in the sign-up 
notice as basic program eligibility requirements.
    New practice payment means the payment as described in Sec. 
1469.23(c).
    Operator means an individual, entity, or joint operation who is in 
general control of the farming operations on the farm at the time of 
application.
    Participant means a producer who is accepted into CSP and any 
signatory to a CSP contract.
    Pastured cropland means a land cover/use category that includes 
areas used for the production of pasture in grass-based livestock 
production systems that could support adapted crops for harvest, 
including but not limited to land in row crops or close-grown crops, and 
forage crops that are in a rotation with row or close-grown crops.

[[Page 843]]

Pastured cropland will receive the same stewardship payment as cropland.
    Pastureland means a land cover/use category of land managed 
primarily for the production of introduced forage plants for grazing 
animals and includes improved pasture. Pastureland cover may consist of 
a single species in a pure stand, a grass mixture, or a grass-legume 
mixture. Management usually consists of cultural treatments: 
fertilization, weed control, reseeding or renovation, and control of 
grazing.
    Practice life span means the time period in which the conservation 
practices are to be used and maintained for their intended purposes as 
defined by NRCS technical references.
    Priority resource concern means nationally significant resource 
concerns and local resource concerns, approved by the Chief, for which 
enhancement payments will be available.
    Producer means an owner, operator, landlord, tenant, or sharecropper 
who shares in the risk of producing any crop or livestock; and is 
entitled to share in the crop or livestock available for marketing from 
a farm (or would have shared had the crop or livestock been produced).
    Quality criteria means the minimally acceptable level of treatment 
as defined in the technical guide of NRCS, required to achieve a 
resource management system for identified resource considerations for a 
particular land use.
    Rangeland means a land cover/use category on which the climax or 
potential plant cover is composed principally of native grasses, 
grasslike plants, forbs, or shrubs suitable for grazing and browsing, 
and introduced forage species that are managed like rangeland. This term 
would include areas where introduced hardy and persistent grasses are 
planted and such practices as deferred grazing, burning, chaining, and 
rotational grazing are used, with little or no chemicals or fertilizer 
being applied. Grasslands, savannas, prairie, many wetlands, some 
deserts, tundra, coastal marshes and wet meadows are considered to be 
rangeland. Certain communities of low forbs and shrubs, such as 
mesquite, chaparral, mountain shrub, and pinyon-juniper, are also 
included as rangeland.
    Resource concern means the condition of natural resources that may 
be sensitive to change by natural forces or human activity. Resource 
concerns include the resource considerations listed in Section III of 
the FOTG, such as soil erosion, soil condition, soil deposition, water 
quality, water quantity, animal habitat, air quality, air condition, 
plant suitability, plant condition, plant management, and animal habitat 
and management.
    Resource-conserving crop rotation means a crop rotation that reduces 
erosion, maintains or improves soil fertility and tilth, interrupts pest 
cycles, or conserves soil moisture and water and that includes at least 
one resource-conserving crop, such as a perennial grass, a legume grown 
for use as forage, seed for planting, or green manure, a legume-grass 
mixture, a small grain grown in combination with a grass or legume, 
whether inter-seeded or planted in rotation.
    Resource management system means a system of conservation practices 
and management relating to land or water use that is designed to prevent 
resource degradation and permit sustained use of land, water, and other 
natural resources, as defined in accordance with the technical guide of 
NRCS.
    Secretary means the Secretary of the U.S. Department of Agriculture.
    Sharecropper means 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.
    Sign-up notice means the public notification document that NRCS 
provides to describe the particular requirements for a specific CSP 
sign-up.
    Significant resource concerns means the list of resource concerns, 
identified by NRCS, associated with an agricultural operation that is 
subject to applicable requirements under CSP, such as the additional 
Tier II contract requirement.
    Soil quality means resource concerns and/or opportunities related to 
depletion of soil organic matter content through soil disturbance or by 
sheet, rill, and wind erosion, and the physical

[[Page 844]]

condition of the soil relative to ease of tillage, fitness as a seedbed, 
the impedance to seedling emergence or root penetration, salinity, and 
overall soil productivity.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities within a specified State, the Pacific 
Basin, or the Caribbean Area.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Stewardship payment means the CSP base payment component of the 
payment as described in Sec. 1469.23(a).
    Structural practice means a land-based 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, 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 activities as defined in 7 CFR part 
1466.
    Technical Service Provider means an individual, private-sector 
entity, or public agency certified or approved by NRCS to provide 
technical services through NRCS or directly to program participants, as 
defined in 7 CFR part 652.
    Tenant means one who rents land from another in consideration of the 
payment of a specified amount of cash or amount of a commodity; or one 
(other than a sharecropper) who rents land in consideration of the 
payment of a share of the crops or proceeds there from.
    Tier means one of the three levels of participation in CSP.
    Water quality means resource concerns or opportunities, including 
concerns such as excessive nutrients, pesticides, sediment, 
contaminants, pathogens and turbidity in surface waters, and excessive 
nutrients and pesticides in ground waters, and any other concerns 
identified by state water quality agencies.
    Watershed or regional resource conservation plan means a plan 
developed for a watershed or other geographical area defined by the 
stakeholders. The plan addresses identified resource problems, contains 
alternative solutions that meet the stakeholder objectives for each 
resource, and addresses applicable laws and regulations as defined in 
the NRCS National Planning Procedures Handbook.
    Wetlands Reserve Program (WRP) means the Commodity Credit 
Corporation program administered by NRCS pursuant to 16 U.S.C. 3837-
3837f.

[70 FR 15212, Mar. 25, 2005, as amended at 76 FR 4806, Jan. 27, 2011]



Sec. 1469.4  Significant resource concerns.

    (a) Soil quality and water quality are nationally significant 
resource concerns for all land uses.
    (b) For each sign-up, the Chief may determine additional nationally 
significant resource concerns for all land uses. Such significant 
resource concerns will reflect pressing conservation needs and emphasize 
off-site environmental benefits. In addition, the Chief may approve 
other priority resource concerns for which enhancement payments will be 
offered for specific locations and land uses.



Sec. 1469.5  Eligibility requirements.

    (a) In general--To be eligible to participate in CSP:
    (1) Applicants must meet the requirements for eligible applicants, 
including any additional eligibility criteria and contract requirements 
that may be included in a CSP sign-up notice pursuant to Sec. 
1469.6(c);
    (2) Land must meet the definition of eligible land; and
    (3) The application must meet the conservation standards established 
pursuant to this section.
    (b) Applicants may submit only one application for each sign-up. 
Producers who are participants in an existing conservation stewardship 
contract are not eligible to submit another application.
    (c) Eligible applicants. To be eligible to participate, an applicant 
must--

[[Page 845]]

    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found in 7 CFR Part 12;
    (2) Have control of the land for the life of the proposed contract 
period.
    (i) The Chief may make an exception for 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; and
    (ii) If the applicant is a tenant, the applicant must provide NRCS 
with the written evidence or assurance of control from the landowner;
    (3) Share in risk of producing any crop or livestock and be entitled 
to share in the crop or livestock available for marketing from the 
agricultural operation (landlords and owners are ineligible to submit an 
application for exclusively cash rented agricultural operations);
    (4) Complete a benchmark condition inventory for the entire 
agricultural operation or the portion being enrolled in accordance with 
Sec. 1469.7(a); and
    (5) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to information 
related to eligibility criteria in the sign-up notice, and information 
to verify the applicant's status as a beginning or a limited resource 
farmer or rancher.
    (d) Eligible land:
    (1) To be eligible for enrollment in CSP, land must be:
    (i) Private agricultural land;
    (ii) Private non-industrial forested land that is an incidental part 
of the agricultural operation;
    (iii) Agricultural land that is Tribal, allotted, or Indian trust 
land;
    (iv) Other incidental parcels, as determined by NRCS, which may 
include, but are not limited to, land within the bounds of working 
agricultural land or small adjacent areas (such as center pivot corners, 
field borders, linear practices, turn rows, intermingled small wet areas 
or riparian areas); or
    (v) Other land on which NRCS determines that conservation treatment 
will contribute to an improvement in an identified natural resource 
concern, including areas outside the boundary of the agricultural land 
such as farmsteads, ranch sites, barnyards, feedlots, equipment storage 
areas, material handling facilities, and other such developed areas. 
Other land must be treated in Tier III contracts; and
    (vi) A majority of the agricultural operation must be within a 
watershed selected for sign-up.
    (2) The following land is not eligible for enrollment in CSP:
    (i) Land enrolled in the Conservation Reserve Program;
    (ii) Land enrolled in the Wetlands Reserve Program;
    (iii) Land enrolled in the Grassland Reserve Program;
    (iv) Public land including land owned by a Federal, State or local 
unit of government;
    (v) Land referred to in paragraphs (d)(2)(i), (ii) (iii) and (iv) of 
this section may not receive CSP payments, but the conservation work on 
this land may be used to determine if an applicant meets the minimum 
level of treatment on the eligible land and may be described in the 
conservation stewardship plan.
    (3) The following land is not eligible for any payment component in 
CSP: Land that is used for crop production after May 13, 2002, that had 
not been planted, considered to be planted, or devoted to crop 
production, as determined by NRCS, for at least 4 of the 6 years 
preceding May 13, 2002.
    (4) Delineation of the agricultural operation.
    (i) The applicant will delineate the agricultural operation to 
include all agricultural lands, other incidental parcels identified in 
paragraph (d)(1)(iv) of this section, and other lands, identified in 
paragraph (d)(1)(v) of this section under the control of the applicant 
and constituting a cohesive management unit, and is operated with 
equipment, labor, accounting system, and management that is 
substantially separate from any other land.
    (ii) In delineating the agricultural operation, USDA farm boundaries 
may be used. If farm boundaries are used in the application, the entire 
farm area must be included within the delineation. An applicant may 
offer one farm or aggregate farms into one agricultural operation and 
any other additional eligible land not within a farm boundary.

[[Page 846]]

    (e) Conservation standards--(1) Minimum tier eligibility 
requirements:
    (i) An applicant is eligible to participate in CSP Tier I only if 
the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed the nationally significant 
resource concerns of Water Quality and Soil Quality to the minimum level 
of treatment as specified in paragraphs (e)(2) and (3) of this section 
on part of the eligible land uses within the agricultural operation. 
Only the acreage meeting such requirements is eligible for stewardship 
and existing practice payments in CSP.
    (ii) An applicant is eligible to participate in CSP Tier II only if 
the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed the nationally significant 
resource concerns of water quality and soil quality to the minimum level 
of treatment as specified in paragraphs (e)(2) and (3) of this section 
for all eligible land uses on the entire agricultural operation. Under 
Tier II, the entire agricultural operation must be enrolled in CSP.
    (iii) An applicant is eligible to participate in CSP Tier III only 
if the benchmark condition inventory demonstrates to the satisfaction of 
NRCS that the applicant has addressed all of the applicable resource 
concerns to the minimum level of treatment as specified in paragraph 
(e)(4) of this section for all eligible land uses on the entire 
agricultural operation. Practices or activities shall not be required 
for participation in the program unless they would have an ultimate 
conservation benefit as demonstrated by the Conservation Practice 
Physical Effects matrix in the FOTG. Under Tier III, the entire 
agricultural operation is enrolled in CSP including other land as 
defined in Sec. 1469.5(d)(1)(v).
    (2) The minimum level of treatment on cropland for Tier I and Tier 
II:
    (i) The minimum level of treatment for soil quality on cropland is 
considered achieved when the Soil Conditioning Index value is positive.
    (ii) The minimum level of treatment for water quality on cropland is 
considered achieved if the benchmark inventory indicates that the 
current level of treatment addresses the risks that nutrients, 
pesticides, sediment, and salinity present to water quality by meeting 
or exceeding the quality criteria for the specific resource concerns of 
nutrients, pesticides, sediment and salinity for surface water and 
nutrients, pesticides and salinity for ground water.
    (iii) The Chief may make minor exceptions to criteria for areas, 
such as tropical and tundra regions, where technology tools are being 
refined or testing is needed to review performance data.
    (3) The minimum level of treatment on pastureland and rangelands for 
Tier I and Tier II is vegetation and animal management accomplished by 
following a grazing management plan that provides for:
    (i) A forage-animal balance;
    (ii) Proper livestock distribution;
    (iii) Timing of use; and
    (iv) Managing livestock access to water courses.
    (4) The minimum level of treatment for Tier III:
    (i) The minimum level of treatment for Tier III is having a fully 
implemented resource management system that meets the quality criteria 
for the local NRCS FOTG for all applicable resource concerns and 
considerations with the following exceptions:
    (A) The minimum requirement for soil quality on cropland is 
considered achieved when the Soil Conditioning Index value is positive;
    (B) The minimum requirement for water quantity--irrigation water 
management on cropland or pastureland is considered achieved when the 
current level of treatment and management for the system results in a 
water use index value of at least 50; and
    (C) The minimum requirement for wildlife is considered achieved when 
the current level of treatment and management for the system results in 
an index value of at least 0.5 using a general or species specific 
habitat assessment guide; and
    (ii) All riparian corridors, including streams and natural 
drainages, within the agricultural operation are buffered to restore, 
protect, or enhance riparian resources. Riparian corridors, as 
appropriate, will be managed or designed to

[[Page 847]]

intercept sediment, nutrients, pesticides, and other materials in 
surface runoff; reduce nutrients and other pollutants in shallow 
subsurface water flow; lower water temperature; and provide litter fall 
or structural components for habitat complexity or to slow out-of-bank 
floods.
    (5) In the instance of a significant natural event, such as drought, 
wildfire, pestilence, or flooding which would prevent the participant or 
applicant from achieving the minimum requirements, those requirements 
will be considered met so long as the participant or applicant can 
provide documentation of their stewardship prior to such an event.



Sec. 1469.6  Enrollment criteria and selection process.

    (a) Selection and funding of priority watersheds. (1) NRCS will 
prioritize watersheds based on a nationally consistent process using 
existing natural resource, environmental quality, and agricultural 
activity data along with other information that may be necessary to 
efficiently operate the program. The watershed prioritization and 
identification process will consider several factors, including but not 
limited to:
    (i) Potential of surface and ground water quality to degradation;
    (ii) Potential of soil to degradation;
    (iii) Potential of grazing land to degradation;
    (iv) State or national conservation and environmental issues e.g., 
location of air non-attainment zones or important wildlife/fisheries 
habitat; and
    (v) Local availability of management tools needed to more 
efficiently operate the program, such as digital soils information.
    (2) Priority watersheds selected, in which producers would be 
potentially eligible for enrollment, will be announced in the sign-up 
notice.
    (b) Enrollment categories. The Chief may limit new program 
enrollments in any fiscal year to enrollment categories designed to 
focus on priority conservation concerns and enhancement measures. NRCS 
will utilize enrollment categories to determine which contracts will be 
funded in a given sign-up.
    (1) Enrollment categories may be defined by criteria related to 
resource concerns and levels of historic conservation treatment, 
including the producer's willingness to achieve additional environmental 
performance or conduct enhancement activities.
    (2) All applications which meet the sign-up criteria within the 
priority watersheds will be placed in an enrollment category regardless 
of available funding.
    (3) NRCS will develop subcategories within each enrollment category 
and include them in the sign-up notice. The development of subcategories 
may consider several factors, including:
    (i) Willingness of the applicant to participate in local 
conservation enhancement activities;
    (ii) Targeting program participation for Limited Resource Producers;
    (iii) Targeting program participation to water quality priority 
areas for nutrient or pest management;
    (iv) Targeting program participation for locally important wildlife/
fisheries habitat creation and protection; and
    (v) Other priorities as determined by the Secretary.
    (4) At the beginning of each sign-up, the Chief will announce the 
order in which categories and subcategories are eligible to be funded.
    (5) All eligible applications will be placed in the highest priority 
enrollment category and sub-category for which the application 
qualifies.
    (6) Enrollment categories and subcategories will be funded in 
priority order until the available funds specified in the CSP sign-up 
notice are exhausted.
    (c) Sign-up process. (1) NRCS will publish a CSP sign-up notice with 
sufficient time for producers to consider the benefits of participation 
prior to the opening of the sign-up period. In the public sign-up 
notice, the Chief will announce and explain the rationale for decisions 
for the following information:
    (i) Any additional program eligibility criteria that are not listed 
in Sec. 1469.5;
    (ii) Any additional nationally significant resource concerns that 
are not listed in Sec. 1469.4(a) that will apply;
    (iii) Any additional requirements that participants must include in 
their

[[Page 848]]

CSP applications and contracts that are not listed in Sec. 1469.21;
    (iv) Information on the priority order of enrollment categories and 
subcategories for funding contracts;
    (v) Specific information on the level of funding that NRCS estimates 
will go toward stewardship, existing practice, and enhancement payments;
    (vi) An estimate of the total funds NRCS expects to obligate under 
new contracts during a given sign-up, and an estimate for the number of 
enrollment categories and contracts NRCS expects to be able to fund; and
    (vii) The schedule for the sign-up process, including the 
deadline(s) for applying.
    (2) NRCS will accept applications according to the timeframes 
specified in the sign-up notice.
    (d) Selection of contracts. (1) NRCS will determine whether the 
application meets the eligibility criteria, and will place applications 
into an enrollment category and subcategory based on the criteria 
specified in the sign-up notice and into a Tier based on the criteria in 
1469.5(e). Enrollment categories will be funded in the order designated 
in the sign-up notice until the available funding is exhausted. NRCS 
will determine the number of categories that can be funded in accordance 
with the sign-up notice, and will inform the applicant of its 
determinations.
    (2) NRCS will develop a conservation stewardship contract for the 
selected applications. If the contract falls within the enrollment 
categories and subcategories funded in the given sign-up, NRCS will make 
payments as described in the contract in return for the implementation 
and/or maintenance of a specified level of conservation treatment on all 
or part of the agricultural operation.



Sec. 1469.7  Benchmark condition inventory and conservation stewardship plan.

    (a) The benchmark condition inventory and associated case file 
information must include:
    (1) A map, aerial photograph, or overlay that delineates the entire 
agricultural operation, including land use and acreage;
    (2) A description of the applicant's production system(s) on the 
agricultural operation to be enrolled;
    (3) The existing conservation practices and resource concerns, 
problems, and opportunities on the operation;
    (4) Other information needed to document existing conservation 
treatment and activities, such as, grazing management, nutrient 
management, pest management, and irrigation water management plans;
    (5) A description of the significant resource concerns and other 
resource concerns that the applicant is willing to address in their 
contract through the adoption of new conservation practices and 
measures; and,
    (6) A list of enhancements that the applicant may be willing to 
undertake as part of their contract.
    (b) Conservation stewardship plan. (1) The conservation stewardship 
plan and associated case file information must include:
    (i) To the extent practicable, a quantitative and qualitative 
description of the conservation and environmental benefits that the 
conservation stewardship contract will achieve;
    (ii) A plan map showing the acreage to be enrolled in CSP;
    (iii) A verified benchmark condition inventory as described in Sec. 
1469.7(a);
    (iv) A description of the significant resource concerns and other 
resource concerns to be addressed in the contract through the adoption 
of new conservation measures;
    (v) A description and implementation schedule of--
    (A) Individual conservation practices and measures to be maintained 
during the contract, consistent with the requirements for the tier(s) of 
participation and the relevant resource concerns and with the 
requirements of the sign-up,
    (B) Individual conservation practices and measures to be installed 
during the contract, consistent with the requirements for the tier(s) of 
participation and the relevant resource concerns,
    (C) Eligible enhancement activities as selected by the applicant and 
approved by NRCS, and
    (D) A schedule for transitioning to higher tier(s) of participation, 
if applicable;

[[Page 849]]

    (vi) A description of the conservation activities that is required 
for a contract to include a transition to a higher tier of 
participation;
    (vii) Information that will enable evaluation of the effectiveness 
of the plan in achieving its environmental objectives; and
    (viii) Other information determined appropriate by NRCS and 
described to the applicant.
    (2) The conservation stewardship plan may be developed with 
assistance from NRCS or NRCS-certified Technical Service Providers.
    (3) All additional conservation practices in the conservation 
stewardship plan for which new practice payments will be provided must 
be carried out in accordance with the applicable NRCS FOTG.



Sec. 1469.8  Conservation practices and activities.

    (a) Conservation practice and activity selection. (1) The Chief will 
provide a list of structural and land management practices and 
activities eligible for each CSP payment component. If the Chief's 
designee provides the list, it will be approved by the Director of the 
Financial Assistance Programs Division of NRCS. When determining the 
lists of practices and activities and their associated rates, the Chief 
will consider:
    (i) The cost and potential conservation benefits;
    (ii) The degree of treatment of significant resource concerns;
    (iii) The number of resource concerns the practice or activity will 
address;
    (iv) Locally available technology;
    (v) New and emerging conservation technology;
    (vi) Ability to address the resource concern based on site specific 
conditions; and,
    (vii) The need for cost-share assistance for specific practices and 
activities to help producers achieve higher management intensity levels 
or to advance in tiers of eligibility.
    (2) To address unique resource conditions in a State or region, the 
Chief may make additional conservation practices, measures, and 
enhancement activities eligible that are not included in the national 
list of eligible CSP practices.
    (3) NRCS will make the list of eligible practices and activities and 
their individual payment rates available to the public.
    (b) NRCS will consider the qualified practices and activities in its 
computation of CSP payments except as provided for in paragraph (d) of 
this section.
    (c) NRCS will not make new practice payments for a conservation 
practice the producer has applied prior to application to the program.
    (d) New practice 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 the Designated Conservationist prior to the 
installation of the practice.
    (e) Where new technologies or conservation practices that show high 
potential for optimizing environmental benefits are available, 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.
    (f) NRCS will set the minimum level of treatment within land 
management practices at the national level; however, the State 
Conservationist may supplement specific criteria to meet localized 
conditions within the State or areas.



Sec. 1469.9  Technical assistance.

    (a) NRCS may use the services of NRCS-approved or certified 
Technical Service Providers in performing its responsibilities for 
technical assistance.
    (b) Technical assistance may include, but is not limited to: 
Assisting applicants during sign-up, processing and assessing 
applications, assisting the participant in developing the conservation 
stewardship plan; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and quality assurance activities.

[[Page 850]]

    (c) NRCS retains approval authority over the certification of 
technical assistance done by non-NRCS personnel.
    (d) NRCS retains approval authority of the conservation stewardship 
contracts and contract payments.
    (e) Conservation stewardship plans will be developed by NRCS 
certified conservation planners.



                    Subpart B_Contracts and Payments



Sec. 1469.20  Application for contracts.

    (a) Applications must include:
    (1) A completed self-assessment workbook;
    (2) Benchmark condition inventory and conservation stewardship plan 
in accordance with Sec. 1469.7 for the eligible land uses on the entire 
operation or, if Tier I, for the portion being enrolled;
    (3) Any other requirements specified in the sign-up notice;
    (4) For Tier I, clear indication of which acres the applicant wishes 
to enroll in the CSP; and,
    (5) A certification that the applicant will agree to meet the 
relevant contract requirements outlined in the sign-up notice.
    (b) Producers who are members of a joint operation, trust, estate, 
association, partnership or similar organization must file a single 
application for the joint operation or organization.
    (c) Producers can submit only one application per sign-up.
    (d) Participants can only have one active contract at any one time.



Sec. 1469.21  Contract requirements.

    (a) To receive payments, each participant must enter into a 
conservation stewardship contract and comply with its provisions. Among 
other provisions, the participant agrees to maintain at least the level 
of stewardship identified in the benchmark inventory for the portion of 
land being enrolled for the entire contract period, as appropriate, and 
implement and maintain any new practices or activities required in the 
contract.
    (b) Program participants will only receive payments from one 
conservation stewardship contract.
    (c) CSP participants must address the following requirements or 
additional resource concerns to the minimum level of treatment by the 
end of their conservation stewardship contract:
    (1) Tier I contract requirement: additional practices and activities 
as included by the applicant in the conservation stewardship plan and 
approved by NRCS, over the part of the agricultural operation enrolled 
in CSP.
    (2) Tier II contract requirements:
    (i) Address an additional locally significant resource concern, as 
described in section III of the NRCS FOTG over the entire agricultural 
operation. Applicants may satisfy this requirement by demonstrating that 
the locally significant resource concern is not applicable to their 
operation or that they have already addressed it in accordance with 
NRCS'; quality criteria; and
    (ii) Additional practices and activities as included by the 
applicant in the conservation stewardship plan and approved by NRCS, 
over the entire agricultural operation, where applicable.
    (3) Tier III contract requirement: additional practices and 
activities as included by the applicant in the conservation stewardship 
plan and approved by NRCS, over the entire agricultural operation, where 
applicable.
    (d) Transition to a higher tier of participation. (1) Upon agreement 
by NRCS and the participant, a conservation stewardship contract may 
include provisions that lead to a higher tier of participation during 
the contract period. Such a transition does not require a contract 
modification if that transition is laid out in the schedule of contract 
activities. In the event that such a transition begins with Tier I, only 
the land area in the agricultural operation that meets the requirements 
for enrollment in Tier I can be enrolled in the contract until the 
transition occurs. Upon transition from Tier I to a higher tier of 
participation, the entire agricultural operation must be incorporated 
into the contract. All requirements applicable to the higher tier of 
participation would then apply. NRCS will calculate all stewardship, 
existing practice, new practice payments, and enhancement payments using 
the applicable enrolled acreage at the time of the payment.

[[Page 851]]

    (2) A contract which transitions to higher tier(s) of participation 
must include:
    (i) A schedule for the activities associated with the transition(s);
    (ii) A date certain by which time the transition(s) must occur; and,
    (iii) A specification that the CSP payment will be based on the 
current Tier of participation, which may change over the life of the 
contract.
    (3) A contract which transitions to a higher tier will be modified 
to receive the higher payments once the required level of treatment has 
been achieved and field verified by NRCS.
    (4) A contract which includes a transition from Tier I to Tier II or 
III may be adjusted in length up to 10 years beginning from the original 
contract date.
    (e) A conservation stewardship contract must:
    (1) Incorporate by reference the conservation stewardship plan;
    (2) Be for 5 years for Tier I, and 5 to 10 years for Tier II or Tier 
III;
    (3) Incorporate all provisions as required by law or statute, 
including participant requirements to--
    (i) Implement and maintain the practices as identified and scheduled 
in the conservation stewardship plan, including those needed to be 
eligible for the specified tier of participation and comply with any 
additional sign-up requirements,
    (ii) Not conduct any practices on the farm or ranch that tend to 
defeat the purposes of the contract,
    (iii) Comply with the terms of the 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 any violation and comply with the terms of 
the contract and attachments thereto. If a violation continues, the 
State Conservationist may terminate the conservation stewardship 
contract, and
    (iv) Supply records and information as required by CCC to determine 
compliance with the contract and requirements of CSP;
    (4) Specify the requirements for operation and maintenance of the 
applied conservation practices;
    (5) Specify the schedule of payments under the life of the contract, 
including how those payments--
    (i) Relate to the schedule for implementing additional conservation 
measures as described in the conservation stewardship plan,
    (ii) Relate to the actual implementation of additional conservation 
measures as described in the conservation stewardship plan, and
    (iii) May be adjusted by NRCS if the participant's management 
decisions change the appropriate set or schedule of conservation 
measures on the operation; and,
    (6) Incorporate any other provisions determined necessary or 
appropriate by NRCS, or included as a requirement for the sign-up.
    (f) Practices scheduled in contracts must be applied and maintained 
within the timelines specified in the contract.
    (g) Contracts expire on September 30 in the last year of the 
contract.
    (h) Participants must:
    (1) Implement the conservation stewardship contract approved by 
NRCS;
    (2) Make available to NRCS, appropriate records showing the timely 
implementation of the contract;
    (3) Comply with the regulations of this part; and
    (4) Not engage in any activity that interferes with the purposes of 
the program, as determined by NRCS.
    (i) NRCS will determine the payments under the contract as described 
in Sec. 1469.23.
    (j) For contracts encompassing the entire agricultural operation, 
the geographic boundaries of the acreage enrolled in the contract must 
include all fields and facilities under the participant's direct 
control, as determined by NRCS.



Sec. 1469.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the operation and maintenance of 
the conservation practice(s) applied under the contract.
    (b) The participant must operate and maintain any new conservation 
practice(s) for which a payment was received to ensure that the new 
practice or enhancement achieves its intended

[[Page 852]]

purpose for the life span of the conservation treatment, as identified 
in the contract or conservation stewardship plan, as determined by NRCS.
    (c) Conservation practices that are installed before the execution 
of a contract, but are needed in the contract to obtain the intended 
environmental benefits, must be operated and maintained as specified in 
the contract whether or not an existing practice payment is made.
    (d) NRCS may periodically inspect the conservation practices during 
the practice lifespan as specified in the contract to ensure that 
operation and maintenance are being carried out, and that the practice 
is fulfilling its intended objectives. When NRCS finds that a 
participant is not operating and maintaining practices installed through 
the CSP in an appropriate manner, NRCS will initiate contract violation 
procedures as specified in Sec. 1469.25. If an existing practice is 
part of a system that meets the quality criteria, but does not 
technically meet NRCS minimum practice standards, the practice must be 
modified or updated to meet the standard according the FOTG as specified 
in Sec. 1469.25(a) of this part.



Sec. 1469.23  Program payments.

    (a) Stewardship component of CSP payments. (1) The conservation 
stewardship plan, as applicable, divides the land area to be enrolled in 
the CSP into land use categories, such as irrigated and non-irrigated 
cropland, irrigated and non-irrigated pasture, pastured cropland and 
range land, among other categories.
    (2) NRCS will determine an appropriate stewardship payment rate for 
each land use category using the following methodology:
    (i) NRCS will initially calculate the average 2001 rates using the 
Agriculture Foreign Investment Disclosure Act (AFIDA) Land Value Survey, 
the National Agriculture Statistics Service (NASS) land rental data, and 
Conservation Reserve Program (CRP) rental rates.
    (ii) Where typical rental rates for a given land use vary widely 
within a State or between adjacent States, NRCS will adjust the county-
level rates to ensure local and regional consistency and equity.
    (iii) The State Conservationists can also contribute additional 
local data, with advice from the State Technical Committee.
    (iv) The final stewardship payment rate will be the adjusted 
regional rates described in paragraph (a)(2)(i) through (iii) of this 
section multiplied by a reduction factor of 0.25 for Tier I, 0.50 for 
Tier II, and 0.75 for Tier III.
    (v) Pastured cropland will receive the same stewardship payment as 
cropland.
    (3) NRCS will compute the stewardship component of the CSP payment 
as the product of: the number of acres in each land use category (not 
including ``other'' or land not in the applicant's control); the 
corresponding stewardship payment rate for the applicable acreage; and a 
tier-specific percentage. The tier-specific percentage is 5 percent for 
Tier I payments, 10 percent for Tier II payments, and 15 percent for 
Tier III payments.
    (4) Other incidental parcels as defined in Sec. 1469.5(d)(1)(iv) 
may be given a stewardship rate as though they were the land use to 
which they are contiguous if they are serving a conservation purpose, 
such as wildlife habitat. Payment is limited to not more than ten 
percent of the contract acres. Minimum treatment requirements for the 
contract tier apply.
    (5) Other land, as defined in Sec. 1469.5(d)(1)(v), is not included 
in the stewardship payment computation.
    (6) NRCS will publish the stewardship payment rates at the 
announcement of each program sign-up.
    (b) Existing practice component of CSP payments. (1) The Chief will 
determine and announce which practices will be eligible for existing 
practice payments in accordance with Sec. 1469.8(a).
    (2) With exceptions including, but not limited to, paragraph (b)(3) 
and (4) of this section, NRCS may pay the participant a percentage of 
the average 2001 county cost of maintaining a land management, and 
structural practice that is documented in the benchmark condition 
inventory as existing upon enrollment in CSP. The Chief may offer 
alternative payment methods such as paying a percentage of the 
stewardship payment as long as the payment will

[[Page 853]]

not exceed 75 percent (or, in the case of a beginning farmer or rancher, 
90 percent) of the average 2001 county costs of installing the practice 
in the 2001 crop year. NRCS will post the rates for payment at the time 
of the sign-up notices on the NRCS website and in USDA Service Centers.
    (3) NRCS will not pay for maintenance of equipment.
    (4) NRCS will not pay an existing practice component of CSP payments 
for any practice that is required to meet conservation compliance 
requirements found in 7 CFR Part 12.
    (5) Existing practice payments are not intended to pay for routine 
maintenance activities related to production practices or practices 
considered typical in farm and ranch operations for a specific location.
    (6) Existing practice payments will be made only on practices that 
meet or exceed the practice standards described in the FOTG.
    (7) The Chief may reduce the rates in any given sign-up notice.
    (c) New practice payments. (1) The Chief will determine and announce 
which practices will be eligible for new practice payments in accordance 
with Sec. 1469.8(a).
    (2) If the conservation stewardship contract requires the 
implementation of a new structural or land management practice, NRCS may 
pay a percentage of the cost of installing the new practice. NRCS will 
provide the list of approved practices and the percentage cost-share 
rate for each practice at the time of each CSP sign-up notice.
    (3) Participants may contribute to their share of the cost of 
installing a new practice through in-kind sources, such as personal 
labor, use of personal equipment, or donated materials. Contributions 
for a participant's share of the practice may also be provided from non-
Federal sources, as determined by the Chief.
    (4) Cost-share payments may be provided by other programs; except 
that payments may not be provided through CSP and another program for 
the same practice on the same land area.
    (5) If additional practices are installed or implemented to advance 
a contract from one tier of participation to a higher tier, the practice 
must be certified as meeting FOTG practice standards by NRCS.
    (6) In no instance will the total financial contributions for 
installing a practice from all public and private entity sources exceed 
100 percent of the actual cost of installing the practice.
    (7) NRCS will not pay a new practice payment for any practice that 
is required to meet the conservation compliance plan requirements found 
in 7 CFR Part 12.
    (8) The Chief may reduce the rates in any given sign-up notice.
    (d) Enhancement component of CSP payments. (1) The Chief will 
establish a list of conservation practices and activities that are 
eligible for enhancement payments for a given sign-up. State 
Conservationists, with advice from the State Technical Committees, will 
tailor the list to meet the needs of the selected watersheds and submit 
to the Chief for concurrence.
    (2) NRCS may pay an enhancement component of a CSP payment if a 
conservation stewardship plan demonstrates to the satisfaction of NRCS 
that the plan's activities will increase conservation performance 
including activities related to energy management as a result of 
additional effort by the participant and result in:
    (i) The improvement of a resource concern by implementing or 
maintaining multiple conservation practices or measures that exceed the 
minimum eligibility requirements for the contract's Tier of 
participation as outlined in the sign-up notice and as described in 
Sec. 1469.5(e) and the contract requirements in Sec. 1469.21; or
    (ii) An improvement in a local resource concern based on local 
priorities and in addition to the national significant resource 
concerns, as determined by NRCS.
    (3) NRCS may also pay an enhancement component of a CSP payment if a 
participant:
    (i) Participates in an on-farm conservation research, demonstration, 
or pilot project as outlined in the sign-up notice; or
    (ii) Cooperates with other producers to implement watershed or 
regional resource conservation plans that involve

[[Page 854]]

at least 75 percent of the producers in the targeted area; or
    (iii) Carries out assessment and evaluation activities relating to 
practices included in the conservation stewardship plan as outlined in 
the sign-up notice.
    (4) NRCS will not pay the enhancement component of a CSP payment for 
any practice that is required to meet the conservation compliance plan 
requirements found in 7 CFR Part 12.
    (5) Eligible enhancement payments. (i) State Conservationists, with 
advice from the State Technical Committees, will develop proposed 
enhancement payment amounts for each practice and activity.
    (ii) An enhancement payment will be made to encourage a producer to 
perform or continue a management practice or activity, resource 
assessment and evaluation project, or field-test a research, 
demonstration, or pilot project that produces enhanced environmental 
performance and benefits or produces information and data to improve a 
resource concern or update the NRCS technical guides. Enhancement 
payments will be:
    (A) For activities where NRCS can demonstrate the economic value of 
the environmental benefits, based on a given activity's expected 
environmental benefit value. The payment may not exceed the activity's 
expected economic value; or
    (B) For activities where NRCS cannot demonstrate the economic value 
of the environmental benefits, a rate that will not exceed a producer's 
cost to implement a given activity.
    (iii) NRCS will post the list of approved enhancement activities and 
payment amounts for each activity concurrent with the CSP sign-up 
notice.
    (6) The Chief may set a not-to-exceed limit or variable payment rate 
for the enhancement payment in any given sign-up notice.
    (7) Enhancements above the minimum criteria for the resource concern 
that are included in the benchmark inventory may be included in the 
first CSP payment.
    (e) Contracts will be limited as follows:
    (1) $20,000 per year for a Tier I conservation stewardship contract,
    (2) $35,000 per year for a Tier II conservation stewardship 
contract, or
    (3) $45,000 per year for a Tier III conservation stewardship 
contract.
    (4) Stewardship components of CSP payments cannot exceed $5,000 per 
year for Tier I, $10,500 per year for Tier II, or $13,500 per year for 
Tier III.
    (5) The new practice payment will not exceed 50 percent of the 
average county costs of installing the practice (or a similar practice, 
if new) in the 2001 crop year with the exception of beginning and 
limited resource producers, in which case the new practice payment may 
be up to 65 percent.
    (f) The new practice and enhancement components of the conservation 
stewardship contract payment may increase once the participant applies 
and agrees to maintain additional conservation practices and activities 
as described in the conservation stewardship plan.
    (g) The Chief of NRCS may limit the stewardship, practice, and 
enhancement components of CSP payments in order to focus funding toward 
targeted activities and conservation benefits the Chief identifies in 
the sign-up notice and any subsequent addenda.
    (h) In the event that annual funding is insufficient to fund 
existing contract commitments, the existing contracts will be pro-rated 
in that contract year.
    (i) NRCS may not make any payments to participants for:
    (1) Practices within their conservation stewardship plan that are 
required to meet conservation compliance requirements found in 7 CFR 
Part 12;
    (2) Practices that are included in maintenance agreements (with 
financial reimbursements for maintenance) that existed prior to the 
conservation stewardship contract approval;
    (3) Construction or maintenance of animal waste storage or treatment 
facilities or associated waste transport or transfer devices for animal 
feeding operations;
    (4) The purchase or maintenance of equipment;
    (5) A non-land based structure that is not integral to a land based 
practice, as determined by the Chief; or

[[Page 855]]

    (6) New practices that were applied with cost-share assistance 
through other USDA cost-share programs.



Sec. 1469.24  Contract modifications and transfers of land.

    (a) Contracts may be modified:
    (1) At the request of the participant, if the modification is 
consistent with the purposes of the conservation security program, or;
    (2) As required by the State Conservationist due to changes to the 
type, size, management, or other aspect of the agricultural operation 
that would interfere with achieving the purposes of the program.
    (b) Participants may request a modification to their contract to 
change their tier of participation under a conservation stewardship 
contract once the measures determined necessary by NRCS to meet the next 
tier level have been established.
    (c) Contract transfers are permitted when there is agreement among 
all parties to the contract and the contract area remains intact.
    (1) NRCS must be notified within 60 days of the transfer of interest 
and the transferee's acceptance of the contract terms and conditions, or 
the contract will be terminated.
    (2) The transferee must be determined by NRCS to be eligible and 
must assume full responsibility under the contract, including operation 
and maintenance of those conservation practices and activities already 
undertaken and to be undertaken as a condition of the contract.



Sec. 1469.25  Contract violations and termination.

    (a) If the 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 the 
violation continues, the State Conservationist may terminate the 
conservation stewardship contract.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
a contract termination is effective immediately upon a determination by 
the State Conservationist that the participant has: submitted false 
information; filed a false claim; engaged in any act for which a finding 
of ineligibility for payments is permitted under this part; or taken 
actions NRCS deems to be sufficiently purposeful or negligent to warrant 
a termination without delay.
    (c) If NRCS terminates a contract due to breach of contract, the 
participant will forfeit all rights for future payments under the 
contract, and must refund all or part of the payments received, plus 
interest, and liquidated damages as determined in accordance with part 
1403 of this chapter. The State Conservationist may require 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.
    (d) 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 will forfeit all rights for 
further payments under the contract, and must pay such liquidated 
damages as are prescribed in the contract. The State Conservationist has 
the option to waive the liquidated damages, depending upon the 
circumstances of the case.
    (e) When making any contract termination decisions, the State 
Conservationist 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 including 
natural disasters or events.
    (f) The participant may voluntarily terminate a contract, without 
penalty or repayment, if the State Conservationist determines that the 
contract terms and conditions have been fully complied with before 
termination of the contract.

[[Page 856]]

    (g) In carrying out this section, the State Conservationist may 
consult with the local conservation district.



                    Subpart C_General Administration



Sec. 1469.30  Fair treatment of tenants and sharecroppers.

    Payments received under this part must be divided in the manner 
specified in the applicable contract or agreement, and NRCS will ensure 
that potential participants who would have an interest in acreage being 
offered receive treatment which NRCS deems to be equitable, as 
determined by the Chief. NRCS may refuse to enter into a contract when 
there is a disagreement among multiple applicants seeking enrollment as 
to an applicant's eligibility to participate in the contract as a 
tenant.



Sec. 1469.31  Appeals.

    (a) An applicant or a participant may obtain administrative review 
of an adverse decision under CSP in accordance with parts 11 and 614, 
Subparts A and C, of this title, except as provided in paragraph (b) of 
this section.
    (b) Participants cannot appeal the following decisions:
    (1) Payment rates, payment limits, and cost-share percentages;
    (2) Eligible conservation practices; and,
    (3) Other matters of general applicability.
    (c) Before a participant can seek judicial review of any action 
taken under this part, the participant must exhaust all administrative 
appeal procedures set forth in paragraph (a) of this section, and for 
purposes of judicial review, no decision will be a final agency action 
except a decision of the Chief under these procedures.



Sec. 1469.32  Compliance with regulatory measures.

    Participants who carry out conservation practices are responsible 
for obtaining the authorities, permits, easements, or other approvals 
necessary for the implementation, operation, and maintenance of the 
conservation practices in keeping with applicable laws and regulations. 
Participants must comply with all laws and are responsible for all 
effects or actions resulting from their performance under the contract.



Sec. 1469.33  Access to agricultural operation.

    Any authorized NRCS representative has the right to enter an 
agricultural operation 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 includes 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. 1469.34  Performance based on advice or action of representatives of 

NRCS.

    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 State Conservationist 
may accept the advice or action as meeting the requirements of CSP. In 
addition, the State Conservationist may grant relief, to the extent it 
is deemed desirable by CCC, to provide a fair and equitable treatment 
because of the good faith reliance on the part of the participant.



Sec. 1469.35  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, NRCS will 
make any payment or portion thereof to any participant 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 are 
applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing

[[Page 857]]

assignment of payment found at 7 CFR part 1404.



Sec. 1469.36  Misrepresentation and scheme or device.

    (a) If the Department determines that a participant erroneously 
represented any fact affecting a CSP determination made in accordance 
with this part, the participant's conservation stewardship contract will 
be terminated immediately in accordance with Sec. 1469.25(b). The 
participant will forfeit all rights for future contract payments, and 
must refund payments received, plus interest, and liquidated damages as 
described in Sec. 1469.25.
    (b) A producer who is determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
CSP;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a CSP determination, must 
refund to NRCS all payments, plus interest, and liquidated damages as 
determined in accordance with Sec. 1469.25 received by such participant 
with respect to all contracts. In addition, NRCS will terminate the 
participant's interest in all conservation stewardship contracts.
    (c) If the producer acquires land subsequent to enrollment in CSP, 
that land is not considered part of the agricultural operation; however, 
if the land was previously owned or controlled by them before the date 
of enrollment and after May 13, 2002, then NRCS will conduct an 
investigation into the activity to see if there was a scheme or device.



PART 1470_CONSERVATION STEWARDSHIP PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
1470.1 Applicability.
1470.2 Administration.
1470.3 Definitions.
1470.4 Allocation and management.
1470.5 Outreach activities.
1470.6 Eligibility requirements.
1470.7 Enhancements and conservation practices.
1470.8 Technical and other assistance.

                    Subpart B_Contracts and Payments

1470.20 Application for contracts and selecting offers from applicants.
1470.21 Contract requirements.
1470.22 Conservation stewardship plan.
1470.23 Conservation activity operation and maintenance.
1470.24 Payments.
1470.25 Contract modifications and transfers of land.
1470.26 Contract renewal.
1470.27 Contract violations and termination.

                    Subpart C_General Administration

1470.30 Fair treatment of tenants and sharecroppers.
1470.31 Appeals.
1470.32 Compliance with regulatory measures.
1470.33 Access to agricultural operation.
1470.34 Equitable relief.
1470.35 Offsets and assignments.
1470.36 Misrepresentation and scheme or device.
1470.37 Environmental credits for conservation improvements.

    Authority: 16 U.S.C. 3838d-3838g.

    Source: 75 FR 31653, June 3, 2010, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1470.1  Applicability.

    (a) This part sets forth the policies, procedures, and requirements 
for the Conservation Stewardship Program (CSP) as administered by the 
Natural Resources Conservation Service (NRCS), for enrollment during 
fiscal year (FY) 2009 and thereafter.
    (b) The purpose of CSP is to encourage producers to address resource 
concerns in a comprehensive manner by:
    (1) Undertaking additional conservation activities; and
    (2) Improving, maintaining, and managing existing conservation 
activities.
    (c) CSP is applicable in any of the 50 States, District of Columbia, 
Commonwealth of Puerto Rico, Guam, Virgin Islands of the United States, 
American Samoa, and Commonwealth of the Northern Mariana Islands.
    (d) NRCS provides financial assistance and technical assistance to 
participants for the conservation, protection, and improvement of soil, 
water, and other related natural resources, and for any similar 
conservation purpose as determined by NRCS.

[[Page 858]]



Sec. 1470.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief, NRCS, who is a Vice 
President of the Commodity Credit Corporation (CCC).
    (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 purposes of the program. 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) To achieve the conservation goals of CSP, NRCS will:
    (1) Make the program available nationwide to eligible applicants on 
a continuous application basis with one or more ranking periods to 
determine enrollments. One of the ranking periods will occur in the 
first quarter of each fiscal year, to the extent practicable; and
    (2) Develop conservation measurement tools (CMT) for the purpose of 
carrying out the program.
    (d) During the period beginning on October 1, 2008, and ending on 
September 30, 2017, NRCS will, to the maximum extent practicable:
    (1) Enroll in CSP an additional 12,769,000 acres for each fiscal 
year; and
    (2) Manage CSP to achieve a national average rate of $18 per acre, 
which includes the costs of all financial and technical assistance and 
any other expenses associated with program enrollment and participation.
    (e) The State Conservationist will:
    (1) Obtain advice from the State Technical Committee and local 
working groups on the development of State-level technical, outreach, 
and program matters, including:
    (i) Establishment of ranking pools appropriate for the conduct of 
CSP within the State to ensure program availability and prioritization 
of conservation activities. Ranking pools may be based on watersheds, 
geographic areas, or other appropriate regions within a State and may 
consider high-priority regional and State-level resource concern areas;
    (ii) Identification of not less than three, nor more than five 
priority resource concerns in particular watersheds, geographic areas, 
or other appropriate regions within a State;
    (iii) Identification of resource-conserving crops that will be part 
of resource-conserving crop rotations;
    (iv) Development of design protocols and participation procedures 
for participation in on-farm research, and demonstration and pilot 
projects; and
    (v) Evaluation of Cooperative Conservation Partnership Initiative 
(CCPI) projects and allowable program adjustments for the conduct of 
projects.
    (2) Assign NRCS employees as designated conservationists to be 
responsible for CSP at the local level; and
    (3) Be responsible for the program in their assigned State.
    (f) NRCS may enter into agreements with Federal, State, and local 
agencies, conservation districts, Indian tribes, private entities, and 
individuals to assist NRCS with program implementation.



Sec. 1470.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, rangeland, and pastureland on 
which agricultural products or livestock are produced and resource 
concerns may be addressed. Agricultural lands may also include other 
land and incidental areas included in the agricultural operation as 
determined by NRCS. Other agricultural lands include cropped woodland, 
marshes, incidental areas included in the agricultural operation, and 
other types of agricultural land used for production of livestock.
    Agricultural operation means all agricultural land and other land, 
as determined by NRCS, whether contiguous or noncontiguous:
    (1) Which is under the effective control of the applicant; and
    (2) Which is operated by the applicant with equipment, labor, 
management, and production or cultivation practices that are 
substantially separate from other operations.
    Animal waste storage or treatment facility means a structural 
conservation practice used for storing or treating animal waste.

[[Page 859]]

    Applicant means a person, legal entity, joint operation, or Indian 
tribe that has an interest in an agricultural operation, as defined in 7 
CFR part 1400, who has requested in writing to participate in CSP.
    Beginning farmer or rancher means:
    (1) An individual or legal entity who:
    (i) Has not operated a farm, ranch, or nonindustrial private forest 
land (NIPF), or who has operated a farm, ranch, or NIPF for not more 
than 10 consecutive years (this requirement applies to all members of a 
legal entity); and
    (ii) Will materially and substantially participate in the operation 
of the farm or ranch.
    (2) 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.
    (3) In the case of a contract with a legal 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, or designee.
    Conservation activities means conservation systems, practices, or 
management measures needed to address a resource concern or improve 
environmental quality through the treatment of natural resources, and 
includes structural, vegetative, and management activities as determined 
by NRCS.
    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,'' ``natural 
resource district,'' or similar name.
    Conservation measurement tool means procedures developed by NRCS to 
estimate the level of environmental benefit to be achieved by a producer 
using the proxy of conservation performance.
    Conservation planning means using the planning process outlined in 
the applicable National Planning Procedures Handbook (NPPH).
    Conservation practice means a specified treatment, such as a 
structural or vegetative practice or management technique, commonly used 
to meet a specific need in planning and carrying out conservation 
programs for which standards and specifications have been developed. 
Conservation practices are in the NRCS Field Office Technical Guide, 
section IV, which is based on the National Handbook of Conservation 
Practices.
    Conservation stewardship plan means a record of the participant's 
decisions that describes the schedule of conservation activities to be 
implemented, managed, or improved. Associated supporting information 
that identifies and inventories resource concerns and existing 
conservation activities, establishes benchmark data, and documents the 
participant's conservation objectives will be maintained with the plan.
    Conservation system means a combination of conservation practices, 
management measures, and enhancements used to address natural resource 
and environmental concerns in a comprehensive, holistic, and integrated 
manner.
    Contract means a legal document that specifies the rights and 
obligations of any participant who has been accepted into the program. A 
CSP contract is an agreement for the transfer of assistance from NRCS to 
the participant for installing, adopting, improving, managing, and 
maintaining conservation activities.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for CSP at the local 
level.

[[Page 860]]

    Effective control means possession of the land by ownership, written 
lease, or other legal agreement and authority to act as decisionmaker 
for the day-to-day management of the operation both at the time the 
applicant enters into a stewardship contract and for the required period 
of the contract.
    Enhancement means a type of conservation activity used to treat 
natural resources and improve conservation performance. Enhancements are 
installed at a level of management intensity that exceeds the 
sustainable level for a given resource concern, and those enhancements 
directly related to a practice standard are applied in a manner that 
exceeds the minimum treatment requirements of the standard.
    Enrollment means for the initial sign-up for FY 2009, NRCS will 
consider a participant ``enrolled'' in CSP based on the fiscal year the 
application is submitted, once NRCS approves the participant's contract. 
For subsequent ranking cut-off periods, NRCS will consider a participant 
enrolled in CSP based on the fiscal year the contract is approved.
    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 practices 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.
    Indian lands means all lands held in trust by the United States for 
individual Indians or Indian tribes, or all land titles held by 
individual Indians or tribes, subject to Federal restrictions against 
alienation or encumbrance, or lands subject to the rights of use, 
occupancy, or benefit of certain Indian tribes. This term also includes 
lands for which the title is held in fee status by Indian tribes and the 
U.S. Government-owned land under the Bureau of Indian Affairs (BIA) 
jurisdiction.
    Indian Tribe means any Indian tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    Joint operation means, as defined in part 1400 of this chapter, a 
general partnership, joint venture, or other similar business 
arrangement in which the members are jointly and severally liable for 
the obligations of the organization.
    Legal entity means, as defined in part 1400 of this chapter, an 
entity created under Federal or State law.
    Limited Resource Farmer or Rancher means:
    (1) A person with direct or indirect gross farm sales not more than 
the current indexed value in each of the previous 2 years ($142,000 is 
the amount for 2010, adjusted for inflation using Prices Paid by Farmer 
Index as compiled by the National Agricultural Statistical Service); 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 2 years (to be determined 
annually using Department of Commerce Data).
    Liquidated damages means a sum of money stipulated in the CSP 
contract that the participant agrees to pay NRCS if the participant 
fails to fulfill the terms of the contract. The sum represents an 
estimate of the technical assistance expenses incurred to service the 
contract, and reflects the difficulties of proof of loss and the 
inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Local working group means the advisory body as described in 7 CFR 
part 610.
    Management measure means one or more specific actions that is not a 
conservation practice, but has the effect of alleviating problems or 
improving the treatment of the natural resources.
    National Organic Program means the program, administered by the 
Department of Agriculture (USDA) Agricultural Marketing Service, which 
regulates the standards for any farm, wild crop harvesting, or handling 
operation

[[Page 861]]

that wants to market an agricultural product as organically produced.
    Natural Resources Conservation Service means an agency of USDA which 
has responsibility for administering CSP using the funds, facilities, 
and authorities of the CCC.
    Nonindustrial private forest land means rural land that has existing 
tree cover or is suitable for growing trees, and is owned by an 
individual, group, association, corporation, Indian tribe, or other 
private legal entity that has definitive decisionmaking authority over 
the land.
    Operation and maintenance means work performed by the participant to 
maintain existing conservation activities to at least the level of 
conservation performance identified at the time the application is 
obligated into a contract, and maintain additional conservation 
activities installed and adopted over the contract period.
    Participant means a person, legal entity, joint operation, or Indian 
tribe that is receiving payment or is responsible for implementing the 
terms and conditions of a CSP contract.
    Payment means financial assistance provided to the participant under 
the terms of the CSP contract.
    Person means, as defined in part 1400 of this chapter, an 
individual, natural person and does not include a legal entity.
    Priority resource concern means a resource concern that is 
identified by the State Conservationist, in consultation with the State 
Technical Committee and local working groups, as a priority for a State, 
or the specific geographic areas within a State.
    Producer means a person, legal entity, joint operation, or Indian 
tribe who has an interest in the agricultural operation, as defined in 
part 1400 of this chapter, or who is engaged in agricultural production 
or forest management.
    Resource concern means a specific natural resource problem that is 
likely to be addressed successfully through the implementation of 
conservation activities by producers.
    Resource-conserving crop means a crop that is one of the following:
    (1) A perennial grass;
    (2) A legume grown for use as forage, seed for planting, or green 
manure;
    (3) A legume-grass mixture;
    (4) A small grain grown in combination with a grass or legume, 
whether inter-seeded or planted in rotation.
    Resource-conserving crop rotation means a crop rotation that:
    (1) Includes at least one resource-conserving crop as determined by 
the State Conservationist;
    (2) Reduces erosion;
    (3) Improves soil fertility and tilth;
    (4) Interrupts pest cycles; and
    (5) In applicable areas, reduces depletion of soil moisture or 
otherwise reduces the need for irrigation.
    Secretary means the Secretary of USDA.
    Socially disadvantaged farmer or rancher means a producer who has 
been subjected to racial or ethnic prejudices because of their identity 
as a member of a group without regard to their individual qualities. A 
socially disadvantaged group is a group whose members have been subject 
to racial or ethnic prejudice because of their identity as members of a 
group, without regard to their individual qualities. These groups 
consist of American Indians or Alaskan Natives, Asians, Blacks or 
African Americans, Native Hawaiians or other Pacific Islanders, and 
Hispanics. A socially disadvantaged applicant is an individual or entity 
who is a member of a socially disadvantaged group. For an entity, at 
least 50 percent ownership in the farm business must be held by socially 
disadvantaged individuals.
    State Conservationist means the NRCS employee authorized to 
implement CSP and direct and supervise NRCS activities in a State, 
Caribbean Area, or Pacific Islands Area.
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Stewardship threshold means the level of natural resource 
conservation and environmental management required, as determined by 
NRCS using the CMT, to conserve and improve the quality and condition of 
a natural resource.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural

[[Page 862]]

resources on land active in agricultural, forestry, or related uses. The 
term includes the following:
    (1) Technical services provided directly to farmers, ranchers, 
forest producers, and other eligible entities, such as conservation 
planning, technical consultation, preparation of forest stewardship 
management plans, and assistance with the design and implementation of 
conservation activities; and
    (2) Technical infrastructure, including processes, tools, and agency 
functions needed to support delivery of technical services, such as 
technical standards, resource inventories, training, data, technology, 
monitoring, and effects analyses.
    Technical Service Provider means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical services 
to program participants in lieu of, or on behalf of, NRCS as referenced 
in 7 CFR part 652.



Sec. 1470.4  Allocation and management.

    (a) The Chief will allocate acres and associated funds to State 
Conservationists:
    (1) Primarily on each State's proportion of eligible land to the 
total amount of eligible land in all States; and
    (2) On consideration of:
    (i) The extent and magnitude of the conservation needs associated 
with agricultural production in each State based on natural resource 
factors that consider national, regional, and State-level priority 
ecosystem areas,
    (ii) The degree to which implementation of the program in the State 
is, or will be, effective in helping producers address those needs, and
    (iii) Other considerations determined by the Chief to achieve 
equitable geographic distribution of program participation.
    (b) The State Conservationist will allocate acres to ranking pools, 
to the extent practicable, based on the same factors the Chief considers 
in making allocations to States.
    (c) Of the acres made available for each of fiscal years 2009 
through 2012 to carry out CSP, NRCS will use, as a minimum:
    (1) Five percent to assist beginning farmers or ranchers, and
    (2) Five percent to assist socially disadvantaged farmers or 
ranchers.
    (d) In any fiscal year, allocated acres that are not enrolled by a 
date determined by NRCS may be reallocated with associated funds for use 
in that fiscal year under CSP. As part of the reallocation process, NRCS 
will consider several factors, including demand from applicants, 
national and regional conservation priorities, and prior-year CSP 
performance in States.
    (e) Of the CSP funds and acres made available for each fiscal year:
    (1) The Chief will reserve 6 percent of funds and acres to ensure an 
adequate source of funds and acres for the CCPI. Of the funds and acres 
reserved, the Chief will allocate:
    (i) Ninety percent to projects based on the direction of State 
Conservationists, with the advice of State Technical Committees; and
    (ii) Ten percent to projects based on a national competitive process 
established by the Chief. In determining funding allocation decisions 
for these projects, NRCS will consider the extent to which they address 
national and regional conservation priorities.
    (2) Any funds and acres reserved for the CCPI in a fiscal year that 
are not obligated by April 1 of that fiscal year may be used to carry 
out other CSP activities during the remainder of that fiscal year.



Sec. 1470.5  Outreach activities.

    (a) NRCS will establish program outreach activities at the national, 
State, and local levels to ensure that potential applicants who control 
eligible land are aware and informed that they may be eligible to apply 
for program assistance.
    (b) Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to, 
beginning farmers or ranchers, limited resource farmers or ranchers, and 
socially disadvantaged farmers or ranchers.
    (c) NRCS will ensure that outreach is provided so as not to limit 
producer participation because of size or type of operation or 
production system, including specialty crop and organic production.

[[Page 863]]

    (d) NRCS will conduct focused outreach in regions of national 
significance in order to maximize program participation. These areas 
could include landscapes such as the Chesapeake Bay watershed and Great 
Lakes basin.



Sec. 1470.6  Eligibility requirements.

    (a) Eligible applicant. To be an eligible applicant for CSP, a 
producer must be the operator in the Farm Service Agency (FSA) farm 
records management system. Potential applicants that are not in the FSA 
farm records management system must establish records with FSA. 
Potential applicants whose records are not current in the FSA farm 
records management system must update those records prior to the close 
of the evaluation period to be considered eligible. NRCS may grant 
exceptions to the ``operator of record'' requirement for producers, 
tenants, and owners in the FSA farm records management system that can 
demonstrate, to the satisfaction of NRCS, they will operate and have 
effective control of the land. Applicants must also meet all of the 
following requirements:
    (1) Have effective control of the land unless an exception is made 
by the Chief in the case of land administered by the BIA, Indian lands, 
or other instances in which the Chief determines that there is 
sufficient assurance of control;
    (2) Be in compliance with the highly erodible land and wetland 
conservation provisions found at 7 CFR part 12;
    (3) Be in compliance with Adjusted Gross Income provisions found at 
7 CFR part 1400;
    (4) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
related to eligibility requirements and ranking factors, conservation 
activity and production system records, information to verify the 
applicant's status as a historically underserved producer, if 
applicable, and payment eligibility as established by 7 CFR part 1400;
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment; and
    (6) Comply with applicable registration and reporting requirements 
of the Federal Funding Accountability and Transparency Act of 2006 (Pub. 
L. 109-282, as amended), and 2 CFR parts 25 and 170.
    (b) Eligible land. A contract application must include all of the 
eligible land on an applicant's agricultural operation, except as 
identified in paragraph (b)(3) of this section. A participant may submit 
an application(s) to enter into an additional contract(s) for newly 
acquired eligible land, which would then compete with other applications 
in a subsequent ranking period. The land as described below is part of 
the agricultural operation and eligible for enrollment in the CSP:
    (1) Private agricultural land;
    (2) Agricultural Indian lands;
    (3) NIPF:
    (i) By special rule in the statute, NIPF is eligible land,
    (ii) No more than 10 percent of the acres enrolled nationally in any 
fiscal year may be NIPF,
    (iii) The applicant will designate by submitting a separate 
application if they want to offer NIPF for funding consideration,
    (iv) If designated for funding consideration, then the NIPF 
component of the operation will include all the applicant's NIPF. If not 
designated for funding consideration, then the applicant's NIPF will not 
be part of the agricultural operation; and
    (4) Other private agricultural land, as determined by the Chief, on 
which resource concerns related to agricultural production could be 
addressed by enrolling the land in CSP.
    (c) Ineligible land. The following ineligible lands are part of the 
agricultural operation, but ineligible for inclusion in the contract or 
for payment in CSP:
    (1) Land enrolled in the Conservation Reserve Program (CRP), 7 CFR 
part 1410;
    (2) Land enrolled in the Wetlands Reserve Program (WRP), 7 CFR part 
1467;
    (3) Land enrolled in the Grassland Reserve Program (GRP), 7 CFR part 
1415;

[[Page 864]]

    (4) Land enrolled in the Conservation Security Program, 7 CFR part 
1469;
    (5) Public land including land owned by a Federal, State, or local 
unit of government; and
    (6) Land used for crop production after June 18, 2008, that had not 
been planted, considered to be planted, or devoted to crop production 
for at least 4 of the 6 years preceding that date, unless that land:
    (i) Had previously been enrolled in CRP,
    (ii) Has been maintained using long-term crop rotation practices as 
determined by the designated conservationist, or
    (iii) Is incidental land needed for efficient operation of the farm 
or ranch as determined by the designated conservationist.

[75 FR 31653, June 3, 2010, as amended at 76 FR 19684, Apr. 8, 2011]



Sec. 1470.7  Enhancements and conservation practices.

    (a) Participant decisions describing the additional enhancements and 
conservation practices to be implemented under the conservation 
stewardship contract will be recorded in the conservation stewardship 
plan.
    (b) NRCS will make available to the public the list of enhancements 
and conservation practices available to be installed, adopted, 
maintained, and managed through the CSP.
    (c) NRCS will make available bundled suites of conservation 
activities for participants to voluntarily select to include as part of 
their conservation stewardship plans. The bundles will be designed to 
coordinate the installation and adoption of enhancements with each other 
to address resource concerns in a more comprehensive and cost-effective 
manner.
    (d) CSP encourages the use of other NRCS programs to install 
conservation practices that are required to meet agreed-upon stewardship 
thresholds, but the practices may not be compensated through CSP.



Sec. 1470.8  Technical and other assistance.

    (a) NRCS may provide technical assistance to an eligible applicant 
or participant either directly or through a technical service provider 
(TSP) as set forth in 7 CFR part 652.
    (b) NRCS retains approval authority over certification of work done 
by non-NRCS personnel for the purpose of approving CSP payments.
    (c) NRCS will ensure that technical assistance is available and 
program specifications are appropriate so as not to limit producer 
participation because of size or type or operation or production system, 
including specialty crop and organic production. In providing technical 
assistance to specialty crop and organic producers, NRCS will provide 
appropriate training to field staff to enable them to work with these 
producers and to utilize cooperative agreements and contracts with 
nongovernmental organizations with expertise in delivering technical 
assistance to these producers.
    (d) NRCS will assist potential applicants dealing with the 
requirements of certification under the National Organic Program and CSP 
requirements concerning how to coordinate and simultaneously meet 
eligibility standards under each program.
    (e) NRCS may utilize the services of State foresters and existing 
technical assistance programs such as the Forest Stewardship Program of 
the U.S. Forest Service, in coordinating assistance to NIPF owners.



                    Subpart B_Contracts and Payments



Sec. 1470.20  Application for contracts and selecting offers from applicants.

    (a) Submission of contract applications. Applicants may submit an 
application to enroll all of their eligible land into CSP on a 
continuous basis.
    (b) Stewardship threshold requirement. To be eligible to participate 
in CSP, an applicant must submit to the designated conservationist for 
approval, a contract application that:
    (1) Indicates the applicant's conservation activities, at the time 
of application, are meeting the stewardship threshold for at least one 
resource concern;
    (2) Would, at a minimum, meet or exceed the stewardship threshold 
for at least one priority resource concern in

[[Page 865]]

addition to the resource concern described in paragraph (b)(1) of this 
section by the end of the conservation stewardship contract by:
    (i) Installing and adopting additional conservation activities, and
    (ii) Improving, maintaining, and managing conservation activities 
present on the agricultural operation at the time the contract 
application is accepted by NRCS;
    (3) Provides a map, aerial photograph, or overlay that:
    (i) Identifies the applicant's agricultural operation and NIPF 
component of the operation, and
    (ii) Delineates eligible land with associated acreage amounts; and
    (4) If the applicant is applying for on-farm research and 
demonstration activities or for pilot testing, describes the nature of 
the research, demonstration, or pilot testing in a manner consistent 
with design protocols and application procedures established by NRCS.
    (c) Evaluation of contract applications. NRCS will conduct one or 
more ranking periods each fiscal year.
    (1) To the extent practicable, one ranking period will occur in the 
first quarter of the fiscal year;
    (2) In evaluating CSP applications, the State Conservationist or 
designated conservationist will rank applications based on the following 
factors, using the CMT, to the maximum extent practicable:
    (i) Level of conservation treatment on all applicable priority 
resource concerns at the time of application,
    (ii) Degree to which the proposed conservation treatment on 
applicable priority resource concerns effectively increases conservation 
performance,
    (iii) Number of applicable priority resource concerns proposed to be 
treated to meet or exceed the stewardship threshold by the end of the 
contract, and
    (iv) Extent to which other resource concerns, in addition to 
priority resource concerns, will be addressed to meet or exceed the 
stewardship threshold by the end of the contract period;
    (3) In the event that application ranking scores from (2) above are 
similar, the application that represents the least cost to the program 
will be given higher priority; and
    (4) The State Conservationist or designated conservationist may not 
assign a higher priority to any application because the applicant is 
willing to accept a lower payment than the applicant would otherwise be 
eligible to receive.
    (d) Weighting of ranking factors. To the extent the CSP objective of 
additional conservation is not being achieved, as determined by the 
Chief, NRCS will adjust the weighting of ranking factors in order to 
place emphasis on increasing net conservation benefits.
    (e) State and local priorities. The Chief may develop and use 
additional criteria for evaluating applications that are determined 
necessary to ensure that national, State, and local conservation 
priorities are effectively addressed.
    (f) Ranking pools. Ranking pools will be established in accordance 
with Sec. 1470.2(e)(1)(i).
    (1) NIPF will compete in ranking pools separate from agricultural 
land. An applicant with both NIPF and agricultural land will have the 
options to submit:
    (i) One application for NIPF;
    (ii) One application for agricultural land; or
    (iii) Two applications, one for each land type.
    (2) An applicant with an agricultural operation or NIPF component of 
the operation that crosses ranking pool boundaries will make application 
and be ranked in the ranking pool where the largest acreage portion of 
their operation occurs.
    (3) Within each State or established ranking pool, the State 
Conservationist will address conservation access for certain farmers or 
ranchers, including:
    (i) Socially disadvantaged farmers or ranchers; and
    (ii) Beginning farmers or ranchers.
    (g) Application pre-approval. The State Conservationist or 
designated conservationist will make application pre-approval 
determinations during established ranking periods based on eligibility 
and ranking score.
    (h) Field verification. NRCS will conduct onsite field verification 
prior to

[[Page 866]]

obligation of contract funding to substantiate the accuracy of the 
information provided by pre-approved applicants during the application 
process.



Sec. 1470.21  Contract requirements.

    (a) After a determination that the application will be approved and 
a conservation stewardship plan will be developed in accordance with 
Sec. 1470.22, the State Conservationist or designee will enter into a 
conservation stewardship contract with the participant to enroll all of 
the eligible land on a participant's agricultural operation.
    (b) The conservation stewardship contract will:
    (1) Provide for payments over a period of 5 years;
    (2) Incorporate by reference the conservation stewardship plan;
    (3) State the payment amount NRCS agrees to make to the participant 
annually, subject to the availability of funds;
    (4) Incorporate all provisions as required by law or statute, 
including requirements that the participant will:
    (i) Implement the conservation stewardship plan approved by NRCS 
during the term of the contract,
    (ii) Operate and maintain conservation activities on the 
agricultural operation consistent with Sec. 1470.23,
    (iii) Comply with the terms of the contract or documents 
incorporated by reference into the contract,
    (iv) Refund as determined by NRCS, any program payments received 
with interest, and forfeit any future payments under the program, upon 
the violation of a term or condition of the contract, consistent with 
Sec. 1470.27,
    (v) Refund as determined by NRCS, all program payments received with 
interest, upon the transfer of the right and interest of the 
participant, in land subject to the contract, unless the transferee of 
the right and interest agrees to assume all obligations of the contract, 
consistent with Sec. 1470.25,
    (vi) Maintain and make available to NRCS upon request, appropriate 
records documenting applied conservation activity and production system 
information, and provide evidence of the effective and timely 
implementation of the conservation stewardship plan and contract, and
    (vii) Not engage in any action during the term of the conservation 
stewardship contract on the eligible land covered by the contract that 
would interfere with the purposes of the conservation stewardship 
contract;
    (5) Permit all economic uses of the land that:
    (i) Maintain the agricultural or forestry nature of the land, and
    (ii) Are consistent with the conservation purposes of the contract;
    (6) Include a provision to ensure that a participant will not be 
considered in violation of the contract for failure to comply with the 
contract due to circumstances beyond the control of the participant, 
including a disaster or related condition, as determined by the State 
Conservationist; and
    (7) Include such other provisions as NRCS determines necessary to 
ensure the purposes of the program are achieved.



Sec. 1470.22  Conservation stewardship plan.

    (a) NRCS will use the conservation planning process as outlined in 
the NPPH to encourage participants to address resource concerns in a 
comprehensive manner.
    (b) The conservation stewardship plan will contain a record of the 
participant's decisions that describes the schedule of conservation 
activities to be implemented, managed, or improved under the 
conservation stewardship contract.
    (c) Associated supporting information maintained with the 
participant's plan will include:
    (1) CMT documentation that will be the basis for:
    (i) Identifying and inventorying resource concerns,
    (ii) Establishing benchmark data on the condition of existing 
conservation activities, and
    (iii) Documenting the participant's conservation objectives to reach 
and exceed stewardship thresholds;
    (2) A plan map delineating enrolled land with associated acreage 
amounts;
    (3) In the case where a participant wishes to initiate or retain 
organic certification, documentation that will support the participant's 
transition to

[[Page 867]]

or participation in the National Organic Program;
    (4) In the case where a participant is approved for the on-farm 
research and demonstration or pilot testing option, a research, 
demonstration, or pilot testing plan consistent with design protocols 
and application procedures established by NRCS; and
    (5) Other information as determined appropriate by NRCS.



Sec. 1470.23  Conservation activity operation and maintenance.

    The participant will maintain and manage existing conservation 
activities on the agricultural operation to at least the level of 
conservation performance identified at the time the application is 
obligated into a contract for the conservation stewardship contract 
period, and additional activities installed and adopted over the term of 
the conservation stewardship contract.



Sec. 1470.24  Payments.

    (a) Annual payments. Subject to the availability of funds, NRCS will 
provide, as appropriate, annual payments under the program to compensate 
a participant for installing and adopting additional conservation 
activities, and improving, maintaining, and managing existing 
conservation activities. A split-rate annual payment structure will be 
used to provide separate payments for additional and existing 
conservation activities in order to place emphasis on implementing 
additional conservation.
    (1) To receive annual payments, a participant must:
    (i) Install and adopt additional conservation activities as 
scheduled in the conservation stewardship plan. At least one additional 
enhancement must be scheduled, installed, and adopted in the first 
fiscal year of the contract. All enhancements must be scheduled, 
installed, and adopted by the end of the third fiscal year of the 
contract, and
    (ii) As a minimum, maintain existing activities to the level of 
existing conservation performance identified at the time the application 
is obligated into a contract for the conservation stewardship contract 
period;
    (2) To earn annual payments for an eligible land use, a participant 
must schedule, install, and adopt at least one additional conservation 
activity on that land-use type. Eligible land-use types that fail to 
have at least one additional conservation activity scheduled, installed, 
and adopted will not receive annual payments;
    (3) A participant's annual payments will be determined using the 
conservation performance estimated by the CMT and computed by land-use 
type for eligible land earning payments. Conservation performance is 
prorated over the contract term so as to accommodate, to the extent 
practicable, participants earning equal annual payments in each fiscal 
year;
    (4) The annual payment rates will be based to the maximum extent 
practicable, on the following factors:
    (i) Costs incurred by the participant associated with planning, 
design, materials, installation, labor, management, maintenance, or 
training,
    (ii) Income foregone by the participant, and
    (iii) Expected environmental benefits, determined by estimating 
conservation performance improvement using the CMT;
    (5) The annual payment method will accommodate some participant 
operational adjustments without the need for contract modification.
    (i) Enhancements may be replaced with similar enhancements without 
adjustment of annual payment as long as the conservation performance is 
determined by NRCS to be equal to or better than the conservation 
performance of the additional enhancements offered at enrollment. An 
enhancement replacement that results in a decline below that 
conservation performance level will not be allowed, and
    (ii) Adjustments to existing activities may occur consistent with 
conservation performance requirements from Sec. 1470.23; and
    (6) Enhancements may be applied on other land included in an 
agricultural operation, as determined by NRCS.
    (b) Supplemental payments. Subject to the availability of funds, 
NRCS will provide a supplemental payment to a participant receiving 
annual payments, who also agrees to adopt a resource-conserving crop 
rotation.

[[Page 868]]

    (1) The State Conservationist will determine whether a resource-
conserving crop rotation is eligible for supplemental payments based on 
whether the resource-conserving crop rotation is designed to provide 
natural resource conservation and production benefits;
    (2) A participant must agree to adopt and maintain a beneficial 
resource-conserving crop rotation for the term of the contract to be 
eligible to receive a supplemental payment. A resource-conserving crop 
rotation is considered adopted when the resource-conserving crop is 
planted on at least one-third of the rotation acres. The resource-
conserving crop must be adopted by the third fiscal year of the contract 
and planted on all rotation acres by the fifth fiscal year of the 
contract; and
    (3) The supplemental payment is set at a rate needed to encourage a 
producer to adopt a resource-conserving crop rotation and will be based, 
to the maximum extent practicable, on costs incurred and income foregone 
by the participant and expected environmental benefits, determined by 
estimating conservation performance improvement using the CMT.
    (c) On-farm research and demonstration or pilot testing. A 
participant may be compensated through their annual payment for:
    (1) On-farm research and demonstration activities; or
    (2) Pilot testing of new technologies or innovative conservation 
activities.
    (d) Minimum contract payment. NRCS will make a minimum contract 
payment to participants who are socially disadvantaged farmers or 
ranchers, beginning farmers or ranchers, or limited resource farmers or 
ranchers, at a rate determined by the Chief in any fiscal year that a 
contract's payment amount total is less than $1,000. Definitions of 
socially disadvantaged farmers or ranchers, beginning farmers or 
ranchers, and limited resource farmers or ranchers are contained in 
Sec. 1470.3.
    (e) Timing of payments. NRCS will make payments as soon as 
practicable after October 1 of each fiscal year for activities carried 
out in the previous fiscal year. For newly enrolled contracts, payments 
will be made as soon as practicable after October 1 following the fiscal 
year of enrollment.
    (f) Non-compensatory matters. A CSP payment to a participant will 
not be provided for:
    (1) New conservation practices or enhancements applied with 
financial assistance through other USDA conservation programs;
    (2) The design, construction, or maintenance of animal waste storage 
or treatment facilities, or associated waste transport or transfer 
devices for animal feeding operations; or
    (3) Conservation activities for which there is no cost incurred or 
income foregone by the participant.
    (g) Payment limits. A person or legal entity may not receive, 
directly or indirectly, payments that, in the aggregate, exceed $40,000 
during any fiscal year for all CSP contracts entered into, and $200,000 
for all CSP contracts entered into during any 5-year period, excluding 
funding arrangements with federally recognized Indian tribes or Alaska 
Native corporations, regardless of the number of contracts entered into 
under the CSP by the person or legal entity.
    (h) Contract limits. Payments under a conservation stewardship 
contract with joint operations will be limited to $80,000 per fiscal 
year and $400,000 over the term of the initial contract period, 
excluding funding arrangements with federally recognized Indian tribes 
or Alaska Native corporations. The payment limits for contracts with 
persons or legal entities are contained in Sec. 1470.24(g).
    (i) Payment limitation provisions for individual Indians and Indian 
tribes. Payment limitations apply to individual tribal member(s) when 
applying and subsequently being granted a contract as an individual(s). 
Contracts with Indian tribes or Alaska Native corporations are not 
subject to payment or contract limitations. Indian tribes and BIA will 
certify in writing that no one individual, directly or indirectly, will 
receive more than the payment limitation. Certification provided at the 
time of contract obligation will cover the entire contract period. The 
tribal entity must also provide, upon request from NRCS, a listing of 
individuals and payment made, by Social Security number or other unique 
identification number, during the previous year for

[[Page 869]]

calculation of overall payment limitations.
    (j) Tax Identification Number. To be eligible to receive a CSP 
payment, all legal entities or persons applying, either alone or as part 
of a joint operation, must provide a tax identification number and 
percentage interest in the legal entity. In accordance with 7 CFR part 
1400, an applicant applying as a joint operation or legal entity must 
provide a list of all members of the legal entity and joint operation 
and associated embedded entities, along with the members' Social 
Security numbers and percentage of interest in the joint operation or 
legal entity. Payments will be directly attributed to legal entity 
members for the purpose of complying with Sec. 1470.24(g).
    (k) Unique tax identification numbers. Where applicable, American 
Indians, Alaska Natives, and Pacific Islanders may use another unique 
identification number for each individual eligible for payment. Any 
participant that utilizes a unique identification number as an 
alternative to a tax identification number will utilize only that 
identifier for any and all other CSP contracts to which the participant 
is a party. Violators will be considered to have provided fraudulent 
representation and be subject to full penalties of Sec. 1470.36.
    (l) Payment data. NRCS will maintain detailed and segmented data on 
CSP contracts and payments to allow for quantification of the amount of 
payments made for:
    (1) Installing and adopting additional activities;
    (2) Improving, maintaining, and managing existing activities;
    (3) Participation in research and demonstration or pilot projects; 
and
    (4) Development and periodic assessment and evaluation of 
conservation stewardship plans developed under this rule.



Sec. 1470.25  Contract modifications and transfers of land.

    (a) NRCS may allow a participant to modify a conservation 
stewardship contract if NRCS determines that the modification is 
consistent with achieving the purposes of the program.
    (b) NRCS will allow modification to a conservation stewardship 
contract to remove contract acres enrolled in the CRP, WRP, or GRP or 
other Federal or State programs that offer greater natural resource 
protection. Such modifications are consistent with the purposes of CSP. 
Participants will not be subject to liquidated damages or refund of 
payments received for enrolling land in these programs.
    (c) NRCS will not allow a participant to modify a conservation 
stewardship contract to increase the contract obligation beyond the 
amount of the initial contract, with exception for contracts approved by 
NRCS for renewal or other exceptional cases as determined by the Chief.
    (d) Land under contract will be considered transferred if the 
participant loses control of the acreage for any reason.
    (1) The participant is responsible to notify NRCS prior to any 
voluntary or involuntary transfer of land under contract;
    (2) If all or part of the land under contract is transferred, the 
contract terminates with respect to the transferred land unless:
    (i) The transferee of the land provides written notice within 60 
days to NRCS that all duties and rights under the contract have been 
transferred to, and assumed by, the transferee, and
    (ii) The transferee meets the eligibility requirements of the 
program; and
    (e) Contract payment adjustments due to modifications will be 
reflected in the fiscal year following the modification.



Sec. 1470.26  Contract renewal.

    (a) At the end of an initial conservation stewardship contract, NRCS 
may allow a participant to renew the contract to receive payments for 
one additional 5-year period, subject to the availability of funds, if 
they meet criteria from paragraph (b) of this section.
    (b) To be considered for contract renewal, the participant must:
    (1) Be in compliance with the terms of their initial contract as 
determined by NRCS;
    (2) Add any newly acquired eligible land that is part of the 
agricultural operation and meets minimum treatment

[[Page 870]]

criteria as established and determined by NRCS;
    (3) At a minimum, meet stewardship thresholds for at least two 
priority resource concerns; and
    (4) Agree to adopt additional conservation activities to address at 
least one additional priority resource concern during the term of the 
renewed conservation stewardship contract.



Sec. 1470.27  Contract violations and termination.

    (a) The State Conservationist may terminate, or by mutual consent 
with the participants, terminate a contract where:
    (1) The participants are unable to comply with the terms of the 
contract as the result of conditions beyond their control; or
    (2) As determined by the State Conservationist, it is in the public 
interest.
    (b) If a contract is terminated in accordance with the provisions of 
paragraph (a) of this section, the State Conservationist may allow the 
participant to retain a portion of any payments received appropriate to 
the effort the participant has made to comply with the contract, or in 
cases of hardship, where forces beyond the participant's control 
prevented compliance with the contract. If a participant claims 
hardship, such claims must be clearly documented and cannot have existed 
when the applicant applied for participation in the program.
    (c) If NRCS determines that a participant is in violation of the 
contract terms or documents incorporated therein, NRCS will give the 
participant a period of time, as determined by NRCS, to correct the 
violation and comply with the contract terms and attachments thereto. If 
a participant continues in violation, NRCS may terminate the CSP 
contract in accordance with paragraph (e) of this section.
    (d) Notwithstanding the provisions of paragraph (c) of this section, 
a contract termination will be effective immediately upon a 
determination by NRCS that the participant:
    (1) Has submitted false information or filed a false claim;
    (2) Engaged in any act, scheme, or device for which a finding of 
ineligibility for payments is permitted under the provisions of Sec. 
1470.36; or
    (3) Engaged in actions that are deemed to be sufficiently purposeful 
or negligent to warrant a termination without delay.
    (e) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract, pay liquidated damages, 
and refund all or part of the payments received, plus interest. 
Participants violating CSP contracts may be determined ineligible for 
future NRCS-administered conservation program funding.
    (1) NRCS may require a participant to provide only a partial refund 
of the payments received if a previously installed conservation activity 
has achieved the expected conservation performance improvement, is not 
adversely affected by the violation or the absence of other conservation 
activities that would have been installed under the contract, and has 
met the associated operation and maintenance requirement of the 
activity; and
    (2) NRCS will have the option to reduce or waive the liquidated 
damages, depending upon the circumstances of the case--
    (i) When terminating a contract, 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 existence 
of hardships beyond the participant's control that have prevented 
compliance with the contract. If a participant claims hardship, that 
claim must be well documented and cannot have existed when the applicant 
applied for participation in the program, and
    (ii) In carrying out its role in this section, NRCS may consult with 
the local conservation district.



                    Subpart C_General Administration



Sec. 1470.30  Fair treatment of tenants and sharecroppers.

    Payments received under this part must be divided in the manner 
specified in the applicable contract. NRCS will ensure that tenants and 
sharecroppers who would have an interest in

[[Page 871]]

acreage being offered receive treatment which NRCS deems to be 
equitable, as determined by the Chief. NRCS may refuse to enter into a 
contract when there is a disagreement among joint applicants seeking 
enrollment as to an applicant's eligibility to participate in the 
contract as a tenant.



Sec. 1470.31  Appeals.

    A participant may obtain administrative review of an adverse 
decision under this part in accordance with 7 CFR parts 11 and 614. 
Determinations in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation activities are not subject to 
appeal.



Sec. 1470.32  Compliance with regulatory measures.

    Participants will be responsible for obtaining the authorities, 
rights, easements, permits, or other approvals or legal compliance 
necessary for the implementation, operation, and maintenance associated 
with the conservation stewardship plan. Participants will be responsible 
for compliance with all laws and for all effects or actions resulting 
from the implementation of the contract.



Sec. 1470.33  Access to agricultural operation.

    NRCS, or its authorized representative, will have the right to enter 
an agricultural operation for the purpose of determining eligibility and 
for ascertaining the accuracy of any representations, including natural 
resource information provided by an applicant for the purpose of 
evaluating a contract application. Access will include the right to 
provide technical assistance, determine eligibility, assess natural 
resource conditions, inspect any work undertaken under the contract, and 
collect information necessary to evaluate the implementation of 
conservation activities in the contract. NRCS, or its authorized 
representative, will make an effort to contact the participant prior to 
the exercise of this provision.



Sec. 1470.34  Equitable relief.

    (a) If a participant relied upon the advice or action of NRCS and 
did not know, or have reason to know, that the action or advice was 
improper or erroneous, the participant may be eligible for equitable 
relief under 7 CFR part 635. The financial or technical liability for 
any action by a participant that was taken based on the advice of a TSP 
will remain with the TSP and will not be assumed by NRCS.
    (b) If a participant has been found in violation of a provision of 
the conservation stewardship contract or any document incorporated by 
reference through failure to comply fully with that provision, the 
participant may be eligible for equitable relief under 7 CFR part 635.



Sec. 1470.35  Offsets and assignments.

    (a) Any payment or portion thereof due to any participant under this 
part will be allowed without regard to any claim or lien in favor of any 
creditor, except agencies of the United States Government. The 
regulations governing offsets and withholdings found at 7 CFR part 1403 
will be applicable to contract payments.
    (b) Any participant entitled to any payment may assign such payments 
in accordance with regulations governing assignment of payment found at 
7 CFR part 1404.



Sec. 1470.36  Misrepresentation and scheme or device.

    (a) If NRCS determines that an applicant intentionally 
misrepresented any fact affecting a CSP determination, the application 
will be determined ineligible immediately.
    (b) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part will not be entitled to contract payments and must refund to NRCS 
all payments, plus interest determined in accordance with 7 CFR part 
1403.
    (c) A participant will refund to NRCS all payments, plus interest 
determined in accordance with 7 CFR part 1403, received by such 
participant with respect to all CSP contracts if they are determined to 
have:

[[Page 872]]

    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program;
    (2) Made any fraudulent representation;
    (3) Adopted any 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; or
    (4) Misrepresented any fact affecting a program determination.
    (d) Participants determined to have committed actions identified in 
paragraph (c) of this section will:
    (1) Have their interest in all CSP contracts terminated; and
    (2) In accordance with Sec. 1470.27(e), may be determined by NRCS 
to be ineligible for future NRCS-administered conservation program 
funding.



Sec. 1470.37  Environmental credits for conservation improvements.

    NRCS believes that environmental benefits will be achieved by 
implementing conservation activities funded through CSP. These 
environmental benefits may result in opportunities for the program 
participant to sell environmental credits. Any requirements related to 
these environmental credits must be compatible with the purposes of the 
contract. NRCS asserts no direct or indirect interest on these credits. 
However, NRCS retains the authority to ensure that operation and 
maintenance (O&M) requirements for CSP-funded improvements are met, 
consistent with Sec. 1470.21 and Sec. 1470.23. Where actions may 
impact the land and conservation activities under a CSP contract, NRCS 
will at the request of the participant, assist with the development of 
an O&M compatibility assessment prior to the participant entering into 
any credit agreement.

[[Page 873]]



                      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 874]]



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 875]]

    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;
    (5) The name(s) of the person(s) responsible for managing the 
program;

[[Page 876]]

    (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 clear, long-term agricultural trade strategy by 
market or product and a

[[Page 877]]

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 
addition of individuals, name changes,

[[Page 878]]

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 879]]

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 880]]

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 881]]

    (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 882]]

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 883]]

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 884]]

    (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 885]]

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 886]]

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 887]]

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_GRANT AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN MARKETS FOR U.S. 

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.
1485.14 Application review and formation of agreements.
1485.15 Operational procedures for brand programs.
1485.16 Contribution rules.
1485.17 Reimbursement rules.
1485.18 Reimbursement procedures.
1485.19 Advances.
1485.20 Employment practices.
1485.21 Financial management.
1485.22 Reports.
1485.23 Evaluation.
1485.24 Compliance reviews and notices.
1485.25 Failure to make required contribution.
1485.26 Submissions.
1485.27 Disclosure of program information.
1485.28 Ethical conduct.
1485.29 Contracting procedures.
1485.30 Property standards.
1485.31 Anti-fraud requirements.
1485.32 Program income.
1485.33 Amendment.
1485.34 Noncompliance with an agreement.
1485.35 Suspension, termination, and closeout of agreements.
1485.36 Paperwork reduction requirements.

    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]

[[Page 888]]



                     Subpart B_Market Access Program

    Source: 77 FR 29499, May, 17, 2012, unless otherwise noted.



Sec. 1485.10  General purpose and scope.

    (a) This subpart sets forth the general terms, conditions, and 
policies governing the Commodity Credit Corporation's (CCC) operation of 
the Market Access Program (MAP).
    (b)(1) In addition to the provisions of this subpart, other 
regulations of general application issued by the U. S. Department of 
Agriculture (USDA), including the regulations set forth in Chapter XXX 
of this title, ``Office of the Chief Financial Officer, Department of 
Agriculture,'' may apply to the MAP and MAP Participants, to the extent 
that these regulations of general application do not directly conflict 
with the provisions of this subpart. These include, but are not limited 
to:
    (i) 7 CFR part 1, subpart A--Official Records
    (ii) 7 CFR part 3--Debt Management
    (iii) 7 CFR part 15, subpart A--Nondiscrimination
    (iv) 7 CFR part 3015--Uniform Federal Assistance Regulations
    (v) 7 CFR part 3016--Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments
    (vi) 2 CFR part 417--Government-wide Debarment and Suspension 
(Nonprocurement)
    (vii) 7 CFR part 3018--New Restrictions on Lobbying
    (viii) 7 CFR part 3019--Uniform Administrative Requirements for 
Grants and Other Agreements with Institutions of Higher Education, 
Hospitals, and Other Nonprofit Organizations
    (ix) 7 CFR part 3021--Government-wide requirements for drug-free 
workplace (financial assistance)
    (x) 7 CFR part 3052--Audits of States, Local Governments, and Non-
profit Organizations
    (xi) 48 CFR part 31--Contract Cost Principles and Procedures of the 
Federal Acquisition Regulations.
    (2) In addition, relevant provisions of the CCC Charter Act (15 
U.S.C. 714 et seq.) and any other statutory provisions that are 
generally applicable to CCC are also applicable to the MAP and the 
regulations set forth in this part.
    (3) MAP Participants must also comply with Title VI of the Civil 
Rights Act of 1964 and related civil rights regulations and policies.
    (4) Other laws and regulations that apply to MAP Participants 
include, but are not limited to:
    (i) 2 CFR part 25--Universal Identifier and Central Contractor 
Registration
    (ii) 2 CFR part 170--Reporting Subaward and Executive Compensation 
Information
    (iii) 2 CFR part 175--Award Term for Trafficking in Persons
    (iv) 2 CFR part 180--OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)
    (v) 37 CFR part 401.1--Rights to Inventions Made by Nonprofit 
Organizations and Small Business Firms Under Government Grants, 
Contracts, and Cooperative Agreements
    (vi) Executive Order 13224, as amended, Blocking Property and 
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or 
Support Terrorism
    (c) Under the MAP, CCC may provide grants to eligible U.S. entities 
to conduct certain marketing and promotion activities aimed at 
developing, maintaining, or expanding commercial export markets for U.S. 
agricultural commodities and products. MAP Participants may receive 
assistance for either generic or brand promotion activities. While 
activities generally take place overseas, reimbursable activities may 
also take place in the United States. CCC expects all activities that 
occur in the United States for which MAP reimbursement is sought to 
develop, maintain, or expand the commercial export market for the 
relevant U.S. agricultural commodity in accordance with the MAP 
Participant's approved MAP program. When considering eligible nonprofit 
U.S. trade organizations, CCC gives priority to organizations that have 
the broadest producer representation and affiliated industry 
participation of the commodity being promoted.

[[Page 889]]

    (d) The MAP generally operates on a reimbursement basis.
    (e) CCC's policy is to ensure that benefits generated by MAP 
agreements are broadly available throughout the relevant agricultural 
sector and that no single entity gains an undue advantage. CCC also 
endeavors to enter into MAP agreements covering a broad array of 
agricultural commodity sectors. The MAP is administered by personnel of 
the Foreign Agricultural Service (FAS) acting on behalf of CCC.



Sec. 1485.11  Definitions.

    For purposes of this subpart the following definitions apply:
    Activity--a specific foreign market development effort undertaken by 
a MAP Participant.
    Administrative expenses or costs-- expenses or costs of 
administering, directing, and controlling an organization that is a MAP 
Participant. Generally, this would include expenses or costs such as 
those related to:
    (1) Maintaining a physical office (including, but not limited to, 
rent, office equipment, office supplies, office d[eacute]cor, office 
furniture, computer hardware and software, maintenance, extermination, 
parking, business cards);
    (2) Personnel (including, but not limited to, salaries, benefits, 
payroll taxes, individual insurance, training);
    (3) Communications (including, but not limited to, phone expenses, 
internet, mobile phones, personal digital assistants, email, mobile 
email devices, postage, courier services, television, radio, walkie 
talkies);
    (4) Management of an organization or unit of an organization 
(including, but not limited to, planning, supervision, supervisory 
travel, teambuilding, recruiting, hiring);
    (5) Utilities (including, but not limited to, sewer, water, energy);
    (6) Professional services (including, but not limited to, accounting 
expenses, financial services, investigatory services).
    Approval letter--a document by which CCC informs an applicant that 
its MAP application for a program year has been approved for funding. 
This letter may also approve specific activities and contain terms and 
conditions in addition to the program agreement. This letter requires a 
countersignature by the MAP Participant before it becomes effective.
    Attach[eacute]/Counselor--the FAS employee representing USDA 
interests in the foreign country in which promotional activities are 
conducted.
    Brand participant--a small-sized U.S. for-profit entity, or a U.S. 
agricultural cooperative that owns the brand(s) of the U.S. agricultural 
commodity to be promoted or has the exclusive rights to use such 
brand(s) and that is participating in the MAP brand promotion program of 
another MAP Participant. This definition does not include any U.S. 
agricultural cooperatives that are MAP Participants that apply for MAP 
funds to implement their own brand programs.
    Brand promotion--an activity that involves the exclusive or 
predominant use of a single U.S. company name, or the logo or brand name 
of a single U.S. company, or the brand of a U.S. agricultural 
cooperative, or any activity undertaken by a MAP Participant in the 
brand program.
    CCC--the Commodity Credit Corporation, including any agency or 
official of the United States delegated the responsibility to act on 
behalf of CCC.
    Contribution--an expenditure made by a MAP Participant, the U.S. 
industry, or State agency in support of an approved activity. This 
includes expenditures to be made by entities in the MAP Participant's 
industry in support of the entities' related promotion activities in the 
markets covered by the MAP Participant's agreement.
    Credit memo--a commercial document, also known as a credit 
memorandum, issued by the MAP Participant to a commercial entity that 
owes the MAP Participant a certain sum. A credit memo is used when the 
MAP Participant owes the commercial entity a sum less than the amount 
the entity owes the Participant. The credit memo reflects an offset of 
the amount the MAP Participant owes the entity against the amount the 
entity owes to the MAP Participant.
    Demonstration projects--activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.

[[Page 890]]

    Expenditure--either payment via the transfer of funds or offset 
reflected in a credit memo in lieu of a transfer of funds.
    FAS--Foreign Agricultural Service, USDA.
    FAS Web site--a Web site maintained by FAS providing information on 
MAP. It is currently accessible at www.fas.usda.gov/mos/programs/
map.asp.
    Foreign third party--a foreign entity that a MAP Participant works 
with to promote the export of a U.S. agricultural commodity under the 
MAP program.
    Generic promotion--an activity that is not a brand promotion but, 
rather, promotes a U.S. agricultural commodity generally. A generic 
promotion activity may include the promotion of a foreign brand (i.e., a 
brand owned primarily by foreign interests and being used to market a 
commodity or product in a foreign market), if the foreign brand uses the 
promoted U.S. agricultural commodity or product from multiple U.S. 
suppliers. A generic promotion activity may also involve the use of 
specific U.S. company names, logos or brand names. However, in that 
case, the MAP Participant must ensure that all U.S. companies seeking to 
promote such U.S. agricultural commodity in the market have an equal 
opportunity to participate in the activity and that at least two U.S. 
companies participate. In addition, an activity that promotes separate 
items from multiple U.S. companies will be considered a generic 
promotion only if the promotion of the separate items maintains a 
unified theme (i.e., a dominant idea or motif) and style and is 
subordinate to the promotion of the generic theme.
    MAP--the Market Access Program.
    MAP Notice--Market Access Program notices are documents that CCC 
issues for informational purposes. These MAP notices are made available 
electronically at http://www.fas.usda.gov/mos/programs/mnotice.html. 
These notices have no legal effect. They are intended to alert MAP 
Participants of various aspects of CCC's current administration of the 
MAP program. For example, CCC issues MAP notices to alert MAP 
Participants of procedures for requesting advances, applicable federal 
pay scale rates, lists of economic and trade sanctions against certain 
foreign countries, reporting formats and computer codes to use with the 
UES.
    MAP Participant or Participant--an entity that has entered into a 
MAP program agreement with CCC.
    Market--the country or countries targeted by an activity.
    Notification--a document from the MAP Participant by which the MAP 
Participant proposes to CCC changes to the activities and/or funding 
levels in an approved MAP program agreement and/or approval letter.
    Product samples--a representative part of a larger whole promoted 
commodity or group of promoted commodities. Product samples include all 
forms of a promoted commodity (e.g., fresh or processed), independent of 
the ultimate utilization of the sample. Product samples might be used in 
support of international marketing activities including, but not limited 
to, displays, food process testing, cooking demonstrations, or trade and 
consumer tastings.
    Program agreement--a document entered into between CCC and a MAP 
Participant setting forth the terms and conditions of approved 
activities under MAP, including any subsequent amendments to such 
agreement.
    Program year--Unless otherwise agreed in writing between CCC and a 
MAP Participant, a 12-month period during which a MAP Participant can 
undertake activities consistent with this subpart and its program 
agreement and approval letter with CCC.
    Promoted commodity--a U.S. agricultural commodity the sale of which 
is the intended result of a promotion activity.
    Sales and trade relations expenditures (STRE)--expenditures made on 
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.
    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 that meets the small 
business

[[Page 891]]

size standards published at 13 CFR part 121, Small Business Size 
Regulations.
    SRTG--the acronym for State Regional Trade Group. An SRTG is a 
nonprofit association of state-funded agricultural promotion agencies.
    Supergrade--a salary level above the reimbursable salary range 
generally allowable under MAP, which CCC may approve on a case by case 
basis. This salary level is available only for certain non-U.S. 
employees who direct MAP Participants' overseas offices.
    Temporary contractor--a contractor, typically a consultant or other 
highly paid professional, that is hired on a short term basis to assist 
in the performance of an activity.
    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.
    UES Web site--a Web site maintained by FAS through which applicants 
may apply online to MAP and any other USDA market development program. 
The Web site is currently accessible at www.fas.usda.gov/mos/ues/
unified.asp.
    Unified Export Strategy (UES)--is a standardized online Internet 
application developed by USDA and available for use by entities to apply 
to any USDA market development program, including the MAP.
    U.S. agricultural commodity--any agricultural commodity, including 
any food, feed, fiber, forestry product, livestock, or insect of U.S. 
origin or fish harvested from a U.S. aquaculture farm or harvested by a 
vessel as defined in Title 46 of the United States Code, in waters that 
are not waters (including the territorial sea) of a foreign country, and 
any product thereof, excluding tobacco. An agricultural commodity shall 
be considered to be U.S. origin if it is comprised of at least 50 
percent by weight, exclusive of added water, of agricultural commodities 
grown or raised in the United States.
    USDA--the United States Department of Agriculture.
    U.S. for-profit entity--a firm, association, or other entity 
organized or incorporated, located and doing business for profit in the 
United States, and engaged in the export or sale of a U.S. agricultural 
commodity.



Sec. 1485.12  Participation eligibility.

    To participate in the MAP, an entity shall be:
    (a) A nonprofit U.S agricultural trade organization;
    (b) A nonprofit SRTG;
    (c) A U.S. agricultural cooperative; or
    (d) A State agency.



Sec. 1485.13  Application process.

    (a) General application requirements. CCC will periodically publish 
a Notice in the Federal Register that it is accepting applications for 
participation in MAP. Applications shall be submitted in accordance with 
the terms and requirements specified in the Notice and in these 
regulations. Applicants are encouraged to submit a UES through the UES 
Internet Web site, but are not required to do so. Applicants may apply 
to conduct a generic promotion program and/or a brand promotion program 
that provides MAP funds to brand participants for branded promotion. An 
applicant who is a U.S. agricultural cooperative may also apply for 
funds to conduct its own brand promotion program.
    (1) Applicant and program information.
    (i) All applications shall contain:
    (A) The name, address, and Internet location of the home page of the 
applicant organization;
    (B) The name of the applicant's Chief Executive Officer;
    (C) The name, telephone number, fax number, and email address of the 
applicant's primary contact person;
    (D) The name(s) of the person(s) responsible for managing the 
proposed program;
    (E) A description of the applicant organization, including the type 
of organization of the applicant (e.g., nonprofit SRTG), its mission, 
and the statutory authorities by which it is constituted and under which 
it operates, if applicable;
    (F) Tax exempt identification number of the applicant, if 
applicable;
    (G) Beginning and ending dates for proposed program year (mm/dd/yy-
mm/dd/yy);

[[Page 892]]

    (H) Dollar amount of CCC resources requested for generic activities;
    (I) Dollar amount of CCC resources requested for brand activities;
    (J) Total dollar amount of CCC resources requested;
    (K) Percentage of CCC resources requested for general administrative 
expenses;
    (L) A Dun and Bradstreet DUNS number for the applicant;
    (M) A description of the applicant organization's membership and 
membership criteria;
    (N) A list of organizations affiliated with the applicant, including 
parent organizations, subsidiaries, and partnerships;
    (O) A description of the applicant's management and administrative 
capability;
    (P) A description of the applicant's prior export promotion 
experience;
    (Q) Value, in U.S. dollars, of proposed contributions from the 
applicant or the applicant's proposed contribution stated as a 
percentage of the total dollar amount of CCC resources requested; and
    (R) Value, in U.S. dollars, of proposed contributions from other 
sources.
    (ii) [Reserved]
    (2) Program justification.
    (i) All applications shall contain:
    (A) A description of the promoted U.S. agricultural commodity(s), 
its harmonized tariff classification, the applicable commodity aggregate 
code (available from the UES Web site) and the percentage of U.S. origin 
content by weight, exclusive of added water;
    (B) A description of the anticipated supply and demand situation for 
the promoted U.S. agricultural commodity(s);
    (C) The volume and value of exports of the promoted U.S. 
agricultural commodity(s) to the targeted markets for the most recent 3-
year period;
    (D) If the proposal is for 2 or more years, an explanation why the 
proposal should be funded on a multi-year basis; and
    (E) A certification and, if requested by CCC, 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. An explanation, if one is 
requested, shall indicate why the applicant is unlikely to carry out the 
activities without Federal financial assistance. In determining whether 
Federal funds would supplement or supplant private or third-party funds 
or contributions, CCC will consider the applicant's prior overall 
marketing budget in the MAP program from year-to-year, variations in 
promotional strategies within a country, and new markets.
    (ii) [Reserved]
    (3) Proposed program's strategic plan.
    (i) All applications shall include a strategic plan that contains:
    (A) A description of overall long term strategic goals to be 
advanced by the proposed activities for the ensuing 3-5 years;
    (B) An explanation of the organization's strategic planning process 
and identification of priority target markets, including a summary of 
proposed budgets by country and commodity aggregate code;
    (C) A description of the world market situation for the exported 
U.S. agricultural commodity(s);
    (D) A description of competition from other exporters;
    (E) An evaluation plan describing the applicant's goals and the 
applicant's plans for monitoring and evaluating performance towards 
achieving these goals. This evaluation plan should set forth specific 
goals and benchmarks set at regular intervals to be used to identify 
results against identified constraints and opportunities and to measure 
progress made in the target market. Evaluation of a proposed MAP 
program's effectiveness will depend on a clear statement by the 
applicant of goals, method of achievement, and expected results of 
programming at regular intervals. The overall goal of the MAP and of 
individual Participants' programming is to achieve or maintain sales 
that would not have occurred in the absence of MAP funding. A MAP 
Participant may modify and resubmit this plan for re-approval at any 
time during the program year.
    (F) For each target country, 5 years or as many years as are 
available of:
    (1) Historical U.S. export data;

[[Page 893]]

    (2) U.S. market share; and
    (3) MAP funds received by the applicant;
    (G) For each target country, 3 years of projected U.S. export data 
and U.S. market share;
    (H) Country strategy, including market constraint(s) impeding U.S. 
exports (e.g., trade barriers) or opportunities present and the strategy 
proposed to overcome constraints or take advantage of the opportunities, 
previous activities in the country, and the projected impact of the 
proposed program on U.S. exports;
    (I) A justification for any proposed overseas office, including a 
staffing plan listing job titles, position descriptions, salary ranges, 
any request for approval of supergrade salaries, and an itemized 
administrative budget;
    (J) A description of any demonstration projects, if applicable;
    (K) Data summarizing the applicant's historical and projected 
exports, market share, and MAP budgets of the promoted U.S. agricultural 
commodity(s);
    (L) A written presentation of all proposed activities including:
    (1) A short description of the relevant market constraint or 
opportunity;
    (2) A budget for each proposed activity, identifying the source of 
funds.
    (ii) Applications for brand promotion assistance shall also include 
in their strategic plans:
    (A) A description of how the brand promotion program will be 
publicized to U.S. industry; and
    (B) The criteria that will be used to allocate funds to U.S. for-
profit entities and U.S. agricultural cooperatives.
    (b) CCC may request any additional information that it deems 
necessary to evaluate an application, including, but not limited to, 
performance measurement information.
    (c) Special rules governing demonstration projects funded with CCC 
resources.
    (1) CCC will consider proposals for demonstration projects, 
provided:
    (i) No more than one such demonstration project per constraint is 
undertaken within a market;
    (ii) The constraint to be addressed in the target market is a lack 
of technical knowledge or expertise;
    (iii) The demonstration project is a practical and cost effective 
method of overcoming the constraint; and
    (iv) A third-party must participate in such project through a 
written agreement with the MAP Participant.
    (d) Universal Identifier and Central Contractor Registration (CCR)
    (1) In accordance with 2 CFR Part 25, each entity that applies to 
the MAP program and does not qualify for an exemption under 2 CFR 25.110 
must:
    (i) Be registered in the CCR prior to submitting an application or 
plan;
    (ii) Maintain an active CCR registration with current information at 
all times during which it has an active Federal award or an application 
or plan under consideration by CCC; and
    (iii) Provide its DUNS number in each application or plan it submits 
to CCC.
    (2) [Reserved]
    (e) Reporting Subaward and Executive Compensation Information. In 
accordance with 2 CFR Part 170, each entity that applies to the MAP 
program and does not qualify for an exception under 2 CFR 170.110(b) 
must ensure it has the necessary processes and systems in place to 
comply with the applicable reporting requirements of 2 CFR Part 170 
should it receive MAP funding.



Sec. 1485.14  Application review and formation of agreements.

    (a) General. CCC will, subject to the availability of funds, approve 
those applications that 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, some of which cannot be mathematically measured--e.g., market 
opportunity, market strategy, and management capability. CCC may require 
that an applicant participate in the MAP through another MAP Participant 
or applicant.
    (b) Application review criteria. In assessing the likelihood of 
success of the applications it receives and deciding which it will 
approve, CCC will follow

[[Page 894]]

results-oriented management principles and consider the following 
criteria:
    (1) The effectiveness of program management;
    (2) Soundness of accounting procedures;
    (3) The nature of the applicant organization. With respect to 
nonprofit U.S. trade organizations, preference will be given to those 
organizations with the broadest base of producer representation of and 
affiliated industry participation for the commodity being promoted;
    (4) Prior export promotion experience;
    (5) Appropriateness of staffing;
    (6) Adequacy of the applicant's strategic plan in the following 
categories;
    (i) Description of target market conditions;
    (ii) Description of and plan for addressing market constraints and 
opportunities;
    (iii) Breadth of industry participation in strategic planning 
process;
    (iv) Strategic prioritization identified in proposed plan;
    (v) Export volume and value and market share goals in each target 
country;
    (vi) Description of evaluation plan and suitability of the plan for 
performance measurement; and
    (vii) Past program results and/or evaluations, including program 
success stories.
    (c) Allocation factors. CCC determines which applications to approve 
and develops preliminary recommended funding levels for each approved 
application based on the following factors, in addition to those in 
paragraph (b) of this section. CCC determines final funding levels after 
allocating available funds to approved applications on the basis of 
criteria that will be fully described in each program year's MAP 
announcement in the Federal Register:
    (1) Size of the budget request in relation to projected value of 
exports;
    (2) Where applicable, size of the budget request in relation to 
actual value of exports in prior years;
    (3) Where applicable, Participant's past projections of exports 
compared with actual exports;
    (4) Level of contributions by the applicant and by all other 
sources;
    (5) Market share goals in target country(ies);
    (6) The percentage by weight, exclusive of added water, of U.S. 
agricultural commodities contained in the promoted products;
    (7) The degree of value-added processing in the United States; and
    (8) Proposed MAP-funded general administrative and overhead costs 
compared to proposed MAP-funded direct promotional costs.
    (d) Approval decision.
    (1) CCC will approve those applications that it determines best 
satisfy the criteria and factors specified above.
    (2) Notification of decision. CCC will notify each applicant in 
writing of the final disposition of its application.
    (e) Formation of agreements. CCC will send a program agreement (or 
amendment to an existing program agreement), an approval letter, and a 
signature card to each approved applicant. The program agreement or 
amendment and the approval letter will outline which activities and 
budgets are approved and will specify any special terms and conditions 
applicable to a MAP Participant's program, including any requirements 
with respect to contributions and program evaluations. An applicant that 
decides to accept the terms and conditions contained in the program 
agreement or amendment and the approval letter must so indicate by 
having its Chief Executive Officer (CEO) or designee sign the program 
agreement or amendment and the approval letter and submit these to CCC. 
Final agreement shall occur when the program agreement or amendment and 
the approval letter are signed by both parties.
    (f) Signature cards. The MAP Participant shall designate at least 
two individuals in its organization to sign program agreements and 
amendments, approval letters, reimbursement claims, and advance 
requests. The MAP Participant shall submit the signature card signed by 
those designated individuals and by the MAP Participant's CEO to CCC. 
The Participant shall immediately notify CCC of any changes in 
signatories and shall submit a revised signature card accordingly.

[[Page 895]]

    (g) UES ID and passwords. CCC will provide each MAP Participant with 
IDs and passwords for the UES Web site, as necessary. MAP Participants 
shall protect these IDs and passwords in accordance with USDA's 
information technology policies that CCC will provide to MAP 
Participants. MAP Participants shall immediately notify CCC whenever a 
person who possesses the ID and password information no longer needs 
such information or a person who is not authorized gains such 
information.
    (h) A MAP Participant through which small-sized U.S. for-profit 
entities are participating in the MAP program shall obtain annual 
certifications from all such entities that they are small-sized entities 
or U.S. agricultural cooperatives as defined in these regulations. The 
Participant shall retain these certifications in accordance with the 
recordkeeping requirements of this subpart.
    (i) Changes to activities and funding.
    (1) Adding a new activity.
    (i) A MAP Participant may not conduct a new activity without first 
obtaining an approved activity budget for such change. To request 
approval of such activity budget, the MAP Participant shall submit a 
notification to CCC.
    (ii) A notification for a new activity shall provide an activity 
justification and identify any related adjustments to the approved 
strategic plan, including changes in market, constraint, or opportunity 
that the activity proposes to address. The notification shall contain 
the activity description, the proposed budget, and a justification of 
transfer of funds.
    (iii) After receipt of the notification, CCC will inform the MAP 
Participant via the UES Web site whether the requested budget is 
approved.
    (2) Modifying existing activities and their funding levels.
    (i) A MAP Participant desiring to increase the funding level for 
existing, approved activities addressing a single constraint or 
opportunity by more than $25,000 or 25 percent of the approved funding 
level, whichever is greater, must first submit a notification explaining 
the adjustment to CCC before making such change.
    (ii) A MAP Participant may make significant adjustments below that 
threshold to the funding levels for existing, approved activities 
without prior notification to CCC, only if it submits a notification 
explaining the adjustments to CCC no later than 30 days after the 
change. Minor adjustments to existing, approved activities and/or 
funding levels do not require notification.
    (iii) Notifications shall describe the activity, changes to the 
activity, the existing funding level, the proposed funding level, and a 
justification for transfer of funds, if applicable.



Sec. 1485.15  Operational procedures for brand programs.

    (a) Where CCC approves an application by a MAP Participant to run a 
brand promotion program that will include brand Participants, the MAP 
Participant shall establish brand program operational procedures. The 
MAP Participant annually shall submit to CCC for approval its proposed 
brand program operational procedures for such program year. CCC will 
notify all new and existing MAP Participants in writing in each 
Participant's annual approval letter and through the FAS Web site as to 
applicable submission dates for and dates for approvals of brand program 
operation procedures. Such procedures shall include, at a minimum, a 
brand program application, application procedures, application review 
criteria, brand participant eligibility requirements, a participation 
agreement, reimbursement requirements, compliance requirements, 
reporting and recordkeeping requirements, employment practices, 
financial management requirements, contracting procedures, and 
evaluation requirements.
    (b) The MAP Participant shall not enter into any participation 
agreements with brand participants nor shall it implement any MAP brand 
activities for the applicable program year unless and until CCC has 
communicated in writing its approval of the proposed operational 
procedures to the MAP Participant.

[[Page 896]]

    (c) Participation agreements between MAP Participants and brand 
participants. Where CCC approves a MAP Participant's application to run 
a brand promotion program that will include brand participants, the MAP 
Participant shall enter into participation agreements with brand 
participants. These agreements must:
    (1) Specify a time period for such brand promotion and require that 
all brand promotion expenditures be made within the MAP Participant's 
approved program year;
    (2) Make no allowance for extension or renewal;
    (3) Limit reimbursable expenditures to those made in countries and 
for activities approved in the brand participant's activity plan;
    (4) Specify the percentage of promotion expenditures that will be 
reimbursed, reimbursement procedures, and documentation requirements;
    (5) Include a written certification by the brand participant that it 
either owns the brand of the product it will promote or has exclusive 
rights to promote the brand in each of the countries in which promotion 
activities will occur;
    (6) Require that all product labels, promotional material, and 
advertising will identify the origin of the U.S. agricultural commodity 
as ``American'', ``Product of the United States of America'', ``Product 
of the U.S.'', ``Product of the U.S.A.'', ``Product of America'', 
``Grown in the United States of America'', ``Grown in the U.S.'', 
``Grown in the U.S.A.'', ``Grown in America'', ``Made in the United 
States of America,'' ``Made in the U.S.'', ``Made in the U.S.A.'', 
``Made in America'', or product of, grown in or made in any state or 
territory of the United States of America spelled out in its entirety, 
or other U.S. regional designation if approved in advance by CCC; that 
such origin identification will be conspicuously displayed in a manner 
easily observed as identifying the origin of the product; and that such 
origin identification will conform, to the extent possible, to the U.S. 
standard of \1/6\ inch (.42 centimeters) in height based on the lower 
case letter ``o''. The use of the above terms as a descriptor or in the 
name of the product (e.g., Texas style chili, Bob's American Pizza) does 
not satisfy the product origin requirement. Phrases ``product of'', 
``grown in'' or ``made in'' are encouraged, but not required. A MAP 
Participant may request an exemption from this requirement on a case-by-
case basis. All such requests shall be in writing and include 
justification satisfactory to CCC that this labeling requirement would 
hinder a MAP Participant's promotional efforts. CCC will determine, on a 
case by case basis, whether sufficient justification exists to grant an 
exemption from the labeling requirement. In addition, CCC may 
temporarily waive this requirement where CCC has determined that such 
labeling will likely harm sales rather than help them. Such 
determinations will be announced to MAP Participants via a MAP notice 
issued on FAS' Web site;
    (7) Include a written certification by the brand participant that it 
is either a small-sized entity as defined in this subpart or a U.S. 
agricultural cooperative;
    (8) Require that the 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) Require the brand participant to maintain all original records 
and documents relating to program activities for 5 calendar years 
following the end of the applicable program year and make such records 
and documents available upon request to authorized officials of the U.S. 
Government.
    (d) MAP Participants may not provide assistance to a single entity 
including a entity reincorporated or re-organized under the same or 
different name if the reincorporated or re-organized entity is 
substantially similar to the pre-existing entity, for brand promotion in 
a single country for more than 5 years. Such 5 years do not need to be 
consecutive. Such 5-year period shall not begin prior to the 1994 
program year or the brand participant's first program year, whichever is 
later. In limited circumstances, CCC may waive the 5 year limitation if 
CCC determines that further assistance is in the best interests of the 
MAP. CCC

[[Page 897]]

shall, at its discretion, decide whether a reincorporated or re-
organized entity is substantially similar to the pre-existing entity for 
purposes of applying this 5-year rule. Brand participants' participation 
in certain international trade shows in foreign countries will not be 
considered when determining such brand participants' time in country for 
purposes of the 5 year graduation requirement. Such shows must meet two 
requirements: They are food or agricultural shows, with no less than 30% 
of exhibitors selling food or agricultural products, and they are 
international shows, meaning they target buyers, distributors and the 
like from more than one foreign country and no less than 15% of each 
show's visitors are from countries other than the host country. CCC will 
compile a list of international trade shows that CCC exempts from the 
graduation requirement and such list will be announced to MAP 
Participants via a MAP notice issued on FAS' Web site.



Sec. 1485.16  Contribution rules.

    (a) In MAP generic promotion programs, a MAP Participant shall 
contribute a total amount in goods, services, and/or cash equal to at 
least 10 percent of the value of resources to be provided by CCC for all 
generic promotion activities proposed to be undertaken by the MAP 
Participant.
    (b) In MAP brand promotion programs, a MAP Participant conducting 
its own brand promotion or a brand participant shall contribute at least 
50 percent of the total eligible expenditures made on each approved 
brand promotion.
    (c) A MAP Participant must use its own funds and may not use MAP 
program funds to pay any administrative costs of the MAP Participant's 
U.S. office(s), including legal fees, except as set forth in this 
subpart. Where the MAP Participant uses its own funds to pay for 
administrative costs, such costs may be counted in calculating the 
amount of contributions the MAP Participant contributes to MAP generic 
or brand promotion programs.
    (d) Eligible contributions.
    (1) In calculating the amount of contributions that it will make, 
and the contributions that the U.S. industry (including expenditures to 
be made by entities in the applicant's industry in support of the 
entities' related promotion activities in the markets covered by the 
applicant's application) or State agency will make, the MAP applicant 
may include the costs listed under paragraph (d)(2) of this section if:
    (i) Expenditures will be made in furtherance of an approved 
activity, and
    (ii) The contributor has not been and will not be reimbursed by any 
source for such costs.
    (2) Subject to paragraph (d)(1) of this section, as well as 
applicable cost principles (e.g., 2 CFR Parts 220, 225, and 230) to the 
extent these principles do not directly conflict with the provisions of 
this subpart, 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 that target a foreign audience;
    (viii) The cost of seasonal greeting cards;
    (ix) Fees for office parking;
    (x) The cost of subscriptions that are of a technical, economic, or 
marketing nature and that are relevant to the approved activities of the 
MAP Participant;
    (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 agreement or 
regulatory requirements;
    (xiv) The cost of giveaways, awards, prizes and gifts;
    (xv) The cost of product samples;
    (xvi) Fees for participating in U.S. government sponsored or 
endorsed export promotion 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;

[[Page 898]]

    (xix) STRE and the cost associated with trade shows, seminars, and 
entertainment conducted in the United States;
    (xx) Other administrative expenses (e.g., supervisory travel from 
the U.S. to an overseas office); and
    (xxi) The cost of any activity expressly listed as reimbursable in 
this subpart.
    (3) The following are not eligible contributions:
    (i) Any portion of salary or compensation of an individual who is 
the target of an approved promotional activity;
    (ii) Any expenditure, including that portion of salary and time 
spent, related to promoting membership in the Participant organization 
(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 that has the effect of reducing 
the selling price of a U.S. 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.
    (4) CCC shall determine, at CCC's discretion, whether any cost not 
expressly listed in this section may be included by the MAP Participant 
as an eligible contribution.



Sec. 1485.17  Reimbursement rules.

    (a) A MAP Participant may seek reimbursement for an eligible 
expenditure if:
    (1) The expenditure was made in furtherance of an approved activity; 
and
    (2) The Participant has not been and will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraphs (a) and (d) of this section, as well as 
applicable cost principles (e.g., 2 CFR Parts 220, 225, and 230) to the 
extent these principles do not directly conflict with the provisions of 
this subpart, for either brand or generic promotion activities, CCC will 
reimburse, in whole or in part, the cost of:
    (1) Production and placement of advertising, in print, electronic 
media, billboards, or posters, which may include advertising the 
availability of price discounts, except that advertising associated with 
a coupon or price discount for the MAP promoted product is not 
reimbursable. If advertising is related to both coupons or price 
discounts for products other than the MAP Participant's promoted 
products as well as for MAP-promoted products, expenditures for such 
advertising will not be reimbursed in whole or in part (e.g., 
expenditures may not be prorated and submitted for reimbursement). 
Electronic media includes, but is not limited to, radio, television, 
electronic mail, internet, telephone, text messaging, and podcasting;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and other similar point of sale materials;
    (3) Direct mail advertising;
    (4) In-store and food service promotions, product demonstrations to 
the trade and to consumers, and distribution of product samples (but not 
the purchase of the product samples);
    (5) Temporary displays and rental of space for temporary displays;
    (6) Expenditures, other than travel expenditures, associated with 
seminars and educational training, whether conducted in the United 
States or outside the United States;
    (7) Subject to Sec. 1485.17(b)(18), expenditures, other than travel 
expenditures, associated with retail, trade and consumer exhibits and 
shows, whether held outside or inside the United States, including 
participation fees, booth construction, transportation of related 
materials, rental of space and equipment, and duplication of related 
printed materials. However, with regard to non-travel expenditures 
associated with retail, trade and consumer exhibits and shows held 
inside the

[[Page 899]]

United States, such expenditures are reimbursable only if the exhibit or 
show is: (1) a food or agricultural show with no less than 30% of 
exhibitors selling food or agricultural products, (2) an international 
show that targets buyers, distributors and the like from more than one 
foreign country and no less than 15% of its visitors are from countries 
other than the host country, and (3) an exhibit or show that the MAP 
Participant has not participated in within the last three years using 
funds from a source other than the MAP. CCC will compile a list of 
approved retail, trade and consumer exhibits and shows held inside the 
United States for which MAP reimbursement is available and such list 
will be announced to MAP Participants via a MAP notice issued on FAS' 
Web site;
    (8) Subject to Sec. 1485.17(b)(18), international travel 
expenditures, not to exceed the full fare economy rate, including any 
fees for modifying the originally purchased airline ticket, per diem, 
passports, visas and inoculations, 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 (or MAP Participant 
directly running its own brand program) to exhibit their company's (or 
cooperative's) products at a retail, trade, or consumer exhibit or show 
held outside the United States. Representatives may include employees 
and board members of private companies, employees or members of 
cooperatives, or any broker, consultant, or marketing representative 
contracted by the company or cooperative to represent the company or 
cooperative in sales transactions;
    (9) Subscriptions that are of a technical, economic, or marketing 
nature and that are relevant to the approved activities of the MAP 
Participant;
    (10) Demonstrators, interpreters, translators, receptionists, and 
similar temporary workers who help with the implementation of individual 
promotional activities, such as trade shows, in-store promotions, food 
service promotions, and trade seminars;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials, subject to such reimbursement limitation as CCC may determine 
and announce in writing to MAP Participants via a MAP notice issued on 
FAS' Web site. Reimbursement is available only when: (1) The items are 
described in detail with a per unit cost in an approved strategic plan 
and (2) distribution of the promotional item is not contingent upon the 
consumer, or other target audience, purchasing a good or service to 
receive the promotional item;
    (12) The design and production of packaging, labeling or origin 
identification, to be used during the program year in which the 
expenditure is made, if such packaging, labeling or origin 
identification is necessary to meet the importing requirements of a 
foreign country;
    (13) The design, production, and distribution of coupons for 
products other than the MAP Participant's promoted products. If such 
activities include both coupons or price discounts for products other 
than the MAP Participant's promoted products as well as for MAP-promoted 
products, expenditures for such activities will not be reimbursed in 
whole or in part (e.g., expenditures may not be prorated and submitted 
for reimbursement);
    (14) An audit of a MAP Participant as required by Office of 
Management and Budget Circular A-133 if the MAP is the MAP Participant's 
largest source of Federal funding;
    (15) The translation of written materials as necessary to carry out 
approved activities;
    (16) Expenditures associated with developing, updating, and 
servicing Web sites on the Internet that clearly target a foreign 
audience;
    (17) International travel expenditures, not to exceed the full fare 
economy rate, including any fees for modifying the originally purchased 
airline ticket, per diem, passports, visas and inoculations, as allowed 
under the U.S. Federal Travel Regulations (41 CFR parts 301 through 
304), incurred for a foreign trade mission conducted outside the United 
States that is an activity under an approved branded program and that 
has met the following conditions:
    (i) Trade mission travel for company (or cooperative) 
representatives was

[[Page 900]]

identified as a separate approved activity in the MAP Participant's UES;
    (ii) The trade mission included representatives, as defined in Sec. 
1485.17(b)(8), from a minimum of five different companies (or 
cooperatives), and no more than two representatives from each 
participating company (or cooperative);
    (iii) The appropriate FAS overseas office supported the trade 
mission by dedicating meaningful funding or other resources (such as 
facilities or staff time) to the activity; and
    (iv)(A) The MAP Participant with the approved brand program produced 
an itinerary or agenda for the trade mission that demonstrated that 
company (or cooperative) representatives would be engaged for a minimum 
of 6 hours per day (except for the first and last days of the mission) 
in trade mission activities that include, at a minimum, each of the 
following:
    (1) A product showcase where the FAS overseas office approved an 
invitation list of qualified buyers;
    (2) Pre-arranged one-on-one business meetings; and
    (3) Evaluation and feedback sessions with FAS staff and trade 
mission sponsors.
    (B) Reimbursement is conditional on the MAP Participant having 
notified in writing the Attach[eacute]/Counselor in the destination 
country in advance of the travel;
    (18) Where USDA has sponsored or endorsed a U.S. pavilion at a 
retail, trade and consumer exhibit or show, whether held outside or 
inside the United States, MAP funds may be used to reimburse the travel 
and/or non-travel expenditures of only those MAP Participants located 
within the U.S. pavilion. Such expenditures must also adhere to the 
standard terms and conditions of the U.S. pavilion organizer. Upon 
written request, CCC may temporarily waive this subsection, on a case by 
case basis, where: the trade show is segregated into product pavilions, 
or a company's distributor or importer is located outside the U.S. 
pavilion. Such waiver will be provided to the MAP Participant in 
writing; and
    (19) Contracts with U.S. based organizations when the only 
contracted service such organizations provide to a MAP Participant is 
carrying out a specific market promotion activity in the United States 
directed to a foreign audience (e.g., a trade mission of foreign buyers 
coming to the United States to visit U.S. exporters). Such contracts may 
be reimbursable as a direct promotional expense. If a U.S. based 
organization provides administrative services to the MAP Participant's 
domestic home office during a program year, any direct promotional 
services such organization provides to the Participant, whether for the 
Participant's domestic or overseas offices, during the same program year 
are not reimbursable.
    (c) Subject to paragraphs (a) and (d) 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, except CCC will 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 stationed overseas;
    (3) Compensation of non-U.S. citizen staff employees or non-U.S. 
contractors stationed overseas subject to the following limitations:
    (i) Where there is a local U.S. Embassy Foreign Service National 
(FSN) salary plan, CCC will not reimburse any portion of such 
compensation that exceeds the compensation prescribed for the most 
comparable position in the FSN salary plan, except for approved 
supergrades, 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, except for approved supergrades;
    (4) A retroactive salary adjustment for non-U.S. citizen staff 
employees or non-U.S. contractors stationed overseas that conforms to a 
change in FSN

[[Page 901]]

salary plans, effective as of the date of such change;
    (5) Accrued annual leave as of the time employment is terminated or 
as of such time as required by local law;
    (6) Overtime paid to clerical staff of approved MAP-funded overseas 
offices;
    (7) Temporary contractor fees for contractors stationed overseas, 
except CCC will not reimburse any portion of any 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, unless a bidding process 
reveals that such a contractor is not available at or below that salary 
rate;
    (8)(i) Subject to Sec. 1485.17(b)(18), international travel 
expenditures, not to exceed the full fare economy rate, including any 
fees for modifying the originally purchased airline ticket, per diem, 
passports, visas and inoculations, for activities held outside the 
United States or in the United States, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304), except that if the 
activity is participation in a retail, trade, or consumer exhibit or 
show held inside the United States, international travel expenditures 
are covered only if the exhibit or show is: (1) A food or agricultural 
show with no less than 30% of exhibitors selling food or agricultural 
products, (2) an international show that targets buyers, distributors 
and the like from more than one foreign country and no less than 15% of 
its visitors are from countries other than the host country, and (3) an 
exhibit or show that the MAP Participant has not participated in within 
the last three years using funds from a source other than the MAP. CCC 
will compile a list of approved retail, trade and consumer exhibits and 
shows held inside the United States for which MAP reimbursement is 
available and such list will be announced to MAP Participants via a MAP 
notice issued on FAS' Web site.
    (ii) CCC generally will not reimburse any portion of air travel, 
including any fees for modifying the originally purchased ticket, in 
excess of the full fare economy rate or when the MAP Participant fails 
to notify the Attach[eacute]/Counselor in the destination country in 
advance of the travel, unless the CCC determines it was impractical to 
provide such notice. If a traveler flies in business class or a 
different premium class, the basis for reimbursement will be the full 
fare economy class rate for the same flight and the MAP Participant 
shall provide documentation establishing such full fare economy class 
rate to support its reimbursement claim. If economy class is not offered 
for the same flight or if the traveler flies on a charter flight, the 
basis for reimbursement will be the average of the full fare economy 
class rate for flights offered by three different airlines between the 
same points on the same date and the MAP Participant shall provide 
documentation establishing such average of the full fare economy class 
rates to support its reimbursement claim.
    (iii) In very limited circumstances, the MAP Participant may be 
reimbursed for air travel up to the business class rate (i.e., a premium 
class rate other than the first class rate) upon prior written approval 
by CCC. Such circumstances are:
    (A) Regularly scheduled flights between origin and destination 
points do not offer economy class (or equivalent) airfare and the MAP 
Participant receives written documentation from its travel agent to that 
effect at the time the tickets are purchased;
    (B) Business class air travel is necessary to accommodate an 
eligible traveler's disability. Such disability must be substantiated in 
writing by a physician; and
    (C) An eligible traveler's origin and/or destination are outside of 
the continental United States and the scheduled flight time, beginning 
with the scheduled departure time, ending with the scheduled arrival 
time, and including stopovers and changes of planes, exceeds 14 hours. 
In such case, per diem and other allowable expenses will also be 
reimbursable for the day of arrival. However, no expenses will be 
reimbursable for a rest period or for any non-work days (e.g., weekends, 
holidays, personal leave, etc.) immediately following the date of 
arrival.
    (iv) Alternatively, in lieu of reimbursing up to the business class 
rate in

[[Page 902]]

such circumstances, CCC will reimburse economy class airfare plus per 
diem and other allowable travel expenses related to a rest period of up 
to 24 hours, either en route or upon arrival at the destination. For a 
trip with multiple destinations, each origin/destination combination 
will be considered separately when applying the 14 hour rule for 
eligibility of reimbursement of business class travel or rest period 
expenses. A stopover is the time a traveler spends at an airport, other 
than the originating or destination airport, which is a normally 
scheduled part of a flight. A change of planes is the time a traveler 
spends at an airport, other than the originating or destination airport, 
to disembark from one flight and embark on another. All travel should 
follow a direct or usually traveled route. Under no circumstances should 
a traveler select flights in a manner that extends the scheduled flight 
time to beyond 14 hours in part to secure eligibility for reimbursement 
of business class travel;
    (9) Automobile mileage at the local U.S. Embassy rate or rental cars 
while in travel status;
    (10) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304);
    (11) Organization costs for overseas offices approved in MAP program 
agreements. Such costs include incorporation fees, brokers' fees, fees 
to attorneys, accountants, or investment counselors, whether or not 
employees of the organization, incurred in connection with the 
establishment or reorganization of the overseas office, and rent, 
utilities, communications originating overseas, office supplies, 
accident liability insurance premiums, and routine accounting and legal 
services required to maintain the overseas office;
    (12) The purchase, lease, or repair of, or insurance premiums for, 
capital goods that have an expected useful life of at least 1 year, such 
as furniture, equipment, machinery, removable fixtures, draperies, 
blinds, floor coverings, computer hardware and software, and portable 
electronic communications devices (including mobile phones, wireless 
email devices, personal digital assistants);
    (13) Such premiums for health or accident insurance and other 
benefits for foreign national employees that the employer is required by 
law to pay;
    (14) Accident liability insurance premiums for facilities used 
jointly with third-party participants for MAP activities or for MAP-
funded travel of third-party participants;
    (15) Market research, including research to determine the types of 
products that are desired in a market;
    (16) Independent evaluations and audits, if not otherwise required 
by CCC, to ensure compliance with program requirements;
    (17) Legal fees to obtain advice on the host country's labor laws;
    (18) Employment agency fees;
    (19) STRE incurred outside of the United States, and STRE incurred 
in conjunction with an approved activity taking place within the United 
States with prior written approval from CCC. MAP Participants are 
required to use the appropriate American Embassy representational 
funding guidelines for breakfasts, lunches, dinners and receptions. MAP 
Participants may exceed Embassy guidelines only when they have received 
written authorization from the FAS Agricultural Counselor at the 
Embassy. The amount of unauthorized STRE expenses that exceed the 
guidelines will not be reimbursed. MAP Participants must pay the 
difference between the total cost of STRE events and the appropriate 
amount as determined by the guidelines. For STRE incurred in the United 
States, the MAP Participant should provide, in its request for approval, 
the basis for determining its proposed expenses;
    (20) 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 published by the U.S. Department of State;
    (21) Evacuation payments (safe haven) and shipment and storage of 
household goods and motor vehicles;

[[Page 903]]

    (22) U.S. office(s) administrative support expenses for the National 
Association of State Departments of Agriculture, the SRTGs, and the 
Intertribal Agriculture Council;
    (23) Non-travel expenditures associated with conducting 
international staff conferences held either in or outside the United 
States;
    (24) Subject to Sec. 1485.17(b)(18), domestic travel expenditures, 
as allowed under the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304), for international retail, trade and consumer exhibits and 
shows conducted in the United States upon prior written approval by CCC. 
Domestic travel expenses to such a show or exhibit are covered only if 
the exhibit or show is: (1) A food or agricultural show with no less 
than 30% of exhibitors selling food or agricultural products, (2) an 
international show that targets buyers, distributors and the like from 
more than one foreign country and no less than 15% of its visitors are 
from countries other than the host country, and (3) an exhibit or show 
that the MAP Participant has not participated in within the last three 
years using funds from a source other than the MAP. CCC will compile a 
list of approved retail, trade and consumer exhibits and shows held 
inside the United States for which MAP reimbursement is available and 
such list will be announced to MAP Participants via a MAP notice issued 
on FAS' Web site;
    (25) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304), for seminars and 
educational training conducted in the United States;
    (26) Domestic travel expenditures, as allowed under the U.S. Federal 
Travel Regulations (41 CFR parts 301 through 304), for one home office 
MAP Participant employee, one MAP Participant board member, or a state 
department of agriculture employee paid by the MAP Participant, when 
such individual accompanies foreign trade missions or technical teams 
while traveling in the United States where the following conditions are 
met:
    (i) Such trade missions or technical team visits are identified in 
the MAP Participant's UES;
    (ii) Such trade missions or technical team visits have been approved 
by CCC; and
    (iii) The MAP-sponsored traveler submits a follow-up trip report to 
CCC that includes the following:
    (A) Purpose for the individual's participation;
    (B) Any pre-arranged business meetings;
    (C) Itinerary and/or agenda for the trip; and
    (D) Feedback from sponsors and trade mission/technical team members 
on the success of the trip.
    (27) Approved demonstration projects;
    (28) Expenditures related to copyright, trademark, or patent 
registration, including attorney fees;
    (29) Rental or lease expenditures for storage space for program-
related materials;
    (30) Business cards that target a foreign audience;
    (31) Expenditures associated with developing, updating, and 
servicing Web sites on the Internet that: Contain a message related to 
exporting or international trade, include a discernible ``link'' to the 
FAS/Washington homepage or an FAS overseas homepage, and have been 
specifically approved by the appropriate FAS commodity division. 
Expenditures related to Web sites or portions of Web sites that are 
accessible only to an organization's members are not reimbursable. 
Reimbursement claims for Web sites that include any sort of ``members 
only'' sections must be prorated to exclude the costs associated with 
those areas subject to restricted access;
    (32) Expenditures not otherwise prohibited from reimbursement that 
are associated with activities held in the United States or abroad 
designed to improve market access by specifically addressing temporary, 
permanent, or impending technical barriers to trade that prohibit or 
threaten U.S. exports of agricultural commodities; and
    (33) Membership fees in professional, industry-related 
organizations.
    (d) CCC will not reimburse any cost of:

[[Page 904]]

    (1) Forward year financial obligations, such as severance pay, 
attributable to employment of foreign nationals;
    (2) Expenses, fines, settlements, judgments or payments relating to 
legal suits, challenges or disputes;
    (3) The design and production of packaging, labeling or origin 
identification, except as specifically allowed in this subpart;
    (4) Product development, product modification or product research;
    (5) Product samples;
    (6) Slotting fees or similar sales expenditures;
    (7) The purchase of, construction of, or lease of space for 
permanent, non-mobile displays, i.e., displays that are constructed to 
remain permanently in the same location beyond one program year. 
However, CCC may, at its discretion, reimburse the construction or 
purchase of permanent displays on a case-by-case basis, if the 
Participant sought and received prior written approval from CCC of such 
construction or purchase;
    (8) Rental, lease or purchase of warehouse space, except for storage 
space for program-related material;
    (9) Coupon redemption or price discounts of the MAP promoted 
commodity;
    (10) Refundable deposits or advances;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials in excess of the limitation that CCC will determine. Such 
determination will be announced in writing via a MAP notice issued on 
FAS' Web site;
    (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 was restricted by U.S. Government action or 
advisory;
    (16) Independent evaluations or audits, including evaluations or 
audits of the activities of a subcontractor, if CCC determines that such 
a review is needed in order to confirm past or to ensure future program 
agreement or regulatory compliance;
    (17) Any arrangement that has the effect of reducing the selling 
price of a U.S. agricultural commodity;
    (18) Goods, 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 that target a U.S. domestic audience;
    (23) Seasonal greeting cards;
    (24) Office parking fees;
    (25) Subscriptions to publications that are not of a technical, 
economic, or marketing nature or that are not relevant to the approved 
activities of the MAP Participant;
    (26) U.S. office(s) administrative expenses, including communication 
costs, except as noted in Sec. 1485.17(c)(22) and except that usage 
costs for communications devices incurred while on reimbursable 
international or domestic travel for approved MAP brand or generic 
promotion activities are reimbursable as eligible travel expenditures as 
allowed under the U.S. Federal Travel Regulations (41 CFR Parts 301 
through 304);
    (27) Any expenditure on an activity that includes any derogatory 
reference or comparison to other U.S. agricultural commodities;
    (28) Payment of U.S. and foreign employees' or contractors' share of 
personal taxes, except where a foreign country's laws require the MAP 
Participant to pay such employees' or contractors' share;
    (29) Any expenditure made for an activity prior to CCC's approval of 
that activity;
    (30) Contributions to a contingency reserve or any similar provision 
made for events the occurrence of which cannot be foretold with 
certainty as to time, intensity, or with an assurance of their 
happening; and
    (31) Expenditures associated with a MAP Participant's creation or 
review of their fraud prevention program, contracting procedures, or 
brand program operational procedures.

[[Page 905]]

    (e) Special rules for approval of supergrades.
    (1) With respect to individuals who are not U.S. citizens and who 
are hired by MAP Participants either as employees or contractors who are 
hired to act as employees, ordinarily, CCC will not reimburse any 
portion of such individual's compensation that exceeds the compensation 
prescribed for the most comparable position in the FSN salary plan 
applicable to the country in which the employee or contractor works. 
However, a MAP Participant may seek a higher level of reimbursement for 
a non-U.S. citizen employee or contractor who will be employed as a 
country director or regional director by requesting that CCC approve 
that employee or contractor as a supergrade.
    (2) To request approval of a supergrade, the MAP Participant shall 
provide CCC with a detailed description of both the duties and 
responsibilities of the position and the qualifications and background 
of the employee or contractor concerned. The Participant shall also 
justify why the comparable FSN salary level is insufficient.
    (3) Where a non-U.S. citizen employee or contractor 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 employee or contractor 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.
    (4) A U.S. citizen with dual citizenship with another foreign 
country or countries shall not be considered a non-U.S. citizen.
    (f) For a brand promotion activity, CCC will reimburse no more than 
50 percent of the total eligible expenditures made on that activity.
    (g) CCC will reimburse for expenditures made after the conclusion of 
a MAP Participant's program year provided:
    (1) The activity was approved by CCC prior to the end of the program 
year;
    (2) The activity was completed within 30 calendar days following the 
end of the program year; and
    (3) All expenditures were made for the activity within 6 months 
following the end of the program year.
    (h) A MAP Participant shall not use MAP funds for any activity or 
any expenses incurred by the MAP Participant prior to the date of the 
program agreement or after the date the program agreement is suspended 
or terminated, except as otherwise permitted by CCC.
    (i) Except as otherwise provided in this subpart, MAP-funded travel 
shall conform to U.S. Federal Travel Regulations (41 CFR parts 301 
through 304) and MAP-funded air travel shall conform to the requirements 
of the Fly America Act (49 U.S.C. 40118). The MAP Participant shall 
notify the Attach[eacute]/Counselor in the destination countries in 
writing in advance of any proposed travel.
    (j) CCC may determine, at CCC's discretion, whether any cost not 
expressly listed in Sec. 1485.17 will be reimbursed.



Sec. 1485.18  Reimbursement procedures.

    (a) Participants are required to use CCC's Internet-based UES system 
to request reimbursement for eligible MAP expenses. 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 or written notice; and

[[Page 906]]

    (8) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the MAP 
Participant's U.S. office to CCC.
    (c) CCC will not reimburse a claim for less than $10,000, except 
that CCC will reimburse a final claim for a MAP Participant's program 
year for a lesser amount.
    (d) CCC will not reimburse claims submitted later than 6 months 
after the end of a MAP Participant's program year.
    (e) If CCC overpays a reimbursement claim, the MAP Participant shall 
repay CCC within 30 days of such overpayment the amount of the 
overpayment either by submitting a check payable to CCC or by offsetting 
its next reimbursement claim. The MAP Participant shall make such 
payment in U.S. dollars, unless otherwise approved in advance by CCC.
    (f) If a MAP Participant receives a reimbursement or offsets an 
advanced payment which is later disallowed, the MAP Participant shall 
repay CCC within 30 days of such disallowance the amount disallowed 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The MAP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.
    (g) MAP funds may be expended by MAP Participants only on 
legitimate, approved activities as set forth in the program agreement 
and approval letter. If a MAP Participant discovers that MAP funds have 
not been properly spent, it shall notify CCC and shall within 30 days of 
its discovery repay CCC the amount owed either by submitting a check 
payable to CCC or by offsetting its next reimbursement claim. The MAP 
Participant shall make such payment in U.S. dollars, unless otherwise 
approved in advance by CCC.
    (h) The MAP Participant shall report any actions that may have a 
bearing on the propriety of any claims for reimbursement in writing to 
CCC.



Sec. 1485.19  Advances.

    (a) Policy. In general, CCC operates the MAP on a reimbursable 
basis.
    (b) Exception. A MAP Participant for generic promotion activities 
may request an advance of MAP funds from CCC, provided the MAP 
Participant meets the criteria for advance payments set forth in the 
applicable parts of this title (e.g., 7 CFR Parts 3015, 3016, and 3019). 
CCC will not approve any request for an advance submitted later than 3 
months after the end of a MAP Participant's program year. At any given 
time, total payments advanced shall not exceed 40 percent of a MAP 
Participant's approved generic activity budget for the program year. CCC 
will not advance funds to a MAP Participant for brand promotion 
activities. When approving a request for an advance, CCC may require the 
MAP Participant to carry adequate fidelity bond coverage when the 
absence of such coverage is considered to create an unacceptable risk to 
the interests of the MAP. Whether an ``unacceptable risk'' exists in a 
particular situation will depend on a number of factors, such as, for 
example, the Participant's history of performance in MAP; the 
Participant's perceived financial stability and resources; and any other 
factors presented in the particular situation that may reflect on the 
Participant's responsibility or the riskiness of its activities.
    (c) Interest. A MAP Participant shall deposit and maintain in an 
insured bank account in the United States all funds advanced by CCC. The 
account shall be interest-bearing, unless the exceptions in the 
applicable parts of this title apply (e.g., 7 CFR Parts 3015, 3016 and 
3019). Interest earned by the MAP Participant on funds advanced by CCC 
is not program income. The MAP Participant shall remit any interest 
earned on the advanced funds to the appropriate entity as set forth in 
the applicable parts of this title.
    (d) Refunds due CCC. A MAP Participant shall fully expend all 
advances on approved generic promotion activities within 90 calendar 
days after the date of disbursement by CCC. By the end of the 90 
calendar days, the MAP Participant must submit reimbursement claims to 
offset the advance and submit a check made payable to CCC for any 
unexpended balance. The MAP Participant shall make such payment

[[Page 907]]

in U.S. dollars, unless otherwise approved in advance by CCC.

[60 FR 6363, Feb. 1, 1995, as amended at 77 FR 41885, July 17, 2012]



Sec. 1485.20  Employment practices.

    (a) A MAP Participant shall enter into written contracts with all 
overseas employees who are paid in whole or in part with MAP funds and 
shall ensure that all terms, conditions, and related formalities of such 
contracts conform to governing local law.
    (b) A MAP Participant 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 MAP Participant may pay salaries or fees in any currency (U.S. 
or foreign). Participants should consult local laws regarding currency 
restrictions.



Sec. 1485.21  Financial management.

    (a) A MAP Participant shall implement and maintain a financial 
management system that conforms to generally accepted accounting 
principles. A MAP Participant's financial management system shall comply 
with the standards set forth in the applicable parts of this title 
(e.g., 7 CFR Parts 3015, 3016 and 3019).
    (b) A MAP Participant shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these regulations.
    (c) A MAP Participant shall retain all records concerning a MAP 
program transaction for a period of 5 years after completion of the 
program transaction and permit CCC to have full and complete access, for 
such 5-year period, to such records. These records shall include all 
documents related to employment of any employees whose salaries are 
reimbursed in whole or in part with MAP funds, whether such employees 
are based in the United States or overseas, such as employment 
applications, contracts, position descriptions, leave records, salary 
changes, and all records pertaining to contractors.
    (d) A MAP 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:
    (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 $75.00. CCC may, from time to time, determine a different 
minimum level and announce that minimum level in writing to all MAP 
Participants via a MAP notice issued on the FAS Web site;
    (3) The exchange rate used to calculate the dollar equivalent of 
expenditures made in a foreign currency and the basis for such 
calculation;
    (4) Copies of reimbursement claims;
    (5) An itemized list of claims charged to each of the MAP 
Participant's CCC resources accounts;
    (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, travel vouchers, 
and credit memos; and
    (7) Documentation supporting contributions. These 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 compliance review documentation related to claimed 
contributions.
    (e) Upon request, a MAP Participant shall provide to CCC originals 
of documents supporting reimbursement claims.



Sec. 1485.22  Reports.

    (a)End-of-Year Contribution Report. Not later than 6 months after 
the end of its program year, a MAP Participant shall submit two copies 
of a report that identifies, by cost category and in U.S. dollar 
equivalent, contributions made by the Participant, the U.S. industry, 
and the States during that program

[[Page 908]]

year. A suggested format of a contribution report is available from FAS. 
Foreign third party contributions are not included in the end-of-year 
contribution report.
    (b)Trip reports. Not later than 45 days after completion of travel 
(other than local travel), a MAP Participant shall electronically 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, and specific 
accomplishments.
    (c) Research reports. Not later than 6 months after the end of its 
program year, a MAP Participant shall submit a report on any research 
conducted pursuant to the approved MAP program.
    (d) Evaluation reports. Not later than 6 months after the end of its 
program year, a MAP Participant shall submit a report on any evaluations 
conducted in accordance with the approved MAP program.
    (e) Where CCC is designated the cognizant agency for audit, CCC may 
require the MAP Participant to submit to CCC an annual OMB Circular A-
133 audit in accordance with 7 CFR Part 3052. If CCC requires an 
additional audit with respect to a particular agreement, the MAP 
Participant shall arrange for such audit and shall submit to CCC, in the 
manner to be specified by CCC, such audit of the agreement.
    (f) CCC may require the submission of additional reports.
    (g) A MAP Participant's program agreement and/or approval letter 
shall specify to whom the Participant shall submit the reports required 
in this section.



Sec. 1485.23  Evaluation.

    (a) Policy. (1) 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 the MAP. 
Evaluation of the 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 
assessment of results of activities at regular intervals. The overall 
goal of the MAP and of individual Participants' programming is to 
achieve or maintain sales that would not have occurred in the absence of 
MAP funding. A MAP Participant that can demonstrate such sales, taking 
into account extenuating factors beyond the Participant's control, will 
have met the overall objective of the GPRA and the need for evaluation.
    (2) 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 MAP 
Participant's program, contributing to program accountability, and 
providing evidence of program effectiveness.
    (b) All MAP Participants must report annual results against their 
target market and/or regional constraint/opportunity performance 
measures. These are outcome results usually based on multiple activities 
and should demonstrate progress made in the market. This report shall be 
completed and submitted to CCC no later than 6 months following the end 
of the Participant's program year.
    (c) MAP Participants conducting a branded program must also complete 
a brand promotion evaluation. 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 approved MAP 
program. This evaluation shall be completed and submitted to CCC no 
later than 6 months following the end of the Participant's program year.
    (d) When appropriate or required by CCC, a MAP Participant shall 
complete a program evaluation. A program evaluation is a review of the 
MAP Participant's entire program, or an appropriate portion of the 
program as agreed to by the MAP Participant and CCC, to determine the 
effectiveness of the MAP Participant's strategy in meeting specified 
goals. Actual scope and timing of the program evaluation shall be 
determined by the MAP Participant and CCC and specified in the approval 
letter. A MAP Participant shall submit, via a cover letter to CCC, an 
executive summary that assesses the program

[[Page 909]]

evaluation's findings and recommendations and proposed changes in 
program strategy or design as a result of the evaluation. In addition to 
the requirements set forth in the applicable parts of this title (e.g., 
7 CFR Parts 3015, 3016, and 3019), a program evaluation shall contain:
    (1) The name of the party conducting the evaluation;
    (2) The scope of the evaluation;
    (3) A concise statement of the market constraint(s)/opportunity(ies) 
and the goals specified in the approved strategic plan;
    (4) A description of the evaluation methodology;
    (5) A description of export sales achieved;
    (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) On an annual basis, or more often when appropriate or required 
by CCC, a MAP Participant shall complete and submit program success 
stories. CCC will announce to all MAP Participants in writing via a MAP 
notice issued on the FAS Web site the detailed requirements for 
completing and submitting program success stories.



Sec. 1485.24  Compliance reviews and notices.

    (a) USDA staff may conduct compliance reviews of MAP Participants' 
activities under the MAP program. MAP Participants shall cooperate fully 
with relevant USDA staff conducting compliance reviews and shall comply 
with all requests from USDA staff to facilitate the conduct of such 
reviews.
    (b) Upon conclusion of the compliance review, USDA staff will 
provide either a written compliance report or a letter to the MAP 
Participant. USDA staff will issue a compliance report if it appears 
that CCC may be entitled to recover funds from that Participant and/or 
it appears that the Participant is not complying with any of the terms 
or conditions of the program agreement, approval letter, or the 
applicable laws and regulations. The compliance report will explain the 
basis for any recovery of funds from the Participant. Within 30 days of 
the date of the compliance report, the MAP Participant shall repay CCC 
the amount owed either by submitting a check payable to CCC or by 
offsetting its next reimbursement claim. The MAP Participant shall make 
such payment in U.S. dollars, unless otherwise approved in advance by 
CCC. If, however, a MAP Participant notifies CCC within 30 days of the 
date of the compliance report that the Participant intends to file an 
appeal pursuant to Sec. 1485.24(e), the amount owed to CCC by the MAP 
Participant is not due until the appeal procedures are concluded and CCC 
has made a final determination as to the amount owed. In the absence of 
any finding of funds due to CCC or other non-compliance, CCC will issue 
a letter to the MAP Participant. If, as a result of a compliance review, 
CCC determines that further review is needed in order to ensure 
compliance with the requirements of MAP, CCC may require the Participant 
to contract for an independent audit.
    (c) In addition, CCC may notify a MAP Participant in writing at any 
time if CCC determines that CCC may be entitled to recover funds from 
the Participant. CCC will explain the basis for any recovery of funds 
from the Participant in the written notice. The MAP Participant shall 
within 30 days of the date of the notice repay CCC the amount owed 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. The MAP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC. If, however, a MAP 
Participant notifies CCC within 30 days of the date of the written 
notice that the Participant intends to file an appeal pursuant to Sec. 
1485.24(e), the amount owed to CCC by the MAP Participant is not due 
until the appeal procedures are concluded and CCC has made a final 
determination as to the amount owed.
    (d) The fact that a compliance review has been conducted by USDA 
staff does not signify that a MAP Participant is in compliance with its 
program agreement, approval letter and/or applicable laws and 
regulations.
    (e) Appeals.

[[Page 910]]

    (1) A MAP Participant may, within 60 days of the date of the 
compliance report or written notice from CCC, submit a written response 
to CCC appealing the report or notice. CCC, at its discretion, may 
extend the period for response.
    (2) After review of the Participant's response, CCC shall determine 
whether the Participant owes any funds to CCC and will inform the 
Participant in writing of the basis for the determination. CCC will 
initiate action to collect such amount by providing the Participant a 
written demand for payment of the debt pursuant to Debt Settlement 
Policies and Procedures, 7 CFR part 1403.
    (3) Within 30 days of the date of the determination, the Participant 
may request in writing that CCC reconsider the determination and shall 
submit in writing the basis for such reconsideration. The Participant 
may also request a hearing.
    (4) If the Participant requests a hearing, CCC will set a date and 
time for the hearing. The hearing will be an informal proceeding. A 
transcript will not ordinarily be prepared unless the Participant bears 
the cost of a transcript; however, CCC may in its discretion have a 
transcript prepared at CCC's expense.
    (5) CCC will base its final determination upon information contained 
in the administrative record. The Participant must exhaust all 
administrative remedies contained in this section before pursuing 
judicial review of a determination by CCC.



Sec. 1485.25  Failure to make required contribution.

    A MAP Participant's required contribution will be specified in the 
approval letter. If the MAP Participant's required contribution is 
specified as a dollar amount and the MAP Participant does not make the 
required contribution, the MAP Participant shall pay to CCC in dollars 
the difference between the amount actually contributed and the amount 
specified in the approval letter. If the MAP Participant's required 
contribution is specified as a percentage of the total amount reimbursed 
by CCC, the MAP Participant may either return to CCC the amount of funds 
reimbursed by CCC to increase its actual contribution percentage to the 
required level or pay to CCC in dollars the difference between the 
amount actually contributed and the amount of funds necessary to 
increase its actual contribution percentage to the required level. A MAP 
Participant shall remit such payment within six months after the end of 
its program year. The MAP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC.



Sec. 1485.26  Submissions.

    For all permissible methods of delivery, submissions required by 
this subpart shall be deemed submitted as of the date received by CCC.



Sec. 1485.27  Disclosure of program information.

    (a) Documents submitted to CCC by MAP 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 CFR 1.12, 
Handling Information from a Private Business.
    (b) Any research conducted by a MAP Participant pursuant to a MAP 
program agreement and/or approval letter shall be subject to the 
provisions relating to intangible property in the applicable parts of 
this title (e.g., 7 CFR Parts 3015, 3016, and 3019).



Sec. 1485.28  Ethical conduct.

    (a) A MAP Participant shall conduct its business in accordance with 
the laws and regulations of the country in which an activity is carried 
out and in accordance with applicable U.S. Federal, state and local 
laws, and regulations. A MAP Participant shall conduct its business in 
the United States in accordance with applicable Federal, state and local 
laws and regulations. All MAP Participants must comply with the 
regulations in the applicable parts of this title (e.g., 7 CFR Parts 
1485, 3015, 3016, 3018, 3021, 3019, and 3052).
    (b) Except for a U.S. agricultural cooperative or a U.S. for-profit 
entity, neither a MAP Participant nor its affiliates shall make export 
sales of U.S. agricultural commodities and products

[[Page 911]]

covered under the terms of the applicable MAP agreement. Nor shall such 
entities charge a fee for facilitating an export sale. A MAP Participant 
may, however, collect check-off funds and membership fees that are 
required for membership in the MAP Participant. 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.
    (c) A MAP Participant shall not limit participation in its MAP 
activities to members of its organization. Participants shall ensure 
that their MAP-funded programs and activities are open to all otherwise 
qualified individuals and entities on an equal basis and without regard 
to any non-merit factors. The MAP Participant shall publicize its 
program and make participation possible for commercial entities 
throughout the relevant commodity sector or, in the case of SRTGs, 
throughout the corresponding region. This includes providing to such 
commercial entities, upon request, a copy of any document in its 
possession or control containing market information developed and 
produced under the terms of its MAP agreement. The Participant may 
charge a fee not to exceed the costs for assembling, duplicating and 
distributing the materials. This paragraph does not apply to U.S. 
agricultural cooperatives when implementing their own brand program.
    (d) A MAP Participant shall select U.S. agricultural industry 
representatives to participate in generic MAP activities such as trade 
teams, sales teams, and trade fairs based on criteria that ensure 
participation on an equitable basis by a broad cross section of the U.S. 
industry. If requested by CCC, a MAP Participant shall submit such 
selection criteria to CCC for approval.
    (e) All MAP Participants should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of a Participant's MAP agreement and the 
recovery of CCC funds related to such promotions from the Participant.
    (f) The MAP Participant must report any actions or circumstances 
that may have a bearing on the propriety of its MAP program to the 
appropriate Attach[eacute]/Counselor, and its U.S. office shall report 
such actions or circumstances in writing to CCC.



Sec. 1485.29  Contracting procedures.

    (a) Neither CCC nor any other agency of the U.S. Government nor any 
official or employee of CCC, FAS, USDA, or the U.S. Government has any 
obligation or responsibility with respect to MAP Participant contracts 
with third parties.
    (b) A MAP Participant shall comply with the procurement standards 
set forth below and in the applicable parts of this title when procuring 
goods and services and when engaging in construction to implement 
program agreements (e.g., 7 CFR Parts 3015, 3016, and 3019). For 
purposes of this subpart, the ``small purchase threshold'' referenced in 
7 CFR part 3019 is the ``simplified acquisition threshold'' established 
by 41 U.S.C. 134.
    (c) Each MAP Participant shall establish contracting procedures for 
contracts that are funded, in whole or in part, with MAP funds that are 
open, fair, and competitive.
    (d) Each MAP Participant shall submit to CCC, for CCC approval, 
written contracting guidelines for contracts that are funded, in whole 
or in part, with MAP funds. CCC will notify all new and existing MAP 
Participants in writing in each Participant's annual approval letter and 
through the FAS web site as to applicable submission dates for and dates 
for approvals of contracting guidelines. CCC's approval of such 
contracting guidelines will remain in place until CCC retracts its 
approval in writing, or until new guidelines are approved that supersede 
them. Once approved by CCC, these contracting guidelines shall govern 
all of a Participant's MAP-funded contracting involving contracts with 
an annual value of $35,000 or more. CCC may determine a different 
minimum value and announce that minimum value in writing to all MAP 
Participants via a MAP notice issued on the FAS Web site. The guidelines 
shall indicate the method for evaluating proposals received for all 
contract competitions, the method for monitoring

[[Page 912]]

and evaluating performance under contracts, and the method for 
initiating corrective action for unsatisfactory performance under 
contracts. The MAP Participant may modify and resubmit these guidelines 
for re-approval at any time. In addition to the requirements set forth 
in the applicable parts of this title (e.g., 7 CFR Parts 3015, 306, 
3019), these guidelines shall include, at a minimum, the following:
    (1) Procedures for developing and publicizing requests for 
proposals, invitations for bids, and similar documents that solicit 
third party offers to provide goods or services. Solicitations for 
professional and technical services shall be based on clear and accurate 
descriptions of and requirements related to the services to be procured. 
Such procedures must include a conflict-of-interest provision that 
states that no employee, officer, board member, or agent thereof of the 
MAP Participant will participate in the review, selection, award or 
administration of a contract if a real or apparent conflict of interest 
would arise. Such a conflict would arise when an employee, official, 
board member, agent, or the employee's, officer's, board member's, 
agent's family, partners, or an organization that employs or is about to 
employ any of the parties indicated herein, has a financial or other 
interest in the firm selected for an award. Procedures shall provide 
that officers, employees, board members, and agents thereof shall 
neither solicit nor accept gratuities, favors, or anything of monetary 
value from contractors or subcontractors. Procedures shall also provide 
for disciplinary actions to be applied for violations of such standards 
by officers, employees, board members or agents thereof;
    (2) Procedures for reviewing proposals, bids, or other offers to 
provide goods and services. Separate procedures shall be developed for 
various situations, including, but not limited to: solicitations for 
highly technical services; solicitations for services that are not 
common in a specific market; solicitations that yield receipt of three 
or more bids; solicitations that yield receipt of fewer than three bids;
    (3) Requirements to conduct all contracting in an openly competitive 
manner. Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids, and/or requests for proposals 
for procurement of any goods or services, and such individuals' families 
or partners, or an organization that employs or is about to employ any 
of the aforementioned, shall be excluded from competition for such 
procurement. MAP Participants' written contracting guidelines may detail 
special situations where the prohibitions in this subparagraph do not 
apply, such as in situations involving highly specialized technical 
services or situations where the services are not commonly offered in a 
specific market;
    (4) Requirements to perform and document in the procurement files 
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 in connection with every 
procurement action that is governed by the contracting guidelines;
    (5) Requirements to conduct an appropriate form of competition every 
3 years on all multi-year contracts that are governed by the contracting 
guidelines. However, contracts for in-country representation are not 
required to be re-competed after the initial reward. Instead, the 
performance of in-country representation must be evaluated and 
documented by the MAP Participant annually to ensure that the terms of 
the contract are being met in a satisfactory manner; and
    (6) Requirements for written contracts with each provider of goods, 
services, or construction work. Such contracts shall require such 
providers to maintain adequate records to account for funds provided to 
them by the MAP Participant.
    (e) A MAP Participant may undertake MAP promotional activities 
directly or through a domestic or foreign third party. However, the MAP 
Participant shall remain responsible and accountable to CCC for all MAP 
promotional activities and related expenditures undertaken by such third 
party

[[Page 913]]

and shall be responsible for reimbursing CCC for any funds that CCC 
determines should be refunded to CCC in relation to such third-party's 
promotional activities and expenditures.



Sec. 1485.30  Property standards.

    The MAP Participant shall insure all MAP-funded real property and 
equipment acquired in furtherance of program activities and safeguard 
such against theft, damage and unauthorized use. The Participant shall 
promptly report any loss, theft, or damage of property to the insurance 
company.



Sec. 1485.31  Anti-fraud requirements.

    (a) All MAP Participants.
    (1) All MAP Participants annually shall submit to CCC for approval a 
detailed fraud prevention program. CCC will notify all new and existing 
MAP Participants in writing in each Participant's annual approval letter 
and through the FAS web site as to applicable submission dates for and 
dates for approvals of fraud prevention programs. MAP Participants 
should review their fraud prevention programs annually. The fraud 
prevention program shall, at a minimum, include an annual review of 
physical controls and weaknesses, a standard process for investigating 
and remediation of suspected fraud cases, and training in risk 
management and fraud detection for all current and future employees. The 
MAP Participant shall not conduct or permit any MAP promotion activities 
to occur unless and until CCC has communicated in writing approval of 
the MAP Participant's fraud prevention program.
    (2) The MAP Participant, within five business days of receiving an 
allegation or information giving rise to a reasonable suspicion of 
misrepresentation or fraud that could give rise to a claim by CCC, shall 
report such allegation or information in writing to such USDA personnel 
as specified in the Participant's MAP program agreement and/or approval 
letter. The MAP Participant shall cooperate fully in any USDA 
investigation of such allegation or occurrence of misrepresentation or 
fraud and shall comply with any directives given by CCC or USDA to the 
MAP Participant for the prompt investigation of such allegation or 
occurrence.
    (b) MAP Participants with brand programs.
    (1) The MAP Participant may charge a fee to brand participants to 
cover the cost of the fraud prevention program.
    (2) The MAP Participant shall repay to CCC funds paid to a brand 
participant through the MAP Participant on claims that the MAP 
Participant or CCC subsequently determines are unauthorized or otherwise 
non-reimbursable expenses within 30 days of the MAP Participant's 
determination or CCC's disallowance. The MAP Participant shall repay CCC 
by submitting a check to CCC or by offsetting the MAP Participant's next 
reimbursement claim. The MAP Participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by CCC. A MAP Participant 
operating a brand program in strict accordance with an approved fraud 
prevention program, however, will not be liable to reimburse CCC for MAP 
funds paid on such claims if the claims were based on misrepresentations 
or fraud of the brand participant, its employees or agents, unless CCC 
determines that the MAP Participant was grossly negligent in the 
operation of the brand program regarding such claims. CCC shall 
communicate any such determination to the MAP Participant in writing.



Sec. 1485.32  Program income.

    Any revenue or refunds generated from an activity, e.g., 
participation fees, proceeds of sales, refunds of value added taxes 
(VAT), the expenditures for which have been wholly or partially 
reimbursed with MAP funds, shall be used by the MAP Participant in 
furtherance of its approved MAP activities in the program period during 
which the MAP funds are available for obligation by the MAP Participant. 
The use of such revenue or refunds shall be governed by 7 CFR Part 1485. 
Interest earned on funds advanced by CCC is not program income.



Sec. 1485.33  Amendment.

    A program agreement may be amended in writing with the consent of 
CCC and the MAP Participant.

[[Page 914]]



Sec. 1485.34  Noncompliance with an agreement.

    If a MAP Participant fails to comply with any term in its program 
agreement or approval letter, CCC may take one or more of the 
enforcement actions set forth in the applicable parts of this title 
(e.g., 7 CFR Parts 3015, 3016, and 3019) and, if, appropriate, initiate 
a claim against the MAP Participant, following the procedures set forth 
in this subpart. CCC may also initiate a claim against a MAP Participant 
if program income or CCC-provided funds are lost due to an action or 
omission of the MAP Participant.



Sec. 1485.35  Suspension, termination, and closeout of agreements.

    A program agreement may be suspended or terminated in accordance 
with the suspension and termination procedures in the applicable parts 
of this title (e.g., 7 CFR Parts 3015, 3016, 3019). If an agreement is 
terminated, the applicable parts of this title will apply to the 
closeout of the agreement (e.g., 7 CFR Parts 3015, 3016, 3019).



Sec. 1485.36  Paperwork reduction requirements.

    The paperwork and recordkeeping requirements imposed by this subpart 
have been approved by OMB under the Paperwork Reduction Act of 1980. OMB 
has assigned control number 0551-0026 for this information collection.



PART 1486_EMERGING MARKETS PROGRAM--Table of Contents



                      Subpart A_General Information

Sec.
1486.100 What is the Emerging Markets Program?
1486.101 What special definitions apply to this program?
1486.102 Is there a list of eligible emerging market countries?
1486.103 Are regional projects possible under the program?

            Subpart B_Eligibility, Applications, and Funding

1486.200 What entities are eligible to participate in the program?
1486.201 Under what conditions may research and consultant 
          organizations, individuals, or any other for-profit entity 
          apply to the program?
1486.202 Are there any ineligible entities?
1486.203 Which commodities/products are eligible for consideration under 
          the program?
1486.204 Are multi-year proposals eligible for funding?
1486.205 What types of funding are available under the program?
1486.206 What is the Quick Response Marketing Fund?
1486.207 What is the Technical Issues Resolution Fund?
1486.208 How does an entity apply to the program?
1486.209 How are program applications evaluated and approved?
1486.210 Are there any limits on the funding of proposals?

                      Subpart C_Program Operations

1486.300 How are applicants notified of decisions on their applications?
1486.301 How is the working relationship established between CCC and the 
          Recipient of program funding?
1486.302 Can changes be made to a project once it has been approved?
1486.303 What specific contracting procedures must be adhered to?

               Subpart D_Contributions and Reimbursements

1486.400 What are the rules on cost sharing?
1486.401 What cost share contributions are eligible?
1486.402 What are ineligible contributions?
1486.403 What expenditures may CCC reimburse under the program?
1486.404 What expenditures are not eligible for program funding?
1486.405 How are Recipients reimbursed for project expenditures?
1486.406 Will CCC make advance payments to Recipients?

             Subpart E_Reporting, Evaluation, and Compliance

1486.500 What are the reporting requirements of the program?
1486.501 What is the rule on notifying field offices of international 
          travel?
1486.502 How is project effectiveness measured?
1486.503 How is program compliance monitored?
1486.504 How does a Recipient respond to a compliance report?
1486.505 Can a Recipient appeal the determinations of the Director, CRS?
1486.506 When will a project be reviewed?
1486.507 What is the effect of failing to make required contributions?

[[Page 915]]

1486.508 How long must Recipients maintain original project records?
1486.509 Are Recipients allowed to charge fees for specific activities 
          in approved projects?
1486.510 What is the policy regarding disclosure of program information?
1486.511 What is the general policy regarding ethical conduct?
1486.512 Has the Office of Management and Budget reviewed the paperwork 
          and record keeping requirements contained in this part?

    Authority: 7 U.S.C. 5622 note.

    Source: 70 FR 255, Jan. 4, 2005, unless otherwise noted.



                      Subpart A_General Information



Sec. 1486.100  What is the Emerging Markets Program?

    (a) The principal purpose of the EMP is to assist U.S. entities in 
developing, maintaining, or expanding the exports of U.S. agricultural 
commodities and products by providing partial funding for technical 
assistance activities that promote U.S. agricultural exports to emerging 
markets, a consistent with U.S. foreign policy interests. The Program is 
intended primarily to support export market development efforts of the 
private sector, but the Program's resources may also be used to assist 
public agricultural organizations as well. Technical assistance may 
include activities such as feasibility studies, market research, sector 
assessments, orientation visits, specialized training, business 
workshops, and similar undertakings.
    (b) The EMP may be used to support exports of U.S. agricultural 
commodities and products only through generic activities.
    (c) Only initiatives that support the export of U.S. agricultural 
commodities and products are eligible for assistance from the program. 
The program's resources may not be used to support the export of another 
country's products to the United States, or to promote the development 
of a foreign economy as a primary objective.
    (d) The program is administered by personnel of USDA's Foreign 
Agricultural Service.



Sec. 1486.101  What special definitions apply to this program?

    For purposes of this subpart, the following definitions apply:
    Activities--components of a project which, when implemented 
collectively, are intended to achieve a specific market development 
objective.
    Administrator--the Administrator of FAS, or designee.
    Advisory Committee--a group of representatives from the private 
sector appointed by the Secretary of Agriculture whose primary mission 
is to review proposals requesting funding under the EMP and make 
recommendations on projects and programs that can enhance exports 
through the use of program funds.
    Agreement--a written assistance agreement under this part.
    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 Foreign Agricultural Service employee 
representing United States Department of Agriculture interests in the 
foreign country in which promotional activities are conducted.
    CCC--Commodity Credit Corporation.
    Compliance Review Staff--the office within the Foreign Agricultural 
Service responsible for performing reviews of Recipients to ensure 
compliance under this part.
    Constraint--a condition in a particular country or region which 
inhibits the development, expansion, or maintenance of exports of a 
specific U.S. agricultural commodity or product.
    Cost Share/Contribution--the amount of funding (cash and in-kind) 
U.S. entities are willing to commit from their own resources in support 
of an approved project.
    Deputy Administrator--the Deputy Administrator, Commodity and 
Marketing Programs, Foreign Agricultural Service, or designee.

[[Page 916]]

    Emerging Market--any country or regional grouping that is taking 
steps toward a market-oriented economy through the food, agriculture, or 
rural business sectors of the economy of the country; has the potential 
to provide a viable and significant market for United States 
agricultural commodities or products; a population greater than 1 
million; and a per capita income level below the level for upper middle-
income countries as determined by the World Bank.
    EMP--Emerging Markets Program.
    FAS--Foreign Agricultural Service.
    Generic Promotion--an activity that does not involve or promote the 
exclusive or predominant use of an individual company name or logo or 
brand name.
    Project--an approach or undertaking made up of one or more 
activities which, taken together, are intended to achieve a specific 
market development objective.
    Project Funds--the funds made available to a Recipient by the 
Commodity Credit Corporation under an agreement, and authorized for 
expenditure in accordance with this part.
    Proposal--an application for funding.
    Recipient--a U.S. entity receiving financial assistance directly 
from the Commodity Credit Corporation or Foreign Agricultural Service to 
carry out a project.
    SRTG--State Regional Trade Group.
    STRE--sales and trade relations expenses including meals, 
receptions, refreshments, checkroom fees, tips, and dining decorations.
    UES--Unified Export Strategy.
    USDA--United States Department of Agriculture.



Sec. 1486.102  Is there a list of eligible emerging market countries?

    The World Bank periodically redefines the income limits on upper 
middle-income economies. Consequently, an absolute list of ``emerging 
market'' countries has not been established. However, CCC will provide 
general guidance on country eligibility in each program announcement.



Sec. 1486.103  Are regional projects possible under the program?

    Projects that focus on regions, such as the Caribbean Basin, rather 
than individual countries, are eligible for consideration provided such 
projects target qualifying emerging markets in the specified region. CCC 
may consider activities which target qualified emerging markets in a 
specific region, but are conducted in a non-emerging market because of 
its importance as a central location and ease of access to that region.



            Subpart B_Eligibility, Applications, and Funding



Sec. 1486.200  What entities are eligible to participate in the program?

    To participate in the EMP, U.S. private or government entities must 
demonstrate a role or interest in the exports of U.S. agricultural 
commodities or products. Government organizations consist of federal, 
state, and local agencies. Private entities include non-profit trade 
associations, universities, agricultural cooperatives, state regional 
trade groups, and profit-making entities and consulting businesses.



Sec. 1486.201  Under what conditions may research and consultant 

organizations, individuals, or any other for-profit entity apply to the 

program?

    (a) Proposals from research and consulting entities will be 
considered for funding assistance only with evidence of substantial 
participation in and financial support by U.S. industry to a proposed 
project. Such support most credibly is provided in the form of actual 
monetary contributions to the cost of a project.
    (b) For-profit entities shall not use program funds to conduct 
private business or to promote private self-interests. For-profit 
entities may not use program funds to supplement the costs of normal 
day-to-day operations or to promote their own products or services 
beyond specific uses approved in a given project.



Sec. 1486.202  Are there any ineligible entities?

    Foreign organizations, whether government or private, may 
participate as

[[Page 917]]

third parties in activities carried out by U.S. entities, but are not 
eligible for funding assistance from the program.



Sec. 1486.203  Which commodities/products are eligible for consideration under 

the program?

    All U.S. agricultural commodities/products except tobacco are 
eligible for consideration. Agricultural product(s) should be comprised 
of at least 50 percent U.S. origin content by weight, exclusive of added 
water, to be eligible for funding. Projects which seek support for 
multiple commodities are also eligible.



Sec. 1486.204  Are multi-year proposals eligible for funding?

    Proposals for projects exceeding 1 year in duration may be 
considered. If approved, funding for multi-year projects is normally 
provided 1 year at a time, with commitments beyond the first year 
subject to interim evaluations intended to assess the progress of the 
project toward meeting its intended objectives.



Sec. 1486.205  What types of funding are available under the program?

    CCC has established three pools of funding within the EMP--the 
Central Fund, the Quick Response Marketing Fund, and the Technical 
Issues Resolution Fund. Each year CCC will inform the public of the 
process by which interested eligible entities may submit proposals for 
funding under the Central Fund. Because of the time sensitive nature of 
issues intended to be addressed, the Quick Response Marketing Fund and 
the Technical Issues Resolution Fund will be available continuously with 
no application deadline.



Sec. 1486.206  What is the Quick Response Marketing Fund?

    (a) This fund was established to address priority constraints to 
market access that arise because of unforeseen events; market conditions 
in emerging markets are often less predictable than in more developed 
countries. It allows responsiveness to time-sensitive marketing problems 
or opportunities, such as a change in an import regime or the removal of 
a trade embargo; an unexpected or unusual change in the political or 
financial situation in a country; or a significant change in crop 
conditions--any of which may have an immediate impact on the access of 
particular commodities or products to specific markets.
    (b) Proposals for the Quick Response Marketing Fund must identify 
specific market access issues that also face time constraints. 
Application content, evaluation, and reporting requirements are the same 
as for the Central Fund.



Sec. 1486.207  What is the Technical Issues Resolution Fund?

    (a) This fund was established to address technical barriers to trade 
in emerging markets worldwide by providing technical assistance, 
training, and exchange of expertise. These include plant quarantine, 
animal health, food safety, and other technical barriers to U.S. exports 
based on unsound or incomplete scientific information.
    (b) Funding priorities are principally those issues that are time 
sensitive and are strategic areas of longer term interest. Funding 
decisions are determined primarily through a review process that 
includes FAS and relevant regulatory agencies. The review is based upon 
the following criteria:
    (1) The activity occurs in an eligible country or region of market 
priority;
    (2) The trade constraint warrants intervention;
    (3) The proposed activity is likely to achieve an impact in the 
short-or long-term;
    (4) The Recipient is qualified to undertake the proposed activity;
    (5) The budget requested is reasonable and includes leveraged 
resources;
    (6) If applicable, a U.S. domestic constraint or trade issue can be 
resolved in support of a proposed activity; and
    (7) The activity has support from USDA field offices.
    (c) Because of the time sensitive nature of the issues intended to 
be addressed by these funds, proposals, whether private or government, 
may be submitted at any time during the year. Reviews of proposals are 
scheduled on a monthly basis. An expedited review may be requested but 
must be justified.
    (d) Application content, evaluation, and reporting requirements are 
the same as for the Central Fund.

[[Page 918]]



Sec. 1486.208  How does an entity apply to the program?

    CCC will periodically announce that it is accepting proposals for 
participation in the EMP. All relevant information, including 
application deadlines (for the Central Fund) and proposal content, will 
be noted in the announcement, and proposals must be submitted in 
accordance with the terms and requirements specified in the 
announcement. CCC may request any additional information it deems 
necessary from any applicant in order to evaluate properly any proposal.



Sec. 1486.209  How are program applications evaluated and approved?

    (a) General. Proposals received by the application deadline stated 
in the announcement for the Central Fund undergo a multi-phase review by 
FAS staff and the EMP Advisory Committee to determine qualifications, 
quality and appropriateness of projects, and reasonableness of project 
budgets.
    (b) Evaluation criteria. FAS will consider a number of factors when 
reviewing proposals, including:
    (1) The ability of the entity to provide an experienced U.S.-based 
staff with knowledge and expertise to ensure adequate development, 
supervision, and execution of the proposed project;
    (2) The entity's willingness to contribute resources, including cash 
and goods and services of the U.S. industry, with greater weight given 
to cash contributions (for private sector proposals only);
    (3) The conditions or constraints affecting the level of U.S. 
exports and market share for the agricultural commodity/product;
    (4) The degree to which the proposed project is likely to contribute 
to the development, maintenance, or expansion of U.S. agricultural 
exports to emerging markets;
    (5) Demonstration of how a proposed project will benefit a 
particular industry as a whole; and
    (6) Past program results and evaluations, if applicable.
    (7) The following priority technical assistance activities:
    (i) Projects and activities which use technical assistance designed 
specifically to improve market access in emerging markets such as 
activities intended to mitigate the impact of sudden political events or 
economic and currency crises in order to maintain U.S. market share;
    (ii) Marketing and distribution of value-added products, including 
new products or new uses. Examples include food service development, 
market research on potential for consumer-ready foods or new uses of a 
product, and export feasibility studies.
    (iii) Studies of food distribution channels in emerging markets, 
including infrastructural impediments to U.S. exports; such studies may 
include cross-commodity activities which focus on problems which affect 
more than one industry, e.g., grain storage handling and inventory 
systems development;
    (iv) Projects that specifically address various constraints to U.S. 
exports, including sanitary and phytosanitary issues and other non-
tariff barriers;
    (v) Assessments and follow-up activities designed to improve 
country-wide food and business systems, to reduce trade barriers, to 
increase prospects for U.S. trade and investment in emerging markets, or 
to determine the potential use for general export credit guarantees;
    (vi) Projects that help foreign governments collect and use market 
information and develop free trade policies that benefit American 
exporters as well as the target country or countries; and
    (vii) Short-term training in agriculture and agribusiness trade that 
will benefit U.S. exporters, including seminars and training at trade 
shows designed to expand the potential for U.S. agricultural exports by 
focusing on the trading system.
    (c) Approval decision. CCC will approve those applications that it 
determines best satisfy the criteria and factors specified in paragraph 
(b) of this section. All decisions regarding the disposition of an 
application are final.



Sec. 1486.210  Are there any limits on the funding of proposals?

    (a) The EMP is a relatively small program intended primarily to 
promote access to qualified emerging markets. Its funds are intended for 
focused

[[Page 919]]

projects with specific activities, rather than expansive concept papers 
which contain only broad ideas. Large, overly expensive projects (e.g., 
in excess of approximately $500,000) are rarely appropriate for the 
program.
    (b) CCC will not reimburse 100 percent of the cost of any project 
undertaken by the private sector. The program is intended to provide 
appropriate assistance to projects which also have a significant amount 
of financial contributions from other sources, especially U.S. private 
industry.
    (c) Funding for continuing and substantially similar projects is 
generally limited to 3 years. After that time, the project is assumed to 
have proven its viability and, if necessary, should be continued by the 
Recipient with its own or with alternative sources of funding.



                      Subpart C_Program Operations



Sec. 1486.300  How are applicants notified of decisions on their applications?

    FAS will notify each applicant in writing of the final decision on 
its application. For approvals, letters will contain the notice of 
approval and any required qualifications or adjustments to the original 
proposal. For rejections, letters will explain reasons why the proposals 
were not approved for funding.



Sec. 1486.301  How is the working relationship established between CCC and the 

Recipient of program funding?

    (a) FAS will send an approval letter followed by a project agreement 
to each approved applicant. The approval letter and agreement will 
specify the terms and conditions applicable to the project, including 
the levels of EMP funding and cost-share contribution requirements. The 
applicant is authorized to begin implementation of the project as of the 
date of the approval letter, unless otherwise indicated.
    (b) An applicant who accepts the terms and conditions contained in 
the agreement should so indicate by having the appropriate authorizing 
official sign the agreement and submit it to the Director, Marketing 
Operations Staff, FAS, USDA. The applicant may not be reimbursed for 
approved project expenses until the Recipient's authorizing official and 
CCC have signed the agreement.



Sec. 1486.302  Can changes be made to a project once it has been approved?

    (a) Approved projects may be modified if circumstances change in 
such a way that they would likely affect the progress and ultimate 
success of a project. All requests for project modifications must be 
made in writing to FAS and must include:
    (1) A justification as to why changes to the project as originally 
designed are needed;
    (2) An explanation of the necessary adjustments in approach or 
strategy;
    (3) A description of necessary changes in the project's time 
line(s); and
    (4) Necessary changes to the project's budget (e.g., shifting of 
budgetary resources from one line item to another in order to 
accommodate the changes).
    (b) Extensions of project time lines must be approved and made by 
FAS.



Sec. 1486.303  What specific contracting procedures must be adhered to?

    (a) The Recipient has full and sole responsibility for the legal 
sufficiency of all contracts it may enter into with one or more third 
parties in order to carry out an approved project and shall assume 
financial liability for any costs or claims resulting from suits, 
challenges, or other disputes based on contracts entered into by the 
Recipient. Neither CCC nor any other agency of the United States 
Government or any official or employee of CCC or the United States 
Government has any obligation or responsibility with respect to 
Recipient contracts with third parties.
    (b) Recipients 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 to third 
parties in any part with project funds must be covered by written 
contracts.
    (d) A Recipient shall:

[[Page 920]]

    (1) Ensure that all expenditures for goods and services in excess of 
$25 reimbursed by CCC 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 or 
gains a financial benefit;
    (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 fee, 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 fees or prices; and
    (6) Document the decision-making process.



               Subpart D_Contributions and Reimbursements



Sec. 1486.400  What are the rules on cost sharing?

    (a) The EMP is intended to complement, not supplant, the efforts of 
the U.S. private sector. Therefore, no private sector proposal will be 
considered without the element of cost-share from the participant and/or 
U.S. partners.
    (b) There is no minimum or maximum amount of cost share. The degree 
of commitment to a proposed project represented by the amount and type 
of private funding are both used in determining which proposals will be 
approved. The type of cost share is also not specified, though some 
contributions are ineligible (Sec. 1486.402 below). Cost-share may be 
actual cash invested or professional time of staff assigned to the 
project. Proposals in which the private sector is willing to commit 
funds, rather than in-kind items such as staff resources, and those with 
higher amounts of cost-share, will be given priority consideration.
    (c) Cost-sharing is not required for proposals from federal, state, 
or local government agencies. It is mandatory from all other eligible 
entities, even when they are party to a joint proposal with a government 
agency.
    (d) Contributions from federal, state, or local government agencies 
or programs may not be counted toward the cost share requirement. 
Similarly, contributions from foreign (non-U.S.) organizations may not 
be counted toward the cost share requirement, but may be included in the 
total cost of the project.
    (e) An activity that is initiated by FAS, and undertaken by an 
entity at the request of FAS, may be exempted from the contribution 
requirement. This determination is made at the discretion of FAS.



Sec. 1486.401  What cost share contributions are eligible?

    (a) Eligible contributions are those expenses that:
    (1) Have not been or will not be reimbursed by any other source 
outside of the Recipient or other participating U.S. entity;
    (2) Are incurred during the period covered by the project agreement;
    (3) Are directly related to activities necessary to implement an 
approved project; and
    (4) Are not proscribed under Sec. 1486.402.
    (b) Contributions must be included in a project's line item budget.



Sec. 1486.402  What are ineligible contributions?

    (a) The following are not eligible as contributions:
    (1) Normal operating expenses and other costs not directly related 
to the project;
    (2) Any portion of salary or compensation of an individual who is 
the focus of a promotional activity;
    (3) Depreciation, e.g., office equipment;
    (4) The cost of insuring articles owned by private individuals;
    (5) The cost of product development or product modifications;
    (6) Slotting fees or similar sales expenditures;

[[Page 921]]

    (7) Funds, services, capital goods, or personnel provided by any 
U.S. government agency;
    (8) Capital investments made by a third party, such as permanent 
structures, real estate, and the purchase of office equipment and 
furniture;
    (9) The value of any services generated by a third party which 
involve no expenditure by the Recipient or third party, e.g., free 
publicity;
    (10) The cost of developing any application/proposal for EMP 
funding;
    (11) Costs included as contributions for any other federally-
assisted project or program;
    (12) Membership fees in clubs and social or professional 
organizations; and
    (13) Any expenditure made prior to approval of an EMP-funded 
project.
    (b) The Deputy Administrator shall determine, at his or her 
discretion, whether any cost not expressly listed in this section may be 
included as an eligible contribution.



Sec. 1486.403  What expenditures may CCC reimburse under the program?

    (a) A Recipient may seek reimbursement for an expenditure if:
    (1) The expenditure is reasonable and is specified in the project 
budget in furtherance of an approved activity; and
    (2) The Recipient 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) Salaries and benefits of the Recipient's existing personnel or 
any other participating entity that are assigned to EMP-funded projects; 
however, reimbursement is limited to:
    (i) The actual daily rate paid by the Recipient for the employee's 
salary or the daily rate of a General Schedule U.S. Government employee, 
GS-15/Step 10 in effect during the calendar year in which the project or 
activity is approved for funding, whichever is less;
    (ii) The actual assigned time of the employee to the project; and
    (iii) Benefits at a maximum rate of 30 percent of the existing 
salary of the employee, prorated to the time assigned to the project. In 
addition, reimbursement for an employee's time spent on an EMP-funded 
project must be in lieu of compensation from the Recipient or any other 
participating entity.
    (2) Consulting fees for professional services; however, 
reimbursement for consulting fees is limited to the daily rate of a 
General Schedule U.S. Government employee, GS-15/Step 10 in effect 
during the calendar year in which the project or activity is approved 
for funding. Reimbursement is authorized only for actual days worked and 
is not authorized for travel and rest days. Benefits are not 
reimbursable.
    (3) STRE, including breakfast, lunch, dinner, and refreshments when 
part of an approved overseas trade activity; miscellaneous courtesies 
such as checkroom fees, taxi fares, and tips; and representation 
expenses such as the costs of social events or receptions that are 
primarily attended by foreign officials, and which are held at foreign 
venues. Such expenses must conform to the American Embassy 
representational funding guidelines as the standard for judging the 
appropriateness of STRE event costs. STRE incurred in the United States 
is not authorized for reimbursement, but may be counted as a cost-share 
contribution to the project.
    (4) Travel expenses, subject to the following:
    (i) Air travel, limited to the full-fare economy class rate and must 
comply with the Fly America Act, 49 U.S.C. App. 1517. The 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 Counselor/Attache in 
the destination country in advance of the travel unless the Deputy 
Administrator determines it was impractical to provide such 
notification.
    (ii) Per diem, limited to the allowable rate for each domestic or 
foreign locale (41 CFR Chapter 301). Expenses in excess of the 
authorized per diem rates may be allowed in special or unusual 
circumstances (41 CFR Chapter 301, subpart D), and must be approved in 
advance.
    (iii) All other expenses while in travel status must conform to U.S. 
Federal Travel Regulations (41 CFR Chapters 301 and 304).
    (5) Direct administrative costs.

[[Page 922]]

    (6) Indirect costs not identified as direct costs but which are 
necessary to the implementation of a project. Indirect costs must be 
specified to be eligible for reimbursement. Indirect costs incurred by 
private entities (other than those identified below) may be reimbursed 
up to a maximum of 10 percent of the EMP funded portion of the project 
budget, excluding indirect costs. Market development cooperators, state 
regional trade groups, for-profit entities, and government Recipients 
(excluding FAS) may not be reimbursed for indirect costs. Indirect costs 
are not reimbursable for any project funded under the Technical Issues 
Resolution Fund or the Quick Response Marketing Fund.
    (7) Rental costs for equipment necessary to carry out approved 
projects. Equipment rentals must be returned by the Recipient to the 
supplier in accordance with the lease agreements, but in no case later 
than 90 calendar days from the completion date of the project.
    (8) Procuring samples of specific commodities or agricultural 
products, which are appropriate and necessary to the success of a 
technical assistance activity.



Sec. 1486.404  What expenditures are not eligible for program funding?

    (a) CCC will not reimburse expenditures made prior to approval of a 
Recipient's proposal, unreasonable expenditures, or any cost of:
    (1) Branded product promotions--in-store, restaurant advertising, 
labeling, etc.;
    (2) Administrative and operational expenses for trade shows;
    (3) Advertising;
    (4) Preparation and printing of magazines, brochures, flyers, 
posters, etc., except in connection with specific approved activities 
such as training;
    (5) Design, development, and maintenance of Internet Web sites;
    (6) Purchase and depreciation of equipment, e.g., office equipment 
or other fixed assets;
    (7) Subsidizing or otherwise providing funds for graduate programs 
at colleges and/or universities (salaries or fees for individual 
students who are directly assigned to specific project activities 
appropriate to their backgrounds may be covered on a pro-rated basis);
    (8) Subsidizing normal, day-to-day operating costs of an entity; 
exception: indirect costs incurred during implementation of an approved 
project;
    (9) Honoraria for speakers;
    (10) Costs of product research or new product development;
    (11) Costs of developing technical assistance proposals submitted to 
the program;
    (12) Refundable deposits or advances;
    (13) STRE expenses within the United States;
    (14) All costs related to the shipping, over land and sea, of 
commodity samples;
    (15) Expenses, fees, fines, settlements, or claims resulting from 
suits, challenges, or disputes emanating from contractual terms, 
conditions, provisions, and related formalities;
    (16) Legal fees, including fees and costs associated with trade 
disputes;
    (17) Real estate costs other than allowable costs for office space 
whose use is assigned specifically to a project funded by the EMP; and
    (18) Any expenditure that has been or will be reimbursed by any 
other source.
    (b) The Deputy Administrator may determine whether any cost not 
expressly listed in this section will be reimbursed.



Sec. 1486.405  How are Recipients reimbursed for project expenditures?

    (a) After implementation of an EMP project for which CCC has agreed 
to provide funding, Recipients may submit claims for reimbursement of 
the expenses incurred to the extent CCC has agreed to pay for such 
costs. Reimbursement for approved project expenses is limited to 85 
percent of the amount specified in the project agreement. The Recipient 
may be reimbursed for the remaining 15 percent of the funds after the 
final performance report containing the information required by the 
agreement is submitted to and approved by FAS.
    (b) A format for reimbursement claims is available from the 
Marketing Operations Staff, FAS, USDA.
    (c) Final reimbursement claims must be made no later than 90 days 
after the completion date of the project, and are

[[Page 923]]

subject to a complete final performance report acceptable to FAS.
    (d) Any duplicate payment or overpayment made by CCC shall be 
returned by the Recipient promptly after discovery of the overpayment by 
the Recipient or within 30 days after notification by FAS, either by 
submitting a check made payable to the Commodity Credit Corporation and 
referencing the applicable project, or by offsetting as a credit on the 
next reimbursement claim. All checks shall be mailed to the Director, 
Marketing Operations Staff, FAS, USDA.



Sec. 1486.406  Will CCC make advance payments to Recipients?

    (a) Policy. In general, CCC operates the EMP on a cost reimbursable 
basis.
    (b) Exception. Upon request, CCC may make advance payments to a 
Recipient against an approved project budget. Up to 40 percent of the 
approved project budget may be provided as an advance, either at one 
time or in incremental payments. Advances should be limited to the 
minimum amounts needed and requested as close as is administratively 
feasible to the actual time of disbursement by the Recipient. 
Reimbursement claims will be used to offset advances. Recipients shall 
deposit and maintain advances in insured, interest-bearing accounts.
    (c) Refunds due CCC. A Recipient shall expend all advances within 90 
calendar days after the date of disbursement by CCC. A Recipient shall 
return all interest earned by advances plus any unexpended portion of 
the advance within 90 calendar days after the date of disbursement by 
CCC by submitting a check payable to CCC. All checks shall be mailed to 
the Director, Marketing Operations Staff, FAS, USDA.



             Subpart E_Reporting, Evaluation, and Compliance



Sec. 1486.500  What are the reporting requirements of the program?

    (a) Performance Reports. (1) Recipients are required to submit 
regular progress reports in accordance with the project agreement. 
Quarterly progress reports are required for all projects with a duration 
of 1 year or longer. Projects of less than 1 year in duration generally 
require a mid-term report.
    (2) Final performance reports must be submitted no later than 90 
days after completion of the project, both electronically (preferably in 
PDF format) and in hard copy.
    (3) Reporting requirements and formats for both quarterly progress 
reports and final performance reports are specified in the project 
agreement between CCC and the Recipient entity.
    (4) All final performance reports will be made available to the 
public.
    (b) Financial Reports. Final financial reports must be submitted no 
later than 90 days after completion of the project. Such reports must 
provide a final accounting of all project expenditures by cost category, 
and include the accounting of actual contributions made to the project 
by the Recipient and all other participating entity or entities.



Sec. 1486.501  What is the rule on notifying field offices of international 

travel?

    The Recipient must advise the Agricultural Counselor(s) or 
Attache(s) in the country or countries of any planned visits by the 
Recipient or its consultants or other participants to such country or 
countries under terms of its agreement. Failure to notify the Counselor/
Attache may result in disallowance of the travel expenditures.



Sec. 1486.502  How is project effectiveness measured?

    Project evaluations may be carried out by FAS at its option with or 
without Recipients. FAS may also seek outside expertise to conduct or 
participate in evaluations.



Sec. 1486.503  How is program compliance monitored?

    (a) The CRS, FAS, performs periodic on-site reviews of Recipients to 
ensure compliance with this part, applicable federal regulations, and 
the terms of the project agreements. Program funds spent inappropriately 
or on unapproved activities must be returned to CCC. The CRS will review 
contributions from Recipients for compliance with project budgets as 
approved and specified in the agreements.

[[Page 924]]

    (b) The Director, CRS, will notify a Recipient through a compliance 
report when, in the opinion of the Director, CRS, it appears that CCC is 
entitled to recover funds from that Recipient. The report will state the 
basis for this action.



Sec. 1486.504  How does a Recipient respond to a compliance report?

    (a) A Recipient shall, within 60 days of the date of the compliance 
report, submit a written response to the Director, CRS. The Director, 
CRS, at his or her discretion, may extend the period for response up to 
an additional 30 days. The response shall include:
    (1) Repayment of any funds determined to be due to CCC;
    (2) Submission of documentation or evidence of any other required 
action; or
    (3) A request for reconsideration of any finding and the supporting 
justification.
    (b) If after review of the compliance report and response, the 
Director, CRS determines that the Recipient owes money to CCC, the 
Director, CRS, will so inform the Recipient and provide a detailed basis 
for the decision. The Recipient has 30 days from the date of the 
Director's, CRS, determination to submit any money owed to CCC or to 
request reconsideration.
    (c) If the Recipient does not respond to the compliance report 
within the required time period, the Director, CRS, may initiate action 
to collect any amount owed to CCC pursuant to 7 CFR Part 1403, Debt 
Settlement Policies.



Sec. 1486.505  Can a Recipient appeal the determinations of the Director, CRS?

    (a) A Recipient may appeal the determinations of the Director, CRS, 
to the Deputy Administrator, CMP. The request must be in writing and be 
submitted to the Office of the Deputy Administrator, CMP, within 30 days 
following the date of the original determination. The Recipient may 
request a hearing.
    (b) If the Recipient submits its appeal and requests a hearing, the 
Deputy Administrator, or the Deputy 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 
Recipient bears the cost of the transcript; however, the Deputy 
Administrator or designee may have a transcript prepared at FAS's 
expense.
    (c) The Deputy Administrator or the Deputy Administrator's designee 
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 Deputy 
Administrator will be the final determination of FAS. The Recipient must 
exhaust all administrative remedies contained in this section before 
pursuing judicial review of a determination by the Deputy Administrator.



Sec. 1486.506  When will a project be reviewed?

    Any project or activity funded under the program is subject to 
review or audit at any time during the course of implementation or after 
the completion of the project.



Sec. 1486.507  What is the effect of failing to make required contributions?

    A Recipient's contribution requirement is specified in the project 
agreement. If a Recipient fails to contribute the total specified in the 
agreement, the difference between the amount contributed and the total 
must be repaid to the CCC in U.S. dollars. If a Recipient is reimbursed 
by CCC for less than the amount of funds approved in the agreement, then 
the final cost share shall equal, on a percentage basis, the original 
ratio of private contributions to the authorized EMP funding level.



Sec. 1486.508  How long must Recipients maintain original project records?

    Each Recipient shall maintain all original records and documents 
relating to the project for 3 calendar years following the end of the 
project's completion. All documents and records related to the project, 
including records pertaining to contractors, shall be made available 
upon request.

[[Page 925]]



Sec. 1486.509  Are Recipients allowed to charge fees for specific activities 

in approved projects?

    Reasonable activity fees or registration fees, if identified as such 
in a project budget, may be charged for projects approved for program 
funding. Income or refunds generated from an activity, however, for 
which the expenditures have been wholly or partially reimbursed, shall 
be repaid by submitting a check payable to CCC or offsetting the 
Recipient's reimbursement claim. Any activity fees charged must be used 
to offset activity expenses. Such fees may not be used as profit or 
counted as cost-share. The intent to charge a fee must be part of the 
original proposal, along with an explanation of how such fees are to be 
used.



Sec. 1486.510  What is the policy regarding disclosure of program information?

    (a) Documents submitted to CCC by Recipients 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) Progress reports, final performance reports, and the results of 
any research or other activity conducted by a Recipient under an 
agreement, shall be the property of the U.S. Government.



Sec. 1486.511  What is the general policy regarding ethical conduct?

    (a) The Recipient shall maintain written standards of conduct 
governing the performance of its employees engaged in the award and 
administration of contracts. No employee, officer, or agent shall 
participate in the selection, award, or administration of a contract 
supported by Federal funds if a real or apparent conflict of interest 
would be involved. Such a conflict would arise when the employee, 
officer, or agent and any member of his or her immediate family, his or 
her partner, or an entity which employs or is about to employ any of the 
parties indicated herein, has a financial or other interest in the firm 
selected for an award. The officers, employees, and agents of the 
Recipient shall neither solicit nor accept gratuities, favors, or 
anything of monetary value from contractors, or parties to sub-
agreements. However, Recipients may set standards for situations in 
which the financial interest is not substantial or the gift is an 
unsolicited item of nominal value. The standards of conduct shall 
provide for disciplinary actions to be applied for violations of such 
standards by officers, employees, or agents of the Recipient.
    (b) A Recipient shall conduct its business in accordance with the 
laws and regulations of the country in which an activity is carried out.



Sec. 1486.512  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 
review and under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.). OMB has assigned control number 0551-0043 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.

    Source: 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.

[[Page 926]]

    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. Proposals which request more than $500,000 of CCC 
funding in a given year will not be considered.
    (b) Length of activities. Funding will not be provided for projects 
that have received TASC funding for 5 years. The 5 years do not need to 
be consecutive.
    (c) Target countries. Proposals may target all eligible export 
markets, including single countries or reasonable regional groupings of 
countries.
    (d) Multiple proposals. Applicants may submit multiple proposals, 
but no participant may have more than five approved projects underway at 
any given time.

[74 FR 22090, May 12, 2009]



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 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;

[[Page 927]]

    (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 44564, 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 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 all proposals for 
eligibility and completeness 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, and submit the proposals and funding 
recommendations to appropriate officials within FAS for decision. 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; 
74 FR 22090, May 12, 2009]

[[Page 928]]



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 3 calendar years following the 
expiration or termination date of the program agreement. Such records 
and documents will be subject to verification by FAS and shall be made 
available upon request to authorized officials of the U.S. Government. 
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.
    (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, as amended at 74 FR 22090, May 12, 2009]



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.

[[Page 929]]

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.



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

[[Page 930]]

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 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.

[[Page 931]]

    (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 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.

[[Page 932]]

    (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.
    (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,

[[Page 933]]

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.

                    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

[[Page 934]]

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 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

[[Page 935]]

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 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.

[[Page 936]]

    (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 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

[[Page 937]]

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 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]

[[Page 938]]



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 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

[[Page 939]]

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.

    Subpart B_Cooperative Agreements and Conservation Easement Deeds

1491.20 Cooperative agreements.
1491.21 Funding.
1491.22 Conservation easement deeds.

                    Subpart C_General Administration

1491.30 Violations and remedies.
1491.31 Appeals.
1491.32 Scheme or device.

    Authority: 16 U.S.C. 3838h-3838i.

    Source: 76 FR 4039, Jan. 24, 2011, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 1491.1  Applicability.

    (a) The regulations in this part set forth requirements, policies, 
and procedures for implementation of the Farm and Ranch Lands Protection 
Program (FRPP) as administered by the Natural Resources Conservation 
Service (NRCS). FRPP cooperative agreements will be administered under 
the regulations in effect at the time the cooperative agreement is 
signed.
    (b) The NRCS Chief may implement FRPP in any of the 50 States, the 
District of Columbia, 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 will--

[[Page 940]]

    (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 will not exceed 50 percent of the 
appraised fair market value of the conservation easement;
    (4) Determine eligibility of the land, landowner, State government, 
local government, Indian Tribe, or nongovernmental organization;
    (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 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 Commodity Credit 
Corporation (CCC) with the selected eligible 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 will enter into cooperative agreements with eligible 
entities to assist NRCS with implementation of this part.



Sec. 1491.3  Definitions.

    The following definitions will apply to this part, and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural uses are defined by the State's FRPP or equivalent, or 
where no program exists. Agricultural uses should be defined by the 
State agricultural use tax assessment program. However, if NRCS finds 
that a State definition of agriculture is so broad that an included use 
could lead to the degradation of soils and agriculture productivity, 
NRCS reserves the right to impose greater deed restrictions on the 
property than allowable under that State definition of agriculture in 
order to protect agricultural use and related conservation values.
    Certified entity means an eligible entity that NRCS has determined 
to meet the requirements of Sec. 1491.4(d) of this part.
    Chief means the Chief of NRCS or designee.
    Commodity Credit Corporation is a government-owned and operated 
entity that was created to stabilize, support, and protect farm income 
and prices. The 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. The 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;
    (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 developed by NRCS in consultation with the landowner through 
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.
    Cooperative agreement means the document that specifies the 
obligations and rights of NRCS and eligible entities participating in 
the program.
    Dedicated fund means an account held by a nongovernmental 
organization which is sufficiently capitalized for the

[[Page 941]]

purpose of covering expenses associated with the management, monitoring, 
and enforcement of conservation easements and where such account cannot 
be used for other purposes.
    Eligible entity means Indian Tribe, State government, local 
government, or a nongovernmental organization which has a farmland 
protection program that purchases agricultural conservation easements 
for the purpose of protecting agriculture use and related conservation 
values by limiting conversion to non-agricultural uses of the land.
    Eligible land means privately owned land on a farm or ranch that 
NRCS has determined to meet the requirements of Sec. 1491.4(f) of this 
part.
    Fair market value means the value of a conservation easement as 
ascertained through standard real property appraisal methods, as 
established in Sec. 1491.4(g).
    Farm and ranch land of local importance means farm or ranch land 
used to produce food, feed, fiber, forage, bio-fuels, and oilseed crops 
that are not identified as having national or statewide importance. 
Where appropriate, these lands are to be identified by the local agency 
or agencies concerned. Farmlands of local importance may include tracts 
of land that have been designated for agriculture by local ordinance.
    Farm and ranch land of statewide importance means, in addition to 
prime and unique farmland, land that is of statewide importance for the 
production of food, feed, fiber, forage, bio-fuels, and oil seed crops. 
Criteria for defining and delineating this land are to be determined by 
the appropriate State agency or agencies. Generally, additional 
farmlands of statewide importance include those that are nearly prime 
farmland and that economically produce high yields of crops when treated 
and managed according to acceptable farming methods. Some may produce as 
high a yield as prime farmlands if conditions are favorable. In some 
States, additional farmlands of statewide importance may include tracts 
of land that have been designated for agriculture by State law in 
accordance with 7 CFR part 657.
    Farm or ranch succession plan means 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 or 
ranchers.
    Field Office Technical Guide means the official local NRCS source of 
resource information and interpretations of guidelines, criteria, and 
requirements for planning and applying conservation practices and 
conservation management systems. The Field Office Technical Guide (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.
    Forest land means a land cover or use category that is at least 10 
percent stocked by single-stemmed woody species of any size that will be 
at least 13 feet tall at maturity. Also included is land bearing 
evidence of natural regeneration of tree cover (cutover forest or 
abandoned farmland) that is not currently developed for non-forest use. 
Ten percent stocked, when viewed from a vertical direction, equates to 
an aerial canopy cover of leaves and branches of 25 percent or greater.
    Forest land of statewide importance means forest land that the State 
Conservationist, in consultation with the State Technical Committee, 
identifies as having ecological or economic significance within the 
State, and may include forested areas or regions of the State that have 
been identified through statewide assessments and strategies conducted 
pursuant to State or Federal law.
    Forest management plan means a site-specific plan that is prepared 
by a professional resource manager, in consultation with the 
participant, and is approved by the State Conservationist. Forest 
management plans may include a forest stewardship plan, as specified in 
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 
2103a), another practice plan approved by the State Forester, or another 
plan determined appropriate by the State Conservationist. The plan 
complies

[[Page 942]]

with applicable Federal, State, Tribal, and local laws, regulations, and 
permit requirements.
    Historical and archaeological resources mean resources that are:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.);
    (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);
    (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); or
    (4) Included in the SHPO or THPO inventory with written 
justification as to why it meets National Register of Historic Places 
criteria.
    Imminent harm means easement violations or threatened violations 
that, as determined by the Chief, would likely cause immediate and 
significant degradation to the conservation values; for example, those 
violations that would adversely impact agriculture use, productivity, 
and related conservation values or result in the erosion of topsoil 
beyond acceptable levels as established by NRCS.
    Impervious surface means surfaces that are covered by asphalt, 
concrete, roofs, or any other surface that does not allow water to 
percolate into the soil.
    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 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians.
    Land Evaluation and Site Assessment System means the land evaluation 
system approved by the 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 regulation at 7 CFR part 658.
    Landowner means a person, legal entity, or Indian Tribe having legal 
ownership of land and those who may be buying eligible land under a 
purchase agreement. The term landowner may include all forms of 
collective ownership including joint tenants, tenants-in-common, and 
life tenants. State governments, local governments, and nongovernmental 
organizations that qualify as eligible entities are not eligible as 
landowners, unless otherwise determined by the Chief.
    Natural Resources Conservation Service means an agency of the 
Department of Agriculture.
    Nongovernmental organization means any organization that:
    (1) Is organized for, and at all times since, the formation of the 
organization, and 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; and
    (3) Is described--
    (i) In section 509(a)(1) and (2) of that Code, or
    (ii) 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 other 
than easements that are recognized by State law. FRPP funds will only be 
used to purchase other interests in land with prior approval from the 
Chief.
    Other productive soils means farm and ranch land soils, in addition 
to prime farmland soils, that include unique farmland and farm and ranch 
land of statewide and local importance.
    Parcel means a farm or ranch submitted for consideration for funding 
under this part.

[[Page 943]]

    Pending offer means 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 farmland means 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.
    Purchase price means the appraised fair market value of the easement 
minus the landowner donation.
    Right of enforcement means a vested right set forth in the 
conservation easement deed, equal in scope to the right of inspection 
and enforcement granted to the grantee, that the Chief, on behalf of the 
United States, may exercise under specific circumstances in order to 
enforce the terms of the conservation easement when not enforced by the 
holder of the easement.
    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 (Puerto 
Rico and the Virgin Islands), or the Pacific Islands Area (Guam, 
American Samoa, and the Commonwealth of the Northern Mariana Islands).
    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861 and 7 CFR part 610, 
subpart C.
    Unique farmland means 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.



Sec. 1491.4  Program requirements.

    (a) Under FRPP, the Chief, on behalf of the CCC, will facilitate and 
provide funding for the purchase of conservation easements or other 
interests in eligible land that is subject to a pending offer from an 
eligible entity for the purpose of protecting the agricultural use and 
related conservation values of the land by limiting non-agricultural 
uses of the land. 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 fair market 
value of the easement. In return, the eligible entity agrees to acquire, 
hold, manage, and enforce the easement. A Federal right of enforcement 
must also be included in each FRPP funded easement deed for the 
protection of the Federal investment.
    (b) The term of all easements or other interests in land will be in 
perpetuity unless prohibited by State law. In States that limit the term 
of the easement or other interest in land, the term of the easement or 
other interest in land must be the maximum allowed by State law.
    (c) To be eligible to receive FRPP funding, an Indian Tribe, State, 
unit of local government, or a nongovernmental organization must meet 
the definition of eligible entity as listed in Sec. 1491.3. In 
addition, eligible entities interested in receiving FRPP funds must 
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) To be considered for certification, an entity must submit a 
written request for certification to NRCS, and must:
    (1) Meet the requirements identified in paragraph (c) of this 
section;
    (2) Use or agree to use for FRPP funded acquisitions, the Uniform

[[Page 944]]

Standards for Professional Appraisal Practice or the Uniform Appraisal 
Standards for Federal Land Acquisitions in conducting appraisals;
    (3) Hold, manage, and monitor a minimum of 25 agricultural land 
conservation easements, unless the entity requests and receives a waiver 
of this requirement from the Chief;
    (4) Hold, manage, and monitor a minimum of five FRPP or Farmland 
Protection Program conservation easements;
    (5) Have the demonstrated ability to complete acquisition of 
easements in a timely fashion;
    (6) Have the capacity to enforce the provisions of easement deeds;
    (7) For nongovernmental organizations, possess a dedicated fund for 
the purposes of easement management, monitoring, and enforcement where 
such fund is sufficiently capitalized in accordance with NRCS standards. 
The dedicated fund must be dedicated to the purposes of managing, 
monitoring, and enforcing each easement held by the eligible entity;
    (8) Be willing to adjust procedures to ensure that the conservation 
easements acquired meet FRPP purposes and are enforceable; and
    (9) Have a plan for administering easements enrolled under this 
part, as determined by the Chief.
    (e) NRCS will notify an entity in writing whether they have been 
certified and the rationale for the agency's decision. Once NRCS 
determines an entity qualifies as certified:
    (1) NRCS will enter into a cooperative agreement with the certified 
entity through which NRCS may obligate funding for up to 5 years. New 
parcels or prior-year unfunded parcels submitted for funding by 
certified entities must compete for funding each year. Selected parcels 
and funding will be added to the existing cooperative agreement using an 
amendment to the cooperative agreement. Funding expiration dates for the 
added parcels will be in the amendment to the cooperative agreement;
    (2) NRCS will accept applications from certified entities 
continuously throughout the fiscal year;
    (3) Certified entities may elect to close easements without NRCS 
approving the conservation easement deeds, titles, or appraisals before 
closing;
    (4) Certified entities will prepare the conservation easement deeds, 
titles, and appraisals according to NRCS requirements as identified in 
the cooperative agreement;
    (5) NRCS will conduct quality assurance reviews of a percentage of 
the conservation easement transactions submitted by the certified entity 
for payment. The review will include whether the deed, title review, or 
appraisals were conducted in accordance with the requirements set forth 
by NRCS in its certification of the eligible entity or in the 
cooperative agreement entered into with the certified entity; and
    (6) If a certified entity closes on the easement without a pre-
closing NRCS review, and the conservation easement deed, title, or 
appraisal fails the NRCS quality assurance review, NRCS will provide the 
certified entity an opportunity to correct the errors. If the certified 
entity fails to correct the errors to NRCS satisfaction, NRCS may 
consider decertification of the entity in accordance with paragraph (f) 
of this section.
    (f) Review and decertification of the certified entity. (1) The 
Chief will conduct a review of the certified entity a minimum of once 
every 3 years to ensure that the certified entities are meeting the 
certification criteria established in Sec. 1491.4(d).
    (2) If the Chief finds that the certified entity no longer meets the 
criteria in Sec. 1491.4(d), the Chief will:
    (i) Allow the certified entity a specified period of time, at a 
minimum 180 days, in which to take such actions as may be necessary to 
correct the identified deficiencies, and
    (ii) If the State Conservationist has determined the certified 
entity does not meet the criteria established in Sec. 1491.4(d) after 
the 180 days, the State Conservationist will send, by certified mail, 
return receipt requested, written notice of proposed decertification of 
the entity's certification status or eligibility for future FRPP 
funding. This notice will contain what actions have not been completed 
to retain certification status, what actions the entity

[[Page 945]]

must take to request certification status, the status of funds in the 
cooperative agreement, and the eligibility of the entity to apply for 
future FRPP funds. The entity may contest the Notice of Decertification 
in writing to the State Conservationist within 20 calendar days of 
receipt of the notice of proposed decertification.
    (3) The period of decertification may not exceed 3 years in 
duration, with duration of decertification based upon the seriousness of 
the facts; and
    (4) The entity may be recertified upon application to NRCS, after 
the decertification period has expired, and when the entity has met the 
requirements as outlined under Sec. 1491.4(d).
    (g) Eligible land:
    (1) Must be privately owned land on a farm or ranch and contain at 
least 50 percent prime, unique, statewide, or locally important 
farmland, unless otherwise determined by the State Conservationist; 
contain historical or archaeological resources; furthers a State or 
local policy consistent with the purposes of the program; and is subject 
to a pending offer by an eligible entity;
    (2) Must be cropland, rangeland, grassland, pastureland, or forest 
land that contributes to the economic viability of an agricultural 
operation or serves as a buffer to protect an agricultural operation 
from development;
    (3) May include land that is incidental to the cropland, rangeland, 
grassland, pastureland, or forest land if the incidental land is 
determined by the Secretary to be necessary for the efficient 
administration of a conservation easement;
    (4) May include parts of or entire farms or ranches;
    (5) Must not include forest land of greater than two-thirds of the 
easement area. Land with contiguous forest that exceeds the greater of 
40 acres or 20 percent of the easement area will have a forest 
management plan before closing, unless the Chief has reviewed and 
approved an alternative means by which the forest land's contribution to 
the economic viability of the land has been demonstrated;
    (6) NRCS will not provide FRPP funds for the purchase of an easement 
or other interest in land on land owned in fee title by an agency of the 
United States, a State or local government, or by a nongovernmental 
organization whose purpose is to protect agricultural use and related 
conservation values, including those listed in the statute under 
eligible land, or land that is already subject to an easement or deed 
restriction that limits the conversion of the land to non-agricultural 
use;
    (7) Must be owned by landowners who certify that they do not exceed 
the adjusted gross income limitation eligibility requirements set forth 
in part 1400 of this title;
    (8) Must possess suitable onsite and offsite conditions which will 
allow the easement to be effective in achieving the purposes of the 
program. Unsuitable conditions may include, but are not limited to, 
hazardous substances on or in the vicinity of the parcel, land use 
surrounding the parcel that is not compatible with agriculture, and 
highway or utility corridors that are planned to pass through or 
immediately adjacent to the parcel; and
    (9) May be land on which gas, oil, earth, or other mineral rights 
exploration has been leased or is owned by someone other than the 
applicant and may be offered for participation in the program. However, 
if an applicant submits an offer for an easement project, the Department 
of Agriculture (USDA) will assess the potential impact that the third 
party rights may have upon achieving the program purposes. USDA reserves 
the right to deny funding for any application where there are exceptions 
to clear title on any property.
    (h) Prior to closing, the value of the conservation easement must be 
appraised. Appraisals must be completed and signed by a State-certified 
general appraiser and must contain a disclosure statement by the 
appraiser. The appraisal must conform to the Uniform Standards of 
Professional Appraisal Practices or the Uniform Appraisal Standards for 
Federal Land Acquisitions, as selected by the eligible entity. State 
Conservationists will provide the guidelines through which NRCS will 
review appraisals for quality assurance purposes. Entities must provide 
a copy of the appraisal to NRCS.
    (i) The landowner will be responsible for complying with the Highly 
Erodible

[[Page 946]]

Land and Wetland Conservation provisions of the Food Security Act of 
1985 (1985 Act), as amended and 7 CFR part 12.
    (j) The entity may substitute acres within a pending offer. 
Substituted acres must not decrease the value of the offered easement or 
the value of the parcel in meeting program purposes. With the State 
Conservationist's approval, a cooperating entity may substitute pending 
offers within their cooperative agreement. The landowner and parcel must 
meet eligibility criteria as described in Sec. 1491.4(e). The State 
Conservationist may require re-ranking of substituted acres and 
substituted parcels.

[76 FR 4039, Jan. 24, 2011, as amended at 77 FR 6944, Feb. 10, 2012]



Sec. 1491.5  Application procedures.

    (a) An Indian Tribe, State, unit of local government, or a 
nongovernmental organization will submit an application to the State 
Conservationist in the State where parcels are located.
    (b) The State Conservationist will determine whether the Indian 
Tribe, State, unit of local government, or a nongovernmental 
organization is eligible to participate in FRPP based on the criteria 
set forth in Sec. 1491.4(c).
    (c) The Chief will determine whether an eligible entity is a 
certified entity based on the criteria set forth in Sec. 1491.4(d), 
information provided by the application, and data in the national FRPP 
database.
    (d) The State Conservationist will notify each Indian Tribe, State, 
unit of local government, or a nongovernmental organization if it has 
been determined eligible, certified, or ineligible.
    (e) Eligible entities with cooperative agreements entered into after 
the effective date of this part will not have to resubmit an annual 
application for the duration of the cooperative agreement. Entities may 
reapply for eligibility when their cooperative agreements expire.
    (f) Throughout the fiscal year, eligible entities may submit to the 
appropriate State Conservationist applications for parcels, in that 
State, with supporting information to be scored, ranked, and considered 
for funding.
    (g) At the end of each fiscal year, the lists of pending, unfunded 
parcels will be cancelled unless the eligible entity requests that 
specific parcels be considered for funding in the next fiscal year. 
Entities must submit a new list of parcels each fiscal year in order to 
be considered for funding unless they request that parcels from the 
previous fiscal year be considered.



Sec. 1491.6  Ranking considerations and proposal selection.

    (a) Before the State Conservationist can score and rank the parcels 
for funding, the eligibility of the landowner and the land must be 
assessed.
    (b) The State Conservationist will use national and State criteria 
to score and rank parcels. The national ranking criteria will be 
established by the Chief, and the State criteria will be determined by 
the State Conservationist, with advice from the State Technical 
Committee. The national criteria will comprise at least half of the 
ranking system score.
    (c) At least 30 days before the ranking of parcels, the State 
Conservationist will announce the date on which ranking of parcels will 
occur. A State Conservationist may announce more than one date of 
ranking in a fiscal year.
    (d) All parcels submitted throughout the fiscal year will be scored. 
All parcels will be ranked together in accordance with the national and 
State ranking criteria before parcels are selected for funding.
    (e) The parcels selected for funding will be listed on the 
agreements of the entities that submitted the parcels, and the 
agreements will be signed by the State Conservationist and the eligible 
entity. Funds for each fiscal year's parcels will be obligated with a 
new signature each year on an amendment to the agreement. Parcels funded 
on each fiscal year's amendment will have a separate deadline for 
closing and requesting reimbursement.
    (f) The national ranking criteria are:
    (1) Percent of prime, unique, and important farmland in the parcel 
to be protected;
    (2) Percent of cropland, pastureland, grassland, and rangeland in 
the parcel to be protected;

[[Page 947]]

    (3) Ratio of the total acres of land in the parcel to be protected 
to average farm size in the county according to the most recent USDA 
Census of Agriculture;
    (4) Decrease in the percentage of acreage of farm and ranch land in 
the county in which the parcel is located between the last two USDA 
Censuses of Agriculture;
    (5) Percent population growth in the county as documented by the 
United States Census;
    (6) Population density (population per square mile) as documented by 
the most recent United States Census;
    (7) Proximity of the parcel to other protected land, such as 
military installations, land owned in fee title by the United States or 
an Indian Tribe, State government or local government, or by a 
nongovernmental organization whose purpose is to protect agricultural 
use and related conservation values, or land that is already subject to 
an easement or deed restriction that limits the conversion of the land 
to non-agricultural use;
    (8) Proximity of the parcel to other agricultural operations and 
infrastructure; and
    (9) Other additional criteria as determined by the Chief.
    (g) State or local criteria as determined by the State 
Conservationist, with advice of the State Technical Committee, may 
include:
    (1) The location of a parcel in an area zoned for agricultural use;
    (2) The performance of an eligible entity's experience in managing 
and enforcing easements. Performance must be measured by the closing 
efficiency or percentage of parcels that have been monitored and the 
percentage of monitoring results that have been reported. The number of 
years of an eligible entity's existence, budget, or staffing level will 
not be used as a ranking factor;
    (3) Multifunctional benefits of farm and ranch land protection 
including social, economic, historical and archaeological, and 
environmental benefits;
    (4) Geographic regions where the enrollment of particular lands may 
help achieve national, State, and regional conservation goals and 
objectives, or enhance existing government or private conservation 
projects;
    (5) Diversity of natural resources to be protected;
    (6) Score in the Land Evaluation and Site Assessment system. This 
score serves as a measure of agricultural viability (access to markets 
and infrastructure); and
    (7) Existence of a farm or ranch succession plan or similar plan 
established to encourage farm viability for future generations.
    (h) State ranking criteria will be developed on a State-by-State 
basis. The State Conservationist will make available a full listing of 
applicable national and State ranking criteria.



    Subpart B_Cooperative Agreements and Conservation Easement Deeds



Sec. 1491.20  Cooperative agreements.

    (a) NRCS, on behalf of the CCC, will enter into a cooperative 
agreement with entities selected for funding. Once a proposal is 
selected by the State Conservationist, the eligible entity must work 
with the State Conservationist to finalize and sign the cooperative 
agreement, incorporating all necessary FRPP requirements. The 
cooperative agreement must address:
    (1) The interests in land to be acquired, including the United 
States' right of enforcement, as well as the form and other terms and 
conditions of the easement deed;
    (2) The management and enforcement of the rights on lands acquired 
with FRPP funds;
    (3) The responsibilities of NRCS;
    (4) The responsibilities of the eligible entity on lands acquired 
with FRPP funds;
    (5) The allowance of parcel substitution upon mutual agreement of 
the parties; and
    (6) Other requirements deemed necessary by NRCS to meet the purposes 
of this part or protect the interests of the United States.
    (b) The term of cooperative agreements will be 5 years for certified 
entities and 3 years for other eligible entities.

[[Page 948]]

    (c) The cooperative agreement will include an attachment listing the 
parcels accepted by the State Conservationist. This list will include 
landowners' names and addresses, acreage, the estimated fair market 
value, the estimated Federal contribution, and other relevant 
information. The cooperative agreement template will be made available 
by the State Conservationist.
    (d) The cooperative agreement will incorporate the provisions 
necessary for the eligible entity to comply with applicable registration 
and reporting requirements of the Federal Funding Accountability and 
Transparency Act of 2006 (Pub. L. 109-282, as amended) and 2 CFR parts 
25 and 170.



Sec. 1491.21  Funding.

    (a) Subject to the statutory limits, the State Conservationist, in 
coordination with the eligible entity, will determine the NRCS share of 
the cost of purchasing a conservation easement or other interest in the 
land.
    (b) NRCS may provide up to 50 percent of the appraised fair market 
value of the conservation easement consistent with Sec. 1491.4(g). An 
eligible entity will share in the cost of purchasing a conservation 
easement in accordance with the limitations of this part.
    (c) A landowner may make donations toward the acquisition of the 
conservation easement.
    (d) The eligible entity must provide a minimum of 25 percent of the 
purchase price of the conservation easement.
    (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 
eligible entity.
    (f) NRCS will conduct its technical and administrative review of 
appraisals and its hazardous materials reviews with FRPP funds.
    (g) If the State Conservationist determines that the purchase of two 
or more conservation easements are comparable in achieving FRPP goals, 
the State Conservationist will not assign a higher priority to any one 
of these conservation easements solely on the basis of lesser cost to 
FRPP.
    (h) Environmental Services Credits:
    (1) NRCS asserts no direct or indirect interest in environmental 
credits that may result from or be associated with an FRPP easement;
    (2) NRCS retains the authority to ensure that the requirements for 
FRPP-funded easements are met and maintained consistent with this part; 
and
    (3) If activities required under an environmental credit agreement 
may affect land covered under a FRPP easement, landowners are encouraged 
to request a compatibility assessment from the eligible entity prior to 
entering into such agreements.



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 will 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. In such cases where State law limits the term of a 
conservation easement, the easement term will be for the maximum allowed 
under State law.
    (c) The eligible entity may use its own terms and conditions in the 
conservation easement deed, but the conservation easement deed must be 
reviewed and approved by National Headquarters in advance of use. 
Individual conservation easement deeds used by the eligible entity will 
be submitted to National Headquarters at least 90 days before the 
planned closing date. Eligible entities with multiple parcels in a 
cooperative agreement may submit a conservation easement deed template 
for review and approval. The deed templates must be reviewed and 
approved by National Headquarters in advance of use. For eligible 
entities that have not been certified, the NRCS State offices will 
review prior to closing the conservation easement deeds for individual 
parcels to ensure that they contain the same language as approved by the 
national office and that the appropriate site-specific information has 
been included. NRCS reserves the right

[[Page 949]]

to require additional specific language or to remove language in the 
conservation easement deed to protect the interests of the United 
States. The Chief may exercise the option to promulgate standard minimum 
conservation deed requirements as a condition for receiving FRPP funds.
    (d) The conveyance document must include a right of enforcement 
clause. NRCS will specify the terms for the right of enforcement clause 
to read as set forth in the FRPP cooperative agreement. This right is a 
vested property right and cannot be condemned by State or local 
government.
    (e) As a condition for participation, a conservation plan will be 
developed by NRCS in consultation with the landowner and implemented 
according to the FOTG. NRCS may work through the local conservation 
district in the development of the conservation plan. The conservation 
plan will be developed and managed in accordance with the 1985 Act, 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 eligible entity will acquire, hold, manage, and enforce the 
easement. The eligible entity may have the option to enter into an 
agreement with governmental or private organizations to carry out 
easement stewardship responsibilities.
    (g) NRCS will sign an acceptance of 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 will be provided to NRCS by the eligible 
entity.
    (i) Impervious surfaces will not exceed 2 percent of the FRPP 
easement area, excluding NRCS-approved conservation practices. The State 
Conservationist may waive the 2 percent impervious surface limitation on 
a parcel-by-parcel basis, provided that no more than 10 percent of the 
easement area is covered by impervious surfaces. Before waiving the 2 
percent limitation, the State Conservationist must consider, at a 
minimum, population density, the ratio of open prime other important 
farmland versus impervious surfaces on the easement area, the impact to 
water quality concerns in the area, the type of agricultural operation, 
and parcel size. Eligible entities may submit an impervious surface 
limitation waiver process to the State Conservationist for review and 
consideration. The eligible entities must apply approved impervious 
surface limitation waiver processes on a parcel-by-parcel basis. State 
Conservationists will not approve blanket waivers of the impervious 
surface limitation for all parcels administered by the eligible entity 
without regard for the characteristics of individual parcels. All FRPP 
easements must include language limiting the amount of impervious 
surfaces within the easement area.
    (j) The conservation easement deed must include an indemnification 
clause requiring the landowner to indemnify and hold harmless the United 
States from any liability arising from or related to the property 
enrolled in FRPP.
    (k) The conservation easement deed must include an amendment clause 
requiring that any changes to the easement deed after its recordation 
must be consistent with the purposes of the conservation easement and 
this part. The conservation easement deed must require that NRCS approve 
any substantive amendment.



                    Subpart C_General Administration



Sec. 1491.30  Violations and remedies.

    (a) In the event of a violation of the easement terms, the eligible 
entity will notify the landowner. The 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 eligible entity fails to enforce any of 
the terms of the conservation easement as determined by the Chief, the 
Chief or his or her successors or assigns may exercise the United 
States' rights to enforce the

[[Page 950]]

terms of the conservation easement through any and all authorities 
available under Federal or State law.
    (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 NRCS 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 will be entitled to recover any and all 
administrative and legal costs from the participating eligible entity, 
including attorney's fees or expenses, associated with any enforcement 
or remedial action as it relates to the enforcement of the FRPP 
easement.
    (e) 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. The CCC's share will be in 
proportion to its percentage of original investment.
    (f) In the event NRCS determines it must exercise its rights 
identified under a conservation easement or other interest in land, NRCS 
will provide written notice by certified mail, return receipt requested, 
to the eligible entity at the eligible entity's last known address. The 
notice will set forth the nature of the noncompliance by the eligible 
entity and a 60-day period to cure. If the eligible entity fails to cure 
within the 60-day period, NRCS will take the action specified under the 
notice. NRCS reserves the right to decline to provide a period to cure 
if NRCS determines that imminent harm may result to the conservation 
values or other interest in land it seeks to protect.



Sec. 1491.31  Appeals.

    (a) A person or eligible 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 or eligible entity may seek judicial review of 
any administrative action taken under this part, the person or eligible 
entity must exhaust all administrative appeal procedures set forth in 
paragraph (a) of this section, and for the purposes of judicial review, 
no decision will be a final agency action except a decision of the Chief 
under these provisions.
    (c) Enforcement action undertaken by NRCS in furtherance of its 
vested property rights are under the jurisdiction of the Federal 
District Court and not subject to review under administrative appeal 
regulations.



Sec. 1491.32  Scheme or device.

    (a) If it is determined by NRCS that a eligible entity has employed 
a scheme or device to defeat the purposes of this part, any part of any 
program payment otherwise due or paid to such an eligible entity during 
the applicable period may be withheld or be required to be refunded, 
with interest, as determined appropriate by NRCS on behalf of the CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, and 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.
1493.4 Criteria for country allocations.

[[Page 951]]

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 952]]



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 953]]

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 954]]

    (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 955]]

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 956]]

    (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 957]]

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 958]]

    (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 959]]

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 960]]

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 961]]

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 962]]

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 963]]

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 964]]

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 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, 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 965]]

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 966]]

                       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 967]]

    (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 968]]

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 969]]

    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 970]]

subject to the revision of the International Chamber of Commerce Uniform 
Customs and Practices for Documentary Credits (copyright); 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 971]]

    (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 972]]

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 973]]

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 974]]

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 975]]

    (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 976]]

    (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 977]]

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 978]]

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 979]]

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

[[Page 980]]

trustee for two or more parties participating in the assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof to such financial 
institution and to the exporter issued the facility payment guarantee in 
lieu of an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a facility payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC; or
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a facility payment guarantee approved by CCC if such financial 
institution:
    (1) At the time of assignment of a facility payment guarantee, is 
not in sound financial condition, as determined by the Treasurer of CCC;
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (d) Alternative satisfaction of facility payment guarantees. CCC 
may, with the agreement of the exporter (or if the right to proceeds 
payable under the facility payment guarantee has been assigned, with the 
agreement of the exporter's assignee), establish procedures, terms or 
conditions for the satisfaction of CCC's obligations under a facility 
payment guarantee other than those provided for in this subpart if CCC 
determines that those alternative procedures, terms or conditions are 
appropriate in rescheduling the debts arising out of any transaction 
covered by the facility payment guarantee and would not result in CCC 
paying more than the amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a facility 
payment guarantee, the exporter or the exporter's assignee, 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

[[Page 981]]

Agriculture or his authorized representative for the five-year period 
specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, this subpart, program announcement(s), and notice(s) to 
participants relating to the FGP, as applicable. Applicants for facility 
payment guarantees under this program are hereby on notice that they 
will be bound by any terms contained in applicable program 
announcement(s) or notice(s) to participants issued prior to the date of 
approval of a facility payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by:
    (1) Wording indicating the delegation of authority or, in the 
alternative, by a certified copy of the delegation of authority; and
    (2) The name and title of the authorized person or officer. Further, 
the exporter or exporter's assignee must ensure that all information/
reports required under this subpart are submitted within the required 
time limits. If requested in writing, CCC will acknowledge receipt of a 
submission by the exporter or the exporter's assignee. If acknowledgment 
of receipt is requested, the exporter or exporter's assignee must submit 
an extra copy of each document and a stamped self-addressed envelope for 
return by U.S. mail. If courier services are desired for the return 
receipt, the exporter or exporter's assignee must also submit a self-
addressed courier service order which includes the recipient's billing 
code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or resident Commissioner, shall be admitted to any share or part of the 
facility payment guarantee or to any benefit that may arise therefrom, 
but this provision shall not be construed to extend to the facility 
payment guarantee if made with a corporation for its general benefit.
    (i) Deadlines. (1) Where a deadline is fixed in terms of days, it 
means business days and excludes Saturdays, Sundays and federal 
holidays.
    (2) Where a deadline is fixed in terms of months, the deadline falls 
on the same day of the month as the day triggering the deadline period, 
or if there is no same day, the last day of the month; and
    (3) Where a deadline would otherwise fall on a Saturday, Sunday or 
federal holiday, the deadline shall be the next business day.



       Subpart D_CCC Supplier Credit Guarantee Program Operations

    Source: 61 FR 33831, July 1, 1996, unless otherwise noted.



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

[[Page 982]]

will be available for scheduled payments. In providing this credit 
guarantee facility, CCC seeks to expand market opportunities for U.S. 
agricultural exporters and assist long-term market development for U.S. 
agricultural commodities.
    (3) The credit facility created by this program is the SCGP payment 
guarantee (payment guarantee). The payment guarantee is an agreement by 
CCC to pay the exporter, or the U.S. financial institution that may take 
assignment of the exporter's right to proceeds, specified amounts of 
principal and, where applicable, interest due from, but not paid by, the 
importer incurring the obligation in connection with the export sale to 
which CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than government, financing and incurs a substantial portion of 
the risk of default by the importer. CCC assumes this risk, in order to 
be able to operate the program for the purposes specified in Sec. 
1493.2.
    (b) Credit facility mechanism. (1) For the purpose of the SCGP, CCC 
will consider applications for payment guarantees only in connection 
with export sales of U.S. agricultural commodities where the payment for 
the agricultural commodities will be made under an unconditional and 
irrevocable importer obligation to a U.S. exporter payable in U.S. 
dollars, as defined in Sec. 1493.410(n).
    (2) The exporter may assign the right to proceeds under the importer 
obligation to a U.S. bank or other financial institution so that the 
exporter may realize the proceeds of the sale prior to the deferred 
payment date(s) as set forth in the importer obligation.
    (3) The SCGP payment guarantee is designed to protect the exporter 
or the exporter's assignee against those losses specified in the payment 
guarantee resulting from defaults, whether for commercial or 
noncommercial reasons, by the importer under the importer's obligation.
    (c) Program administration. The SCGP will be administered pursuant 
to subpart A and this subpart and any Program Announcements and Notices 
to Participants issued by CCC pursuant to, and not inconsistent with, 
this subpart. This program is under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec. 1493.410(c), 
``Contacts P/R'').
    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a SCGP 
allocation for a specific country. The Program Announcement for a 
country allocation will designate specific allocations for U.S. 
agricultural commodities or products thereof, will indicate the form of 
promissory note required by CCC, and will provide other pertinent 
information. Exporters may negotiate export sales to importers in that 
country for one of the commodities specified in the 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

[[Page 983]]

SCGP will have the following meanings:
    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
SCGP. The Contacts P/R also contains details about where to submit 
information required to qualify for program participation, to apply for 
payment guarantees, to request amendments of payment guarantees, to 
submit evidence of export reports, and to give notices of default and 
file claims for loss.
    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has been 
established or a mechanism to establish such price has been agreed upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter, or an intervening 
purchaser, to the importer in connection with a sale of an agricultural 
commodity, above and beyond the commodity's value, stated on the 
appropriate FOB, FAS, CFR or CIF basis. Discounts and allowances 
include, but are not limited to, the provision of additional goods, 
services or benefits; the promise to provide additional goods, services 
or benefits in the future; financial rebates; the assumption of any 
financial or contractual obligations; the whole or partial release of 
the importer from any financial or contractual obligations; or 
settlements made in favor of the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-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

[[Page 984]]

entry, reduced by the value of any discounts or allowances granted to 
the importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of Sec. 
1493.420.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (l) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (m) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (n) Importer obligation. A promissory note or notes that conform(s) 
with the requirements for such note(s) specified in the applicable 
country or regional Program Announcement(s).
    (o) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms (copyright) 
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,

[[Page 985]]

less the value of marine and war risk insurance, reduced by the value of 
any discounts or allowances granted to the importer in connection with 
the sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (u) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, the form of promissory note required 
for a particular country or region, and include other information and 
requirements.
    (v) SCGP. The Supplier Credit Guarantee Program described by this 
subpart.
    (w) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (x) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (y) USDA. United States Department of Agriculture.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6 1997]



Sec. 1493.420  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
the SCGP, the applicant must qualify for participation in this program. 
Based upon the information submitted by the applicant and other publicly 
available sources, CCC will determine whether the applicant is eligible 
for participation in the program.
    (a) Submission of documentation. In order to qualify for 
participation in the SCGP, an applicant must submit to 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,

[[Page 986]]

suspended, or proposed for debarment from contracting with or 
participating in programs administered by any U.S. Government agency. 
[''Principals,'' for the purpose of this certification, means officers; 
directors; owners of five percent or more of stock; partners; and 
persons having primary management or supervisory responsibility within a 
business entity (e.g., general manager, plant manager, head of a 
subsidiary division, or business segment, and similar positions).] I 
further agree that, should any such debarment, suspension, or notice of 
proposed debarment occur in the future, [name of applicant] will 
immediately notify CCC.''
    (b) Previous qualification. Any exporter that is qualified under 
subpart B, Sec. 1493.30 is qualified under this section to submit 
applications for a SCGP payment guarantee, and the information provided 
by the exporter pursuant to Sec. 1493.30 will be deemed to also have 
been provided under this section. Each application must include the 
statement required by Sec. 1493.430(a)(17) incorporating the 
certifications of Sec. 1493.440, including the certification in Sec. 
1493.440(e) that the information previously provided pursuant to Sec. 
1493.420 has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.
    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the SCGP if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or participating in any program 
administered by a U.S. Government agency; or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec. 1493.430  Application for a payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country;
    (2) Name and address of the importer;
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country;
    (4) Date of sale;
    (5) Exporter's sale number;
    (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

[[Page 987]]

which the exporter is applying for a payment guarantee is also being 
used as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable;
    (16) Other information as requested by CCC or specified in Program 
Announcements and Notices to Participants, as applicable; and
    (17) The exporter's statement, ``ALL SECTION 1493.440 CERTIFICATIONS 
ARE BEING MADE IN THIS APPLICATION'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec. 1493.440.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec. 1493.450(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.
    (c) Ineligible exporter. An exporter will be ineligible to obtain a 
payment guarantee if such exporter:
    (1) Directly or indirectly owns or controls the importer;
    (2) Is directly or indirectly owned or controlled by the importer; 
or
    (3) Is directly or indirectly owned or controlled by a person(s) or 
entity(ies) which also owns or controls the importer.



Sec. 1493.440  Certification requirements for payment guarantee.

    By providing the statement in Sec. 1493.430(a)(17), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in Sec. 
1493.430(a)(17), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by Sec. 
1493.410(x).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of 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 988]]



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 989]]

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 990]]

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 991]]



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 992]]

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 993]]

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 994]]



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.

[[Page 995]]

    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:
    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a payment guarantee, including those records 
generated and maintained by agents, intervening purchasers, and related 
companies involved in special arrangements with the exporter. The 
Secretary of Agriculture and the Comptroller General of the United 
States, through their authorized representatives, must be given full and 
complete access to the premises of the exporter or the exporter's 
assignee, as applicable, during regular business hours from the 
effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's, or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by Sec. 
1493.490(b), and must provide access to such documentation if requested 
by the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully 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;

[[Page 996]]

and the name and title of the authorized person or officer. Further, the 
exporter or exporter's assignee must ensure that all information/reports 
required under these regulations are submitted within the required time 
limits. If requested in writing, CCC will acknowledge receipt of a 
submission by the exporter or the exporter's assignee. If acknowledgment 
of receipt is requested, the exporter or exporter's assignee must submit 
an extra copy of each document and a stamped self-addressed envelope for 
return by U.S. mail. If courier services are desired for the return 
receipt, the exporter or exporter's assignee must also submit a self-
addressed courier service order which includes the recipient's billing 
code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information requirements contained in this part (7 CFR part 
1493, subpart D) have been approved by the Office of Management and 
Budget (OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 
and have been assigned OMB Control Number 0551-0037.



PART 1494_EXPORT BONUS PROGRAMS--Table of Contents



              Subpart A_Export Enhancement Program Criteria

Sec.
1494.10 General statement.
1494.20 Criteria.

             Subpart B_Export Enhancement Program Operations

1494.101 General statement.
1494.201 Definitions of terms.
1494.301 Information required for program participation.
1494.401 Performance security.
1494.501 Submission of offers to CCC.
1494.601 Acceptance of offers by CCC.
1494.701 Payment of bonus.
1494.801 Enforcement and termination of agreements with CCC.
1494.901 Dispute resolution and appeals.
1494.1001 Miscellaneous provisions.

            Subpart C_Dairy Export Incentive Program Criteria

1494.1100 General statement.
1494.1101 Criteria.

           Subpart D_Dairy Export Incentive Program Operations

1494.1200 Program operations.
1494.1201 Paperwork Reduction Act.

    Source: 56 FR 25011, June 3, 1991, unless otherwise noted.



              Subpart A_Export Enhancement Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec. 1494.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity 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:

[[Page 997]]

    (a) The expected contribution of proposed initiatives in furthering 
trade policy negotiations and, in particular, in furthering the U.S. 
trade policy negotiating strategy of countering competitors' subsidies 
and other unfair trade practices by displacing such countries' 
subsidized exports in targeted countries;
    (b) The contribution which initiatives will make toward realizing 
U.S. agricultural export goals and, in particular, in developing, 
expanding, or maintaining markets for U.S. agricultural commodities;
    (c) The effect that sales facilitated by initiatives would have on 
non-subsidizing exporters of agricultural products; and
    (d) The subsidy requirements of proposed initiatives compared to the 
expected benefits.



             Subpart B_Export Enhancement Program Operations

    Authority: 15 U.S.C. 714c; 7 U.S.C. 5602, 5651, 5661, 5662, 5676.



Sec. 1494.101  General statement.

    This subpart contains the regulations governing the operation of the 
Export Enhancement Program (EEP) of the Commodity Credit Corporation 
(CCC). CCC will, from time to time, announce, through public press 
release, initiatives to facilitate the export of U.S. agricultural 
commodities to targeted markets. The public press release, which will 
contain the name of a person for interested parties to contact, will be 
followed by the issuance of an Invitation for Offers (Invitation). 
Invitations will be issued pursuant to this subpart by the General Sales 
Manager (GSM) and will specify the eligible country(ies) (the targeted 
market), the unit of measure, the eligible commodity, the maximum 
quantity of the eligible commodity eligible for a CCC bonus, the quality 
specifications of the eligible commodity (including possible 
restrictions on type, kind, grade and/or class or other quality 
specifications), the eligible buyer(s), the method and rate for 
determining liquidated damages and performance security requirements, 
and any other terms and conditions peculiar to that Invitation. 
Invitations may be one of the following two types: Those inviting 
exporters which have a sales contract with an eligible buyer to submit a 
competitive offer for a CCC Bonus; and those inviting exporters which 
have a sales contract with an eligible buyer to apply for an Announced 
CCC Bonus. After an interested person has qualified to submit an offer 
for an eligible commodity, the eligible exporter may submit an offer to 
CCC in response to an Invitation. Such offer must contain the 
information required by this subpart and any additional information 
required by the applicable Invitation. The exporter's offer will include 
either the Announced CCC Bonus, if applicable, or an amount in dollars 
and cents for a bonus deemed necessary by the exporter to make a 
commercial sale of the eligible commodity for export to the eligible 
country competitive with export sales of the commodity by other 
exporting countries to buyers in the eligible country. If the exporter 
has furnished the required performance security and the offer is 
acceptable to CCC, then CCC will notify the exporter that its 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

[[Page 998]]

    (5) The public press release for the Announced CCC Bonus in effect 
at the time of the offer, if applicable.
    (b) Announced CCC bonus--A CCC bonus announced by CCC by public 
press release in connection with an Invitation which specifies that the 
CCC bonus amount will be pre-determined and announced by CCC.
    (c) FSA--The Farm Service Agency, U.S. Department of Agriculture.
    (d) Bonus value--The CCC bonus multiplied by the quantity of the 
eligible commodity exported pursuant to an Agreement, provided that the 
eligible commodity enters into the eligible country. (The bonus value is 
paid to the exporter in CCC certificates or other form of payment.)
    (e) Business day--Days during which employees of the U.S. Department 
of Agriculture in Washington, DC or in Kansas City, Missouri, as 
applicable depending upon the office to which a submission is to be 
made, are on official duty during normal business hours.
    (f) CCC--The Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (g) CCC bonus--A dollar and cents amount, established through CCC's 
acceptance of the exporter's offer for such bonus amount, to be paid to 
the exporter for each unit of the eligible commodity exported pursuant 
to an Agreement, provided that the eligible commodity enters into the 
eligible country.
    (h) CCC Certificate--The CCC Commodity Certificate or Certificates 
issued by CCC that may be transferred or exchanged for a CCC-owned 
commodity pursuant to CCC's regulations on Commodity Certificates, In 
Kind Payments, and Other Forms of Payment, currently codified at 7 CFR 
part 1470.
    (i) CCC Operations Division (CCCOD)--The CCC Operations Division, 
FAS, U.S. Department of Agriculture.
    (j) Date of entry--Either the date on the certificate of entry 
specified in Sec. 1494.401(f)(2) indicating that the eligible commodity 
entered the eligible country on that date or the date that an entry 
document was issued by a customs port authority or other government 
official, whichever is later.
    (k) Date of export--One of the following dates, depending upon the 
method of shipment:
    (1) The on-board date shown on the export carrier's bill of lading, 
when the eligible commodity is shipped from the U.S. without being 
transshipped through a Canadian port;
    (2) The on-board date at the Canadian port shown on the export 
carrier's bill of lading, when the eligible commodity is shipped from a 
Canadian transshipment port on the St. Lawrence River, provided its 
identity had been preserved until shipped from Canada;
    (3) The on-board date shown on the export carrier's through bill of 
lading, when the eligible commodity is loaded to a lash barge for 
shipment from the U.S.; or
    (4) The date of entry shown on an authenticated landing certificate 
or similar document issued by an official of the government of the 
eligible country, when the eligible commodity is shipped by rail or 
truck from the U.S.
    (l) Date of sale--The earliest date the exporter has knowledge that 
a sales contract, as defined in paragraph (bb) of this section, exists 
with an eligible buyer.
    (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

[[Page 999]]

Act and the regulations issued thereunder.)
    (q) Eligible exporter. A person that has been notified by CCC that 
such person is qualified to submit offers in response to Invitations.
    (r) Export or exported--The shipment of the eligible commodity from 
the United States or from the Canadian transshipment port, as permitted 
by this subpart, destined for the eligible country.
    (s) Exporter--An eligible exporter that enters into an Agreement 
with CCC under this subpart.
    (t) Export carrier--The carrier on which the eligible commodity is 
shipped under the Agreement to the eligible country or to a port in a 
nearby country, if transshipments other than through Canada are allowed 
by the applicable Invitation. (``Export carrier'' may mean an ocean 
vessel and, on Canadian transshipments, will mean the ocean vessel 
loaded at the Canadian transshipment port; or, on overland shipments, a 
railcar or truck; or a container or lash barge loaded with the eligible 
commodity for which a through on-board bill of lading is issued for 
shipment to the eligible country, provided that the loaded container or 
lash barge is subsequently lifted aboard an ocean vessel.)
    (u) FAS--The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (v) GSM--The General Sales Manager, FAS, U.S. Department of 
Agriculture, acting in the capacity of Vice President, CCC, or the GSM's 
designee.
    (w) Invitation--The Invitation for Offers issued by CCC pursuant to 
this subpart, generally specifying the eligible country, the eligible 
commodity, the maximum quantity of the eligible commodity eligible for a 
CCC bonus, the quality specifications of the eligible commodity, the 
eligible buyer(s), the method and rate for determining liquidated 
damages and performance security requirements, allowances for 
transshipments, and any other terms and conditions particular to that 
Invitation. (If the Invitation contains terms or conditions that are 
inconsistent with this subpart, the terms and conditions of the 
Invitation will prevail for the purposes of Agreements entered into 
pursuant to such Invitation.)
    (x) Notice to exporters--EEP Contacts--A notice issued by FAS by 
public press release which contains specific addresses; telephone, 
facsimile and telex numbers; and contacts within FAS and FSA to obtain 
further information concerning qualification as an eligible exporter, 
the submission of offers in response to Invitations, amendments to 
Agreements, requests for bonus payments, the submission of export and 
entry documentation, and other matters related to the EEP.
    (y) Official Inspection Certificate--A valid official export 
inspection or other quality analysis certificate, as specified in the 
applicable Invitation.
    (z) Official weight certificate--A valid official export weight or 
other quantity certificate, as specified in the applicable Invitation.
    (aa) Person--An individual, partnership, corporation, association or 
other legal entity.
    (bb) Sales contract--The sales contract entered into between an 
eligible exporter and an eligible buyer which sets forth the terms and 
conditions of a sale of the eligible commodity from the eligible 
exporter to the buyer. (Written 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.

[[Page 1000]]

    (ee) Unit of measure--The unit of measure for the eligible 
commodity, as specified in the applicable Invitation.
    (ff) United States or U.S.--All of the 50 States, the District of 
Columbia, and the territories and possessions of the United States.
    (gg) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995; 62 
FR 24561, May 6, 1997]



Sec. 1494.301  Information required for program participation.

    Before CCC will consider an offer from an interested person, such 
person must qualify for participation in the program. Based upon 
information submitted by the interested person and available from public 
sources, CCC will determine whether the interested person is eligible 
for participation in the program.
    (a) Submission of documentation. An interested person that wishes to 
qualify as an eligible exporter must furnish the following information 
or documentation to CCC at the address referenced in the Notice to 
Exporters--EEP Contacts:
    (1) The address of the interested person's office and the name and 
address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the interested person, e.g., 
sole proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the interested person, if the 
interested person is a corporation;
    (4) The name and address of an office(s) of the interested person 
within the U.S., if the interested person is a foreign corporation or 
other foreign entity; and
    (5) A certified statement describing the interested person's 
participation, if any, during the past three years in U.S. Government 
programs, contracts or agreements.
    (6) The following certification: ``I certify, to the best of my 
knowledge and belief, that neither [name of interested person] nor any 
of its principals has been debarred, suspended, or proposed for 
debarment from contracting with or participating in programs 
administered by any U.S. Government agency. [``Principals,'' for the 
purpose of this certification, means officers; directors; owners of five 
percent or more of stock; partners; and persons having primary 
management or supervisory responsibility within a business entity (e.g., 
general manager, plant manager, head of a subsidiary division or 
business segment, and similar positions).] I further agree that, should 
any such debarment, suspension, or notice of proposed debarment occur in 
the future, [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.

[[Page 1001]]

    (e) Ineligibility for program participation. A person may be 
ineligible to participate in the EEP if such person:
    (1) Is currently debarred, suspended or proposed for debarment from 
contracting with or participating in any program administered by a U.S. 
Government agency; or
    (2) Is controlled or can be controlled, in whole or in part, by any 
individuals or entities currently debarred, suspended or proposed for 
debarment from contracting with or participating in programs 
administered by a U.S. Government agency.
    (f) Duty to update information provided to CCC. An eligible exporter 
is under a continuing obligation to inform CCC of any changes in the 
information or documentation submitted to CCC pursuant to paragraph (a) 
of this section and to provide current and accurate information to CCC.
    (g) Payment of bonus to exporters without proven EEP participation. 
An eligible exporter that has not yet demonstrated its ability to 
participate successfully in the EEP will be eligible to receive a bonus 
payment(s) only after the eligible commodity specified in an EEP 
Agreement has entered into the eligible country. Such an exporter must 
furnish performance security under ``Option B'' of the applicable 
Invitation and follow the procedure specified in Sec. 1494.701(d) to 
request the payment of the bonus. An eligible exporter may demonstrate 
its ability to participate successfully in the EEP by entering or 
causing to be entered into the eligible country at least 95% of the 
quantity of the eligible commodity specified in any one EEP Agreement. 
CCC will consider that an exporter has proven its ability to participate 
successfully in the EEP as of the date on which CCC pays to the exporter 
a bonus for entry of a quantity that brings the total entered quantity 
for any one EEP Agreement to at least 95%. For all EEP Agreements that 
such exporter enters into with CCC subsequent to that date, the exporter 
may furnish performance security under ``Option A'' of the applicable 
Invitation and will be eligible to receive bonus payments in accordance 
with Sec. 1494.701(c).

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995]



Sec. 1494.401  Performance security.

    (a) Requirement to establish performance security. Prior to the 
submission of an offer to CCC in response to an Invitation, an eligible 
exporter must establish performance security, in a form which is 
acceptable to CCC, in order to guarantee the eligible exporter's 
faithful performance of the Agreement. If CCC enters into an Agreement 
with the eligible exporter, this performance security must remain in 
effect until its cancellation or reduction is authorized by CCC pursuant 
to paragraph (f) of this section. An offer made by an eligible exporter 
will not be considered if proof of the establishment of the performance 
security is not made available to CCC by 3 p.m. on the date for which 
the offer is submitted for consideration.
    (b) Form of performance security. The performance security must be 
acceptable to CCC and may be an irrevocable standby letter of credit, a 
bond, or a certified or cashier's check. If a standby letter of credit 
is furnished as performance security, the opening bank may be a U.S. 
bank or a foreign bank. If the standby letter of credit is opened by a 
foreign bank, it must be 100 percent confirmed by a U.S. bank. If a 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

[[Page 1002]]

bonus only after the exported eligible commodity has entered into the 
eligible country. The applicable Invitation will specify the exact 
amount of performance security for the eligible commodity required under 
either ``Option A'' or ``Option B'' and the method and rate for 
determining liquidated damages. After the exporter and CCC enter into an 
Agreement, the exporter may request CCC to change the performance 
security option for an entire Agreement from ``Option B'' to ``Option 
A'' and, if CCC agrees to this change, the exporter will increase the 
performance security amount to the level required by the applicable 
Invitation for ``Option A''.
    (d) Additional security. The exporter shall promptly furnish such 
additional security as CCC may determine is necessary to protect CCC 
under an Agreement if the surety(ies) or obligating bank:
    (1) Becomes unacceptable to the U.S. Government or CCC; and/or
    (2) Fails to furnish reports on its financial condition as required 
by the U.S. Government or CCC.
    (e) Right to funds under the performance security. If CCC enters 
into an Agreement with an exporter under the EEP, CCC will have the 
right to funds from the performance security established by the exporter 
for such Agreement to recover:
    (1) The amount of any bonus paid to the exporter under the Agreement 
if the exporter fails to perform in accordance with such Agreement;
    (2) Any funds owed by the exporter to CCC related to the specific 
EEP Agreement for which the performance security was established, 
including those for liquidated damages, discounts for late performance, 
overpayments made by CCC, storage charges, or other damages or charges 
as determined by CCC; and/or
    (3) Any amounts or funds that could be owed by the exporter to CCC 
in accordance with subparagraphs (e) (1) and (2) of this section for 
unfulfilled obligations under the Agreement if the performance security 
should expire prior to the exporter's fulfillment of these obligations. 
Should the exporter fulfill these obligations, in accordance with the 
Agreement, after CCC has drawn upon the performance security, CCC will 
return the funds drawn to the exporter or other appropriate party, as 
determined by CCC. CCC may return the performance security if it 
determines that the exporter is not liable for any damages incurred by 
CCC as a result of the exporter's failure to fulfill its obligations 
under the Agreement and that the exporter will not retain any bonus 
payment which was not earned.
    (f) Cancellation or reduction of performance security. (1) CCC will 
agree, upon request by the exporter, to a cancellation of the 
performance security established for an Agreement when CCC determines, 
on the basis of evidence provided by the exporter or other evidence 
available to CCC, that:
    (i) The exporter has fully performed under the Agreement;
    (ii) The exporter has fully compensated CCC for all costs incurred 
or damages suffered by CCC, unless CCC has determined to hold the 
exporter harmless for such damages pursuant to Sec. 1494.801(d) as a 
result of the exporter's nonperformance of the Agreement; or
    (iii) It is no longer in the best interest of the EEP to require the 
exporter to maintain the performance security, 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

[[Page 1003]]

surveyor in the target country or other documentation deemed acceptable 
by the GSM showing:
    (i) That the eligible commodity entered the eligible country;
    (ii) The identification of the export carrier;
    (iii) The quantity of the eligible commodity unloaded;
    (iv) The kind, type, grade and/or class of the eligible commodity; 
and
    (v) The date(s) and place(s) of unloading of the eligible commodity 
in the eligible country.
    (3) If the exporter makes multiple shipments against a sales 
contract with an eligible buyer, CCC may agree to a proportional 
reduction in the amount of the required performance security when the 
exporter has furnished evidence that the exporter has performed under 
the Agreement with respect to a particular shipment.
    (4) Upon the payment of liquidated damages by an exporter to CCC 
under a specific Agreement or the determination by CCC, pursuant to 
Sec. 1494.801(d), to hold the exporter harmless for the payment of 
liquidated damages owed to CCC under a specific Agreement, CCC will 
allow the exporter to cancel or reassign that portion of the performance 
security opened for such specific Agreement that would relate to the 
value of the liquidated damages.



Sec. 1494.501  Submission of offers to CCC.

    (a) Consideration of offers. Unless otherwise specified in the 
Invitation, CCC will consider offers on a daily basis from the date of 
issuance of the Invitation until such time that CCC announces that 
offers will no longer be accepted under the Invitation, the total 
quantity of the eligible commodity announced in the Invitation has been 
awarded, or the Invitation has expired as indicated by the expiration 
date shown in the Invitation.
    (1) Prior to the submission of an offer to CCC, the eligible 
exporter must have entered into a sales contract, as defined in Sec. 
1494.201(bb), with an eligible buyer for the export sale and the 
delivery of the eligible commodity to the eligible country.
    (2) The date of sale of the eligible exporter's sales contract with 
an eligible buyer must be after the issuance date of the applicable 
Invitation.
    (3) The sales contract between the eligible exporter and an eligible 
buyer may be conditioned upon the eligible exporter's entering into an 
Agreement with CCC under the EEP for the payment of a bonus.
    (4) CCC will not be responsible to any person for any loss caused by 
the failure of the eligible exporter to obtain a CCC bonus.
    (5) The eligible exporter must promptly notify CCC in writing of any 
amendment to the sales contract with an eligible buyer.
    (b) Submission of offers. Eligible exporters must submit offers, or 
modifications or withdrawals thereof, to the address, telephone, telex 
or facsimile numbers specified in the Notice to Exporters--Contacts for 
EEP. Telephonic offers must be confirmed in writing immediately 
thereafter by telex or facsimile. If a telephonic offer is not confirmed 
in writing by 9 a.m. on the next business day, the offer will not be 
considered. The date and time affixed to submissions will be as 
determined by CCC.
    (c) Content of offers. Offers to CCC for a CCC bonus under the EEP 
must contain the information shown below in 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.''

[[Page 1004]]

    (3) The full business name and address of the eligible exporter 
making the offer.
    (4) The name and title of the individual signing the offer.
    (5) The telephone number and telex or facsimile number of the 
eligible exporter submitting the offer.
    (6) The CCC bonus in dollar and cents requested by the eligible 
exporter for each unit of measure of the eligible commodity to be 
exported to the eligible country. The offer shall contain only one CCC 
bonus. In offers submitted in response to an Invitation in which CCC has 
announced the bonus amount, the eligible exporter shall state the dollar 
and cents amount of the Announced CCC Bonus.
    (7) The quantity, on a net weight basis, (less any dockage, if 
applicable) of the eligible commodity for which the eligible exporter 
wishes to receive a CCC bonus pursuant to an EEP Agreement. This 
quantity shall be exclusive of tolerances and expressed in the unit of 
measure specified in the applicable Invitation. This quantity may be 
less than the sales contract quantity.
    (8) The U.S. coast of export. The Invitation may require the 
eligible exporter to indicate: The coasts of export if more than one 
coast of export is allowed for an offer; the Canadian port if the 
eligible commodity is to be transshipped through a Canadian port on the 
St. Lawrence River; or the U.S. city and state from which the shipments 
will cross the border into the eligible country if the eligible 
commodity is to be shipped by rail or truck.
    (9) The quality of the eligible commodity to be exported to the 
eligible buyer, if required by the applicable Invitation, including any 
additional quality specifications not found in the Invitation but 
included in the tender specifications by the eligible buyer or the sales 
contract with the eligible buyer. The Invitation may limit an offer to 
one or more quality designations for the eligible commodity.
    (10) The names of the eligible buyer and the eligible country. 
Unless otherwise provided for in the applicable Invitation, an offer 
shall contain only one eligible buyer and one eligible country. The 
Invitation may also provide that the eligible buyer need not necessarily 
be located in the eligible country.
    (11) The date of sale of the sales contract with the eligible buyer.
    (12) The number assigned by the eligible exporter to the sales 
contract.
    (13) The quantity of the eligible commodity specified in the sales 
contract, expressed in the unit of measure specified in the applicable 
Invitation.
    (14) The sales contract loading tolerance, if any, expressed in a 
percentage.
    (15) The sales contract unit price, delivery terms (e.g., FOB, C&F, 
etc.); the nature of any arrangements or understandings of the eligible 
exporter and any other person that would affect the sales contract, 
including but not limited to arrangements or understandings concerning 
commissions, rebates, and other payments if applicable; credit payment 
terms (e.g., GSM-102, GSM-103, or other credit arrangements); and, if 
required by the applicable Invitation, the discharge port. The possible 
credit payment terms referenced in an offer are for CCC's information 
only and are not to be construed as a contingency for consideration or 
acceptance. The eligible exporter is fully responsible for the 
arrangement of such payment terms independently from the 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.

[[Page 1005]]

    (19) The designation of bonus payment under ``Option A'' or ``Option 
B,'' as described in Sec. 1494.401(c).
    (20) The words ``ALL ITEM 20 CERTIFICATIONS ARE BEING MADE IN THIS 
OFFER'' which, when included in the offer by the eligible exporter, will 
indicate that the eligible exporter is certifying that:
    (i) The information furnished to CCC with respect to the sales 
contract is correct;
    (ii) The date of sale with an eligible buyer was after the issuance 
date of the applicable Invitation;
    (iii) The sale does not replace any sale made to the eligible buyer 
by the eligible exporter, or any affiliate or subsidiary of the eligible 
exporter, prior to the issuance date of the applicable Invitation;
    (iv) There are no other arrangements or understandings between the 
eligible exporter and any other person that would alter the information 
provided under paragraph (c) of this section;
    (v) There were and will be no corrupt payments or extra sales 
services, or other items extraneous to the export sale provided in 
connection with the export sale, and the transaction complied with 
applicable U.S. law;
    (vi) The CCC bonus requested in the offer has been arrived at 
independently, without any consultation, communication, or agreement 
with any other eligible exporter or competitor relating to:
    (A) The amount of the CCC bonus;
    (B) The intention to submit an offer; or
    (C) The methods or factors used to calculate the CCC bonus 
requested;
    (vii) The CCC bonus requested in the offer has not been and will not 
knowingly be disclosed by the eligible exporter, directly or indirectly, 
to any other eligible exporter or competitor before the time the offer 
is to be considered by CCC, unless otherwise required by law;
    (viii) No attempt has been made, or will be made, by the eligible 
exporter to induce any other concern to submit, or not to submit, an 
offer for the purpose of restricting competition;
    (ix) The signatory of the offer:
    (A) Is the person in the eligible exporter's organization 
responsible for determining the CCC bonus being requested and has not 
participated and will not participate in any action contrary to 
subparagraphs (c)(20) (vi), (vii), and (viii) of this section; or
    (B) Has been authorized in writing to act as agent for the eligible 
exporter for the purposes of paragraphs (b) and (c) of this section and 
certifies that the eligible exporter named in the offer and the 
signatory have not participated and will not participate in any action 
contrary to subparagraphs (c)(20) (vi), (vii), and (viii) of this 
section;
    (x) If the eligible commodity is vegetable oil or a vegetable oil 
product, that none of the eligible commodity has been or will be used as 
the basis of a claim of a refund, as drawback, pursuant to Section 313 
of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, tax or fee 
imposed under Federal law on an imported commodity or product;
    (xi) The agricultural commodity or product to be exported under an 
EEP Agreement is a U.S. agricultural commodity as defined by Sec. 
1494.201(gg).
    (xii) The eligible exporter is providing the assurances required by 
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

[[Page 1006]]

this subpart or the applicable Invitation may make such offer ineligible 
for consideration by CCC.
    (e) CCC's right to additional information. CCC may require the 
individual who signed the offer to provide documentary evidence of such 
individual's authority to execute an Agreement with CCC on behalf of the 
eligible exporter making the offer. CCC may require the eligible 
exporter to submit any other information which CCC deems necessary for 
consideration of the eligible exporter's offer. The exporter must 
furnish a copy of the sales contract to CCC upon request.
    (f) Considerations in making an offer. In making an offer, the 
eligible exporter should take into consideration that the exchange of 
CCC Certificates which may be issued as a bonus will be governed by the 
terms and conditions stated on the certificates and by any applicable 
regulations or procedures issued by or on behalf of CCC.

[56 FR 25011, June 3, 1991, as amended at 62 FR 24561, May 6, 1997]



Sec. 1494.601  Acceptance of offers by CCC.

    (a) Establishment of acceptable sales prices and CCC bonuses. For 
each Invitation, CCC will establish sales prices for the eligible 
commodity and CCC bonus amounts which would be acceptable to CCC in 
terms of furthering the objectives of the EEP.
    (1) In establishing acceptable sales prices for the eligible 
commodity, CCC will consider available relevant market data.
    (2) In determining acceptable CCC bonus amounts, CCC may take into 
consideration factors such as, but not limited to, the following: The 
prevailing domestic market price of the eligible commodity; the price of 
the same agricultural commodity exported by other exporting countries to 
the eligible country; ocean freight rates for the export of the eligible 
commodity from the U.S. and other exporting countries to the eligible 
country; the particular preferences or purchasing practices of buyers in 
the eligible country which would customarily affect the acceptability of 
the eligible commodity relative to that of competing exports of the same 
agricultural commodity to the eligible country from other exporting 
countries; and the cost effectiveness of the payment of a CCC bonus 
amount in view of CCC's obligation to maximize the use of resources 
available for the operation of the EEP.
    (3) The acceptable sales prices and bonus amounts will be modified 
by CCC as necessary to take advantage of updated information that 
becomes available to CCC.
    (b) Acceptance of offers for a CCC bonus on a competitive basis. An 
offer from an eligible exporter for a CCC bonus on a competitive bonus 
that meets all of the requirements of this subpart will first be 
reviewed to determine if the offer contains an acceptable sales price. 
If the sales price contained in the offer is found to be acceptable, 
then the CCC bonus contained in the offer will be reviewed to determine 
if the CCC bonus requested is found to be acceptable. Offers with 
acceptable sales prices and acceptable CCC bonuses will be accepted 
under each Invitation beginning with the offer having the lowest CCC 
bonus amount, subject to the limitations in paragraphs (f) and (h) of 
this section.
    (c) Acceptance of offers for an announced CCC bonus. Offers from 
eligible exporters for an Announced CCC Bonus 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

[[Page 1007]]

acceptance of offers by public press release as soon as possible after 
the notification to the exporter. The announcement will generally 
include the eligible commodity, the eligible country, the exporter, the 
delivery period, the CCC bonus, and, if applicable, the class of the 
eligible commodity.
    (f) Limitation on acceptance of offers. The total quantity of the 
eligible commodity, exclusive of tolerances, to be exported under all 
offers that are accepted by CCC pursuant to a particular Invitation will 
not be greater than the total quantity of the eligible commodity stated 
in such Invitation. CCC may refuse to accept further offers under an 
applicable Invitation if the quantity of the eligible commodity, 
exclusive of tolerances, already accepted totals the quantity, exclusive 
of tolerances, that is being tendered for by the eligible buyer, even 
though such quantity may be less than the total quantity available under 
that Invitation.
    (g) Rejection of offers. Any offer or part of an offer submitted for 
consideration that is not accepted by CCC by 10 a.m. of the next 
business day after the date for which the offer was submitted for 
consideration will be deemed to have been rejected.
    (h) CCC's right of rejection. Notwithstanding any other provisions 
of this subpart, CCC reserves the right to reject any or all offers 
submitted for consideration on a particular day, including those offers 
that have acceptable sales prices and CCC bonus amounts.



Sec. 1494.701  Payment of bonus.

    (a) Forms of bonus. The bonus may be paid to the exporter in CCC 
Certificates or in any other form specified in the applicable Invitation 
which CCC determines to be appropriate.
    (b) Quantity on which bonus is paid. The quantity of the eligible 
commodity exported from the U.S. which is eligible for the payment of a 
CCC bonus is the net weight (less any dockage, if applicable) or count 
which is established by the Official Inspection Certificate, the 
Official Weight Certificate or the export bill of lading, whichever is 
less. If the exporter has furnished performance security under ``Option 
A'' of the applicable Invitation and wishes the bonus to be paid prior 
to the entry of the eligible commodity into the eligible country, this 
quantity will be used in calculating the bonus value for the purposes of 
making payment to the exporter. If the exporter is not paid the bonus 
until the commodity enters into the eligible country, then this quantity 
will also be used in calculating the bonus value for the purposes of 
making payment to the exporter, unless in the determination of CCC, 
there is evidence to suggest that there was destruction, diversion or 
loss of the eligible commodity prior to entry into the eligible country. 
The payment of a bonus value to an exporter does not indicate that the 
bonus has been earned by the exporter under the Agreement; pursuant to 
Sec. 1494.801(a)(3), the bonus is not earned by the exporter until the 
eligible commodity enters into the eligible country in accordance with 
the Agreement and the exporter submits proof of such entry to CCC.
    (c) Request for bonus payment under ``Option A.'' If the exporter 
has furnished performance security under ``Option A'' of the applicable 
Invitation and wishes the bonus to be paid after export of the eligible 
commodity, the exporter must, within 30 calendar days after the date of 
export of the eligible 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:

[[Page 1008]]

    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance; and
    (C) The weight or count of the eligible commodity.
    (iii) The original or an original copy of the Official Inspection 
Certificate, as required in the applicable Invitation. The certificate 
must show:
    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity to which the certificate 
relates; and
    (D) The quality description of the eligible commodity.
    (iv) If the documents submitted under paragraphs (c)(1)(ii) and 
(iii) of this section do not specify the export carrier, the exporter 
must also submit a signed certification that the commodity represented 
by the Official Inspection and/or the Official Weight certificates is 
the identical eligible commodity represented on the export bill of 
lading.
    (2) If the export of the eligible commodity was by lash barge, the 
exporter must furnish, in addition to the documents required by 
paragraph (c)(1) of this section, a statement from the vessel's agent 
showing that the lash barge was loaded to the lash vessel named in the 
on-board lash bill of lading and that the eligible commodity is destined 
for the eligible country.
    (3) If the export of the eligible commodity was from a Canadian 
transshipment port on the St. Lawrence River, the exporter must furnish 
to the Director the following, in addition to the documents required by 
paragraph (c)(1) of this section:
    (i) Documentary evidence covering the movement of the eligible 
commodity from the United States to the export carrier described in the 
on-board bill of lading issued at the Canadian transshipment port and 
showing the information provided in paragraphs (c)(1) and, if 
applicable, (c)(2) of this section; and
    (ii) A certification that the eligible commodity exported is the 
identical eligible commodity that was shipped from the United States.
    (4) If the export of the eligible commodity was by railcar or truck, 
the exporter must furnish to the Director the following, in addition to 
the documents required by paragraphs (c)(1)(ii) and (iii) of this 
section:
    (i) The authenticated landing certificate or similar document issued 
by the government of the eligible country; and
    (ii) The original or an original copy of the bill of lading issued 
at the point of loading the railcar or truck. The bill of lading must 
show:
    (A) The identification of the export carrier;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity;
    (D) The date that the railcar or truck was loaded; and
    (E) That the eligible commodity is destined for the eligible 
country.
    (d) Request for bonus payment under ``Option B.'' If the exporter 
has furnished performance security under ``Option B'' of the applicable 
Invitation and wishes the bonus to be paid after the entry of the 
exported eligible commodity into the eligible country, the exporter 
must, within 60 calendar days 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

[[Page 1009]]

paid, as specified in paragraph (b) of this section, less any dockage if 
applicable.
    (g) Late requests for bonus payment. If CCC decides to pay the bonus 
in the form of a CCC Certificate(s) and the exporter fails to request 
issuance of the certificate(s) within 30 calendar days after the date of 
export of the eligible commodity, if the exporter has chosen performance 
security ``Option A,'' or within 60 days after the entry of the eligible 
commodity into the eligible country, if the exporter has chosen 
performance security ``Option B'', CCC may, upon issuing the 
certificate(s), discount the certificate(s) in an amount determined 
appropriate by CCC to compensate it for costs which may be incurred by 
CCC as a result of the exporter's delay.



Sec. 1494.801  Enforcement and termination of agreements with CCC.

    (a) Performance in accordance with an Agreement with CCC. (1) An 
exporter which enters into an Agreement with CCC must ensure that the 
eligible commodity is exported from the U.S. and enters the eligible 
country in accordance with the terms and conditions of the Agreement.
    (2) The diversion of the eligible commodity to a country other than 
the eligible country is prohibited. Transshipments of the eligible 
commodity are permitted only if specifically allowed in the applicable 
Invitation or for shipment through a Canadian transshipment port on the 
St. Lawrence River if the eligible commodity had been shipped from the 
United States via the Great Lakes coastal range and its identity had 
been preserved until shipped from Canada.
    (3) Regardless of whether or not a bonus has been paid by CCC to the 
exporter pursuant to Sec. 1494.701, the bonus is not earned by the 
exporter until the eligible commodity enters into the eligible country 
in accordance with the Agreement. In order to retain a bonus or request 
payment of a bonus, depending upon the option chosen for furnishing 
performance security, and to request cancellation of the performance 
security, the exporter must provide evidence to CCC, as specified in 
Sec. 1494.401(f)(2), that the eligible commodity entered into the 
eligible country. If, on the basis of evidence available to it, CCC 
determines that there was destruction, diversion or loss of the eligible 
commodity prior to entry into the eligible country, CCC will not release 
the amount of performance security corresponding to the amount of 
eligible commodity for which insufficient evidence of entry into the 
eligible country was presented to CCC until:
    (i) CCC recovers from the exporter the amount of the bonus 
corresponding to such amount of the eligible commodity, if the exporter 
has already been paid the bonus under performance security ``Option A''; 
and
    (ii) The requirements of either Sec. 1494.401(f)(1)(ii) or Sec. 
1494.401(f)(1)(iii) have been met.
    (4) The failure of an exporter to perform in full and to fulfill all 
of its obligations under the Agreement will constitute a breach of the 
Agreement. An exporter which breaches the Agreement may be required to 
forfeit its right to receive or retain part or all of the bonus 
authorized or paid under the Agreement and may also be liable to CCC for 
damages. Examples of an exporter's failure to perform under the 
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.

[[Page 1010]]

    (b) Return of bonus. An exporter that fails to fulfill all of its 
obligations under the Agreement shall be in default. If an exporter that 
has already been paid the bonus value defaults, CCC shall have the right 
to recover the bonus value paid for the quantity of the eligible 
commodity with respect to which the exporter failed to perform under the 
Agreement.
    (1) If CCC has paid this bonus value in the form of a CCC 
Certificate(s), the exporter shall pay to CCC the higher of:
    (i) The dollar value of the CCC Certificate(s);
    (ii) The dollar amount received for the CCC Certificate(s) if the 
CCC Certificate(s) was transferred to another party; or
    (iii) The dollar amount of the proceeds from the sale of the CCC-
owned commodities exchanged for the CCC Certificate(s) if the 
commodities were sold to another party.
    (2) If CCC has paid this bonus value in some other form, as 
specified in the applicable Invitation, the exporter shall pay to CCC 
the dollar and cents amount or equivalent of the bonus value paid to the 
exporter.
    (c) Liability for liquidated damages. The exporter's failure to 
perform under the Agreement will cause serious and substantial losses to 
CCC, such as damages to the EEP and CCC's domestic price support 
program, storage charges, and administrative and other costs incurred. 
If the exporter breaches the Agreement, the exporter will be liable to 
pay to CCC as liquidated damages an amount obtained by applying the 
method or rate for determining damages specified in the applicable 
Invitation to the quantity of the eligible commodity with respect to 
which the exporter failed to perform under such Agreement. In submitting 
an offer in response to an Invitation issued under this subpart, the 
exporter agrees that such liquidated damages are reasonable estimates of 
the probable actual damages which may be incurred by CCC.
    (d) Decision to hold the exporter harmless for liquidated damages. 
CCC will hold an exporter harmless for the payment of liquidated damages 
if:
    (1) The exporter's failure to perform under the Agreement was due to 
causes solely without the exporter's fault or negligence and the 
exporter had taken the necessary action to enable it to export the 
required quantity of the eligible commodity and enter it into the 
eligible country; or
    (2) The eligible commodity was lost or destroyed after it had been 
placed aboard the export carrier.

In making the decision whether to hold an exporter harmless pursuant to 
this paragraph, CCC may consider any information available to CCC, 
including any information provided to it by the exporter.
    (e) Fraud, scheme or device. Notwithstanding any other provision of 
law, CCC may take action to recover any bonus paid or to hold the 
exporter liable for the payment of damages caused to CCC if the exporter 
engages in fraud with respect to the EEP, or adopts or participates in 
adopting a scheme or device which is designed to evade this subpart or 
which has the effect of evading this subpart. Such acts shall include, 
but are not limited to:
    (1) Concealing information which is required by this subpart; or
    (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

[[Page 1011]]

the eligible country. If an exporter exports and enters into the 
eligible country, in accordance with the requirements of the Agreement, 
a quantity of the eligible commodity which is greater than the quantity 
specified in Sec. 1494.501(c)(7), the exporter may request payment of 
the bonus value based upon the actual quantity, on a net weight basis, 
exported and entered into the eligible country, but not greater than the 
quantity specified in Sec. 1494.501(c)(7), plus 5 percent.
    (h) Termination of agreements. (1) CCC may, by written notice to the 
exporter, terminate an Agreement, in whole or in part, as a result of:
    (i) the failure of the exporter to carry out any provisions of the 
Agreement;
    (ii) the failure of the exporter to maintain a business office in 
the U.S.;
    (iii) the failure of the exporter to maintain an agent in the U.S. 
for service of process; or
    (iv) the suspension or debarment of the exporter from participation 
in CCC or other U.S. Government programs.

If an Agreement is terminated by CCC pursuant to this subparagraph, CCC 
will not compensate the exporter for any costs incurred by the exporter. 
The exporter will be liable to CCC for any funds owed to CCC for the 
repayment of any bonus already paid and may be liable to CCC for 
liquidated or other damages suffered by CCC. If CCC intends to hold the 
exporter liable for liquidated damages, and it has not already so 
notified the exporter prior to the termination of the Agreement, CCC 
will generally do so at the time that it notifies the exporter of the 
termination of the Agreement.
    (2) CCC may, by written notice to the exporter, terminate an 
Agreement, in whole or in part, if CCC determines it to be in the best 
interest of CCC. If an agreement is so terminated, the exporter will be 
compensated for reasonable losses, as determined by CCC, resulting from 
such termination. These losses will not include lost profits and will 
not exceed the bonus value under the Agreement.
    (i) Amendment of agreements. (1) CCC will have the authority to 
amend an Agreement, either before or after such Agreement has been 
breached by the exporter, if the exporter requests that the Agreement be 
amended and CCC determines that such amendment would serve the best 
interests of the EEP. The exporter may be required to submit documentary 
evidence to CCC to demonstrate that it is making progress toward 
fulfilling the Agreement before CCC will consider amending the 
Agreement. All requests for amendments submitted by exporters, and all 
amendments made by CCC to an Agreement, under this subpart shall be in 
writing.
    (2) Prior to amending an Agreement with the exporter, CCC will 
consider whether the amendment to the Agreement should include a 
reduction in the CCC bonus or a modification of the sales price. If CCC 
determines that the CCC bonus and the sales price are still acceptable, 
it may amend the Agreement to incorporate the exporter's requested 
change, while maintaining the current CCC bonus and sales price, 
provided that the amendment would otherwise serve the best interests of 
the EEP. If CCC determines that the CCC bonus and/or the sales price are 
no longer acceptable, due to changes in market or other conditions, it 
will so 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

[[Page 1012]]

terminate the Agreement. In the alternative, if CCC determines that a 
continuation of the Agreement would serve the best interests of the EEP, 
and if the exporter requests an amendment, CCC may amend the Agreement 
to take into account the amendment to the sales contract or change in 
delivery schedule. An amendment to an Agreement will be in accordance 
with paragraph (i)(1) of this section. CCC will promptly advise the 
exporter of its determination in writing by letter, facsimile, or telex.



Sec. 1494.901  Dispute resolution and appeals.

    (a) Dispute resolution. (1) The Director of the CCC Operations 
Division (Director, CCCOD) and the exporter will attempt to resolve any 
disputes, including any adverse determinations made by CCC, arising 
under the EEP, this subpart, the applicable Invitation, or the 
Agreement.
    (2) The exporter may seek reconsideration of a determination by the 
Director, CCCOD relating to the Agreement by submitting a letter 
requesting reconsideration to the Director, CCCOD, within 30 days of the 
date of the determination. For the purposes of this section, the date of 
a determination will be the date of the letter or other means of 
notification to the exporter of the determination. The exporter may 
include with the letter requesting reconsideration any additional 
information which it wishes the Director, CCCOD, to consider in 
reviewing its request. The Director, CCCOD, will respond to the request 
for reconsideration within 30 days of the date on which the request or 
the final documentary evidence submitted by the exporter is received by 
him, whichever is later, unless the GSM extends the time permitted for 
response. If the exporter fails to request reconsideration of a 
determination by the Director, CCCOD, that the exporter owes any funds 
to CCC under the Agreement, then such funds will become a debt of the 
exporter to CCC at the expiration of the 30-day period for submitting 
such a request.
    (3) If the exporter requested a reconsideration of a determination 
by the Director, CCCOD, pursuant to subparagraph (a)(2) of this section, 
and the Director, CCCOD, upheld the original determination, then the 
exporter may appeal the determination to the GSM in accordance with the 
procedures set forth in paragraph (b) of this section. If the exporter 
fails to appeal the determination to the GSM, then any funds owed to CCC 
will become a debt of the exporter to CCC at the expiration of the 30-
day period for submitting an appeal to the GSM.
    (b) Appeal procedures. (1) An exporter which has exhausted the 
procedures set forth in paragraph (a) of this section may appeal to the 
GSM a determination of the Director, CCCOD, relating to the Agreement 
between the exporter and CCC. An appeal to the GSM must be in writing 
and filed with the office of the GSM no later than 30 days following the 
date of the final determination by the Director, CCCOD. In this appeal 
to the GSM, the exporter shall be entitled to an administrative hearing 
before the GSM, if the exporter indicates in its appeal letter that it 
desires such a hearing.
    (2) If the exporter does not desire an administrative hearing, the 
exporter 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

[[Page 1013]]

making a determination. A transcript of the hearing will not ordinarily 
be prepared unless the exporter bears the costs involved in preparing 
the transcript, although the GSM may arrange to have a transcript 
prepared at the expense of the Government if it is determined to be 
appropriate. The exporter may provide additional written information to 
the GSM up until the time that the GSM makes a determination. The GSM 
will base the determination upon the information contained in the 
administrative record and will endeavor to make a decision within 60 
days of the date of the hearing or the date of receipt of the 
transcript, if one is to be prepared, whichever is later.
    (4) The decision of the GSM will be the final determination of CCC 
and the exporter will be entitled to no further administrative appellate 
rights.
    (5) If the GSM upholds a determination of the Director, CCCOD, that 
the exporter owes any funds to CCC under the Agreement, then such funds 
will become a debt of the exporter to CCC.
    (c) Failure to comply with determination. If, for any reason, the 
exporter has failed to pay funds to CCC which have been determined to be 
owed to CCC under the Agreement and the exporter has exhausted its 
rights under this section or has failed to exercise such rights, then 
CCC will have the right to withdraw funds from the performance security 
established by the exporter or to take any other measures available to 
CCC as result of this subpart or any laws or regulations, including debt 
settlement regulations, applicable to CCC.
    (d) Exporter's obligation to perform. The exporter will continue to 
have an obligation to perform under the Agreement pending the conclusion 
of all procedures under this section.



Sec. 1494.1001  Miscellaneous provisions.

    (a) Assignments. The exporter may not assign the Agreement or any 
rights thereunder, including the right to receive a bonus under the 
Agreement.
    (b) Maintenance of records and access to premises. (1) For a period 
of five years after CCC agrees to the cancellation of an exporter's 
performance security for an Agreement, the exporter must maintain 
accurate records showing sales and deliveries of the eligible commodity 
exported in connection with the Agreement. The Secretary of Agriculture 
and the Comptroller General of the United States, through their 
authorized representatives, will have full and complete access to the 
premises of the exporter during regular business hours from the 
effective date of the Agreement until the expiration of such five-year 
period to inspect, examine, audit and make copies of the exporter's 
books, records and accounts concerning transactions relating to the 
Agreement, including, but not limited to, financial records and accounts 
pertaining to sales, inventory, processing, and administrative and 
incidental costs, both normal and unforeseen. From the effective date of 
the Agreement and until the expiration of such five-year period, the 
exporter may be required to make available to the Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, records that pertain to transactions 
conducted outside the program, if, in the opinion of the GSM, such 
records would pertain directly to the review of transactions 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

[[Page 1014]]

share in any of the benefits of any Agreement entered into pursuant to 
the EEP, but this provision may not be construed to extend to an 
Agreement made by CCC with a corporation for its general benefit.
    (f) Paperwork Reduction Act. The information collection requirements 
contained in this subpart have been approved by the Office of Management 
and Budget (OMB) in accordance with the provisions of 44 U.S.C. chapter 
35 and have been assigned OMB control number 0551-0028.
    (g) Waiver of irregularities. CCC reserves the right to waive any 
informality or minor irregularity with respect to any aspect of the 
operation of the EEP or any Agreement executed thereunder in order to 
best accomplish the purposes of the program.



            Subpart C_Dairy Export Incentive Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec. 1494.1100  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity Credit Corporation's (CCC) Dairy Export Incentive Program 
(DEIP). These criteria are interrelated and will be considered together 
in order to select eligible commodities and eligible countries for DEIP 
initiatives which will best meet the program's objectives. The 
objectives of the program are to increase U.S. agricultural commodity 
exports and to encourage other countries exporting agricultural 
commodities to undertake serious negotiations on agricultural trade 
problems. Under the DEIP, bonuses are made available by CCC to enable 
exporters to meet prevailing world prices for targeted dairy products in 
targeted destinations. In the operation of the DEIP, CCC will make 
reasonable efforts to avoid the displacement of commercial export sales 
of U.S. dairy products and to ensure that sales facilitated by the DEIP 
are in addition to, and not in place of, any export sales of dairy 
products that the exporter would have otherwise made in the absence of 
the program.



Sec. 1494.1101  Criteria.

    The criteria considered in evaluating and approving proposals for 
the DEIP are those set forth in Sec. 1494.20 of this part.



           Subpart D_Dairy Export Incentive Program Operations

    Authority: 15 U.S.C. 713a-14, 714c.

    Source: 57 FR 45263, Oct. 1, 1992, unless otherwise noted.



Sec. 1494.1200  Program operations.

    This subpart contains the regulations governing the operation of the 
Dairy Export Incentive Program (DEIP) of the Commodity Credit 
Corporation (CCC). Under the DEIP, CCC facilitates the export of U.S. 
dairy products by paying bonuses to exporters which export U.S. dairy 
products to targeted markets in accordance with the terms and conditions 
of an Agreement entered into between the exporter and 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 1499_FOOD FOR PROGRESS PROGRAM--Table of Contents



Sec.
1499.1 General statement.

[[Page 1015]]

1499.2 Definitions.
1499.3 Eligibility determination.
1499.4 Application process.
1499.5 Agreements.
1499.6 Payments.
1499.7 Transportation of goods.
1499.8 Entry and handling of commodities.
1499.9 Damage to or loss of commodities.
1499.10 Claims for damage to or loss of commodities.
1499.11 Use of commodities and sales proceeds.
1499.12 Subrecipients.
1499.13 Recordkeeping and reporting requirements.
1499.14 Noncompliance with an agreement.
1499.15 Suspension, termination, and closeout of agreements.
1499.16 Appeals.
1499.17 Paperwork Reduction Act.

    Authority: 7 U.S.C. 1736o; and 15 U.S.C. 714b and 714c.

    Source: 74 FR 13066, Mar. 26, 2009, unless otherwise noted.



Sec. 1499.1  General statement.

    (a) This part sets forth the general terms and conditions governing 
the donation of commodities by the Commodity Credit Corporation (CCC) to 
participants in the Food for Progress Program (FFPr). Under FFPr, 
participants use the donated commodities or proceeds from the sale of 
such commodities to implement activities in a foreign country pursuant 
to an agreement with CCC. The Foreign Agricultural Service (FAS) of the 
Department of Agriculture (USDA) administers FFPr on behalf of CCC.
    (b) In addition to the provisions of this part, other regulations of 
general application issued by USDA, including the regulations set forth 
in Chapter 30 of this title, are applicable to the FFPr. All provisions 
of the CCC Charter Act (15 U.S.C. 714 et seq.) and any other statutory 
provisions that are generally applicable to CCC are applicable to FFPr 
and the regulations set forth in this part.
    (c) This part shall not apply to a donation by CCC to a foreign 
government or an intergovernmental agency or organization (such as the 
United Nations' World Food Program) under FFPr.



Sec. 1499.2  Definitions.

    The following definitions are applicable to this part:
    Activity means a project to be carried out by a participant, 
directly or through a subrecipient, to fulfill the objectives of an 
agreement.
    Agreement means a legally binding agreement entered into between CCC 
and a participant to implement activities under FFPr.
    CCC means the Commodity Credit Corporation and includes any official 
of the United States delegated the responsibility to act on behalf of 
CCC.
    CCC-provided funds means U.S. dollars provided under an agreement to 
a participant for expenses for the internal transportation, storage and 
handling of the donated commodities, expenses involved in the 
administration and monitoring of the activities under the agreement, and 
technical assistance related to the monetization of donated commodities.
    Commodities mean U.S. agricultural commodities or products of U.S. 
agricultural commodities.
    Donated commodities means the commodities donated by CCC to a 
participant under an agreement. The term may include donated commodities 
that are used to produce a further processed product for use under the 
agreement.
    FAS means the Foreign Agricultural Service acting on behalf of CCC.
    FFPr means the Food for Progress Program.
    Force majeure is a common clause in contracts, exempting the parties 
for non-fulfillment of their obligations as a result of conditions 
beyond their control, such as earthquakes, floods or war.
    Income means interest earned on sale proceeds and other resources 
received by a participant, other than sale proceeds, as a result of 
carrying out an agreement. The term may include resources from VAT 
refunds, activity fees, interest on loans, and other sources.
    Participant means an entity with which CCC has entered into an 
agreement.
    Subrecipient means a legal entity that receives donated commodities, 
income, sale proceeds or other resources from a participant for the 
purpose of implementing in the targeted country activities described in 
a FFPr agreement and that is accountable to such participant

[[Page 1016]]

for the use of such commodities, funds, or resources. The term may 
include foreign or international organizations (such as agencies of the 
United Nations) at the discretion of FAS.
    Sale proceeds mean funds received by a participant from the sale of 
donated commodities.
    Targeted country means the country in which activities are 
implemented under an agreement.



Sec. 1499.3  Eligibility determination.

    (a) An entity will be eligible to become a participant only after 
FAS determines that the entity has:
    (1) Organizational experience in implementing and managing awards, 
and the capability and personnel to develop, implement, monitor, report 
on, and provide accountability for activities in accordance with this 
part;
    (2) Experience working in the proposed targeted country;
    (3) An adequate financial framework to implement the activities the 
entity proposes to carry out under FFPr. In order to determine whether 
the entity is financially responsible, FAS may require it to submit 
corporate policies and financial materials that have been audited or 
otherwise reviewed by a third party;
    (4) A person or agent located in the United States with respect to 
which service of judicial process may be obtained by FAS on behalf of 
the entity; and
    (5) An operating financial account in the proposed targeted country, 
or a satisfactory explanation for not having such an account and a 
description of how a FFPr agreement would be administered without such 
an account.
    (b) In determining whether an entity will be eligible to be a 
participant, FAS may consider the entity's previous compliance or 
noncompliance with the provisions of this part and part 1599 of this 
title. FAS may consider matters such as whether the entity corrected 
deficiencies in the implementation of an agreement in a timely manner 
and whether the entity has timely and accurately filed reports and other 
submissions that are required to be filed with FAS and other agencies of 
the United States.



Sec. 1499.4  Application process.

    (a) An entity seeking to enter into an agreement with CCC shall 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under FFPr in the proposed targeted 
country. An application shall contain the items specified in paragraph 
(b) of this section and shall be submitted electronically to FAS at the 
address set forth at http://www.fas.usda.gov. An entity that has not yet 
met the eligibility requirements in Sec. 1499.3 may submit an 
application, but FAS will not enter into an agreement with an entity 
until FAS had made a determination of eligibility under Sec. 1499.3.
    (b) An applicant shall include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction that contains the elements specified in 
paragraph (c) of this section; and
    (3) A plan of operation that contains the elements specified in 
paragraph (d) of this section.
    (c) The introduction shall include:
    (1) An explanation of the need for the food aid in the targeted 
country and how the applicant's proposed activities would address that 
need;
    (2) Information regarding the applicant's ability to become 
registered and operate in the targeted country;
    (3) Information about the applicant's past food aid projects; and
    (4) A budget that details the amount of any sale proceeds, income, 
and CCC-provided funds that the applicant proposes to use to fund:
    (i) Administrative costs;
    (ii) Inland transportation, storage and handling costs; and
    (iii) Activity costs.
    (d) A plan of operation shall include:
    (1) The name of the targeted country where the proposed activities 
would be implemented;
    (2) The kind, quantity, and proposed use of the commodities 
requested, and any commodities that would be acceptable substitutions 
therefor, and the proposed delivery schedule;
    (3) If monetization or barter is proposed:

[[Page 1017]]

    (i) The quantity of the requested commodities that would be sold or 
bartered;
    (ii) The amount of sale proceeds anticipated;
    (iii) The amount of income expected to be generated;
    (iv) The anticipated monetization completion date;
    (v) The goods or services to be generated from the barter of the 
requested commodities; and
    (vi) The value of the goods or services anticipated to be generated 
from the barter of the requested commodities.
    (4) A list of each of the activities that would be implemented, with 
a brief statement of the objectives to be accomplished under each 
activity;
    (5) For each proposed activity, the targeted geographic area, 
anticipated beneficiaries, and methods that the applicant would use to 
choose such beneficiaries, including obtaining and considering 
statistics on poverty levels, food deficits, and any other required 
items set forth on the FAS Web site at http://www.fas.usda.gov.
    (6) For each proposed activity:
    (i) An explanation of whether the activity would be carried out 
through the distribution or barter of the requested commodities or 
funded by sale proceeds, income, or a combination thereof; and
    (ii) The amount of commodities requested and of any sale proceeds 
and income expected to be generated to carry out such activity; and
    (iii) A detailed description of the activity, including the steps 
involved in its implementation and the anticipated completion date;
    (7) Any cash or non-cash contributions that the applicant expects to 
receive from non-CCC sources that:
    (i) Are critical to the implementation of the proposed activities; 
or
    (ii) Enhance the implementation of the activities;
    (8) Any subrecipient that would be involved and a description of 
each subrecipient's responsibilities and its capability to perform 
responsibilities;
    (9) Any governmental or nongovernmental entities that would be 
involved and the extent to which FFPr will strengthen or increase the 
capabilities of such entities to further economic development in the 
targeted country;
    (10) The method by which the applicant intends to inform 
beneficiaries of an activity about the source of the requested 
commodities or funding for the activity and, where the beneficiaries 
will be receiving the commodities directly, how to prepare and use them 
properly;
    (11) Established baselines, a timeline, and proposed outcomes that 
would enable FAS to measure the applicant's progress towards achieving 
the objectives of the proposed activities;
    (12) If the proposed activities would involve the use of sale 
proceeds or income:
    (i) The process that the applicant would use to sell the requested 
commodities, including steps the applicant would take to use, to the 
extent possible, the private sector in the monetization process; and
    (ii) The procedures that the applicant would use to assure that sale 
proceeds and income are received and deposited into a separate, 
interest-bearing account and disbursed from such account for use only in 
accordance with the agreement;
    (13) A description of any port, transportation, storage, and 
warehouse facilities that would be used with sufficient detail to 
demonstrate that they would be adequate to handle the requested 
commodities without undue spoilage or waste, and, in cases where the 
applicant proposes to distribute some or all of the requested 
commodities, a description of how they would be transported from the 
receiving port to the point at which distribution would be made to the 
beneficiaries;
    (14) Any reprocessing or repackaging of the requested commodities 
that would take place prior to the distribution, sale or barter by the 
applicant;
    (15) The action the applicant would take to ensure that any 
commodities to be distributed to beneficiaries, rather than sold, would 
be imported and distributed free from all customs, duties, tolls, and 
taxes;
    (16) A plan that shows how the requested commodities could be 
imported and distributed without a disruptive impact upon production, 
prices and marketing of the same or like products

[[Page 1018]]

in the country where they will be delivered, and the extent to which any 
sale or barter of the requested commodities would displace or interfere 
with any sales that may otherwise be made by the applicant or any other 
entity in the country where they will be delivered; and
    (17) Any additional required items set forth on the FAS Web site at 
http://www.fas.usda.gov.



Sec. 1499.5  Agreements.

    (a) After FAS approves an applicant's proposal, FAS will develop an 
agreement in consultation with the applicant. The agreement will set 
forth the obligations of CCC and the participant. A participant must 
comply with the terms of the agreement to receive assistance.
    (b) A participant shall not use donated commodities, sale proceeds, 
income or CCC-provided funds for any activity or any expenses incurred 
by the participant prior to the date of the agreement or after the 
agreement is suspended or terminated, except as approved by FAS.
    (c) The agreement will include a budget that sets forth the maximum 
amounts of sale proceeds and CCC-provided funds that may be expended for 
various purposes under the agreement. A participant may make adjustments 
to this budget without prior approval from FAS only as specified in the 
agreement.
    (d) Prior to providing any donated commodities or CCC-provided funds 
to a participant under an agreement, FAS may require the participant to 
complete a training program administered by FAS that is designed to 
ensure that the participant is aware of, and has the capacity to 
complete, all required reporting and audit functions set forth in this 
part.
    (e) A participant will be prohibited from using CCC-provided funds 
to acquire goods and services, either directly or indirectly through 
another party, from certain countries that will be specified in the 
agreement. Any violation of this provision of the agreement will be a 
basis for immediate termination by CCC of the agreement, in addition to 
the imposition of any other applicable civil and criminal penalties.
    (f) The agreement will prohibit the sale or transshipment of the 
donated commodities to a country not specified in the agreement for as 
long as such donated commodities are controlled by the participant.
    (g) CCC may enter into a multicountry agreement in which donated 
commodities are delivered to one country and activities are carried out 
in another.
    (h) CCC may provide donated commodities and CCC-provided funds under 
a multiyear agreement contingent upon the availability of commodities 
and funds.



Sec. 1499.6  Payments.

    (a) If the participant arranges for transportation in accordance 
with Sec. 1499.7(b)(2), and the participant seeks payment directly, the 
participant shall, as specified in the agreement, either submit to FAS, 
or maintain on file and make available to FAS, the following documents:
    (1) A signed copy of the completed Form CCC-512;
    (2) The original, or a true copy of, each on-board bill of lading 
indicating the freight rate and signed by the originating carrier;
    (3) For all non-containerized cargoes:
    (i) A signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate (Vessel Hold Certificate);
    (ii) A signed copy of the National Cargo Bureau Certificate of 
Readiness (Vessel Hold Inspection Certificate); and,
    (iii) A signed copy of the National Cargo Bureau Certificate of 
Loading;
    (4) For all containerized cargoes, a copy of the FGIS Container 
Condition Inspection Certificate;
    (5) A signed copy of the liner booking note or charter party 
covering ocean transportation of the cargo;
    (6) In the case of charter shipments, a signed notice of arrival at 
the first discharge port, unless FAS has determined that circumstances 
of force majeure have prevented the vessel's arrival at the first port 
of discharge;
    (7) A request by the participant for reimbursement of freight, 
survey costs other than at load port, and other expenses approved by 
CCC, indicating the

[[Page 1019]]

amount due and accompanied by a certification from the carrier or other 
parties that payments have been received from the participant; and
    (8) A document on letterhead and signed by an officer or agent of 
the participant specifying 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 participant's taxpayer identification 
number; and the type of the account into which the payment will be 
deposited.
    (b) If the participant arranges for transportation in accordance 
with Sec. 1499.7(b)(2), and the participant has used a freight 
forwarder, the participant shall cause the freight forwarder to submit 
the documents specified in Sec. 1499.6(a) in order to receive payment 
from CCC.
    (c) In no case will CCC reimburse a participant for demurrage costs 
or pay demurrage to any other entity.
    (d) If FAS has agreed to pay the costs of transporting, storing, and 
distributing the donated commodities from the designated port or point 
of entry, the participant will be reimbursed in the manner set forth in 
the agreement.
    (e) If the agreement authorizes the payment of CCC-provided funds, 
CCC will pay these funds to the participant on a reimbursement for 
expenses basis, except as provided in paragraph (f)(1) of this section. 
The participant shall request the payment of CCC-provided funds to 
reimburse it for authorized expenses in the manner set forth in the 
agreement.
    (f)(1) A participant may request an advance of the amount of funds 
specified in the agreement. FAS will not approve any request for an 
advance if:
    (i) It is received earlier than 60 days after the date of a previous 
advance made in connection with the same agreement; or
    (ii) Any required reports, as specified in Sec. 1499.13 and in the 
agreement, are more than six months in arrears.
    (2) Except as may otherwise be provided in the agreement, the 
participant shall deposit and maintain in a bank account located in the 
United States all funds advanced by CCC. The account shall be interest-
bearing, unless the exceptions in Sec. 3019.22(k) of this title apply, 
or FAS determines that this requirement would constitute an undue 
burden. The participant shall remit semi-annually to CCC any interest 
earned on the advanced funds. The participant shall, no later than 10 
days after the end of each calendar quarter, submit a financial 
statement to FAS accounting for all funds advanced and all interest 
earned.
    (3) The participant shall return to CCC any funds that are advanced 
by CCC if such funds have not been obligated as of the 180th day after 
the advance was made. Such funds and interest shall be transferred to 
FAS within 30 days of such date.
    (g) If a participant is required to pay funds to CCC in connection 
with an agreement, the participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by FAS.
    (h) Suppliers of commodities shall seek payment according to the 
purchase contract with CCC.



Sec. 1499.7  Transportation of goods.

    (a) Shipments of donated commodities are subject to the requirements 
of 46 U.S.C. 55305 and 55314, regarding carriage on U.S.-flag vessels.
    (b) Transportation of donated commodities and other goods such as 
bags that may be provided by CCC under FFPr will be acquired under a 
specific agreement in the manner determined by FAS. Such transportation 
will be acquired by:
    (1) CCC in accordance with the Federal Acquisition Regulations 
(FAR), USDA's procurement regulations set forth in chapter 4 of title 48 
of the Code of Federal Regulations (the AGAR), and directives issued by 
the Director, Office of Procurement and Property Management, USDA; or
    (2) The participant, with reimbursement by CCC, in the manner 
specified in the agreement.
    (c) A participant that acquires transportation in accordance with 
paragraph (b)(2) of this section may only use the services of a freight 
forwarder that is licensed by the FMC and that would not have a conflict 
of interest in carrying out the freight forwarder duties. To assist FAS 
in determining whether there is a potential conflict of interest, the 
participant must submit

[[Page 1020]]

to FAS a certification indicating that the freight forwarder:
    (1) Is not engaged in, and will not engage in, supplying commodities 
or furnishing ocean transportation or ocean transportation-related 
services for commodities provided under any FFPr agreement to which the 
participant is a party; and
    (2) Is not affiliated with the participant and has not made 
arrangements to give or receive any payment, kickback, or illegal 
benefit in connection with its selection as an agent of the participant.
    (d) A participant that is responsible for transportation under 
paragraph (b)(2) of this section shall declare in the transportation 
contract the point at which the ocean carrier will take custody of 
commodities to be transported.



Sec. 1499.8  Entry and handling of commodities.

    (a) The participant shall make all necessary arrangements for 
receiving the donated commodities in the targeted country, including 
obtaining appropriate approvals for entry and transit. The participant 
shall store and maintain the donated commodities in good condition from 
the time of delivery at the port of entry or the point of receipt from 
the originating carrier until their distribution, sale or barter.
    (b) The participant shall, as provided in the agreement, arrange for 
transporting, storing, and distributing the donated commodities from the 
designated point and time where title to the commodities passes to the 
participant by contracting directly with suppliers of services, as set 
forth in the agreement.
    (c)(1) If a participant arranges for the packaging or repackaging of 
donated commodities that are to be distributed, the participant shall 
ensure that the packaging:
    (i) Is plainly labeled in the language of the targeted country;
    (ii) Contains the name of the donated commodities;
    (iii) Includes a statement indicating that the donated commodities 
are furnished by the people of the United States of America; and,
    (iv) Includes a statement indicating that the donated commodities 
shall not be sold, exchanged or bartered.
    (2) If a participant arranges for the reprocessing and repackaging 
of donated commodities that are to be distributed, the participant shall 
ensure that the packaging:
    (i) Is plainly labeled in the language of the targeted country;
    (ii) Contains the name of the reprocessed product;
    (iii) Includes a statement indicating that the reprocessed product 
was made with commodities furnished by the people of the United States 
of America; and,
    (iv) Includes a statement indicating that the reprocessed product 
shall not be sold, exchanged or bartered.
    (3) If a participant distributes donated commodities that are not 
packaged, the participant shall, to the extent practicable, display:
    (i) Banners, posters or other media informing the public of the name 
and source of the donated commodities; and
    (ii) A statement that the donated commodities may not be sold, 
exchanged, or bartered.
    (d) A participant shall arrange with the government of the targeted 
country that all donated commodities to be distributed will be imported 
and distributed free from all customs, duties, tolls, and taxes. A 
participant is encouraged to make similar arrangements, where possible, 
with the government of the country where donated commodities to be sold 
or bartered are delivered.



Sec. 1499.9  Damage to or loss of commodities.

    (a) FAS will be responsible for the donated commodities prior to the 
transfer of title to the commodities to the participant. The participant 
will be responsible for the donated commodities following the transfer 
of title to the commodities to the participant. The title will transfer 
as specified in the agreement.
    (b) A participant shall inform FAS, in the manner and within the 
time period set forth in the agreement, of any damage to or loss of the 
donated commodities that occurs following the transfer of title to the 
commodities to

[[Page 1021]]

the participant. The participant shall take all steps necessary to 
protect its interests and the interests of CCC with respect to any 
damage to or loss of the donated commodities that occurs after title has 
been transferred to the participant. The agreement will specify whether 
the participant is responsible for obtaining a survey in the event that 
the donated commodities are damaged or lost following the transfer of 
title to the commodities to the participant.
    (c) If the donated commodities are damaged or lost during the time 
that they are in the care of the carrier:
    (1) And either FAS or the participant engages the services of an 
independent cargo surveyor, the surveyor will provide to FAS and the 
participant any report, narrative chronology or other commentary that it 
prepares;
    (2) FAS and the participant will provide to each other the names and 
addresses of any individuals known to be present at the time of 
discharge or during the survey who can verify the quantity of damaged or 
lost commodities;
    (3) And the participant engages the services of the surveyor, CCC 
will reimburse the participant for the reasonable costs, as determined 
by FAS, of the survey, unless:
    (i) The participant was required by the agreement to pay for the 
survey;
    (ii) The survey was a delivery survey and the surveyor did not also 
prepare a discharge survey; or
    (iii) The survey was not conducted contemporaneously with the 
discharge of the vessel, unless FAS determines that such action was 
justified under the circumstances;
    (4) Any survey obtained by the participant shall, to the extent 
practicable, be conducted jointly by the surveyor, the participant, and 
the carrier, and the survey report shall be signed by all parties;
    (5) And the damage or loss occurred with respect to a bulk grain 
shipment, if the agreement provides that the participant is responsible 
for survey and outturn reports, the participant shall engage the 
services of an independent cargo surveyor to:
    (i) Observe the discharge of the cargo;
    (ii) Report on discharging methods, including scale type, 
calibrations and any other factor that may affect the accuracy of scale 
weights, and, if scales are not used, state the reason therefor and 
describe the actual method used to determine weight;
    (iii) Estimate the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (iv) Advise on the quality of sweepings;
    (v) Obtain copies of port or vessel records, if possible, showing 
the quantity discharged; and
    (vi) Notify the participant immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if additional 
services are necessary to protect the cargo; and
    (6) And the damage or loss occurred with respect to a container 
shipment, if the agreement provides that the participant is responsible 
for survey and outturn reports, the participant shall engage the 
services of an independent cargo surveyor to list the container numbers 
and seal numbers shown on the containers, indicate whether the seals 
were intact at the time the containers were opened, and note whether the 
containers were in any way damaged.
    (d) If the participant has title to the donated commodities, and the 
value of any damaged donated commodities is in excess of $1,000, the 
participant shall immediately arrange for an inspection by a public 
health official or other competent authority approved by FAS and provide 
to FAS a certification by such public health official or other competent 
authority regarding the exact quantity and condition of the damaged 
commodities. The value of damaged donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities. The 
participant shall inform FAS of the results of the inspection and 
indicate whether the damaged commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.

[[Page 1022]]

    (e)(1) If the participant has title to the donated commodities, the 
participant shall arrange for the recovery of that portion of the 
donated commodities designated as suitable for the use authorized in the 
agreement. The participant shall dispose of donated commodities that are 
unfit for such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or for other non-food use; or
    (iii) Destruction of the commodities if they are unfit for any use, 
in such manner as to prevent their use for any purpose.
    (2) The participant shall arrange for all U.S. Government markings 
to be obliterated or removed before the donated commodities are 
transferred by sale or donation.
    (f) A participant may retain any proceeds generated by the disposal 
of the donated commodities in accordance with paragraph (e)(1) of this 
section and shall use the proceeds for expenses related to the disposal 
of the donated commodities and for activities specified in the 
agreement.
    (g) The participant shall notify FAS immediately and provide 
detailed information about the actions taken in accordance with 
paragraph (e)(1) of this section, including the quantities, values, and 
dispositions of commodities determined to be unfit.



Sec. 1499.10  Claims for damage to or loss of commodities.

    (a) FAS will be responsible for claims arising out of damage to or 
loss of a quantity of the donated commodities prior to the transfer of 
title to the commodities to the participant.
    (b) If the participant has title to the donated commodities, and the 
value of the damaged or lost donated commodities is estimated to be 
$20,000 or greater, the participant will be responsible for:
    (1) Initiating a claim arising out of such damage or loss, including 
actions relating to collections pursuant to commercial insurance 
contracts; and
    (2) Notifying FAS immediately and providing detailed information 
about the circumstances surrounding such damage or loss, the quantity of 
damaged or lost donated commodities, and the value of the damage or 
loss.
    (c) If the participant has title to the donated commodities, and the 
value of the damaged or lost donated commodities is estimated to be less 
than $20,000, the participant will be responsible for providing detailed 
information about the damage or loss in the next report required to be 
filed under Sec. 1499.13(c)(1) or (2) and shall not be required to 
initiate a claim collection action.
    (d)(1) The value of a claim for lost donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities.
    (2) The value of a claim for damaged donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities, less 
any funds generated if such commodities are sold in accordance with 
Sec. 1499.9(e)(1).
    (e) If FAS determines that a participant is not exercising due 
diligence in the pursuit of a claim, FAS may require the participant to 
assign its rights to pursue the claim to FAS.
    (f)(1) The participant may retain any funds obtained as a result of 
a claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds shall only be expended for 
purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, however, 
that if the participant paid for the freight or a portion thereof, FAS 
will use a portion of such funds to reimburse the participant for such 
expense on a prorated basis.

[[Page 1023]]



Sec. 1499.11  Use of commodities and sale proceeds.

    (a) A participant must use the donated commodities in accordance 
with the agreement.
    (b) A participant shall not permit the distribution, handling, or 
allocation of donated commodities on the basis of political affiliation, 
geographic location, or the ethnic, tribal or religious identity or 
affiliation of the potential consumers or beneficiaries.
    (c) A participant shall not permit the distribution, handling, or 
allocation of donated commodities by the military forces or any 
government or insurgent group without the specific authorization of FAS.
    (d) A participant may sell or barter donated commodities only if 
such sale or barter is provided for in the agreement or the participant 
is disposing of damaged commodities as specified in Sec. 1499.9. The 
participant shall sell the donated commodities at a reasonable market 
price in the economy where the sale occurs. The participant shall use 
any sale proceeds, income, or goods or services derived from the sale or 
barter of the donated commodities only as provided in the agreement.
    (e) The participant shall deposit all sale proceeds and income into 
a separate, interest-bearing account unless the exceptions in Sec. 
3019.22(k) of this title apply, the account is in a country where the 
laws or customs prohibit the payment of interest, or FAS determines that 
this requirement would constitute an undue burden.
    (f) A participant may use sale proceeds or income to purchase real 
or personal property only if local law permits the participant to retain 
title to such property. However, the participant shall not use sale 
proceeds or income 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 pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
participant may use sale proceeds or income to pay for repairs to or 
rehabilitation of a structure located on such real property to the 
extent necessary to avoid spoilage or loss of donated commodities, but 
only if such structure is not used in whole or in part for any religious 
or sectarian purposes while the donated commodities are stored in it. If 
such use is not specifically provided for in the agreement, such use may 
only occur after receipt of written approval from FAS.
    (g) A participant shall endeavor to comply with Sec. Sec. 3019.41 
through 3019.43 of this title when procuring goods and services and when 
engaging in construction work to implement the agreement. The 
participant shall also establish procedures to prevent fraud. As 
provided for in the agreement, the participant shall enter into a 
written contract with each provider of goods, services or construction 
work that requires the provider to maintain adequate records to account 
for all donated commodities or funds or both provided to the provider by 
the participant and to submit periodic reports to the participant. The 
participant shall submit a copy of the signed contracts to FAS.



Sec. 1499.12  Subrecipients.

    (a) If provided for in the agreement, a participant may utilize the 
services of a subrecipient to implement activities under this agreement. 
The participant shall enter into a written subagreement with the 
subrecipient, and provide a copy of such subagreement to FAS, in the 
manner set forth in the agreement, prior to the transfer of any donated 
commodities, sale proceeds, income or CCC-provided funds to the 
subrecipient. Such written subagreement shall require the subrecipient 
to pay to the participant the value of any donated commodities, sale 
proceeds, income, or CCC-provided cash funds that are not used in 
accordance with the subagreement or are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (b) If a participant demonstrates to FAS that it is not feasible to 
enter into a subagreement with a subrecipient, FAS may grant approval to 
proceed without a subagreement; provided, however, that the participant 
must obtain such approval from FAS prior to transferring any donated 
commodities,

[[Page 1024]]

sale proceeds, income, or CCC-provided funds to the subrecipient.
    (c) The participant shall monitor the actions of a subrecipient as 
necessary to ensure that donated commodities or funds provided to the 
subrecipient are used for authorized purposes in compliance with 
applicable laws and regulations and the agreement and that performance 
goals are achieved. The participant shall provide in the subagreement 
that the subrecipient must comply with applicable provisions of the 
regulations set forth in Chapter XXX of this title.



Sec. 1499.13  Recordkeeping and reporting requirements.

    (a) A program participant shall retain records and permit access to 
records in accordance with the requirements of Sec. 3019.53 of this 
title. The date of submission of the final expenditure report, as 
referenced in Sec. 3019.53(b) of this title, shall be the final date of 
submission of the forms required by paragraphs (c)(1) and (2) of this 
section as prescribed by FAS.
    (b) A participant shall, within 30 days after export of all or a 
portion of the donated commodities, submit evidence of such export to 
FAS, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by FAS or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where commodities were delivered.
    (c)(1) A participant shall submit to FAS information, using a form 
as prescribed by FAS, covering the receipt, handling and disposition of 
the donated commodities. Such report shall be submitted to FAS, by the 
dates and for the reporting periods specified in the agreement, until 
all of the donated commodities have been distributed, sold or bartered 
and such disposition has been reported to FAS.
    (2) If the agreement authorizes the sale or barter of donated 
commodities, the participant shall submit to FAS information, using a 
form as prescribed by FAS, covering the receipt and use of sale proceeds 
and income, and, in the case of bartered commodities, covering the 
services and goods derived from the barter of donated commodities. Such 
reports shall be submitted to FAS, by the dates and for the reporting 
periods specified in the agreement, until all of the sale proceeds and 
income have been disbursed and reported to FAS. When reporting financial 
information, the participant shall include the amounts in U.S. dollars 
and the exchange rate.
    (3) The participant shall report, in the manner specified in the 
agreement, its progress, measured against established baselines, towards 
achieving the objectives of the activities under the agreement.
    (4) The participant shall retain copies of and make available to FAS 
all barter receipts, contracts or other documents related to the barter 
of the donated commodities and the services or goods derived from such 
barter, for a minimum of two years after the agreement has been closed 
out.
    (5) The participant shall provide to FAS additional information or 
reports relating to the agreement if requested by FAS.
    (d) A participant shall submit to FAS, in the manner specified in 
the agreement, an annual audit in accordance with Sec. 3019.26 of this 
title. If FAS requires an annual financial audit with respect to a 
particular agreement, and CCC provides funds for this purpose, the 
participant shall arrange for such audit and submit it to FAS, in the 
manner specified in the agreement.
    (e)(1) A participant shall, as provided in the agreement, submit to 
FAS interim and final evaluations of the implementation of the 
agreement. Unless otherwise provided in the agreement, the evaluations 
shall be submitted at the mid-point and end-point of the implementation 
period. The participant shall arrange for the evaluations to be 
conducted by an independent third party that:
    (i) Is financially and legally separate from the participant's 
organization;
    (ii) Has staff with demonstrated knowledge, analytical capability, 
language skills and experience in conducting evaluations of development 
programs involving agriculture, education, and nutrition;
    (iii) Uses acceptable analytical frameworks such as comparison with

[[Page 1025]]

non-project areas, surveys, involvement of stakeholders in the 
evaluation, and statistical analyses;
    (iv) Uses local consultants, as appropriate, to conduct portions of 
the evaluation; and,
    (v) Provides a detailed outline of the evaluation, major tasks, and 
specific schedules prior to initiating the evaluation.
    (2) Receipt by FAS of the evaluations referred to in paragraph 
(e)(1) of this section is a condition for the participant to retain any 
funds provided by CCC to carry out the evaluations.
    (f) A participant shall submit to FAS the financial reports and 
information outlined in Sec. 3019.52 of this title. The agreement will 
specify the acceptable forms and time requirements for submission.



Sec. 1499.14  Noncompliance with an agreement.

    If a participant fails to comply with a term of an agreement, FAS 
may take one or more of the enforcement actions set forth in Sec. 
3019.62 of this title and, if appropriate, initiate a claim against the 
participant. FAS may also initiate a claim against a participant if the 
donated commodities are damaged or lost or the sale proceeds, income, or 
CCC-provided funds are lost due to an action or omission of the 
participant.



Sec. 1499.15  Suspension, termination, and closeout of agreements.

    (a) An agreement may be suspended or terminated by CCC if it 
determines that:
    (1) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (2) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the donated commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the targeted country.
    (b) An agreement may be terminated in accordance with Sec. 3019.61 
of this title. If an agreement is terminated, the participant shall:
    (1) Be responsible for the safety of any undistributed donated 
commodities and dispose of such commodities only as agreed to by FAS; 
and
    (2) Follow the closeout procedures in Sec. Sec. 3019.71 through 
3019.73 of this title.
    (c) An agreement will be considered completed when CCC and the 
participant have fulfilled their responsibilities under the agreement or 
the agreement has been terminated. The procedures in sections Sec. Sec. 
3019.71 through 3019.73 of this title will apply to the closeout of a 
completed agreement.



Sec. 1499.16  Appeals.

    A participant may appeal a determination arising under this part to 
FAS. Such appeal will be in writing and submitted to the FAS official 
and in the manner set forth in the agreement. The participant will be 
given an opportunity to have a hearing before a final decision is made 
regarding its appeal.



Sec. 1499.17  Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
have been approved by the Office of Management and Budget under 
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB Number 
0551-0035.

[[Page 1027]]



   CHAPTER XV--FOREIGN AGRICULTURAL SERVICE, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1520            Availability of information to the public...        1029
1530            The Refined Sugar Re-Export Program, the 
                    Sugar Containing Products Re-Export 
                    Program, and the Polyhydric Alcohol 
                    Program.................................        1029
1540            International agricultural trade............        1036
1560            Procedures to monitor Canadian fresh fruit 
                    and vegetable imports...................        1041
1570            Export bonus programs.......................        1042
1580            Trade adjustment assistance for farmers.....        1043
1599            McGovern-Dole International Food for 
                    Education and Child Nutrition Program...        1051

[[Page 1029]]



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.usda.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 1030]]

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 1031]]

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 1032]]

    (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 1033]]

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 1034]]

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 1035]]



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 1036]]

    (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 1037]]



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 1038]]

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 1039]]

    (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 1040]]

    (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 1041]]

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 1042]]

 
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 1043]]



   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 (FAS).
1580.301 Application for trade adjustment assistance.
1580.302 Technical assistance and services.
1580.303 Adjustment assistance payments.
1580.401 Subsequent year petition recertification.
1580.501 Administration.
1580.502 Maintenance of records, audits, and compliance.
1580.503 Recovery of overpayments.
1580.504 Debarment, suspension, and penalties.
1580.505 Appeals.
1580.506 Judicial review.
1580.602 Paperwork Reduction Act assigned number.

    Authority: 19 U.S.C. 2401.

    Source: 75 FR 9089, Mar. 1, 2010, unless otherwise noted.

[[Page 1044]]



Sec. 1580.101  General statement.

    This part provides regulations for the Trade Adjustment Assistance 
(TAA) for Farmers program as authorized by the Trade Act of 1974, 
amended by Subtitle C of Title I of the Trade Act of 2002 (Pub. L. 107-
210), and re-authorized and modified by the American Recovery and 
Reinvestment Act of 2009 (Pub. L. 111-5). The regulations establish 
procedures by which a group of producers of raw agricultural commodities 
or fishermen (jointly referred to as ``producers'') can petition for 
certification of eligibility and through which individual producers 
covered by a certified petition can apply for technical assistance and 
cash benefits for the development and implementation of approved 
business adjustment plans.



Sec. 1580.102  Definitions.

    As used in the part, the following terms mean:
    Agricultural commodity means any commodity in its raw or natural 
state; found in chapters 1, 3, 4, 5, 6, 7, 8, 10, 12, 14, 23, 24, 41, 
51, and 52 of the Harmonized Tariff Schedule of the United States (HTS).
    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 articles that are substantially 
equivalent for commercial purposes (i.e., adapted to the same uses and 
essentially interchangeable therefore). For fishery products, 
competition could be either from farm-raised or wild-caught products.
    Authorized representative means an entity that represents a group of 
agricultural commodity producers or fishermen.
    Average price received by the producer means the average of the 3 
marketing year prices per unit received by the producer from the first 
level of sales for the commodity.
    Cash receipts mean the value of commodity marketings during the 
calendar year, irrespective of the year of production, as calculated by 
the Economic Research Service of the USDA.
    Certification of eligibility means the date on which the 
Administrator (FAS) announces in the Federal Register or by Department 
news release, whichever comes first, a certification of eligibility to 
apply for trade adjustment assistance.
    Contributed importantly means a cause which is important, but not 
necessarily more important than any other cause.
    County price maintained by the Secretary means a daily price 
obtained from a USDA agency for the commodity and producer location, 
except that weekly or monthly prices may be used if daily prices are 
unavailable.
    Department means the U.S. Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs of the Farm Service Agency (FSA).
    Family member means an individual to whom a producer 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.
    Filing period means the dates during which petitions may be 
submitted, as published in the Federal Register.
    FSA means the Farm Service Agency of the U.S. Department of 
Agriculture.
    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 designated by the 
Administrator (FAS) with respect to an agricultural commodity. In the 
case of an agricultural commodity that does not have a designated 
marketing year, a calendar year will be used.
    National average price means the average price paid to producers for 
an agricultural commodity in a marketing year as determined by the 
National Agricultural Statistics Service (NASS) of the U.S. Department 
of Agriculture, or

[[Page 1045]]

the National Marine Fisheries Service of the National Oceanic and 
Atmospheric Administration, when available, or when unavailable, as 
determined by the Administrator (FAS).
    NIFA means the National Institute of Food and Agriculture, the 
Federal agency within the U.S. Department of Agriculture which 
administers the Federal agricultural extension programs.
    Producer means a person who shares in the risk of producing an 
agricultural commodity and is entitled to a share of the commodity for 
marketing; including an operator, a sharecropper, or a person who owns 
or rents the land on which the commodity is produced; or a person who 
reports gain or loss from the trade or business of fishing on the 
person's annual Federal income tax return for the taxable year that most 
closely corresponds to the marketing year with respect to which a 
petition is filed.
    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.
    State Cooperative Extension Service means an organization 
established at the land-grant college or university under the Smith-
Lever Act of May 8, 1914, as amended (7 U.S.C. 341-349); section 209(b) 
of the Act of October 26, 1974, as amended (D.C. Code, through section 
31-1719(b)); or section 1444 of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977, as amended (7 U.S.C. 3221).
    United States means the 50 States of the United States, the District 
of Columbia, and Puerto Rico.
    Value of production means the value of commodities produced during 
the crop year calculated as production times the marketing year average 
price. This may be equal to cash receipts when the crop year for the 
commodity runs from January through December.



Sec. 1580.201  Petitions for trade adjustment assistance.

    (a) A group of producers in the United States or its authorized 
representative may file a petition for trade adjustment assistance.
    (b) Filings may be written or electronic, as provided for by the 
Administrator (FAS), and submitted to FAS no later than the last day of 
the filing period announced in the Federal Register. Petitions received 
after this date will be returned to the sender.
    (c) Petitions shall include the following information.
    (1) Name, business address, phone number, and e-mail address (if 
available) of each producer in the group, or its authorized 
representative. The petition 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 petition shall indicate if the group is filing on 
behalf of all producers in the United States, or if it is 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.
    (4) The beginning and ending dates for the marketing year upon which 
the petition is based. A petition may be filed for only the most recent 
full marketing year for which data are available for national average 
prices, or quantity of production, or value of production, or cash 
receipts.
    (5) A justification statement explaining why the petitioners should 
be considered eligible for adjustment assistance.
    (6) Supporting information justifying the basis of the petition, 
including required data for the petitioned marketing year and the 
previous 3 marketing years.
    (i) Whenever possible, the petitioners shall use national average 
data compiled by the National Agricultural Statistics Service (NASS) or 
the National Marine Fisheries Service (NMFS), to determine national 
average prices, or quantity of production, or value of production, or 
cash receipts. If NASS or NMFS has not compiled such data for the 
commodity, the petitioners shall provide alternative data for the 
marketing year under review and for the

[[Page 1046]]

previous 3 marketing years, and identify the source of the data. In such 
cases the Administrator (FAS) shall determine if the alternative data is 
acceptable.
    (ii) If the petition is filed on behalf of producers in a 
specifically identified impacted area, the petitioners shall provide the 
national average prices or county prices if applicable, or quantity of 
production or value of production, or cash receipts for the petitioned 
commodity in the impacted area for the marketing year under review and 
for the previous 3 marketing years, and identification of the data 
source.
    (iii) The Administrator (FAS) may request petitioners to provide 
records to support their data.
    (d) Once the petition is received, the Administrator (FAS) shall 
determine if it meets the requirements of Sec. 1580.201(c) of this 
part, and if so, publish notice in the Federal Register that a petition 
has been filed and that an investigation is being initiated. The notice 
shall identify the agricultural commodity, including any like or 
directly competitive commodities, the marketing year being investigated, 
the data 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 petitioner. If the petition does not meet the 
requirements of Sec. 1580.201(c) of this part, the Administrator (FAS) 
shall notify as soon as practicable the contact person or the authorized 
representative for the group of the deficiencies.



Sec. 1580.202  Hearings, petition reviews, and amendments.

    (a) If the petitioner, or any other person found by the 
Administrator (FAS) to have a substantial interest in the proceedings, 
submits not later than 10 days after the date of publication of notice 
in the Federal Register under Sec. 1580.201(d) of this part, a request 
in writing for a hearing, the Administrator (FAS) 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 having an interest in the 
proceedings takes issue with any of the information published in the 
Federal Register concerning the petition, such person may submit to the 
Administrator (FAS) their comments in writing or electronically for 
consideration by the Administrator (FAS) not later than 10 days after 
the date of publication of notice in the Federal Register under Sec. 
1580.201(d) of this part.
    (c) A producer or group of producers that resides outside of the 
State or region identified in the petition filed under paragraph (a) of 
this section, may file a request to become a party to that petition not 
later than 15 days after the date that the notice is published in the 
Federal Register under Sec. 1580.201(d) of this part. The Administrator 
(FAS) may amend the original petition to expand the impacted area and 
include the additional filer, or consider it a separate filing.
    (d) The Administrator (FAS) shall publish in the Federal Register as 
soon as practicable 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 (FAS).

    (a) As soon as practicable after the petition has been filed, but in 
any event not later than 40 days after that date, the Administrator 
(FAS) shall certify a group of producers as eligible to apply for 
adjustment assistance under this chapter if the Administrator (FAS) 
determines:
    (1) At least one of the following:
    (i) The national average price of the agricultural commodity 
produced by the group during the most recent marketing year for which 
data are available is less than 85 percent of the average of the 
national average price for the commodity in the 3 marketing years 
preceding such marketing year; or
    (ii) The quantity of production of the agricultural commodity 
produced by the group during such marketing year is less than 85 percent 
of the average of the quantity of production of the commodity produced 
by the group in the 3 marketing years preceding such marketing year; or
    (iii) The value of production of the agricultural commodity produced 
by

[[Page 1047]]

the group during such marketing year is less than 85 percent of the 
average value of production of the commodity produced by the group in 
the 3 marketing years preceding such marketing year; or
    (iv) The cash receipts for the agricultural commodity produced by 
the group during such marketing year are less than 85 percent of the 
average of the cash receipts for the commodity produced by the group in 
the 3 marketing years preceding such marketing year;
    (2) The volume of imports of articles like or directly competitive 
with the agricultural commodity produced by the group in the marketing 
year with respect to which the group files the petition increased 
compared to the average volume of such imports during the 3 marketing 
years preceding such marketing year; and
    (3) The increase in such imports contributed importantly to the 
decrease in the national average price, or quantity of production, or 
value of production, or cash receipts for, the agricultural commodity.
    (b) In any case in which there are separate classes of goods within 
an agricultural commodity, the Administrator (FAS) shall treat each 
class as a separate commodity in determining:
    (1) Group eligibility;
    (2) The national average price, or quantity of production, or value 
of production, or cash receipts; and
    (3) The volume of imports.
    (c) Upon making a determination, whether affirmative or negative, 
the Administrator (FAS) 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 (FAS) 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, Web site notices on the Internet, use of 
broadcast print media, and transmittal through local USDA offices.
    (e) Whenever a group of agricultural producers is certified as 
eligible to apply for assistance, the Administrator (FAS) shall notify 
NIFA, the Agricultural Marketing Service, and FSA who will assist in 
informing other producers about the TAA for Farmers program and how they 
may apply for trade adjustment assistance.



Sec. 1580.301  Application for trade adjustment assistance.

    (a) Only producers covered by a certification of eligibility under 
Sec. 1580.203 of this title, may apply for adjustment assistance.
    (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 
sufficient documentation to establish that:
    (1) The producer produced the agricultural commodity in the 
marketing year for which the petition is filed and in at least 1 of the 
3 marketing years preceding that marketing year;
    (2) There has been a decrease in the quantity of the agricultural 
commodity produced by the producer in the marketing year for which the 
petition is certified from the most recent prior marketing year 
preceding that marketing year for which data is available; or
    (3) There has been a decrease in the price of the agricultural 
commodity based on:
    (i) The price received for the agricultural commodity by the 
producer during the marketing year with respect to which the petition is 
filed from the average price for the commodity received by the producer 
in the 3 marketing years preceding that marketing year; or
    (ii) The effective posted county price maintained by the Secretary 
for the agricultural commodity on the date on which the Administrator 
(FAS) accepts a petition for consideration as published in the Federal 
Register from

[[Page 1048]]

the average effective posted county level price for the commodity in the 
3 marketing years preceding that date. If USDA prices are not available, 
prices from verifiable sources, including universities, cooperatives, or 
local markets, may be used.
    (4) If a petition is certified with respect to a commodity not 
produced by the producer every year, the producer may establish the 
average price received by the producer for the commodity in the 3 
marketing years preceding the year in which the petition is filed by 
using annual price data for the 3 most recent marketing years in which 
the producer produced the commodity.
    (5) The producer must certify that the producer has not received 
cash benefits under the Trade Adjustment Assistance for Workers or Trade 
Adjustment Assistance for Firms programs; or TAA for Farmers benefits 
based on the production of an agricultural commodity covered by another 
TAA for Farmers petition.
    (d) The producer must certify that:
    (1) For petitions certified for 2008 crops, their compliance with 
person determinations set forth in part 1400 of this title, subpart B 
and average adjusted gross income limitation requirements set forth in 
subpart G, effective July 18, 1996.
    (2) For petitions certified for 2009 and subsequent crops, their 
average gross nonfarm income and average adjusted gross farm income meet 
requirements set forth in part 1400 of this title, subpart F, and 
payment limitation requirements set forth in part 1400 of this title, 
subparts A and B, effective December 29, 2008; and,
    (e) The total amount of payments made to a producer for which the 
application was approved may not exceed the limitations on payments 
applicable to:
    (1) For petitions certified for 2008 crops, counter-cyclical 
payments, set forth in part 1400 of this title, subpart A, effective 
July 18, 1996.
    (2) For petitions certified for 2009 and subsequent crops, the 
counter-cyclical payments, including the Average Crop Revenue Election 
(ACRE) set forth in part 1400 of this title, subparts A and B, effective 
December 29, 2008; and
    (f) If requested by FSA, a producer must provide documentation 
regarding average adjusted gross income and payment limitations.



Sec. 1580.302  Technical assistance and services.

    (a) Initial Technical Assistance: A producer covered by a 
certification who has been determined by FSA to meet the requirements of 
Sec. 1580.301 of this part, is eligible to receive Initial Technical 
Assistance through NIFA to be completed within 180 days of petition 
certification. Such assistance shall include information regarding:
    (1) Improving the yield and marketing of that agricultural 
commodity, and
    (2) The feasibility and desirability, of substituting one or more 
agricultural commodities for that agricultural commodity.
    (b) Intensive Technical Assistance: Upon completion of Initial 
Technical Assistance, a producer is eligible to participate in Intensive 
Technical Assistance. Intensive Technical Assistance shall consist of:
    (1) A series of courses to further assist the producer in improving 
the competitiveness of producing the agricultural commodity certified 
under Sec. 1580.203 of this part, or another agricultural commodity, 
and
    (2) Assistance in developing an initial business plan based on the 
courses completed under paragraph (a) of this section.
    (c) During Intensive Technical Assistance: NIFA shall deliver and 
the producer shall be required to attend a series of Intensive Technical 
Assistance workshops relevant to the circumstances of the producer.
    (d) Initial Business Plan: Upon completion of the Initial and 
Intensive Technical Assistance, the producer shall be required to 
develop an Initial Business Plan recommended by NIFA and approved by the 
Administrator (FAS) before receiving an adjustment assistance payment. 
The Initial Business Plan will:
    (1) Reflect the skills gained by the producer through the courses 
described in paragraph (c) of this section; and

[[Page 1049]]

    (2) Demonstrate how the producer will apply those skills to the 
circumstances of the producer.
    (e) Upon approval of the Initial Business Plan, the producer will 
receive an amount not to exceed $4,000 to implement the Initial Business 
Plan or develop a Long-Term Business Adjustment Plan.
    (f) A producer who completes the Intensive Technical Assistance and 
whose Initial Business Plan has been approved shall be eligible, in 
addition to the amount under paragraph (e) of this section, for 
assistance in developing a Long-Term Business Adjustment Plan.
    (g) Long-Term Business Adjustment Plan: The Long-Term Business 
Adjustment Plan shall:
    (1) Include steps reasonably calculated to materially contribute to 
the economic adjustment of the producer to changing market conditions;
    (2) Take into consideration the interests of the workers employed by 
the producer; and
    (3) Demonstrate that the producer will have sufficient resources to 
implement the business plan.
    (h) Upon recommendation by NIFA and approval of the producer's Long-
Term Business Adjustment Plan by the Administrator (FAS), the producer 
shall be entitled to receive an amount not to exceed $8,000 to implement 
their Long-Term Business Adjustment Plan.
    (i) The Initial Business Plan and Long-Term Business Adjustment Plan 
must be completed and approved within 36 months after a petition is 
certified.
    (j) A producer shall not receive a combined total of more than 
$12,000 for the Initial Business Plan and the Long Term Business 
Adjustment Plan in the 36-month period following petition certification.
    (k) The Administrator (FAS) may authorize supplemental assistance 
necessary to defray reasonable transportation and subsistence expenses 
incurred by a producer in connection with the initial technical 
assistance, if such initial technical assistance is provided at 
facilities that are not within normal commuting distance of the regular 
place of residence of the producer. NIFA and FSA will work with the 
producer and the Administrator (FAS) to facilitate application for and 
proper payment of reasonable allowable supplemental expenses. The 
Administrator (FAS) will not authorize payments to a producer:
    (1) For subsistence expenses that exceed the lesser of:
    (i) The actual per diem expenses for subsistence incurred by a 
producer; or
    (ii) The prevailing per diem allowance rate authorized under Federal 
travel regulations; or
    (2) For travel expenses that exceed the prevailing mileage rate 
authorized under the Federal travel regulations.



Sec. 1580.303  Adjustment assistance payments.

    (a) If the Administrator (FAS) determines that insufficient 
appropriated fiscal year funds are available to provide maximum cash 
benefits to all eligible applicants, after having deducted estimated 
transportation and substance payments and administrative and technical 
assistance costs, the Administrator (FAS) shall prorate cash payments to 
producers for the approved initial and long-term business plans.
    (b) Any producer 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.
    (c) In the case of death, incompetency, disappearance, or 
dissolution of a producer that is eligible to receive benefits in 
accordance with this part, such producer or producers specified in 7 CFR 
part 707 may receive such benefits.



Sec. 1580.401  Subsequent year petition recertification.

    (a) Prior to the anniversary of the petition certification date:
    (1) Groups or authorized representatives that provided the data to 
justify their initial petition shall provide the Administrator (FAS) 
data for the most recent marketing year, and
    (2) The Administrator (FAS) shall make a determination with respect 
to the re-certification of petitions for the subsequent year by applying 
criteria as set forth in Sec. 1580.203 of this part for the most recent 
marketing year.

[[Page 1050]]

    (b) The Administrator (FAS) will promptly publish in the Federal 
Register the determination with the reasons for the determination.
    (c) If a petition is re-certified, only eligible producers who did 
not receive training and cash benefits under this program may apply.



Sec. 1580.501  Administration.

    (a) The petition process will be administered by FAS. FAS will 
publish in the Federal Register the filing dates for commodity groups to 
file petitions.
    (b) FSA will administer the producer application and payment 
process.
    (c) State and county FSA committees and representatives do not have 
the authority to modify or waive any of the provisions of this part.
    (d) The technical assistance process and the recommendation for 
approval of all producer business plans will be under the general 
supervision of NIFA. NIFA may award the technical assistance and 
services to a state cooperative extension service.
    (e) The Deputy Administrator may, in consultation with the 
Administrator, FAS, authorize the 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 by applicants 
does not adversely affect the operation of the program.



Sec. 1580.502  Maintenance of records, audits, and compliance.

    (a) Producers 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. 
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 the U.S. Department of Agriculture or any agency 
thereof, 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 within 30 days of the filing.
    (d) If requested in writing by the U.S. Department of Agriculture or 
any agency thereof, 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) of this part, 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. Failure to 
provide necessary and accurate information to verify compliance, or 
failure to comply with this part's requirements, will result in 
ineligibility for all program benefits subject to this part for the year 
or years subject to the request.



Sec. 1580.503  Recovery of overpayments.

    (a) If the Administrator (FAS) determines that any producer has 
received any payment under this program to which the producer was not 
entitled, or has expended funds received under this program for purpose 
that was not approved by the Administrator (FAS) such producer will be 
liable to repay such amount. The Administrator (FAS) may waive such 
repayment if it is determined that:

[[Page 1051]]

    (1) The payment was made without fault on the part of the producer; 
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) of this section, the Administrator (FAS), shall recover 
the overpayment as a debt following the procedures in 7 CFR part 3. The 
requirement for demand and notice and opportunity for a hearing under 
the debt collection procedures in 7 CFR part 3 shall satisfy the notice 
and hearing requirements under 19 U.S.C. 2401f(c), and the appeal 
procedures in Sec. 1580.505 of this part shall not apply to collection 
of overpayments



Sec. 1580.504  Debarment, suspension, and penalties.

    (a) Generally. The regulations governing Governmentwide Debarment 
and Suspension (Nonprocurement), 7 CFR part 3017, and Government 
Requirements for Drug-Free Workplace (Financial Assistance), 7 CFR part 
3021, apply to this part.
    (b) Additional specific suspension and debarment provision for this 
program. In addition to any other debarment or suspension of a producer 
under paragraph (a) of this section, in connection with this program, if 
the Administrator (FAS) or a court of competent jurisdiction, determines 
that a producer:
    (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 producer has received any 
payment under this program to which the producer was not entitled, the 
Administrator (FAS) shall suspend and debar such producer from any 
future payments under this program, as provided in 19 U.S.C. 2401f(b).
    (c) Criminal penalty. 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 producer 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.

    (a) A producer adversely affected by a determination with respect to 
their application for trade adjustment assistance under Sec. 1580.301 
of this part or with respect to the receipt of technical assistance or 
payments under Sec. 1580.302 of this part may file a notice of appeal 
within 30 days of the date that the notification of the adverse 
determination was sent.
    (b) A producer may not seek judicial review of any adverse decision 
under this paragraph without receiving a final determination pursuant to 
this paragraph.



Sec. 1580.506  Judicial review.

    Any producer aggrieved by a final agency determination under this 
part may appeal to the U.S. Court of International Trade for a review of 
such determination in accordance with its rules and procedures.



Sec. 1580.602  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 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 General statement.
1599.2 Definitions.
1599.3 Eligibility determination.
1599.4 Application process.
1599.5 Agreements.
1599.6 Payments.
1599.7 Transportation of goods.
1599.8 Entry and handling of commodities.
1599.9 Damage to or loss of commodities.
1599.10 Claims for damage to or loss of commodities.
1599.11 Use of commodities and sales proceeds.
1599.12 Subrecipients.
1599.13 Recordkeeping and reporting requirements.

[[Page 1052]]

1599.14 Noncompliance with an agreement.
1599.15 Suspension, termination, and closeout of agreements.
1599.16 Appeals.
1599.17 Paperwork Reduction Act.

    Authority: 7 U.S.C. 1736o-1.

    Source: 74 FR 13072, Mar. 26, 2009, unless otherwise noted.



Sec. 1599.1  General statement.

    (a) This part sets forth the general terms and conditions governing 
the donation of commodities by the Foreign Agricultural Service (FAS) of 
the U.S. Department of Agriculture (USDA) to participants in the 
McGovern-Dole International Food for Education and Child Nutrition 
Program (McGovern-Dole Program). Under the McGovern-Dole Program, 
participants use the donated commodities, proceeds from the sale of such 
commodities, or funds provided by FAS to implement activities in a 
foreign country pursuant to an agreement with FAS. FAS administers the 
McGovern-Dole Program and acts on behalf of the Commodity Credit 
Corporation (CCC) in cases where the agreement is funded with CCC 
resources.
    (b) In addition to the provisions of this part, other regulations of 
general application issued by the Department, including the regulations 
set forth in Chapter 30 of this title, are applicable to the McGovern-
Dole Program. In cases where an agreement is funded with CCC resources, 
provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) and any other 
statutory provisions that are generally applicable to CCC are applicable 
to McGovern-Dole Program and the regulations set forth in this part.
    (c) This part shall not apply to a donation by FAS to a foreign 
government or an intergovernmental agency or organization (such as the 
United Nations' World Food Program) under the McGovern-Dole Program.



Sec. 1599.2  Definitions.

    The following definitions are applicable to this part:
    Activity means a project to be carried out by a participant, 
directly or through a subrecipient, to fulfill the objectives of an 
agreement.
    Agreement means a legally binding agreement entered into between FAS 
and a participant to implement activities under the McGovern-Dole 
Program.
    CCC means the Commodity Credit Corporation and includes any official 
of the United States delegated the responsibility to act on behalf of 
CCC.
    Commodities mean U.S. agricultural commodities or products of U.S. 
agricultural commodities.
    Donated commodities mean the commodities donated by FAS to a 
participant under an agreement. The term may include donated commodities 
that are used to produce a further processed product for use under the 
agreement.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FAS-provided funds means U.S. dollars provided under an agreement to 
a participant for expenses for the internal transportation, storage and 
handling of the donated commodities, expenses involved in the 
administration and monitoring of the activities under the agreement, and 
the costs of activities conducted in the targeted country that would 
enhance the effectiveness of the activities implemented by the 
participant under the McGovern-Dole Program.
    Force majeure is a common clause in contracts, exempting the parties 
for non-fulfillment of their obligations as a result of conditions 
beyond their control, such as earthquakes, floods or war.
    Income means interest earned on sale proceeds and other resources 
received by a participant, other than sale proceeds, as a result of 
carrying out an agreement. The term may include resources from VAT 
refunds, activity fees, interest on loans, and other sources.
    McGovern-Dole Program means the McGovern-Dole International Food for 
Education and Child Nutrition Program.
    Participant means an entity with which FAS has entered into an 
agreement.
    Subrecipient means a legal entity that receives donated commodities, 
income, sale proceeds or other resources from a

[[Page 1053]]

participant for the purpose of implementing in the targeted country 
activities described in a McGovern-Dole Program agreement and that is 
accountable to such participant for the use of such commodities, funds, 
or resources. The term may include foreign or international 
organizations (such as agencies of the United Nations) at the discretion 
of FAS.
    Sale proceeds mean funds received by a participant from the sale of 
donated commodities.
    Targeted country means the country in which activities are 
implemented under an agreement.



Sec. 1599.3  Eligibility determination.

    (a) An entity will be eligible to become a participant only after 
FAS determines that the entity has:
    (1) Organizational experience in implementing and managing awards, 
and the capability and personnel to develop, implement, monitor, report 
on, and provide accountability for activities in accordance with this 
part;
    (2) Experience working in the proposed targeted country;
    (3) An adequate financial framework to implement the activities the 
entity proposes to carry out under McGovern-Dole Program. In order to 
determine whether the entity is financially responsible, FAS may require 
it to submit corporate policies and financial materials that have been 
audited or otherwise reviewed by a third party;
    (4) A person or agent located in the United States with respect to 
which service of judicial process may be obtained by FAS on behalf of 
the entity; and
    (5) An operating financial account in the proposed targeted country, 
or a satisfactory explanation for not having such an account and a 
description of how a McGovern-Dole Program agreement would be 
administered without such an account.
    (b) In determining whether an entity will be eligible to be a 
participant, FAS may consider the entity's previous compliance or 
noncompliance with the provisions of this part and part 1499 of this 
title. FAS may consider matters such as whether the entity corrected 
deficiencies in the implementation of an agreement in a timely manner 
and whether the entity has timely and accurately filed reports and other 
submissions that are required to be filed with FAS and other agencies of 
the United States.



Sec. 1599.4  Application process.

    (a) An entity seeking to enter into an agreement with FAS shall 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the McGovern-Dole Program in 
the proposed targeted country. An application shall contain the items 
specified in paragraph (b) of this section and shall be submitted 
electronically to FAS at the address set forth at http://
www.fas.usda.gov. An entity that has not yet met the eligibility 
requirements in Sec. 1599.3 may submit an application, but FAS will not 
enter into an agreement with an entity until FAS had made a 
determination of eligibility under Sec. 1599.3.
    (b) An applicant shall include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction that contains the elements specified in 
paragraph (c) of this section; and
    (3) A plan of operation that contains the elements specified in 
paragraph (d) of this section.
    (c) The introduction shall include:
    (1) An explanation of the need for food aid in the targeted country 
and how the applicant's proposed activities would address that need;
    (2) An explanation of the need for a school feeding program in the 
targeted country and information regarding:
    (i) The country's current school feeding operations, if they exist, 
the length and sessions of a typical school year, and current funding 
resources; and
    (ii) Teacher training, parent-teacher associations, community 
infrastructure, and health, nutrition, water and sanitation conditions;
    (3) Information regarding the applicant's ability to become 
registered and operate in the targeted country;
    (4) Information about the applicant's past food aid projects;

[[Page 1054]]

    (5) Methods that the applicant proposes to use to involve indigenous 
institutions as well as local communities and governments in the 
development and implementation of the activities in order to foster 
local capacity building and leadership;
    (6) A budget that details the amount of any sale proceeds, income, 
and FAS-provided funds that the applicant proposes to use to fund:
    (i) Administrative costs;
    (ii) Inland transportation, storage and handling costs; and
    (iii) Activity costs;
    (7) A statement verifying the commitment of the government of the 
targeted country to work 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; and
    (8) A description of:
    (i) How the benefits of education, enrollment, and attendance of 
children in schools in the targeted communities will be sustained when 
the assistance under the McGovern-Dole Program terminates; and
    (ii) The estimated period of time required until the targeted 
country or the applicant would be able to sustain the program without 
additional assistance under the McGovern-Dole Program.
    (d) A plan of operation shall include:
    (1) The name of the targeted country where the proposed activities 
would be implemented;
    (2) The kind, quantity, and proposed use of the commodities 
requested, and any commodities that would be acceptable substitutions 
therefor, and the proposed delivery schedule;
    (3) If monetization or barter is proposed:
    (i) The quantity of the requested commodities that would be sold or 
bartered;
    (ii) The amount of sale proceeds anticipated;
    (iii) The amount of income expected to be generated;
    (iv) The anticipated monetization completion date;
    (v) The goods or services to be generated from the barter of the 
requested commodities;
    (vi) The value of the goods or services anticipated to be generated 
from the barter of the requested commodities; and
    (vii) A justification for monetizing the requested commodities that 
discusses why monetization would provide a greater benefit than the 
receipt of FAS-provided funds to carry out activities.
    (4) A list of each of the activities that would be implemented, with 
a brief statement of the objectives to be accomplished under each 
activity;
    (5) For each proposed activity, the targeted geographic area, 
anticipated beneficiaries, and methods that the applicant would use to 
choose such beneficiaries, including obtaining and considering 
statistics on poverty levels, food deficits, literacy rates, and any 
other required items set forth on the FAS Web site at http://
www.fas.usda.gov.
    (6) For each proposed activity:
    (i) An explanation of whether the activity would be carried out 
through the distribution or barter of the requested commodities or 
funded by FAS-provided funds, sale proceeds, income, or a combination 
thereof; and
    (ii) The amount of commodities and FAS-provided funds requested, and 
of any sale proceeds and income expected to be generated, to carry out 
such activity; and
    (iii) A detailed description of the activity, including the steps 
involved in its implementation and the anticipated completion date;
    (7) Any cash or non-cash contributions that the applicant expects to 
receive from non-FAS sources that:
    (i) Are critical to the implementation of the proposed activities; 
or
    (ii) Enhance the implementation of the activities;
    (8) Any subrecipient that would be involved and a description of 
each subrecipient's responsibilities and its capability to perform 
responsibilities;
    (9) Any governmental or nongovernmental entities that would be 
involved and the extent to which the McGovern-Dole Program will 
strengthen or increase the capabilities of such entities

[[Page 1055]]

to further educational and economic development in the targeted country;
    (10) The method by which the applicant intends to inform 
beneficiaries of an activity about the source of the requested 
commodities or funding for the activity and, where the beneficiaries 
will be receiving the commodities directly, how to prepare and use them 
properly;
    (11) Established baselines, a timeline, and proposed outcomes that 
would enable FAS to measure the applicant's progress towards achieving 
the objectives of the proposed activities and the McGovern-Dole Program, 
which include:
    (i) Increased enrollment and attendance rates, especially for girls;
    (ii) Improved student achievement levels through improvements in the 
learning environment;
    (iii) Improved maternal, child and student health and nutrition;
    (iv) Attracting non-FAS contributions to development activities;
    (v) Enabling community support for infrastructure development; and
    (vi) Increased government and community support in education;
    (12) If the proposed activities would involve the use of sale 
proceeds or income:
    (i) The process that the applicant would use to sell the requested 
commodities, including steps the applicant would take to use, to the 
extent possible, the private sector in the monetization process; and
    (ii) The procedures that the applicant would use to assure that sale 
proceeds and income are received and deposited into a separate, 
interest-bearing account and disbursed from such account for use only in 
accordance with the agreement;
    (13) A description of any port, transportation, storage, and 
warehouse facilities that would be used with sufficient detail to 
demonstrate that they would be adequate to handle the requested 
commodities without undue spoilage or waste, and, in cases where the 
applicant proposes to distribute some or all of the requested 
commodities, a description of how they would be transported from the 
receiving port to the point at which distribution is made to the 
beneficiaries;
    (14) Any reprocessing or repackaging of the requested commodities 
that would take place prior to the distribution, sale or barter by the 
applicant;
    (15) The action the applicant would take to ensure that any 
commodities to be distributed to beneficiaries, rather than sold, would 
be imported and distributed free from all customs, duties, tolls, and 
taxes;
    (16) A plan that shows how the requested commodities could be 
imported and distributed without a disruptive impact upon production, 
prices and marketing of the same or like products in the country where 
they will be delivered, and the extent to which any sale or barter of 
the requested commodities would displace or interfere with any sales 
that may otherwise be made by the applicant or any other entity in the 
country where they will be delivered; and
    (17) Any additional required items set forth on the FAS Web site at 
http://www.fas.usda.gov.



Sec. 1599.5  Agreements.

    (a) After FAS approves an applicant's proposal, FAS will develop an 
agreement in consultation with the applicant. The agreement will set 
forth the obligations of FAS and the participant. A participant must 
comply with the terms of the agreement to receive assistance.
    (b) A participant shall not use donated commodities, sale proceeds, 
income or FAS-provided funds for any activity or any expenses incurred 
by the participant prior to the date of the agreement or after the 
agreement is suspended or terminated, except as approved by FAS.
    (c) The agreement will include a budget that sets forth the maximum 
amounts of sale proceeds and FAS-provided funds that may be expended for 
various purposes under the agreement. A participant may make adjustments 
to this budget without prior approval from FAS only as specified in the 
agreement.
    (d) Prior to providing any donated commodities or FAS-provided funds 
to a participant under an agreement, FAS may require the participant to 
complete a training program administered by FAS that is designed to 
ensure that

[[Page 1056]]

the participant is aware of, and has the capacity to complete, all 
required reporting and audit functions set forth in this part.
    (e) A participant will be prohibited from using FAS-provided funds 
to acquire goods and services, either directly or indirectly through 
another party, from certain countries that will be specified in the 
agreement. Any violation of this provision of the agreement will be a 
basis for immediate termination by FAS of the agreement in addition to 
the imposition of any other applicable civil and criminal penalties.
    (f) The agreement will prohibit the sale or transshipment of the 
donated commodities to a country not specified in the agreement for as 
long as such donated commodities are controlled by the participant.
    (g) FAS may enter into a multicountry agreement in which donated 
commodities are delivered to one country and activities are carried out 
in another.
    (h) FAS may provide donated commodities and FAS-provided funds under 
a multiyear agreement contingent upon the availability of commodities 
and funds.



Sec. 1599.6  Payments.

    (a) If the participant arranges for transportation in accordance 
with Sec. 1599.7(b)(2), and the participant seeks payment directly, the 
participant shall, as specified in the agreement, either submit to FAS, 
or maintain on file and make available to FAS, the following documents:
    (1) A signed copy of the completed Form CCC-512;
    (2) The original, or a true copy of, each on-board bill of lading 
indicating the freight rate and signed by the originating carrier;
    (3) For all non-containerized cargoes:
    (i) A signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate (Vessel Hold Certificate);
    (ii) A signed copy of the National Cargo Bureau Certificate of 
Readiness (Vessel Hold Inspection Certificate); and
    (iii) A signed copy of the National Cargo Bureau Certificate of 
Loading;
    (4) For all containerized cargoes, a copy of the FGIS Container 
Condition Inspection Certificate;
    (5) A signed copy of the liner booking note or charter party 
covering ocean transportation of the cargo;
    (6) In the case of charter shipments, a signed notice of arrival at 
the first discharge port, unless FAS has determined that circumstances 
of force majeure have prevented the vessel's arrival at the first port 
of discharge;
    (7) A request by the participant for reimbursement of freight, 
survey costs other than at load port, and other expenses approved by FAS 
indicating the amount due and accompanied by a certification from the 
carrier or other parties that payments have been received from the 
participant; and
    (8) A document on letterhead and signed by an officer or agent of 
the participant specifying 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 participant's taxpayer identification 
number; and the type of the account into which the payment will be 
deposited.
    (b) If the participant arranges for transportation in accordance 
with Sec. 1599.7(b)(2), and the participant has used a freight 
forwarder, the participant shall cause the freight forwarder to submit 
the documents specified in Sec. 1599.6(a) in order to receive payment 
from FAS.
    (c) In no case will FAS reimburse a participant for demurrage costs 
or pay demurrage to any other entity.
    (d) If FAS has agreed to pay the costs of transporting, storing, and 
distributing the donated commodities from the designated port or point 
of entry, the participant will be reimbursed in the manner set forth in 
the agreement.
    (e) If the agreement authorizes the payment of FAS-provided funds, 
FAS will pay these funds to the participant on a reimbursement for 
expenses basis, except as provided in paragraph (f)(1) of this section. 
The participant shall request the payment of FAS-provided funds to 
reimburse it for authorized expenses in the manner set forth in the 
agreement.

[[Page 1057]]

    (f)(1) A participant may request an advance of the amount of funds 
specified in the agreement. FAS will not approve any request for an 
advance if:
    (i) It is received earlier than 60 days after the date of a previous 
advance made in connection with the same agreement; or
    (ii) Any required reports, as specified in Sec. 1499.13 and in the 
agreement, are more than six months in arrears.
    (2) Except as may otherwise be provided in the agreement, the 
participant shall deposit and maintain in a bank account located in the 
United States all funds advanced by FAS. The account shall be interest-
bearing, unless the exceptions in Sec. 3019.22(k) of this title apply, 
or FAS determines that this requirement would constitute an undue 
burden. The participant shall remit semi-annually to FAS any interest 
earned on the advanced funds. The participant shall, no later than 10 
days after the end of each calendar quarter, submit a financial 
statement to FAS accounting for all funds advanced and all interest 
earned.
    (3) The participant shall return to FAS any funds that are advanced 
by FAS if such funds have not been obligated as of the 180th day after 
the advance was made. Such funds and interest shall be transferred to 
FAS within 30 days of such date.
    (g) If a participant is required to pay funds to FAS in connection 
with an agreement, the participant shall make such payment in U.S. 
dollars, unless otherwise approved in advance by FAS.
    (h) Suppliers of commodities shall seek payment according to the 
purchase contract.



Sec. 1599.7  Transportation of goods.

    (a) Shipments of donated commodities are subject to the requirements 
of 46 U.S.C. 55305 and 55314, regarding carriage on U.S.-flag vessels.
    (b) Transportation of donated commodities and other goods such as 
bags that may be provided by FAS under the McGovern-Dole Program will be 
acquired under a specific agreement in the manner determined by FAS. 
Such transportation will be acquired by:
    (1) FAS in accordance with the Federal Acquisition Regulations 
(FAR), the Department's procurement regulations set forth in chapter 4 
of title 48 of the Code of Federal Regulations (the AGAR) and directives 
issued by the Director, Office of Procurement and Property Management, 
U.S. Department of Agriculture; or
    (2) The participant, with reimbursement by FAS, in the manner 
specified in the agreement.
    (c) A participant that acquires transportation in accordance with 
paragraph (b)(2) of this section may only use the services of a freight 
forwarder that is licensed by the Federal Maritime Commission (FMC) and 
that would not have a conflict of interest in carrying out the freight 
forwarder duties. To assist FAS in determining whether there is a 
potential conflict of interest, the participant must submit to FAS a 
certification indicating that the freight forwarder:
    (1) Is not engaged, and will not engage, in supplying commodities or 
furnishing ocean transportation or ocean transportation-related services 
for commodities provided under any McGovern-Dole Program agreement to 
which the participant is a party; and
    (2) Is not affiliated with the participant and has not made 
arrangements to give or receive any payment, kickback, or illegal 
benefit in connection with its selection as an agent of the participant.
    (d) A participant that is responsible for transportation under 
paragraph (b)(2) of this section shall declare in the transportation 
contract the point at which the ocean carrier will take custody of 
commodities to be transported.



Sec. 1599.8  Entry and handling of commodities.

    (a) The participant shall make all necessary arrangements for 
receiving the donated commodities in the targeted country, including 
obtaining appropriate approvals for entry and transit. The participant 
shall store and maintain the donated commodities in good condition from 
the time of delivery at the port of entry or the point of receipt from 
the originating carrier until their distribution, sale or barter.
    (b) The participant shall, as provided in the agreement, arrange for 
transporting, storing, and distributing the

[[Page 1058]]

donated commodities from the designated point and time where title to 
the commodity passes to the participant by contracting directly with 
suppliers of services, as set forth in the agreement.
    (c)(1) If a participant arranges for the packaging or repackaging of 
donated commodities that are to be distributed, the participant shall 
ensure that the packaging:
    (i) Is plainly labeled in the language of the targeted country;
    (ii) Contains the name of the donated commodities;
    (iii) Includes a statement indicating that the donated commodities 
are furnished by the people of the United States of America; and
    (iv) Includes a statement indicating that the donated commodities 
shall not be sold, exchanged or bartered.
    (2) If a participant arranges for the reprocessing and repackaging 
of donated commodities that are to be distributed, the participant shall 
ensure that the packaging:
    (i) Is plainly labeled in the language of the targeted country;
    (ii) Contains the name of the reprocessed product;
    (iii) Includes a statement indicating that the reprocessed product 
was made with commodities furnished by the people of the United States 
of America; and
    (iv) Includes a statement indicating that the reprocessed product 
shall not be sold, exchanged or bartered;
    (3) If a participant distributes donated commodities that are not 
packaged, the participant shall, to the extent practicable, display:
    (i) Banners, posters or other media informing the public of the name 
and source of the donated commodities; and
    (ii) A statement that the donated commodities may not be sold, 
exchanged, or bartered.
    (d) A participant shall arrange with the government of the targeted 
country that all donated commodities to be distributed will be imported 
and distributed free from all customs, duties, tolls, and taxes. A 
participant is encouraged to make similar arrangements, where possible, 
with the government of the country where donated commodities to be sold 
or bartered are delivered.



Sec. 1599.9  Damage to or loss of commodities.

    (a) FAS will be responsible for the donated commodities prior to the 
transfer of title to the commodities to the participant. The participant 
will be responsible for the donated commodities following the transfer 
of title to the commodities to the participant. The title will transfer 
as specified in the agreement.
    (b) A participant shall inform FAS, in the manner and within the 
time period set forth in the agreement, of any damage to or loss of the 
donated commodities that occurs following the transfer of title to the 
commodities to the participant. The participant shall take all steps 
necessary to protect its interests and the interests of FAS with respect 
to any damage to or loss of the donated commodities that occurs after 
title has been transferred to the participant. The agreement will 
specify whether the participant is responsible for obtaining a survey in 
the event that the donated commodities are damaged or lost following the 
transfer of title to the commodities to the participant.
    (c) If the donated commodities are damaged or lost during the time 
that they are in the care of the carrier:
    (1) And either FAS or the participant engages the services of an 
independent cargo surveyor, the surveyor will provide to FAS and the 
participant any report, narrative chronology or other commentary that it 
prepares;
    (2) FAS and the participant will provide to each other the names and 
addresses of any individuals known to be present at the time of 
discharge or during the survey who can verify the quantity of damaged or 
lost commodities;
    (3) And the participant engages the services of the surveyor, FAS 
will reimburse the participant for the reasonable costs, as determined 
by FAS, of the survey, unless:
    (i) The participant was required by the agreement to pay for the 
survey;
    (ii) The survey was a delivery survey and the surveyor did not also 
prepare a discharge survey; or

[[Page 1059]]

    (iii) The survey was not conducted contemporaneously with the 
discharge of the vessel, unless FAS determines that such action was 
justified under the circumstances;
    (4) Any survey obtained by the participant shall, to the extent 
practicable, be conducted jointly by the surveyor, the participant, and 
the carrier, and the survey report shall be signed by all parties;
    (5) And the damage or loss occurred with respect to a bulk grain 
shipment, if the agreement provides that the participant is responsible 
for survey and outturn reports, the participant shall obtain the 
services of an independent cargo surveyor to:
    (i) Observe the discharge of the cargo;
    (ii) Report on discharging methods, including scale type, 
calibrations and any other factor that may affect the accuracy of scale 
weights, and, if scales are not used, state the reason therefor and 
describe the actual method used to determine weight;
    (iii) Estimate the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (iv) Advise on the quality of sweepings;
    (v) Obtain copies of port or vessel records, if possible, showing 
the quantity discharged; and
    (vi) Notify the participant immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if additional 
services are necessary to protect the cargo; and
    (6) And the damage or loss occurred with respect to a container 
shipment, if the agreement provides that the participant is responsible 
for survey and outturn reports, the participant shall engage the 
services of an independent cargo surveyor to list the container numbers 
and seal numbers shown on the containers, indicate whether the seals 
were intact at the time the containers were opened, and note whether the 
containers were in any way damaged.
    (d) If the participant has title to the donated commodities, and the 
value of any damaged donated commodities is in excess of $1,000, the 
participant shall immediately arrange for an inspection by a public 
health official or other competent authority approved by FAS and provide 
to FAS a certification by such public health official or other competent 
authority regarding the exact quantity and condition of the damaged 
commodities. The value of damaged donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by CCC with respect to such commodities. The 
participant shall inform FAS of the results of the inspection and 
indicate whether the damaged commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (e)(1) If the participant has title to the donated commodities, the 
participant shall arrange for the recovery of that portion of the 
donated commodities designated as suitable for the use authorized in the 
agreement. The participant shall dispose of donated commodities that are 
unfit for such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or for other non-food use; or
    (iii) Destruction of the commodities if they are unfit for any use, 
in such manner as to prevent their use for any purpose.
    (2) The participant shall arrange for all U.S. Government markings 
to be obliterated or removed before the donated commodities are 
transferred by sale or donation.
    (f) A participant may retain any proceeds generated by the disposal 
of the donated commodities in accordance with paragraph (e)(1) of this 
section and shall use the proceeds for expenses related to the disposal 
of the donated commodities and for activities specified in the 
agreement.
    (g) The participant shall notify FAS immediately and provide 
detailed information about the actions taken in accordance with 
paragraph (e) of this section, including the quantities, values and 
dispositions of commodities determined to be unfit.

[[Page 1060]]



Sec. 1599.10  Claims for damage to or loss of commodities.

    (a) FAS will be responsible for claims arising out of damage to or 
loss of a quantity of the donated commodities prior to the transfer of 
title to the commodities to the participant.
    (b) If the participant has title to the donated commodities, and the 
value of the damaged or lost donated commodities is estimated to be 
$20,000 or greater, the participant will be responsible for:
    (1) Initiating a claim arising out of such damage or loss, including 
actions relating to collections pursuant to commercial insurance 
contracts; and
    (2) Notifying FAS immediately and providing detailed information 
about the circumstances surrounding such damage or loss, the quantity of 
damaged or lost donated commodities, and the value of the damage or 
loss.
    (c) If the participant has title to the donated commodities, and the 
value of the damaged or lost donated commodities is estimated to be less 
than $20,000, the participant will be responsible for providing detailed 
information about the damage or loss in the next report required to be 
filed under Sec. 1599.13(c)(1) or (2) and shall not be required to 
initiate a claim collection action.
    (d)(1) The value of a claim for lost donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities.
    (2) The value of a claim for damaged donated commodities shall be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities, less 
any funds generated if such commodities are sold in accordance with 
Sec. 1599.9(e)(1).
    (e) If FAS determines that a participant is not exercising due 
diligence in the pursuit of a claim, FAS may require the participant to 
assign its rights to pursue the claim to FAS.
    (f)(1) The participant may retain any funds obtained as a result of 
a claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds shall only be expended for 
purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, however, 
that if the participant paid for the freight or a portion thereof, FAS 
will use a portion of such funds to reimburse the participant for such 
expense on a prorated basis.



Sec. 1599.11  Use of commodities and sale proceeds.

    (a) A participant must use the donated commodities in accordance 
with the agreement.
    (b) A participant shall not permit the distribution, handling, or 
allocation of donated commodities on the basis of political affiliation, 
geographic location, or the ethnic, tribal or religious identity or 
affiliation of the potential consumers or beneficiaries.
    (c) A participant shall not permit the distribution, handling, or 
allocation of donated commodities by the military forces or any 
government or insurgent group without the specific authorization of FAS.
    (d) A participant may sell or barter donated commodities only if 
such sale or barter is provided for in the agreement or the participant 
is disposing of damaged commodities as specified in Sec. 1599.9. The 
participant shall sell the donated commodities at a reasonable market 
price in the economy where the sale occurs. The participant shall use 
any sale proceeds, income, or goods or services derived from the sale or 
barter of the donated commodities only as provided in the agreement.
    (e) The participant shall deposit all sale proceeds and income into 
a separate, interest-bearing account unless the exceptions in Sec. 
3019.22(k) of this title apply, the account is in a country where the 
laws or customs prohibit the payment of interest, or FAS determines that 
this requirement would constitute an undue burden.
    (f) A participant may use sale proceeds or income to purchase real 
or personal property only if local law permits the participant to retain 
title to

[[Page 1061]]

such property. However, the participant shall not use sale proceeds or 
income 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 pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
participant may use sale proceeds or income to pay for repairs to or 
rehabilitation of a structure located on such real property to the 
extent necessary to avoid spoilage or loss of donated commodities, but 
only if such structure is not used in whole or in part for any religious 
or sectarian purposes while the donated commodities are stored in it. If 
such use is not specifically provided for in the agreement, such use may 
only occur after receipt of written approval from FAS.
    (g) A participant shall endeavor to comply with Sec. Sec. 3019.41 
through 3019.43 of this title when procuring goods and services and when 
engaging in construction work to implement the agreement. The 
participant shall also establish procedures to prevent fraud. As 
provided for in the agreement, the participant shall enter into a 
written contract with each provider of goods, services or construction 
work that requires the provider to maintain adequate records to account 
for all donated commodities or funds or both provided to the provider by 
the participant and to submit periodic reports to the participant. The 
participant shall submit a copy of the signed contracts to FAS.



Sec. 1599.12  Subrecipients.

    (a) If provided for in the agreement, a participant may utilize the 
services of a subrecipient to implement activities under this agreement. 
The participant shall enter into a written subagreement with the 
subrecipient, and provide a copy of such subagreement to FAS, in the 
manner set forth in the agreement, prior to the transfer of any donated 
commodities, sale proceeds, income or FAS-provided funds to the 
subrecipient. Such written subagreement shall require the subrecipient 
to pay to the participant the value of any donated commodities, sale 
proceeds, income, or FAS-provided cash funds that are not used in 
accordance with the subagreement or are lost, damaged, or misused as a 
result of the subrecipient's failure to exercise reasonable care.
    (b) If a participant demonstrates to FAS that it is not feasible to 
enter into a subagreement with a subrecipient, FAS may grant approval to 
proceed without a subagreement; provided, however, that the participant 
must obtain such approval from FAS prior to transferring any donated 
commodities, sale proceeds, income, or FAS-provided funds to the 
subrecipient.
    (c) The participant shall monitor the actions of a subrecipient as 
necessary to ensure that donated commodities or funds provided to the 
subrecipient are used for authorized purposes in compliance with 
applicable laws and regulations and the agreement and that performance 
goals are achieved. The participant shall provide in the subagreement 
that the subrecipient must comply with applicable provisions of the 
regulations set forth in Chapter XXX of this title.



Sec. 1599.13  Recordkeeping and reporting requirements.

    (a) A program participant shall retain records and permit access to 
records in accordance with the requirements of Sec. 3019.53 of this 
title. The date of submission of the final expenditure report, as 
referenced in Sec. 3019.53(b) of this title, shall be the final date of 
submission of the forms required by paragraphs (c)(1) and (2) of this 
section, as prescribed by FAS.
    (b) A participant shall, within 30 days after export of all or a 
portion of the donated commodities, submit evidence of such export to 
FAS, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by FAS or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where commodities were delivered.
    (c)(1) A participant shall submit to FAS information, using a form 
as prescribed by FAS, covering the receipt, handling and disposition of 
the donated

[[Page 1062]]

commodities. Such report shall be submitted to FAS, by the dates and for 
the reporting periods specified in the program agreement, until all of 
the donated commodities have been distributed, sold or bartered and such 
disposition has been reported to FAS.
    (2) If the agreement authorizes the sale or barter of donated 
commodities, the participant shall submit to FAS information, using a 
form as prescribed by FAS, covering the receipt and use of sale proceeds 
and income, and, in the case of bartered commodities, covering the 
services and goods derived from the barter of donated commodities. Such 
reports shall be submitted to FAS, by the dates and for the reporting 
periods specified in the agreement, until all of the sale proceeds and 
income have been disbursed and reported to FAS. When reporting financial 
information, the participant shall include the amounts in U.S. dollars 
and the exchange rate.
    (3) The participant shall report, in the manner specified in the 
agreement, its progress, measured against established baselines, towards 
achieving the objectives of the activities under the agreement.
    (4) The participant shall retain copies of and make available to FAS 
all barter receipts, contracts or other documents related to the barter 
of the donated commodities and the services or goods derived from such 
barter, for a minimum of two years after the agreement has been closed 
out.
    (5) The participant shall provide to FAS additional information or 
reports relating to the agreement if requested by FAS.
    (d) A participant shall submit to FAS, in the manner specified in 
the agreement, an annual audit in accordance with Sec. 3019.26 of this 
title. If FAS requires an annual financial audit with respect to a 
particular agreement, and FAS provides funds for this purpose, the 
participant shall arrange for such audit and submit to FAS, in the 
manner specified in the agreement.
    (e)(1) A participant shall, as provided in the agreement, submit to 
FAS interim and final evaluations of the implementation of the 
agreement. Unless otherwise provided in the agreement, the evaluations 
shall be submitted at the mid-point and end-point of the implementation 
period. The participant shall arrange for the evaluations to be 
conducted by an independent third party that:
    (i) Is financially and legally separate from the participant's 
organization;
    (ii) Has staff with demonstrated knowledge, analytical capability, 
language skills and experience in conducting evaluations of development 
programs involving agriculture, education, and nutrition;
    (iii) Uses acceptable analytical frameworks such as comparison with 
non-project areas, surveys, involvement of stakeholders in the 
evaluation, and statistical analyses;
    (iv) Uses local consultants, as appropriate, to conduct portions of 
the evaluation; and
    (v) Provides a detailed outline of the evaluation, major tasks, and 
specific schedules prior to initiating the evaluation.
    (2) Receipt by FAS of the evaluations referred to in paragraph 
(e)(1) of this section is a condition for the participant to retain any 
funds provided by FAS to carry out the evaluations.
    (f) A participant shall submit to FAS the financial reports and 
information outlined in Sec. 3019.52 of this title. The agreement will 
specify the acceptable forms and time requirements for submission.



Sec. 1599.14  Noncompliance with an agreement.

    If a participant fails to comply with a term of an agreement, FAS 
may take one or more of the enforcement actions set forth in Sec. 
3019.62 of this title and, if appropriate, initiate a claim against the 
participant. FAS may also initiate a claim against a participant if the 
donated commodities are damaged or lost or the sale proceeds, income, or 
FAS-provided funds are lost due to an action or omission of the 
participant.



Sec. 1599.15  Suspension, termination, and closeouts of agreements.

    (a) An agreement may be suspended or terminated by FAS if it 
determines that:
    (1) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or

[[Page 1063]]

    (2) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the donated commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the targeted country.
    (b) An agreement may be terminated in accordance with Sec. 3019.61 
of this title. If an agreement is terminated, the participant shall:
    (1) Be responsible for the safety of any undistributed donated 
commodities and dispose of such commodities only as agreed to by FAS; 
and
    (2) Follow the closeout procedures in Sec. Sec. 3019.71 through 
3019.73 of this title.
    (c) An agreement will be considered completed when FAS and the 
participant have fulfilled their responsibilities under the agreement or 
the agreement has been terminated. The procedures in Sec. Sec. 3019.71 
through 3019.73 of this title will apply to the closeout of a completed 
agreement.



Sec. 1599.16  Appeals.

    A participant may appeal a determination arising under this part to 
FAS. Such appeal will be in writing and submitted to the FAS official 
and in the manner set forth in the agreement. The participant will be 
given an opportunity to have a hearing before a final decision is made 
regarding its appeal.



Sec. 1599.17  Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
have been approved by OMB under provisions of 44 U.S.C. Chapter 35 and 
have been assigned OMB Number 0551-0035.


[[Page 1065]]



                              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.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 1067]]



                    Table of CFR Titles and Chapters




                      (Revised as January 1, 2014)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300-- 
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)

[[Page 1068]]

       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)
        II  Recovery Accountability and Transparency Board (Parts 
                200--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         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 (Parts 2100--2199)
       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 (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600-- 3699)
    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)

[[Page 1069]]

    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)

[[Page 1070]]

    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
     XCVII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--99)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         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)

[[Page 1071]]

      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)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      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 Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and 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)

[[Page 1072]]

        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)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      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)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      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)

[[Page 1073]]

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 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)

[[Page 1074]]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. 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  U.S. 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  Office of Workers' Compensation Programs, 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 Service, Department of 
                Labor (Parts 1000--1099)

[[Page 1075]]

                       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 (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          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)

[[Page 1076]]

        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--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)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099)
       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)

[[Page 1077]]

        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 (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           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)
       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)

[[Page 1078]]

      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  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 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)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)

[[Page 1079]]

         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)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     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)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  National Institute for Literacy (Parts 1100--1199)
       XII  National Council on Disability (Parts 1200--1299)

[[Page 1080]]

                          Title 35 [Reserved]

             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)
        VI  [Reserved]
       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 (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory 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)

[[Page 1081]]

       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 A--Federal Procurement Regulations System 
                [Note]
            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)
   62--100  [Reserved]
            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)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [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 303-1--303-99)
       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--599)

[[Page 1082]]

         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 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             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
        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)

[[Page 1083]]

       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)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  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  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)

[[Page 1084]]

        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)
        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) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (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  Pipeline and Hazardous Materials Safety 
                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)

[[Page 1085]]

         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  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 1087]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2014)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     22, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  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
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 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
  National Institute of Food and Agriculture      7, XXXIV
  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, L
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV, L
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII, L
  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

[[Page 1088]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
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
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
Bureau of Ocean Energy Management, Regulation,    30, II
     and Enforcement
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
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                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  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
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       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 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 Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I

[[Page 1089]]

Defense Contract Audit Agency                     32, I
Defense Department                                2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 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          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 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
Election Assistance Commission                    2, LVIII; 11, II
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                             2, IX; 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                   2, XV; 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                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 1090]]

  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 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                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
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 Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
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
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
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

[[Page 1091]]

Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
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          2, III; 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
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 6, I; 8, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 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 Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V

[[Page 1092]]

Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
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
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department                               2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Bureau of Ocean Energy Management, Regulation,  30, II
       and Enforcement
  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
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  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 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
Investment Security, Office of                    31, VIII
Iraq Reconstruction, Special Inspector General    5, LXXXVII
     for
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                                2, XXVIII; 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
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V

[[Page 1093]]

  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
  Office of Workers' Compensation Programs        20, VII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  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 Royalty Board                         37, III
  U.S. 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, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
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
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 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   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
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              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
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

[[Page 1094]]

National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 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, IV
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
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
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Offices of Independent Counsel                    28, VI
Office of Workers' Compensation Programs          20, VII
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
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                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory 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
Privacy and Civil Liberties Oversight Board       6, X
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
Recovery Accountability and Transparency Board    4, II
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII, L
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV, L
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII, L

[[Page 1095]]

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                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 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                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
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
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                     2, XII; 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; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  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                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, 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
[[Page 1096]]

U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       2, VIII; 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 1097]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2009, 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, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.fdsys.gov. For changes to this volume of the CFR 
prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 1964-
1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. The 
``List of CFR Sections Affected 1986-2000'' is available at 
www.fdsys.gov.

                                  2009

7 CFR
                                                                   74 FR
                                                                    Page
Chapter XI
1205.200--1205.210 (Subpart) Added.................................51070
1205.510 (b)(2) and (3)(ii) table revised..........................32403
    (b)(3)(ii) table corrected.....................................39211
1207.510 (a)(1), (b)(1) and (3) table revised......................63543
1209.30 (a) through (e) revised....................................50919
1209.38 (l) and (m) redesignated as (m) and (n); new (l) added.....50920
1209.230 Removed...................................................50920
1209.300 Correctly revised.........................................18464
1216 Order.........................................................34687
1220.201 (a) table revised.........................................62676
1220.616 (d) revised................................................9049
1220.622 (b) amended................................................9049
1220.628 (a) revised................................................9049
1240 Removed.......................................................17768
1291.1 Revised.....................................................13316
1291.2 Revised.....................................................13316
1291.4 (a) revised.................................................13317
1291.5 (e), (f) and (g) added......................................13317
1291.6 Revised.....................................................13317
1291.10 (d) amended................................................13318
Chapter XIV
1400 Regulation at 73 FR 79273 comment period extended..............6117
1400.1 (a)(4), (5) and (6) amended.................................31577
1410.1 (j) revised; interim........................................30911
1410.2 (b) amended; interim........................................30911
1410.3 (c) amended; interim........................................30912
1410.11 Revised; interim...........................................30912
1410.22 (b) amended; interim.......................................30912
1410.40 (g) added; interim.........................................30912
1410.42 (d) revised; interim.......................................30912
1410.44 Revised; interim...........................................30912
1410.53 Revised; interim...........................................30912
1412.53 (b)(1)(ii)(K) corrected.....................................6352
1415 Revised; interim...............................................3870
1415.3 Amended; interim............................................42174
1415.4 (h)(5) revised; (i)(3) removed; interim.....................42174
1415.17 (e)(1) revised; interim....................................42174
1421 Authority citation and heading revised........................15649
1421.1 Heading and (a) revised; (e) removed........................15649
1421.2 (c)(1) removed; (c)(2) and (3) redesignated as new (c)(1) 
        and (2)....................................................15650
1421.3 Amended.....................................................15650
1421.4 (a)(1) amended; (a)(2) revised..............................15650
1421.5 (a)(1) and (f) amended; (c) revised.........................15651
1421.6 (a), (b)(5), (c)(5), (h)(1)(i), (2) and (i) amended.........15651
1421.7 (c), (1) and (2) amended; (d) removed.......................15651
1421.8 (c)(2) removed; (c)(3) redesignated as new (c)(2); (a)(2), 
        (b)(1) introductory text, (c)(1) and new (2) amended.......15651

[[Page 1098]]

1421.9 (a) and (c) revised; (b) amended; (d) through (g) added.....15651
1421.10 Revised....................................................15652
1421.13 Heading revised; (a) removed; (b) redesignated as new (a); 
        new (a)(2) amended.........................................15654
1421.101 (a)(1) amended............................................15654
1421.102 (a)(2)(ii), (3) and (4) amended...........................15654
1421.103 Heading and (c) revised; (a) introductory text and (3) 
        amended....................................................15654
1421.104 (a)(1) and (b)(2) amended; (b) introductory text and (c) 
        revised; (b)(3) removed....................................15654
1421.106 (d) amended; (g) removed..................................15654
1421.107 (b), (d), (g)(1) introductory text, (ii), (h)(2)(i), 
        (ii), (iv) introductory text, (A)(7), (i)(2) and (j) 
        amended....................................................15654
1421.108 (c) amended...............................................15654
1421.109 (a)(2), (3), (c), (e) introductory text, (f) introductory 
        text, (h), (i)(1), (j) and (p) amended; (b) introductory 
        text, (k) introductory text and (q) revised................15655
1421.110 Removed; new 1421.110 redesignated from 1421.111; (a), 
        (b) introductory text and (c) amended; (e) added...........15655
1421.111 Redesignated as 1421.110; new 1421.111 redesignated from 
        1421.112; (b) revised; (c) introductory text, (1) and (2) 
        amended; (d) redesignated as (e); new (d) and (f) added....15655
1421.112 Redesignated as 1421.111; new 1421.112 redesignated from 
        1421.113; (b)(1) amended...................................15655
1421.113 Redesignated as 1421.112; new 1421.113 redesignated from 
        1421.114; (b) amended......................................15655
1421.114 Redesignated as 1421.113..................................15655
1421.200 (c)(1) revised............................................15655
1421.201 (b) introductory text revised; (b)(1), (2) and (3) 
        introductory text removed; (b)(3)(i), (ii) and (iii) 
        redesignated as new (b)(1), (2) and (3)....................15655
1421.202 (c) amended...............................................15656
1421.203 (a)(1), (2), (c)(1), (2), (d), (f)(1) and (g) amended.....15656
1421.300--1421.307 (Subpart D) Heading revised.....................15656
1421.300 (a) amended...............................................15656
1421.302 Removed; new 1421.302 redesignated from 1421.303; (a), 
        (e)(2) and (f) amended.....................................15656
1421.303 Redesignated as 1421.302; new 1421.303 redesignated from 
        1421.304...................................................15656
1421.304 Redesignated as 1421.303; new 1421.304 redesignated from 
        1421.305; (a) and (d) through (g) amended; (h) removed.....15656
1421.305 Redesignated as 1421.304; new 1421.305 redesignated from 
        1421.306...................................................15656
1421.306 Redesignated as 1421.305; new 1421.306 redesignated from 
        1421.307; (a), (c) and (d) amended.........................15656
1421.307 Redesignated as 1421.306..................................15656
1421.400--1421.423 (Subpart E) Nomenclature changes................15656
1421.400 (a) amended; (b) removed..................................15656
1421.401 Removed; new 1421.401 redesignated from 1421.402; (b)(1) 
        amended....................................................15656
1421.402 Redesignated as 1421.401; new 1421.402 redesignated from 
        1421.403...................................................15656
1421.403 Redesignated as 1421.402; new 1421.403 redesignated from 
        1421.404...................................................15656
1421.404 Redesignated as 1421.403; new 1421.404 redesignated from 
        1421.405...................................................15656
1421.405 Redesignated as 1421.404; new 1421.405 redesignated from 
        1421.406...................................................15656
1421.406 Redesignated as 1421.405; new 1421.406 redesignated from 
        1421.407...................................................15656
1421.407 Redesignated as 1421.406; new 1421.407 redesignated from 
        1421.408...................................................15656
1421.408 Redesignated as 1421.407; new 1421.408 redesignated from 
        1421.409...................................................15656
1421.409 Redesignated as 1421.408; new 1421.409 redesignated from 
        1421.410; amended..........................................15656
1421.410 Redesignated as 1421.409; new 1421.410 redesignated from 
        1421.411...................................................15656

[[Page 1099]]

1421.411 Redesignated as 1421.410; new 1421.411 redesignated from 
        1421.412...................................................15656
1421.412 Redesignated as 1421.411; new 1421.412 redesignated from 
        1421.413...................................................15656
1421.413 Redesignated as 1421.412; new 1421.413 redesignated from 
        1421.414...................................................15656
1421.414 Redesignated as 1421.413; new 1421.414 redesignated from 
        1421.415...................................................15656
1421.415 Redesignated as 1421.414; new 1421.415 redesignated from 
        1421.416...................................................15656
1421.416 Redesignated as 1421.415; new 1421.416 redesignated from 
        1421.417...................................................15656
1421.417 Redesignated as 1421.416; new 1421.417 redesignated from 
        1421.418...................................................15656
1421.418 Redesignated as 1421.417; new 1421.418 redesignated from 
        1421.420...................................................15656
1421.419 Removed; new 1421.419 redesignated from 1421.421..........15656
1421.420 Redesignated as 1421.418; new 1421.420 redesignated from 
        1421.22....................................................15656
1421.421 Redesignated as 1421.419; new 1421.421 redesignated from 
        1421.23....................................................15656
1421.422 Redesignated as 1421.420..................................15656
1421.423 Redesignated as 1421.421..................................15656
1421.5551--1421.5559 (Subpart F) Removed...........................15656
1434 Authority citation revised....................................15656
1434.1 Revised.....................................................15656
1434.6 (b) removed; (c), (d) and (e) redesignated as new (b), (c) 
        and (d); new (b) introductory text and (2) amended; new 
        (b)(1) revised.............................................15657
1434.15 Heading and (c)(1) revised; (c)(2) amended.................15657
1434.18 (a) amended; (a)(3) added..................................15657
1434.21 (a) amended................................................15657
1434.22 Removed; new 1434.22 redesignated from 1434.23.............15657
1434.23 Redesignated as new 1434.22................................15657
1435 Authority citation revised....................................15363
1435.1 Introductory text amended; (d) revised......................15363
1435.2 Amended.....................................................15363
    Correctly amended; CFR correction..............................66567
1435.3 (a) removed; (b) redesignated as new (a); heading and new 
        (a) introductory text amended..............................15364
1435.100--1435.106 (Subpart B) Heading revised.....................15364
1435.101 (a) and (b) revised.......................................15364
1435.102 (c)(3) amended............................................15364
1435.103 (f) revised...............................................15364
1435.104 (c)(2) removed; (c)(3) and (4) redesignated as new (c)(2) 
        and (3)....................................................15364
1435.105 (b) revised; (c)(2) and (f) amended; (j) added............15364
1435.200 (a) amended; (f), (g) and (h) redesignated as (h), (i) 
        and (j); new (f) and (g) added; (e) and new (i) revised....15364
1435.201 (a) amended...............................................15365
1435.300 (a)(1) and (b) revised; (a)(2) amended....................15365
1435.301 (a)(1) and (4) revised; (a)(3) amended....................15365
1435.302 Revised...................................................15365
1435.303 Removed; new 1435.303 redesignated from 1435.304; (a) and 
        (b) revised................................................15365
1435.304 Redesignated as new 1435.303; new 1435.304 redesignated 
        from 1435.305..............................................15365
1435.305 Redesignated as new 1435.304; new 1435.305 redesignated 
        from 1435.306; (b) amended.................................15365
1435.306 Redesignated as new 1435.305; new 1435.306 redesignated 
        from 1435.307; (a) introductory text amended; (b), (e) 
        introductory text, (1), (2) and (g) revised; (h) added.....15365
1435.307 Redesignated as new 1435.306; new 1435.307 redesignated 
        from 1435.308..............................................15365
1435.307 Revised...................................................15366
1435.308 Redesignated as new 1435.307..............................15365
1435.308 Added.....................................................15366
1435.309 (c)(4) and (e)(3) amended.................................15366

[[Page 1100]]

1435.310 (b)(1)(i)(A) and (B) amended; (b)(1)(i)(C) and (2) 
        removed; (b)(3) redesignated as new (b)(2).................15366
1435.312 (a) amended...............................................15367
1435.313 (b) and (c) redesignated as (a)(1) and (2); new (b) added
                                                                   15367
1435.318 (a) revised; (b) through (e) redesignated as (c) through 
        (f); new (b) added.........................................15367
1435.400--1435.405 (Subpart E) Redesignated as Subpart F...........15367
1435.400--1435.405 (Subpart F) Redesignated from Subpart E.........15367
1435.400 Redesignated as 1435.500..................................15367
1435.401 Redesignated as 1435.501..................................15367
1435.402 Redesignated as 1435.502..................................15367
1435.403 Redesignated as 1435.503..................................15367
1435.404 Redesignated as 1435.504..................................15367
1435.405 Redesignated as 1435.505..................................15367
1435.500 Redesignated from 1435.400................................15367
1435.501 Redesignated from 1435.401................................15367
1435.502 Redesignated from 1435.402................................15367
1435.503 Redesignated from 1435.403................................15367
1435.504 Redesignated from 1435.404................................15367
1435.505 Redesignated from 1435.405................................15367
1436 Authority citation revised....................................41587
1436.1 Amended.....................................................41587
1436.2 (a), (c) introductory text, (d) and (f) amended; (g) 
        revised....................................................41587
1436.3 Amended.....................................................41587
1436.4 Revised.....................................................41587
1436.5 (a)(4), (7), (11) and (b) introductory text amended; (a)(5) 
        and (6) revised............................................41588
1436.6 (f)(1) removed; (f)(2) and (4) redesignated as new (f)(1) 
        and (2); (a) introductory text, (2), (b) introductory 
        text, (c) introductory text, (3), (5), (d) and (f)(3) 
        introductory text revised; (a)(1), (3), (4), (b)(3), (4), 
        (5), (e), new (f)(1) and new (2) amended; (a)(5), (6), 
        (b)(6), (f) introductory text and (g) added; (f)(1) 
        removed....................................................41588
1436.7 Revised.....................................................41589
1436.8 Revised.....................................................41589
1436.9 Revised.....................................................41590
1436.10 (a) and (b) amended........................................41590
1436.11 Revised....................................................41591
1436.12 Revised....................................................41591
1436.13 (a), (b), (d), (e), (f)(2) and (h) amended; (c) revised....41591
1436.14 Amended....................................................41591
1436.15 (a), (b), (c) and (e) amended; (f) revised.................41591
1436.16 Heading revised; (d) redesignated as (e); new (d) added; 
        (a)(2), (3) introductory text, (4), (5) introductory text, 
        (b)(1), (2), (c) and new (e) amended.......................41591
1436.19 (a) and (b) amended........................................41592
1439 Removed.......................................................31578
1465 Revised.......................................................64595
1465.23 (d) correctly revised; interim.............................10674
1466.1--1466.9 (Subpart A) Revised; interim.........................2308
1466.8 (c)(2)(iii) revised; interim................................25617
1466.10 Revised; interim............................................2313
1466.11 Revised; interim............................................2313
1466.20 Revised; interim............................................2313
1466.21 Revised; interim............................................2313
1466.22 Revised; interim............................................2313
1466.23 Revised; interim............................................2313
1466.24 Revised; interim............................................2313
    (a), (b) and (c) correctly revised.............................10675
1466.25 Revised; interim............................................2313
1466.26 Revised; interim............................................2313
1466.27 (c)(4) revised..............................................2316
1466.30--1466.36 (Subpart C) Revised; interim.......................2316
1467 Revised; interim...............................................2328
    Regulation at 74 FR 2328 comment period reopened...............26281
1467.4 (a)(2) and (e)(5) revised; interim..........................26284

[[Page 1101]]

1467.7 (c)(1) revised; (d) redesignated as (e); new (d) added; 
        interim....................................................26284
1467.10 (e) removed; interim.......................................26284
1467.11 (a)(2)(iv) and (b)(2)(iii) revised; (a)(5) and (b)(4) 
        removed; interim...........................................26284
1467.12 (b) amended; interim.......................................26285
1470 Added; interim................................................37511
    Regulation at 74 FR 37511 comment period extended..............48005
1487.4 Revised.....................................................22090
1487.6 (b) revised.................................................22090
1487.8 (a)(4) revised..............................................22090
1491 Revised; interim...............................................2818
1491.3 Correctly amended; interim..................................31581
1491.4 (b) and (f)(6) correctly revised; interim...................31581
1491.22 (c) correctly amended; (d) correctly revised; interim......31581
1491.30 (f) correctly revised; interim.............................31581
1496 Removed.......................................................13066
1499 Revised.......................................................13066
Chapter XV
1599 Revised.......................................................13072

                                  2010

7 CFR
                                                                   75 FR
                                                                    Page
Chapter XI
1205.314 Revised...................................................24374
1205.319 Revised...................................................24374
1207.510 (b)(1) and (3) table correctly revised....................14491
1208 Added..........................................................6091
1215.21 (a) revised................................................67610
1218.40 (a) introductory text and (3) revised......................31282
1218.45 (a) revised................................................31282
1219 Order.........................................................61589
1221.200--1221.234 (Subpart B) Added...............................70575
1245 Added.........................................................18398
1250.200--1250.207 (Subpart) Added.................................55256
Chapter XIV
1400.1 (a) introductory text and (2) amended; (a)(8) added; (f) 
        revised......................................................899
1400.2 (g) amended...................................................899
1400.6 (a) amended...................................................899
1400.7 Removed.......................................................899
1400.101 (a) amended.................................................899
1400.102 (a) amended; (c) revised....................................899
1400.104 (a)(1), (2), (3)(ii), (4)(iii), (v) and (5)(iii) amended 
                                                                     899
1400.105 (d)(1) and (2) added........................................900
1400.106 (b) amended.................................................900
1400.202 (c)(1) introductory text and (2) introductory text 
        amended......................................................900
1400.203 (b)(1) introductory text and (2) introductory text 
        amended......................................................900
1400.204 (c) redesignated as (d); new (c) added; (a)(2) 
        introductory text, (3), new (d)(1) introductory text, (ii) 
        and (2) introductory text amended............................900
1400.205 (e) and (f) redesignated as (f) and (g); new (e) added......900
1400.206 (b) redesignated as (c); new (b) added......................900
1400.301 (d) amended.................................................900
1400.401 (a) revised...............................................19189
1405.9 (c)(1) amended..............................................70812
1410.2 Amended; interim............................................27168
    (b) amended; interim...........................................44071
1410.4 (b) revised; interim........................................44071
1410.5 (c) added;..................................................27169
1410.6 (a)(1), (2) introductory text, (i)(B), (C), (ii) 
        introductory text, (B), (3), (b)(1) introductory text, 
        (2)(iii), (6), (7), (11), (12), (c) introductory text and 
        (3) amended; (a)(2)(i) removed; (a)(2)(ii) redesignated as 
        new (a)(2)(i); new (a)(2)(i) introductory text amended; 
        interim....................................................44071
1410.31 (c) redesignated as (d); new (c) added; interim............44071
1410.33 (a)(3) amended; (a)(4) redesignated as (a)(5); new (a)(4) 
        added......................................................27169
1410.62 (g) added;.................................................27169
    (g) amended; (h) added; interim................................44071
1410.63 (c) revised; interim.......................................44071
1410.64 Added......................................................27169
1412.3 Amended.....................................................19189
1412.41 (a)(1) and (2)(i) revised; (a)(3) and (b) amended..........19191
1412.45 (d) removed................................................19191
1412.51 (c) amended................................................19191

[[Page 1102]]

1412.53 (b)(1)(ii) amended; (b)(1)(ii)(G) removed; (b)(1)(ii)(H) 
        through (L) redesignated as (b)(1)(ii)(G) through (J) and 
        (O); new (b)(1)(ii)(K) through (N) and (iii) added.........19192
1412.61 (a) amended; (c) added.....................................19192
1412.66 (b) amended................................................19192
1412.67 (a) and (b) revised; (c)(2) amended; (d) removed...........19192
1412.72 (a), (d) introductory text, (1) and (h) amended; (d)(2), 
        (3) and (4) redesignated as (d)(2)(i), (ii) and (iii); new 
        (d)(2) introductory text added.............................19192
1412.73 (c) and (d) added..........................................19192
1412.77 (a) amended; (f) added.....................................19192
1412.78 (a)(2)(iii) amended........................................19193
1413 Added.........................................................41965
1415 Revised.......................................................73925
1416.700--1416.705 (Subpart H) Removed.............................25110
1421.4 (a)(1) and (e)(1)(ii) amended...............................19193
1421.5 (c)(4) and (5) amended......................................19193
1421.104 (a)(1) revised; (a)(2) amended............................19193
1421.107 (g)(1) and (2) amended....................................19193
1423.3 Amended.....................................................50849
1427 Authority citation revised....................................50849
1427.3 Amended.....................................................50849
1427.105 (a) and (b) revised; (c) removed; (d) and (e) 
        redesignated as new (c) and (d)............................50849
1430 Authority citation revised....................................41367
1430.100--1430.104 (Subpart A) Revised.............................41367
1435.201 (a) amended...............................................17561
1435.318 (e) and (f) amended.......................................17561
1450 Added.........................................................66234
1455 Added; interim................................................39140
1463 Authority citation revised....................................76923
1463.5 (a) amended.................................................76923
1470 Added.........................................................31653
    Technical correction...........................................34924
Chapter XV
1580 Revised; interim...............................................9089

                                  2011

7 CFR
                                                                   76 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3)(ii) table revised..........................54081
    (b)(3)(ii) table correctly revised.............................69083
1206.19 Removed....................................................36283
1206.24 Removed....................................................36283
1206.30 (a) revised................................................36283
1206.31 (h) removed; (i) redesignated as new (h)...................36283
1206.32 Revised....................................................36283
1210.501 Revised...................................................42012
1210.502 Added.....................................................42012
1214 Added.........................................................69103
    Regulation at 76 FR 69103 stayed indefinitely..................71241
1214.100--1214.108 (Subpart B) Added...............................69113
1217 Added..................................................22755, 46193
1217.1--1217.88 (Subpart A) Correctly added........................53816
1217.100--1217.108 (Subpart B) Regulation at 76 FR 46193 corrected
                                                                   53816
1217.88 Correctly revised..........................................53816
1218 Section 610 review............................................11939
1221 Referendum results............................................28625
1245 Removed.......................................................14279
1260.141 (a) and table revised.....................................42014
Chapter XIV
1410.1 (h) amended..................................................4805
1429 Added..........................................................6316
1436.6 (a)(5) and (b)(6) amended....................................4805
1436.9 (d)(3)(iii) amended..........................................4805
1437.3 Amended......................................................4805
1437.102 (b)(4) amended.............................................4805
1450.1 (f) correctly added; interim................................56951
1450.2 (a) correctly amended; interim..............................56951
1450.5 (a) correctly amended; interim..............................56951
1450.102 (a)(3) correctly amended; interim.........................56951
1450.206 (a)(3) correctly amended; interim.........................56951
1465.5 (c)(10) and (11) revised; (c)(12) added.....................19684
1468.3 Amended......................................................4806
1469.3 Amended......................................................4806
1470.6 (a)(4) and (5) revised; (a)(6) added........................19684
1491 Revised........................................................4039

[[Page 1103]]

                                  2012

7 CFR
                                                                   77 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3)(ii) table revised..........................51869
1206.42 (b) revised................................................21846
1208.1--1208.78 (Subpart A) Added..................................26919
1260.113 (c) revised...............................................52599
Chapter XIV
1427.25 (c)(2), (e)(2)(ii) and (f)(2)(ii) revised..................19927
1485 Heading correctly revised.....................................41885
1485.10--1485.36 (Subpart B) Revised...............................29499
1485.19 (b) correctly revised......................................41885
1491.4 (d) introductory text and (e) introductory text revised......6944

                                  2013

7 CFR
                                                                   78 FR
                                                                    Page
Chapter XI
1205.510 (b)(2) and (3)(ii) table revised..........................39553
1206.31 (g) revised................................................39566
1207.501 Removed...................................................52082
1207.507 (a) revised...............................................52082
1217.40 (a), (b)(1), (2) introductory text, (2)(i), (ii), (c) 
        introductory text and (2) revised; (c)(3) added............77333
1217.41 (b) introductory text, (1), (2), (3), (4) and (5) revised 
                                                                   77334
1217.43 (c) revised................................................77334
1217.70 (b) revised................................................77334
1217.108 Revised...................................................77334
1218.52 (c) revised; (d)(2) amended................................59779
1220.201 (a) table revised.............................................2
1222 Added.........................................................56820
1230 Policy statement..............................................14909
1280.217 (e) revised...............................................28123
1280.219 Revised...................................................28123
Chapter XIV
1410.6 (c)(2) amended..............................................48037
1435 Authority citation revised....................................45446
1435.400--1435.401 (Subpart E) Added...............................45446
1435.600--1435.607 (Subpart G) Added...............................45446
1437 Authority citation revised; interim...........................21018
1437.3 Amended; interim............................................21018
1437.4 (c), (d) and (e) added; interim.............................21018
1437.6 (b) amended; interim........................................21018
1437.9 (e)(6) and (7) amended; interim.............................21018
1437.13 (b) revised; interim.......................................21018
1437.14 (a) and (b) introductory text revised; (d) removed; 
        interim....................................................21019
1437.105 (a)(6) revised; interim...................................21019
1437.301 (b) revised; interim......................................21019
1437.302 (b), (c) and (d) amended; (e) revised; (f) removed; 
        interim....................................................21019
1437.303 (f) added; interim........................................21019
1437.305 (g) added; interim........................................21019
1437.501 (b)(1) revised; interim...................................21019
1437.502 (c) amended; interim......................................21019
1437.503 (a) and (b) amended; interim..............................21019
1437.504 (e) amended; interim......................................21019
1437.505 Revised; interim..........................................21019


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