[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 7

Agriculture


________________________

Parts 700 to 899

                         Revised as of January 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

          U.S. GOVERNMENT OFFICIAL EDITION NOTICE

          Legal Status and Use of Seals and Logos
          
          
          The seal of the National Archives and Records Administration 
              (NARA) authenticates the Code of Federal Regulations (CFR) as 
              the official codification of Federal regulations established 
              under the Federal Register Act. Under the provisions of 44 
              U.S.C. 1507, the contents of the CFR, a special edition of the 
              Federal Register, shall be judicially noticed. The CFR is 
              prima facie evidence of the original documents published in 
              the Federal Register (44 U.S.C. 1510).

          It is prohibited to use NARA's official seal and the stylized Code 
              of Federal Regulations logo on any republication of this 
              material without the express, written permission of the 
              Archivist of the United States or the Archivist's designee. 
              Any person using NARA's official seals and logos in a manner 
              inconsistent with the provisions of 36 CFR part 1200 is 
              subject to the penalties specified in 18 U.S.C. 506, 701, and 
              1017.

          Use of ISBN Prefix

          This is the Official U.S. Government edition of this publication 
              and is herein identified to certify its authenticity. Use of 
              the 0-16 ISBN prefix is for U.S. Government Publishing Office 
              Official Editions only. The Superintendent of Documents of the 
              U.S. Government Publishing Office requests that any reprinted 
              edition clearly be labeled as a copy of the authentic work 
              with a new ISBN.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
              
          U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E

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

          U.S. Superintendent of Documents  Washington, DC 
              20402-0001

          http://bookstore.gpo.gov

          Phone: toll-free (866) 512-1800; DC area (202) 512-1800

[[Page iii]]




                            Table of Contents



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

  Title 7:
    SUBTITLE B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter VII--Farm Service Agency, Department of 
          Agriculture                                                5
          Chapter VIII--Grain Inspection, Packers and 
          Stockyard Administration (Federal Grain Inspection 
          Service), Department of Agriculture                      455
  Finding Aids:
      Table of CFR Titles and Chapters........................     611
      Alphabetical List of Agencies Appearing in the CFR......     631
      List of CFR Sections Affected...........................     641

[[Page iv]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 7 CFR 701.1 refers 
                       to title 7, part 701, 
                       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, 2017), 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 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail [email protected].

SALES

    The Government Publishing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll-free, 
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2104, 24 hours a day. For payment by check, 
write to: US Government Publishing Office - New Orders, P.O. Box 979050, 
St. Louis, MO 63197-9000.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.ofr.gov. For more 
information, contact the GPO Customer Contact Center, U.S. Government 
Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-
mail, [email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.
    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 Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    January 1, 2017.







[[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, 2017.

    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, Robert J. Sheehan, III was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
John Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                          TITLE 7--AGRICULTURE




                  (This book contains parts 700 to 899)

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

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

                                                                    Part

chapter vii--Farm Service Agency, Department of Agriculture.         701

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

[[Page 3]]

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

[[Page 5]]



       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE




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


  Editorial Note: 1. Nomenclature changes to chapter VII appear at 59 FR 
60299, Nov. 23, 1994, as corrected at 59 FR 66438, Dec. 27, 1994, and at 
60 FR 64297, Dec. 15, 1995.

             SUBCHAPTER A--AGRICULTURAL CONSERVATION PROGRAM
Part                                                                Page
700

[Reserved]

701             Emergency Conservation Program, Emergency 
                    Forest Restoration Program, and certain 
                    related programs previously administered 
                    under this part.........................           7
707             Payments due persons who have died, 
                    disappeared, or have been declared 
                    incompetent.............................          19
708             Record retention requirements--all programs.          22
SUBCHAPTER B--FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION 
                               ADJUSTMENT
714             Refunds of penalties erroneously, illegally, 
                    or wrongfully collected.................          24
718             Provisions applicable to multiple programs..          26
                SUBCHAPTER C--REGULATIONS FOR WAREHOUSES
735             Regulations for the United States Warehouse 
                    Act.....................................          51
743

[Reserved]

                     SUBCHAPTER D--SPECIAL PROGRAMS
750             Soil Bank...................................          65
755             Reimbursement Transportation Cost Payment 
                    Program for Geographically Disadvantaged 
                    Farmers and Ranchers....................          65
759             Disaster designations and notifications.....          70
760             Indemnity payment programs..................          74
761             Farm loan programs; general program 
                    administration..........................         165
762             Guaranteed farm loans.......................         189
763             Land Contract Guarantee Program.............         228
764             Direct loan making..........................         236

[[Page 6]]

765             Direct loan servicing--regular..............         260
766             Direct loan servicing--special..............         275
767             Inventory property management...............         328
768

[Reserved]

769             Highly Fractionated Indian Land Loan Program         334
770             Indian tribal land aquisition loans.........         340
771             Boll Weevil Eradication Loan Program........         344
772             Servicing minor program loans...............         347
773             Special Apple Loan Program..................         353
774             Emergency Loan for Seed Producers Program...         356
780             Appeal regulations..........................         359
781             Disclosure of foreign investment in 
                    agricultural land.......................         366
782             End-Use Certificate Program.................         372
784             2004 Ewe Lamb Replacement and Retention 
                    Payment Program.........................         378
785             Certified State Mediation Program...........         382
786             Dairy Disaster Assistance Payment Program 
                    (DDAP-III)..............................         389
789             Agriculture Priorities and Allocations 
                    System (APAS)...........................         397
        SUBCHAPTER E--PROVISIONS COMMON TO MORE THAN ONE PROGRAM
792             Debt settlement policies and procedures.....         416
795             Payment limitation..........................         425
                      SUBCHAPTER F--PUBLIC RECORDS
798             Availability of information to the public...         432
                 SUBCHAPTER G--ENVIRONMENTAL PROTECTION
799             Compliance with the National Environmental 
                    Policy Act..............................         434

[[Page 7]]



             SUBCHAPTER A_AGRICULTURAL CONSERVATION PROGRAM



                           PART 700 [RESERVED]



PART 701_EMERGENCY CONSERVATION PROGRAM, EMERGENCY FOREST RESTORATION
PROGRAM, AND CERTAIN RELATED PROGRAMS PREVIOUSLY ADMINISTERED UNDER THIS
PART--Table of Contents



                            Subpart A_General

Sec.
701.1 Administration.
701.2 Definitions.
701.3-701.12 [Reserved]
701.13 Submitting requests.
701.14 Onsite inspections.
701.15 Starting practices before cost-share request is submitted; non-
          entitlement to payment; payment subject to the availability of 
          funds.
701.16 Practice approval.
701.17-701.20 [Reserved]
701.21 Filing payment application.
701.22 Eligibility to file for cost-share assistance.
701.23 Eligible costs.
701.24 Dividing cost-share among more than one participant.
701.25 Practices carried out with aid from ineligible persons or 
          ineligible legal entities.
701.26-701.30 [Reserved]
701.31 Maintenance and proper use of practices.
701.32 Failure to comply with program provisions.
701.33 Death, incompetency, or disappearance.
701.34 Appeals.
701.35 Compliance with regulatory measures.
701.36 Schemes and devices and claims avoidances.
701.37 Loss of control of property during the practice life span.
701.38-701.40 [Reserved]
701.41 Cost-share assistance not subject to claims.
701.42 Assignments.
701.43 Information collection requirements.
701.44 Agricultural Conservation Program (ACP) contracts.
701.45 Forestry Incentives Program (FIP) contracts.

                Subpart B_Emergency Conservation Program

701.100-701.102 [Reserved]
701.103 Scope.
701.104 Producer eligibility.
701.105 Land eligibility.
701.106-701.109 [Reserved]
701.110 Qualifying minimum cost of restoration.
701.111 Prohibition on duplicate payments.
701.112 Eligible ECP practices.
701.113-701.116 [Reserved]
701.117 Average adjusted gross income limitation.
701.118-701.125 [Reserved]
701.126 Maximum cost-share percentage.
701.127 Maximum ECP payments per person or legal entity.
701.128-701.149 [Reserved]
701.150 2005 hurricanes.
701.151 Definitions.
701.152 Availability of funding.
701.153 Debris removal and water for livestock.
701.154 [Reserved]
701.155 Nursery.
701.156 Poultry.
701.157 Private non-industrial forest land.

             Subpart C_Emergency Forest Restoration Program

701.200-701.202 [Reserved]
701.203 Scope.
701.204 Participant eligibility.
701.205 Land eligibility.
701.206-701.209 [Reserved]
701.210 Qualifying minimum cost of restoration.
701.211 Prohibition on duplicate payments.
701.212 Eligible EFRP practices.
701.213-701.225 [Reserved]
701.226 Maximum financial assistance.

    Authority: 16 U.S.C. 2201-2206; Sec. 101, Pub. L. 109-148, 119 Stat. 
2747; and Pub. L. 111-212, 124 Stat. 2302

    Source: 69 FR 10302, Mar. 4, 2004, unless otherwise noted.



                            Subpart A_General



Sec.  701.1  Administration.

    (a) Subject to the availability of funds, this part provides the 
terms, conditions and requirements of the Emergency Conservation Program 
(ECP) and the Emergency Forest Restoration Program (EFRP) administered 
by the Farm Service Agency (FSA). Neither program is an entitlement 
program and payments will only be made

[[Page 8]]

to the extent that the Deputy Administrator announces the eligibility of 
benefits for certain natural disasters, the areas in which such benefits 
will be available, the time period in which the disaster and the 
rehabilitation must occur, and only so long as all the conditions for 
eligibility specified in this part and elsewhere in law are met. 
However, the Deputy Administrator will not apply any non-statutory 
limitation on payments provided for in this part in such a way that it 
would necessarily result in the non-expenditure of program funds 
required to otherwise be made by law.
    (b) ECP and EFRP are administered by the Administrator, FSA through 
the Deputy Administrator, FSA, and shall be carried out in the field by 
State and county FSA committees (State and county committees), subject 
to the availability of funds. Except as otherwise provided in this rule, 
discretionary determinations to be made under this rule will be made by 
the Deputy Administrator. Matters committed to the discretion of the 
Deputy Administrator shall be considered in all cases to be permissive 
powers and no person or legal entity shall, under any circumstances, be 
considered to be entitled to an exercise of such power in their favor.
    (c) State and county committees, and representatives and employees, 
do not have authority to modify or waive any regulations in this part.
    (d) The State committee may take any action authorized or required 
of the county committee by this part, but which the county committee has 
not taken, 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.
    (e) No provision or delegation herein to a State or county committee 
shall preclude the Administrator, FSA, or a designee, from determining 
any question arising under the program or from reversing or modifying 
any determination made by a State or county committee.
    (f) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines and other requirements in cases 
where lateness or failure to meet such other requirements does not 
adversely affect the operation of the program.
    (g) The Deputy Administrator may limit the authority of state and 
county committees to approve cost share in excess of specified amounts.
    (h) Data furnished by the applicants 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.
    (i) FSA may consult with any other Federal agency, State agency, or 
other provider of technical assistance for such assistance as is 
determined by FSA to be necessary to implement ECP or EFRP. FSA is 
responsible for the technical aspects of ECP and EFRP but may enter into 
a Memorandum of Agreement with another party to provide technical 
assistance. If the requirement for technical assistance results in undue 
delay or significant hardship to producers in a county, the State 
committee may request in writing that FSA waive this requirement for 
that county. However, nothing in this paragraph or in this part creates 
a right of appeal or action for an applicant with respect to provisions 
relating to internal procedures of FSA.
    (j) The provisions in this part shall not create an entitlement in 
any person or legal entity to any ECP or EFRP cost share or claim or any 
particular notice or form or procedure.
    (k) Additional terms and conditions may be set forth in the 
application or the forms participants will be required to sign for 
participation in the ECP or EFRP.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70087, Nov. 17, 2010]



Sec.  701.2  Definitions.

    (a) The terms defined in part 718 of this chapter shall be 
applicable to this part and all documents issued in accordance with this 
part, except as otherwise provided in this section.
    (b) The following definitions shall apply to this part:

[[Page 9]]

    Agricultural producer means an owner, operator, or tenant of a farm 
or ranch used to produce for food or fiber, crops (including but not 
limited to, grain or row crops; seed crops; vegetables or fruits; hay 
forage or pasture; orchards or vineyards; flowers or bulbs; or field 
grown ornamentals) or livestock (including but not limited to, dairy or 
beef cattle; poultry; swine; sheep or goats; fish or other animals 
raised by aquaculture; other livestock or fowl) for commercial 
production. Producers of animals raised for recreational uses only are 
not considered agricultural producers.
    Annual agricultural production means production of crops for food or 
fiber in a commercial operation that occurs on an annual basis under 
normal conditions.
    Applicant means a person or legal entity who has submitted to FSA a 
request to participate in the ECP or EFRP.
    Cost-share payment means the payment made by FSA to assist a program 
participant under this part to establish practices required to address 
qualifying damage suffered in connection with a qualifying disaster.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, the ECP Program Manager, or designee.
    Farmland means land devoted to agricultural production, including 
land used for aquaculture, or other land as may be determined by the 
Deputy Administrator.
    Natural disaster means wildfires, hurricanes or excessive winds, 
drought, ice storms or blizzards, floods, or other naturally-occurring 
resource impacting events as determined by FSA. For EFRP, a natural 
disaster also includes insect or disease infestations as determined by 
FSA in consultation with other Federal and State agencies as 
appropriate.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70087, Nov. 17, 2010]



Sec. Sec.  701.3-701.12  [Reserved]



Sec.  701.13  Submitting requests.

    (a) Subject to the availability of funds, the Deputy Administrator 
shall provide for an enrollment period for submitting ECP or EFRP cost-
share requests.
    (b) Requests may be accepted after the announced enrollment period, 
if such acceptance is approved by the Deputy Administrator and is in 
accordance with the purposes of the program.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.14  Onsite inspections.

    (a) An onsite inspection must be made before approval of any request 
for ECP or EFRP assistance.
    (b) Notwithstanding paragraph (a) of this section, onsite 
inspections may be waived by FSA, in its discretion only, where damage 
is so severe that an onsite inspection is unnecessary, as determined by 
FSA.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.15  Starting practices before cost-share request is submitted;
non-entitlement to payment; payment subject to the availability of funds.

    (a) Subject to paragraphs (b) and (c) of this section, costs will 
not be shared for practices or components of practices that are started 
before a request for cost share under this part is submitted with the 
applicable county FSA office.
    (b) Costs may be shared for drought and non-drought practices or 
components of practices that are started before a request is submitted 
with the county FSA office, only if:
    (1) Considered and approved on a case-by-case basis in accordance 
with instructions of the Deputy Administrator;
    (2) The disaster that is the basis of a claim for cost-share 
assistance created a situation that required the producer to take 
immediate action to prevent further losses;
    (3) The Deputy Administrator determines that the request for 
assistance was filed within a reasonable amount of time after the start 
of the enrollment period; and
    (4) The practice was started no more than 60 days before the ECP or 
EFRP designation was approved for the applicable county office.

[[Page 10]]

    (c) Any action taken prior to approval of a claim is taken at the 
producer's own risk.
    (d) An application for relief may be denied for any reason.
    (e) All payments under this part are subject to the availability of 
funds.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.16  Practice approval.

    (a) Requests shall be prioritized before approval based on factors 
deemed appropriate by FSA, which include, but are not limited to:
    (1) Type and degree of damage;
    (2) Type of practices needed to address the problem;
    (3) Availability of funds;
    (4) Availability of technical assistance;
    (5) Environmental concerns;
    (6) Safety factors; or
    (7) In the case of ECP, welfare of eligible livestock.
    (b) Requests for cost-share assistance may be approved if:
    (1) Funds are available; and
    (2) The requested practice is determined eligible.

[69 FR 10302, Mar. 4, 2004, and amended at 75 FR 70088, Nov. 17, 2010]



Sec. Sec.  701.17-701.20  [Reserved]



Sec.  701.21  Filing payment application.

    Cost-share assistance is conditioned upon the availability of funds 
and the performance of the practice in compliance with all applicable 
specifications and program regulations.
    (a) Completion of practice. After completion of the approved 
practice, the participant must certify completion and request payment by 
the payment request deadline. FSA will provide the participant with a 
form or another manner to be used to request payment.
    (b) Proof of completion. Participants shall submit to FSA, at the 
local county office, the information needed to establish the extent of 
the performance of approved practices and compliance with applicable 
program provisions.
    (c) Payment request deadline. The time limits for submission of 
information shall be determined by the Deputy Administrator. The payment 
request deadline for each ECP practice will be provided in the agreement 
after the application is approved. Time limits may be extended where 
failure to submit required information within the applicable time limits 
is due to reasons beyond the control of the participant.



Sec.  701.22  Eligibility to file for cost-share assistance.

    Any eligible participant, as defined in this part, who paid part of 
the cost of an approved practice may file an application for cost-share 
payment.



Sec.  701.23  Eligible costs.

    (a) Cost-share assistance may be authorized for all reasonable costs 
incurred in the completion of the practice, up to the maximums provided 
in Sec. Sec.  701.126, 701.127, and 701.226.
    (b) Eligible costs shall be limited as follows:
    (1) Costs for use of personal equipment shall be limited to those 
incurred beyond the normal operation of the eligible land.
    (2) Costs for personal labor shall be limited to personal labor not 
normally required in the operation of the eligible land.
    (3) Costs for the use of personal equipment and labor must be less 
than that charged for such equipment and labor by commercial contractors 
regularly employed in such areas.
    (4) Costs shall not exceed those needed to achieve the minimum 
performance necessary to resolve the problem being corrected by the 
practice. Any costs above those levels shall not be considered to be 
eligible costs for purposes of calculations made under this part.
    (c) Costs shall not exceed the practice specifications in Sec.  
701.112(d) or Sec.  701.212(d) for cost-share calculations.
    (d) The gross amount on which the cost-share eligibility may be 
computed will not include any costs that were reimbursed by a third 
party including, but not limited to, an insurance indemnity payment.
    (e) Total cost-share payments from all sources shall not exceed the 
total of eligible costs of the practice to the applicant.

[69 FR 10302, Mar. 4, 2004, and amended at 75 FR 70088, Nov. 17, 2010]

[[Page 11]]



Sec.  701.24  Dividing cost-share among more than one participant.

    (a) For qualifying cost-share assistance under this part, the cost 
shall be credited to the participant who personally performed the 
practice or who paid to have it performed by a third party. If a payment 
or credit was made by one participant to another potential participant, 
paragraph (c) of this section shall apply.
    (b) If more than one participant contributed to the performance of 
the practice, the cost-share assistance for the practice shall be 
divided among those eligible participants in the proportion they 
contributed to the performance of the practice. FSA may determine what 
proportion was contributed by each participant by considering the value 
of the labor, equipment, or material contributed by each participant and 
any other factors deemed relevant toward performance.
    (c) Allowance by a participant of a credit to another participant 
through adjustment in rent, cash or other consideration, may be 
considered as a cost of a practice to the paying party only if FSA 
determines that such credit is directly related to the practice. An 
applicant who was fully reimbursed shall be considered as not having 
contributed to the practice performance.



Sec.  701.25  Practices carried out with aid from ineligible persons or
ineligible legal entities.

    Any assistance provided by someone other than the eligible 
participant, including assistance from a State or Federal agency, shall 
be deducted from the participant's total costs incurred for the practice 
for the purpose of computing ECP or EFRP cost shares. If unusual 
conditions exist, the Deputy Administrator may waive deduction of such 
contributions upon a request from the State committee and demonstration 
of the need for such a waiver.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec. Sec.  701.26-701.30  [Reserved]



Sec.  701.31  Maintenance and proper use of practices.

    (a) Each participant receiving cost-share assistance is responsible 
for the required maintenance and proper use of the practice. Some 
practices have an established life span or minimum period of time during 
which they are expected to function as a conservation practice with 
proper maintenance. Cost-share assistance shall not be authorized for 
normal upkeep or maintenance of any practice.
    (b) If a practice is not properly maintained for the established 
life span, the participant may be required to refund all or part of 
cost-share assistance received. The Deputy Administrator will determine 
what constitutes failure to maintain a practice and the amount that must 
be refunded.



Sec.  701.32  Failure to comply with program provisions.

    Costs may be shared for performance actually rendered even though 
the minimum requirements otherwise established for a practice have not 
been satisfied if a reasonable effort was made to satisfy the minimum 
requirements and if the practice, as performed, will adequately address 
the need for the practice.



Sec.  701.33  Death, incompetency, or disappearance.

    In case of death, incompetency, or disappearance of any participant, 
any cost-share payment due shall be paid to the successor, as determined 
in accordance with part 707 of this chapter.



Sec.  701.34  Appeals.

    Part 11 of this title and parts 614 and 780 of this chapter apply to 
determinations made under this part.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.35  Compliance with regulatory measures.

    Participants who perform practices shall be responsible for 
obtaining the authorities, permits, rights, easements, or other 
approvals necessary to the performance and maintenance of the practices 
according to applicable laws and regulations. The ECP or EFRP 
participant shall be wholly responsible for any actions taken with 
respect to the project and shall, in addition, be responsible for 
returning and refunding any ECP or EFRP cost shares made,

[[Page 12]]

where the purpose of the project cannot be accomplished because of the 
applicants' lack of clearances or other problems.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.36  Schemes and devices and claims avoidances.

    (a) If FSA determines that a participant has taken any action 
designed to defeat, or has the effect of defeating, the purposes of this 
program, the participant shall be required to refund all or part of any 
of the program payments otherwise due or paid that participant or 
related person or legal entity for that particular disaster. These 
actions include, but are not limited to, failure to properly maintain or 
deliberately destroying a practice and providing false or misleading 
information related to practices, costs, or arrangements between 
entities or individuals that would have an effect on any eligibility 
determination, including, but not limited to, a payment limit 
eligibility.
    (b) All or any part of cost-share assistance that otherwise would be 
due any participant may be withheld, or required to be refunded, if the 
participant has adopted, or participated in, any scheme or device 
designed to evade the maximum cost-share limitation that applies to the 
program or to evade any other requirement or provision of the program or 
this part.
    (c) If FSA determines that a participant has employed any scheme or 
device to deprive any other person or legal entity of cost-share 
assistance, or engaged in any actions to receive payments under this 
part that also were designed to avoid claims of the United States or its 
instrumentalities or agents against that party, related parties, or 
third parties, the participant shall refund all or part of any of those 
program payments paid to that participant for the project.
    (d) For purposes of this section, a scheme or device can include, 
but is not limited to, instances of coercion, fraud, or 
misrepresentation regarding the claim for ECP or EFRP assistance and the 
facts and circumstances surrounding such claim.
    (e) A participant who has knowingly supplied false information or 
filed a false claim shall be ineligible for cost-share assistance 
related to the disaster for which the false information was filed, or 
for any period of time FSA deems appropriate. False information or a 
false claim includes, but is not limited to, a request for payment for a 
practice not carried out, a false billing, or a billing for practices 
that do not meet required specifications.

[69 FR 10302, Mar. 4, 2004, and amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.37  Loss of control of the property during the practice life
span.

    In the event of voluntary or involuntary loss of control of the land 
by the ECP or EFRP cost-share recipient during the practice life-span, 
if the person or legal entity acquiring control elects not to become a 
successor to the ECP or EFRP agreement and the practice is not 
maintained, each participant who received cost-share assistance for the 
practice may be jointly and severally liable for refunding any ECP or 
EFRP cost-share assistance related to that practice. The practice life 
span, for purposes of this section, includes any maintenance period that 
is essential to its success.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec. Sec.  701.38-701.40  [Reserved]



Sec.  701.41  Cost-share assistance not subject to claims.

    Any cost-share assistance or portion thereof due any participant 
under this part shall be allowed without regard to questions of title 
under State law, and without regard to any claim or lien against any 
crop or property, or proceeds thereof, except liens and other claims of 
the United States or its instrumentalities. The regulations governing 
offsets and withholdings at parts 792 and 1403 of this title shall be 
applicable to this program and the provisions most favorable to a 
collection of the debt shall control.



Sec.  701.42  Assignments.

    Participants may assign ECP cost-share assistance payments, in whole 
or in part, according to part 1404 of this title.

[[Page 13]]



Sec.  701.43  Information collection requirements.

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



Sec.  701.44  Agricultural Conservation Program (ACP) contracts.

    Contracts for ACP that are, or were, administered under this part or 
similar contracts executed in connection with the Interim Environmental 
Quality Incentives Program, shall, unless the Deputy Administrator 
determines otherwise, be administered under, and be subject to, the 
regulations for ACP contracts and the ACP program that were contained in 
the 7 CFR parts 700 to 899, edition revised as of January 1, 1998, and 
under the terms of the agreements that were entered into with 
participants.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.45  Forestry Incentives Program (FIP) contracts.

    The regulations governing the FIP as of July 31, 2002, and contained 
in the 7 CFR parts 700 to 899, edition revised as of January 1, 2002, 
shall continue to apply to FIP contracts in effect as of that date, 
except as provided in accord with a delegation of the administration of 
that program and such delegation and actions taken thereunder shall 
apply to any other FIP matters as may be at issue or in dispute.

[69 FR 10302, Mar. 4, 2004, as amended at 75 FR 70088, Nov. 17, 2010]



                Subpart B_Emergency Conservation Program



Sec. Sec.  701.100-701.102  [Reserved]



Sec.  701.103  Scope.

    (a) FSA will provide cost-share assistance to farmers and ranchers 
to rehabilitate farmland damaged by wind erosion, floods, hurricanes, or 
other natural disasters as determined by the Deputy Administrator, and 
to carry out emergency water conservation measures during periods of 
severe drought, subject to the availability of funds and only for areas, 
natural disasters, and time periods approved by the Deputy 
Administrator.
    (b) The objective of the ECP is to make cost-share assistance 
available to eligible participants on eligible land for certain 
practices, to rehabilitate farmland damaged by floods, hurricanes, wind 
erosion, or other natural disasters, and for the installation of water 
conservation measures during periods of severe drought.
    (c) Payments may also be made under this subpart for:
    (1) Emergency water conservation or water enhancement measures 
(including measures to assist confined livestock) during periods of 
severe drought; and
    (2) Floodplain easements for runoff and other emergency measures 
that the Deputy Administrator determines is necessary to safeguard life 
and property from floods, drought, and the products of erosion on any 
watershed whenever fire, flood, or other natural occurrence is causing 
or has caused, a sudden impairment of the watershed.
    (d) Payments under this part are subject to the availability of 
appropriated funds and any limitations that may otherwise be provided 
for by Congress.

[69 FR 10302, Mar. 4, 2004. Redesignated and amended at 75 FR 70088, 
Nov. 17, 2010]



Sec.  701.104  Producer eligibility.

    (a) To be eligible to participate in the ECP the Deputy 
Administrator must determine that a person or legal entity is an 
agricultural producer with an interest in the land affected by the 
natural disaster, and that person or legal entity must be liable for or 
have paid the expense that is the subject of the cost share. The 
applicant must be a landowner or user in the area where the qualifying 
event has occurred, and must be a party who will incur the expense that 
is the subject of the cost share.
    (b) Federal agencies and States, including all agencies and 
political subdivisions of a State, are ineligible to participate in the 
ECP.

[[Page 14]]

    (c) All producer eligibility is subject to the availability of funds 
and an application may be denied for any reason.

[69 FR 10302, Mar. 4, 2004. Redesignated and amended at 75 FR 70088, 
Nov. 17, 2010]



Sec.  701.105  Land eligibility.

    (a) For land to be eligible, the Deputy Administrator must determine 
that land that is the subject of the cost share:
    (1) Will have new conservation problems caused as a result of a 
natural disaster that, if not treated, would:
    (i) Impair or endanger the land;
    (ii) Materially affect the productive capacity of the land;
    (iii) Represent unusual damage that, except for wind erosion, is not 
of the type likely to recur frequently in the same area; and
    (iv) Be so costly to repair that Federal assistance is or will be 
required to return the land to productive agricultural use. Conservation 
problems existing prior to the disaster are not eligible for cost-share 
assistance.
    (2) Be physically located in a county in which the ECP has been 
implemented; and
    (3) Be one of the following:
    (i) Land expected to have annual agricultural production,
    (ii) A field windbreak or a farmstead shelterbelt on which the ECP 
practice to be implemented involves removing debris that interferes with 
normal farming operations on the farm and correcting damage caused by 
the disaster; or
    (iii) A farm access road on which debris interfering with the normal 
farming operation needs to be removed.
    (b) Land is ineligible for cost share if the Deputy Administrator 
determines that it is, as applicable:
    (1) Owned or controlled by the United States;
    (2) Owned or controlled by States, including State agencies or other 
political subdivisions of a State;
    (3) Protected by a levee or dike that was not effectively and 
properly functioning prior to the disaster, or is protected, or intended 
to be protected, by a levee or dike not built to U.S. Army Corps of 
Engineers, NRCS, or comparable standards;
    (4) Adjacent to water impoundment reservoirs that are subject to 
inundation when the reservoir is filled to capacity;
    (5) Land on which levees or dikes are located;
    (6) Subject to frequent damage or susceptible to severe damage 
according to paragraph (c) of this section;
    (7) Subject to flowage or flood easements and inundation when water 
is released in normal operations;
    (8) Between any levee or dike and a stream, river, or body of water, 
including land between two or more levees or dikes;
    (9) Located in an old or new channel of a stream, creek, river or 
other similar body of water, except that land located within or on the 
banks of an irrigation canal may be eligible if the Deputy Administrator 
determines that the canal is not a channel subject to flooding;
    (10) In greenhouses or other confined areas, including but not 
limited to, land in corrals, milking parlors, barn lots, or feeding 
areas;
    (11) Land on which poor farming practices, such as failure to farm 
on the contour, have materially contributed to damaging the land;
    (12) Unless otherwise provided for, not considered to be in annual 
agricultural production, such as land devoted to stream banks, channels, 
levees, dikes, native woodland areas, roads, and recreational uses; or
    (13) Devoted to trees including, but not limited to, timber 
production.
    (c) To determine the likely frequency of damage and of the 
susceptibility of the land to severe damage under paragraph (b)(6) of 
this section, FSA will consider all relevant factors, including, but not 
limited to, the location of the land, the history of damage to the land, 
and whether the land was or could have been protected by a functioning 
levee or dike built to U. S. Army Corps of Engineers, NRCS, or 
comparable standards. Further, in making such determinations, 
information may be obtained and used from the Federal Emergency 
Management Agency or any other Federal, State (including State agencies 
or political subdivisions), or other entity or individual providing 
information regarding, for

[[Page 15]]

example, flood susceptibility for the land, soil surveys, aerial 
photographs, or flood plain data or other relevant information.

[69 FR 10302, Mar. 4, 2004. Redesignated at 75 FR 70088, Nov. 17, 2010]



Sec. Sec.  701.106-701.109  [Reserved]



Sec.  701.110  Qualifying minimum cost of restoration.

    (a) To qualify for assistance under Sec.  701.103(a), the eligible 
damage must be so costly that Federal assistance is or will be required 
to return the land to productive agricultural use or to provide 
emergency water for livestock.
    (b) The Deputy Administrator shall establish the minimum qualifying 
cost of restoration. Each affected State may be allowed to establish a 
higher minimum qualifying cost of restoration.
    (c) A producer may request a waiver of the qualifying minimum cost 
of restoration. The waiver request shall document how failure to grant 
the waiver will result in environmental damage or hardship to the 
producer and how the waiver will accomplish the goals of the program.

[69 FR 10302, Mar. 4, 2004; 69 FR 22377, Apr. 26, 2004. Redesignated and 
amended at 75 FR 70088, Nov. 17, 2010]



Sec.  701.111  Prohibition on duplicate payments.

    (a) Duplicate payments. Participants are not eligible to receive 
funding under the ECP for land on which the participant has or will 
receive funding under:
    (1) The Wetland Reserve Program (WRP) provided for in 7 CFR part 
1467;
    (2) The Emergency Wetland Reserve Program (EWRP) provided for in 7 
CFR part 623;
    (3) The Emergency Watershed Protection Program (EWP), provided for 
in 7 CFR part 624, for the same or similar expenses.
    (4) Any other program that covers the same or similar expenses so as 
to create duplicate payments, or, in effect, a higher rate of cost share 
than is allowed under this part.
    (b) Refund. Participants who receive any duplicate funds, payments, 
or benefits shall refund any ECP payments received.

[69 FR 10302, Mar. 4, 2004, as amended at 71 FR 30265, May 26, 2006. 
Redesignated at 75 FR 70088, Nov. 17, 2010]



Sec.  701.112  Eligible ECP practices.

    (a) Cost-share assistance may be offered for ECP practices to 
replace or restore farmland, fences, or conservation structures to a 
condition similar to that existing before the natural disaster. No 
relief under this subpart shall be allowed to address conservation 
problems existing before the disaster.
    (b) The practice or practices made available when the ECP is 
implemented shall be only those practices authorized by FSA for which 
cost-share assistance is essential to permit accomplishment of the 
program goals.
    (c) Cost-share assistance may be provided for permanent vegetative 
cover, including establishment of the cover where needed, only in 
conjunction with eligible structures or installations where cover is 
needed to prevent erosion and/or siltation or to accomplish some other 
ECP purpose.
    (d) Practice specifications shall represent the minimum levels of 
performance needed to address the ECP need.

[69 FR 10302, Mar. 4, 2004. Redesignated and amended at 75 FR 70088, 
Nov. 17, 2010]



Sec. Sec.  701.113-701.116  [Reserved]



Sec.  701.117  Average adjusted gross income limitation.

    To be eligible for payments issued from the $16 million provided 
under the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and 
Iraq Accountability Appropriations Act, 2007 (Pub. L. 110-28, section 
9003), each applicant must meet the provisions of the Adjusted Gross 
Income Limitations at 7 CFR part 1400 subpart G.

[72 FR 45880, Aug. 16, 2007. Redesignated at 75 FR 70088, Nov. 17, 2010]



Sec. Sec.  701.118-701.125  [Reserved]



Sec.  701.126  Maximum cost-share percentage.

    (a) In addition to other restrictions that may be applied by FSA, an 
ECP participant shall not receive more than

[[Page 16]]

75 percent of the lesser of the participant's total actual cost or of 
the total allowable costs, as determined by this part, to perform the 
practice.
    (b) However, notwithstanding paragraph (a) of this section, a 
qualified limited resource producer that participates in the ECP may 
receive no more than 90 percent of the participant's actual cost to 
perform the practice or 90 percent of the total allowable costs for the 
practice as determined under this part.
    (c) In addition to other limitations that apply, in no case shall 
the ECP payment exceed 50 percent of what the Deputy Administrator has 
determined is the agricultural value of the affected land.

[69 FR 10302, Mar. 4, 2004. Redesignated and amended at 75 FR 70088, 
Nov. 17, 2010]



Sec.  701.127  Maximum ECP payments per person or legal entity.

    A person or legal entity, as defined in part 1400 of this title, is 
limited to a maximum ECP cost-share of $200,000 per person or legal 
entity, per natural disaster.

[75 FR 7088, Nov. 17, 2010]



Sec. Sec.  701.128-701.149  [Reserved]



Sec.  701.150  2005 hurricanes.

    In addition benefits elsewhere allowed by this part, claims related 
to calendar year 2005 hurricane losses may be allowed to the extent 
provided for in Sec. Sec.  701.150 through 701.157. Such claims under 
those sections will be limited to losses in counties that were declared 
disaster counties by the President or the Secretary because of 2005 
hurricanes and to losses to oyster reefs. Claims under Sec. Sec.  
701.151 through 701.157 shall be subject to all normal ECP limitations 
and provisions except as explicitly provided in those sections.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
70089, Nov. 17, 2010]



Sec.  701.151  Definitions.

    The following definitions apply to Sec. Sec.  701.152 through 
701.157:
    Above-ground irrigation facilities means irrigation pipes, 
sprinklers, pumps, emitters, and any other integral part of the above 
ground irrigation system.
    Barn means a structure used for the housing of animals or farm 
equipment.
    Commercial forest land means forest land with trees intended to be 
harvested for commercial purposes that has a productivity potential 
greater than or equal to 20 cubic feet per year of merchantable timber.
    Date of loss means the date the hurricane damage occurred in 
calendar year 2005.
    Eligible county means any county that was declared a disaster county 
by the President or the Secretary because of a calendar year 2005 
hurricane, that otherwise meets the eligibility requirements of this 
part.
    Forest management plan means a plan of action and direction on 
forest lands to achieve a set of results usually specified as goals or 
objectives consistent with program policies prepared or approved by a 
natural resource professional, such as a State forestry agency 
representative.
    Poultry house means a building used to house live poultry for the 
purpose of commercial food production.
    Private non-industrial forest land means rural commercial forest 
lands with existing tree cover, or which are suitable for growing trees, 
that are owned by a private non-industrial forest landowner as defined 
in this section.
    Private non-industrial forest landowner means, for purposes of the 
ECP for forestry, an individual, group, association, corporation, Indian 
tribe, or other legal private entity owning non-industrial private 
forest land or who 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. Owners or lessees 
principally engaged in the primary processing of raw wood products are 
excluded from this definition. Owners of land leased to lessees who 
would be excluded under the previous sentence are also excluded.
    Shade house means a metal or wood structure covered by a material 
used for shade purposes.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
70089, Nov. 17, 2010]

[[Page 17]]



Sec.  701.152  Availability of funding.

    Payments under Sec. Sec.  1701.53 through 701.157 are subject to the 
availability of funds under Public Law 109-148.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
Nov. 17, 2010]



Sec.  701.153  Debris removal and water for livestock.

    Subject to the other eligibility provisions of this part, an ECP 
participant addressing damage in an eligible county from hurricanes 
during calendar year 2005 may be allowed up to 90 percent of the 
participant's actual cost or of the total allowable cost for cleaning up 
structures such as barns, shade houses and above-ground irrigation 
facilities, for removing poultry house debris, including carcasses, and 
for providing water for livestock.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
70089, Nov. 17, 2010]



Sec.  701.154  [Reserved]



Sec.  701.155  Nursery.

    (a) Subject to the other eligibility provisions of this part except 
as provided explicitly in this section, assistance may be made available 
in an eligible county under this section for the cost of removing 
nursery debris such as nursery structures, shade houses, and above 
ground irrigation facilities, where such debris was created in calendar 
year 2005 by a 2005 hurricane.
    (b) Notwithstanding Sec.  701.126, an otherwise eligible ECP 
participant may be allowed up to 90 percent of the participant's actual 
cost or of the total allowable cost for losses described in paragraph 
(a) of this section.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
70089, Nov. 17, 2010]



Sec.  701.156  Poultry.

    (a) Subject to the other eligibility provisions of this part except 
as provided explicitly in this section, assistance may be allowed under 
this section for uninsured losses in calendar year 2005 to a poultry 
house in an eligible county due to a 2005 hurricane.
    (b) Claimants under this section may be allowed an amount up to the 
lesser of:
    (1) The lesser of 50 percent of the participant's actual or the 
total allowable cost of the reconstruction or repair of a poultry house, 
or
    (2) $50,000 per poultry house.
    (c) The total amount of assistance provided under this section and 
any indemnities for losses to a poultry house paid to a poultry grower, 
may not exceed 90 percent of the total costs associated with the 
reconstruction or repair of a poultry house.
    (d) Poultry growers must provide information on insurance payments 
on their poultry houses. Copies of contracts between growers and poultry 
integrators may be required.
    (e) Assistance under this section is limited to amounts necessary 
for reconstruction and/or repair of a poultry house to the same size as 
before the hurricane.
    (f) Assistance is limited to poultry houses used to house poultry 
for commercial enterprises. A commercial poultry enterprise is one with 
a dedicated structure for poultry and a number of poultry that exceeds 
actual non-commercial uses of poultry and their products at all times, 
and from which poultry or related products are actually, and routinely, 
sold in commercial quantities for food, fiber, or eggs. Unless otherwise 
approved by FSA, a commercial quantity is a quantity per week that would 
normally exceed $100 in sales.
    (g) Poultry houses with respect to which claims are made under this 
section must be reconstructed or repaired to meet current building 
standards.

[71 FR 30265, May 26, 2006. Redesignated at 75 FR 70088, Nov. 17, 2010]



Sec.  701.157  Private non-industrial forest land.

    (a) Subject to the other eligibility provisions of this part except 
as provided explicitly in this section, assistance made available under 
this section with respect to private, non-industrial forest land in an 
eligible county for costs related to reforestations, rehabilitation, and 
related measures undertaken because of losses in calendar year 2005 
caused by a 2005 hurricane. To be eligible, a non-industrial private 
forest landowner must have suffered a

[[Page 18]]

loss of, or damage to, at least 35 percent of forest acres on commercial 
forest land of the forest landowner in a designated disaster county due 
to a 2005 hurricane or related condition. The 35 percent loss shall be 
determined based on the value of the land before and after the hurricane 
event.
    (b) During the 5-year period beginning on the date of the loss, the 
eligible private non-industrial forest landowner must:
    (1) Reforest the eligible damaged forest acres in accordance with a 
forest management plan approved by FSA that is appropriate for the 
forest type where the forest management plan is developed by a person or 
legal entity with appropriate forestry credentials, as determined by the 
Deputy Administrator;
    (2) Use the best management practices included in the forest 
management plan; and
    (3) Exercise good stewardship on the forest land of the landowner 
while maintaining the land in a forested state.
    (c) Notwithstanding Sec.  701.126, an ECP participant shall not 
receive under this section more than 75 percent of the participant's 
actual cost or of the total allowable cost of reforestation, 
rehabilitation, and related measures.
    (d) Payments under this section shall not exceed a maximum of $150 
per acre for any acre.
    (e) Requests will be prioritized based upon planting tree species 
best suited to the site as stated in the forest management plan.

[71 FR 30265, May 26, 2006. Redesignated and amended at 75 FR 70088, 
70089, Nov. 17, 2010]



             Subpart C_Emergency Forest Restoration Program

    Source: 75 FR 70889, Nov. 17, 2010, unless otherwise noted.



Sec. Sec.  701.200-701.202  [Reserved]



Sec.  701.203  Scope.

    (a) Subject to the availability of funds and only for areas, natural 
disasters, and time periods for the natural disaster and rehabilitation 
approved by the Deputy Administrator, FSA will provide financial 
assistance to owners of nonindustrial private forest land who carry out 
emergency measures to restore land damaged by a natural disaster on or 
after January 1, 2010, as determined by FSA.
    (b) The objective of EFRP is to make financial assistance available 
to eligible participants on eligible land for certain practices to 
restore nonindustrial private forest land that has been damaged by a 
natural disaster.



Sec.  701.204  Participant eligibility.

    (a) To be eligible to participate in EFRP, a person or legal entity 
must be an owner of nonindustrial private forest land affected by a 
natural disaster, and must be liable for or have the expense that is the 
subject of the financial assistance. The owner must be a person or legal 
entity (including an Indian tribe) with full decision-making authority 
over the land, as determined by FSA, or with such waivers as may be 
needed from lenders or others as may be required, to undertake program 
commitments.
    (b) Federal agencies and States, including all agencies and 
political subdivisions of a State, are ineligible for EFRP.
    (c) An application may be denied for any reason.



Sec.  701.205  Land eligibility.

    (a) For land to be eligible, it must be nonindustrial private forest 
land and must, as determined by FSA:
    (1) Have existing tree cover or have had tree cover immediately 
before the natural disaster and be suitable for growing trees;
    (2) Have damage to natural resources caused by a natural disaster, 
which occurred on or after January 1, 2010, that, if not treated, would 
impair or endanger the natural resources on the land and would 
materially affect future use of the land; and
    (3) Be physically located in a county in which EFRP has been 
implemented.
    (b) Land is ineligible for EFRP if FSA determines that the land is 
any of the following:
    (1) Owned or controlled by the United States; or
    (2) Owned or controlled by States, including State agencies or 
political subdivisions of a State.

[[Page 19]]



Sec. Sec.  701.206-701.209  [Reserved]



Sec.  701.210  Qualifying minimum cost of restoration.

    (a) FSA will establish the minimum qualifying cost of restoration, 
which may vary by State or region.
    (b) An applicant may request a waiver of the qualifying minimum cost 
of restoration. The waiver request must document how failure to grant 
the waiver will result in environmental damage or hardship to the person 
or legal entity, and how the waiver will accomplish the goals of the 
program.



Sec.  701.211  Prohibition on duplicate payments.

    (a) Participants are not eligible to receive funding under EFRP for 
land on which FSA determines that the participant has or will receive 
funding for the same or similar expenses under:
    (1) The Emergency Conservation Program provided for in subpart B of 
this part;
    (2) The Wetland Reserve Program (WRP) provided for in part 1467 of 
this title;
    (3) The Emergency Wetland Reserve Program (EWRP) provided for in 
part 623 of this chapter;
    (4) The Emergency Watershed Protection Program (EWP), provided for 
in part 624 of this chapter; or
    (5) Any other program that covers the same or similar expenses so as 
to create duplicate payments, or, have the effect of creating in total, 
otherwise, a higher rate of financial assistance than is allowed on its 
own under this part.
    (b) Participants who receive any duplicate funds, payments, or 
benefits must refund any EFRP payments received, except the Deputy 
Administrator may reduce the refund amount to the amount determined 
appropriate by the Deputy Administrator to ensure that the total amount 
of assistance received by the owner of the land under all programs does 
not exceed an amount otherwise allowed in this part.



Sec.  701.212  Eligible EFRP practices.

    (a) Financial assistance may be offered to eligible persons or legal 
entities for EFRP practices to restore forest health and forest-related 
resources on eligible land.
    (b) Practice specifications must represent the minimum level of 
performance needed to restore the land to the applicable FSA, NRCS, 
Forest Service, or State forestry standard.



Sec. Sec.  701.213-701.225  [Reserved]



Sec.  701.226  Maximum financial assistance.

    (a) In addition to other restrictions that may be applied by FSA, an 
EFRP participant will not receive more than 75 percent of the lesser of 
the participant's total actual cost or of the total allowable costs, as 
determined by this subpart, to perform the practice.
    (b) A person, as defined in part 1400 of this title, is limited to a 
maximum cost-share of $500,000 per person or legal entity, per disaster.
    (c) The Deputy Administrator may waive the provisions of this 
section on a case by case basis to address unusually large losses. Such 
relief is solely at the discretion of the Deputy Administrator, and the 
failure to provide such relief is not subject to administrative review 
or appeal under parts 11 or 780 of this title.



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



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

    Authority: 7 U.S.C. 1385 and 8786.

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



Sec.  707.1  Applicability.

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

[[Page 20]]

applicable by the individual program regulations.



Sec.  707.2  Definitions.

    ``Person'' when relating to one who dies, disappears, or becomes 
incompetent, prior to receiving payment, means a person who has earned a 
payment in whole or in part pursuant to any of the programs to which 
this part is applicable. ``Children'' shall include legally adopted 
children who shall be entitled to share in any payment in the same 
manner and to the same extent as legitimate children of natural parents. 
``Brother'' or ``sister'', when relating to one who, pursuant to the 
regulations in this part, is eligible to apply for the payment which is 
due a person who dies, disappears, or becomes incompetent prior to the 
receipt of such payment, shall include brothers and sisters of the half 
blood who shall be considered the same as brothers and sisters of the 
whole blood. ``Payment'' means a payment by draft, check or certificate 
pursuant to any of the Programs to which this part is applicable. 
Payments shall not be considered received for the purposes of this part 
until such draft, check or certificate has been negotiated or used.



Sec.  707.3  Death.

    (a) Where any person who would otherwise be eligible to receive a 
payment dies before the payment is received, payment may be released in 
accordance with this section so long as, and only if, a timely program 
application has been filed by the deceased before the death or filed in 
a timely way before or after the death by a person legally authorized to 
act for the deceased. Timeliness will be determined under the relevant 
program regulations. All program conditions for payment under the 
relevant program regulations must have been met for the deceased to be 
considered otherwise eligible for the payment. However, the payment will 
not be made under this section unless, in addition, a separate release 
application is filed in accordance with Sec.  707.7. If these conditions 
are met, payment may be released without regard to the claims of 
creditors other than the United States, in accordance with the following 
order of precedence:
    (1) To the administrator or executor of the deceased person's 
estate.
    (2) To the surviving spouse, if there is no administrator or 
executor and none is expected to be appointed, or if an administrator or 
executor was appointed but the administration of the estate is closed 
(i) prior to application by the administrator or executor for such 
payment or (ii) prior to the time when a check, draft, or certificate 
issued for such payment to the administrator or executor is negotiated 
or used.
    (3) If there is no surviving spouse, to the sons and daughters in 
equal shares. Children of a deceased son or daughter of a deceased 
person shall be entitled to their parent's share of the payment, share 
and share alike. If there are no surviving direct descendants of a 
deceased son or daughter of such deceased person, the share of the 
payment which otherwise would have been made to such son or daughter 
shall be divided equally among the surviving sons and daughters of such 
deceased person and the estates of any deceased sons or daughters where 
there are surviving direct descendants.
    (4) If there is no surviving spouse and no direct descendant, 
payment shall be made to the father and mother of the deceased person in 
equal shares, or the whole thereof to the surviving father or mother.
    (5) If there is no surviving spouse, no direct descendant, and no 
surviving parent, payment shall be made to the brothers and sisters of 
the deceased person in equal shares. Children of a deceased brother or 
sister shall be entitled to their parent's share of the payment, share 
and share alike. If there are no surviving direct descendants of the 
deceased brother or sister of such deceased person, the share of the 
payment which otherwise would have been made to such brother or sister 
shall be divided equally among the surviving brothers and sisters of 
such deceased person and the estates of any deceased brothers or sisters 
where there are surviving direct descendants.
    (6) If there is no surviving spouse, direct descendant, parent, or 
brothers or sisters or their descendants, the payment shall be made to 
the heirs-at-law in accordance with the law of the State of domicile of 
the deceased person.

[[Page 21]]

    (b) If any person who is entitled to payment under the above order 
of precedence is a minor, payment of his share shall be made to his 
legal guardian, but if no legal guardian has been appointed payment 
shall be made to his natural guardian or custodian for his benefit, 
unless the minor's share of the payment exceeds $1,000, in which event 
payment shall be made only to his legal guardian.
    (c) Any payment which the deceased person could have received may be 
made jointly to the persons found to be entitled to such payment or 
shares thereof under this section or, pursuant to instructions issued by 
the Farm Service Agency, a separate payment may be issued to each person 
entitled to share in such payment.

[30 FR 6246, May 5, 1965, as amended at 75 FR 81835, Dec. 29, 2010]



Sec.  707.4  Disappearance.

    (a) Where any person who would otherwise be eligible to receive a 
payment disappears before the payment is received, payment may be 
released in accordance with this section so long as, and only if, a 
timely program application has been filed by that person before the 
disappearance or filed timely before or after the disappearance by 
someone legally authorized to act for the person involved. Timeliness 
will be determined under the relevant program regulations. All program 
conditions for payment under the relevant program regulations must have 
been met for the person involved to be considered otherwise eligible for 
the payment. However, the payment will not be made unless, in addition, 
a separate release application is filed in accordance with Sec.  707.7. 
If these conditions are met, payment may be released without regard to 
the claims of creditors other than the United States, in accordance with 
the following order of precedence:
    (1) The conservator or liquidator of his estate, if one be duly 
appointed.
    (2) The spouse.
    (3) An adult son or daughter or grandchild for the benefit of his 
estate.
    (4) The mother or father for the benefit of his estate.
    (5) An adult brother or sister for the benefit of his estate.
    (6) Such person as may be authorized under State law to receive 
payment for the benefit of his estate.
    (b) A person shall be deemed to have disappeared if (1) he has been 
missing for a period of more than 3 months, (2) a diligent search has 
failed to reveal his whereabouts, and (3) such person has not 
communicated during such period with other persons who would be expected 
to have heard from him. Evidence of such disappearance must be presented 
to the county committee in the form of a statement executed by the 
person making the application for payment, setting forth the above 
facts, and must be substantiated by a statement from a disinterested 
person who was well acquainted with the person who has disappeared.

[30 FR 6246, May 5, 1965, as amended at 75 FR 81835, Dec. 29, 2010]



Sec.  707.5  Incompetency.

    (a) Where any person who would otherwise be eligible to receive a 
payment is adjudged incompetent by a court of competent jurisdiction 
before the payment is received, payment may be released in accordance 
with this section so long as, and only if, a timely and binding program 
application has been filed by the person involved while capable or by 
someone legally authorized to file an application for the person 
involved. Timeliness is determined under the relevant program 
regulations. In all cases, the payment application must have been timely 
under the relevant program regulations and all program conditions for 
payment must have been met by or on behalf of the person involved. 
However, the payment will not be made unless, in addition, a separate 
release application is filed in accordance with Sec.  707.7. If these 
conditions are met, payment may be released without regard to the claims 
of creditors other than the United States, to the guardian or committee 
legally appointed for the person involved. In case no guardian or 
committee had been appointed, payment, if for not more than $1,000, may 
be released without regard to claims of creditors other than the United 
States, to one of the following in the following order for the benefit 
of the person who was the subject of the adjudication:

[[Page 22]]

    (1) The spouse.
    (2) An adult son, daughter, or grandchild.
    (3) The mother or father.
    (4) An adult brother or sister.
    (5) Such person as may be authorized under State law to receive 
payment for the person (see standard procedure prescribed for the 
respective region).
    (b) In case payment is more than $1,000, payment may be released 
only to such person as may be authorized under State law to receive 
payment for the incompetent, so long as all conditions for other 
payments specified in paragraph (a) of this section and elsewhere in the 
applicable regulations have been met. Those requirements include the 
filing of a proper and timely and legally authorized program application 
by or for the person adjudged incompetent. The release of funds under 
this paragraph will be made without regard to claims of creditors other 
than the United States unless the agency determines otherwise.

[75 FR 81836, Dec. 30, 2010]



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

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

[30 FR 6246, May 5, 1965, as amended at 75 FR 81836, Dec. 29, 2010]



Sec.  707.7  Release application.

    No payment may be made under this part unless a proper program 
application was filed in accordance with the rules for the program that 
generated the payment. That application must have been timely and filed 
by someone legally authorized to act for the deceased, disappeared, or 
declared-incompetent person. The filer can be the party that earned the 
payment themselves--such as the case of a person who filed a program 
application before they died--or someone legally authorized to act for 
the party that earned the payment. All program conditions for payment 
must have been met before the death, disappearance, or incompetency 
except for the timely filing of the application for payment by the 
person legally authorized to act for the party earning the payment. But, 
further, for the payment to be released under the rules of this part, a 
second application must be filed. That second application is a release 
application filed under this section. In particular, as to the latter, 
where all other conditions have been met, persons desiring to claim 
payment for themselves or an estate in accordance with this part 707 
must do so by filing a release application on Form FSA-325, 
``Application for Payment of Amounts Due Persons Who Have Died, 
Disappeared or Have Been Declared Incompetent.If the person who died, 
disappeared, or was declared incompetent did not apply for payment by 
filing the applicable program application for payment form, such program 
application for payment must also be filed in accordance with applicable 
regulations. If the payment is made under the Naval Stores Conservation 
Program, Part II of the Form FSA-325 shall be executed by the local 
District Supervisor of the U.S. Forest Service. In connection with 
applications for payment under all other programs itemized in Sec.  
707.1, Form FSA-325, and program applications for payments where 
required, shall be filed with the FSA county office where the person who 
earned the payment would have been required to file his application.

[30 FR 6246, May 5, 1965, as amended at 75 FR 81836, Dec. 29, 2010]



PART 708_RECORD RETENTION REQUIREMENTS_ALL PROGRAMS--Table of Contents



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

[[Page 23]]



Sec.  708.1  Record retention period.

    For the purposes of the programs in this chapter, no receipt, 
invoice, or other record required to be retained by any agricultural 
producer as evidence tending to show performance of a practice under any 
such program needs to be retained by such producer more than two years 
following the close of the program year of the program.

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

[[Page 24]]



 SUBCHAPTER B_FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION 
                               ADJUSTMENT





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



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

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

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



Sec.  714.35  Basis, purpose, and applicability.

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



Sec.  714.36  Definitions.

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



Sec.  714.37  Instructions and forms.

    The Deputy Administrator shall cause to be prepared and issued such

[[Page 25]]

instructions and forms as are necessary for carrying out the regulations 
in the part.



Sec.  714.38  Who may claim refund.

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



Sec.  714.39  Manner of filing.

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



Sec.  714.40  Time of filing.

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



Sec.  714.41  Statement of claim.

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



Sec.  714.42  Designation of trustee.

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



Sec.  714.43  Recommendation by county committee.

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



Sec.  714.44  Recommendation by State committee.

    A representative of the State committee shall review each claim 
referred by the county committee. If a claim is

[[Page 26]]

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



Sec.  714.45  Approval by Deputy Administrator.

    The Deputy Administrator shall review each claim forwarded to him by 
the State committee to determine whether, (a) the penalty was 
erroneously, illegally, or wrongfully collected, (b) the claimant bore 
the burden of the payment of the penalty, (c) the claim was timely 
filed, and (d) under the applicable law and regulations the claimant is 
entitled to a refund. If a claim is filed initially with the Deputy 
Administrator, he shall obtain the recommendations of the county 
committee and the State committee if he deems such action necessary in 
arriving at a proper determination of the claim. The claimant shall be 
advised in writing of the action taken by the Deputy Administrator. If 
disapproved, the claimant shall be notified with an explanation of the 
reasons for such disapproval.



Sec.  714.46  Certification for payment.

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



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



                      Subpart A_General Provisions

Sec.
718.1 Applicability.
718.2 Definitions.
718.3 State committee responsibilities.
718.4 Authority for farm entry and providing information.
718.5 Rule of fractions.
718.6 Controlled substance.
718.7 Furnishing maps.
718.8 Administrative county.
718.9 Signature requirements.
718.10 Time limitations.
718.11 Disqualification due to federal crop insurance fraud.

            Subpart B_Determination of Acreage and Compliance

718.101 Measurements.
718.102 Acreage reports.
718.103 Prevented planted and failed acreage.
718.104 Late-filed and revised acreage reports.
718.105 Tolerances, variances, and adjustments.
718.106 Non-compliance and false acreage reports.
718.107 Acreages.
718.108 Measuring acreage including skip row acreage
718.109 Deductions.
718.110 Adjustments.
718.111 Notice of measured acreage.
718.112 Redetermination.

  Subpart C_Reconstitution of Farms, Allotments, Quotas, and Base Acres

718.201 Farm constitution.
718.202 Determining the land constituting a farm.
718.203 County committee action to reconstitute a farm.
718.204 Reconstitution of base acres.
718.205 Substantive change in farming operation, and changes in related 
          legal entities.
718.206 Determining farms, tracts, and base acres when reconstitution is 
          made by division.
718.207 Determining base acres when reconstitution is made by 
          combination.

              Subpart D_Equitable Relief From Ineligibility

718.301 Applicability.
718.302 Definitions and abbreviations.
718.303 Reliance on incorrect actions or information.
718.304 Failure to fully comply.
718.305 Forms of relief.
718.306 Finality.
718.307 Special relief approval authority for State Executive Directors.

    Authority: 7 U.S.C. 1501-1524, 1921-2008r, 7201-7334, 7901-8002 and 
9011-9097, 15 U.S.C. 714b and c, and 16 U.S.C. 3801-3847.

[[Page 27]]


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



                      Subpart A_General Provisions

    Source: 68 FR 16172, Apr. 3, 2003, unless otherwise noted.



Sec.  718.1  Applicability.

    (a) This part is applicable to all programs specified in chapters 
VII and XIV of this title that are administered by the Farm Service 
Agency (FSA) and to any other programs that adopt this part by 
reference. This part governs how FSA administers marketing quotas, 
allotments, base acres, and acreage reports for those programs to which 
this part applies. The regulations to which this part applies are those 
that establish procedures for measuring allotments and program eligible 
acreage, for determining program compliance, farm reconstitutions, 
application of finality, and equitable relief from compliance or 
ineligibility.
    (b) For all programs, except for those administered under parts 761 
through 774 of this chapter:
    (1) The provisions of this part will be administered under the 
general supervision of the Administrator, FSA, and carried out in the 
field by State and county FSA committees (State and county committees);
    (2) State and county committees, and representatives and employees 
thereof, do not have authority to modify or waive any regulations in 
this part;
    (3) No provisions or delegation herein to a State or county 
committee will preclude the Administrator, FSA, or a designee, from 
determining any question arising under the program or from reversing or 
modifying any determination made by a State or county committee;
    (4) The Deputy Administrator, FSA, may authorize State and county 
committees to waive or modify deadlines and other requirements in cases 
where lateness or failure to meet such other requirements does not 
adversely affect the operation of the program.
    (c) The programs under parts 761 through 774 will be administered 
according to the part, or parts, applicable to the specific program.

[72 FR 63284, Nov. 8, 2007, as amended at 80 FR 41994, July 16, 2015]



Sec.  718.2  Definitions.

    Except as provided in individual parts of chapters VII and XIV of 
this title, the following terms shall be as defined herein:
    Administrative variance (AV) means the amount by which the 
determined acreage of tobacco may exceed the effective allotment and be 
considered in compliance with program regulations.
    Allotment means an acreage for a commodity allocated to a farm in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Allotment crop means any tobacco crop for which acreage allotments 
are established pursuant to part 723 of this chapter.
    Barley means barley that follows the standard planting and 
harvesting practice of barley for the area in which the barley is grown.
    Base acres means, with respect to a covered commodity on a farm, the 
number of acres in effect on September 30, 2013, as defined in the 
regulations in part 1412, subpart B, of this title that were in effect 
on that date, subject to any reallocation, adjustment, or reduction. The 
term ``base acres'' includes any generic base acres as specified in part 
1412 planted to a covered commodity as specified in part 1412.
    Beginning farmer or rancher means a person or legal entity (for 
legal entities to be considered a beginning farmer or rancher, all 
members must be related by blood or marriage and all members must be 
beginning farmers or ranchers) for which both of the following are true 
for the farmer or rancher:
    (1) Has not operated a farm or ranch for more than 10 years; and
    (2) Materially and substantially participates in the operation.
    CCC means the Commodity Credit Corporation.
    Combination means consolidation of two or more farms or parts of 
farms, having the same operator, into one farm.
    Common land unit means the smallest unit of land that has an 
identifiable

[[Page 28]]

border and all of the following in common:
    (1) Owner;
    (2) Management;
    (3) Cover; and
    (4) Where applicable, producer association.
    Common ownership unit means a distinguishable parcel of land 
consisting of one or more tracts of land with the same owners, as 
determined by FSA.
    Constitution means the make-up of the farm before any change is made 
because of change in ownership or operation.
    Contiguous means sharing any part of a boundary but not overlapping.
    Contiguous county means a county contiguous to the reference county 
or counties.
    Contiguous county office means the FSA county office that is in a 
contiguous county.
    Controlled environment means, with respect to those crops for which 
a controlled environment is required or expected to be provided, 
including but not limited to ornamental nursery, aquaculture (including 
ornamental fish), and floriculture, as applicable under the particular 
program, 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.
    Controlled substances means the term set forth in 21 CFR part 1308.
    Corn means field corn or sterile high-sugar corn that follows the 
standard planting and harvesting practices for corn for the area in 
which the corn is grown. Popcorn, corn nuts, blue corn, sweet corn, and 
corn varieties grown for decoration uses are not corn.
    County means the county or parish of a state. For Alaska, Puerto 
Rico and the Virgin Islands, a county shall be an area designated by the 
State committee with the concurrence of the Deputy Administrator.
    County committee means the FSA county committee.
    Crop reporting date means the latest date upon which the 
Administrator, FSA will allow the farm operator, owner, or their agent 
to submit a crop acreage report in order for the report to be considered 
timely.
    Cropland. (a) Means land which the county committee determines meets 
any of the following conditions:
    (1) Is currently being tilled for the production of a crop for 
harvest. Land which is seeded by drilling, broadcast or other no-till 
planting practices shall be considered tilled for cropland definition 
purposes;
    (2) Is not currently tilled, but it can be established that such 
land has been tilled in a prior year and is suitable for crop 
production;
    (3) Is currently devoted to a one-row or two-row shelter belt 
planting, orchard, or vineyard;
    (4) Is in terraces that, were cropped in the past, even though they 
are no longer capable of being cropped;
    (5) Is in sod waterways or filter strips planted to a perennial 
cover;
    (6) Is preserved as cropland in accordance with part 1410 of this 
title; or
    (7) Is land that has newly been broken out for purposes of being 
planted to a crop that the producer intends to, and is capable of, 
carrying through to harvest, using tillage and cultural practices that 
are consistent with normal practices in the area; provided further that, 
in the event that such practices are not utilized other than for reasons 
beyond the producer's control, the cropland determination shall be void 
retroactive to the time at which the land was broken out.
    (b) Land classified as cropland shall be removed from such 
classification upon a determination by the county committee that the 
land is:
    (1) No longer used for agricultural production;
    (2) No longer suitable for production of crops;
    (3) Subject to a restrictive easement or contract that prohibits its 
use for the production of crops unless otherwise authorized by the 
regulation of this chapter;
    (4) No longer preserved as cropland in accordance with the 
provisions of part 1410 of this title and does not meet the conditions 
in paragraphs (a)(1) through (a)(6) of this definition; or
    (5) Converted to ponds, tanks or trees other than those trees 
planted in compliance with a Conservation Reserve

[[Page 29]]

Program contract executed pursuant to part 1410 of this title, or trees 
that are used in one-or two-row shelterbelt plantings, or are part of an 
orchard or vineyard.
    Current year means the year for which allotments, quotas, acreages, 
and bases, or other program determinations are established for that 
program. For controlled substance violations, the current year is the 
year of the actual conviction.
    Deputy Administrator means Deputy Administrator for Farm Programs, 
Farm Service Agency, U.S. Department of Agriculture or their designee.
    Determination means a decision issued by a State, county or area FSA 
committee or its employees that affects a participant's status in a 
program administered by FSA.
    Determined acreage means that acreage established by a 
representative of the Farm Service Agency by use of official acreage, 
digitizing or planimetering areas on the photograph or other 
photographic image, or computations from scaled dimensions or ground 
measurements.
    Direct and counter-cyclical program (DCP) cropland means land that 
currently meets the definition of cropland, land that was devoted to 
cropland at the time it was enrolled in a production flexibility 
contract in accordance with part 1413 of this title and continues to be 
used for agricultural purposes, or land that met the definition of 
cropland on or after April, 4, 1996, and continues to be used for 
agricultural purposes and not for nonagricultural commercial or 
industrial use.
    Division means the division of a farm into two or more farms or 
parts of farms.
    Double cropping means, as determined by the Deputy Administrator on 
a regional basis, consecutive planting of two specific crops that have 
the capability to be planted and carried to maturity for the intended 
uses, as reported by the producer, on the same acreage within a 12-month 
period. To be considered double cropping, the planting of two specific 
crops must be in an area where such double cropping is considered 
normal, or could be considered normal, for all growers under normal 
growing conditions and growers are typically able to repeat the same 
cycle successfully in a subsequent 12-month period.
    Entity means a corporation, joint stock company, association, 
limited partnership, limited liability partnership, limited liability 
company, irrevocable trust, estate, charitable organization, or other 
similar organization, including any such organization participating in 
the farming operation as a partner in a general partnership, a 
participant in a joint venture, or a participant in a similar 
organization.
    Extra Long Staple (ELS) Cotton means cotton that follows the 
standard planting and harvesting practices of the area in which the 
cotton is grown, and meets all of the following conditions:
    (1) American-Pima, Sea Island, Sealand, all other varieties of the 
Barbandense species of cotton and any hybrid thereof, and any other 
variety of cotton in which 1 or more of these varieties is predominant; 
and,
    (2) The acreage is grown in a county designated as an ELS county by 
the Secretary; and,
    (3) The production from the acreage is ginned on a roller-type gin.
    Family member means an individual to whom a person is related as 
spouse, lineal ancestor, lineal descendant, or sibling, including:
    (1) Great grandparent;
    (2) Grandparent;
    (3) Parent;
    (4) Child, including a legally adopted child;
    (5) Grandchild
    (6) Great grandchildren;
    (7) Sibling of the family member in the farming operation; and
    (8) Spouse of a person listed in paragraphs (1) through (7) of this 
definition.
    Farm means a tract, or tracts, of land that are considered to be a 
separate operation under the terms of this part provided further that 
where multiple tracts are to be treated as one farm, the tracts must 
have the same operator and must also have the same owner except that 
tracts of land having different owners may be combined if all owners 
agree to the treatment of the multiple tracts as one farm for these 
purposes.

[[Page 30]]

    Farm inspection means an inspection by an authorized FSA 
representative using aerial or ground compliance to determine the extent 
of producer adherence to program requirements.
    Farm number means a number assigned to a farm by the county 
committee for the purpose of identification.
    Farmland means the sum of the DCP cropland, forest, acreage planted 
to an eligible crop acreage as specified in 1437.3 of this title and 
other land on the farm.
    Field means a part of a farm which is separated from the balance of 
the farm by permanent boundaries such as fences, permanent waterways, 
woodlands, and croplines in cases where farming practices make it 
probable that such cropline is not subject to change, or other similar 
features.
    GIS means Geographic Information System or a system that stores, 
analyzes, and manipulates spatial or geographically referenced data. GIS 
computes distances and acres using stored data and calculations.
    GPS means Global Positioning System or a positioning system using 
satellites that continuously transmit coded information. The information 
transmitted from the satellites is interpreted by GPS receivers to 
precisely identify locations on earth by measuring distance from the 
satellites.
    Grain sorghum means grain sorghum of a feed grain or dual purpose 
variety (including any cross that, at all stages of growth, having 
characteristics of a feed grain or dual purpose variety) that follows 
the standard planting and harvesting practice for grain sorghum for the 
area in which the grain sorghum was planted. Sweet sorghum is not 
considered a grain sorghum.
    Ground measurement means the distance between 2 points on the 
ground, obtained by actual use of a chain tape, GPS with a minimum 
accuracy level as determined by the Deputy Administrator, or other 
measuring device.
    Intended use means for a crop or a commodity, the end use for which 
it is grown and produced.
    Joint operation means a general partnership, joint venture, or other 
similar business organization.
    Landlord means one who rents or leases farmland to another.
    Limited resource farmer or rancher means a farmer or rancher who is 
both of the following:
    (1) A person whose direct or indirect gross farm sales do not exceed 
$176,800 (2014 program year) in each of the 2 calendar years that 
precede the most immediately preceding complete taxable year before the 
relevant program year that corresponds to the relevant program year (for 
example, for the 2014 program year, the two years would be 2011 and 
2012), adjusted upwards in later years for any general inflation; and
    (2) A person whose total household income was at or below the 
national poverty level for a family of four in each of the same two 
previous years referenced in paragraph (1) of this definition. (Limited 
resource farmer or rancher status can be determined using a Web site 
available through the Limited Resource Farmer and Rancher Online Self 
Determination Tool through National Resource and Conservation Service at 
http://www.lrftool.sc.egov.usda.gov.)
    Measurement service means a measurement of acreage or farm-stored 
commodities performed by a representative of FSA and paid for by the 
producer requesting the measurement.
    Measurement service after planting means determining a crop or 
designated acreage after planting but before the farm operator files a 
report of acreage for the crop.
    Measurement service guarantee means a guarantee provided when a 
producer requests and pays for an authorized FSA representative to 
measure acreage for FSA and CCC program participation unless the 
producer takes action to adjust the measured acreage. If the producer 
has taken no such action, and the measured acreage is later discovered 
to be incorrect, the acreage determined pursuant to the measurement 
service will be used for program purposes for that program year.
    Minor child means an individual who is under 18 years of age. For 
the purpose of programs under chapters VII and XIV of this title, State 
court proceedings conferring majority on an individual under 18 years of 
age will not

[[Page 31]]

change such an individual's status as a minor.
    Nonagricultural commercial or industrial use means land that is no 
longer suitable for producing annual or perennial crops, including 
conserving uses, or forestry products.
    Normal planting period means that period during which the crop is 
normally planted in the county, or area within the county, with the 
expectation of producing a normal crop.
    Normal row width means the normal distance between rows of the crop 
in the field, but not less than 30 inches for all crops.
    Oats means oats that follows the standard planting and harvesting 
practice of oats for the area in which the oats are grown.
    Operator means an individual, entity, or joint operation who is 
determined by the FSA county committee to be in control of the farming 
operations on the farm.
    Owner means one who has legal ownership of farmland, including:
    (1) Any agency of the Federal Government; however, such agency is 
not eligible to receive any program payment;
    (2) One who is buying farmland under a contract for deed; or
    (3) One who has a life-estate in the property.
    Partial reconstitution means a reconstitution that is made effective 
in the current year for some crops, but is not made effective in the 
current year for other crops. This results in the same farm having two 
or more farm numbers in one crop year.
    Participant means one who participates in, or receives payments or 
benefits in accordance with any of the programs administered by FSA.
    Pasture means land that is used to, or has the potential to, produce 
food for grazing animals.
    Person means an individual, or an individual participating as a 
member of a joint operation or similar operation, a corporation, joint 
stock company, association, limited stock company, limited partnership, 
irrevocable trust, revocable trust together with the grantor of the 
trust, estate, or charitable organization including any entity 
participating in the farming operation as a partner in a general 
partnership, a participant in a joint venture, a grantor of a revocable 
trust, or a participant in a similar entity, or a State, political 
subdivision or agency thereof. To be considered a separate person for 
the purpose of this part, the individual or other legal entity must:
    (1) Have a separate and distinct interest in the land or the crop 
involved;
    (2) Exercise separate responsibility for such interest; and
    (3) Be responsible for the cost of farming related to such interest 
from a fund or account separate from that of any other individual or 
entity.
    Planted and considered planted (P&CP) means with respect to an 
acreage amount, the sum of the planted and prevented planted acres on 
the farm approved by the FSA county committee for a crop. P&CP is 
limited to initially planted or prevented planted crop acreage, except 
for crops planted in an FSA approved double-cropping sequence. 
Subsequently planted crop acreage and replacement crop acreage are not 
included as P&CP.
    Producer means an owner, operator, landlord, tenant, or 
sharecropper, who shares in the risk of producing a crop and who is 
entitled to share in the crop available for marketing from the farm, or 
would have shared had the crop been produced. A producer includes a 
grower of hybrid seed.
    Quota means the pounds allocated to a farm for a commodity in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Random inspection means an examination of a farm by an authorized 
representative of FSA selected as a part of an impartial sample to 
determine the adherence to program requirements.
    Reconstitution means a change in the land constituting a farm as a 
result of combination or division.
    Reported acreage means the acreage reported by the farm operator, 
farm owner, farm producer, or their agent on a Form prescribed by the 
FSA.
    Required inspection means an examination by an authorized 
representative of FSA of a farm specifically selected by application of 
prescribed rules to determine adherence to program requirements or to 
verify the

[[Page 32]]

farm operator's, farm owner's, farm producer, or agent's report.
    Rice means rice that follows the standard planting and harvesting 
practices of the area excluding sweet, glutinous, or candy rice such as 
Mochi Gomi.
    Secretary means the Secretary of Agriculture of the United States, 
or a designee.
    Sharecropper means one who performs work in connection with the 
production of a crop under the supervision of the operator and who 
receives a share of such crop for its labor.
    Skip-row or strip-crop planting means a cultural practice in which 
strips or rows of the crop are alternated with strips of idle land or 
another crop.
    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, ethnic, or gender prejudice because of their 
identity as members of a group without regard to their individual 
qualities. 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,
    (5) Native Hawaiians or other Pacific Islanders, and
    (6) Women.
    Staking and referencing means determining an acreage before planting 
by:
    (1) Measuring or computing a delineated area from ground 
measurements and documenting the area measured; and, (2) Staking and 
referencing the area on the ground.
    Standard deduction means an acreage that is excluded from the gross 
acreage in a field because such acreage is considered as being used for 
farm equipment turn-areas. Such acreage is established by application of 
a prescribed percentage of the area planted to the crop in lieu of 
measuring the turn area.
    State committee means the FSA State committee.
    Subdivision means a part of a field that is separated from the 
balance of the field by temporary boundary, such as a cropline which 
could be easily moved or will likely disappear.
    Subsequent crop means a crop following an initial crop that is not 
in an approved double cropping combination.
    Tenant means:
    (1) One who rents land from another in consideration of the payment 
of a specified amount of cash or amount of a commodity; or
    (2) One (other than a sharecropper) who rents land from another 
person in consideration of the payment of a share of the crops or 
proceeds therefrom.
    Tolerance means a prescribed amount within which the reported 
acreage and/or production may differ from the determined acreage and/or 
production and still be considered as correctly reported.
    Tract means a unit of contiguous land under one ownership, which is 
operated as a farm, or part of a farm.
    Tract combination means the combining of two or more tracts if the 
tracts have common ownership and are contiguous.
    Tract division means the dividing of a tract into two or more tracts 
because of a change in ownership or operation.
    Turn-area means the area across the ends of crop rows which is used 
for operating equipment necessary to the production of a row crop (also 
called turn row, headland, or end row).
    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.
    Upland cotton means planted and stub cotton that is not considered 
extra long staple cotton, and that follows the standard planting and 
harvesting practices of the area and is produced 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. For program purposes, brown lint cotton is considered 
upland cotton.
    Wheat means wheat for feed or dual purpose variety that follows the 
standard planting and harvesting practice of

[[Page 33]]

wheat for the area in which the wheat is grown.

[68 FR 16172, Apr. 3, 2003; 69 FR 250, Jan. 5, 2004, as amended at 79 FR 
74571, Dec. 15, 2014; 80 FR 41994, July 16, 2015]



Sec.  718.3  State committee responsibilities.

    (a) The State committee shall, with respect to county committees:
    (1) Take any action required of the county committee, which the 
county committee fails to take in accordance with this part;
    (2) Correct or require the county committee to correct any action 
taken by such committee, which is not in accordance with this part; or
    (3) Require the county committee to withhold taking any action which 
is not in accordance with this part.
    (b) The State committee shall submit to the Deputy Administrator 
requests to deviate from deductions prescribed in Sec.  718.109, or the 
error amount or percentage for refunds of redetermination costs as 
prescribed in Sec.  718.112.

[61 FR 37552, July 18, 1996, as amended at 80 FR 41994, July 16, 2015]



Sec.  718.4  Authority for farm entry and providing information.

    (a) This section applies to all farms that have a tobacco allotment 
or quota under part 723 of this chapter and all farms that are currently 
participating in programs administered by FSA.
    (b) A representative of FSA may enter any farm that participates in 
an FSA or CCC program in order to conduct a farm inspection as defined 
in this part. A program participant may request that the FSA 
representative present written authorization for the farm inspection 
before granting access to the farm. If a farm inspection is not allowed 
within 30 days of written authorization:
    (1) All FSA and CCC program benefits for that farm shall be denied;
    (2) The person preventing the farm inspection shall pay all costs 
associated with the farm inspection;
    (3) The entire crop production on the farm will be considered to be 
in excess of the quota established for the farm; and
    (4) For tobacco, the farm operator must furnish proof of disposition 
of:
    (i) All tobacco which is in addition to the production shown on the 
marketing card issued with respect to such farm; and
    (ii) No credit will be given for disposing of excess tobacco other 
than that identified by a marketing card unless disposed of in the 
presence of FSA in accordance with Sec.  718.109 of this part.
    (c) If a program participant refuses to furnish reports or data 
necessary to determine benefits in accordance with paragraph (a) of this 
section, or FSA determines that the report or data was erroneously 
provided through the lack of good faith, all program benefits relating 
to the report or data requested will be denied.



Sec.  718.5  Rule of fractions.

    (a) Fractions shall be rounded after completion of the entire 
associated computation. All mathematical calculations shall be carried 
to two decimal places beyond the number of decimal places required by 
the regulations governing each program. In rounding, fractional digits 
of 49 or less beyond the required number of decimal places shall be 
dropped; if the fractional digits beyond the required number of decimal 
places are 50 or more, the figure at the last required decimal place 
shall be increased by ``1'' as follows:

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

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



Sec.  718.6  Controlled substance.

    (a) The following terms apply to this section:

[[Page 34]]

    (1) USDA benefit means the issuance of any grant, contract, loan, or 
payment by appropriated funds of the United States.
    (2) Person means an individual.
    (b) Notwithstanding any other provision of law, any person convicted 
under Federal or State law of:
    (1) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance in any crop year is ineligible during the 
crop year of conviction and the four succeeding crop years, for any of 
the following USDA benefits:
    (i) Any payments or benefits under the Direct and Counter Cyclical 
Program (DCP) in accordance with part 1412 of this title;
    (ii) Any payments or benefits for losses to trees, crops, or 
livestock covered under disaster programs administered by FSA;
    (iii) Any price support loan available in accordance with part 1421 
of this title;
    (iv) Any price support or payment made under the Commodity Credit 
Corporation Charter Act;
    (v) A farm storage facility loan made under section 4(h) of the 
Commodity Credit Corporation Charter Act or any other Act;
    (vi) Crop Insurance under the Federal Crop Insurance Act;
    (vii) A loan made or guaranteed under the Consolidated Farm and 
Rural Development Act or any other law administered by FSA's Farm Loan 
Programs.
    (2) Possession or trafficking of a controlled substance, is 
ineligible for any or all USDA benefits:
    (i) At the discretion of the court,
    (ii) To the extent and for a period of time the court determines.
    (c) If a person denied benefits under this section is a shareholder, 
beneficiary, or member of an entity or joint operation, benefits for 
which the entity or joint operation is eligible will be reduced, for the 
appropriate period, by a percentage equal to the total interest of the 
shareholder, beneficiary, or member.

[72 FR 63284, Nov. 8, 2007]



Sec.  718.7  Furnishing maps.

    (a) A reasonable number, as determined by FSA, of reproductions of 
photographs, mosaic maps, and other maps will be made available to the 
owner of a farm, an insurance company reinsured by the Federal Crop 
Insurance Corporation (FCIC), or a private party contractor performing 
official duties on behalf of FSA, CCC, and other USDA agencies.
    (b) For all others, reproductions will be made available at the rate 
FSA determines will cover the cost of making such items available.

[80 FR 41994, July 16, 2015]



Sec.  718.8  Administrative county.

    (a) If all land on the farm is physically located in one county, the 
farm will be administratively located in that county, except as provided 
in the rest of this section.
    (b) In cases where there is no FSA office in the county in which the 
farm is physically located or FSA county offices have been consolidated, 
the farm will be administratively located in a county contiguous to the 
physical county in the same State that is most convenient for the farm 
operator and owner.
    (c) If a county contiguous to the county in which the farm is 
physically located in the same State does not have an FSA county office, 
the farm will be administratively located in a contiguous county in 
another contiguous State that is convenient to the farm operator and 
owner. Requests for changes made to administrative county under this 
paragraph must be made to FSA by August 1 of each year for the change to 
take effect that calendar year.
    (d) When land on the farm is physically located in more than one 
county, the farm will be administered in one county office responsible 
for administration of programs for one or more of the physical counties 
involved in the farm's constitution as determined by FSA. Paragraph (b) 
or (c) of this section apply if changes occur to that administrative 
county.

[[Page 35]]

    (e) The operator and owner of a farm administered in any county can 
request a change of administrative county to another county in the same 
State by August 1 for the change to take effect that calendar year. 
Requests for change in administrative county will be reviewed and 
approved by county committee if all the following can be determined to 
apply:
    (1) The requested change does not impact the constitution of a farm;
    (2) The requested change will not result in increased program 
eligibility or additional benefits for the farm's producers that would 
not be earned absent the change in administrative county being made; and
    (3) The change is not to circumvent any of the provisions of other 
program regulations to which this part applies.
    (f) The State committee will submit all requests for exceptions from 
regulations specified in this section to the Deputy Administrator.

[79 FR 57713, Sept. 26, 2014, as amended at 80 FR 119, Jan. 2, 2015; 80 
FR 41995, July 16, 2015]



Sec.  718.9  Signature requirements.

    (a) When a program authorized by this chapter or chapter XIV of this 
title requires the signature of a producer, landowner, landlord, or 
tenant, then a spouse may sign all such FSA or CCC documents on behalf 
of the other spouse, except as otherwise specified in this section, 
unless such other spouse has provided written notification to FSA and 
CCC that such action is not authorized. The notification must be 
provided to FSA for each farm.
    (b) A spouse may not sign a document on behalf of the other spouse 
with respect to:
    (1) Program document required to be executed in accordance with part 
3 of this title;
    (2) Easements entered into under part 1410 of this title;
    (3) Power of attorney;
    (4) Such other program documents as determined by FSA or CCC.
    (c) An individual; duly authorized officer of a corporation; duly 
authorized partner of a partnership; executor or administrator of an 
estate; trustee of a trust; guardian; or conservator may delegate to 
another the authority to act on their behalf with respect to FSA and CCC 
programs administered by USDA service center agencies by execution of a 
Power of Attorney, or such other form as approved by the Deputy 
Administrator. FSA and CCC may, at their discretion, allow the 
delegations of authority by other individuals through use of the Power 
of Attorney or such other form as approved by the Deputy Administrator.
    (d) Notwithstanding another provision of this regulation or any 
other FSA or CCC regulation in this title, a parent may execute 
documents on behalf of a minor child unless prohibited by a statute or 
court order.
    (e) Notwithstanding any other provision in this title, an authorized 
agent of the Bureau of Indian Affairs (BIA) of the United States 
Department of Interior may sign as agent for landowners with properties 
affiliated with or under the management or trust of the BIA. For 
collection purposes, such payments will be considered as being made to 
the persons who are the beneficiaries of the payment or may, 
alternatively, be considered as an obligation of all persons on the farm 
in general. In the event of a need for a refund or other claim may be 
collected, among other means, by other monies due such persons or the 
farm.
    (f) Documents that were previously acted on and approved by the FSA 
county office or county committee will not subsequently be determined 
inadequate or invalid because of the lack of signature authority of any 
person signing the document on behalf of the applicant or any other 
individual, entity, general partnership, or joint venture, unless the 
person signing the program document knowingly and willfully falsified 
the evidence of signature authority or a signature. However, FSA may 
require affirmation of the document by those parties deemed appropriate 
for an affirmation, as determined by the Deputy Administrator. Nothing 
in this paragraph relieves participants of any other program 
requirements.

[68 FR 16172, Apr. 3, 2003; 69 FR 250, Jan. 5, 2004, as amended at 80 FR 
41995, July 16, 2015]



Sec.  718.10  Time limitations.

    Whenever the final date prescribed in any of the regulations in this 
title for the performance of any act falls on a

[[Page 36]]

Saturday, Sunday, national holiday, State holiday on which the office of 
the county or State Farm Service Agency committee having primary 
cognizance of the action required to be taken is closed, or any other 
day on which the cognizant office is not open for the transaction of 
business during normal working hours, the time for taking required 
action shall be extended to the close of business on the next working 
day. Or in case the action required to be taken may be performed by 
mailing, the action shall be considered to be taken within the 
prescribed period if the mailing is postmarked by midnight of such next 
working day. Where the action required to be taken is with a prescribed 
number of days after the mailing of notice, the day of mailing shall be 
excluded in computing such period of time.



Sec.  718.11  Disqualification due to Federal crop insurance violation.

    (a) Section 515(h) of the Federal Crop Insurance Act (FCIA) provides 
that a person who willfully and intentionally provides 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 FSA that a producer has been found to have committed a 
violation to which paragraph (a) of this section applies, that person 
will be ineligible for payments under the programs specified in 
paragraph (a) of this section that are funded by FSA 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.

[72 FR 63284, Nov. 8, 2007]



            Subpart B_Determination of Acreage and Compliance

    Source: 68 FR 16176, Apr. 3, 2003, unless otherwise noted.



Sec.  718.101  Measurements.

    (a) Measurement services include, but are not limited to, measuring 
land and crop areas, quantities of farm-stored commodities, and 
appraising the yields of crops in the field when required for program 
administration purposes. The county committee shall provide measurement 
service if the producer requests such service and pays the cost, except 
that service shall not be provided to determine total acreage or 
production of a crop when the request is made:
    (1) After the established final reporting date for the applicable 
crop, unless a late filed report is accepted as provided in Sec.  
718.104;
    (2) After the farm operator has furnished production evidence when 
required for program administration purposes except as provided in this 
subpart; or
    (3) In connection with a late-filed report of acreage, unless there 
is evidence of the crop's existence in the

[[Page 37]]

field and use made of the crop, or the lack of the crop due to a 
disaster condition affecting the crop.
    (b) The acreage requested to be measured by staking and referencing 
shall not exceed the effective farm allotment for marketing quota crops 
or acreage of a crop that is limited to a specific number of acres to 
meet any program requirement.
    (c) When a producer requests, pays for, and receives written notice 
that measurement services have been furnished, the measured acreage 
shall be guaranteed to be correct and used for all program purposes for 
the current year even though an error is later discovered in the 
measurement thereof, if the producer has taken action with an economic 
significance based on the measurement service, and the entire crop 
required for the farm was measured. If the producer has not taken action 
with an economic significance based on the measurement service, the 
producer shall be notified in writing that an error was discovered and 
the nature and extent of such error. In such cases, the corrected 
acreage will be used for determining program compliance for the current 
year.
    (d) When a measurement service reveals acreage in excess of the 
permitted acreage and the allowable tolerance as defined in this part, 
the producer must destroy the excess acreage and pay for FSA to verify 
destruction, in order to keep the measurement service guarantee.

[68 FR 16176, Apr. 3, 2003, as amended at 80 FR 41995, July 16, 2015]



Sec.  718.102  Acreage reports.

    (a) In order to be eligible for benefits, participants in the 
programs specified in paragraphs (b)(1) through (b)(6) of this section 
must submit accurate information annually as required by these 
provisions.
    (b)(1) Participants in programs for which eligibility for benefits 
is tied to base acres must report the acreage of fruits and vegetables 
planted for harvest on a farm enrolled in such program;
    (2) Participants in the programs governed by parts 1421 and 1427 of 
this title must report the acreage planted to a commodity for harvest 
for which a marketing assistance loan or loan deficiency payment is 
requested;
    (3) Participants in the programs governed by part 1410 of this title 
must report the intended use of land enrolled in such programs;
    (4) All participants in the programs governed by part 1437 of this 
title must report all acreage and intended use of the eligible crop in 
the country in which the producer has a share;
    (5) Participants in the programs governed by part 723 of this 
chapter and part 1464 of this title must report the acreage planted to 
tobacco by kind on all farms that have an effective allotment or quota 
greater than zero;
    (6) All participants in the programs governed by parts 1412, 1421, 
and 1427 of this title must report the use of all cropland on the farm.
    (7) All producers reporting acreage as prevented planted acreage or 
failed acreage must provide documentation that meets the provisions of 
Sec.  718.103 to the FSA county office where the farm is administered.
    (c) The annual acreage reports required in paragraph (a) of this 
section must be filed with the county committee by the farm operator, 
farm owner, producer of the crop on the farm, or duly authorized 
representative by the final reporting date applicable to the crop as 
established by the Deputy Administrator.
    (d) Participants in programs to which this part is applicable must 
report all crops, in all counties, in which they have an interest. This 
includes crops on cropland and noncropland, including native or improved 
grass that will be hayed or grazed.

[68 FR 16176, Apr. 3, 2003, as amended at 71 FR 13741, Mar. 17, 2006; 79 
FR 74571, Dec. 15, 2014; 80 FR 41995, July 16, 2015]



Sec.  718.103  Prevented planted and failed acreage.

    (a) Prevented planting is the inability to plant an eligible crop 
with proper equipment during the planting period as a result of an 
eligible cause of loss, as determined by CCC. The eligible cause of loss 
that prevented the planting must have:
    (1) Occurred after a previous planting period for the crop;

[[Page 38]]

    (2) Occurred before the final planting date for the crop in the 
applicable crop year or, in the case of multiple plantings, the harvest 
date of the first planting in the applicable planting period, and
    (3) Similarly affected other producers in the area, as determined by 
CCC.
    (b) FSA may approve acreage as ``prevented planted acreage'' if all 
other conditions for such approval are met and provided the conditions 
in paragraphs (b)(1) through (6) of this section are met.
    (1) Except as specified in paragraph (b)(2) of this section, 
producers must report the acreage, on forms specified by FSA, within 15 
calendar days after the final planting date determined for the crop by 
FSA.
    (2) If the acreage is reported after the period identified in 
paragraph (b)(1) of this section, the application must be filed in time 
to permit:
    (i) The county committee or its authorized representative to make a 
farm visit to verify eligible disaster conditions that prevented the 
specified acreage or crop from being planted; or
    (ii) The county committee or its authorized representative the 
opportunity to determine, based on visual inspection, that the acreage 
or crop in question was affected by eligible disaster conditions such as 
damaging weather or other adverse natural occurrences that prevented the 
acreage or crop from being planted.
    (3) A farm visit to inspect the acreage or crop is required for all 
late-filed acreage reports where prevented planting credit is sought. 
Under no circumstance may acreage reported after the 15-day period 
referenced in paragraph (b)(1) of this section be deemed acceptable 
unless the criteria in paragraph (b)(2) of this section are met. State 
and county committees do not have the authority to waive the field 
inspection and verification provisions for late-filed reports.
    (4) All determinations made during field inspections must be 
documented on each late-filed acreage report, with results also recorded 
in county committee minutes to support the documentation.
    (5) The acreage must have been prevented from being planted as the 
result of a natural disaster and not a management decision.
    (6) The prevented planted acreage report was approved by the county 
committee. The county committee may disapprove prevented planted acreage 
credit if it is not satisfied with the documentation provided.
    (c) To receive prevented planted credit for acreage, the producer 
must show to the satisfaction of FSA that the producer intended to plant 
the acreage. Documentation supporting such intent includes documents 
related to field preparation, seed purchase, and any other information 
that shows the acreage could and would have been planted and harvested 
absent the natural disaster or eligible cause of loss that prevented the 
planting.
    (d) Prevented planted acreage credit will not be given to crops 
where the prevented-planted acreage was affected by drought, unless:
    (1) On the final planting date for non-irrigated acreage, the area 
that is prevented from being planted has insufficient soil moisture for 
germination of seed and progress toward crop maturity because of a 
prolonged period of dry weather, as determined by CCC; and
    (2) Prolonged precipitation deficiencies exceeded the D2 level as 
determined using the U.S. Drought Monitor; and
    (3) Verifiable information is collected from sources whose business 
or purpose it is to record weather conditions, as determined by CCC, and 
including but not limited to the local weather reporting stations of the 
U.S. National Weather Service.
    (e) Prevented planted acreage credit under this part applies to 
irrigated crops where the acreage was prevented from being planted due 
to a lack of water resulting from drought conditions or contamination by 
saltwater intrusion of an irrigation supply resulting from drought 
conditions if there was not a reasonable probability of having adequate 
water to carry out an irrigation practice.
    (f) Acreage ineligible for prevented planting coverage includes, but 
is not limited to, acreage:

[[Page 39]]

    (1) With respect to which the planting history or conservation plans 
indicate it would remain fallow for crop rotation purposes;
    (2) Used for conservation purposes or intended to be or considered 
to have been left unplanted under any program administered by USDA, 
including the Conservation Reserve and Wetland Reserve Programs;
    (3) Not planted because of a management decision;
    (4) Affected by the containment or release of water by any 
governmental, public, or private dam or reservoir project, if an 
easement exists on the acreage affected for the containment or release 
of water;
    (5) Where any other person receives a prevented planted payment for 
any crop for the same crop year, unless the acreage meets all the 
requirements for double cropping under this part;
    (6) Where pasture or other forage crop is in place on the acreage 
during the time that planting of the crop generally occurs in the area;
    (7) Where another crop is planted (previous or subsequent) that does 
not meet the double cropping definition;
    (8) Where any volunteer or cover crop is hayed, grazed, or otherwise 
harvested on the acreage for the same crop year;
    (9) Where there is an inadequate supply of irrigation water 
beginning on the Federal crop insurance sale closing date for the 
previous crop year or the Noninsured Crop Disaster Assistance Program 
(NAP) application closing date for the crop as specified in part 1437 of 
this title through the final planting date of the current year;
    (10) On which a failure or breakdown of irrigation equipment or 
facilities, unless the failure or breakdown is due to a natural 
disaster;
    (11) That is under quarantine imposed by a county, State, or Federal 
government agency;
    (12) That is affected by chemical or herbicide residue, unless the 
residue is due to a natural disaster;
    (13) That is affected by drifting herbicide;
    (14) On which a crop was produced, but the producer was unable to 
obtain a market for the crop;
    (15) Involving a planned planting of a ``value loss crop'' as that 
term is defined for NAP as specified in part 1437 of this title, 
including, but not limited to, Christmas trees, aquaculture, or 
ornamental nursery, for which NAP assistance is provided under value 
loss procedure;
    (16) For which the claim for prevented planted credit relates to 
trees or other perennials unless the producer can prove resources were 
available to plant, grow, and harvest the crop, as applicable;
    (17) That is affected by wildlife damage;
    (18) Upon which, the reduction in the water supply for irrigation is 
due to participation in an electricity buy-back program, or the sale of 
water under a water buy-back or legislative changes regarding water 
usage, or any other cause which is not a natural disaster; or
    (19) That is devoted to non-cropland.
    (g) CCC may allow exceptions to acreage ineligible for prevented 
planting coverage when surface water or ground water is reduced because 
of a natural disaster (as determined by CCC).
    (h) Failed acreage is acreage that was planted with the proper 
equipment during the planting period but failed as a result of an 
eligible cause of loss, as determined by CCC.
    (i) To be approved by CCC as failed acreage the acreage must have 
been reported as failed acreage before disposition of the crop, and the 
acreage must have been planted under normal conditions but failed as the 
result of a natural disaster and not a management decision. Producers 
who file a failed acreage report must have the request acted on by the 
county committee. The county committee may will deny the acreage report 
if it is not satisfied with the documentation provided.
    (j) To receive failed acreage credit the producer must show all of 
the following:
    (1) That the acreage was planted under normal conditions using the 
proper equipment with the intent to harvest the acreage.
    (2) Provide documentation that the crop was planted using farming 
practices consistent for the crop and area,

[[Page 40]]

but could not be brought to harvest because of disaster-related 
conditions.
    (k) The eligible cause for failed acreage must have:
    (1) Occurred after the crop was planted, and
    (2) Before the normal harvest date for the crop in the applicable 
crop year or in the case of multiple plantings, the harvest date of the 
first planting in the applicable planting period, and
    (3) Other producers in the area were similarly affected as 
determined by CCC.
    (l) Eligible failed acreage will be determined on the basis of the 
producer planting the crop under normal conditions with the expectation 
to take the crop to harvest.
    (m) Acreage ineligible for failed acreage credit includes, but is 
not limited to acreage:
    (1) Which was planted using methods that could not be considered 
normal for the area and without the expectation of harvest;
    (2) Used for conservation purposes or intended to be or considered 
to have been un-harvested under any program administered by USDA, 
including the Conservation Reserve and Wetland Reserve Programs; or
    (3) That failed because of a management decision.

[71 FR 13741, Mar. 17, 2006, as amended at 80 FR 41995, July 16, 2015]



Sec.  718.104  Late-filed and revised acreage reports.

    (a) Late-filed acreage reports may be accepted after the final 
reporting date and processed by FSA if both of the following apply:
    (1) The crop or identifiable crop residue remains in the field, 
permitting FSA to verify and determine the acreage and
    (2) The amount of acreage has not already been determined by FSA.
    (b) The farm operator filing a report late must pay the cost of a 
farm inspection unless FSA determines that failure to report in a timely 
manner was beyond the producer's control.
    (c) Revised acreage reports may be filed with respect to 2005 and 
subsequent years to change the acreage reported if:
    (1) The acreage has not already been determined by FSA; and
    (2) Actual crop or residue is present in the field.
    (d) Revised reports shall be filed and accepted:
    (1) At any time for all crops if the crop or residue still exists in 
the field for inspection to verify the existence and use made of the 
crop, the lack of the crop, or a disaster condition affecting the crop; 
and
    (2) If the producer was in compliance with all other program 
requirements at the reporting date.

[71 FR 13742, Mar. 17, 2006, as amended as 80 FR 41996, July 16, 2015]



Sec.  718.105  Tolerances, variances, and adjustments.

    (a) Tolerance is the amount by which the determined acreage for a 
crop may differ from the reported acreage or allotment for the crop and 
still be considered in compliance with program requirements under 
Sec. Sec.  718.102(b)(1), (b)(3) and (b)(5).
    (b) Tolerance rules apply to those fields for which a staking and 
referencing was performed but such acreage was not planted according to 
those measurements or when a measurement service is not requested for 
acreage destroyed to meet program requirements.
    (c) Tolerance rules do not apply to:
    (1) Program requirements of Sec. Sec.  718.102(b)(2), (b)(4) and 
(b)(6);
    (2) Official fields upon which the entire field is devoted to one 
crop;
    (3) Those fields for which staking and referencing was performed and 
such acreage was planted according to those measurements; or
    (4) The adjusted acreage for farms using measurement after planting 
which have a determined acreage greater than the marketing quota crop 
allotment.
    (d) An administrative variance is applicable to all allotment crop 
acreages. Allotment crop acreages as determined in accordance with this 
part shall be deemed in compliance with the effective farm allotment or 
program requirement when the determined acreage does not exceed the 
effective farm allotment by more than an administrative variance 
determined as follows:

[[Page 41]]

    (1) For all kinds of tobacco subject to marketing quotas, except 
dark air-cured and fire-cured the larger of 0.1 acre or 2 percent of the 
allotment; and
    (2) For dark air-cured and fire-cured tobacco, an acreage based on 
the effective acreage allotment as provided in the table as follows:

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

    (e) A tolerance applies to tobacco, other than flue-cured or burley, 
if the measured acreage exceeds the allotment by more than the 
administrative variance but by not more than the tolerance. Such excess 
acreage of tobacco may be adjusted to the effective farm acreage 
allotment to avoid marketing quota penalties or receive price support.
    (f) If the acreage report for a crop is outside the tolerance for 
that crop:
    (1) FSA may consider the requirements of Sec. Sec.  718.102 (b)(1), 
(b)(3) and (b)(5) not to have been met, and;
    (2) Participants may be ineligible for all or a portion of payments 
or benefits subject to the requirements of Sec. Sec.  718.102 (b)(1), 
(b)(3) and (b)(5).

[68 FR 16176, Apr. 3, 2003, as amended at 80 FR 41996, July 16, 2015]



Sec.  718.106  Non-compliance and false acreage reports.

    (a) Participants who provide false or inaccurate acreage reports may 
be ineligible for some or all payments or benefits, subject to the 
requirements of Sec.  718.102(b)(1) and (3).
    (b) [Reserved]

[80 FR 41996, July 16, 2015]



Sec.  718.107  Acreages.

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



Sec.  718.108  Measuring acreage including skip row acreage.

    (a) When one crop is alternating with another crop, whether or not 
both crops have the same growing season, only the acreage that is 
actually planted to the crop being measured will be considered to be 
acreage devoted to the measured crop.
    (b) Subject to the provisions of this paragraph and section, whether 
planted in a skip row pattern or without a pattern of skipped rows, the 
entire acreage of the field or subdivision may be considered as devoted 
to the crop only where the distance between the rows, for all rows, is 
40 inches or less. If there is a skip that creates idle land wider than 
40 inches, or if the distance between any rows is more than 40 inches, 
then the area planted to the crop shall be considered to be that area 
which would represent the smaller of; a 40 inch width between rows, or 
the normal row spacing in the field for all other rows in the field--
those that are not more than 40 inches apart. The allowance for 
individual rows would be made based on the smaller of actual spacing 
between those rows or the normal spacing in the field. For example, if 
the crop is planted in single, wide rows that are 48 inches apart, only 
20 inches to either side of each row (for a total of 40 inches between 
the two rows) could, at a maximum, be considered as devoted as the crop 
and normal spacing in the field would control. Half the normal distance 
between rows will also be allowed beyond the outside planted rows not to 
exceed 20 inches

[[Page 42]]

and will reflect normal spacing in the field.
    (c) In making calculations under this section, further reductions 
may be made in the acreage considered planted if it is determined that 
the acreage is more sparsely planted than normal using reasonable and 
customary full production planting techniques.
    (d) The Deputy Administrator has the discretionary authority to 
allow row allowances other than those specified in this section in those 
instances in which crops are normally planted with spacings greater or 
less than 40 inches, such as in case of tobacco, or where other 
circumstances are present which the Deputy Administrator finds justifies 
that allowance.
    (e) Paragraphs (a) through (d) of this section shall apply with 
respect to the 2003 and subsequent crops. For preceding crops, the rules 
in effect on January 1, 2002, shall apply.



Sec.  718.109  Deductions.

    (a) Any contiguous area which is not devoted to the crop being 
measured and which is not part of a skip-row pattern under Sec.  718.108 
shall be deducted from the acreage of the crop if such area meets the 
following minimum national standards or requirements:
    (1) A minimum width of 30 inches;
    (2) For tobacco--three-hundredths (.03) acre. Turn areas, terraces, 
permanent irrigation and drainage ditches, sod waterways, non-cropland, 
and subdivision boundaries each of which is at least 30 inches in width 
may be combined to meet the 0.03-acre minimum requirement; or
    (3) For all other crops and land uses--one-tenth (.10) acre. Turn 
areas, terraces, permanent irrigation and drainage ditches, sod 
waterways, non-cropland, and subdivision boundaries each of which is at 
least 30 inches in width and each of which contain 0.1 acre or more may 
be combined to meet any larger minimum prescribed for a State in 
accordance with this subpart.
    (b) If the area not devoted to the crop is located within the 
planted area, the part of any perimeter area that is more than 217.8 
feet (33 links) in width will be considered to be an internal deduction 
if the standard deduction is used.
    (c) A standard deduction of 3 percent of the area devoted to a row 
crop and zero percent of the area devoted to a close-sown crop may be 
used in lieu of measuring the acreage of turn areas.



Sec.  718.110  Adjustments.

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



Sec.  718.111  Notice of measured acreage.

    (a) FSA will provide notice of measured acreage and mail it to the 
farm operator. This notice constitutes notice to all parties who have 
ownership, leasehold interest, or other interest in such farm.
    (b) [Reserved]

[80 FR 41996, July 16, 2015]



Sec.  718.112  Redetermination.

    (a) A redetermination of crop acreage, appraised yield, or farm-
stored production for a farm may be initiated by the county committee, 
State committee, or Deputy Administrator at any time. Redetermination 
may be requested by a producer with an interest in the farm if the 
producer pays the

[[Page 43]]

cost of the redetermination. The request must be submitted to FSA within 
5 calendar days after the initial appraisal of the yield of a crop, or 
before the farm-stored production is removed from storage. A redeter 
mina tion will be undertaken in the manner prescribed by the Deputy 
Administrator. A redetermination will be used in lieu of any prior 
determination unless it is determined by the representative of the 
Deputy Administrator that there is good cause not to do so.
    (b) FSA will refund the payment of the cost for a redetermination 
when, because of an error in the initial determination:
    (1) The appraised yield is changed by at least the larger of:
    (i) Five percent or 5 pounds for cotton;
    (ii) Five percent or 1 bushel for wheat, barley, oats, and rye; or
    (iii) Five percent or 2 bushels for corn and grain sorghum; or
    (2) The farm stored production is changed by at least the smaller of 
3 percent or 600 bushels; or
    (3) The acreage of the crop is:
    (i) Changed by at least the larger of 3 percent or 0.5 acre; or
    (ii) Considered to be within program requirements.

[68 FR 16176, Apr. 3, 2003, as amended at 80 FR 41996, July 16, 2015]



  Subpart C_Reconstitution of Farms, Allotments, Quotas, and Base Acres

    Source: 68 FR 16178, Apr. 3, 2003, unless otherwise noted.



Sec.  718.201  Farm constitution.

    (a) In order to implement FSA programs and monitor compliance with 
regulations, FSA must have records on what land is being farmed by a 
particular producer. This is accomplished by a determination of what 
land or group of lands ``constitute'' an individual unit or farm. Land 
that was properly constituted under prior regulations will remain so 
constituted until a reconstitution is required by paragraph (c) of this 
section. The constitution and identification of land as a ``farm'' for 
the first time and the subsequent reconstitution of a farm made 
thereafter will include all land operated by an individual entity or 
joint operation as a single farming unit except that it may not include:
    (1) Land under separate ownership unless the owners agree in writing 
or have previously agreed in writing and the labor, equipment, 
accounting system, and management are operated in common by the 
operator, but separate from other tracts;
    (2) Land under a lease agreement of less than 1 year duration;
    (3) Federally owned land unless it is rangeland on which no crops 
are planted and on which there are no crop base acres established;
    (4) State-owned wildlife lands unless the former owner has 
possession of the land under a leasing agreement;
    (5) Land constituting a farm that is declared ineligible to be 
enrolled in a program under the regulations governing the program;
    (6) For base acre crops, land located in counties that are not 
contiguous except where:
    (i) Counties are divided by a river;
    (ii) Counties do not share a common border because of a correction 
line adjustment; or
    (iii) The land is within 20 miles, by road, of other land that will 
be a part of the farming unit;
    (7) Land subject to either a default election or a valid election 
made under part 1412 of this title for each and all covered commodities 
constituted with land that has a different default election or valid 
election for each and all covered commodities, irrespective of whether 
or not any of the land has base acres; or
    (8) Land subject to an election of individual coverage under the 
Agriculture Risk Coverage Program (ARC-IC) in any State constituted with 
any land in another State.
    (b)(1) If all land on the farm is physically located in one county, 
the farm shall be administratively located in such county. If there is 
no FSA office in the county or the county offices have been 
consolidated, the farm shall be administratively located in the 
contiguous county most convenient for the farm operator.

[[Page 44]]

    (2) If the land on the farm is located in more than one county, the 
farm shall be administratively located in either of such counties as the 
county committees and the farm operator agree. If no agreement can be 
reached, the farm shall be administratively located in the county where 
the principal dwelling is situated, or where the major portion of the 
farm is located if there is no dwelling.
    (c) A reconstitution of a farm either by division or by combination 
is required whenever:
    (1) A change has occurred in the operation of the land since the 
last constitution or reconstitution and as a result of such change the 
farm does not meet the conditions for constitution of a farm as 
specified in paragraph (a) of this section, except that no 
reconstitution will be made if the county committee determines that the 
primary purpose of the change in operation is to establish eligibility 
to transfer allotments subject to sale or lease, or increase the amount 
of program benefits received;
    (2) The farm was not properly constituted the previous time;
    (3) An owner requests in writing that the land no longer be included 
in a farm composed of tracts under separate ownership;
    (4) The county committee determines that the farm was reconstituted 
on the basis of false information;
    (5) The county committee determines that tracts included in a farm 
are not being operated as a single farming unit.
    (d) Reconstitution shall not be approved if the county committee 
determines that the primary purpose of the reconstitution is to:
    (1) Circumvent the provisions of part 12 of this title; or
    (2) Circumvent any other chapter of this title.

[68 FR 16178, Apr. 3, 2003, as amended at 80 FR 41996, July 16, 2015]



Sec.  718.202  Determining the land constituting a farm.

    (a) In determining the constitution of a farm, consideration shall 
be given to provisions such as ownership and operation. For purposes of 
this part, the following rules shall be applicable to determining what 
land is to be included in a farm.
    (b) A minor shall be considered to be the same owner or operator as 
the parent, court-appointed guardian, or other person responsible for 
the minor child, unless the parent or guardian has no interest in the 
minor's farm or production from the farm, and the minor:
    (1) Is a producer on a farm;
    (2) Maintains a separate household from the parent or guardian;
    (3) Personally carries out the farming activities; and
    (4) Maintains a separate accounting for the farming operation.
    (c) A minor shall not be considered to be the same owner or operator 
as the parent or court-appointed guardian if the minor's interest in the 
farming operation results from being the beneficiary of an irrevocable 
trust and ownership of the property is vested in the trust or the minor.
    (d) A life estate tenant shall be considered to be the owner of the 
property for their life.
    (e) A trust shall be considered to be an owner with the beneficiary 
of the trust; except a trust can be considered a separate owner or 
operator from the beneficiary, if the trust:
    (1) Has a separate and distinct interest in the land or crop 
involved;
    (2) Exercises separate responsibility for the separate and distinct 
interest; and
    (3) Maintains funds and accounts separate from that of any other 
individual or entity for the interest.
    (f) The county committee shall require specific proof of ownership.
    (g) Land owned by different persons of an immediate family living in 
the same household and operated as a single farming unit shall be 
considered as being under the same ownership in determining a farm.
    (h) All land operated as a single unit and owned and operated by a 
parent corporation and subsidiary corporations of which the parent 
corporation owns more than 50 percent of the value of the outstanding 
stock, or where the parent is owned and operated by subsidiary 
corporations, shall be constituted as one farm.

[[Page 45]]



Sec.  718.203  County committee action to reconstitute a farm.

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



Sec.  718.204  Reconstitution of base acres.

    (a) Farms will be reconstituted in accordance with this subpart when 
it is determined that the land areas are not properly constituted and, 
to the extent practicable as determined by county committee, the 
reconstitution will be based on the facts and conditions existing at the 
time the change requiring the reconstitution occurred.
    (b) Reconstitutions will be effective for the calendar year if 
initiated by August 1 of that year. Any reconstitution initiated after 
August 1 will not be effective for that year; it will be effective for 
the subsequent year.
    (c) The Deputy Administrator may approve an exception to permit a 
reconstitution initiated after August 1 to be effective for the same 
year, if FSA determines that the failure is due to administrative 
problems as determined by FSA at the local or national level. Producers 
have no right to seek an exception under this paragraph. When such 
situations exist, FSA will establish procedures under which 
reconstitutions will be accepted.

[79 FR 57714, Sept. 26, 2014]



Sec.  718.205  Substantive change in farming operation, and changes in
related legal entities.

    (a) Land that is properly constituted as a farm shall not be 
reconstituted if:
    (1) The reconstitution request is based upon the formation of a 
newly established legal entity which owns or operates the farm or any 
part of the farm and the county committee determines there is not a 
substantive change in the farming operation;
    (2) The county committee determines that the primary purpose of the 
request for reconstitution is to:
    (i) Obtain additional benefits under one or more commodity programs;
    (ii) Avoid damages or penalties under a contract or statute;
    (iii) Correct an erroneous acreage report; or
    (iv) Circumvent any other program provisions. In addition, no farm 
shall remain as constituted when the county committee determines that a 
substantive change in the farming operation has occurred which would 
require a reconstitution, except as otherwise approved by the State 
committee with the concurrence of the Deputy Administrator.
    (b) In determining whether a substantive change has occurred with 
respect to a farming operation, the county committee shall consider 
factors such as the composition of the legal entities having an interest 
in the farming operation with respect to management, financing, and 
accounting. The county committee shall also consider the use of land, 
labor, and equipment available to the farming operations and any other 
relevant factors that bear on the determination.
    (c) Unless otherwise approved by the State committee with the 
concurrence of the Deputy Administrator, when the county committee 
determines that a corporation, trust, or other legal entity is formed 
primarily for the purpose of obtaining additional benefits under the 
commodity programs of this title, the farm shall remain as constituted, 
or shall be reconstituted, as applicable, when the farm is owned or 
operated by:
    (1) A corporation having more than 50 percent of the stock owned by 
members of the same family living in the same household;
    (2) Corporations having more than 50 percent of the stock owned by 
stockholders common to more than one corporation; or
    (3) Trusts in which the beneficiaries and trustees are family 
members living in the same household.
    (d) Application of the provisions of paragraph (c) of this section 
shall not limit or affect the application of paragraphs (a) and (b) of 
this section.



Sec.  718.206  Determining farms, tracts, and base acres when
reconstitution is made by division.

    (a) The methods for dividing farms, tracts, and base acres are, in 
order of

[[Page 46]]

precedence: Estate, designation by landowner, cropland, and default. The 
proper method will be determined on a crop-by-crop basis.
    (b) The estate method for reconstitution is the pro-rata 
distribution of base acres for a parent farm among the heirs in settling 
an estate. If the estate sells a tract of land before the farm is 
divided among the heirs, the base acres for that tract will be 
determined according to paragraphs (c) through (e) of this section.
    (1) Base acres must be divided in accordance with a will, but only 
if the county committee determines that the terms of the will are such 
that a division can reasonably be made by the estate method.
    (2) If there is no will or the county committee determines that the 
terms of a will are not clear as to the division of base acres, the base 
acres will be apportioned in the manner agreed to in writing by all 
interested heirs or devisees who acquire an interest in the property for 
which base acres have been established. An agreement by the 
administrator or executor will not be accepted in lieu of an agreement 
by the heirs or devisees.
    (3) If base acres are not apportioned as specified in paragraph 
(b)(1) or (2) of this section, the base acres must be divided as 
specified in paragraph (d) or (e) of this section, as applicable.
    (c) If the ownership of a tract of land is transferred from a parent 
farm, the transferring owner may request that the county committee 
divide the base acres, including historical acreage that has been double 
cropped, between the parent farm and the transferred tract, or between 
the various tracts if the entire farm is sold to two or more purchasers.
    (1) If the county committee determines that base acres cannot be 
divided in the manner designated by the owner because the owner's 
designation does not meet the requirements of paragraph (c)(2) of this 
section, FSA will notify the owner and permit the owner to revise the 
designation to meet the requirements. If the owner does not furnish a 
revised designation of base acres within a reasonable time after such 
notification, or if the revised designation does not meet the 
requirements, the county committee will divide the base acres in a pro-
rata manner in accordance with paragraph (d) or (e) of this section.
    (2) The landowner may designate a manner in which base acres are 
divided by filing a signed written memorandum of understanding of the 
designation of base acres with the county committee before the transfer 
of ownership of the land. Both the transferring owner and transferee 
must sign the written designation of base acres.
    (i) Within 30 days after a prescribed form, letter, or notice of 
base acres is issued by FSA following the reconstitution of a farm but 
before any subsequent transfer of ownership of the land, all owners in 
existence at time of the reconstitution request may seek a different 
manner of base acre designation by agreeing in writing by executing a 
form CCC-517 or other designated form.
    (ii) The landowner must designate the base acres that will be 
permanently reduced when the sum of the base acres exceeds the effective 
cropland plus double-cropped acres for the farm.
    (iii) When the part of the farm from which the ownership is being 
transferred was owned for less than 3 years, the designation by 
landowner method of designating base acres cannot be used unless the 
county committee determines that the primary purpose of the ownership 
transfer was other than to retain or to sell base acres. In the absence 
of such a determination, and if the farm contains land that has been 
owned for less than 3 years, the part of the farm that has been owned 
for less than 3 years will be considered as a separate farm and the base 
acres must be assigned to that farm in accordance with paragraph (d) or 
(e) of this section. Such apportionment will be made prior to any 
designation of base acres with respect to the part that has been owned 
for 3 years or more.
    (3) The designation by landowner method may be applied, at the 
owner's request, to land owned by an Indian Tribal Council that is 
leased to two or more producers for the production of any crop of a 
commodity for which base acres have been established. If the land is 
leased to two or more producers, an Indian Tribal Council may

[[Page 47]]

request that the county committee divide the base acres between the 
applicable tracts in the manner designated by the Council. The use of 
this method is not subject to the requirements specified in paragraph 
(c)(2) of this section.
    (d) The cropland method for reconstitution is the pro-rata 
distribution of base acres to the resulting tracts in the same 
proportion that each resulting tract bears to the cropland for the 
parent tract. This method of division will be used if paragraphs (b) and 
(c) of this section do not apply.
    (e) The default method for reconstitution is the separation of 
tracts from a farm with each tract maintaining the base acres attributed 
to the tract when the reconstitution is initiated.
    (f) Farm program payment yields calculated for the resulting farms 
of a division may be increased or decreased if the county committee 
determines the method used did not provide an equitable distribution 
considering available land, cultural operations, and changes in the type 
of farming conducted on the farm. Any increase in the farm program 
payment yield on a resulting farm will be offset by a corresponding 
decrease on another resulting farm of the division.

[80 FR 41997, July 16, 2015]



Sec.  718.207  Determining base acres when reconstitution is made by
combination.

    (a) When two or more farms or tracts are combined for a year, that 
year's base acres, with respect to the combined farm or tract, as 
required by applicable program regulations, will not be greater than the 
sum of the base acres for each of the farms or tracts comprising the 
combination, subject to the provisions of Sec.  718.204.
    (b) [Reserved]

[80 FR 41998, July 16, 2015]



              Subpart D_Equitable Relief From Ineligibility

    Source: 67 FR 66307, Oct. 31, 2002, unless otherwise noted.



Sec.  718.301  Applicability.

    (a) This subpart is applicable to programs administered by the Farm 
Service Agency under chapters VII and XIV of this title, except for an 
agricultural credit program carried out under the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1921 et seq.), as amended. 
Administration of this subpart shall be under the supervision of the 
Deputy Administrator, except that such authority shall not limit the 
exercise of authority allowed State Executive Directors of the Farm 
Service agency as provided for in Sec.  718.307.
    (b) Section 718.306 does not apply to a function performed under 
either section 376 of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1921 et seq.), or a conservation program administered by the 
Natural Resources Conservation Service of the United States Department 
of Agriculture.
    (c) The relief provisions of this part cannot be used to extend a 
benefit or assistance not otherwise available under law or not otherwise 
available to others who have satisfied or complied with every 
eligibility or compliance requirement of the provisions of law or 
regulations governing the program benefit or assistance.

[67 FR 66307, Oct. 31, 2002, as amended at 80 FR 41998, July 16, 2015]



Sec.  718.302  Definitions and abbreviations.

    In addition to the definitions provided in Sec.  718.2 of this part, 
the following terms apply to this subpart:
    Covered program means a program specified in Sec.  718.301 of this 
subpart.
    FSA means the Farm Service Agency of the United States Department of 
Agriculture.
    OGC means the Office of the General Counsel of the United States 
Department of Agriculture.
    SED means, for activities within a particular state, the State 
Executive Director of the United States Department of Agriculture, FSA, 
for that state.

[67 FR 66307, Oct. 31, 2002, as amended at 80 FR 41998, July 16, 2015]

[[Page 48]]



Sec.  718.303  Reliance on incorrect actions or information.

    (a) Notwithstanding any other law, if an action or inaction by a 
participant is based upon good faith reliance on the action or advice of 
an authorized representative of an FSA county or State committee, and 
that action or inaction results in the participant's noncompliance with 
the requirements of a covered program that is to the detriment of the 
participant, then that action or inaction still may be approved by the 
Deputy Administrator as meeting the requirements of the covered program, 
and benefits may be extended or payments made in as specified in Sec.  
718.305.
    (b) This section applies only to a participant who:
    (1) Relied in good faith upon the action of, or information provided 
by, an FSA county or State committee or an authorized representative of 
such committee regarding a covered program;
    (2) Acted, or failed to act, as a result of the FSA action or 
information; and
    (3) Was determined to be not in compliance with the requirements of 
that covered program.
    (c) This section does not apply to cases where the participant had 
sufficient reason to know that the action or information upon which they 
relied was improper or erroneous or where the participant acted in 
reliance on their own misunderstanding or misinterpretation of program 
provisions, notices or information.

[80 FR 41998, July 16, 2015]



Sec.  718.304  Failure to fully comply.

    (a) When the failure of a participant to fully comply with the terms 
and conditions of a covered program precludes the providing of payments 
or benefits, relief may be authorized as specified in Sec.  718.305 if 
the participant made a good faith effort to comply fully with the 
requirements of the covered program.
    (b) This section only applies to participants who are determined by 
FSA to have made a good faith effort to comply fully with the terms and 
conditions of the covered program and have performed substantial actions 
required for program eligibility.

[80 FR 41998, July 16, 2015]



Sec.  718.305  Forms of relief.

    (a) The Administrator of FSA, Executive Vice President of CCC, or 
their designee, may authorize a participant in a covered program to:
    (1) Retain loans, payments, or other benefits received under the 
covered program;
    (2) Continue to receive loans, payments, and other benefits under 
the covered program;
    (3) Continue to participate, in whole or in part, under any contract 
executed under the covered program;
    (4) In the case of a conservation program, re-enroll all or part of 
the land covered by the program; and
    (5) Receive such other equitable relief as determined to be 
appropriate.
    (b) As a condition of receiving relief under this subpart, the 
participant may be required to remedy their failure to meet the program 
requirement, or mitigate its affects.



Sec.  718.306  Finality.

    (a) A determination by an FSA State or county committee (or employee 
of such committee) becomes final on an application for benefits and 
binding 90 days from the date the application for benefits has been 
filed, and supporting documentation required to be supplied by the 
producer as a condition for eligibility for the particular program has 
been filed, unless any of the following exceptions exist:
    (1) The participant has requested an administrative review of the 
determination in accordance with part 780 of this chapter;
    (2) The determination was in any way based on erroneous, innocent, 
or purposeful misrepresentation; false statement; fraud; or willful 
misconduct by or on behalf of the participant;
    (3) The determination was modified by the Administrator, FSA, or in 
the case of CCC programs conducted under Chapter XIV of this title, the 
Executive Vice President, CCC; or
    (4) The participant knew or had reason to know that the 
determination was erroneous.
    (b) Should an erroneous determination become final under the 
provisions of this section, the erroneous decision will be corrected 
according to paragraph (c) of this section.

[[Page 49]]

    (1) If, as a result of the erroneous decision, payment was issued, 
no action will be taken by FSA, CCC, or a State or county committee to 
recover unearned payment amounts unless one or more of the exceptions in 
paragraph (a) of this section applies;
    (2) If payment was not issued before the error was discovered, the 
payment will not be issued. FSA and CCC are under no obligation to issue 
payments or render decisions that are contrary to law or regulation.
    (c) FSA and CCC will modify and correct determinations when errors 
are discovered. As specified in paragraph (b) of this section, FSA or 
CCC may be precluded from recovering unearned payments that issued as a 
result of the erroneous decision. FSA or CCC's inability to recover or 
demand refunds of unearned amounts as specified in paragraph (b) will 
only be effective through the year in which the error was found and 
communicated to the participant.

[67 FR 66307, Oct. 31, 2002, as amended at 80 FR 41998, July 16, 2015]



Sec.  718.307  Special relief approval authority for State Executive
Directors.

    (a) General nature of the special authority. Notwithstanding 
provisions in this subpart providing supervision and relief authority to 
other officials, an SED, after consultation with and approval from OGC 
but without further review by other officials (other than the Secretary) 
may grant relief to a participant under the provisions of Sec. Sec.  
718.303 through 718.305 as if the SED were the final arbiter within the 
agency of such matters so long as:
    (1) The program matter with respect to which the relief is sought is 
a program matter in a covered program which is operated within the State 
under the control of the SED;
    (2) The total amount of relief which will be provided to the 
participant (that is, to the individual or entity that applies for the 
relief) by that SED under this special authority for errors during that 
year is less than $20,000 (including in that calculation, any loan 
amount or other benefit of any kind payable for that year and any other 
year);
    (3) The total amount of such relief which has been previously 
provided to the participant using this special authority for errors, as 
calculated above, is not more than $5,000;
    (4) The total amount of loans, payments, and benefits of any kind 
for which relief is provided to similarly situated participants by an 
SED for errors for any year under the authority provided in this 
section, as calculated above, is not more than $1,000,000.
    (b) Report of the exercise of the power. A grant of relief shall be 
considered to be under this section and subject to the special finality 
provided in this section only if the SED grants the relief in writing 
when granting the relief to the party who will receive the benefit of 
such relief and only if, in that document, the SED declares that they 
are exercising that power. The SED must report the exercise of that 
power to the Deputy Administrator so that a full accounting may be made 
in keeping with the limitations of this section. Absent such a report, 
relief will not be considered to have been made under this section.
    (c) Additional limits on the authority. The authority provided under 
this section does not extend to:
    (1) The administration of payment limitations under part 1400 of 
this chapter (Sec. Sec.  1001 to 1001F of 7 U.S.C. 1308 et seq.);
    (2) The administration of payment limitations under a conservation 
program administered by the Secretary; or
    (3) Highly erodible land and wetland conservation requirements under 
subtitles B or C of Title XII of the Food Security Act of 1985 (16 
U.S.C. 3811 et seq.) as administered under 7 CFR part 12.
    (d) Relief may not be provided by the SED under this section until a 
written opinion or written acknowledgment is obtained from OGC that 
grounds exist for determination that requirements for granting relief 
under Sec.  718.303 or Sec.  718.304 have been met, that the form of 
relief is authorized under Sec.  718.305, and that the granting of the 
relief is within the lawful authority of the SED.
    (e) Relation to other authorities. The authority provided under this 
section

[[Page 50]]

is in addition to any other applicable authority that may allow relief.

[67 FR 66307, Oct. 31, 2002, as amended at 80 FR 41998, July 16, 2015]

[[Page 51]]



                 SUBCHAPTER C_REGULATIONS FOR WAREHOUSES





PART 735_REGULATIONS FOR THE UNITED STATES WAREHOUSE ACT
--Table of Contents



                      Subpart A_General Provisions

Sec.
735.1 Applicability.
735.2 Administration.
735.3 Definitions.
735.4 Fees.
735.5 Penalties.
735.6 Suspension, revocation and liquidation.
735.7 Return of suspended or revoked certificates of licensing or 
          certificates of authorization.
735.8 Appeals.
735.9 Dispute resolution and arbitration of private parties.
735.10 Posting of certificates of licensing, certificates of 
          authorization or other USWA documents.
735.11 Lost or destroyed certificates of licensing, authorization or 
          agreements.
735.12 Safe keeping of records.
735.13 Information of violations.
735.14 Bonding and other financial assurance requirements.

                      Subpart B_Warehouse Licensing

735.100 Application.
735.101 Financial records and reporting requirements.
735.102 Financial assurance requirements.
735.103 Amendments to license.
735.104 Insurance requirements.
735.105 Care of agricultural products.
735.106 Excess storage and transferring of agricultural products.
735.107 Warehouse charges and tariffs.
735.108 Inspections and examinations of warehouses.
735.109 Disaster loss to be reported.
735.110 Conditions for delivery of agricultural products.
735.111 Fair treatment.
735.112 Terminal and futures contract markets

        Subpart C_Inspectors, Samplers, Classifiers, and Weighers

735.200 Service licenses.
735.201 Agricultural product certificates; format.
735.202 Standards of grades for other agricultural products.

                      Subpart D_Warehouse Receipts

735.300 Warehouse receipt requirements.
735.301 Notification requirements.
735.302 Paper warehouse receipts.
735.303 Electronic warehouse receipts.

                     Subpart E_Electronic Providers

735.400 Administration.
735.401 Electronic warehouse receipt and USWA electronic document 
          providers.
735.402 Providers of other electronic documents.
735.403 Audits.
735.404 Schedule of charges and rates.

    Authority: 7 U.S.C. 241 et seq.

    Source: 67 FR 50763, Aug. 5, 2002, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  735.1  Applicability.

    (a) The regulations of this part set forth the terms and conditions 
under which the Secretary of Agriculture through the Farm Service Agency 
(FSA) will administer the United States Warehouse Act (USWA or the Act) 
and sets forth the standards and the terms and conditions a participant 
must meet for eligibility to act under the USWA. The extent the 
provisions of this part are more restrictive, or more lenient, with 
respect to the same activities governed by State law, the provisions of 
this part shall prevail.
    (b) Additional terms and conditions may be set forth in applicable 
licensing agreements, provider agreements and other documents.
    (c) Compliance with State laws relating to the warehousing, grading, 
weighing, storing, merchandising or other similar activities is not 
required with respect to activities engaged in by a warehouse operator 
in a warehouse subject to a license issued in accordance with this part.



Sec.  735.2  Administration.

    (a) FSA will administer all provisions and activities regulated 
under the Act under the general direction and supervision of the FSA's 
Deputy Administrator, Commodity Operations (DACO), or a designee.
    (b) DACO may waive or modify the licensing or authorization 
requirements or deadlines in cases where lateness or

[[Page 52]]

failure to meet such requirements does not adversely affect the 
licensing or authorizations operated under the Act.
    (c) DACO will provide affected licensees or authorized providers 
with changes to their licensing or provider agreements before the 
effective date.
    (d) Licensing and authorization agreement updates will be available 
at:
    (1) DACO's USWA website, and
    (2) The following address: Deputy Administrator, Commodity 
Operations, Farm Service Agency, United States Department of 
Agriculture, STOP 0550, 1400 Independence Avenue, SW, Washington, DC 
20250-0550.



Sec.  735.3  Definitions.

    Words used in this part will be applicable to the activities 
authorized by this part and will be used in all aspects of administering 
the Act.
    Access means the ability, when authorized, to read, change, and 
transfer warehouse receipts or other applicable document information 
retained in a central filing system.
    Agricultural product means an agriculturally-produced product stored 
or handled for the purposes of interstate or foreign commerce, including 
a processed product of such agricultural product, as determined by DACO.
    Central filing system (CFS) means an electronic system operated and 
maintained by a provider, as a disinterested third party, authorized by 
DACO where information relating to warehouse receipts, USWA documents 
and other electronic documents is recorded and maintained in a 
confidential and secure fashion independent of any outside influence or 
bias in action or appearance.
    Certificate means a USWA document that bears specific assurances 
under the Act or warrants a person to operate or perform in a certain 
manner and sets forth specific responsibilities, rights, and privileges 
granted to the person under the Act.
    Control of the facility means ultimate responsibility for the 
operation and integrity of a facility by ownership, lease, or operating 
agreement.
    Department means the Department of Agriculture.
    Electronic document means any document that is generated, sent, 
received, or stored by electronic, optical, or similar means, including, 
but not limited to, electronic data interchange, advanced communication 
methods, electronic mail, telegram, telex, or telecopy.
    Electronic warehouse receipt (EWR) means a warehouse receipt that is 
authorized by DACO to be issued or transmitted under the Act in the form 
of an electronic document.
    Examiner means an individual designated by DACO for the purpose of 
examining warehouses or for any other activities authorized under the 
Act.
    Financial assurance means the surety or other financial obligation 
authorized by DACO that is a condition of receiving a license or 
authorization under the Act.
    Force majeure means severe weather conditions, fire, explosion, 
flood, earthquake, insurrection, riot, strike, labor dispute, act of 
civil or military, non-availability of transportation facilities, or any 
other cause beyond the control of the warehouse operator or provider 
that renders performance impossible.
    Holder means a person that has possession in fact or by operation of 
law of a warehouse receipt, USWA electronic document, or any electronic 
document.
    License means a license issued under the Act by DACO.
    Licensing agreement means the document and any amendment or addenda 
to such agreement executed by the warehouse operator and FSA specifying 
licensing terms and conditions specific to the warehouse operator and 
the agricultural product licensed to be stored.
    Non-storage agricultural product means an agricultural product 
received temporarily into a warehouse for conditioning, transferring or 
assembling for shipment, or lots of an agricultural product moving 
through a warehouse for current merchandising or milling use, against 
which no warehouse receipts are issued and no storage charges assessed.
    Official Standards of the United States means the standards of the 
quality or condition for an agricultural product, fixed and established 
under (7 U.S.C. 51) the United States Cotton Standards Act, (7 U.S.C. 
71) the United States

[[Page 53]]

Grain Standards Act, (7 U.S.C. 1622) the Agricultural Marketing Act of 
1946, or other applicable official United States Standards.
    Other electronic documents (OED) means those electronic documents, 
other than an EWR or USWA electronic document, that may be issued or 
transferred, related to the shipment, payment or financing of 
agricultural products that DACO has authorized for inclusion in a 
provider's CFS.
    Person means a person as set forth in 1 U.S.C. 1, a State; or a 
political subdivision of a State.
    Provider means a person authorized by DACO, as a disinterested third 
party, which maintains one or more confidential and secure electronic 
systems independent of any outside influence or bias in action or 
appearance.
    Provider agreement means the document and any amendment or addenda 
to such agreement executed by the provider and FSA that sets forth the 
provider's responsibilities concerning the provider's operation or 
maintenance of a CFS.
    Receipt means a warehouse receipt issued in accordance with the Act, 
including an electronic warehouse receipt.
    Schedule of charges means the tariff or uniform rate or amount 
charged by an authorized person for specific services offered or 
rendered under the Act.
    Schedule of fees means the fees charged and assessed by FSA for 
licensing, provider agreements or services furnished under the Act to 
help defray the costs of administering the Act, and as such are shown in 
a schedule of fees attached to the licensing or provider agreement.
    Service license means the document and any amendment to such 
document, issued under the Act by DACO to individuals certified 
competent by the licensed warehouse operator to perform inspection, 
sampling, grading classifying, or weighing services according to 
established standards and procedures, set forth in Sec.  735.202, at the 
specific warehouse license.
    Stored agricultural products means all agricultural products 
received into, stored within, or delivered out of the warehouse that are 
not classified as a non-storage agricultural product under this part.
    User means a person that uses a provider's CFS.
    USWA electronic document means a USWA electronic document initiated 
by DACO to be issued, transferred or transmitted that is not identified 
as an EWR or OED in the appropriate licensing or provider agreement or 
as determined by DACO.
    Warehouse means a structure or other authorized storage facility, as 
determined by DACO, in which any agricultural product may be stored or 
handled for the purpose of interstate or foreign commerce.
    Warehouse capacity means the maximum quantity of an agricultural 
product that the warehouse will accommodate when stored in a manner 
customary to the warehouse as determined by DACO.
    Warehouse operator means a person lawfully engaged in the business 
of storing or handling agricultural products.
    Warehousing activities and practices means any legal, operational, 
managerial or financial duty that a warehouse operator has regarding an 
agricultural product.



Sec.  735.4  Fees.

    (a) FSA will assess persons covered by the Act fees to cover the 
costs of administering the Act.
    (b) Warehouse operators, licensees, applicants, or providers must 
pay:
    (1) An annual fee as provided in the applicable licensing or 
provider agreement; and
    (2) Fees that FSA assesses for specific services, examinations and 
audits, or as provided in the applicable licensing or provider 
agreement.
    (c) The schedule of fees showing the current fees or any annual fee 
changes will be provided as an addendum to the applicable licensing or 
provider agreement or/and:
    (1) Will be available at DACO's USWA Web site, or
    (2) May be requested at the following address: Deputy Administrator, 
Commodity Operations, Farm Service Agency, United States Department of

[[Page 54]]

Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, DC 
20250-0550.
    (d) At the sole discretion of DACO, these fees may be waived.



Sec.  735.5  Penalties.

    If a person fails to comply with any requirement of the Act, the 
regulations set forth in this part or any applicable licensing or 
provider agreement, DACO may assess, after an opportunity for a hearing 
as provided in Sec.  735.8, a civil penalty:
    (a) Of not more than the amount specified in Sec.  3.91(b)(10)(i) of 
this title per violation, if an agricultural product is not involved in 
the violation; or
    (b) Of not more than 100 percent of the value of the agricultural 
product, if an agricultural product is involved in the violation.

[67 FR 50763, Aug. 5, 2002, as amended at 75 FR 17560, Apr. 7, 2010]



Sec.  735.6  Suspension, revocation and liquidation.

    (a) DACO may, after an opportunity for a hearing as provided in 
Sec.  735.8, suspend, revoke or liquidate any license or agreement 
issued under the Act, for any violation of or failure to comply with any 
provision of the Act, regulations or any applicable licensing or 
provider agreement.
    (b) The reasons for a suspension, revocation or liquidation under 
this part include, but are not limited to:
    (1) Failure to perform licensed or authorized services as provided 
in this part or in the applicable licensing or provider agreement;
    (2) Failure to maintain minimum financial requirements as provided 
in the applicable licensing or provider agreement;
    (3) Failure to submit a proper annual financial statement within the 
established time period as provided in the applicable licensing or 
provider agreement.
    (4) Failure to maintain control of the warehouse or provider system.
    (5) The warehouse operator or provider requests closure, 
cancellation or liquidation. and
    (6) Commission of fraud against FSA, any depositor, EWR or OED 
holder or user, or any other function or operation under this part.
    (c) FSA retains USWA's full authority over a warehouse operator or 
provider for one year after such license revocation or provider 
agreement termination or until satisfaction of any claims filed against 
such warehouse operator or provider are resolved, whichever is later.
    (d) Upon DACO's determination that continued operation of a 
warehouse by a warehouse operator or an electronic provider system by a 
provider is likely to result in probable loss of assets to storage 
depositors, or loss of data integrity to EWR or OED holders and users. 
DACO may immediately suspend, close, or take control and begin an 
orderly liquidation of such warehouse inventory or provider system data 
as provided in this part or in the applicable licensing or provider 
agreement.
    (e) Any disputes involving probable loss of assets to storage 
depositors, or loss of data integrity to EWR or OED holders and users 
will be determined by DACO for the benefit of the depositors, or EWR or 
OED holders and users and such determinations shall be final.



Sec.  735.7  Return of suspended or revoked certificates of licensing 
or certificates of authorization.

    (a) When a license issued to a warehouse operator or service license 
ends or is suspended or revoked by DACO, such certificates of licensing 
and applicable licensing agreement and certificates of authorization 
must be immediately surrendered and returned to DACO.
    (b) When an agreement with a provider ends or is suspended or 
revoked by DACO, such certificates of authorization and applicable 
provider agreement must be immediately surrendered to DACO



Sec.  735.8  Appeals.

    (a) Any person who is subject to an adverse determination made under 
the Act may appeal the determination by filing a written request with 
DACO at the following address: Deputy Administrator, Commodity 
Operations, Farm Service Agency, United States Department of 
Agriculture, STOP 0550, 1400

[[Page 55]]

Independence Avenue, SW., Washington, DC 20250-0550.
    (b) Any person who believes that they have been adversely affected 
by a determination under this part must seek review by DACO within 
twenty-eight calendar days of such determination, unless provided with 
notice by DACO of a different deadline.
    (c) The appeal process set forth in this part is applicable to all 
licensees and providers under any provision of the Act, regulations or 
any applicable licensing agreement as follows:
    (1) DACO will notify the person in writing of the nature of the 
suspension, revocation or liquidation action;
    (2) The person must notify DACO of any appeal of its action within 
twenty-eight calendar days;
    (3) The appeal and request must state whether:
    (i) A hearing is requested,
    (ii) The person will appear in person at such hearing, or
    (iii) Such hearing will be held by telephone;
    (4) DACO will provide the person a written acknowledgment of their 
request to pursue an appeal;
    (5) When a person requests an appeal and does not request a hearing 
DACO will allow that person:
    (i) To submit in writing the reasons why they believe DACO's 
determination to be in error,
    (ii) Twenty-eight calendar days from the receipt of the 
acknowledgment to file any statements and documents in support of their 
appeal, unless provided with notice by DACO of a different deadline, and
    (iii) An additional fourteen calendar days to respond to any new 
issues raised by DACO in response to the person's initial submission, 
unless provided with notice by DACO of a different deadline;
    (6) If the person requests to pursue an appeal and requests a 
hearing, DACO will:
    (i) Notify the person of the date of the hearing,
    (ii) Determine the location of the hearing, when the person asks to 
appear in person,
    (iii) Notify the person of the location of the hearing,
    (iv) Afford the person twenty-eight calendar days from the receipt 
of the notification of the scheduling of the hearing to submit any 
statements and documents in support of the appeal, unless provided with 
notice by DACO of a different deadline, and
    (v) Allow the person an additional fourteen calendar days from the 
date of the hearing to submit any additional material, unless provided 
with notice by DACO of a different deadline;
    (7) Determinations of DACO will be final and no further appeal 
within USDA will be available except as may be specified in the final 
determination of DACO; and
    (8) A person may not initiate an action in any court of competent 
jurisdiction concerning a determination made under the Act prior to the 
exhaustion of the appeal process set forth in this section.



Sec.  735.9  Dispute resolution and arbitration of private parties.

    (a) A person may initiate legal action in any court of competent 
jurisdiction concerning a claim for noncompliance or an unresolved 
dispute with respect to activities authorized under the Act.
    (b) Any claim for noncompliance or an unresolved dispute between a 
warehouse operator or provider and another party with respect to 
activities authorized under the Act may be resolved by the parties 
through mutually agreed-upon arbitration procedures or as may be 
prescribed in the applicable licensing or provider agreement. No 
arbitration determination or award will affect DACO's authority under 
the Act.
    (c) In no case will USDA provide assistance or representation to 
parties involved in an arbitration proceeding arising with respect to 
activities authorized under the Act.



Sec.  735.10  Posting of certificates of licensing, certificates of
authorization or other USWA documents.

    (a) The warehouse operator must post, in a conspicuous place in the 
principal place where warehouse receipts are issued, any applicable 
certificate furnished by DACO that the warehouse operator is an 
authorized licensee under the Act.

[[Page 56]]

    (b) Immediately upon receipt of their certificate of service 
licensing or any modification or extension thereof under the Act, the 
licensee and warehouse operator must jointly post the same, and 
thereafter, except as otherwise provided in the regulations in this part 
or as prescribed in the applicable licensing agreement, keep such 
certificate of licensing conspicuously posted in the office where all or 
most of the services are done, or in such place as may be designated by 
DACO.
    (c) The provider must post, in a conspicuous place in the principal 
place of business, any applicable certificate of authorization furnished 
by DACO that the provider is authorized to offer and provide specific 
services under the Act.



Sec.  735.11  Lost or destroyed certificates of licensing, authorization
or agreements.

    FSA will replace lost or destroyed certificates of licensing, 
certificate of authorization or applicable agreement upon satisfactory 
proof of loss or destruction. FSA will mark such certificates or 
agreements as duplicates.



Sec.  735.12  Safe keeping of records.

    Each warehouse operator or provider must take necessary precautions 
to safeguard all records, either paper or electronic format, from 
destruction.



Sec.  735.13  Information of violations.

    Every person licensed or authorized under the Act must immediately 
furnish DACO any information they may have indicating that any provision 
of the Act or the regulations in this part has been violated.



Sec.  735.14  Bonding and other financial assurance requirements.

    (a) As a condition of receiving a license or authorization under the 
Act, the person applying for the license or authorization must execute 
and file with DACO a bond or provide such other financial assurance as 
DACO determines appropriate to secure the person's compliance with the 
Act.
    (b) Such bond or assurance must be for a period of not less than one 
year and in such amount as required by DACO.
    (c) Failure to provide for, or renew, a bond or a financial 
assurance instrument will result in the immediate and automatic 
revocation of the warehouse operator's license or provider's agreement.
    (d) If DACO determines that a previously accepted bond or other 
financial assurance is insufficient, DACO may immediately suspend or 
revoke the license or authorization covered by the bond or other 
financial assurance if the person that filed the bond or other financial 
assurance does not provide such additional bond or other financial 
assurance as DACO determines appropriate.
    (e) To qualify as a suitable bond or other financial assurance, the 
entity issuing the bond or other financial assurance must be subject to 
service of process in lawsuits or legal actions on the bond or other 
financial assurance in the State in which the warehouse is located.



                      Subpart B_Warehouse Licensing



Sec.  735.100  Application.

    (a) An applicant for a license must submit to DACO information and 
documents determined by DACO to be sufficient to conclude that the 
applicant can comply with the provisions of the Act. Such documents must 
include a current review or an audit-level financial statement prepared 
according to generally accepted accounting standards as defined by the 
American Institute of Certified Public Accountants. For any entity that 
is not an individual, a document that establishes proof of the existence 
of the entity, such as:
    (1) For a partnership, an executed partnership agreement; and
    (2) For a corporation:
    (i) Articles of incorporation certified by the Secretary of State of 
the applicable State of incorporation;
    (ii) Bylaws; and
    (iii) Permits to do business; and
    (3) For a limited partnership, an executed limited partnership 
agreement; and
    (4) For a limited liability company:
    (i) Articles of organization or similar documents; and

[[Page 57]]

    (ii) Operating agreement or similar agreement.
    (b) The warehouse facilities of an operator licensed under the Act 
must, as determined by DACO, be:
    (1) Physically and operationally suitable for proper storage of the 
applicable agricultural product or agricultural products specified in 
the license;
    (2) Operated according to generally accepted warehousing activities 
and practices in the industry for the applicable agricultural product or 
agricultural products stored in the facility; and
    (3) Subject to the warehouse operator's control of the facility 
including all contiguous storage space with respect to such facilities.
    (c) As specified in individual licensing agreements, a warehouse 
operator must:
    (1) Meet the basic financial requirements determined by DACO; and
    (2) Meet the net worth requirements determined by DACO;
    (d) In order to obtain a license, the warehouse operator must 
correct any exceptions made by the warehouse examiner at the time of the 
original warehouse examination.
    (e) DACO may issue a license for the storage of two or more 
agricultural products in a single warehouse as provided in the 
applicable licensing agreements. The amount of the bond or financial 
assurance, net worth, and inspection and license fees will be determined 
by DACO in accordance with the licensing agreements applicable to the 
specific agricultural product, based upon the warehouses' total capacity 
for storing such product, that would require:
    (1) The largest bond or financial assurance;
    (2) The greatest amount of net worth; and
    (3) The greatest amount of fees.



Sec.  735.101  Financial records and reporting requirements.

    (a) Warehouse operators must maintain complete, accurate, and 
current financial records that must be available to DACO for review or 
audit at DACO's request as may be prescribed in the applicable licensing 
agreement.
    (b) Warehouse operators must, annually, present a financial 
statement as may be prescribed in the applicable licensing agreement to 
DACO.



Sec.  735.102  Financial assurance requirements.

    (a) Warehouse operators must file with DACO financial assurances 
approved by DACO consisting of:
    (1) A warehouse operator's bond; or
    (2) Obligations that are unconditionally guaranteed as to both 
interest and principal by the United States, in a sum equal at their par 
value to the amount of the bond otherwise required to be furnished, 
together with an irrevocable power of attorney authorizing DACO to 
collect, sell, assign and transfer such obligations in case of any 
default in the performance of any of the conditions required in the 
licensing agreement; or
    (3) An irrevocable letter of credit issued in the favor of DACO with 
a term of not less than two years; or
    (4) A certificate of participation in, and coverage by, an indemnity 
or insurance fund as approved by DACO, established and maintained by a 
State, backed by the full faith and credit of the applicable State, 
which guarantees depositors of the licensed warehouse full 
indemnification for the breach of any obligation of the licensed 
warehouse operator under the terms of the Act. If a warehouse operator 
files a bond or financial assurance in the form of a certification of 
participation in an indemnity or insurance fund, the certification may 
only be used to satisfy any deficiencies in assets above the minimum net 
worth requirement as prescribed in the applicable licensing agreement. A 
certificate of participation and coverage in this fund must be furnished 
to DACO annually; or
    (5) Other alternative instruments and forms of financial assurance 
approved by DACO as may be prescribed in the applicable licensing 
agreement.
    (b) The warehouse operator may not withdraw obligations required 
under this section until one year after license termination or until 
satisfaction of any claims against the obligations, whichever is later.

[[Page 58]]



Sec.  735.103  Amendments to license.

    FSA will issue an amended license upon:
    (a) Receipt of forms prescribed and furnished by DACO outlining the 
requested changes to the license;
    (b) Payment of applicable licensing and examination fees;
    (c) Receipt of bonding or other financial assurance if required in 
the applicable licensing agreement; and
    (d) Receipt of a report on the examination of the proposed 
facilities pending inclusion or exclusion, if determined necessary by 
DACO.



Sec.  735.104  Insurance requirements.

    Each warehouse operator must comply fully with the terms of 
insurance policies or contracts covering their licensed warehouse and 
all products stored therein, and must not commit any acts, nor permit 
others to do anything, that might impair or invalidate such insurance.



Sec.  735.105  Care of agricultural products.

    Each warehouse operator must at all times, including during any 
period of suspension of their license, exercise such care in regard to 
stored and non-storage agricultural products in their custody as 
required in the applicable licensing agreement.



Sec.  735.106  Excess storage and transferring of agricultural products.

    (a) If at any time a warehouse operator stores an agricultural 
product in a warehouse subject to a license issued under the Act in 
excess of the warehouse capacity for which it is licensed, such 
warehouse operator must immediately notify DACO of such excess storage 
and the reason for the storage.
    (b) A warehouse operator who desires to transfer stored agricultural 
products to another warehouse may do so either by physical movement, by 
other methods as may be provided in the applicable licensing agreement, 
or as authorized by DACO.



Sec.  735.107  Warehouse charges and tariffs.

    (a) A warehouse operator must not make any unreasonable or 
exorbitant charge for services rendered.
    (b) A warehouse operator must follow the terms and conditions for 
each new or revised warehouse tariff or schedule of charges and rates as 
prescribed in the applicable licensing agreement.



Sec.  735.108  Inspections and examinations of warehouses.

    (a) Warehouse operators must permit any agent of the Department to 
enter and inspect or examine, on any business day during the usual hours 
of business, any licensed warehouse, the offices of the warehouse 
operator, the books, records, papers, and accounts.
    (b) Routine and special inspections and examinations will be 
unannounced.
    (c) Warehouse operators must provide safe access to all storage 
facilities.
    (d) Warehouse operators must inform any agent of the Department, 
upon arrival, of any hazard.
    (e) Agents of the Department must accomplish inspections and 
examinations of warehouses in a manner that is efficient and cost-
effective without jeopardizing any inspection and examination integrity.



Sec.  735.109  Disaster loss to be reported.

    If at any time a disaster or loss occurs at or within any licensed 
warehouse, the warehouse operator must report immediately the occurrence 
of the disaster or loss and the extent of damage, to DACO.



Sec.  735.110  Conditions for delivery of agricultural products.

    (a) In the absence of a lawful excuse, a warehouse operator will, 
without unnecessary delay, deliver the agricultural product stored or 
handled in the warehouse on a demand made by:
    (1) The holder of the warehouse receipt for the agricultural 
product; or
    (2) The person that deposited the agricultural product, if no 
warehouse receipt has been issued.
    (b) Prior to delivery of the agricultural product, payment of the 
accrued charges associated with the storage or handling of the 
agricultural product, including satisfaction of the warehouse operator's 
lien, must be made if requested by the warehouse operator.
    (c) When the holder of a warehouse receipt requests delivery of an 
agricultural product covered by the warehouse

[[Page 59]]

receipt, the holder must surrender the warehouse receipt to the 
warehouse operator before obtaining the agricultural product.
    (d) A warehouse operator must cancel each warehouse receipt 
surrendered to the warehouse operator upon the delivery of the 
agricultural product for which the warehouse receipt was issued and in 
accordance with the applicable licensing agreement.
    (e) For the purpose of this part, unless prevented from doing so by 
force majeure, a warehouse operator will deliver or ship such 
agricultural products stored or handled in their warehouse as prescribed 
in the applicable licensing agreement.



Sec.  735.111  Fair treatment.

    (a) Contingent upon the capacity of a warehouse, a warehouse 
operator will deal in a fair and reasonable manner with persons storing, 
or seeking to store, an agricultural product in the warehouse if the 
agricultural product is:
    (1) Of the kind, type, and quality customarily stored or handled in 
the area in which the warehouse is located;
    (2) Tendered to the warehouse operator in a suitable condition for 
warehousing; and
    (3) Tendered in a manner that is consistent with the ordinary and 
usual course of business.
    (b) Nothing in this section will prohibit a warehouse operator from 
entering into an agreement with a depositor of an agricultural product 
to allocate available storage space.



Sec.  735.112  Terminal and futures contract markets.

    (a) DACO may issue service licenses to weigh-masters or their 
deputies to perform services relating to warehouse receipts that are 
deliverable in satisfaction of futures contracts in such contract 
markets or as may be prescribed in any applicable licensing agreement.
    (b) DACO may authorize a registrar of warehouse receipts issued for 
an agricultural product in a warehouse licensed under the Act that 
operates in any terminal market or in any futures contract market the 
official designated by officials of the State in which such market is 
located if such individual is not:
    (1) An owner or employee of the licensed warehouse;
    (2) The owner of, or an employee of the owner of, such agricultural 
product deposited in any such licensed warehouse; or
    (3) As may be prescribed in any applicable licensing or provider 
agreement.



        Subpart C_Inspectors, Samplers, Classifiers, and Weighers



Sec.  735.200  Service licenses.

    (a) FSA may issue to a person a license for:
    (1) Inspection of any agricultural product stored or handled in a 
warehouse subject to the Act;
    (2) Sampling of such an agricultural product;
    (3) Classification of such an agricultural product according to 
condition, grade, or other class and certify the condition, grade, or 
other class of the agricultural product;
    (4) Weighing of such an agricultural product and certify the weight 
of the agricultural product; or
    (5) Performing two or more services specified in paragraphs (a)(1), 
(a)(2), (a)(3) or (a)(4) of this section.
    (b) Each person seeking a license to perform activities described in 
this section must submit an application on forms furnished by DACO that 
contain, at a minimum, the following information:
    (1) The name, location and license number of the warehouses where 
the applicant would perform such activities;
    (2) A statement from the warehouse operator that the applicant is 
competent and authorized to perform such activities at specific 
locations; and
    (3) Evidence that the applicant is competent to inspect, sample, 
classify, according to grade or weigh the agricultural product.
    (c) The warehouse operator will promptly notify DACO in writing of 
any changes with respect to persons authorized to perform such 
activities at the licensed warehouse.

[[Page 60]]



Sec.  735.201  Agricultural product certificates; format.

    Each inspection, grade, class, weight or combination certificate 
issued under the Act by a licensee to perform such services must be:
    (a) In a format prescribed by DACO;
    (b) Issued and maintained in a consecutive order; and
    (c) As prescribed in the applicable licensing or provider agreement 
and authorized by DACO.



Sec.  735.202  Standards of grades for other agricultural products.

    Official Standards of the United States for any kind, class or grade 
of an agricultural product to be inspected must be used if such 
standards exist. Until Official Standards of the United States are fixed 
and established for the kind of agricultural product to be inspected, 
the kind, class and grade of the agricultural product must be stated, 
subject to the approval of DACO. If such standards do not exist for such 
an agricultural product, the following will be used:
    (a) State standards established in the State in which the warehouse 
is located,
    (b) In the absence of any State standards, in accordance with the 
standards, if any, adopted by the local board of trade, chamber of 
commerce, or by the agricultural product trade generally in the locality 
in which the warehouse is located, or
    (c) In the absence of the standards set forth in paragraphs (a) and 
(b) of this section, in accordance with any standards approved for the 
purpose by DACO.



                      Subpart D_Warehouse Receipts



Sec.  735.300  Warehouse receipt requirements.

    (a) Warehouse receipts may be:
    (1) Negotiable or non-negotiable;
    (2) For a single unit, multiple units, identity preserved or 
commingled lot; and
    (3) In a paper or electronic format that, besides complying with the 
requirements of the Act, must be in a format as prescribed in the 
applicable licensing or provider agreement and authorized by DACO.
    (b) The warehouse operator must:
    (1) At the request of a depositor of an agricultural product stored 
or handled in a warehouse licensed under the Act, issue a warehouse 
receipt to the depositor;
    (2) Not issue a warehouse receipt for an agricultural product unless 
the agricultural product is actually stored in their warehouse at the 
time of issuance;
    (3) Not issue a warehouse receipt until the quality, condition and 
weight of such an agricultural product is ascertained by a licensed 
inspector and weigher;
    (4) Not directly or indirectly compel or attempt to compel the 
depositor to request the issuance of a warehouse receipt omitting the 
statement of quality or condition;
    (5) Not issue an additional warehouse receipt under the Act for a 
specific identity-preserved or commingled agricultural product lot (or 
any portion thereof) if another warehouse receipt representing the same 
specific identity-preserved or commingled lot of the agricultural 
product is outstanding. No two warehouse receipts issued by a warehouse 
operator may have the same warehouse receipt number or represent the 
same agricultural product lot;
    (6) When issuing a warehouse receipt and purposefully omitting any 
information, notate the blank to show such intent;
    (7) Not deliver any portion of an agricultural product for which 
they have issued a negotiable warehouse receipt until the warehouse 
receipt has been surrendered to them and canceled as prescribed in the 
applicable licensing agreement;
    (8) Not deliver more than 90% of the receipted quantity of an 
agricultural product for which they have issued a non-negotiable 
warehouse receipt until such warehouse receipt has been surrendered or 
the depositor or the depositor's agent has provided a written order for 
the agricultural product and the warehouse receipt surrendered upon 
final delivery; and
    (9) Deliver, upon proper presentation of a warehouse receipt for any 
agricultural product, and payment or tender

[[Page 61]]

of all advances and charges, to the depositor or lawful holder of such 
warehouse receipt the agricultural product of such identity, quantity, 
grade and condition as set forth in such warehouse receipt.
    (c) In the case of a lost or destroyed warehouse receipt, a new 
warehouse receipt upon the same terms, subject to the same conditions, 
and bearing on its face the number and the date of the original 
warehouse receipt may be issued.



Sec.  735.301  Notification requirements.

    Warehouse operators must file with DACO the name and genuine 
signature of each person authorized to sign warehouse receipts for the 
licensed warehouse operator, and will promptly notify DACO of any 
changes with respect to persons authorized to sign.



Sec.  735.302  Paper warehouse receipts.

    Paper warehouse receipts must be issued as follows:
    (a) On distinctive paper specified by DACO;
    (b) Printed by a printer authorized by DACO; and
    (c) Issued, identified and maintained in a consecutive order.



Sec.  735.303  Electronic warehouse receipts.

    (a) Warehouse operators issuing EWR under the Act may issue EWR's 
for the agricultural product stored in their warehouse. Warehouse 
operators issuing EWR's under the Act must:
    (1) Only issue EWR's through one FSA-authorized provider annually;
    (2) Inform DACO of the identity of their provider, when they are a 
first time user of EWR's, 60 calendar days in advance of issuing an EWR 
through that provider. DACO may waive or modify this 60-day requirement 
as set forth in Sec.  735.2(b);
    (3) Before issuing an EWR, request and receive from FSA a range of 
consecutive warehouse receipt numbers that the warehouse will use 
consecutively for issuing their EWR's;
    (4) When using an authorized provider, issue and cancel all 
warehouse receipts as EWR's;
    (5) Cancel an EWR only when they are the holder of the warehouse 
receipt;
    (6) Be the holder of an EWR to correct information contained within 
any required data field;
    (7) Receive written authorization from FSA at least 30 calendar days 
before changing providers. Upon authorization, they may request their 
current provider to transfer their EWR data from its Central Filing 
System (CFS) to the CFS of the authorized provider whom they select; and
    (8) Notify all holders of EWR's by inclusion in the CFS at least 30 
calendar days before changing providers, unless otherwise required or 
allowed by FSA.
    (b) An EWR establishes the same rights and obligations with respect 
to an agricultural product as a paper warehouse receipt and possesses 
the following attributes:
    (1) The holder of an EWR will be entitled to the same rights and 
privileges as the holder of a paper warehouse receipt.
    (2) Only the current holder of the EWR may transfer the EWR to a new 
holder.
    (3) The identity of the holder must be confidential and included as 
information for every EWR.
    (4) Only one person may be designated as the holder of an EWR at any 
one time.
    (5) A warehouse operator may not issue an EWR on a specific 
identity-preserved or commingled lot of agricultural product or any 
portion thereof while another valid warehouse receipt representing the 
same specific identity-preserved or commingled lot of agricultural 
product remains not canceled. No two warehouse receipts issued by a 
warehouse operator may have the same warehouse receipt number or 
represent the same agricultural product lot.
    (6) An EWR may only be issued to replace a paper warehouse receipt 
if requested by the current holder of the paper warehouse receipt.
    (7) Holders and warehouse operators may authorize any other user of 
their provider or the provider itself to act on

[[Page 62]]

their behalf with respect to their activities with this provider. This 
authorization must be in writing, and acknowledged and retained by the 
warehouse operator and provider.
    (c) A warehouse operator not licensed under the Act may, at the 
option of the warehouse operator, issue EWRs in accordance with this 
subpart, except this option does not apply to a warehouse operator that 
is licensed under State law to store agricultural products in a 
warehouse if the warehouse operator elects to issue an EWR under State 
law.



                     Subpart E_Electronic Providers



Sec.  735.400  Administration.

    This subpart sets forth the regulations under which DACO may 
authorize one or more electronic systems under which:
    (a) Electronic documents relating to the shipment, payment, and 
financing of the sale of agricultural products may be issued or 
transferred; or
    (b) Electronic receipts may be issued and transferred.



Sec.  735.401  Electronic warehouse receipt and USWA electronic document
providers.

    (a) To establish a USWA-authorized system to issue and transfer 
EWR's and USWA electronic documents, each applicant must submit to DACO 
information and documents determined by DACO to be sufficient to 
determine that the applicant can comply with the provisions of the Act. 
Each provider operating pursuant to this section must meet the following 
requirements:
    (1) Have and maintain a net worth as specified in the applicable 
provider agreement;
    (2) Maintain two insurance policies; one for ``errors and 
omissions'' and another for ``fraud and dishonesty.'' Each policy's 
minimum coverage and maximum deductible amounts and applicability of 
other forms of financial assurances as set forth in Sec.  735.14 will be 
prescribed in the applicable provider agreement. Each policy must 
contain a clause requiring written notification to FSA 30 days prior to 
cancellation or as prescribed by FSA;
    (3) Submit a current review or an audit level financial statement 
prepared according to generally accepted accounting standards as defined 
by the American Institute of Certified Public Accountants;
    (4) For any entity that is not an individual, a document that 
establishes proof of the existence, such as:
    (i) For a partnership, an executed partnership agreement; and
    (ii) For a corporation:
    (A) Articles of incorporation certified by the Secretary of State of 
the applicable State of incorporation;
    (B) Bylaws; and
    (C) Permits to do business; and
    (iii) For a limited partnership, an executed limited partnership 
agreement; and
    (iv) For a limited liability company:
    (A) Articles of organization or similar documents; and
    (B) Operating agreement or similar agreement.
    (5) Meet any additional financial requirements as set forth in the 
applicable provider agreement;
    (6) Pay user fees annually to FSA, as set and announced annually by 
FSA prior to April 1 of each calendar year; and
    (7) Operate a CFS as a neutral third party in a confidential and 
secure fashion independent of any outside influence or bias in action or 
appearance.
    (b) The provider agreement will contain, but not be limited to, 
these basic elements:
    (1) Scope of authority;
    (2) Minimum document and warehouse receipt requirements;
    (3) Liability;
    (4) Transfer of records protocol;
    (5) Records;
    (6) Conflict of interest requirements;
    (7) USDA common electronic information requirements;
    (8) Financial requirements
    (9) Terms of insurance policies or assurances;
    (10) Provider's integrity statement;
    (11) Security audits; and
    (12) Submission, authorization, approval, use and retention of 
documents.
    (c) DACO may suspend or terminate a provider's agreement for cause 
at any time.

[[Page 63]]

    (1) Hearings and appeals will be conducted in accordance with 
procedures as set forth in Sec. Sec.  735.6 and 735.8.
    (2) Suspended or terminated providers may not execute any function 
pertaining to USDA, USWA documents, or USWA or State EWR's during the 
pendency of any appeal or subsequent to this appeal if the appeal is 
denied, except as authorized by DACO.
    (3) The provider or DACO may terminate the provider agreement 
without cause solely by giving the other party written notice 60 
calendar days prior to termination.
    (d) Each provider agreement will be automatically renewed annually 
on April 30th as long as the provider complies with the terms contained 
in the provider agreement, the regulations in this subpart, and the Act.



Sec.  735.402  Providers of other electronic documents.

    (a) To establish a USWA-authorized system to issue and transfer OED, 
each applicant must submit to DACO information and documents determined 
by DACO to be sufficient to determine that the applicant can comply with 
the provisions of the Act. Each provider operating pursuant to this 
section must meet the following requirements:
    (1) Have and maintain a net worth as specified in the applicable 
provider agreement;
    (2) Maintain two insurance policies; one for 'errors and omissions' 
and another for 'fraud and dishonesty'. Each policy's minimum coverage 
and maximum deductible amounts and applicability of other forms of 
financial assurances as set forth in Sec.  735.14 will be prescribed in 
the applicable provider agreement. Each policy must contain a clause 
requiring written notification to FSA 30 days prior to cancellation or 
as prescribed by FSA;
    (3) Submit a current review or an audit level financial statement 
prepared according to generally accepted accounting standards as defined 
by the American Institute of Certified Public Accountants;
    (4) For any entity that is not an individual, a document that 
establishes proof of the existence, such as:
    (i) For a partnership, an executed partnership agreement; and
    (ii) For a corporation:
    (A) Articles of incorporation certified by the Secretary of State of 
the applicable State of incorporation;
    (B) Bylaws; and
    (C) Permits to do business; and
    (iii) For a limited partnership, an executed limited partnership 
agreement; and
    (iv) For a limited liability company:
    (A) Articles of organization or similar documents; and
    (B) Operating agreement or similar agreement.
    (5) Meet any additional financial requirements as set forth in the 
applicable provider agreement;
    (6) Pay user fees annually to FSA, as set and announced annually by 
FSA prior to April 1 of each calendar year; and
    (7) Operate a CFS as a neutral third party in a confidential and 
secure fashion independent of any outside influence or bias in action or 
appearance.
    (b) The provider agreement will contain, but not be limited to, 
these basic elements:
    (1) Scope of authority;
    (2) Minimum document and warehouse receipt requirements;
    (3) Liability;
    (4) Transfer of records protocol;
    (5) Records;
    (6) Conflict of interest requirements;
    (7) USDA common electronic information requirements;
    (8) Financial requirements;
    (9) Terms of insurance policies or assurances;
    (10) Provider's integrity statement;
    (11) Security audits; and
    (12) Submission, authorization, approval, use and retention of 
documents.
    (c) DACO may suspend or terminate a provider's agreement for cause 
at any time.
    (1) Hearings and appeals will be conducted in accordance with 
procedures as set forth in Sec. Sec.  735.6 and 735.8.
    (2) Suspended or terminated providers may not execute any function 
pertaining to USDA, USWA documents, USWA or State EWR's or OED's during 
the pendency of any appeal or subsequent to this appeal if the appeal is 
denied, except as authorized by DACO.
    (d) Each provider agreement will be automatically renewed annually 
on

[[Page 64]]

April 30th as long as the provider complies with the terms contained in 
the provider agreement, the regulations in this subpart, and the Act.
    (e) In addition to audits prescribed in this section the provider 
must submit a copy of any audit, examination or investigative report 
prepared by any Federal regulatory agency with respect to the provider 
including agencies such as, but not limited to, the Comptroller of the 
Currency, Department of the Treasury, the Federal Trade Commission, and 
the Commodity Futures Trading Commission.



Sec.  735.403  Audits.

    (a) No later than 120 calendar days following the end of the 
provider's fiscal year, the provider authorized under Sec. Sec.  735.401 
and 735.402 must submit to FSA an annual audit level financial statement 
and an electronic data processing audit that meets the minimum 
requirements as provided in the applicable provider agreement. The 
electronic data processing audit will be used by DACO to evaluate 
current computer operations, security, disaster recovery capabilities of 
the system, and compatibility with other systems authorized by DACO.
    (b) Each provider will grant the Department unlimited, free access 
at any time to all records under the provider's control relating to 
activities conducted under this part and as specified in the applicable 
provider agreement.



Sec.  735.404  Schedule of charges and rates.

    (a) A provider authorized under Sec. Sec.  735.401 or 735.402 must 
furnish FSA with copies of its current schedule of charges and rates for 
all services as they become effective.
    (b) Charges and rates assessed any user by the provider must be in 
effect for a minimum period of one year.
    (c) Providers must furnish FSA and all users a 60-calendar day 
advance notice of their intent to change any charges and rates.

                           PART 743 [RESERVED]

[[Page 65]]



                      SUBCHAPTER D_SPECIAL PROGRAMS





PART 750_SOIL BANK--Table of Contents



    Editorial Note: Part 750 (formerly part 485 of title 6), published 
at 21 FR 6289, Aug. 22, 1956, and redesignated at 26 FR 5788, June 29, 
1961, is no longer carried in the Code of Federal Regulations. This 
deletion does not relieve any person of any obligation or liability 
incurred under these regulations, nor deprive any person of any rights 
received or accrued under the provisions of this part. For Federal 
Register citations affecting this part, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985,'' published in seven 
separate volumes.



PART 755_REIMBURSEMENT TRANSPORTATION COST PAYMENT PROGRAM FOR
GEOGRAPHICALLY DISADVANTAGED FARMERS AND RANCHERS--Table of Contents



Sec.
755.1 Administration.
755.2 Definitions.
755.3 Time and method of application.
755.4 Eligibility.
755.5 Proof of eligible reimbursement costs incurred.
755.6 Availability of funds.
755.7 Transportation rates.
755.8 Calculation of individual payments.
755.9 Misrepresentation and scheme or device.
755.10 Death, incompetence, or disappearance.
755.11 Maintaining records.
755.12 Refunds; joint and several liability.
755.13 Miscellaneous provisions and appeals.

    Authority: 7 U.S.C. 8792.

    Source: 75 FR 34340, June 17, 2010, unless otherwise noted.



Sec.  755.1  Administration.

    (a) This part establishes the terms and conditions under which the 
Reimbursement Transportation Cost Payment (RTCP) Program for 
geographically disadvantaged farmers and ranchers will be administered.
    (b) The RTCP Program will be administered under the general 
supervision of the FSA Administrator, or a designee, and will be carried 
out in the field by FSA State and county committees and FSA employees.
    (c) FSA State and county committees, and representatives and 
employees thereof, do not have the authority to modify or waive any of 
the provisions of the regulations of this part, except as provided in 
paragraph (e) of this section.
    (d) The FSA State committee will take any action required by the 
provisions of this part that has not been taken by the FSA county 
committee. The FSA State committee will also:
    (1) Correct or require an FSA county committee to correct any action 
taken by the county committee that is not in compliance with the 
provisions of this part.
    (2) Require an FSA county committee to not take an action or 
implement a decision that is not in compliance with the provisions of 
this part.
    (e) No provision or delegation of this part to an FSA State 
committee or a county committee will preclude the FSA Administrator, or 
a designee, from determining any question arising under the program or 
from reversing or modifying any determination made by a State committee 
or a county committee.
    (f) The Deputy Administrator for Farm Programs, FSA, may waive or 
modify program requirements of this part in cases where failure to meet 
requirements does not adversely affect the operation of the program and 
where the requirement is not statutorily mandated.



Sec.  755.2  Definitions.

    The following definitions apply to this part. The definitions in 
parts 718 and 1400 of this title also apply, except where they may 
conflict with the definitions in this section.
    Actual transportation rate means the transportation rate that 
reflects the actual transportation costs incurred and can be determined 
by supporting documentation.
    Agricultural commodity means any agricultural commodity (including 
horticulture, aquaculture, and floriculture), food, feed, fiber, 
livestock (including elk, reindeer, bison, horses, or deer), or insects, 
and any product thereof.

[[Page 66]]

    Agricultural operation means a parcel or parcels of land; or body of 
water applicable to aquaculture, whether contiguous or noncontiguous, 
constituting a cohesive management unit for agricultural purposes. An 
agricultural operation will be regarded as located in the county in 
which the principal dwelling is situated, or if there is no dwelling 
thereon, it will be regarded to be in the county in which the major 
portion of the land or applicable body of water is located.
    Application period means the period established by the Deputy 
Administrator for geographically disadvantaged farmers and ranchers to 
apply for program benefits.
    County office or FSA county office means the FSA offices responsible 
for administering FSA programs in a specific area, sometimes 
encompassing more than one county, in a State.
    Department or USDA means the U.S. Department of Agriculture.
    Eligible reimbursement amount means the reported costs incurred to 
transport an agricultural commodity or input used to produce an 
agricultural commodity in an insular area, Alaska, or Hawaii, over a 
distance of more than 30 miles. The amount is calculated by multiplying 
the number of units of the reported transportation amount times the 
applicable transportation fixed, set, or actual rate times the 
applicable FY allowance (COLA).
    Farm Service Agency or FSA means the Farm Service Agency of the 
USDA.
    Fiscal year or FY means the year beginning October 1 and ending the 
following September 30. The fiscal year will be designated for this part 
by year reference to the calendar year in which it ends. For example, FY 
2010 is from October 1, 2009, through September 30, 2010 (inclusive).
    Fixed transportation rate means the per unit transportation rate 
determined by FSA to reflect the transportation cost applicable to an 
agricultural commodity or input used to produce an agricultural 
commodity in a particular region.
    FY allowance (COLA) means the nonforeign area cost of living 
allowance or post differential, as applicable, for that FY set by Office 
of Personnel Management for Federal employees stationed in Alaska, 
Hawaii, and other insular areas, as authorized by 5 U.S.C. 5941 and E.O. 
10000 and specified in 5 CFR part 591, subpart B, appendices A and B.
    Geographically disadvantaged farmer or rancher means a farmer or 
rancher in an insular area, Alaska, or Hawaii.
    Input transportation costs means those transportation costs of 
inputs used to produce an agricultural commodity including, but not 
limited to, air freight, ocean freight, and land freight of chemicals, 
feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, and 
other inputs as determined by FSA.
    Insular area means the Commonwealth of Puerto Rico; Guam; American 
Samoa; the Commonwealth of the Northern Mariana Islands; the Federated 
States of Micronesia; the Republic of the Marshall Islands; the Republic 
of Palau; and the Virgin Islands of the United States.
    Payment amount means the amount due a producer that is the sum of 
all eligible reimbursement amounts, as calculated by FSA subject to the 
availability of funds, and subject to an $8,000 cap per producer per FY.
    Producer means any geographically disadvantaged farmer or rancher 
who is an 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 title, who is, or 
whose members are, a citizen of or legal resident alien in the United 
States, and who, as determined by the Secretary, shares in the risk of 
producing an agricultural commodity in substantial commercial 
quantities, and who is entitled to a share of the agricultural commodity 
from the agricultural operation.
    Reported transportation amount means the reported number of units 
(such as pounds, bushels, pieces, or parts) applicable to an 
agricultural commodity or input used to produce an agricultural 
commodity, which is used in calculating the eligible reimbursement 
amount.
    Set transportation rate means the transportation rate established by 
FSA for a commodity or input for which there is not a fixed 
transportation rate

[[Page 67]]

or supporting documentation of the actual transportation rate.
    United States means the 50 States of the United States of America, 
the District of Columbia, the Commonwealths of Puerto Rico and the 
Northern Mariana Islands, and any other territory or possession of the 
United States.
    Verifiable records means evidence that is used to substantiate the 
amount of eligible reimbursements by geographically disadvantaged 
farmers and ranchers in an agricultural operation that can be verified 
by FSA through an independent source.



Sec.  755.3  Time and method of application.

    (a) To be eligible for payment, producers must obtain and submit a 
completed application for payment and meet other eligibility 
requirements specified in this part. Producers may obtain an application 
in person, by mail, or by facsimile from any county FSA office. In 
addition, producers may download a copy of the application at 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 where the 
agricultural operation is located, but, in any case, must be received by 
the FSA county office by the close of business on the last day of the 
application period established by the Deputy Administrator.
    (c) All producers who incurred transportation costs for eligible 
reimbursements and who share in the risk of an agricultural operation 
must certify to the information on the application before the 
application will be considered complete. FSA may require the producer to 
provide documentation to support all verifiable records.
    (d) Each producer requesting payment under this part 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 FSA. Refusal to allow FSA 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 Federal Government 
may be punishable by imprisonment, fines and other penalties or 
sanctions.
    (e) To ensure all producers are provided an opportunity to submit 
actual costs for reimbursement at the actual cost rate, applicants will 
have 30 days after the end of the FY to provide supporting documentation 
of actual transportation costs to the FSA County Office. The actual 
costs documented in supporting documentation will override previously 
reported costs of eligible reimbursable costs at the fixed or set rate 
made during the application period.
    (f) If verifiable records are not provided to FSA, the producer will 
be ineligible for payment.
    (g) If supporting documentation is provided within 30 days after the 
end of the FY, but an application was not submitted to the applicable 
FSA County Office before the end of the application period, the producer 
is not eligible for payment.
    (h) Producers 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 FSA, any application received after the 
close of business on such date will not be eligible for benefits under 
this program.



Sec.  755.4  Eligibility.

    (a) To be eligible to receive payments under this part, a 
geographically disadvantaged farmer or rancher must:
    (1) Be a producer of an eligible agricultural commodity in 
substantial commercial quantities;
    (2) Incur transportation costs for the transportation of the 
agricultural commodity or input used to produce the agricultural 
commodity;
    (3) Submit an accurate and complete application for payment as 
specified in Sec.  755.3; and
    (4) Be in compliance with the wetland and highly erodible 
conservation requirements in part 12 of this title and meet the adjusted 
gross income and

[[Page 68]]

pay limit eligibility requirements in part 1400 of this title, as 
applicable, except that the $8,000 cap provided for in this rule is a 
per producer cap, not a per person cap. For example, a partnership of 
four individuals would be considered one producer, not four persons, for 
the purposes of this cap and thus the partnership could only generate a 
single $8,000 payment under this program if the cap holds because of 
full subscription of the program.
    (b) Individual producers in an agricultural operation that is an 
entity are only eligible for a payment based on their share of the 
operation. A producer is not eligible for payment based on the share of 
production of any other producer.
    (c) Multiple producers, such as the buyer and seller of a commodity 
(for example, a producer of hay and a livestock operation that buys the 
hay), are not eligible for payments for the same eligible transportation 
cost. Unless the multiple producers agree otherwise, only the last buyer 
will be eligible for the payment.
    (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 
part, 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 RTCP payments.



Sec.  755.5  Proof of eligible reimbursement costs incurred.

    (a) To be eligible for reimbursement based on FSA fixed or set rates 
as specified in Sec.  755.7, the requirements specified in paragraphs 
(b) and (c) of this section must be met at the time of the application. 
To be eligible for reimbursement of actual costs, the requirements of 
paragraph (d) must also be met, within 30 days after the end of the 
applicable fiscal year.
    (b) Eligible verifiable records to support eligible reimbursement 
costs include, but are not limited to:
    (1) Invoices;
    (2) Account statements;
    (3) Contractual Agreements; or
    (4) Bill of Lading.
    (c) Verifiable records must show:
    (1) Name of producer(s);
    (2) Commodity and unit of measure;
    (3) Type of input(s) associated with transportation costs;
    (4) Date(s) of service;
    (5) Name of person or entity providing the service, as applicable, 
and;
    (6) Retail sales receipts with verifiable records handwritten as 
applicable.
    (d) To be eligible for reimbursement based on actual costs, the 
producer must provide supporting documentation that documents the 
specific costs incurred for transportation of each commodity or input. 
Such documentation must:
    (1) Show transportation costs for each specific commodity or input, 
and
    (2) Show the units of measure for each commodity or input, such that 
FSA can determine the transportation cost per unit.



Sec.  755.6  Availability of funds.

    (a) Payments under this part are subject to the availability of 
funds.
    (b) A reserve will be created to handle appeals and errors.



Sec.  755.7  Transportation rates.

    (a) Payments may be based on fixed, set, or actual transportation 
rates. Fixed and set transportation rates will be established by FSA, 
based on available data for transportation costs for that commodity or 
input in the applicable State or insular region.
    (b) Fixed transportation rates will establish per unit 
transportation costs for each eligible commodity or input used to 
produce the eligible commodity.
    (c) Set transportation rates will be established for those 
transportation costs that are not on the FSA list of fixed rates and for 
which an actual rate cannot be documented. The set transportation rate 
will be set by FSA, based on available data of transportation costs for 
similar commodities and inputs.
    (d) Actual transportation rates will be determined based on 
supporting documentation.

[[Page 69]]



Sec.  755.8  Calculation of individual payments.

    (a) Transportation cost for each commodity or input will be 
calculated by multiplying the number of reported eligible units (the 
reported transportation amount) times the fixed, set, or actual 
transportation rate, as applicable.
    (b) Eligible reimbursement amounts will be calculated by multiplying 
the result of paragraph (a) of this section times the appropriate FY 
COLA percentage, as provided in this part.
    (c) If transported inputs are used for both eligible and ineligible 
commodities, the eligible reimbursable costs will be determined on a 
revenue share of eligible commodities times input cost, as determined by 
FSA, and transportation may be allowed only for those commodities which 
were produced for the commercial market.
    (d) The total payment amount for a producer is the sum of all 
eligible reimbursable amounts determined in paragraph (b) of this 
section for all commodities and inputs used to produce the eligible 
commodities listed on the application.
    (e) Payment amounts are subject to $8,000 cap per FY per producer as 
defined in this part, not per ``person'' or ``legal entity'' as those 
terms might be defined in part 1400 of this title.
    (f) In the event that approval of all calculated payment amounts 
would result in expenditures in excess of the amount available, FSA will 
recalculate the payment amounts in a manner that FSA determines to be 
fair and reasonable.



Sec.  755.9  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, a producer will be ineligible to receive payments under this part 
if the producer is determined by FSA to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this part;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any payment to any producer engaged in a misrepresentation, 
scheme, or device, must be refunded with interest together with such 
other sums as may become due. Any producer engaged in acts prohibited by 
this section and receiving payment under this part will be jointly and 
severally liable with other producers involved in such claim for 
benefits for any refund due under 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.  755.10  Death, incompetence, or disappearance.

    (a) In the case of the death, incompetency, or disappearance of a 
person or the dissolution of an entity that is eligible to receive a 
payment in accordance with this part, such alternate person or persons 
specified in part 707 of this chapter may receive such payment, as 
determined appropriate by FSA.
    (b) Payments may be made to an otherwise eligible producer who is 
now deceased or to 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 
over the deceased producer's estate or a 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 be 
identified in the application for payment.



Sec.  755.11  Maintaining records.

    Persons applying for payment under this part 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 to the producer under this part.



Sec.  755.12  Refunds; joint and several liability.

    (a) Any producer that receives excess payment, payment as the result 
of erroneous information provided by any person, or payment resulting 
from a

[[Page 70]]

failure to comply with any requirement or condition for payment under 
this part, must refund the amount of that payment to FSA.
    (b) Any refund required will be due from the date of the 
disbursement by the agency with interest determined in accordance with 
paragraph (d) of this section and late payment charges as provided in 
part 1403 of this title.
    (c) Each producer that has an interest in the agricultural operation 
will be jointly and severally liable for any refund and related charges 
found to be due to FSA.
    (d) Interest will be applicable to any refunds to FSA required in 
accordance with parts 792 and 1403 of this title except as otherwise 
specified in this part. Such interest will be charged at the rate that 
the U.S. Department of the Treasury charges FSA for funds, and will 
accrue from the date FSA made the payment to the date the refund is 
repaid.
    (e) FSA may waive the accrual of interest if it determines that the 
cause of the erroneous payment was not due to any action of the person 
or entity, or was beyond the control of the person or entity committing 
the violation. Any waiver is at the discretion of FSA alone.



Sec.  755.13  Miscellaneous provisions and appeals.

    (a) Offset. FSA may offset or withhold any amount due to FSA from 
any benefit provided under this part in accordance with the provisions 
of part 1403 of this title.
    (b) Claims. Claims or debts will be settled in accordance with the 
provisions of part 1403 of this title.
    (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 eligible 
reimbursable costs 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 part 
1404 of this title.
    (e) Violations regarding controlled substances. The provisions of 
Sec.  718.6 of this chapter, which generally limit program payment 
eligibility for persons who have engaged in certain offenses with 
respect to controlled substances, will apply to this part.
    (f) Appeals. The appeal regulations specified in parts 11 and 780 of 
this chapter apply to determinations made under this part.



PART 759_DISASTER DESIGNATIONS AND NOTIFICATIONS--Table of Contents



Sec.
759.1 Administration.
759.2 Purpose.
759.3 Abbreviations and definitions.
759.5 Secretarial disaster area determination and notification process.
759.6 EM to be made available.

    Authority: 5 U.S.C. 301, 7 U.S.C. 1961 and 1989.

    Source: 77 FR 41254, July 13, 2012, unless otherwise noted.



Sec.  759.1  Administration.

    (a) This part will be administered under the general supervision and 
direction of the Administrator, Farm Service Agency (FSA).
    (b) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this part as amended or 
supplemented.
    (c) The Administrator will take any action required by the 
regulations of this part that the Administrator determines has not 
already been taken. The Administrator will also:
    (1) Correct or require correction of any action taken that is not in 
accordance with the regulations of this part; or
    (2) Require withholding taking any action that is not in accordance 
with this part.
    (d) No provision or delegation in these regulations will preclude 
the Administrator or a designee or other such person, from determining 
any question arising under this part, or from reversing or modifying any 
determination made under this part.
    (e) Absent a delegation to the contrary, this part will be 
administered by the Deputy Administrator for Farm

[[Page 71]]

Programs of FSA on behalf of the Administrator of FSA or the Secretary, 
but nothing in this part will inhibit the ability of the Administrator 
of FSA or the person holding the equivalent position in the event of a 
reorganization to delegate the functions of DAFP under these regulations 
to another person. Likewise, nothing shall inhibit the ability of the 
Secretary to reassign any duties with respect to the designations of 
disasters under this part.



Sec.  759.2  Purpose.

    (a) This part specifies the types of incidents that can result in an 
area being determined a disaster area, which under other regulations 
makes qualified farmers in such areas eligible for Emergency loans (EM) 
or eligible for such other assistance that may be available, based on 
Secretarial disaster designations. Nothing in this part overrides 
provision of those regulations that govern the actual administration and 
availability of the disaster assistance regulations.
    (b) This part specifies the responsibility of the County Emergency 
Board (CEB), State Emergency Board (SEB), and the State Executive 
Director (SED) in regard to Secretarial Designations with regards to 
disasters. It also addresses matters relating to the handling of a 
Presidential declaration of disaster or the imposition of a USDA 
quarantine by the Secretary with respect to triggering the availability 
of EM loans.



Sec.  759.3  Abbreviations and definitions.

    (a) Abbreviations. The following abbreviations apply to this part.
    CEB means the County Emergency Board.
    CED means the County Executive Director.
    DAFP means the Deputy Administrator for Farm Programs of the Farm 
Service Agency.
    EM means Emergency loan administered under 7 CFR part 764.
    FSA means the Farm Service Agency.
    LAR means the Loss Assessment Report.
    SEB means the State Emergency Board.
    SED means the State Executive Director.
    USDA means the United States Department of Agriculture.
    (b) Definitions. The following definitions apply to this part.
    Administrator means the Administrator of FSA.
    Contiguous county is used in reference to a primary county as 
defined in this section. A contiguous county is any county whose 
boundary touches at any point with that of the primary county. For 
programs other than the EM Program, disaster assistance regulations will 
specify whether benefits will be available only in the primary counties 
or also in the contiguous counties. For the EM Program that issue is 
addressed in Sec.  759.6, unless specified otherwise in the disaster 
assistance regulations for other programs or in Sec.  759.6 for the EM 
Program, only the ``primary'' county will be considered the qualifying 
``disaster county.'' Therefore, if the disaster assistance regulations 
specify that they cover the disaster area and contiguous counties, then 
the only eligible counties would be the primary county and those 
contiguous to that county. Coverage would not include coverage of those 
counties that are in turn contiguous to those counties that are 
contiguous to the primary county.
    County is used when referring to a geographical area, a local 
administrative subdivision of a State or a similar political subdivision 
of the United States generally considered to be in county usage, for 
example, it includes an area referred to as a ``county'' or ``parish.'' 
Except where otherwise specified, the use of the term county or similar 
political subdivision is for administrative purposes only.
    CEB is comprised of the representatives of several USDA agencies 
that have responsibilities for reporting the occurrence of, and 
assessing the damage caused by, a natural disaster, and for requesting 
approval in declaring a county a disaster area.
    CED is the person in charge of administering the local FSA county 
office for a particular county.
    Disaster area is the county or counties declared or designated as a 
disaster area as a result of natural disaster related losses. The 
disaster area only includes the primary counties, but

[[Page 72]]

benefits may be available in the counties contiguous to the primary 
county if so provided by the disaster assistance regulations or, in the 
case of the EM Program, in Sec.  759.6.
    LAR is a loss assessment report prepared by the CEB relating to the 
State and county where the potential disaster occurred and for which 
county or counties the CEB is responsible. The LAR includes as 
applicable, but is not limited to, starting and ending dates of the 
disaster, crop year affected, type of disaster incident, area of county 
affected by disaster; total number of farms affected, crop loss or 
pasture loss data associated with the applicable disaster (or both types 
of losses), livestock destroyed, and other property losses.
    Natural disaster is a disaster in which unusual and adverse weather 
conditions or other natural phenomena have substantially affected 
farmers by causing severe physical losses, severe production losses, or 
both.
    Primary county is a county determined to be a disaster area.
    Presidential declaration is a declaration of a disaster by the 
President under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121-2) requiring Federal emergency assistance 
to supplement State and local efforts to save lives and protect 
property, public health and safety, or to avert or lessen the threat of 
a disaster.
    Production losses (severe) within a county are those in which there 
has been a reduction county-wide of at least a 30 percent or more loss 
of production of at least one crop in the county.
    SEB means the State Emergency Board which is comprised of the 
representatives of several USDA agencies having emergency program 
responsibilities at the State level. The board is required to respond to 
emergencies and carry out the Secretary's emergency preparedness 
responsibilities.
    SED is the person who serves as the Chairperson of the USDA SEB in 
each State, is responsible for providing the leadership and coordination 
for all USDA emergency programs at the State level, and is subject to 
the supervision of DAFP.
    Severe physical losses means, for the purpose of determining an 
Administrator's declaration of physical loss, losses that consist of 
severe damage to, or destruction of: Physical farm property including 
farmland (except sheet erosion); structures on the land including, but 
not limited to, building, fences, dams; machinery, equipment, supplies, 
and tools; livestock, livestock products, poultry and poultry products; 
harvested crops and stored crops.
    Substantially affected when used to refer to producers and to the 
relationship of a particular producer to a particular disaster means a 
producer who has sustained qualifying physical or production losses, as 
defined in this section, as a result of the natural disaster.
    U.S. Drought Monitor is a system for classifying drought severity 
according to a range of abnormally dry to exceptional drought. It is a 
collaborative effort between Federal and academic partners that is 
produced on a weekly basis to synthesize multiple indices, outlooks, and 
drought impacts on a map and in narrative form. This synthesis of 
indices is reported by the National Drought Mitigation Center.
    United States means each of the several States, the Commonwealth of 
Puerto Rico, the Virgin Islands of the United States, Guam, American 
Samoa, and the Commonwealth of the Northern Mariana Islands. Extension 
of disaster assistance, following a disaster designation, to insular 
areas of the United States not covered by this definition of ``United 
States'' will be only as authorized by law, and as determined by the 
Administrator on behalf of the Secretary to be appropriate.



Sec.  759.5  Secretarial disaster area determination and notification 
process.

    (a) U.S. Drought Monitor. With respect to drought and without 
requiring an LAR:
    (1) If any portion of a county is physically located in an area with 
a Drought Monitor Intensity Classification value of D3 (drought-extreme) 
or higher during any part of the growing season of the crops affected by 
the disaster in the county, then the county will be designated a 
disaster area by the Secretary.

[[Page 73]]

    (2) If any portion of a county meets the threshold Drought Monitor 
Intensity Classification value of D2 (drought-severe) for at least 8 
consecutive weeks during the growing season of affected crops, then the 
county will be designated a disaster area by the Secretary.
    (b) CEB and SEB recommendations. In instances where counties have 
been impacted by a disaster but the county has not been designated a 
disaster area under the provisions of paragraph (a) of this section, CEB 
will make a disaster designation recommendation request to SEB when a 
disaster has resulted in severe production losses. The determination of 
the sufficiency of the production losses will be governed by the 
provisions in paragraph (c) of this section. The CEB may make such 
efforts as are needed to identify counties that have been impacted and 
had such production losses. A farmer, Indian Tribal Council, or local 
governing body may initiate the process by reporting production losses 
or drought conditions to CEB and suggesting that there be a 
recommendation in favor of designating a county as a disaster area. 
Recommendations by a CEB in favor of a disaster designation by a CEB 
under this paragraph are subject to the following:
    (1) A LAR is required as part of a CEB disaster designation request. 
CEB will submit a disaster designation request with a LAR to SEB for 
review and recommendation for approval by the Secretary. CEB's written 
request and SEB recommendation must be submitted within three months of 
the last day of the occurrence of a natural disaster.
    (2) If SEB determines a qualifying natural disaster and loss have 
occurred, SEB will forward the recommendation to the Administrator. The 
natural disaster may include drought conditions that were not 
sufficiently severe to meet the criteria in paragraph (a) of this 
section. Since the U.S. Drought Monitor tracks only drought conditions, 
not specifically agricultural losses resulting from those conditions, it 
is possible for a drought that does not meet the criteria in paragraph 
(a) of this section to result in production losses that constitute a 
natural disaster.
    (3) The Secretary or the Secretary's designee will make disaster 
area determinations. The Secretary may delegate the authority to the 
SED. In such case, the SED will act on behalf of the Secretary, subject 
to review by DAFP as may be appropriate and consistent with the 
delegation. The delegation of authority to the SED may be revoked by the 
authority making that delegation or by other authorized person. In all 
cases, DAFP may reverse any SED determination made in accordance with 
this section unless the delegation to the SED specifies that such review 
is not allowed.
    (c) Eligible production losses. For purposes of making 
determinations under paragraph (b) of this section, in order for an area 
to be declared a disaster area under paragraph (b) of this section based 
on production losses, the county must have had production losses of 30 
percent of at least one crop in the county as the result of a natural 
disaster.
    (d) Discretionary exception to production losses for designating a 
county as a disaster county. For purposes of the EM program only, unless 
otherwise specified in the designation, a county may be designated by 
DAFP as a designated disaster county even though the conditions 
specified in paragraphs (a) through (c) of this section are not present 
so long as the disaster has otherwise produced such significant 
production losses, or other such extenuating circumstances so as to 
justify, in the opinion of the Secretary, the designation of a county as 
a disaster area. In making this determination, the Secretary may 
consider all relevant factors including such factors as the nature and 
extent of production losses; the number of farmers who have sustained 
qualifying production losses; the number of farmers that other lenders 
in the county indicate they will not be in position to provide emergency 
financing; whether the losses will cause undue hardship to a certain 
segment of farmers in the county; whether damage to particular crops has 
resulted in undue hardship; whether other Federal or State benefit 
programs, which are being made available due to the same

[[Page 74]]

disaster, will consequently lessen undue hardship and the demand for EM; 
and any other factors considered relevant.



Sec.  759.6  EM to be made available.

    (a) For purposes of the EM Program under part 764, subpart I, of 
this chapter, a county will be considered an eligible disaster area as 
designated by FSA for coverage of the EM Program as follows:
    (1) Secretarial designations. When production losses meet the 
requirements in Sec.  759.5 and the county has been designated as a 
disaster area for that reason, or when the discretionary exception to 
production losses for EM under Sec.  759.5(d) has been exercised, the 
primary and contiguous counties will be areas in which otherwise 
eligible producers can receive EM loans.
    (2) Physical loss notification. When only qualifying physical losses 
occur, the SED will submit a request to the FSA Administrator to make a 
determination that a natural disaster has occurred in a county, 
resulting in severe physical losses. If the FSA Administrator determines 
that such a natural disaster has occurred, then EM can be made available 
to eligible farmers for physical losses only in the primary county (the 
county that was the subject of that determination) and the counties 
contiguous to that county.
    (3) USDA quarantine. Any quarantine imposed by the Secretary of 
Agriculture under the Plant Protection Act or the animal quarantine 
laws, as defined in section 2509 of the Food, Agriculture, Conservation, 
and Trade Act of 1990, automatically authorizes EM for production and 
physical losses resulting from the quarantine in a primary county (the 
county in which the quarantine was in force) and (where the quarantine 
effects extend beyond that county) the counties contiguous to that 
primary county.
    (4) Presidential declaration. Whenever the President declares a 
Major Disaster Declaration or an Emergency Declaration, FSA will make EM 
available to eligible applicants in declared and contiguous counties, 
provided:
    (i) The Presidential declaration is not solely for Category A or 
Category B Public Assistance or Hazard Mitigation Grant Assistance, and
    (ii) The Presidential Major Disaster declaration is for losses due 
to severe, general disaster conditions including but not limited to 
conditions such as flood, hurricane, or earthquake.
    (b) [Reserved]



PART 760_INDEMNITY PAYMENT PROGRAMS--Table of Contents



                Subpart A_Dairy Indemnity Payment Program

                           Program Operations

Sec.
760.1 Administration.
760.2 Definitions.

                   Payments to Dairy Farmers for Milk

760.3 Indemnity payments on milk.
760.4 Normal marketings of milk.
760.5 Fair market value of milk.
760.6 Information to be furnished.
760.7 Other requirements for affected farmers.
760.8 Application for payments for milk.
760.9 Other legal recourse.

            Payments to Manufacturers Affected by Pesticides

760.20 Payments to manufacturers of dairy products.
760.21 Application for payments by manufacturers.
760.22 Information to be furnished by manufacturer.
760.23 Other requirements for manufacturers.

                           General Provisions

760.24 Limitation of authority.
760.25 Estates and trusts; minors.
760.26 Appeals.
760.27 Setoffs.
760.28 Overdisbursement.
760.29 Death, incompetency, or disappearance.
760.30 Records and inspection thereof.
760.31 Assignment.
760.32 Instructions and forms.
760.33 Availability of funds.

  Subpart B_General Provisions for Supplemental Agricultural Disaster 
                           Assistance Programs

760.101 Applicability.
760.102 Administration of ELAP, LFP, LIP, SURE, and TAP.
760.103 Eligible producer.
760.104 Risk management purchase requirements.

[[Page 75]]

760.105 Waiver for certain crop years; buy-in.
760.106 Equitable relief.
760.107 Socially disadvantaged, limited resource, or beginning farmer or 
          rancher.
760.108 Payment limitation.
760.109 Misrepresentation and scheme or device.
760.110 Appeals.
760.111 Offsets, assignments, and debt settlement.
760.112 Records and inspections.
760.113 Refunds; joint and several liability.
760.114 Minors.
760.115 Deceased individuals or dissolved entities.
760.116 Miscellaneous.

Subpart C_Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
                              Fish Program

760.201 Applicability.
760.202 Definitions.
760.203 Eligible losses, adverse weather, and other loss conditions.
760.204 Eligible livestock, honeybees, and farm-raised fish.
760.205 Eligible producers, owners, and contract growers.
760.206 Notice of loss and application process.
760.207 Notice of loss and application period.
760.208 Availability of funds.
760.209 Livestock payment calculations.
760.210 Honeybee payment calculations.
760.211 Farm-raised fish payment calculations.

               Subpart D_Livestock Forage Disaster Program

760.301 Applicability.
760.302 Definitions.
760.303 Eligible livestock producer.
760.304 Covered livestock.
760.305 Eligible grazing losses.
760.306 Application for payment.
760.307 Payment calculation.

                  Subpart E_Livestock Indemnity Program

760.401 Applicability.
760.402 Definitions.
760.403 Eligible owners and contract growers.
760.404 Eligible livestock.
760.405 Application process.
760.406 Payment calculation.

                    Subpart F_Tree Assistance Program

760.500 Applicability.
760.501 Administration.
760.502 Definitions.
760.503 Eligible losses.
760.504 Eligible orchardists and nursery tree growers.
760.505 Application.
760.506 Payment calculation.
760.507 Obligations of a participant.

       Subpart G_Supplemental Revenue Assistance Payments Program

760.601 Applicability.
760.602 Definitions.
760.610 Participant eligibility.
760.611 Qualifying losses, eligible causes and types of loss.
760.613 De minimis exception.
760.614 Lack of access.
760.620 Time and method of application and certification of interests.
760.621 Requirement to report acreage and production.
760.622 Incorrect or false producer production evidence.
760.631 SURE guarantee calculation.
760.632 Payment acres.
760.633 2008 SURE guarantee calculation.
760.634 SURE guarantee for value loss crops.
760.635 Total farm revenue.
760.636 Expected revenue.
760.637 Determination of production.
760.638 Determination of SURE yield.
760.640 National average market price.
760.641 Adjustments made to NAMP to reflect loss of quality.
760.650 Calculating SURE.

                    Subpart H_Crop Assistance Program

760.701 Applicability.
760.702 Definitions.
760.703 Producer eligibility requirements.
760.704 Time and method of application.
760.705 Payment rates and calculation of payments.
760.706 Availability of funds.
760.707 Proof of loss.
760.708 Miscellaneous provisions and limitations.

                Subpart I_2005	2007 Crop Disaster Program

760.800 Applicability.
760.801 Administration.
760.802 Definitions.
760.803 Eligibility.
760.804 Time and method of application.
760.805 Limitations on payments and other benefits.
760.806 Crop eligibility requirements.
760.807 Miscellaneous provisions.
760.808 General provisions.
760.809 Eligible damaging conditions.
760.810 Qualifying 2005, 2006, or 2007 quantity crop losses.
760.811 Rates and yields; calculating payments.
760.812 Production losses; participant responsibility.
760.813 Determination of production.

[[Page 76]]

760.814 Calculation of acreage for crop losses other than prevented 
          planted.
760.815 Calculation of prevented planted acreage.
760.816 Value loss crops.
760.817 Quality losses for 2005, 2006, and 2007 crops.
760.818 Marketing contracts.
760.819 Misrepresentation, scheme, or device.
760.820 Offsets, assignments, and debt settlement.
760.821 Compliance with highly erodible land and wetland conservation.

             Subpart J_2005	2007 Livestock Indemnity Program

760.900 Administration.
760.901 Applicability.
760.902 Eligible counties and disaster periods.
760.903 Definitions.
760.904 Limitations on payments and other benefits.
760.905 Eligible owners and contract growers.
760.906 Eligible livestock.
760.907 Application process.
760.908 Deceased individuals or dissolved entities.
760.909 Payment calculation.
760.910 Appeals.
760.911 Offsets, assignments, and debt settlement.
760.912 Records and inspections.
760.913 Refunds; joint and several liability.

 Subpart K_General Provisions for 2005	2007 Livestock Compensation and 
                         Catfish Grant Programs

760.1000 Applicability.
760.1001 Eligible counties, disaster events, and disaster periods.
760.1002 Definitions.
760.1003 Limitations on payments and other benefits.

           Subpart L_2005	2007 Livestock Compensation Program

760.1100 Applicability.
760.1101 Administration.
760.1102 Definitions.
760.1103 Eligible livestock and producers.
760.1104 Application for payment.
760.1105 Application process.
760.1106 Payment calculation.
760.1107 Appeals.
760.1108 Offsets, assignments, and debt settlement.
760.1109 Recordkeeping and inspections.
760.1110 Refunds; joint and several liability.

                Subpart M_2005	2007 Catfish Grant Program

760.1200 Administration.
760.1201 Application for payment.
760.1202 Eligible producers.
760.1203 Payment calculation.

        Subpart N_Dairy Economic Loss Assistance Payment Program

760.1301 Administration.
760.1302 Definitions and acronyms.
760.1303 Requesting benefits.
760.1304 Eligibility.
760.1305 Proof of production.
760.1306 Availability of funds.
760.1307 Dairy operation payment quantity.
760.1308 Payment rate.
760.1309 Appeals.
760.1310 Misrepresentation and scheme or device.
760.1311 Death, incompetence, or disappearance.
760.1312 Maintaining records.
760.1313 Refunds; joint and several liability.
760.1314 Miscellaneous provisions.

    Authority: 7 U.S.C. 4501, 7 U.S.C. 1531, 16 U.S.C. 3801, note, and 
19 U.S.C. 2497; Title III, Pub. L. 109-234, 120 Stat. 474; Title IX, 
Pub. L. 110-28, 121 Stat. 211; and Sec. 748, Pub. L. 111-80, 123 Stat. 
2131.



                Subpart A_Dairy Indemnity Payment Program

    Authority: 7 U.S.C. 450j-l.

    Source: 43 FR 10535, Mar. 14, 1978, unless otherwise noted.

                           Program Operations



Sec.  760.1  Administration.

    This indemnity payment program will be carried out by FSA under the 
direction and supervision of the Deputy Administrator. In the field, the 
program will be administered by the State and county committees.



Sec.  760.2  Definitions.

    For purposes of this subject, the following terms shall have the 
meanings specified:
    (a) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the U.S. Department of Agriculture 
to whom he has delegated, or to whom he may hereafter delegate, 
authority to act in his stead.

[[Page 77]]

    (b) FSA means the Farm Service Agency, U.S. Department of 
Agriculture.
    (c) Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA.
    (d) State committee means the FSA State committee.
    (e) County committee means the FSA county committee.
    (f) Pesticide means an economic poison which was registered pursuant 
to the provisions of the Federal Insecticide, Fungicide, and Rodenticide 
Act, as amended (7 U.S.C. 135 through 135k), and approved for use by the 
Federal Government.
    (g) Chemicals or Toxic Substances means any chemical substance or 
mixture as defined in the Toxic Substances Control Act (15 U.S.C. 2602).
    (h) Nuclear Radiation or Fallout means contamination from nuclear 
radiation or fallout from any source.
    (i) Violating Substance means one or more of the items defined in 
paragraphs (f), (g), and (h) of this section.
    (j) Public agency means any Federal, State or local public 
regulatory agency.
    (k) Affected farmer means a person who produces whole milk which is 
removed from the commerical market any time from:
    (1) Pursuant to the direction of a public agency because of the 
detection of pesticide residues in such whole milk by tests made by a 
public agency or under a testing program deemed adequate for the purpose 
by a public agency, or
    (2) Pursuant to the direction of a public agency because of the 
detection of other residues of chemicals or toxic substances residues, 
or contamination from nuclear radiation or fallout in such whole milk by 
tests made by a public agency or under a testing program deemed adequate 
for the purpose by a public agency.
    (l) Affected manufacturer means a person who manufactures dairy 
products which are removed from the commercial market pursuant to the 
direction of a public agency because of the detection of pesticide 
residue in such dairy products by tests made by a public agency or under 
a testing program deemed adequate for the purpose by a public agency.
    (m) Milk handler means the marketing agency to or through which the 
affected dairy farmer marketed his whole milk at the time he was 
directed by the public agency to remove his whole milk from the 
commercial market.
    (n) Person means an individual, partnership, association, 
corporation, trust, estate, or other legal entity.
    (o) Application period means any period during which an affected 
farmer's whole milk is removed from the commercial market pursuant to 
direction of a public agency for a reason specified in paragraph (k) of 
this section and for which application for payment is made.
    (p) Pay period means (1) in the case of an affected farmer who 
markets his whole milk through a milk handler, the period used by the 
milk handler in settling with the affected farmer for his whole milk, 
usually biweekly or monthly, or (2) in the case of an affected farmer 
whose commercial market consists of direct retail sales to consumers, a 
calendar month.
    (q) Whole milk means milk as it is produced by cows.
    (r) Commercial market means (1) the market to which the affected 
farmer normally delivers his whole milk and from which it was removed 
because of detection therein of a residue of a violating substance(s) or 
(2) the market to which the affected manufacturer normally delivers his 
dairy products and from which they were removed because of detection 
therein of pesticide residue.
    (s) Removed from the commercial market means (1) produced and 
destroyed or fed to livestock, (2) produced and delivered to a handler 
who destroyed it or disposed of it as salvage (such as separating whole 
milk, destroying the fat, and drying the skim milk), or (3) produced and 
otherwise diverted to other than the commercial market.
    (t) Payment subject to refund means a payment which is made by a 
milk handler to an affected farmer, and which such farmer is obligated 
to refund to the milk handler.
    (u) Base period means the calendar month or 4-week period 
immediately

[[Page 78]]

preceding removal of milk from the market.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 
22, 1979; 52 FR 17935, May 13, 1987; 53 FR 44001, Nov. 1, 1988; 56 FR 
1358, Jan. 14, 1991; 61 FR 18485, Apr. 26, 1996; 71 FR 27190, May 10, 
2006]

                   Payments to Dairy Farmers for Milk



Sec.  760.3  Indemnity payments on milk.

    An indemnity payment for milk may be made to an affected farmer who 
is determined by the county committee to be in compliance with all the 
terms and conditions of this subpart in the amount of the fair market 
value of his normal marketings for the application period, as determined 
in accordance with Sec. Sec.  760.4 and 760.5, less (a) any amount he 
received for whole milk marketed during the applications period, and (b) 
any payment not subject to refund which he received from a milk handler 
with respect to whole milk removed from the commercial market during the 
application period.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec.  760.4  Normal marketings of milk.

    (a) The county committee shall determine the affected farmer's 
normal marketings which, for the purposes of this subpart, shall be the 
sum of the quantities of whole milk which such farmer would have sold in 
the commercial market in each of the pay periods in the application 
period but for the removal of his whole milk from the commercial market 
because of the detection of a residue of a violating substance.
    (b) Normal marketings for each pay period are based on the average 
daily production during the base period.
    (c) Normal marketings determined in paragraph (b) of this section 
are adjusted for any change in the daily average number of cows milked 
during each pay period the milk is off the market compared with the 
average number of cows milked daily during the base period.
    (d) If only a portion of a pay period falls within the application 
period, normal marketings for such pay period shall be reduced so that 
they represent only that part of such pay period which is within the 
application period.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 
22, 1979]



Sec.  760.5  Fair market value of milk.

    (a) The county committee shall determine the fair market value of 
the affected farmer's normal marketings, which, for the purposes of this 
subpart, shall be the sum of the net proceeds such farmer would have 
received for his normal marketings in each of the pay periods in the 
application period.
    (b) The county committee shall determine the net proceeds the 
affected farmer would have received in each of the pay periods in the 
application period (1) in the case of an affected farmer who markets his 
whole milk through a milk handler, by multiplying the affected farmer's 
normal marketings for each such pay period by the average net price per 
hundred-weight of whole milk paid during the pay period by such farmer's 
milk handler in the same area for whole milk similar in quality and 
butterfat test to that marketed by the affected farmer in the base 
period used to determine his normal marketings, or (2) in the case of an 
affected farmer whose commercial market consists of direct retail sales 
to consumers, by multiplying the affected farmer's normal marketings for 
each such pay period by the average net price per hundredweight of whole 
milk, as determined by the county committee, which other producers in 
the same area who marketed their whole milk through milk handlers 
received for whole milk similar in quality and butterfat test to that 
marketed by the affected farmer during the base period used to determine 
his normal marketings.
    (c) In determining the net price for whole milk, the county 
committee shall deduct from the gross price therefor any transportation, 
administrative, and other costs of marketing which it determines are 
normally incurred by the affected farmer but which were not incurred 
because of the removal of his whole milk from the commercial market.

[[Page 79]]



Sec.  760.6  Information to be furnished.

    The affected farmer shall furnish to the county committee complete 
and accurate information sufficient to enable the county committee or 
the Deputy Administrator to make the determinations required in this 
subpart. Such information shall include, but is not limited to:
    (a) A copy of the notice from, or other evidence of action by, the 
public agency which resulted in the removal of the affected farmer's 
whole milk from the commercial market.
    (b) The specific name of the violating substance causing the removal 
of his whole milk from the commercial market, if not included in the 
notice or other evidence of action furnished under paragraph (a) of this 
section.
    (c) The quantity and butterfat test of whole milk produced and 
marketed during the base period. This information must be a certified 
statement from the affected farmer's milk handler or any other evidence 
the county committee accepts as an accurate record of milk production 
and butterfat tests during the base period.
    (d) The average number of cows milked during the base period and 
during each pay period in the application.
    (e) If the affected farmer markets his whole milk through a milk 
handler, a statement from the milk handler showing, for each pay period 
in the application period, the average price per hundred-weight of whole 
milk similar in quality to that marketed by the affected farmer during 
the base period used to determine his normal marketings. If the milk 
handler has information as to the transportation, administrative, and 
other costs of marketing which are normally incurred by producers who 
market through the milk handler but which the affected farmer did not 
incur because of removal of his whole milk from the market, the average 
price stated by the milk handler shall be the average gross price paid 
producers less any such costs. If the milk handler does not have such 
information, the affected farmer shall furnish a statement setting forth 
such costs, if any.
    (f) The amount of proceeds, if any, received by the affected farmer 
from the marketing of whole milk produced during the application period.
    (g) The amount of any payments not subject to refund made to the 
affected farmer by the milk handler with respect to the whole milk 
produced during the application period and remove from the commercial 
market.
    (h) To the extent that such information is available to the affected 
farmer, the name of any pesticide, chemical, or toxic substance used on 
the farm within 24 months prior to the application period, the use made 
of the pesticide, chemical, or toxic substance, the approximate date of 
such use, and the name of the manufacturer and the registration number, 
if any, on the label on the container of the pesticide, chemical, or 
toxic substance.
    (i) To the extent possible, the source of the pesticide, chemical, 
or toxic substance that caused the contamination of the whole milk, and 
the results of any laboratory tests on the feed supply.
    (j) Such other information as the county committee may request to 
enable the county committee or the Deputy Administrator to make the 
determinations required in this subpart.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, June 
22, 1979]



Sec.  760.7  Other requirements for affected farmers.

    An indemnity payment for milk may be made under this subpart to an 
affected farmer only under the following conditions:
    (a) If the pesticide, chemical, or toxic substance, contaminating 
the milk was used by the affected farmer, he established each of the 
following:
    (1) That the pesticide, chemical or toxic substance, when used, was 
registered (if applicable) and approved for use as provided in Sec.  
760.2(f);
    (2) That the contamination of his milk was not the result of his 
failure to use the pesticide, chemical, or toxic substance, according to 
the directions and limitations stated on the label;
    (3) That the contamination of his milk was not otherwise his fault.
    (b) If the pesticide, chemical, or toxic substance contaminating the 
milk was not used by the affected farmer, he establishes each of the 
following:

[[Page 80]]

    (1) He did not know or have reason to believe that any feed which he 
purchased and which contaminated his milk contained a harmful residue of 
a pesticide, a chemical, or a toxic substance or was contaminated by 
nuclear radiation or fallout.
    (2) None of the milk was produced by dairy cattle which he knew, or 
had reason to know at the time he acquired them, were contaminated with 
residues of pesticides, chemicals or toxic substances, or by nuclear 
radiation or fallout.
    (3) The contamination of his milk was not otherwise his fault.
    (c) The affected farmer has adopted recommended practices for 
eliminating residues of pesticides, chemicals, or toxic substances or 
contamination from nuclear radiation or fallout from his milk as soon as 
practicable following the discovery of the initial contamination.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec.  760.8  Application for payments for milk.

    The affected farmer or his legal representative, as provided in 
Sec. Sec.  760.25 and 760.29, must sign and file an application for 
payment on a form which is approved for that purpose by the Deputy 
Administrator. The form must be filed with the county FSA office for the 
county where the farm headquarters are located no later than December 31 
following the end of the fiscal year in which the loss occurred, or such 
later date as the Deputy Administrator may specify. The application for 
payment shall cover application periods of at least 28 days, except 
that, if the entire application period, or the last application period, 
is shorter than 28 days, applications for payment may be filed for such 
shorter period. The application for payment shall be accompanied by the 
information required by Sec.  760.6 as well as any other information 
which will enable the county committee to determine whether the making 
of an indemnity payment is precluded for any of the reasons set forth in 
Sec.  760.7. Such information shall be submitted on forms approved for 
the purpose by the Deputy Administrator.

[43 FR 10535, Mar. 14, 1978, as amended at 51 FR 12986, Apr. 17, 1986; 
52 FR 17935, May 13, 1987]



Sec.  760.9  Other legal recourse.

    (a) No indemnity payment shall be made for contaminated milk 
resulting from residues of chemicals or toxic substances if, within 30 
days after receiving a complete application, the Deputy Administrator 
determines that other legal recouse is available to the farmer. An 
application shall not be deemed complete unless it contains all 
information necessary to make a determination as to whether other legal 
recourse is available to the farmer. However, notwithstanding such a 
determination, the Deputy Administrator may reopen the case at a later 
date and make a new determination on the merits of the case as may be 
just and equitable.
    (b) In the event that a farmer receives an indemnity payment under 
this subpart, and such farmer is later compensated for the same loss by 
the person (or the representative or successor in interest of such 
person) responsible for such loss, the indemnity payment shall be 
refunded by the farmer to the Department of Agriculture: Provided, That 
the amount of such refund shall not exceed the amount of other 
compensation received by the farmer.

[Amdt. 1, 44 FR 36361, June 22, 1979]

            Payments to Manufacturers Affected by Pesticides



Sec.  760.20  Payments to manufacturers of dairy products.

    An indemnity payment may be made to the affected manufacturer who is 
determined by the Deputy Administrator to be in compliance with all the 
terms and conditions of this subpart in the amount of the fair market 
value of the product removed from the commercial market because of 
pesticide residues, less any amount the manufacturer receives for the 
product in the form of salvage.


[[Page 81]]


    Note: Manufacturers are not eligible for payment when dairy products 
are contaminated by chemicals, toxic substances (other than pesticides) 
or nuclear radiation or fallout.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec.  760.21  Application for payments by manufacturers.

    The affected manufacturer, or his legal representatives, shall file 
an application for payment with the Deputy Administrator, FSA, 
Washington, D.C., through the county office serving the county where the 
contaminated product is located. The application for payment may be in 
the form of a letter or memorandum. Such letter or memorandum, however, 
must be accompanied by acceptable documentation to support such 
application for payment.



Sec.  760.22  Information to be furnished by manufacturer.

    The affected manufacturer shall furnish the Deputy Administrator, 
through the county committee, complete and accurate information 
sufficient to enable him to make the determination as to the 
manufacturer's eligibility to receive an indemnity payment. Such 
information shall include, but is not limited to:
    (a) A copy of the notice or other evidence of action by the public 
agency which resulted in the product being removed from the commerical 
market.
    (b) The name of the pesticide causing the removal of the product 
from the commerical market and, to the extent possible, the source of 
the pesticide.
    (c) A record of the quantity of milk or butterfat used to produce 
the product for which an indemnity payment is requested.
    (d) The identity of any pesticide used by the affected manufacturer.
    (e) Such other information as the Deputy Administrator may request 
to enable him to make the determinations required in this subpart.



Sec.  760.23  Other requirements for manufacturers.

    An indemnity payment may be made under this subpart to an affected 
manufacturer only under the following conditions:
    (a) If the pesticide contaminating the product was used by the 
affected manufacturer, he establishes each of the following: (1) That 
the pesticide, when used, was registered and recommended for such use as 
provided in Sec.  760.2(f); (2) that the contamination of his product 
was not the result of his failure to use the pesticide in accordance 
with the directions and limitations stated on the label of the 
pesticide; and (3) that the contamination of his product was not 
otherwise his fault.
    (b) If the pesticide contaminating the product was not used by the 
affected manufacturer: (1) He did not know or have reason to believe 
that the milk from which the product was processed contained a harmful 
level of pesticide residue, and (2) the contamination of his product was 
not otherwise his fault.
    (c) In the event that a manufacturer receives an indemnity payment 
under this subpart, and such manufacturer is later compensated for the 
same loss by the person (or the representative or successor in interest 
of such person) responsible for such loss, the indemnity payment shall 
be refunded by the manufacturer to the Department of Agriculture: 
Provided, That the amount of such refund shall not exceed the amount of 
other compensation received by the manufacturer.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982; 51 
FR 12987, Apr. 17, 1986; 52 FR 17935, May 13, 1987]

                           General Provisions



Sec.  760.24  Limitation of authority.

    (a) County executive directors and State and county committees do 
not have authority to modify or waive any of the provisions of the 
regulations in this subpart.
    (b) The State committee may take any action authorized or required 
by the regulations in this subpart to be taken by the county committee 
when such action has not been taken by the county committee. The State 
committee may also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee which is not in accordance with the 
regulations in this subpart, or (2) require a county committee to 
withhold taking any action

[[Page 82]]

which is not in accordance with the regulations in this subpart.
    (c) No delegation herein to a State or county committee shall 
preclude the Deputy Administrator or his designee from determining any 
question arising under the regulations in this subpart or from reversing 
or modifying any determination made by a State or county committee.



Sec.  760.25  Estates and trusts; minors.

    (a) A receiver of an insolvent debtor's estate and the trustee of a 
trust estate shall, for the purpose of this subpart, be considered to 
represent an insolvent affected farmer or manufacturer and the 
beneficiaries of a trust, respectively, and the production of the 
receiver or trustee shall be considered to be the production of the 
person or manufacturer he represents. Program documents executed by any 
such person will be accepted only if they are legally valid and such 
person has the authority to sign the applicable documents.
    (b) An affected dairy farmer or manufacturer who is a minor shall be 
eligible for indemnity payments only if he meets one of the following 
requirements:
    (1) The right of majority has been conferred on him by court 
proceedings or by statute;
    (2) A guardian has been appointed to manage his property and the 
applicable program documents are signed by the guardian; or
    (3) A bond is furnished under which the surety guarantees any loss 
incurred for which the minor would be liable had he been an adult.



Sec.  760.26  Appeals.

    The appeal regulations issued by the Administrator, FSA, part 780 of 
this chapter, shall be applicable to appeals by dairy farmers or 
manufacturers from determinations made pursuant to the regulations in 
this subpart.



Sec.  760.27  Setoffs.

    (a) If the affected farmer or manufacturer is indebted to any agency 
of the United States and such indebtedness is listed on the county debt 
record, indemnity payments due the affected farmer or manufacturer under 
the regulations in this part shall be applied, as provided in the 
Secretary's setoff regulations, part 13 of this title, to such 
indebtedness.
    (b) Compliance with the provisions of this section shall not deprive 
the affected farmer or manufacturer of any right he would otherwise have 
to contest the justness of the indebtedness involved in the setoff 
action, either by administrative appeal or by legal action.



Sec.  760.28  Overdisbursement.

    If the indemnity payment disbursed to an affected farmer or to a 
manufacturer exceeds the amount authorized under the regulations in this 
subpart, the affected farmer or manufacturer shall be personally liable 
for repayment of the amount of such excess.



Sec.  760.29  Death, incompetency, or disappearance.

    In the case of the death, incompetency, or disappearance of any 
affected farmer or manufacturer who would otherwise receive an indemnity 
payment, such payment may be made to the person or persons specified in 
the regulations contained in part 707 of this chapter. The person 
requesting such payment shall file Form FSA-325, ``Application for 
Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been 
Declared Incompetent,'' as provided in that part.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec.  760.30  Records and inspection thereof.

    (a) The affected farmer, as well as his milk handler and any other 
person who furnished information to such farmer or to the county 
committee for the purpose of enabling such farmer to receive a milk 
indemnity payment under this subpart, shall maintain any existing books, 
records, and accounts supporting any information so furnished for 3 
years following the end of the year during which the application for 
payment was filed. The affected farmer, his milk handler, and any other 
person who furnishes such information to the affected farmer or to the 
county

[[Page 83]]

committee shall permit authorized representatives of the Department of 
Agriculture and the General Accounting Office, during regular business 
hours, to inspect, examine, and make copies of such books, records, and 
accounts.
    (b) The affected manufacturer or any other person who furnishes 
information to the Deputy Administrator for the purposes of enabling 
such manufacturer to receive an indemnity payment under this subpart 
shall maintain any books, records, and accounts supporting any 
information so furnished for 3 years following the end of the year 
during which the application for payment was filed. The affected 
manufacturer or any other person who furnishes such information to the 
Deputy Administrator shall permit authorized representatives of the 
Department of Agriculture and the General Accounting Office, during 
regular business hours, to inspect, examine, and make copies of such 
books, records, and accounts.



Sec.  760.31  Assignment.

    No assignment shall be made of any indemnity payment due or to come 
due under the regulations in this subpart. Any assignment or attempted 
assignment of any indemnity payment due or to come due under this 
subpart shall be null and void.



Sec.  760.32  Instructions and forms.

    The Deputy Administrator shall cause to be prepared such forms and 
instructions as are necessary for carrying out the regulations in this 
subpart. Affected farmers and manufacturers may obtain information 
necessary to make application for a dairy indemnity payment from the 
county FSA office. Form FSA-373--Application for Indemnity Payment, is 
available at the county ASC office.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec.  760.33  Availability of funds.

    (a) Payment of indemnity claims will be contingent upon the 
availability of FSA funds to pay such claims. Claims will be, to the 
extent practicable within funding limits, paid from available funds, on 
a first-come, first-paid basis, based on the date FSA approves the 
application, until funds available in that fiscal year have been 
expended.
    (b) DIPP claims received in a fiscal year after all available funds 
have been expended will not receive payment for such claims.

[75 FR 41367, July 16, 2010]



  Subpart B_General Provisions for Supplemental Agricultural Disaster 
                           Assistance Programs

    Source: 74 FR 31571, July 2, 2009, unless otherwise noted.



Sec.  760.101  Applicability.

    (a) This subpart establishes general conditions for this subpart and 
subparts C through H of this part and applies only to those subparts. 
Subparts C through H cover the following programs provided for in the 
``2008 Farm Bill'' (Pub. L. 110-246):
    (1) Emergency Assistance for Livestock, Honey Bees, and Farm-Raised 
Fish Program (ELAP);
    (2) Livestock Forage Disaster Program (LFP);
    (3) Livestock Indemnity Payments Program (LIP);
    (4) Supplemental Revenue Assistance Payments Program (SURE); and
    (5) Tree Assistance Program (TAP).
    (b) To be eligible for payments under these programs, participants 
must comply with all provisions under this subpart and the relevant 
particular subpart for that program. All other provisions of law also 
apply.



Sec.  760.102  Administration of ELAP, LFP, LIP, SURE, and TAP.

    (a) The programs in subparts C through H of this part will be 
administered under the general supervision and direction of the 
Administrator, Farm Service Agency (FSA), and the Deputy Administrator 
for Farm Programs, FSA (who is referred to as the ``Deputy 
Administrator'' in this part).
    (b) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this part as amended or 
supplemented, except as specified in paragraph (e) of this section.

[[Page 84]]

    (c) The State FSA committee will take any action required by the 
regulations of this part 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 accordance with 
the regulations of this part or
    (2) Require a county FSA committee to withhold taking any action 
that is not in accordance with this part.
    (d) No provision or delegation to a State or county FSA committee 
will preclude the Administrator, the Deputy Administrator for Farm 
Programs, or a designee or other such person, from determining any 
question arising under the programs of this part, or from reversing or 
modifying any determination made by a State or county FSA committee.
    (e) The Deputy Administrator for Farm Programs may authorize State 
and county FSA committees to waive or modify non-statutory deadlines, or 
other program requirements of this part in cases where lateness or 
failure to meet such requirements does not adversely affect operation of 
the programs in this part. Participants 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.  760.103  Eligible producer.

    (a) In general, the term ``eligible producer'' means, in addition to 
other requirements as may apply, an individual or entity described in 
paragraph (b) of this section that, as determined by the Secretary, 
assumes the production and market risks associated with the agricultural 
production of crops or livestock on a farm either as the owner of the 
farm, when there is no contract grower, or a contract grower of the 
livestock when there is a contract grower.
    (b) To be eligible for benefits, an individual or entity must be a:
    (1) Citizen of the United States;
    (2) Resident alien; for purposes of this part, resident alien means 
``lawful alien'' as defined in 7 CFR part 1400;
    (3) Partnership of citizens of the United States; or
    (4) Corporation, limited liability corporation, or other farm 
organizational structure organized under State law.



Sec.  760.104  Risk management purchase requirements.

    (a) To be eligible for program payments under:
    (1) ELAP, SURE, and TAP, eligible producers for any commodity at any 
location for which the producer seeks benefits must have for every 
commodity on every farm in which the producer has an interest for the 
relevant program year:
    (i) In the case of an ``insurable commodity,'' (which for this part 
means a commodity for which the Deputy Administrator determines 
catastrophic coverage is available from the USDA Risk Management Agency 
(RMA)) obtained catastrophic coverage or better under a policy or plan 
of insurance administered by RMA under the Federal Crop Insurance Act 
(FCIA) (7 U.S.C. 1501-1524), except that this obligation will not 
include crop insurance pilot programs so designated by RMA or to forage 
crops intended for grazing, and
    (ii) In the case of a ``noninsurable commodity,'' (which is any 
commodity for which, as to the particular production in question, is not 
an ``insurable commodity,'' but for which coverage is available under 
the Noninsured Crop Disaster Assistance Program (NAP) operated under 7 
CFR part 1437), have obtained NAP coverage by filing the proper 
paperwork and fee within the relevant deadlines, except that this 
requirement will not include forage on grazing land.
    (2) LFP, with respect to those grazing lands incurring losses for 
which assistance is being requested, eligible livestock producers must 
have:
    (i) Obtained a policy or plan of insurance for the forage crop under 
FCIA, or
    (ii) Filed the required paperwork and paid the administrative fee by 
the applicable State filing deadline for NAP coverage for that grazing 
land.

[[Page 85]]

    (b) Producers who did not purchase a policy or plan of insurance 
administered by RMA in accordance with FCIA (7 U.S.C. 1501-1524), or NAP 
coverage for their applicable crops, will not be eligible for assistance 
under ELAP, LFP, SURE, and TAP, as provided in paragraph (a) of this 
section unless the producer is one of the classes of farmers for which 
an exemption under Sec.  760.107 apply, is exempt under the ``buy-in'' 
provisions of this subpart, or is granted relief from that requirement 
by the Deputy Administrator under some other provision of this part.
    (c) Producers who have obtained insurance by a written agreement as 
specified in Sec.  400.652(d) of this title even though that production 
would not normally be considered an ``insurable commodity'' under the 
rules of this subpart, will be considered to have met the risk 
management purchase requirement of this subpart with respect to such 
production. The commodity to which the agreement applies will be 
considered for purposes of this subpart to be an ``insurable 
commodity.''
    (d) Producers by an administrative process who were granted NAP 
coverage for the relevant period as a form of relief in an 
administrative proceeding, or who were awarded NAP coverage for the 
relevant period through an appeal through the National Appeals Division 
(NAD), will be considered as having met the NAP eligibility criteria of 
this section for that crop as long as the applicable NAP service fee has 
been paid.
    (e) The risk management purchase requirement for programs specified 
under this part will be determined based on the initial intended use of 
a crop at the time a policy or plan of insurance or NAP coverage was 
purchased and as reported on the acreage report.

[74 FR 31571, July 2, 2009, as amended at 74 FR 46673, Sept. 11, 2009]



Sec.  760.105  Waiver for certain crop years; buy-in.

    (a) For the 2008 crop year, the insurance or NAP purchase 
requirements of Sec.  760.104 (this is referred to as the ``purchase'' 
requirement) will be waived for eligible producers for losses during the 
2008 crop year if the eligible producer paid a fee (buy-in fee) equal to 
the applicable NAP service fee or catastrophic risk protection plan fee 
to the Secretary by September 16, 2008. Payment of a buy-in fee under 
this section is for the sole purpose of becoming eligible for 
participation in ELAP, LFP, SURE, and TAP. Payment of a buy-in fee does 
not provide any actual insurance or NAP coverage or assistance.
    (b) For the 2009 crop year, the purchase requirement will be waived 
for purchases where the closing date for coverage occurred prior to 
August 14, 2008, so long as the buy-in fee set by the Secretary of 
Agriculture was paid by January 12, 2009.
    (c) Any producer of 2008 commodities who is otherwise ineligible 
because of the purchase requirement and who did not meet the conditions 
of paragraph (a) of this section may still be covered for ELAP, SURE, or 
TAP assistance if the producer paid the applicable fee described in 
paragraph (d) of this section no later than May 18, 2009, provided that 
in the case of each:
    (1) Insurable commodity, excluding grazing land, the eligible 
producers on the farm agree to obtain a policy or plan of insurance 
under FCIA (7 U.S.C. 1501-1524), excluding a crop insurance pilot 
program under that subtitle, for the next insurance year for which crop 
insurance is available to the eligible producers on the farm at a level 
of coverage equal to 70 percent or more of the recorded or appraised 
average yield indemnified at 100 percent of the expected market price, 
or an equivalent coverage, and
    (2) Noninsurable commodity, the eligible producers on the farm must 
agree to file the required paperwork, and pay the administrative fee by 
the applicable State filing deadline, for NAP for the next year for 
which a policy is available.
    (d) For producers seeking eligibility under paragraph (c) of this 
section, the applicable buy-in fee for the 2008 crop year was the 
catastrophic risk protection plan fee or the applicable NAP service fee 
in effect prior to NAP service fee adjustments specified in the 2008 
Farm Bill.

[[Page 86]]



Sec.  760.106  Equitable relief.

    (a) The Secretary may provide equitable relief on a case-by-case 
basis for the purchase requirement to eligible participants that:
    (1) Are otherwise ineligible or provide evidence, satisfactory to 
FSA, that the failure to meet the requirements of Sec.  760.104 for one 
or more eligible crops on the farm was unintentional and not because of 
any fault of the participant, as determined by the Secretary, or
    (2) Failed to meet the requirements of Sec.  760.104 due to the 
enactment of the 2008 Farm Bill after the:
    (i) Applicable sales closing date for a policy or plan of insurance 
in accordance with the FCIA (7 U.S.C. 1501-1524) or
    (ii) Application closing date for NAP.
    (b) Equitable relief will not be granted to participants in 
instances of:
    (1) A scheme or device that had the effect or intent of defeating 
the purposes of a program of insurance, NAP, or any other program 
administered under this part or elsewhere in this title,
    (2) An intentional decision to not meet the purchase or buy-in 
requirements,
    (3) Producers against whom sanctions have been imposed by RMA or FSA 
prohibiting the purchase of coverage or prohibiting the receipt of 
payments otherwise payable under this part,
    (4) Violations of highly erodible land and wetland conservation 
provisions of 7 CFR part 12,
    (5) Producers who are ineligible under any provisions of law, 
including regulations, relating to controlled substances (see for 
example 7 CFR 718.6), or
    (6) A producer's debarment by a federal agency from receiving any 
federal government payment if such debarment included payments of the 
type involved in this matter.
    (c) In general, no relief that is discretionary will be allowed 
except upon a finding by the Deputy Administrator or the Deputy 
Administrator's designee that the person seeking the relief acted in 
good faith as determined in accordance with such rules and procedures as 
may be set by the Deputy Administrator.

[74 FR 31571, July 2, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.107  Socially disadvantaged, limited resource, or beginning
farmer or rancher.

    (a) Risk management purchase requirements, as provided in Sec.  
760.104, will be waived for a participant who, as specified in 
paragraphs (b)(1) through (3) of this section, is eligible to be 
considered a ``socially disadvantaged farmer or rancher,'' a ``limited 
resource farmer or rancher,'' or a ``beginning farmer or rancher.''
    (b) To qualify for this section as a ``socially disadvantaged farmer 
or rancher,'' ``limited resource farmer or rancher,'' or ``beginning 
farmer or rancher,'' participants must meet eligibility criteria as 
follows:
    (1) A ``socially disadvantaged farmer or rancher'' is, for this 
section, 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:
    (i) American Indians or Alaskan Natives,
    (ii) Asians or Asian-Americans,
    (iii) Blacks or African Americans,
    (iv) Native Hawaiians or other Pacific Islanders, and
    (v) Hispanics.
    (2) A ``limited resource farmer or rancher'' means for this section 
a producer who is both:
    (i) A producer whose direct or indirect gross farm sales do not 
exceed $100,000 in both of the two calendar years that precede the 
calendar year that corresponds to the relevant program year, adjusted 
upwards for any general inflation since fiscal year 2004, inflation as 
measured using the Prices Paid by Farmer Index compiled by the National 
Agricultural Statistics Service (NASS), and

[[Page 87]]

    (ii) A producer whose total household income is at or below the 
national poverty level for a family of four, or less than 50 percent of 
the county median household income for the same two calendar years 
referenced in paragraph (b)(2)(i) of this section, as determined 
annually using Commerce Department data. (Limited resource farmer or 
rancher status can be determined using a Web site available through the 
Limited Resource Farmer and Rancher Online Self Determination Tool 
through the National Resource and Conservation Service at http://
www.lrftool.sc.egov.usda.gov/tool.asp.)
    (3) A ``beginning farmer or rancher'' means for this section a 
person or legal entity who for a program year both:
    (i) Has never previously operated a farm or ranch, or who has not 
operated a farm or ranch in the previous 10 years, applicable to all 
members (shareholders, partners, beneficiaries, etc., as fits the 
circumstances) of an entity, and
    (ii) Will have or has had for the relevant period materially and 
substantially participated in the operation of a farm or ranch.
    (c) If a legal entity requests to be considered a ``socially 
disadvantaged,'' ``limited resource,'' or ``beginning'' farmer or 
rancher, at least 50 percent of the persons in the entity must in their 
individual capacities meet the definition as provided in paragraphs 
(b)(1) through (3) of this section and it must be clearly demonstrated 
that the entity was not formed for the purposes of avoiding the purchase 
requirements or formed after the deadline for the purchase requirement.

[74 FR 31571, July 2, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.108  Payment limitation.

    (a) For 2008, no person, as defined and determined under the 
provisions in part 1400 of this title in effect for 2008 may receive 
more than:
    (1) $100,000 total for the 2008 program year under ELAP, LFP, LIP, 
and SURE combined or
    (2) $100,000 for the 2008 program year under TAP.
    (b) For 2009 and subsequent program years, no person or legal 
entity, excluding a joint venture or general partnership, as determined 
by the rules in part 1400 of this title may receive, directly or 
indirectly, more than:
    (1) $100,000 per program year total under ELAP, LFP, LIP, and SURE 
combined; or
    (2) $100,000 per program year under TAP.
    (c) The Deputy Administrator may take such actions as needed, 
whether or not specifically provided for, to avoid a duplication of 
benefits under the multiple programs provided for in this part, or 
duplication of benefits received in other programs, and may impose such 
cross-program payment limitations as may be consistent with the intent 
of this part.
    (1) FSA will review ELAP payments after the funding factor as 
specified in Sec.  760.208 is determined to be 100 percent. FSA will 
ensure that total ELAP payments provided to a participant in a year, 
together with any amount provided to the same participant for the same 
loss as a result of any Federal crop insurance program, the Noninsured 
Crop Disaster Assistance Program, or any other Federal disaster program, 
plus the value of the commodity that was not lost, is not more than 95 
percent of the value of the commodity in the absence of the loss, as 
estimated by FSA.
    (2) [Reserved]
    (d) In applying the limitation on average adjusted gross income 
(AGI) for 2008, an individual or entity is ineligible for payment under 
ELAP, LFP, LIP, SURE, and TAP if the individual's or entity's average 
adjusted gross income (AGI) exceeds $2.5 million for 2007, 2006, and 
2005 under the provisions in part 1400 of this title in effect for 2008.
    (e) For 2009 through 2011, the average AGI limitation provisions in 
part 1400 of this title relating to limits on payments for persons or 
legal entities, excluding joint ventures and general partnerships, with 
certain levels of average adjusted gross income (AGI) will apply under 
this subpart and will apply to each applicant for ELAP, LFP, LIP, SURE, 
and TAP. Specifically, for 2009 through 2011, a person or legal entity 
with an average adjusted gross nonfarm income, as defined in Sec.  
1404.3 of this title, that exceeds $500,000 will not

[[Page 88]]

be eligible to receive benefits under this part.
    (f) The direct attribution provisions in part 1400 of this title 
apply to ELAP, LFP, LIP, SURE, and TAP for 2009 and subsequent years. 
Under those rules, any payment to any legal entity will also be 
considered for payment limitation purposes to be a payment to persons or 
legal entities with an interest in the legal entity or in a sub-entity. 
If any such interested person or legal entity is over the payment 
limitation because of direct payment or their indirect interests or a 
combination thereof, then the payment to the actual payee will be 
reduced commensurate with the amount of the interest of the interested 
person in the payee. Likewise, by the same method, if anyone with a 
direct or indirect interest in a legal entity or sub-entity of a payee 
entity exceeds the AGI levels that would allow a participant to directly 
receive a payment under this part, then the payment to the actual payee 
will be reduced commensurately with that interest. For all purposes 
under this section, unless otherwise specified in part 1400 of this 
title, the AGI figure that will be relevant for a person or legal entity 
will be an average AGI for the three taxable years that precede the most 
immediately preceding complete taxable year, as determined by CCC.

[74 FR 31571, July 2, 2009, as amended at 74 FR 46673, Sept. 11, 2009]



Sec.  760.109  Misrepresentation and scheme or device.

    (a) A participant who is determined to have deliberately 
misrepresented any fact affecting a program determination made in 
accordance with this part, or otherwise used a scheme or device with the 
intent to receive benefits for which the participant would not otherwise 
be entitled, will not be entitled to program payments and must refund 
all such payments received, plus interest as determined in accordance 
with part 792 of this chapter. The participant will also be denied 
program benefits for the immediately subsequent period of at least 2 
crop years, and up to 5 crop years. Interest will run from the date of 
the original disbursement by FSA.
    (b) A participant will refund to FSA all program payments, plus 
interest, as determined in accordance with part 792 of this chapter, 
provided however, that in any case it will run from the date of the 
original disbursement, received by such participant with respect to all 
contracts or applications, as may be applicable, if the participant is 
determined to have knowingly done any of the following:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
the program,
    (2) Made any fraudulent representation, or
    (3) Misrepresented any fact affecting a program determination.



Sec.  760.110  Appeals.

    (a) Appeals. Appeal regulations set forth at parts 11 and 780 of 
this title apply to this part.
    (b) Determinations not eligible for administrative review or appeal. 
FSA determinations that are not in response to a specific individual 
participant'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 parts 11 
or 780 of this title. Such determinations include, but are not limited 
to, application periods, deadlines, coverage periods, crop years, fees, 
prices, general statutory or regulatory provisions that apply to 
similarly situated participants, national average payment prices, 
regions, crop definition, average yields, and payment factors 
established by FSA for any of the programs for which this subpart 
applies or similar matters requiring FSA determinations.



Sec.  760.111  Offsets, assignments, and debt settlement.

    (a) Any payment to any participant 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. The 
regulations governing offsets and withholdings in part 792 of this title 
apply to payments made under this part.

[[Page 89]]

    (b) Any participant entitled to any payment may assign any 
payment(s) in accordance with regulations governing the assignment of 
payments in part 1404 of this title.



Sec.  760.112  Records and inspections.

    (a) Any participant receiving payments under any program in ELAP, 
LFP, LIP, SURE, or TAP, or any other legal entity or person who provides 
information for the purposes of enabling a participant to receive a 
payment under ELAP, LFP, LIP, SURE, or TAP, 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 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 livestock and acreage in which 
the participant has an interest for the purpose of confirming the 
accuracy of information provided by or for the participant.
    (b) [Reserved]



Sec.  760.113  Refunds; joint and several liability.

    (a) In the event that the participant fails to comply with any term, 
requirement, or condition for payment or assistance arising under ELAP, 
LFP, LIP, SURE, or TAP and if any refund of a payment to FSA will 
otherwise become due in connection with this part, the participant must 
refund to FSA all payments made in regard to such matter, together with 
interest and late-payment charges as provided for in part 792 of this 
chapter provided that interest will in all cases run from the date of 
the original disbursement.
    (b) All persons with a financial interest in an operation or in an 
application for payment will be jointly and severally liable for any 
refund, including related charges, that is determined to be due FSA for 
any reason under this part.



Sec.  760.114  Minors.

    A minor child is eligible to apply for program benefits under ELAP, 
LFP, LIP, SURE, or TAP if all the eligibility requirements are met and 
the provision for minor children in part 1400 of this title are met.



Sec.  760.115  Deceased individuals or dissolved entities.

    (a) Payments may be made for eligible losses suffered by an eligible 
participant 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 participant, 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 participant 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.  760.116  Miscellaneous.

    (a) As a condition to receive benefits under ELAP, LFP, LIP, SURE, 
or TAP, a participant must have been in compliance with the provisions 
of parts 12 and 718 of this title, and must not otherwise be precluded 
from receiving benefits under those provisions or under any law.
    (b) Rules of the Commodity Credit Corporation that are cited in this 
part will be applied to this subpart in the same manner as if the 
programs covered in this subpart were programs funded by the Commodity 
Credit Corporation.



Subpart C_Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
                              Fish Program

    Source: 74 FR 46673, Sept. 11, 2009, unless otherwise noted.



Sec.  760.201  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the

[[Page 90]]

Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish 
Program (ELAP) will be administered.
    (b) Eligible producers of livestock, honeybees, and farm-raised fish 
will be compensated to reduce eligible losses that occurred in the 
calendar year for which the producer requests benefits. The eligible 
loss must have been a direct result of eligible adverse weather or 
eligible loss conditions as determined by the Deputy Administrator, 
including, but not limited to, blizzards, wildfires, disease, and insect 
infestation. ELAP does not cover losses that are covered under LFP, LIP, 
or SURE.



Sec.  760.202  Definitions.

    The following definitions apply to this subpart and to the 
administration of ELAP. The definitions in parts 718 and 1400 of this 
title also apply, except where they conflict with the definitions in 
this section.
    Adult beef bull means a male beef breed bovine animal that was used 
for breeding purposes that was at least 2 years old before the beginning 
date of the eligible adverse weather or eligible loss condition.
    Adult beef cow means a female beef breed bovine animal that had 
delivered one or more offspring before the beginning date of the 
eligible adverse weather or eligible loss condition. A first-time bred 
beef heifer is also considered an adult beef cow if it was pregnant on 
or by the beginning date of the eligible adverse weather or eligible 
loss condition.
    Adult buffalo and beefalo bull means a male animal of those breeds 
that was used for breeding purposes and was at least 2 years old before 
the beginning date of the eligible adverse weather or eligible loss 
condition.
    Adult buffalo and beefalo cow means a female animal of those breeds 
that had delivered one or more offspring before the beginning date of 
the eligible adverse weather or eligible loss condition. A first-time 
bred buffalo or beefalo heifer is also considered an adult buffalo or 
beefalo cow if it was pregnant by the beginning date of the eligible 
adverse weather or eligible loss condition.
    Adult dairy bull means a male dairy breed bovine animal that was 
used primarily for breeding dairy cows and was at least 2 years old by 
the beginning date of the eligible adverse weather or eligible loss 
condition.
    Adult dairy cow means a female bovine dairy breed animal used for 
the purpose of providing milk for human consumption that had delivered 
one or more offspring by the beginning date of the eligible adverse 
weather or eligible loss condition. A first-time bred dairy heifer is 
also considered an adult dairy cow if it was pregnant by the beginning 
date of the eligible adverse weather or eligible loss condition.
    Agricultural operation means a farming operation.
    Application means FSA form used to apply for either the emergency 
loss assistance for livestock or emergency loss assistance for farm-
raised fish or honeybees.
    Aquatic species means any species of aquatic organism grown as food 
for human consumption, fish raised as feed for fish that are consumed by 
humans, or ornamental fish propagated and reared in an aquatic medium by 
a commercial operator on private property in water in a controlled 
environment. Catfish and crawfish are both defined as aquatic species 
for ELAP. However, aquatic species do not include reptiles or 
amphibians.
    Bait fish means small fish caught for use as bait to attract large 
predatory fish. For ELAP, it also must meet the definition of aquatic 
species and not be raised as food for fish; provided, however, that only 
bait fish produced in a controlled environment can generate claims under 
ELAP.
    Buck means a male goat.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit by the eligible producer.
    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 by the participant with structures, 
facilities, and

[[Page 91]]

growing media (including, but not limited to, water and nutrients) was 
in fact controlled by the participant at the time of the eligible 
adverse weather or eligible loss condition.
    County committee or county office means the respective FSA committee 
or office.
    Deputy Administrator or DAFP means the Deputy Administrator for Farm 
Programs, Farm Service Agency, U.S. Department of Agriculture or the 
designee.
    Eligible adverse weather or eligible loss condition means any 
disease, adverse weather, or other loss condition as determined by the 
Deputy Administrator. The eligible adverse weather or eligible loss 
condition would have resulted in agricultural losses not covered by 
other programs in this part for which the Deputy Administrator 
determines financial assistance needs to be provided to producers. The 
disease, adverse weather, or other conditions may include, but are not 
limited to, blizzards, wildfires, water shortages, and other factors. 
Specific eligible adverse weather and eligible loss conditions may vary 
based on the type of loss. Identification of eligible adverse weather 
and eligible loss conditions will include locations (National, State, or 
county-level) and start and end dates.
    Equine animal means a domesticated horse, mule, or donkey.
    Ewe means a female sheep.
    Farming operation means a business enterprise engaged in producing 
agricultural products.
    Farm-raised fish means any aquatic species that is propagated and 
reared in a controlled environment.
    FSA means the Farm Service Agency.
    Game or sport fish means fish pursued for sport by recreational 
anglers; provided, however, that only game or sport fish produced in a 
controlled environment can generate claims under ELAP.
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats. Goats are further delineated into categories by 
sex (bucks and nannies) and age (kids).
    Kid means a goat less than 1 year old.
    Lamb means a sheep less than 1 year old.
    Livestock owner, for death loss purposes, means one having legal 
ownership of the livestock for which benefits are being requested on the 
day such livestock died due to an eligible adverse weather or eligible 
loss condition. For all other purposes of loss under ELAP, ``livestock 
owner'' means one having legal ownership of the livestock for which 
benefits are being requested during the 60 days prior to the beginning 
date of the eligible adverse weather or eligible loss condition.
    Nanny means a female goat.
    Non-adult beef cattle means a beef breed bovine animal that does not 
meet the definition of adult beef cow or bull. Non-adult beef cattle are 
further delineated by weight categories of either less than 400 pounds 
or 400 pounds or more at the time they died. For a loss other than 
death, means a bovine animal less than 2 years old that that weighed 500 
pounds or more on or before the beginning date of the eligible adverse 
weather or eligible loss condition.
    Non-adult buffalo or beefalo means an animal of those breeds that 
does not meet the definition of adult buffalo or beefalo cow or bull. 
Non-adult buffalo or beefalo are further delineated by weight categories 
of either less than 400 pounds or 400 pounds or more at the time of 
death. For a loss other than death, means an animal of those breeds that 
is less than 2 years old that weighed 500 pounds or more on or before 
the beginning date of the eligible adverse weather or eligible loss 
condition.
    Non-adult dairy cattle means a bovine dairy breed animal used for 
the purpose of providing milk for human consumption that does not meet 
the definition of adult dairy cow or bull. Non-adult dairy cattle are 
further delineated by weight categories of either less than 400 pounds 
or 400 pounds or more at the time they died. For a loss other than 
death, means a bovine dairy breed animal used for the purpose of 
providing milk for human consumption that is less than 2 years old that 
weighed 500 pounds or more on or before the beginning date of the 
eligible adverse weather or eligible loss condition.

[[Page 92]]

    Normal grazing period, with respect to a county, means the normal 
grazing period during the calendar year with respect to each specific 
type of grazing land or pastureland in the county.
    Normal mortality means the numerical amount, computed by a 
percentage, as established for the area by the FSA State Committee, of 
expected livestock deaths, by category, that normally occur during a 
calendar year for a producer.
    Poultry means domesticated chickens, turkeys, ducks, and geese. 
Poultry are further delineated into categories by sex, age, and purpose 
of production as determined by FSA.
    Ram means a male sheep.
    Secretary means the Secretary of Agriculture or a designee of the 
Secretary.
    Sheep means a domesticated, ruminant mammal of the genus Ovis. Sheep 
are further defined by sex (rams and ewes) and age (lambs) for purposes 
of dividing into categories for loss calculations.
    State committee, State office, county committee, or county office 
means the respective FSA committee or office.
    Swine means a domesticated omnivorous pig, hog, or boar. Swine for 
purposes of dividing into categories for loss calculations are further 
delineated into categories by sex and weight as determined by FSA.
    United States means all 50 States of the United States, the 
Commonwealth of Puerto Rico, the Virgin Islands of the United States, 
Guam, and the District of Columbia.



Sec.  760.203  Eligible losses, adverse weather, and other loss conditions.

    (a) An eligible loss covered under this subpart is a loss that an 
eligible producer or contract grower of livestock, honeybees, or farm-
raised fish incurs due to an eligible adverse weather or eligible loss 
condition, as determined by the Deputy Administrator, (including, but 
not limited to, blizzards and wildfires).
    (b) A loss covered under LFP, LIP, or SURE is not eligible for ELAP.
    (c) To be eligible, the loss must have occurred:
    (1) During the calendar year for which payment is being requested 
and
    (2) Due to an eligible adverse weather event or loss condition that 
occurred on or after January 1, 2008, and before October 1, 2011.
    (d) For a livestock feed loss to be considered an eligible loss, the 
livestock feed loss must be one of the following:
    (1) Loss of purchased forage or feedstuffs that was intended for use 
as feed for the participant's eligible livestock that was physically 
located in the county where the eligible adverse weather or eligible 
loss condition occurred on the beginning date of the eligible adverse 
weather or eligible loss condition. The loss must be due to an eligible 
adverse weather or eligible loss condition, as determined by the Deputy 
Administrator, including, but not limited to, blizzard, flood, 
hurricane, tidal surge, tornado, volcanic eruption, wildfire on non-
Federal land, or lightning;
    (2) Loss of mechanically harvested forage or feedstuffs intended for 
use as feed for the participant's eligible livestock that was physically 
located in the county where the eligible adverse weather or eligible 
loss condition occurred on the beginning date of the eligible adverse 
weather or eligible loss condition. The loss must have occurred after 
harvest due to an eligible adverse weather or eligible loss condition, 
as determined by the Deputy Administrator, including, but not limited 
to, blizzard, flood, hurricane, tidal surge, tornado, volcanic eruption, 
wildfire on non-Federal land, or lightning;
    (3) A loss resulting from the additional cost incurred for providing 
or transporting livestock feed to eligible livestock due to an eligible 
adverse weather or eligible loss condition as determined by the Deputy 
Administrator, including, but not limited to, costs associated with 
equipment rental fees for hay lifts and snow removal. The additional 
costs incurred must have been incurred for losses suffered in the county 
where the eligible adverse weather or eligible loss condition occurred;
    (4) A loss resulting from the additional cost of purchasing 
additional livestock feed, above normal quantities, required to maintain 
the eligible livestock during an eligible adverse weather or eligible 
loss condition, until

[[Page 93]]

additional livestock feed becomes available, as determined by the Deputy 
Administrator. To be eligible, the additional feed purchased above 
normal quantities must be feed that is fed to maintain livestock in the 
county where the eligible adverse weather or eligible loss condition 
occurred.
    (e) For a grazing loss to be considered eligible, the grazing loss 
must have been incurred on eligible grazing lands physically located in 
the county where the eligible adverse weather or eligible loss condition 
occurred. The grazing loss must be due to an eligible adverse weather or 
eligible loss condition, as determined by the Deputy Administrator, 
including, but not limited to, flood, freeze, hurricane, hail, tidal 
surge, volcanic eruption, and wildfire on non-Federal land. The grazing 
loss will not be eligible if it is due to an adverse weather condition 
covered by LFP as specified in subpart D, such as drought or wildfire on 
federally managed land where the producer is prohibited by the Federal 
agency from grazing the normally permitted livestock on the managed 
rangeland due to a fire.
    (f) For a loss due to livestock death to be considered eligible, the 
livestock death must have occurred in the county where the eligible loss 
condition occurred. The livestock death must be due to an eligible loss 
condition determined as eligible by the Deputy Administrator and not 
related to an eligible adverse weather event as specified in Subpart E 
for LIP.
    (g) For honeybee or farm-raised fish feed losses to be considered 
eligible, the honeybee or farm-raised fish feed producer must have 
incurred the loss in the county where the eligible adverse weather or 
eligible loss condition occurred. The honeybee or farm-raised fish feed 
losses must be for feed that was intended as feed for the honeybees or 
farm-raised fish that was damaged or destroyed due to an eligible 
adverse weather or eligible loss condition, as determined by the Deputy 
Administrator, including, but not limited to, earthquake, excessive 
wind, flood, hurricane, tidal surge, tornado, volcanic eruption, and 
wildfire.
    (h) For honeybee colony or honeybee hive losses to be considered 
eligible, the honeybee colony or honeybee hive producer must have 
incurred the loss in the county where the eligible adverse weather or 
eligible loss condition occurred. The honeybee colony or honeybee hive 
losses must be due to an eligible adverse weather or eligible loss 
condition, as determined by the Deputy Administrator, including, but not 
limited to, earthquake, excessive wind, flood, hurricane, tornado, 
volcanic eruption, and wildfire. To be eligible for a loss of honeybees 
due to colony collapse disorder, the eligible honeybee producer must 
provide acceptable documentation to support that the loss was due to 
colony collapse disorder. Except for 2008 and 2009 honeybee losses, 
acceptable documentation must include an acceptable colony collapse 
disorder certification by an independent third party as determined by 
the Deputy Administrator, plus any other documentation requested by FSA. 
For 2008 and 2009 honeybee losses such an independent certification is 
not required in all cases, but rather a self-certification by the 
honeybee producer as determined acceptable by the Deputy Administrator 
may be allowed in addition to whatever other documentation might be 
requested.
    (i) For a death loss for bait fish or game fish to be considered 
eligible, the producer must have incurred the loss in the county where 
the eligible adverse weather or eligible loss condition occurred. The 
bait fish or game fish death must be due to an eligible adverse weather 
or eligible loss condition as determined by the Deputy Administrator 
including, but not limited to, an earthquake, flood, hurricane, tidal 
surge, tornado, and volcanic eruption.

[74 FR 46673, Sept. 11, 2009, as amended at 75 FR 19188, Apr. 14, 2010; 
76 FR 54075, Aug. 31, 2010]



Sec.  760.204  Eligible livestock, honeybees, and farm-raised fish.

    (a) To be considered eligible livestock for livestock feed losses 
and grazing losses, livestock must meet all the following conditions:
    (1) Be alpacas, adult or non-adult dairy cattle, adult or non-adult 
beef cattle, adult or non-adult buffalo, adult or non-adult beefalo, 
deer, elk, emus,

[[Page 94]]

equine, goats, llamas, poultry, reindeer, sheep, or swine;
    (2) Be livestock that would normally have been grazing the eligible 
grazing land or pastureland during the normal grazing period for the 
specific type of grazing land or pastureland for the county;
    (3) Be livestock that is owned, cash-leased, purchased, under 
contract for purchase, or been raised by a contract grower or an 
eligible livestock producer, during the 60 days prior to the beginning 
date of the eligible adverse weather or eligible loss condition;
    (4) Be livestock that has been maintained for commercial use as part 
of the producer's farming operation on the beginning date of the 
eligible adverse weather or eligible loss condition;
    (5) Be livestock that has not been produced and maintained for 
reasons other than commercial use as part of a farming operation; and
    (6) Be livestock that was not in a feedlot, on the beginning date of 
the eligible adverse weather or eligible loss condition, as a part of 
the normal business operation of the producer, as determined by the 
Deputy Administrator.
    (b) The eligible livestock types for feed losses and grazing losses 
are:
    (1) Adult beef cows or bulls,
    (2) Adult buffalo or beefalo cows or bulls,
    (3) Adult dairy cows or bulls,
    (4) Alpacas,
    (5) Deer,
    (6) Elk,
    (7) Emus,
    (8) Equine,
    (9) Goats,
    (10) Llamas,
    (11) Non-adult beef cattle,
    (12) Non-adult buffalo or beefalo,
    (13) Non-adult dairy cattle,
    (14) Poultry,
    (15) Reindeer,
    (16) Sheep, and
    (17) Swine;
    (c) Ineligible livestock for feed losses and grazing losses include, 
but are not limited to:
    (1) Livestock that were or would have been in a feedlot, on the 
beginning date of the eligible adverse weather or eligible loss 
condition, as a part of the normal business operation of the producer, 
as determined by FSA;
    (2) Yaks;
    (3) Ostriches;
    (4) All beef and dairy cattle, and buffalo and beefalo that weighed 
less than 500 pounds on the beginning date of the eligible adverse 
weather or eligible loss condition;
    (5) Any wild free roaming livestock, including horses and deer;
    (6) Livestock produced or maintained for reasons other than 
commercial use as part of a farming operation, including, but not 
limited to, livestock produced or maintained exclusively for 
recreational purposes, such as:
    (i) Roping,
    (ii) Hunting,
    (iii) Show,
    (iv) Pleasure,
    (v) Use as pets, or
    (vi) Consumption by owner.
    (d) For death losses for livestock owners to be eligible, the 
livestock must meet all of the following conditions:
    (1) Be alpacas, adult or non-adult dairy cattle, beef cattle, 
beefalo, buffalo, deer, elk, emus, equine, goats, llamas, poultry, 
reindeer, sheep, or swine, and meet all the conditions in paragraph (f) 
of this section.
    (2) Be one of the following categories of animals for which 
calculations of eligibility for payments will be calculated separately 
for each producer with respect to each category:
    (i) Adult beef bulls;
    (ii) Adult beef cows;
    (iii) Adult buffalo or beefalo bulls;
    (iv) Adult buffalo or beefalo cows;
    (v) Adult dairy bulls;
    (vi) Adult dairy cows;
    (vii) Alpacas;
    (viii) Chickens, broilers, pullets;
    (ix) Chickens, chicks;
    (x) Chickens, layers, roasters;
    (xi) Deer;
    (xii) Ducks;
    (xiii) Ducks, ducklings;
    (xiv) Elk;
    (xv) Emus;
    (xvi) Equine;
    (xvii) Geese, goose;
    (xviii) Geese, gosling;
    (xix) Goats, bucks;
    (xx) Goats, nannies;
    (xxi) Goats, kids;

[[Page 95]]

    (xxii) Llamas;
    (xxiii) Non-adult beef cattle;
    (xxiv) Non-adult buffalo or beefalo;
    (xxv) Non-adult dairy cattle;
    (xxvi) Reindeer;
    (xxvii) Sheep, ewes;
    (xxviii) Sheep, lambs;
    (xxix) Sheep, rams;
    (xxx) Swine, feeder pigs under 50 pounds;
    (xxxi) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
    (xxxii) Swine, sows, boars, barrows, gilts over 150 pounds;
    (xxxiii) Turkeys, poults; and
    (xxxiv) Turkeys, toms, fryers, and roasters.
    (e) Under ELAP, ``contract growers'' will only be deemed to include 
producers of livestock, other than feedlots, whose income is dependent 
on the actual weight gain and survival of the livestock. For death 
losses for contract growers to be eligible, the livestock must meet all 
of the following conditions:
    (1) Be poultry or swine, as defined in Sec.  760.202, and meet all 
the conditions in paragraph (f) of this section.
    (2) Be one of the following categories of animals for which 
calculations of eligibility for payments will be calculated separately 
for each contract grower with respect to each category:
    (i) Chickens, broilers, pullets;
    (ii) Chickens, layers, roasters;
    (iii) Geese, goose;
    (iv) Swine, boars, sows;
    (v) Swine, feeder pigs;
    (vi) Swine, lightweight barrows, gilts;
    (vii) Swine, sows, boars, barrows, gilts; and
    (viii) Turkeys, toms, fryers, and roasters.
    (f) For livestock death losses to be considered eligible livestock 
for the purpose of generating payments under this subpart, livestock 
must meet all of the following conditions:
    (1) They must have died:
    (i) On or after the beginning date of the eligible loss condition; 
and
    (ii) On or after January 1, 2008, and no later than 60 calendar days 
from the ending date of the eligible loss condition, but before November 
30, 2011; and
    (iii) As a direct result of an eligible loss condition that occurs 
on or after January 1, 2008, and before October 1, 2011; and
    (iv) In the calendar year for which payment is being requested; and
    (2) Been maintained for commercial use as part of a farming 
operation on the day the livestock died; and
    (3) Before dying, not have been produced or maintained for reasons 
other than commercial use as part of a farming operation, such non-
eligible uses being understood to include, but not be limited to, any 
uses of wild free roaming animals or use of the animals for recreational 
purposes, such as pleasure, hunting, roping, pets, or for show.
    (g) For honeybee losses to be eligible, the honeybee colony must 
meet the following conditions:
    (1) Been maintained for the purpose of producing honey or 
pollination for commercial use in a farming operation on the beginning 
date of the eligible adverse weather or eligible loss condition;
    (2) Been physically located in the county where the eligible adverse 
weather or eligible loss condition occurred on the beginning date of the 
eligible adverse weather or eligible loss condition;
    (3) Been a honeybee colony in which the participant has a risk in 
the honey production or pollination farming operation on the beginning 
date of the eligible adverse weather or eligible loss condition;
    (4) Been a honeybee colony for which the producer had an eligible 
loss of a honeybee colony, honeybee hive, or honeybee feed; the feed 
must have been intended as feed for honeybees.
    (h) For fish to be eligible to generate payments under ELAP, the 
fish must be produced in a controlled environment so to be considered 
``farm raised fish'' as defined in this subpart, and the farm-raised 
fish must:
    (1) For feed losses:
    (i) Be an aquatic species that is propagated and reared in a 
controlled environment;
    (ii) Be maintained and harvested for commercial use as part of a 
farming operation; and
    (iii) Be physically located in the county where the eligible adverse

[[Page 96]]

weather or eligible loss condition occurred on the beginning date of the 
eligible adverse weather or eligible loss condition.
    (2) For death losses:
    (i) Be bait fish or game fish that are propagated and reared in a 
controlled environment;
    (ii) Been maintained for commercial use as part of a farming 
operation; and
    (iii) Been physically located in the county where the eligible loss 
adverse weather or eligible loss condition occurred on the beginning 
date of the eligible adverse weather or eligible loss condition.

[74 FR 46673, Sept. 11, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.205  Eligible producers, owners, and contract growers.

    (a) To be considered an eligible livestock producer for livestock 
feed losses and to receive payments, the participant must have owned, 
cash-leased, purchased, entered into a contract to purchase, or been a 
contract grower of eligible livestock during the 60 days prior to the 
beginning date of the eligible adverse weather or eligible loss 
condition and must have had a loss that is determined to be eligible as 
specified in Sec.  760.203(d), and the producer's eligible livestock 
must have been livestock that would normally have been grazing the 
eligible grazing land or pastureland during the normal grazing period 
for the specific type of grazing land or pastureland for the county as 
specified in paragraph (b)(1)(i) or (ii) of this section.
    (b) To be considered an eligible livestock producer for grazing 
losses and to receive payments, the participant must have:
    (1) Owned, cash-leased, purchased, entered into a contract to 
purchase, or been a contract grower of eligible livestock during the 60 
days prior to the beginning date of the eligible adverse weather or 
eligible loss condition, must have had a loss that is determined to be 
eligible as specified in Sec.  760.203(e), and the loss must have 
occurred on land that is:
    (i) Native or improved pastureland with permanent vegetative cover 
or
    (ii) Planted to a crop planted specifically for the purpose of 
providing grazing for covered livestock;
    (2) Have had eligible livestock that would normally have been 
grazing the eligible grazing land or pastureland during the normal 
grazing period for the specific type of grazing land or pastureland for 
the county as specified in paragraph (b)(1)(i) or (ii) of this section;
    (3) Provided for the eligible livestock pastureland or grazing land, 
including cash leased pastureland or grazing land for covered livestock 
that is physically located in the county where the eligible adverse 
weather or loss condition occurred during the normal grazing period for 
the county.
    (c) For livestock death losses to be eligible the producer must have 
had a loss that is determined to be eligible as specified in Sec.  
760.203(f) and in addition to other eligibility rules that may apply to 
be eligible as a:
    (1) Livestock owner for the payment with respect to the death of an 
animal under this subpart, the applicant must have had legal ownership 
of the livestock on the day the livestock died and under conditions in 
which no contract grower could have been eligible for ELAP payment with 
respect to the animal. Eligible types of animal categories for which 
losses can be calculated for an owner are specified in Sec.  760.204(d).
    (2) Contract grower for ELAP payment with respect to the death of an 
animal, the animal must be in one of the categories specified in Sec.  
760.204(e), and the contract grower must have had:
    (i) 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;
    (ii) Control of the eligible livestock on the day the livestock 
died; and
    (iii) A risk of loss in the animal.
    (d) To be considered an eligible honeybee producer, a participant 
must have an interest and risk in an eligible honeybee colony, as 
specified in Sec.  760.204(g), for the purpose of producing honey or 
pollination for commercial use as part of a farming operation and

[[Page 97]]

must have had a loss that is determined to be eligible as specified in 
Sec.  760.203(g) or (h).
    (e) To be considered an eligible farm-raised fish producer for feed 
loss purposes, the participant must have produced eligible farm-raised 
fish, as specified in Sec.  760.204(h)(1), with the intent to harvest 
for commercial use as part of a farming operation and must have had a 
loss that is determined to be eligible as specified in Sec.  760.203(g);
    (f) A producer seeking payments must not be ineligible under the 
restrictions applicable to foreign persons contained in Sec.  760.103(b) 
and must meet all other requirements of subpart B and other applicable 
USDA regulations.



Sec.  760.206  Notice of loss and application process.

    (a) To apply for ELAP, the participant that suffered eligible 
livestock, honeybee, or farm-raised fish losses must submit, to the FSA 
administrative county office that maintains the participant's farm 
records for the agricultural operation, the following:
    (1) A notice of loss to FSA as specified in Sec.  760.207(a),
    (2) A completed application as specified in Sec.  760.207(b) for one 
or both of the following:
    (i) For livestock feed, grazing and death losses, the participant 
must submit a completed Emergency Loss Assistance for Livestock 
Application;
    (ii) For honeybee feed, honeybee colony, honeybee hive, or farm-
raised fish feed or death losses, the participant must submit a 
completed Emergency Loss Assistance for Farm-Raised Fish or Honeybees 
Application;
    (3) A report of acreage;
    (4) A copy of the participant's grower contract, if the participant 
is a contract grower; and
    (5) Other supporting documents required for FSA to determine 
eligibility of the participant, livestock, and loss.
    (b) For livestock, honeybee, or farm-raised fish feed losses, 
participant must provide verifiable documentation of:
    (1) Purchased feed intended as feed for livestock, honeybees, or 
farm-raised fish that was lost, or additional feed purchased above 
normal quantities to sustain livestock, honeybees, and farm-raised fish 
for a short period of time until additional feed becomes available, due 
to an eligible adverse weather or eligible loss condition. To be 
considered acceptable documentation, the participant must provide 
original feed receipts and each feed receipt must include the date of 
feed purchase, name, address, and telephone number of feed vendor, type 
and quantity of feed purchased, cost of feed purchased, and signature of 
feed vendor if the vendor does not have a license to conduct this type 
of transaction.
    (2) Harvested feed intended as feed for livestock, honeybees, or 
farm-raised fish that was lost due to an eligible adverse weather or 
eligible loss condition. Documentation may include, but is not limited 
to, weight tickets, truck scale tickets, contemporaneous diaries used to 
verify that the crop was stored with the intent to feed the crop to 
livestock, honeybees, or farm-raised fish, and custom harvest documents 
that clearly identify the amount of feed produced from the applicable 
acreage. Documentation must clearly identify the acreage from which the 
feed was produced.
    (c) For eligible honeybee colony and honeybee hive losses and 
eligible farm-raised fish losses, the participant must also provide 
documentation of inventory on the beginning date of the eligible adverse 
weather or loss condition and the ending inventory. Documentation may 
include, but is not limited to, any combination of the following:
    (1) A report of acreage,
    (2) Loan records,
    (3) Private insurance documents,
    (4) Property tax records,
    (5) Sales and purchase receipts,
    (6) State colony registration documentation, and
    (7) Chattel inspections.
    (d) For the loss of honeybee colonies due to colony collapse 
disorder, the participant must also provide acceptable documentation or 
certification that the loss of the honeybee colony was due to colony 
collapse disorder. Except for 2008 and 2009 honeybee colony losses, 
acceptable documentation must include an independent third party 
certification determined acceptable by the Deputy Administrator, plus 
such additional information and documentation as may be requested. For

[[Page 98]]

2008 and 2009 honeybee colony losses a self-certification may be 
accepted by FSA together with any additional information demanded by FSA 
as determined appropriate by the Deputy Administrator.
    (e) For livestock death losses, the participant must provide 
evidence of loss, current physical location of livestock in inventory, 
and physical location of claimed livestock at the time of death. The 
participant must provide:
    (1) Documentation listing the quantity and kind of livestock that 
died as a direct result of the eligible loss condition during the 
calendar year for which payment is being requested, which must include: 
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, or other similar verifiable documents as determined by FSA.
    (2) Adequate proof that the death of the eligible livestock occurred 
as a direct result of an eligible loss condition in the calendar year 
for which payment is requested.
    (3) If adequate verifiable proof of death documentation is not 
available, the participant must provide reliable records, in conjunction 
with verifiable beginning and ending inventory records, as proof of 
death. Reliable records may include: Contemporaneous producer records, 
dairy herd improvement records, brand inspection records, vaccination 
records, pictures, and other similar reliable documents, as determined 
by FSA.
    (4) Certification of livestock deaths by third parties will be 
acceptable for eligibility determination only if verifiable proof of 
death records or reliable proof of death records in conjunction with 
verifiable beginning and ending inventory records are not available and 
both of the following conditions are met:
    (i) The livestock owner or livestock contract grower, as applicable, 
certifies in writing:
    (A) That there is no other verifiable or reliable documentation of 
death available;
    (B) The number of livestock, by category as determined by FSA, was 
in inventory at the time the applicable loss condition occurred;
    (C) The physical location of the livestock, by category, in 
inventory when the deaths occurred; and
    (D) Any other details required for FSA to determine the 
certification acceptable; and
    (ii) The third party is an independent source who is not affiliated 
with the farming operation such as a hired hand and is not a ``family 
member,'' defined as a person to whom a member in the farming operation 
or their spouse is related as a lineal ancestor, lineal descendant, 
sibling, spouse, or otherwise by marriage, and provides their telephone 
number, address, and a written statement containing specific details 
about:
    (A) Their knowledge of the livestock deaths;
    (B) Their affiliation with the livestock owner;
    (C) The accuracy of the deaths claimed by the livestock owner or 
contract grower including, but not limited to, the number and kind or 
type of the participant's livestock that died because of the eligible 
loss condition; and
    (D) Any other information required for FSA to determine the 
certification acceptable.
    (f) FSA will use the data furnished by the participant and the third 
party to determine eligibility for program payment. Furnishing the data 
is voluntary; however, without all required data program, payment will 
not be approved or provided.

[74 FR 46673, Sept. 11, 2009, as amended at 75 FR 19188, Apr. 14, 2010]



Sec.  760.207  Notice of loss and application period.

    (a) In addition to submitting an application for payment at the 
appropriate time, the participant that suffered eligible livestock, 
honeybee, or farm-raised fish losses that create or could create a claim 
for benefits must:
    (1) For losses during calendar year 2008 and in calendar year 2009 
prior to September 11, 2009, provide a notice of loss to FSA no later 
than December 10, 2009;

[[Page 99]]

    (2) For losses on or after September 11, 2009, the participant must 
provide a notice of loss to FSA within the earlier of:
    (i) 30 calendar days of when the loss is apparent to the participant 
or
    (ii) 30 calendar days after the end of the calendar year in which 
the loss occurred.
    (3) The participant must submit the notice of loss required in 
paragraphs (a)(1) and (a)(2) of this section to the administrative FSA 
county office
    (b) In addition to the notices of loss required in paragraph (a) of 
this section, a participant must also submit a completed application for 
payment no later than:
    (1) 30 calendar days after the end of the calendar year in which the 
loss occurred or
    (2) December 10, 2009 for losses that occurred during 2008.



Sec.  760.208  Availability of funds.

    By law, ``up to'' $50 million per year for the years in question may 
be approved for use by the Secretary and accordingly, within that cap, 
the only funds that will be considered available to pay claims will be 
that amount approved by the Secretary. Nothing in these regulations will 
limit the ability of the Secretary to restrict the availability of funds 
for the program as permitted by the relevant legislation. Payments will 
not be made for claims arising out of a particular year until, for all 
claims for that year, the time for applying for a payment has passed. In 
the event that, within the limits of the funding made available by the 
Secretary within the statutory cap, approval of eligible applications 
would result in expenditures in excess of the amount available, FSA will 
prorate the available funds by a national factor to reduce the total 
expected payments to the amount made available by the Secretary. FSA 
will make payments based on the factor for the national rate determined 
by FSA. FSA will prorate the payments in such manner as it determines 
appropriate and reasonable. Claims that are unpaid or prorated for a 
calendar year for any reason will not be carried forward for payment 
under other funds for later years or otherwise, but will be considered, 
as to any unpaid amount, void and nonpayable.



Sec.  760.209  Livestock payment calculations.

    (a) Payments for an eligible livestock producer will be calculated 
based on losses for no more than 90 days during the calendar year. 
Payment calculations for feed losses will be based on 60 percent of the 
producer's actual cost for:
    (1) Livestock feed that was purchased forage or feedstuffs intended 
for use as feed for the participant's eligible livestock that was 
physically damaged or destroyed due to the direct result of an eligible 
adverse weather or eligible loss condition, as provided in Sec.  
760.203(d)(1);
    (2) Livestock feed that was mechanically harvested forage or 
feedstuffs intended for use as feed for the participant's eligible 
livestock that was physically damaged or destroyed after harvest due to 
the direct result of an eligible adverse weather or eligible loss 
condition, as provided in Sec.  760.203(d)(2);
    (3) The additional cost incurred for providing or transporting 
livestock feed to eligible livestock due to an eligible adverse weather 
or eligible loss condition, as provided in Sec.  760.203(d)(3); or
    (4) The additional cost of purchasing additional livestock feed 
above normal, to maintain the eligible livestock during an eligible 
adverse weather or eligible loss condition until additional livestock 
feed becomes available, as provided in Sec.  760.203(d)(4).
    (b) Payments for an eligible livestock producer for grazing losses, 
except for losses due to wildfires on non-Federal land, will be 
calculated based on 60 percent of the lesser of:
    (1) The total value of the feed cost for all covered livestock owned 
by the eligible livestock producer based on the number of days grazing 
was lost, not to exceed 90 days of daily feed cost for all covered 
livestock, or
    (2) The total value of grazing lost for all eligible livestock based 
on the normal carrying capacity, as determined by the Secretary, of the 
eligible grazing land of the eligible livestock producer for the number 
of grazing days lost, not to exceed 90 days of lost grazing.

[[Page 100]]

    (c) The total value of feed cost to be used in the calculation for 
paragraph (b)(1) of this section is based on the number of days grazing 
was lost and equals the product obtained by multiplying:
    (1) A payment quantity equal to the feed grain equivalent, as 
determined in paragraph (d) of this section;
    (2) A payment rate equal to the corn price per pound, as determined 
in paragraph (e) of this section;
    (3) The number of all covered livestock owned by the eligible 
producer converted to an animal unit basis;
    (4) The number of days grazing was lost, not to exceed 90 calendar 
days during the normal grazing period for the specific type of grazing 
land; and
    (5) The producer's ownership share in the livestock.
    (d) The feed grain equivalent to be used in the calculation for 
paragraph (c)(1) of this section equals, in the case of:
    (1) An adult beef cow, 15.7 pounds of corn per day or
    (2) Any other type or weight of livestock, an amount determined by 
the Secretary that represents the average number of pounds of corn per 
day necessary to feed that specific type of livestock.
    (e) The corn price per pound to be used in the calculation for 
paragraph (c)(2) of this section equals the quotient obtained by 
dividing:
    (1) The higher of:
    (i) The national average corn price per bushel of corn for the 12-
month period immediately preceding March 1 of the calendar year for 
which payments are calculated; or
    (ii) The national average corn price per bushel of corn for the 24-
month period immediately preceding March 1 of the calendar year for 
which payments are calculated; by
    (2) 56.
    (f) The total value of grazing lost to be used in the calculation 
for paragraph (b)(2) of this section equals the product obtained by 
multiplying:
    (1) A payment quantity equal to the feed grain equivalent of 15.7 
pounds of corn per day;
    (2) A payment rate equal to the corn price per pound, as determined 
in paragraph (e) of this section;
    (3) The number of animal units the eligible livestock producer's 
grazing land or pastureland can sustain during the normal grazing period 
in the county for the specific type of grazing land or pastureland, in 
the absence of an eligible adverse weather or eligible loss condition, 
determined by dividing the:
    (i) Number of eligible grazing land or pastureland acres of the 
specific type of grazing land or pastureland by
    (ii) The normal carrying capacity of the specific type of eligible 
grazing land or pastureland; and
    (4) The number of days grazing was lost, not to exceed 90 calendar 
days during the normal grazing period for the specific type of grazing 
land.
    (g) Payments for an eligible livestock producer for grazing losses 
due to a wildfire on non-Federal land will be calculated by multiplying:
    (1) The result of dividing:
    (i) The number of acres of grazing land or pastureland acres 
affected by the fire by
    (ii) The normal carrying capacity of the specific type of eligible 
grazing land or pastureland; times
    (2) The daily value of grazing as calculated by FSA under this 
section; times
    (3) The number of days grazing was lost due to fire, not to exceed 
180 calendar days; times
    (4) 50 percent.
    (h) Payments for an eligible livestock producer for eligible 
livestock death losses due to an eligible loss condition will be based 
on the following:
    (1) Payments will be calculated by multiplying:
    (i) The national payment rate for each livestock category times
    (ii) The number of eligible livestock that died in each category as 
a result of an eligible loss condition in excess of normal mortality, as 
determined in paragraph (d)(2) of this section;
    (2) Normal mortality for each livestock category as determined by 
FSA on a statewide basis using local data sources including, but not 
limited to, State livestock organizations and the Cooperative Extension 
Service for the State.
    (3) National payment rates to be used in the calculation for 
paragraph (b)(1) of this section for eligible livestock

[[Page 101]]

owners and eligible livestock contract growers are:
    (i) A national payment rate for eligible livestock owners that is 
based on 75 percent of the average fair market value of the applicable 
livestock as computed using nationwide prices for the previous calendar 
year unless some other price is approved by the Deputy Administrator.
    (ii) A national payment rate for eligible livestock contract growers 
that is based on 75 percent of the relevant average income loss 
sustained by the contract grower, with respect to the dead livestock.
    (i) Payments calculated in this section are subject to the 
adjustments and limits provided for in this part.



Sec.  760.210  Honeybee payment calculations.

    (a) An eligible honeybee producer may receive payments for honeybee 
feed losses due to an eligible adverse weather or loss condition, as 
provided in Sec.  760.203(g), based on 60 percent of the producer's 
actual cost for honeybee feed that was:
    (1) Damaged or destroyed due to an eligible adverse weather or 
eligible loss condition and
    (2) Intended as feed for an eligible honeybee colony, as provided in 
Sec.  760.204(g);
    (b) An eligible honeybee producer may receive payments for honeybee 
colony losses due to an eligible adverse weather or eligible loss 
condition, as provided in Sec.  760.203(h), based on 60 percent of the 
average fair market value for the number of honeybee colonies that were 
damaged or destroyed due to an eligible adverse weather or eligible loss 
condition, as computed using nationwide prices unless some other price 
data is approved for use by the Deputy Administrator, for losses in 
excess of normal honeybee mortality, as determined by the Deputy 
Administrator.
    (c) An eligible honeybee producer may receive payments for honeybee 
hive losses due to an eligible adverse weather or eligible loss 
condition, as provided in Sec.  760.203(h), based on 60 percent of the 
average fair market value for the number of honeybee hives that were 
damaged or destroyed due to an eligible adverse weather or eligible loss 
condition, as computed using nationwide prices unless some other price 
data is approved for use by the Deputy Administrator.
    (d) Payments calculated in this section are subject to the 
adjustments and limits provided for in this part.

[74 FR 46673, Sept. 11, 2009, as amended at 75 FR 19188, Apr. 14, 2010]



Sec.  760.211  Farm-raised fish payment calculations.

    (a) An eligible farm-raised fish producer may receive payments for 
fish feed losses due to an eligible adverse weather or eligible loss 
condition, as provided in Sec.  760.203(g), based on 60 percent of the 
producer's actual replacement cost for the fish feed that was:
    (1) Damaged or destroyed due to an eligible adverse weather or 
eligible loss condition and
    (2) Intended as feed for the eligible farm-raised fish, as provided 
in Sec.  760.204(h)(1).
    (b) An eligible producer of farm-raised game or sport fish may 
receive payments for death losses of farm-raised fish due to an eligible 
adverse weather or eligible loss condition, as provided in Sec.  
760.203(i), based on 60 percent of the average fair market value of the 
game fish or sport fish that died as a direct result of an eligible 
adverse weather or eligible loss condition, as computed using nationwide 
prices unless some other price data is approved for use by the Deputy 
Administrator.
    (c) Payments calculated in this section or elsewhere with respect to 
ELAP are subject to the adjustments and limits provided for in this part 
and are also subject to the payment limitations and average adjusted 
gross income limitations that are contained in subpart B.

[74 FR 46673, Sept. 11, 2009, as amended at 75 FR 19189, Apr. 14, 2010]



               Subpart D_Livestock Forage Disaster Program

    Source: 74 FR 46680, Sept. 11, 2009, unless otherwise noted.



Sec.  760.301  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the

[[Page 102]]

Livestock Forage Disaster Program (LFP) will be administered.
    (b) Eligible livestock producers will be compensated for eligible 
grazing losses for covered livestock that occur due to a qualifying 
drought or fire that occurs:
    (1) On or after January 1, 2008, and before October 1, 2011, and
    (2) In the calendar year for which benefits are being requested.



Sec.  760.302  Definitions.

    The following definitions apply to this subpart and to the 
administration of LFP. The definitions in parts 718 and 1400 of this 
title also apply, except where they conflict with the definitions in 
this section.
    Adult beef bull means a male beef breed bovine animal that was at 
least 2 years old and used for breeding purposes on or before the 
beginning date of a qualifying drought or fire.
    Adult beef cow means a female beef breed bovine animal that had 
delivered one or more offspring. A first-time bred beef heifer is also 
considered an adult beef cow if it was pregnant on or before the 
beginning date of a qualifying drought or fire.
    Adult buffalo and beefalo bull means a male animal of those breeds 
that was at least 2 years old and used for breeding purposes on or 
before the beginning date of a qualifying drought or fire.
    Adult buffalo and beefalo cow means a female animal of those breeds 
that had delivered one or more offspring. A first-time bred buffalo or 
beefalo heifer is also considered an adult buffalo or beefalo cow if it 
was pregnant on or before the beginning date of a qualifying drought or 
fire.
    Adult dairy bull means a male dairy breed bovine animal at least 2 
years old used primarily for breeding dairy cows on or before the 
beginning date of a qualifying drought or fire.
    Adult dairy cow means a female dairy breed bovine animal used for 
the purpose of providing milk for human consumption that had delivered 
one or more offspring. A first-time bred dairy heifer is also considered 
an adult dairy cow if it was pregnant on or before the beginning date of 
a qualifying drought or fire.
    Agricultural operation means a farming operation.
    Application means the ``Livestock Forage Disaster Program'' form.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit by the eligible livestock 
producer.
    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.
    Covered livestock means livestock of an eligible livestock producer 
that, during the 60 days prior to the beginning date of a qualifying 
drought or fire, the eligible livestock producer owned, leased, 
purchased, entered into a contract to purchase, was a contract grower 
of, or sold or otherwise disposed of due to a qualifying drought during 
the current production year. It includes livestock that the producer 
otherwise disposed of due to drought in one or both of the two 
production years immediately preceding the current production year as 
determined by the Secretary. Notwithstanding the foregoing portions of 
this definition, covered livestock for ``contract growers'' will not 
include livestock in feedlots. ``Contract growers'' under LFP will only 
include producers of livestock not in feedlots whose income is dependent 
on the actual weight gain and survival of the livestock.
    Equine animal means a domesticated horse, mule, or donkey.
    Farming operation means a business enterprise engaged in producing 
agricultural products.
    Federal Agency means, with respect to the control of grazing land, 
an agency of the Federal government that manages rangeland on which 
livestock is generally permitted to graze. For the purposes of this 
section, it includes, but is not limited to, the U.S. Department of the 
Interior (DOI) Bureau of Indian Affairs (BIA), DOI Bureau of Land 
Management (BLM), and USDA Forest Service (FS).
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats.

[[Page 103]]

    Non-adult beef cattle means a beef breed bovine animal that weighed 
500 pounds or more on or before the beginning date of a qualifying 
drought or fire but that does not meet the definition of adult beef cow 
or bull.
    Non-adult buffalo or beefalo means an animal of those breeds that 
weighed 500 pounds or more on or before the beginning date of a 
qualifying drought or fire, but does not meet the definition of adult 
buffalo or beefalo cow or bull.
    Non-adult dairy cattle means a bovine animal, of a breed used for 
the purpose of providing milk for human consumption, that weighed 500 
pounds or more on or before the beginning date of a qualifying drought 
or fire, but that does not meet the definition of adult dairy cow or 
bull.
    Normal carrying capacity means, with respect to each type of grazing 
land or pastureland in a county, the normal carrying capacity that would 
be expected from the grazing land or pastureland for livestock during 
the normal grazing period in the county, in the absence of a drought or 
fire that diminishes the production of the grazing land or pastureland.
    Normal grazing period means, with respect to a county, the normal 
grazing period during the calendar year with respect to each specific 
type of grazing land or pastureland in the county served by the 
applicable county committee.
    Owner means one who had legal ownership of the livestock for which 
benefits are being requested during the 60 days prior to the beginning 
of a qualifying drought or fire.
    Poultry means a domesticated chicken, turkey, duck, or goose. 
Poultry are further delineated by sex, age, and purpose of production, 
as determined by FSA.
    Sheep means a domesticated, ruminant mammal of the genus Ovis.
    Swine means a domesticated omnivorous pig, hog, or boar. Swine are 
further delineated by sex and weight, as determined by FSA.
    U.S. Drought Monitor is a system for classifying drought severity 
according to a range of abnormally dry to exceptional drought. It is a 
collaborative effort between Federal and academic partners, produced on 
a weekly basis, to synthesize multiple indices, outlooks, and drought 
impacts on a map and in narrative form. This synthesis of indices is 
reported by the National Drought Mitigation Center at http://
www.drought.unl.edu/dm/monitor.html.



Sec.  760.303  Eligible livestock producer.

    (a) To be considered an eligible livestock producer, the eligible 
producer on a farm must:
    (1) During the 60 days prior to the beginning date of a qualifying 
drought or fire, own, cash or share lease, or be a contract grower of 
covered livestock or
    (2) Provide pastureland or grazing land for covered livestock, 
including cash-leased pastureland or grazing land, that is:
    (i) Physically located in a county affected by a qualifying drought 
during the normal grazing period for the county or
    (ii) Rangeland managed by a Federal agency for which the otherwise 
eligible livestock producer is prohibited by the Federal agency from 
grazing the normal permitted livestock due to a qualifying fire.
    (b) The eligible livestock producer must have certified that the 
livestock producer has suffered a grazing loss due to a qualifying 
drought or fire to be eligible for LFP payments.
    (c) An eligible livestock producer does not include any owner, cash 
or share lessee, or contract grower of livestock that rents or leases 
pastureland or grazing land owned by another person on a rate-of-gain 
basis. (That is, where the lease or rental agreement calls for payment 
based in whole or in part on the amount of weight gained by the animals 
that use the pastureland or grazing land.)
    (d) A producer seeking payment must not be ineligible for payments 
under the restrictions applicable to foreign persons contained in Sec.  
760.103(b) and must meet all other requirements of subpart B and other 
applicable USDA regulations.
    (e) If a contract grower is an eligible livestock producer for 
covered livestock, the owner of that livestock is not eligible for 
payment.

[[Page 104]]



Sec.  760.304  Covered livestock.

    (a) To be considered covered livestock for LFP payments, livestock 
must meet all the following conditions:
    (1) Be adult or non-adult beef cattle, adult or non-adult beefalo, 
adult or non-adult buffalo, adult or non-adult dairy cattle, alpacas, 
deer, elk, emus, equine, goats, llamas, poultry, reindeer, sheep, or 
swine;
    (2) Be livestock that would normally have been grazing the eligible 
grazing land or pastureland in the county:
    (i) During the normal grazing period for the specific type of 
grazing land or pastureland for the county or
    (ii) When the Federal agency prohibited the eligible livestock 
producer from using the managed rangeland for grazing due to a fire;
    (3) Be livestock that the eligible livestock producer:
    (i) During the 60 days prior to the beginning date of a qualifying 
drought or fire:
    (A) Owned,
    (B) Leased,
    (C) Purchased,
    (D) Entered into a contract to purchase, or
    (E) Was a contract grower of; or
    (ii) Sold or otherwise disposed of due to qualifying drought during:
    (A) The current production year or
    (B) 1 or both of the 2 production years immediately preceding the 
current production year;
    (4) Been maintained for commercial use as part of the producer's 
farming operation on the beginning date of the qualifying drought or 
fire;
    (5) 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, any uses of wild free roaming animals 
or use of the animals for recreational purposes, such as pleasure, 
roping, hunting, pets, or for show; and
    (6) Not have been livestock that were or would have been in a 
feedlot, on the beginning date of the qualifying drought or fire, as a 
part of the normal business operation of the eligible livestock 
producer, as determined by the Secretary.
    (b) The covered livestock categories are:
    (1) Adult beef cows or bulls,
    (2) Adult buffalo or beefalo cows or bulls,
    (3) Adult dairy cows or bulls,
    (4) Alpacas,
    (5) Deer,
    (6) Elk,
    (7) Emu,
    (8) Equine,
    (9) Goats,
    (10) Llamas,
    (11) Non-adult beef cattle,
    (12) Non-adult buffalo or beefalo,
    (13) Non-adult dairy cattle,
    (14) Poultry,
    (15) Reindeer,
    (16) Sheep, and
    (17) Swine.
    (c) Livestock that are not covered include, but are not limited to:
    (1) Livestock that were or would have been in a feedlot, on the 
beginning date of the qualifying drought or fire, as a part of the 
normal business operation of the eligible livestock producer, as 
determined by the Secretary;
    (2) Yaks;
    (3) Ostriches;
    (4) All beef and dairy cattle, and buffalo and beefalo that weighed 
less than 500 pounds on the beginning date of the qualifying drought or 
fire;
    (5) Any wild free roaming livestock, including horses and deer; and
    (6) Livestock produced or maintained for reasons other than 
commercial use as part of a farming operation, including, but not 
limited to, livestock produced or maintained for recreational purposes, 
such as:
    (i) Roping,
    (ii) Hunting,
    (iii) Show,
    (iv) Pleasure,
    (v) Use as pets, or
    (vi) Consumption by owner.

[74 FR 46680, Sept. 11, 2009, as amended at 75 FR 19189, Apr. 14, 2010]



Sec.  760.305  Eligible grazing losses.

    (a) A grazing loss due to drought is eligible for LFP only if the 
grazing loss for the covered livestock occurs on land that:
    (1) Is native or improved pastureland with permanent vegetative 
cover or
    (2) Is planted to a crop planted specifically for the purpose of 
providing grazing for covered livestock; and

[[Page 105]]

    (3) Is grazing land or pastureland that is owned or leased by the 
eligible livestock producer that is physically located in a county that 
is, during the normal grazing period for the specific type of grazing 
land or pastureland for the county, rated by the U.S. Drought Monitor as 
having a:
    (i) D2 (severe drought) intensity in any area of the county for at 
least 8 consecutive weeks during the normal grazing period for the 
specific type of grazing land or pastureland for the county, as 
determined by the Secretary, or
    (ii) D3 (extreme drought) or D4 (exceptional drought) intensity in 
any area of the county at any time during the normal grazing period for 
the specific type of grazing land or pastureland for the county, as 
determined by the Secretary. (As specified elsewhere in this subpart, 
the amount of potential payment eligibility will be higher than under 
(a)(3)(i) of this section where the D4 trigger applies or where the D3 
condition as determined by the Secretary lasts at least 4 weeks during 
the normal grazing period for the specific type of grazing land or 
pastureland for the county.)
    (b) A grazing loss is not eligible for LFP if the grazing loss due 
to drought on land used for haying or grazing under the Conservation 
Reserve Program established under subchapter B of chapter 1 of subtitle 
D of title XII of the Food Security Act of 1985 (16 U.S.C. 3831-3835a).
    (c) A fire qualifies for LFP only if:
    (1) The grazing loss occurs on rangeland that is managed by a 
Federal agency and
    (2) The eligible livestock producer is prohibited by the Federal 
agency from grazing the normal permitted livestock on the managed 
rangeland due to a fire.
    (d) An eligible livestock producer may be eligible for LFP payments 
only on those grazing lands incurring losses for which the livestock 
producer:
    (1) Meets the risk management purchase requirements specified in 
Sec.  760.104; or
    (2) Does not meet the risk management purchase requirements 
specified in Sec.  760.104 because the risk management purchase 
requirement is waived according to Sec. Sec.  760.105, 760.106, or 
760.107.



Sec.  760.306  Application for payment.

    (a) To apply for LFP, the participant that suffered eligible grazing 
losses:
    (1) During 2008, must submit a completed application for payment and 
required supporting documentation to the administrative FSA county 
office no later than December 10, 2009 or
    (2) During 2009 and later years, must submit a completed application 
for payment and required supporting documentation to the administrative 
FSA county office no later than 30 calendar days after the end of the 
calendar year in which the grazing loss occurred.
    (b) A participant must also provide a copy of the grower contract, 
if a contract grower, and other supporting documents required for 
determining eligibility as an applicant at the time the participant 
submits the completed application for payment. Supporting documents must 
include:
    (1) Evidence of loss,
    (2) Current physical location of livestock in inventory,
    (3) Evidence of meeting risk management purchase requirements as 
specified in subpart B,
    (4) Evidence that grazing land or pastureland is owned or leased,
    (5) A report of acreage according to part 718 of this chapter for 
the grazing lands incurring losses for which assistance is being 
requested under this subpart;
    (6) Adequate proof, as determined by FSA that the grazing loss:
    (i) Was for the covered livestock;
    (ii) If the loss of grazing occurred as the result of a fire that 
the:
    (A) Loss was due to a fire and
    (B) Participant was prohibited by the Federal agency from grazing 
the normal permitted livestock on the managed rangeland due to a fire;
    (iii) Occurred on or after January 1, 2008, and before October 1, 
2011; and
    (iv) Occurred in the calendar year for which payments are being 
requested;
    (7) Adequate proof, absent an appropriate waiver (if there is a 
waiver, it itself must be documented by the producer), as determined by 
FSA, that the participant had obtained, for the grazing land incurring 
the losses for which

[[Page 106]]

assistance is being requested, one or both of the following:
    (i) A policy or plan of insurance under the Federal Crop Insurance 
Act (7 U.S.C. 1501-1524); or
    (ii) Filed the required paperwork, and paid the administrative fee 
by the applicable State filing deadline, for the noninsured crop 
disaster assistance program;
    (8) Any other supporting documentation as determined by FSA to be 
necessary to make a determination of eligibility of the participant. 
Supporting documents include, but are not limited to: Verifiable 
purchase and sales records; grower contracts; veterinarian records; bank 
or other loan papers; rendering truck receipts; Federal Emergency 
Management Records; National Guard records; written contracts; 
production records; private insurance documents; sales records; and 
similar documents determined acceptable to FSA.
    (c) Data furnished by the participant 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.  760.307  Payment calculation.

    (a) An eligible livestock producer will be eligible to receive 
payments for grazing losses for qualifying drought as specified in Sec.  
760.305(a) equal to one, two, or three times the monthly payment rate 
specified in paragraphs (e) or (f) of this section. Total LFP payments 
to an eligible livestock producer in a calendar year for grazing losses 
due to qualifying drought will not exceed three monthly payments for the 
same livestock. Payments calculated in this section or elsewhere with 
respect to LFP are subject to the adjustments and limits provided for in 
this part and are also subject to the payment limitations and average 
adjusted gross income provisions that are contained in subpart B. 
Payment may only be made to the extent that eligibility is specifically 
provided for in this subpart. Hence, with respect to drought, payments 
will be made only as a ``one month'' payment, a ``two month'' payment, 
or a ``three month'' payment based on the provisions of paragraphs (b), 
(c), and (d) of this section.
    (b) To be eligible to receive a one month payment, that is a payment 
equal to the monthly feed cost as determined under paragraph (g) of this 
section, the eligible livestock producer must own or lease grazing land 
or pastureland that is physically located in a county that is rated by 
the U.S. Drought Monitor as having at least a D2 severe drought 
(intensity) in any area of the county for at least 8 consecutive weeks 
during the normal grazing period for the specific type of grazing land 
or pastureland in the county.
    (c) To be eligible to receive a two month payment, that is a payment 
equal to twice the monthly feed cost as determined under paragraph (g) 
of this section, the eligible livestock producer must own or lease 
grazing land or pastureland that is physically located in a county that 
is rated by the U.S. Drought Monitor as having at least a D3 (extreme 
drought) intensity in any area of the county at any time during the 
normal grazing period for the specific type of grazing land or 
pastureland for the county.
    (d) To be eligible to receive a three month payment, that is a 
payment equal to three times the monthly feed cost as determined under 
paragraph (g) of this section, the eligible livestock producer must own 
or lease grazing land or pastureland that is physically located in a 
county that is rated by the U.S. Drought Monitor as having at least a D3 
(extreme drought) intensity in any area of the county for at least 4 
weeks during the normal grazing period for the specific type of grazing 
land or pastureland for the county, or is rated as having a D4 
(exceptional drought) intensity in any area of the county at any time 
during the normal grazing period for the specific type of grazing land 
or pastureland for the county.
    (e) The monthly payment rate for LFP for grazing losses due to a 
qualifying drought, except as provided in paragraph (f) of this section, 
will be equal to 60 percent of the lesser of:
    (1) The monthly feed cost for all covered livestock owned or leased 
by the eligible livestock producer, as determined in paragraph (g) of 
this section or

[[Page 107]]

    (2) The monthly feed cost calculated by using the normal carrying 
capacity of the eligible grazing land of the eligible livestock 
producer, as determined in paragraph (j) of this section.
    (f) In the case of an eligible livestock producer that sold or 
otherwise disposed of covered livestock due to a qualifying drought in 1 
or both of the 2 production years immediately preceding the current 
production year, the payment rate is 80 percent of the monthly payment 
rate calculated in paragraph (e) of this section.
    (g) The monthly feed cost for covered livestock equals the product 
obtained by multiplying:
    (1) 30 days;
    (2) A payment quantity equal to the amount referred to in paragraph 
(h) of this section as the ``feed grain equivalent'', as determined 
under paragraph (h) of this section; and
    (3) A payment rate equal to the corn price per pound, as determined 
in paragraph (i) of this section.
    (h) The feed grain equivalent equals, in the case of:
    (1) An adult beef cow, 15.7 pounds of corn per day or
    (2) In the case of any other type or weight of covered livestock, an 
amount determined by the Secretary that represents the average number of 
pounds of corn per day necessary to feed that specific type of 
livestock.
    (i) The corn price per pound equals the quotient obtained by 
dividing:
    (1) The higher of:
    (i) The national average corn price per bushel for the 12-month 
period immediately preceding March 1 of the calendar year for which LFP 
payment is calculated or
    (ii) The national average corn price per bushel for the 24-month 
period immediately preceding March 1 of the calendar year for which LFP 
payment is calculated
    (2) By 56.
    (j) The monthly feed cost using the normal carrying capacity of the 
eligible grazing land equals the product obtained by multiplying:
    (1) 30 days;
    (2) A payment quantity equal to the feed grain equivalent of 15.7 
pounds of corn per day;
    (3) A payment rate equal to the corn price per pound, as determined 
in paragraph (i) of this section; and
    (4) The number of animal units the eligible livestock producer's 
grazing land or pastureland can sustain during the normal grazing period 
in the county for the specific type of grazing land or pastureland, in 
the absence of a drought or fire, determined by dividing the:
    (i) Number of eligible grazing land or pastureland acres of the 
specific type of grazing land or pastureland by
    (ii) The normal carrying capacity of the specific type of eligible 
grazing land or pastureland as determined under this subpart.
    (k) An eligible livestock producer will be eligible to receive 
payments for grazing losses due to a fire as specified in Sec.  
760.305(c):
    (1) For the period, subject to paragraph (l)(2) of this section:
    (i) Beginning on the date on which the Federal Agency prohibits the 
eligible livestock producer from using the managed rangeland for grazing 
and
    (ii) Ending on the earlier of the last day of the Federal lease of 
the eligible livestock producer or the day that would make the period a 
180 day period and
    (2) For grazing losses that occur on not more than 180 days per 
calendar year.
    (3) For 50 percent of the monthly feed cost, as determined under 
Sec.  760.308(g), pro-rated to a daily rate, for the total number of 
livestock covered by the Federal lease of the eligible livestock 
producer.



                  Subpart E_Livestock Indemnity Program

    Source: 74 FR 31575, July 2, 2009, unless otherwise noted.



Sec.  760.401  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Livestock Indemnity Program (LIP) will be administered under Titles 
XII and XV of the 2008 Farm Bill (Pub. L. 110-246).
    (b) Eligible livestock owners and contract growers will be 
compensated in accordance with Sec.  760.406 for eligible

[[Page 108]]

livestock deaths in excess of normal mortality that occurred in the 
calendar year for which benefits are being requested as a direct result 
of an eligible adverse weather event. An ``eligible adverse weather 
event'' is one, as determined by the Secretary, occurring in the program 
year that could and did, even when normal preventative or corrective 
measures were taken and good farming practices were followed, directly 
result in the death of livestock. Because feed can be purchased or 
otherwise obtained in the event of a drought, drought is not an eligible 
adverse weather event except when anthrax, resulting from drought, 
causes the death of eligible livestock.



Sec.  760.402  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.
    Adult beef bull means a male beef breed bovine animal that was at 
least 2 years old and used for breeding purposes before it died.
    Adult beef cow means a female beef breed bovine animal that had 
delivered one or more offspring before dying. A first-time bred beef 
heifer is also 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 was 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 is also considered an adult buffalo or beefalo 
cow if it was pregnant at the time it died.
    Adult dairy bull means a male dairy breed bovine animal at least 2 
years old used primarily for breeding dairy cows before it died.
    Adult dairy cow means a female bovine dairy breed 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 is 
also considered an adult dairy cow if it was pregnant at the time it 
died.
    Adverse weather means damaging weather events, including, but not 
limited to, hurricanes, floods, blizzards, disease, wildfires, extreme 
heat, and extreme cold.
    Agricultural operation means a farming operation.
    Application means the ``Livestock Indemnity Program'' form.
    Buck means a male goat.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit by the eligible producer.
    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.
    Deputy Administrator or DAFP means the Deputy Administrator for Farm 
Programs, Farm Service Agency, U.S. Department of Agriculture or the 
designee.
    Equine animal means a domesticated horse, mule, or donkey.
    Ewe means a female sheep.
    Farming operation means a business enterprise engaged in producing 
agricultural products.
    FSA means the Farm Service Agency.
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats. Goats are further defined by sex (bucks and 
nannies) and age (kids).
    Kid means a goat less than 1 year old.
    Lamb means a sheep less than 1 year old.
    Livestock owner means one having legal ownership of the livestock 
for which benefits are being requested on the day such livestock died.
    Nanny means a female goat.
    Non-adult beef cattle means a beef breed bovine animal that does not 
meet the definition of adult beef cow or bull. Non-adult beef cattle are 
further delineated by weight categories of either less than 400 pounds 
or 400 pounds or more at the time they died.
    Non-adult buffalo or beefalo means an animal of those breeds that 
does not meet the definition of adult buffalo or beefalo cow or bull. 
Non-adult buffalo or beefalo are further delineated by

[[Page 109]]

weight categories of either less than 400 pounds or 400 pounds or more 
at the time of death.
    Non-adult dairy cattle means a dairy breed bovine animal, of a breed 
used for the purpose of providing milk for human consumption, that does 
not meet the definition of adult dairy cow or bull. Non-adult dairy 
cattle are further delineated by weight categories of either less than 
400 pounds or 400 pounds or more at the time they died.
    Normal mortality means the numerical amount, computed by a 
percentage, as established for the area by the FSA State Committee, of 
expected livestock deaths, by category, that normally occur during a 
calendar year for a producer.
    Poultry means domesticated chickens, turkeys, ducks, and geese. 
Poultry are further delineated by sex, age, and purpose of production as 
determined by FSA.
    Ram means a male sheep.
    Secretary means the Secretary of Agriculture or a designee of the 
Secretary.
    Sheep means a domesticated, ruminant mammal of the genus Ovis. Sheep 
are further defined by sex (rams and ewes) and age (lambs) for purposes 
of dividing into categories for loss calculations.
    State committee, State office, county committee, or county office 
means the respective FSA committee or office.
    Swine means a domesticated omnivorous pig, hog, or boar. Swine for 
purposes of dividing into categories for loss calculations are further 
delineated by sex and weight as determined by FSA.
    United States means all fifty States of the United States, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and the District 
of Columbia.



Sec.  760.403  Eligible owners and contract growers.

    (a) In addition to other eligibility rules that may apply, to be 
eligible as a:
    (1) Livestock owner for benefits with respect to the death of an 
animal under this subpart, the applicant must have had legal ownership 
of the eligible livestock on the day the livestock died and under 
conditions in which no contract grower could have been eligible for 
benefits with respect to the animal. Eligible types of animal categories 
for which losses can be calculated for an owner are specified in Sec.  
760.404(a).
    (2) Contract grower for benefits with respect to the death of an 
animal, the animal must be in one of the categories specified on Sec.  
760.404(b), and the contract grower must have had
    (i) 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;
    (ii) Control of the eligible livestock on the day the livestock 
died; and
    (iii) A risk of loss in the animal.
    (b) A producer seeking payment must not be ineligible under the 
restrictions applicable to foreign persons contained in Sec.  760.103(b) 
and must meet all other requirements of subpart B and other applicable 
USDA regulations.



Sec.  760.404  Eligible livestock.

    (a) To be considered eligible livestock for livestock owners, the 
kind of livestock must be alpacas, adult or non-adult dairy cattle, beef 
cattle, buffalo, beefalo, elk, emus, equine, llamas, sheep, goats, 
swine, poultry, deer, or reindeer and meet all the conditions in 
paragraph (c) of this section.
    (b) To be considered eligible livestock for contract growers, the 
kind of livestock must be poultry or swine as defined in Sec.  760.402 
and meet all the conditions in paragraph (c) of this section.
    (c) To be considered eligible livestock for the purpose of 
generating payments under this subpart, livestock must meet all of the 
following conditions:
    (1) Died as a direct result of an eligible adverse weather event 
that occurred on or after January 1, 2008, and before October 1, 2011;
    (2) Died no later than 60 calendar days from the ending date of the 
applicable adverse weather event, but before November 30, 2011;
    (3) Died in the calendar year for which benefits are being 
requested;
    (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

[[Page 110]]

than commercial use as part of a farming operation, such non-eligible 
uses being understood to include, but not be limited to, any uses of 
wild, free roaming animals or use of the animals for recreational 
purposes, such as pleasure, hunting, roping, pets, or for show.
    (d) The following categories of animals owned by a livestock owner 
are eligible livestock and calculations of eligibility for payments will 
be calculated separately for each producer with respect to each 
category:
    (1) Adult beef bulls;
    (2) Adult beef cows;
    (3) Adult buffalo or beefalo bulls;
    (4) Adult buffalo or beefalo cows;
    (5) Adult dairy bulls;
    (6) Adult dairy cows;
    (7) Alpacas;
    (8) Chickens, broilers, pullets;
    (9) Chickens, chicks;
    (10) Chickens, layers, roasters;
    (11) Deer;
    (12) Ducks;
    (13) Ducks, ducklings;
    (14) Elk;
    (15) Emus;
    (16) Equine;
    (17) Geese, goose;
    (18) Geese, gosling;
    (19) Goats, bucks;
    (20) Goats, nannies;
    (21) Goats, kids;
    (22) Llamas;
    (23) Non-adult beef cattle;
    (24) Non-adult buffalo or beefalo;
    (25) Non-adult dairy cattle;
    (26) Reindeer;
    (27) Sheep, ewes;
    (28) Sheep, lambs;
    (29) Sheep, rams;
    (30) Swine, feeder pigs under 50 pounds;
    (31) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
    (32) Swine, sows, boars, barrows, gilts over 150 pounds;
    (33) Turkeys, poults; and
    (34) Turkeys, toms, fryers, and roasters.
    (e) The following categories of animals are eligible livestock for 
contract growers and calculations of eligibility for payments will be 
calculated separately for each producer with respect to each category:
    (1) Chickens, broilers, pullets;
    (2) Chickens, layers, roasters;
    (3) Geese, goose;
    (4) Swine, boars, sows;
    (5) Swine, feeder pigs;
    (6) Swine, lightweight barrows, gilts;
    (7) Swine, sows, boars, barrows, gilts; and
    (8) Turkeys, toms, fryers, and roasters.

[74 FR 31575, July 2, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.405  Application process.

    (a) In addition to submitting an application for payment at the 
appropriate time, a producer or contract grower that suffered livestock 
losses that create or could create a claim for benefits must:
    (1) For losses during 2008 and losses in 2009, prior to July 13, 
2009, provide a notice of loss to FSA no later than September 13, 2009.
    (2) For losses on or after July 13, 2009, provide a notice of loss 
to FSA within the earlier of:
    (i) 30 calendar days of when the loss of livestock is apparent to 
the participant or
    (ii) 30 calendar days after the end of the calendar year in which 
the loss of livestock occurred.
    (3) The participant must submit the notice of loss required in 
paragraphs (a)(1) and (a)(2) to the FSA administrative county office 
that maintains the participant's farm records for the agricultural 
operation.
    (b) In addition to the notices of loss required in paragraph (a) of 
this section, a participant must also submit a completed application for 
payment no later than
    (1) 30 calendar days after the end of the calendar year in which the 
loss of livestock occurred or
    (2) September 13, 2009 for losses during 2008.
    (c) Applicants must submit supporting documentation with their 
application. For contract growers, the information must include a copy 
of the grower contract and other documents establishing their status. In 
addition, for all applicants, including contract growers, supporting 
documents must show:
    (1) Evidence of loss,
    (2) Current physical location of livestock in inventory,

[[Page 111]]

    (3) Physical location of claimed livestock at the time of death, and
    (4) Inventory numbers and other inventory information necessary to 
establish actual mortality as required by FSA.
    (d) The participant must provide adequate proof that the death of 
the eligible livestock occurred as a direct result of an eligible 
adverse weather event in the calendar year for which benefits are 
requested. The quantity and kind of livestock that died as a direct 
result of the eligible adverse weather event during the calendar year 
for which benefits are being requested may be documented by: purchase 
records; veterinarian records; bank or other loan papers; rendering-
plant 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 FSA.
    (e) If adequate verifiable proof of death documentation is not 
available, the participant may provide reliable records, in conjunction 
with verifiable beginning and ending inventory records, as proof of 
death. Reliable records may include contemporaneous producer records, 
dairy herd improvement records, brand inspection records, vaccination 
records, pictures, and other similar reliable documents as determined by 
FSA.
    (f) Certification of livestock deaths by third parties may be 
accepted only if verifiable proof of death records or reliable proof of 
death records in conjunction with verifiable beginning and ending 
inventory records are not available and both of the following conditions 
are met:
    (1) The livestock owner or livestock contract grower, as applicable, 
certifies in writing:
    (i) That there is no other verifiable or reliable documentation of 
death available;
    (ii) The number of livestock, by category identified in this subpart 
and by FSA were in inventory at the time the applicable adverse weather 
event occurred;
    (iii) The physical location of the livestock, by category, in 
inventory when the deaths occurred; and
    (iv) Other details required for FSA to determine the certification 
acceptable; and
    (2) The third party is an independent source who is not affiliated 
with the farming operation such as a hired hand and is not a ``family 
member,'' defined as a person whom a member in the farming operation or 
their spouse is related as lineal ancestor, lineal descendant, sibling, 
spouse, and provides their telephone number, address, and a written 
statement containing specific details about:
    (i) Their knowledge of the livestock deaths;
    (ii) Their affiliation with the livestock owner;
    (iii) The accuracy of the deaths claimed by the livestock owner or 
contract grower including, but not limited to, the number and kind or 
type of the participant's livestock that died because of the eligible 
adverse weather event; and
    (iv) Other information required by FSA to determine the 
certification acceptable.
    (g) Data furnished by the participant and the third party 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.  760.406  Payment calculation.

    (a) Under this subpart, separate payment rates for eligible 
livestock owners and eligible livestock contract growers are specified 
in paragraphs (b) and (c) of this section, respectively. Payments for 
LIP are calculated by multiplying the national payment rate for each 
livestock category by the number of eligible livestock in excess of 
normal mortality in each category that died as a result of an eligible 
adverse weather event. Normal mortality for each livestock category will 
be determined by FSA on a State-by-State basis using local data sources 
including, but not limited to, State livestock

[[Page 112]]

organizations and the Cooperative Extension Service for the State. 
Adjustments will be applied as specified in paragraph (d) of this 
section.
    (b) The LIP national payment rate for eligible livestock owners is 
based on 75 percent of the average fair market value of the applicable 
livestock as computed using nationwide prices for the previous calendar 
year unless some other price is approved by the Deputy Administrator.
    (c) The LIP national payment rate for eligible livestock contract 
growers is based on 75 percent of the average income loss sustained by 
the contract grower with respect to the dead livestock.
    (d) The LIP payment calculated for eligible livestock contract 
growers will be reduced by the amount the participant received from the 
party who contracted with the producer to raise the livestock for the 
loss of income from the dead livestock.



                    Subpart F_Tree Assistance Program

    Source: 75 FR 25108, May 7, 2010, unless otherwise noted.



Sec.  760.500  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the Tree Assistance Program (TAP) will be administered under Titles XII 
and XV of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-
246, the 2008 Farm Bill).
    (b) Eligible orchardists and nursery tree growers will be 
compensated as specified in Sec.  760.506 for eligible tree, bush, and 
vine losses in excess of 15 percent mortality, or, where applicable, 15 
percent damage, adjusted for normal mortality and normal damage, that 
occurred in the calendar year for which benefits are being requested and 
as a direct result of a natural disaster.



Sec.  760.501  Administration.

    The program will be administered as specified in Sec.  760.102 and 
in this subpart.



Sec.  760.502  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.
    Bush means, a low, branching, woody plant, from which at maturity of 
the bush, an annual fruit or vegetable crop is produced for commercial 
purposes, such as a blueberry bush. The definition does not cover plants 
that produce a bush after the normal crop is harvested such as 
asparagus.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit by the eligible producer.
    County committee means the respective FSA committee.
    County office means the FSA or U.S. Department of Agriculture (USDA) 
Service Center that is responsible for servicing the farm on which the 
trees, bushes, or vines are located.
    Cutting means a piece of a vine which was planted in the ground to 
propagate a new vine for the commercial production of fruit, such as 
grapes, kiwi fruit, passion fruit, or similar fruit.
    Deputy Administrator or DAFP means the Deputy Administrator for Farm 
Programs, FSA, USDA, or the designee.
    Eligible nursery tree grower means a person or legal entity that 
produces nursery, ornamental, fruit, nut, or Christmas trees for 
commercial sale.
    Eligible orchardist means a person or legal entity that produces 
annual crops from trees, bushes, or vines for commercial purposes.
    FSA means the Farm Service Agency.
    Lost means, with respect to the extent of damage to a tree or other 
plant, that the plant is destroyed or the damage is such that it would, 
as determined by FSA, be more cost effective to replace the tree or 
other plant than to leave it in its deteriorated, low-producing state.
    Natural disaster means plant disease, insect infestation, drought, 
fire, freeze, flood, earthquake, lightning, or other natural occurrence 
of such magnitude or severity so as to be considered disastrous, as 
determined by the Deputy Administrator.
    Normal damage means the percentage, as established for the area by 
the FSA State Committee, of trees, bushes, or vines in the individual 
stand that

[[Page 113]]

would normally be damaged during a calendar year for a producer.
    Normal mortality means percentage, as established for the area by 
the FSA State Committee, of expected lost trees, bushes, or vines in the 
individual stand that normally occurs during a calendar year for a 
producer. This term refers to the number of whole trees, bushes, or 
vines that are destroyed or damaged beyond rehabilitation. Mortality 
does not include partial damage such as lost tree limbs.
    Seedling means an immature tree, bush, or vine that was planted in 
the ground or other growing medium to grow a new tree, bush, or vine for 
commercial purposes.
    Stand means a contiguous acreage of the same type of trees 
(including Christmas trees, ornamental trees, nursery trees, and potted 
trees), bushes (including shrubs), or vines.
    State committee means the respective FSA committee.
    Tree means a tall, woody plant having comparatively great height, 
and a single trunk from which an annual crop is produced for commercial 
purposes, such as a maple tree for syrup, papaya tree, or orchard tree. 
Trees used for pulp or timber are not considered eligible trees under 
this subpart.
    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, and that has a 
flexible stem supported by climbing, twining, or creeping along a 
surface. Perennials that are normally propagated as annuals such as 
tomato plants, biennials such as the plants that produce strawberries, 
and annuals such as pumpkins, squash, cucumbers, watermelon, and other 
melons, are excluded from the term vine in this subpart.



Sec.  760.503  Eligible losses.

    (a) To be considered an eligible loss under this subpart:
    (1) Eligible trees, bushes, or vines must have been lost or damaged 
as a result of natural disaster as determined by the Deputy 
Administrator;
    (2) The individual stand must have sustained a mortality loss or 
damage, as the case may be, loss in excess of 15 percent after 
adjustment for normal mortality or damage;
    (3) The loss could not have been prevented through reasonable and 
available measures; and
    (4) The trees, bushes, or vines, in the absence of a natural 
disaster, would not normally have required rehabilitation or replanting 
within the 12-month period following the loss.
    (b) The damage or loss must be visible and obvious to the county 
committee representative. If the damage is no longer visible, the county 
committee may accept other evidence of the loss as it determines is 
reasonable.
    (c) The county committee may require information from a qualified 
expert, as determined by the county committee, to determine extent of 
loss in the case of plant disease or insect infestation.
    (d) The Deputy Administrator will determine the types of trees, 
bushes, and vines that are eligible.
    (e) An individual stand that did not sustain a sufficient loss as 
specified in paragraph (a)(2) of this section is not eligible for 
payment, regardless of the amount of loss sustained.



Sec.  760.504  Eligible orchardists and nursery tree growers.

    (a) To be eligible for TAP payments, the eligible orchardist or 
nursery tree grower must:
    (1) Have planted, or be considered to have planted (by purchase 
prior to the loss of existing stock planted for commercial purposes) 
trees, bushes, or vines for commercial purposes, or have a production 
history, for commercial purposes, of planted or existing trees, bushes, 
or vines;
    (2) Have suffered eligible losses of eligible trees, bushes, or 
vines occurring between January 1, 2008, and September 30, 2011, as a 
result of a natural disaster or related condition;
    (3) Meet the risk management purchase requirement as specified in 
Sec.  760.104 or the waiver requirements in Sec.  760.105 or Sec.  
760.107; and
    (4) Have continuously owned the stand from the time of the disaster 
until the time that the TAP application is submitted.

[[Page 114]]

    (b) A new owner of an orchard or nursery who does not meet the 
requirements of paragraph (a) of this section may receive TAP payments 
approved for the previous owner of the orchard or nursery and not paid 
to the previous owner, if the previous owner of the orchard or nursery 
agrees to the succession in writing and if the new owner:
    (1) Acquires ownership of trees, bushes, or vines for which benefits 
have been approved;
    (2) Agrees to complete all approved practices that the original 
owner has not completed; and
    (3) Otherwise meets and assumes full responsibility for all 
provisions of this part, including refund of payments made to the 
previous owner, if applicable.
    (c) A producer seeking payment must not be ineligible under the 
restrictions applicable to citizenship and foreign corporations 
contained in Sec.  760.103(b) and must meet all other requirements of 
subpart B of this part.
    (d) Federal, State, and local governments and agencies and political 
subdivisions thereof are not eligible for payment under this subpart.



Sec.  760.505  Application.

    (a) To apply for TAP, a producer that suffered eligible tree, bush, 
or vine losses that occurred:
    (1) During calendar years 2008, 2009, or 2010, prior to May 7, 2010, 
must provide an application for payment and supporting documentation to 
FSA no later than July 6, 2010.
    (2) On or after May 7, 2010, must provide an application for payment 
and supporting documentation to FSA within 90 calendar days of the 
disaster event or date when the loss of trees, bushes, or vines is 
apparent to the producer.
    (b) The producer must submit the application for payment within the 
time specified in paragraph (a) of this section to the FSA 
administrative county office that maintains the producer's farm records 
for the agricultural operation.
    (c) A complete application includes all of the following:
    (1) A completed application form provided by FSA;
    (2) An acreage report for the farming operation as specified in part 
718, subpart B, of this chapter;
    (3) Subject to verification and a loss amount determined appropriate 
by the county committee, a written estimate of the number of trees, 
bushes, or vines lost or damaged that is certified by the producer or a 
qualified expert, including the number of acres on which the loss 
occurred; and
    (4) Sufficient evidence of the loss to allow the county committee to 
calculate whether an eligible loss occurred.
    (d) Before requests for payment will be approved, the county 
committee:
    (1) Must make an eligibility determination based on a complete 
application for assistance;
    (2) Must verify actual qualifying losses and the number of acres 
involved by on-site visual inspection of the land and the trees, bushes, 
or vines;
    (3) May request additional information and may consider all relevant 
information in making its determination; and
    (4) Must verify actual costs to complete the practices, as 
documented by the producer.



Sec.  760.506  Payment calculations.

    (a) Payment to an eligible orchardist or nursery tree grower for the 
cost of replanting or rehabilitating trees, bushes, or vines damaged or 
lost due to a natural disaster, in excess of 15 percent damage or 
mortality (adjusted for normal damage or mortality), will be calculated 
as follows:
    (1) For the cost of planting seedlings or cuttings, to replace lost 
trees, bushes, or vines, the lesser of:
    (i) 70 percent of the actual cost of the practice, or
    (ii) The amount calculated using rates established by the Deputy 
Administrator for the practice.
    (2) For the cost of pruning, removal, and other costs incurred for 
salvaging damaged trees, bushes, or vines, or in the case of mortality, 
to prepare the land to replant trees, bushes, or vines, the lesser of:
    (i) 50 percent of the actual cost of the practice, or

[[Page 115]]

    (ii) The amount calculated using rates established by the Deputy 
Administrator for the practice.
    (b) An orchardist or nursery tree grower that did not plant the 
trees, bushes, or vines, but has a production history for commercial 
purposes on planted or existing trees and lost the trees, bushes, or 
vines as a result of a natural disaster, in excess of 15 percent damage 
or mortality (adjusted for normal damage or mortality), will be eligible 
for the salvage, pruning, and land preparation payment calculation as 
specified in paragraph (a)(2) of this section. To be eligible for the 
replanting payment calculation as specified in paragraph (a)(1) of this 
section, the orchardist or nursery grower who did not plant the stock 
must be a new owner who meets all of the requirements of Sec.  
760.504(b) or be considered the owner of the trees under provisions 
appearing elsewhere in this subpart.
    (c) Eligible costs for payment calculation include costs for:
    (1) Seedlings or cuttings, for tree, bush, or vine replanting;
    (2) Site preparation and debris handling within normal horticultural 
practices for the type of stand being re-established, and necessary to 
ensure successful plant survival;
    (3) Pruning, removal, and other costs incurred to salvage damaged 
trees, bushes, or vines, or, in the case of tree mortality, to prepare 
the land to replant trees, bushes, or vines;
    (4) Chemicals and nutrients necessary for successful establishment;
    (5) Labor to plant seedlings or cuttings as determined reasonable by 
the county committee; and
    (6) Labor used to transplant existing seedlings established through 
natural regeneration into a productive tree stand.
    (d) The following costs are not eligible:
    (1) Costs for fencing, irrigation, irrigation equipment, protection 
of seedlings from wildlife, general improvements, re-establishing 
structures, and windscreens.
    (2) Any other costs not listed in paragraphs (c)(1) through (c)(6) 
of this section, unless specifically determined eligible by the Deputy 
Administrator.
    (e) Producers must provide the county committee documentation of 
actual costs to complete the practices, such as receipts for labor 
costs, equipment rental, and purchases of seedlings or cuttings.
    (f) When lost stands are replanted, the types planted may be 
different from those originally planted. The alternative types will be 
eligible for payment if the new types have the same general end use, as 
determined and approved by the county committee. Payments for 
alternative types will be based on the lesser of rates established to 
plant the types actually lost or the cost to establish the alternative 
used. If the type of plantings, seedlings, or cuttings differs 
significantly from the types lost, the costs may not be approved for 
payment.
    (g) When lost stands are replanted, the types planted may be planted 
on the same farm in a different location than the lost stand. To be 
eligible for payment, site preparation costs for the new location must 
not exceed the cost to re-establish the original stand in the original 
location.
    (h) Eligible orchardists or nursery tree growers may elect not to 
replant the entire eligible stand. If so, the county committee will 
calculate payment based on the number of qualifying trees, bushes, or 
vines actually replanted.
    (i) If a practice, such as site preparation, is needed to both 
replant and rehabilitate trees, bushes, or vines, the producer must 
document the expenses attributable to replanting versus rehabilitation. 
The county committee will determine whether the documentation of 
expenses detailing the amounts attributable to replanting versus 
rehabilitation is acceptable. In the event that the county committee 
determines the documentation does not include acceptable detail of cost 
allocation, the county committee will pro-rate payment based on physical 
inspection of the loss, damage, replanting, and rehabilitation.
    (j) The cumulative total quantity of acres planted to trees, bushes, 
or vines for which a producer may receive payment under this part for 
losses that occurred between January 1, 2008, and

[[Page 116]]

September 30, 2011, will not exceed 500 acres.



Sec.  760.507  Obligations of a participant.

    (a) Eligible orchardists and nursery tree growers must execute all 
required documents and complete the TAP-funded practice within 12 months 
of application approval.
    (b) Eligible orchardist or nursery tree growers must allow 
representatives of FSA to visit the site for the purposes of certifying 
compliance with TAP requirements.
    (c) Producers who do not meet all applicable requirements and 
obligations will not be eligible for payment.



       Subpart G_Supplemental Revenue Assistance Payments Program

    Source: 74 FR 68490, Dec. 28, 2009, unless otherwise noted.



Sec.  760.601  Applicability.

    (a) This subpart specifies the terms and conditions of the 
Supplemental Revenue Assistance Payments Program (SURE).
    (b) Assistance in the form of SURE payments is available for crop 
losses occurring in the crop year 2008 through September 30, 2011, 
caused by disaster as determined by the Secretary. Crop losses must have 
occurred in crop year 2008 or subsequent crop years due to an eligible 
disaster event that occurs on or before September 30, 2011.
    (c) SURE provides disaster assistance to eligible participants on 
farms in:
    (1) Disaster counties designated by the Secretary, which also 
includes counties contiguous to such declared disaster counties, if the 
participant incurred actual production losses of at least 10 percent to 
at least one crop of economic significance on the farm; and
    (2) Any county, if the participant incurred eligible total crop 
losses of greater than or equal to 50 percent of the normal production 
on the farm, as measured by revenue, including a loss of at least 10 
percent to at least one crop of economic significance on the farm.
    (d) Subject to the provisions in subpart B of this part, SURE 
payments will be issued on 60 percent of the difference between the SURE 
guarantee and total farm revenue, calculated using the National Average 
Market Price as specified in this subpart.

[74 FR 68490, Dec. 28, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.602  Definitions.

    (a) The following definitions apply to all determinations made under 
this subpart.
    (b) The terms defined in parts 718, 1400, and 1437 of this title and 
subpart B of this part will be applicable, except where those 
definitions conflict with the definitions set forth in this section In 
the event that a definition in any of those parts conflicts with the 
definitions set forth in this subpart, the definitions in this subpart 
apply. Any additional conflicts will be resolved by the Deputy 
Administrator.
    Actual crop acreage means all acreage for each crop planted or 
intended to be planted on the farm.
    Actual production history yield means the average of the actual 
production history yields for each insurable or noninsurable crop as 
calculated under the Federal Crop Insurance Act (FCIA) (7 U.S.C. 1501-
1524) or Noninsured Crop Disaster Assistance Program (NAP) as set forth 
in part 1437 of this title, respectively. FSA will use the actual 
production history yield data provided for crop insurance or NAP, if 
available, in the SURE payment calculation.
    Actual production on the farm means, unless the Deputy Administrator 
determines that the context requires otherwise, the sum obtained by 
adding:
    (1) For each insurable crop on the farm, excluding value loss crops, 
the product obtained by multiplying:
    (i) 100 percent of the per unit price for the crop used to calculate 
a crop insurance indemnity for the applicable crop insurance if a crop 
insurance indemnity is triggered. If a price is not available, then the 
price is 100 percent of the NAP established price for the crop, times
    (ii) The relevant per unit quantity of the crop produced on the 
farm, adjusted for quality losses, plus
    (2) For each noninsurable crop on the farm, excluding value loss 
crops, the product obtained by multiplying:

[[Page 117]]

    (i) 100 percent of the per unit NAP established price for the crop, 
times
    (ii) The relevant per unit quantity of the crop produced on the 
farm, adjusted for quality losses, plus
    (3) For value loss crops, the value of inventory immediately after 
the disaster.
    Adjusted actual production history yield means a yield that will not 
be less than the participant's actual production history yield for a 
year and:
    (1) In the case of an eligible participant on a farm that has at 
least 4 years of actual production history for an insurable crop that 
are established other than pursuant to section 508(g)(4)(B) of FCIA, the 
average of the production history for the eligible participant without 
regard to any yields established under that section;
    (2) In the case of an eligible participant on a farm that has less 
than 4 years of actual production history for an insurable crop, of 
which one or more were established pursuant to section 508(g)(4)(B) of 
FCIA, the average of the production history for the eligible participant 
as calculated without including the lowest of the yields established 
pursuant to section 508(g)(4)(B) of FCIA; or
    (3) In all other cases, the actual production history yield of the 
eligible participant on a farm.
    Adjusted NAP yield means a yield that will not be less than the 
participant's actual production history yield for NAP for a year and:
    (1) In the case of an eligible participant on a farm that has at 
least 4 years of actual production history under NAP that are not 
replacement yields, the average of the production history without regard 
to any replacement yields;
    (2) In the case of an eligible participant on a farm that has less 
than 4 years of actual production history under NAP that are not 
replacement yields, the average of the production history without 
including the lowest of replacement yields; or
    (3) In all other cases, the actual production history yield of the 
eligible participant on the farm under NAP.
    Administrative fee means a fixed fee payable by a participant for 
NAP or crop insurance coverage, including buy-in fees, based on the 
number of covered crops under NAP or insurance under FCIA.
    Appraised production means production determined by FSA, or an 
insurance provider approved by FCIC, that was unharvested, but which was 
determined to reflect the crop's yield potential at the time of 
appraisal. An appraisal may be provided in terms of a potential value of 
the crop.
    Aquaculture means the reproduction and rearing of aquatic species as 
specified in part 1437 of this title in controlled or selected 
environments.
    Brownout means a disruption of electrical or other similar power 
source for any reason. A brownout, although it may indirectly have an 
adverse effect on crops, is not a disaster for the purposes of this 
subpart and losses caused by a brownout will not be considered a 
qualifying loss.
    Catastrophic risk protection (CAT) means the minimum level of 
coverage offered by the Risk Management Agency (RMA) for crop insurance. 
CAT is further specified in parts 402 and 1437 of this title.
    Counter-cyclical program payment yield means the weighted average 
payment yield established under part 1412, subpart C of this title.
    County expected yield means an estimated yield, expressed in a 
specific unit of measure equal to the average of the most recent five 
years of official county yields established by FSA, excluding the years 
with the highest and lowest yields, respectively.
    Crop insurance indemnity means, for the purpose of this subpart, the 
net payment to a participant excluding the value of the premium for crop 
losses covered under crop insurance administered in accordance with FCIA 
by RMA.
    Crop of economic significance means any crop, as defined in this 
subpart that contributed, or, if the crop is not successfully produced, 
would have contributed or is expected to contribute, 5 percent or more 
of the total expected revenue from all of a participant's crops on a 
farm.
    Crop year means as determined by the Deputy Administrator for a 
commodity on a nationwide basis the calendar year

[[Page 118]]

in which the crop is normally harvested or, where more than one calendar 
year is involved, the calendar year in which the majority of the crop 
would have been harvested. For crops on which catastrophic risk 
protection, as defined in this section, is available, the crop year will 
be as defined as in such coverage. Crop year determinations by the 
Deputy Administrator will be final in all cases and, because these are 
matters of general applicability, will not considered by the Farm 
Service Agency to be subject to administrative appeal.
    Determined acreage or determined production means the amount of 
acres or production for a farm established by a representative of FSA by 
use of appropriate means such as official acreage, digitizing and 
planimetering areas on the photograph or other photographic image, or 
computations from scaled dimensions or ground measurements. In the case 
of production, any production established by a representative of FSA 
through audit, review, measurement, appraisal, or other acceptable means 
of determining production, as determined by FSA.
    Disaster means damaging weather, including drought, excessive 
moisture, hail, freeze, tornado, hurricane, typhoon, excessive wind, 
excessive heat, weather-related saltwater intrusion, weather-related 
irrigation water rationing, or any combination thereof and adverse 
natural occurrences such as earthquakes or volcanic eruptions. Disaster 
includes a related condition that occurs as a result of the damaging 
weather or adverse natural occurrence and exacerbates the condition of 
the crop, such as disease and insect infestation. It does not include 
brownouts or power failures.
    Disaster county means a county included in the geographic area 
covered by a qualifying natural disaster designation under section 
321(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 
1961(a)) and for SURE, the term ``disaster county'' also includes a 
county contiguous to a county declared a disaster by the Secretary; 
however, farms not in a disaster county may qualify under SURE where for 
the relevant period, as determined under this subpart, the actual 
production on a farm is less than 50 percent of the normal production on 
the farm.
    Double-cropping means, as determined by the Deputy Administrator on 
a regional basis, planting for harvest a crop of a different commodity 
on the same acres in cycle with another crop in a 12-month period in an 
area where such double-cropping is considered normal, or could be 
considered to be normal, for all growers and under normal growing 
conditions and normal agricultural practices for the region and being 
able to repeat the same cycle in the following 12-month period.
    Farm means, for the purposes of determining SURE eligibility, the 
entirety of all crop acreage in all counties that a producer planted or 
intended to be planted for harvest for normal commercial sale or on-farm 
livestock feeding, including native and improved grassland intended for 
haying. In the case of aquaculture, except for species for which an 
Aquaculture Grant Program payment was received, the term ``farm'' 
includes all acreage used for all aquatic species being produced in all 
counties that the producer intended to harvest for normal commercial 
sale. In the case of honey, the term ``farm'' means all bees and 
beehives in all counties that the participant intended to be harvested 
for a honey crop for normal commercial sale.
    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government Corporation operated and managed by USDA RMA.
    FSA means the Farm Service Agency.
    Harvested means:
    (1) For insurable crops, harvested is as defined according to the 
applicable crop insurance policy administered in accordance with FCIA by 
RMA;
    (2) For NAP-covered single harvest crops, a mature crop that has 
been removed from the field, either by hand or mechanically;
    (3) For noninsurable crops with potential multiple harvests in one 
year or one crop harvested over multiple years, that the participant 
has, by hand or mechanically, removed at least one mature crop from the 
field during the crop year; or

[[Page 119]]

    (4) For mechanically harvested noninsurable crops, that the mature 
crop has been removed from the field and placed in or on a truck or 
other conveyance, except hay is considered harvested when in the bale, 
whether removed from the field or not. Grazing of land will not be 
considered harvested for the purpose of determining an unharvested or 
prevented planting payment factor.
    Initial crop means a first crop planted for which assistance is 
provided under this subpart.
    Insurable crop means an agricultural commodity (excluding livestock) 
for which the participant on a farm is eligible to obtain a policy or 
plan of crop insurance administered in accordance with FCIA by RMA. Such 
a crop for which the participant purchased insurance from RMA is 
referred to as an insured crop.
    Insurance is available means when crop information is contained in 
RMA's county actuarial documents for a particular crop and a policy or 
plan of insurance administered in accordance with FCIA by RMA. If the 
Adjusted Gross Revenue Plan of crop insurance was the only plan of 
insurance available for the crop in the county in the applicable crop 
year, insurance is considered not available for that crop. If an AGR 
plan or a pilot plan was the only plan available, producers are not 
required to purchase it to meet the risk management purchase 
requirement, but it will satisfy the risk management purchase 
requirement. In that case, the other ways to meet the requirement would 
be, if all the requirements of this subpart are met, a buy-in or NAP.
    Intended use means the original use for which a crop or a commodity 
is grown and produced.
    Marketing year means the 12 months immediately following the 
established final harvest date of the crop of a commodity, as determined 
by the Deputy Administrator, and not an individual participant's final 
harvest date. FSA will use the marketing year determined by NASS, when 
available.
    Maximum average loss level means the maximum level of crop loss that 
will be used in calculating SURE payments for a participant without 
reliable or verifiable production records as defined in this section. 
Loss levels are expressed in either a percent of loss or a yield per 
acre, and reflect the amount of production that a participant should 
have produced considering the eligible disaster conditions in the area 
or county, as determined by the FSA county committee in accordance with 
instructions issued by the Deputy Administrator.
    Multi-use crop means a crop intended for more than one use during 
the calendar year such as grass harvested for seed, hay, or grazing.
    Multiple planting means the planting for harvest of the same crop in 
more than one planting period in a crop year on the same or different 
acreage. This is also sometimes referred in this rule as multiple 
cropping.
    NAMP means the national average market price determined in 
accordance with Sec. Sec.  760.640 and 760.641.
    NASS is the USDA National Agricultural Statistics Service.
    Noninsurable crop means a commercially produced crop for which the 
eligible participants on a farm may obtain coverage under NAP.
    Noninsured Crop Disaster Assistance Program or NAP means the FSA 
program carried out under 7 U.S.C. 7333, as specified in part 1437 of 
this title.
    Normal production on the farm means, for purposes of the revenue 
calculations of this subpart, the sum of the expected revenue for all 
crops on the farm. It is stated in terms of revenue, because different 
crops may have different units of measure.
    Planted acreage means land in which seed, plants, or trees have been 
placed, appropriate for the crop and planting method, at a correct 
depth, into a seed bed that has been properly prepared for the planting 
method and production practice normal to the area, as determined by the 
FSA county committee.
    Prevented planting means the inability to plant an eligible crop 
with proper equipment during the planting period as a result of a 
disaster, as determined by FSA. All prevented planted cropland must meet 
conditions provided in Sec.  718.103 of this chapter. Additionally, all 
insured crops must satisfy the provisions of prevented planting provided 
in Sec.  457.8 of this title.

[[Page 120]]

    Price election means, for an insured crop, the crop insurance price 
elected by the participant multiplied by the percentage of price elected 
by the participant.
    Production means quantity of a crop or commodity produced on the 
farm expressed in a specific unit of measure including, but not limited 
to, bushels or pounds and used to determine the normal production on a 
farm. Normal production for the whole farm is stated in terms of 
revenue, because different crops may have different units of measure.
    Qualifying loss means a 10 percent loss of at least one crop of 
economic significance due to disaster and on a farm that is either:
    (1) Located in a disaster county (a county for which a Secretarial 
disaster designation has been issued or in a county contiguous to a 
county that has received a Secretarial disaster designation), or
    (2) If not located in any disaster county or county contiguous to 
such a county, but has an overall loss greater than or equal to 50 
percent of normal production on the farm (expected revenue for all crops 
on the farm) due to disaster.
    Qualifying natural disaster designation means a natural disaster 
designated by the Secretary for production losses under section 321(a) 
of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(a)).
    Related condition means, with respect to a disaster, a condition 
that causes deterioration of a crop such as insect infestation, plant 
disease, or aflatoxin that is accelerated or exacerbated as a result of 
damaging weather, as determined by the Deputy Administrator.
    Reliable production records means evidence provided by the 
participant 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 acreage or production means information obtained from the 
participant or the participant's agent, on a form prescribed by FSA or 
through insurance records.
    RMA means the Risk Management Agency.
    Salvage value means the dollar amount or equivalent for the quantity 
of the commodity that cannot be marketed or sold in any recognized 
market for the crop.
    Secretary means the Secretary of Agriculture.
    State means a State; the District of Columbia, the Commonwealth of 
Puerto Rico, and any other territory or possession of the United States.
    Subsequent crop means any crop planted after an initial crop, on the 
same land, during the same crop year.
    SURE means the Supplemental Revenue Assistance Payments Program.
    Unit of measure means:
    (1) For all insurable crops, the FCIC established unit of measure;
    (2) For all noninsurable crops, if available, the established unit 
of measure used for the NAP price and yield;
    (3) For aquatic species, a standard unit of measure such as gallons, 
pounds, inches or pieces, established by the FSA State committee for all 
aquatic species or varieties;
    (4) For turfgrass sod, a square yard;
    (5) For maple sap, a gallon; and
    (6) For all other crops, the smallest unit of measure that lends 
itself to the greatest level of accuracy, as determined by the FSA State 
committee.
    USDA means United States Department of Agriculture.
    Value loss crop has the meaning specified in part 1437, subpart D of 
this title. Unless otherwise announced by FSA, value loss crops for SURE 
include aquaculture, floriculture, ornamental nursery, Christmas trees, 
mushrooms, ginseng, and turfgrass sod.
    Verifiable production records mean evidence that is used to 
substantiate the amount of production reported and that can be verified 
by FSA through an independent source.

[[Page 121]]

    Volunteer stand means plants that grow from seed residue or are 
indigenous or are not planted. Volunteer plants may sprout from seeds 
left behind during a harvest of a previous crop; be unintentionally 
introduced to land by wind, birds, or fish; or be inadvertently mixed 
into a crop's growing medium.



Sec.  760.610  Participant eligibility.

    (a) In addition to meeting the eligibility requirements of Sec.  
760.103, a participant must meet all of the following conditions:
    (1) All insurable crops on the participant's farm must be covered by 
crop insurance administered by RMA in accordance with FCIA, and all 
noninsured crops must be covered under NAP, as specified in Sec.  
760.104, unless the participant meets the requirements in either Sec.  
760.105 or Sec.  760.107. At the discretion of FSA, the equitable relief 
provisions in Sec.  760.106 may apply.
    (2) Crop losses must have occurred in crop year 2008 or subsequent 
crop years due to an eligible disaster event that occurred on or before 
September 30, 2011.
    (i) For insured crops, the coverage period, as defined in the 
insurance policy, must have begun on or before September 30, 2011;
    (ii) For NAP crops, the coverage period must have begun on or before 
September 30, 2011; and
    (iii) The final planting date for that crop according to the Federal 
crop insurance or NAP policy must have been on or before September 30, 
2011.
    (3) A qualifying loss as defined in Sec.  760.602 must have 
occurred.
    (4) The participant must have been in compliance with the Highly 
Erodible Land Conservation and Wetland Conservation provisions of part 
12 of this title, for 2008 and subsequent crop years through September 
30, 2011, as applicable, and must not otherwise be barred from receiving 
benefits or payments under part 12 of this title or any other law.
    (5) The participant must not be ineligible or otherwise barred from 
the requisite risk management insurance programs or NAP because of past 
violations where those insurance programs or NAP would otherwise be 
available absent such violations.
    (6) The participant must have an entitlement to an ownership share 
of the crop and also assume production and market risks associated with 
the production of the crop. In the event the crop was planted but not 
produced, participants must have an ownership share of the crop that 
would have been produced.
    (i) Any verbal or written contract that precludes the grower from 
having an ownership share renders the grower ineligible for payments 
under this subpart.
    (ii) Growers growing eligible crops under contract are not eligible 
participants under this subpart unless the grower has an ownership share 
of the crop.
    (b) In the event that a producer is determined not to be an eligible 
producer of a crop in accordance with this section, such crop will be 
disregarded in determining the producer's production or eligibility for 
payments under this subpart. However, any insurance, farm program, or 
NAP payments received by the producer on such crop will count as farm 
revenue if that producer is an eligible participant as a producer of 
other crops.
    (c) Participants may not receive payments with respect to volunteer 
stands of crops. Volunteer stands will not be considered in either the 
calculation of revenue or of the SURE guarantee.
    (d) A deceased applicant or an applicant that is a dissolved entity 
that suffered losses prior to the death or the dissolution that met all 
eligibility criteria prior to death or dissolution may be eligible for 
payments for such losses if an authorized representative signs the 
application for payment. Proof of authority to sign for the deceased 
participant or dissolved entity must be provided. If a participant 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. 
Eligibility of such participant will be determined, as it is for other 
participants, based upon ownership share and risk in producing the crop.

[[Page 122]]

    (e) Participants receiving payments under the Emergency Assistance 
for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) as 
specified in subpart C of this part are not eligible to receive payments 
under SURE for the same loss.
    (f) Participants with a farming interest in multiple counties who 
apply for SURE payment based on a Secretarial disaster designation must 
have a 10 percent loss of a crop of economic significance located in at 
least one disaster county, as defined in this subpart, to be eligible 
for SURE.

[74 FR 68490, Dec. 28, 2009, as amended at 76 FR 54075, Aug. 31, 2011]



Sec.  760.611  Qualifying losses, eligible causes and types of loss.

    (a) Eligible causes of loss are disasters which cause types of 
losses where the crop could not be planted or where crop production was 
adversely affected in quantity, quality, or both. A qualifying loss, as 
defined in this subpart, must be the result of a disaster.
    (b) A loss will not be considered a qualifying loss if any of the 
following apply:
    (1) The cause of the loss was not the result of disaster;
    (2) The cause of loss was due to poor management decisions or poor 
farming practices, as determined by the FSA county committee on a case-
by-case basis;
    (3) The cause of loss was due to failure of the participant to re-
seed or replant to the same crop in a county where it is customary to 
re-seed or replant after a loss before the final planting date;
    (4) The cause of loss was due to water contained or released by any 
governmental, public, or private dam or reservoir project if an easement 
exists on the acreage affected by the containment or release of the 
water;
    (5) The cause of loss was due to conditions or events occurring 
outside of the applicable crop year growing season; or
    (6) The cause of loss was due to a brownout.
    (c) The following types of loss, regardless of whether they were the 
result of a disaster, are not qualifying losses:
    (1) Losses to crops not intended for harvest in the applicable crop 
year;
    (2) Losses of by-products resulting from processing or harvesting a 
crop, such as, but not limited to, cotton seed, peanut shells, wheat or 
oat straw, or corn stalks or stovers;
    (3) Losses to home gardens; or to a crop subject to a de minimis 
election according to Sec.  760.613;
    (4) Losses of crops that were grazed or, if prevented from being 
planted, had the intended use of grazing; or
    (5) Losses of first year seeding for forage production, or immature 
fruit crops.
    (d) The following losses of ornamental nursery stock are not a 
qualifying loss:
    (1) Losses caused by a failure of power supply or brownout as 
defined in Sec.  760.602;
    (2) Losses caused by the inability to market nursery stock as a 
result of quarantine, boycott, or refusal of a buyer to accept 
production;
    (3) Losses caused by fires that are not the result of disaster;
    (4) Losses affecting crops where weeds and other forms of 
undergrowth in the vicinity of nursery stock have not been controlled; 
or
    (5) Losses caused by the collapse or failure of buildings or 
structures.
    (e) The following losses for honey, where the honey production by 
colonies or bees was diminished, are not a qualifying loss:
    (1) Losses caused by the unavailability of equipment or the collapse 
or failure of equipment or apparatus used in the honey operation;
    (2) Losses caused by improper storage of honey;
    (3) Losses caused by bee feeding;
    (4) Losses caused by the application of chemicals;
    (5) Losses caused by theft or fire not caused by a natural condition 
including, but not limited to, arson or vandalism;
    (6) Losses caused by the movement of bees by the participant or any 
other legal entity or person;
    (7) Losses caused by disease or pest infestation of the colonies, 
unless approved by the Secretary;
    (8) Losses of income from pollinators; or

[[Page 123]]

    (9) Losses of equipment or facilities.



Sec.  760.613  De minimis exception.

    (a) Participants seeking the de minimis exception to the risk 
management purchase requirements of this subpart, must certify:
    (1) That a specific crop on the farm is not a crop of economic 
significance on the farm; or
    (2) That the administrative fee required for the purchase of NAP 
coverage for a crop exceeds 10 percent of the value of that coverage.
    (b) To be eligible for a de minimis exception to the risk management 
purchase requirement in Sec.  760.104, the participant must elect such 
exception at the same time the participant files the application for 
payment and the certification of interests, as specified in Sec.  
760.620, and specify the crop or crops for which the participant is 
requesting such exception.
    (c) FSA will not consider the value of any crop elected under 
paragraph (b) of this section in calculating both the SURE guarantee and 
the total farm revenue.
    (d) All provisions of this subpart apply in the event a participant 
does not obtain an exception according to this section.



Sec.  760.614  Lack of access.

    In addition to other provisions for eligibility provided for in this 
part, the Deputy Administrator may provide assistance to participants 
who suffered 2008 production losses that meet the lack of access 
provisions in 19 U.S.C. 2497(g)(7)(F), where deemed appropriate, and 
consistent with the statutory provision. Such a determination to 
exercise that authority, and the terms on which to exercise that 
authority, will be considered to be a determination of general effect, 
not a ``relief'' determination, and will not be considered by the Farm 
Service Agency to be appealable administratively either within FSA or 
before the National Appeals Division.



Sec.  760.620  Time and method of application and certification of interests.

    (a) Each producer interested in obtaining a SURE payment must file 
an application for payment and provide an accurate certification of 
interests. The application will be on a form prescribed by FSA and will 
require information or certifications from the producer regarding any 
other assistance, payment, or grant benefit the producer has received 
for any of the producer's crops or interests on a farm as defined in 
this subpart; regardless of whether the crop or interest is covered in 
the farm's SURE guarantee according to Sec.  760.631. The producer's 
certification of interests will help FSA establish whether the producer 
is an eligible participant.
    (b) Eligible participants with a qualifying loss as defined in this 
subpart must submit an application for payment and certification of 
interests by March 1 of the calendar year that is two years after the 
relevant corresponding calendar year for the crop year which benefits 
are sought to be eligible for payment (for example, the final date to 
submit an application for a SURE payment for the 2009 crop year will be 
March 1, 2011). Producers who do not submit the application by that date 
will not be eligible for payment.
    (c) To the extent available and practicable, FSA will assist 
participants with information regarding their interests in a farm, as of 
the date of certification, based on information already available to FSA 
from various sources. However, the participant is solely responsible for 
providing an accurate certification from which FSA can determine the 
participant's farm interests for the purposes of this program. As 
determined appropriate by FSA, failure of a participant to provide an 
accurate certification of interests as part of the application may 
render the participant ineligible for any assistance under SURE.
    (d) To elect a de minimis exception to the risk management purchase 
requirement for a crop or crops, the participant must meet the 
requirements specified in Sec.  760.613. When electing a de minimis 
exception, the participant must specify the crops for which the 
exception is requested and provide the certification and supporting 
documentation for that exception at the time the application and 
certification of interests is filed with FSA.

[[Page 124]]



Sec.  760.621  Requirement to report acreage and production.

    (a) As a condition of eligibility for payment under this subpart, 
participants must submit an accurate and timely report of all cropland, 
non-cropland, prevented planting, and subsequent crop acreage and 
production for the farm in all counties.
    (b) Acreage and production reports that have been submitted to FSA 
for NAP or to RMA for crop insurance purposes may satisfy the 
requirement of paragraph (a) of this section provided that the 
participant's certification of interests submitted as required by Sec.  
760.620 corresponds to the report requirements in paragraph (a) of this 
section, as determined by the FSA county committee.
    (c) Reports of production submitted for NAP or FCIA purposes must 
satisfy the requirements of NAP or FCIA, as applicable. In all other 
cases, in order for production reports or appraisals to be considered 
acceptable for SURE, production reports and appraisals must meet the 
requirements set forth in part 1437 of this title.
    (d) In any case where production reports or an appraisal is not 
acceptable, maximum loss provisions apply as specified in Sec.  760.637.



Sec.  760.622  Incorrect or false producer production evidence.

    (a) If production evidence, including but not limited to acreage and 
production reports, provided by a participant is false or incorrect, as 
determined by the FSA county committee at any time after an application 
for payment is made, the FSA county committee will determine whether:
    (1) The participant submitting the production evidence acted in good 
faith or took action to defeat the purposes of the program, such that 
the information provided was intentionally false or incorrect.
    (2) The same false, incorrect, or unacceptable production evidence 
was submitted for payment(s) under crop insurance or NAP, and if so, for 
NAP covered crops, make any NAP program adjustments according to Sec.  
1437.15 of this title.
    (b) If the FSA county committee determines that the production 
evidence submitted is false, incorrect, or unacceptable, and the 
participant who submitted the evidence did not act in good faith or took 
action to defeat the purposes of the program, the provisions of Sec.  
760.109, including a denial of future program benefits, will apply. The 
Deputy Administrator may take further action, including, but not limited 
to, making further payment reductions or requiring refunds or taking 
other legal action.
    (c) If the FSA county committee determines that the production 
evidence is false, incorrect, or unacceptable, but the participant who 
submitted the evidence acted in good faith, payment may be adjusted and 
a refund may be required.



Sec.  760.631  SURE guarantee calculation.

    (a) Except as otherwise provided in this part, the SURE guarantee 
for a farm is the sum obtained by adding the dollar amounts calculated 
in paragraphs (a)(1) through (a)(3) of this section.
    (1) For each insurable crop on the farm except for value loss crops, 
115 percent of the product obtained by multiplying together:
    (i) The price election. If a price election was not made or a 
participant is eligible as specified in Sec. Sec.  760.105, 760.106, or 
760.107, then the percentage of price will be 55 percent of the NAP 
established price;
    (ii) The payment acres determined according to Sec.  760.632;
    (iii) The SURE yield as calculated according to Sec.  760.638; and
    (iv) The coverage level elected by the participant. If a coverage 
level was not elected or a participant is eligible as specified in Sec.  
760.105, Sec.  760.106, or Sec.  760.107, a coverage level of 50 percent 
will be used in the calculation.
    (2) For each noninsurable crop on a farm except for value loss 
crops, 120 percent of the product obtained by multiplying:
    (i) 100 percent of the NAP established price for the crop;
    (ii) The payment acres determined according to Sec.  760.632;
    (iii) The SURE yield calculated according to Sec.  760.638; and
    (iv) 50 percent.

[[Page 125]]

    (3) The guarantee for value loss crops as calculated according to 
Sec.  760.634.
    (4) In the case of an insurable crop for which crop insurance 
provides for an adjustment in the guarantee liability, or indemnity, 
such as in the case of prevented planting, that adjustment will be used 
in determining the guarantee for the insurable crop.
    (5) In the case of a noninsurable crop for which NAP provides for an 
adjustment in the level of assistance, such as in the case of 
unharvested crops, that adjustment will be used for determining the 
guarantee for the noninsurable crop.
    (b) Those participants who are eligible according to Sec.  760.105, 
Sec.  760.106, or Sec.  760.107 who do not have crop insurance or NAP 
coverage will have their SURE guarantee calculated based on catastrophic 
risk protection or NAP coverage available for those crops.
    (c) FSA will not include in the SURE guarantee the value of any crop 
that has a de minimis exception, according to Sec.  760.613.
    (d) For crops where coverage may exist under both crop insurance and 
NAP, such as for pasture, rangeland, and forage, adjustments to the 
guarantee will be the product obtained by multiplying the county 
expected yield for that crop times:
    (1) 115 percent;
    (2) 100 percent of the NAP established price;
    (3) The payment acres determined according to Sec.  760.632;
    (4) The SURE yield calculated according to Sec.  760.638; and
    (5) The coverage level elected by the participant.
    (e) Participants who do not have a SURE yield as specified in Sec.  
760.638 will have a yield determined for them by the Deputy 
Administrator.
    (f) The SURE guarantee may not be greater than 90 percent of the sum 
of the expected revenue for each of the crops on a farm, as determined 
by the Deputy Administrator.



Sec.  760.632  Payment acres.

    (a) Payment acres as calculated in this section are used in 
determining both total farm revenue and the SURE guarantee for a farm. 
Payment acreage will be calculated using the lesser of the reported or 
determined acres shown to have been planted or prevented from being 
planted to a crop.
    (b) Initial crop acreage will be the payment acreage for SURE, 
unless the provisions for subsequent crops in this section are met. 
Subsequently planted or prevented planted acre acreage is considered 
acreage for SURE only if the provisions of this section are met. All 
plantings of an annual or biennial crop are considered the same as a 
planting of an initial crop in tropical regions as defined in part 1437, 
subpart F, of this title.
    (c) In cases where there is double cropped acreage, each crop may be 
included in the acreage for SURE only if the specific crops are either 
insured crops eligible for double cropping according to RMA or approved 
by the FSA State committee as eligible double cropping practices in 
accordance with procedures approved by the Deputy Administrator.
    (d) Except for insured crops, participants with double cropped 
acreage not meeting the criteria in paragraph (c) of this section may 
have such acreage included in the acreage for SURE on more than one crop 
only if the participant submits verifiable records establishing a 
history of carrying out a successful double cropping practice on the 
specific crops for which payment is requested.
    (e) Participants having multiple plantings may have each planting 
included in the SURE guarantee only if the planting meets the 
requirements of part 1437 of this title and all other provisions of this 
subpart are satisfied.
    (f) Provisions of part 718 of this title specifying what is 
considered prevented planting and how it must be documented and reported 
will apply to this payment acreage for SURE.
    (g) Subject to the provisions of this subpart, the FSA county 
committee will:
    (1) Use the most accurate data available when determining planted 
and prevented planted acres; and
    (2) Disregard acreage of a crop produced on land that is not 
eligible for crop insurance or NAP.

[[Page 126]]

    (h) For any crop acreage for which crop insurance or NAP coverage is 
canceled, those acres will no longer be considered the initial crop and 
will, therefore, no longer be eligible for SURE.
    (i) Notwithstanding any other provisions of these or other 
applicable regulations that relate to tolerance in part 718 of this 
title, if a farm has a crop that has both FSA and RMA acreage for 
insured crops, payment acres for the SURE guarantee calculation will be 
based on acres for which an indemnity was received if RMA acres do not 
differ from FSA acres by more than the larger of 5 percent or 10 acres 
not to exceed 50 acres. If the difference between FSA and RMA acres is 
more than the larger of 5 percent or 10 acres not to exceed 50 acres, 
then the payment acres for the SURE guarantee will be calculated using 
RMA acres. In that case, the participant will be notified of the 
discrepancy and that refunds of unearned payments may be required after 
FSA and RMA reconcile acreage data.



Sec.  760.633  2008 SURE guarantee calculation.

    (a) For a participant who is eligible due to the 2008 buy-in waiver 
for risk management purchase under the provisions of Sec.  760.105(c), 
the SURE guarantee for their farm for the 2008 crop will be calculated 
according to Sec.  760.631, or according to Sec.  760.634 for value loss 
crops, with the exception that the:
    (1) Price election in Sec.  760.631(a)(1)(i) is 100 percent of the 
NAP established price for the crop;
    (2) Coverage level in Sec.  760.631(a)(1)(iv) is 70 percent; and
    (3) The percent specified in Sec.  760.631(a)(2)(iv) is 70 percent 
instead of 50 percent; and
    (4) Coverage level used in Sec.  760.634(a)(1)(ii) is 70 percent; 
and
    (5) The percent specified in Sec.  760.634(a)(2)(ii) is 70 percent 
instead of 50 percent.
    (b) For those 2008 crops that meet the requirements of Sec. Sec.  
760.104, 760.105(a), 760.106, or 760.107, the SURE guarantee will be the 
higher of:
    (1) The guarantee calculated according to Sec.  760.631, or 
according to Sec.  760.634 for value loss crops, with the exception that 
the percent specified in Sec. Sec.  760.631(a)(1) and 760.634(a)(1) will 
be 120 percent instead of 115 percent;
    (2) The guarantee calculated according to Sec.  760.631, or 
according to Sec.  760.634 for value loss crops, will be used with the 
exception that the:
    (i) Price election in Sec.  760.631(a)(1)(i) is 100 percent of the 
NAP established price for the crop; and
    (ii) Coverage level in Sec. Sec.  760.631(a)(1)(iv) and 
760.634(a)(1)(ii) will be 70 percent; and
    (iii) The percent specified in Sec. Sec.  760.631(a)(2)(iv) and 
760.634(a)(2)(ii) will be 70 percent instead of 50 percent.



Sec.  760.634  SURE guarantee for value loss crops.

    (a) The SURE guarantee for value loss crops will be the sum of the 
amounts calculated in paragraphs (a)(1) and (a)(2) of this section, 
except as otherwise specified.
    (1) For each insurable crop on the farm, 115 percent of the product 
obtained by multiplying:
    (i) The value of inventory immediately prior to disaster, and
    (ii) The coverage level elected by the participant. If a coverage 
level was not elected or a participant is eligible as specified in 
Sec. Sec.  760.106 or 760.107, a coverage level of 27.5 percent will be 
used in the calculation.
    (2) For each noninsurable crop on the farm, 120 percent of the 
product obtained by multiplying:
    (i) The value of inventory immediately prior to a disaster, and
    (ii) 50 percent.
    (b) Aquaculture participants who received assistance under the 
Aquaculture Grant Program (Pub. L. 111-5) will not be eligible for SURE 
assistance on those species for which a grant benefit was received under 
the Aquaculture Grant Program for feed losses associated with that 
species.
    (c) In the case of an insurable value loss crop for which crop 
insurance provides for an adjustment in the guarantee, liability, or 
indemnity, such as in the case of inventory exceeding peak inventory 
value, the adjustment will be used in determining the SURE guarantee for 
the insurable crop.
    (d) In the case of a noninsurable value loss crop for which NAP 
provides

[[Page 127]]

for an adjustment in the level of assistance, such as in the case of 
unharvested field grown inventory, the adjustment will be used in 
determining the SURE guarantee for the noninsurable crop.



Sec.  760.635  Total farm revenue.

    (a) For the purpose of SURE payment calculation, total farm revenue 
will equal the sum obtained by adding the amounts calculated in 
paragraphs (a)(1) through (a)(12) of this section.
    (1) The estimated actual value for each crop produced on a farm, 
except for value loss crops, which equals the product obtained by 
multiplying:
    (i) The actual production of the payment acres for each crop on a 
farm for purposes of determining losses under FCIA or NAP; and
    (ii) NAMP, as calculated for the marketing year as specified in 
Sec.  760.640 and as adjusted if required as specified in Sec.  760.641.
    (2) The estimated actual value for each value loss crop produced on 
a farm that equals the value of inventory immediately after disaster.
    (3) 15 percent of the amount of any direct payments made to the 
participant under part 1412 of this title.
    (4) The total amount of any counter-cyclical and average crop 
revenue election payments made to the participant under part 1412 of 
this title.
    (5) The total amount of any loan deficiency payments, marketing loan 
gains, and marketing certificate gains made to the participant under 
parts 1421 and 1434 of this title.
    (6) The amount of payments for prevented planting.
    (7) The amount of crop insurance indemnities.
    (8) The amount of NAP payments received.
    (9) The value of any guaranteed payments made to a participant in 
lieu of production pursuant to an agreement or contract, if the crop is 
included in the SURE guarantee.
    (10) Salvage value for any crops salvaged.
    (11) The value of any other disaster assistance payments provided by 
the Federal Government for the same loss for which the eligible 
participant applied for SURE.
    (12) For crops for which the eligible participant received a waiver 
under the provisions of Sec.  760.105(c) or obtained relief according to 
Sec.  760.106, the value determined by FSA based on what the participant 
would have received, irrespective of any other provision, if NAP or crop 
insurance coverage had been obtained.
    (b) Sale of plant parts or by-products, such as straw, will not be 
counted as farm revenue.
    (c) For value loss crops:
    (1) Other inventory on hand or marketed at some time other than 
immediately prior to and immediately after the disaster event are 
irrelevant for revenue purposes and will not be counted as revenue for 
SURE.
    (2) Revenue will not be adjusted for market loss.
    (3) Quality losses will not be considered in determining revenue.
    (4) In no case will market price declines in value loss crops, due 
to any cause, be considered in the calculation of payments for those 
crops.



Sec.  760.636  Expected revenue.

    The expected revenue for each crop on a farm is:
    (a) For each insurable crop, except value loss crops, the product 
obtained by multiplying:
    (1) The SURE yield as specified in Sec.  760.638;
    (2) The payment acres as specified in Sec.  760.632; and
    (3) 100 percent of the price for the crop used to calculate a crop 
insurance indemnity for an applicable policy of insurance if a crop 
insurance indemnity is triggered. If a price is not available, then the 
price is 100 percent of the NAP established price for the crop, and
    (b) For each noninsurable crop, except value loss crops, the product 
obtained by multiplying
    (1) The SURE yield as specified in Sec.  760.638;
    (2) The payment acres as specified in Sec.  760.632; and
    (3) 100 percent of the NAP price.
    (c) For each value loss crop, the value of inventory immediately 
prior to the disaster.

[[Page 128]]



Sec.  760.637  Determination of production.

    (a) Except for value loss crops, production for the purposes of this 
part includes all harvested, appraised, and assigned production for the 
payment acres determined according to Sec.  760.632.
    (b) The FSA county committee will use the best available data to 
determine production, including RMA and NAP loss records and yields for 
insured and noninsured crops.
    (c) The production of any eligible crop harvested more than once in 
a crop year will include the total harvested production from all 
harvests.
    (d) Crop production losses occurring in tropical regions, as defined 
in part 1437, subpart F of this chapter, will be based on a crop year 
beginning on January 1 and ending on December 31 of the same calendar 
year. All crop harvests in tropical regions that take place between 
those dates will be considered a single crop.
    (e) Any record of an appraisal of crop production conducted by RMA 
or FSA through a certified loss adjustor will be used if available. 
Unharvested appraised production will be included in the calculation of 
revenue under SURE. If the unharvested appraised crop is subsequently 
harvested for the original intended use, the larger of the actual or 
appraised production will be used to determine payment.
    (1) If no appraisal is available, the participant is required to 
submit verifiable or reliable production evidence.
    (2) If the participant does not have verifiable or reliable 
production evidence, the FSA county committee will use the higher of the 
participant's crop certification or the maximum average loss level to 
determine the participant's crop production losses.
    (f) Production will be adjusted based on a whole grain equivalent, 
as established by FSA, for all crops with an intended use of grain, but 
harvested as silage, cobbage, or hay, cracked, rolled, or crimped.
    (g) For crops sold in a market that is not a recognized market for 
that crop and has no established county expected yield and NAMP, the 
quantity of such crops will not be considered production; rather, 100 
percent of the salvage value will be included in the revenue 
calculation.
    (h) Production from different counties that is commingled on the 
farm before it was a matter of record and cannot be separated by using 
records or other means acceptable to FSA will have the NAMP prorated to 
each respective county by FSA. Commingled production may be attributed 
to the applicable county, if the participant made the location of 
production of a crop a matter of record before commingling, if the 
participant does either of the following:
    (1) Provides copies of verifiable documents showing that production 
of the crop was purchased, acquired, or otherwise obtained from the farm 
in that county; or
    (2) Had the farm's production in that county measured in a manner 
acceptable to the FSA county committee.
    (i) The FSA county committee will assign production for the purpose 
of NAMP for the farm if the FSA county committee determines that the 
participant failed to provide verifiable or reliable production records.
    (j) If RMA loss records are not available, or if the FSA county 
committee determines that the RMA loss records as reported by the 
insured participant appear to be questionable or incomplete, or if the 
FSA county committee makes inquiry, then participants are responsible 
for:
    (1) Retaining and providing, when required, the best available 
verifiable and reliable production records available for the crops;
    (2) Summarizing all the production evidence;
    (3) Accounting for the total amount of production for the crop on a 
farm, whether or not records reflect this production;
    (4) Providing the information in a manner that can be easily 
understood by the FSA county committee; and
    (5) Providing supporting documentation if the FSA county committee 
has reason to question the disaster event or that all production has 
been taken into account.
    (k) The participant must supply verifiable or reliable production 
records to substantiate production to

[[Page 129]]

the FSA county committee. If the eligible crop was sold or otherwise 
disposed of through commercial channels, acceptable production records 
include: Commercial receipts; settlement sheets; warehouse ledger sheets 
or load summaries; or appraisal information from a loss adjuster 
acceptable to FSA. If the eligible crop was farm-stored, sold, fed to 
livestock, or disposed of by means other than commercial channels, 
acceptable production records for these purposes include: Truck scale 
tickets; appraisal information from a loss adjuster acceptable to FSA; 
contemporaneous reliable diaries; or other documentary evidence, such as 
contemporaneous reliable measurements. Determinations of reliability 
with respect to this paragraph will take into account, as appropriate, 
the ability of the agency to verify the evidence as well as the 
similarity of the evidence to reports or data received by FSA for the 
crop or similar crops. Other factors deemed relevant may also be taken 
into account.
    (l) If no verifiable or reliable production records are available, 
the FSA county committee will use the higher of the participant's 
certification or the maximum average loss level to determine production.
    (m) Participants must provide all records for any production of a 
crop that is grown with an arrangement, agreement, or contract for 
guaranteed payment.
    (n) FSA may verify the production evidence submitted with records on 
file at the warehouse, gin, or other entity that received or may have 
received the reported production.



Sec.  760.638  Determination of SURE yield.

    (a) Except for value loss crops as specified in Sec.  760.634, a 
SURE yield will be determined for each crop, type, and intended use on a 
farm, using the higher of the participant's weighted:
    (1) Adjusted actual production history yield as determined in 
paragraph (b) of this section; or
    (2) Counter-cyclical yield as determined in paragraph (c) of this 
section.
    (b) The adjusted actual production history yield, as defined in 
Sec.  760.602, will be weighted by the applicable crop year total 
planted and prevented planted acres, by crop, type, and intended use for 
each county. RMA data will be used for calculating the SURE yield for 
insured crops.
    (c) The counter-cyclical yield for a crop on a SURE farm will be 
weighted in such manner as FSA deems fit taking into account a desire 
for a consistent system and FSA's ability to make timely yield 
determinations.
    (d) Participants who do not purchase crop insurance or NAP coverage, 
but who are otherwise eligible for payment, will have a SURE yield 
determined by the FSA county committee as follows:
    (1) A weighted yield, based on planted and prevented planted acres, 
the location county, crop type, and intended use, will be determined at 
65 percent of the county expected yield for each crop.
    (2) The SURE yield will be the higher of the yield calculated using 
the method in paragraph (d)(1) of this section or 65 percent of the 
weighted counter-cyclical yield as determined in paragraph (c) of this 
section.
    (e) For those participants with crop insurance but without an 
adjusted actual production history yield, a SURE yield will be 
determined by the applicable FSA county committee. This paragraph will 
apply in the case where the insurance policy does not require an actual 
production history yield, or where a participant has no production 
history.

[74 FR 68490, Dec. 28, 2009, as amended at 75 FR 19189, Apr. 14, 2010]



Sec.  760.640  National average market price.

    (a) The Deputy Administrator will establish the National Average 
Market Price (NAMP) using the best sources available, as determined by 
the Deputy Administrator, which may include, but are not limited to, 
data from NASS, Cooperative Extension Service, Agricultural Marketing 
Service, crop insurance, and NAP.
    (b) NAMP may be adjusted by the FSA State committee, in accordance 
with instructions issued by the Deputy Administrator and as specified in 
Sec.  760.641, to recognize average quality loss factors that are 
reflected in the market by county or part of a county.

[[Page 130]]

    (c) With respect to a crop for which an eligible participant on a 
farm receives assistance under NAP, the NAMP will not exceed the price 
of the crop established under NAP.
    (d) To the extent practicable, the NAMP will be established on a 
harvested basis without the inclusion of transportation, storage, 
processing, marketing, or other post-harvest expenses, as determined by 
FSA.
    (e) NAMP may be adjusted by the FSA State committee, as authorized 
by The Deputy Administrator, to reflect regional variations in price 
consistent with those prices established under the FCIA or NAP.



Sec.  760.641  Adjustments made to NAMP to reflect loss of quality.

    (a) The Deputy Administrator will authorize FSA county committees, 
with FSA State committee concurrence, to adjust NAMP for a county or 
part of a county:
    (1) To reflect the average quality discounts applied to the local or 
regional market price of a crop due to a reduction in the intrinsic 
characteristics of the production resulting from adverse weather, as 
determined annually by the State office of the FSA; or
    (2) To account for a crop for which the value is reduced due to 
excess moisture resulting from a disaster related condition.
    (3) For adjustments specified in paragraphs (a)(1) and (a)(2) of 
this section, an adjustment factor that represents the regional or local 
price received for the crop in the county will be calculated by the FSA 
State committee. The adjustment factor will be based on the average 
actual market price compared to NAMP.
    (b) For adjustments made under paragraph (a) of this section, 
participants must provide verifiable evidence of actual or appraised 
production, clearly indicating an average loss of value caused by poor 
quality or excessive moisture that meets or exceeds the quality 
adjustment for the county or part of a county established in paragraph 
(a)(3) of this section to be eligible to receive the quality-adjusted 
NAMP as part of their SURE payment calculation. In order to be 
considered at all for the purpose of quality adjustments, the verifiable 
evidence of production must itself detail the extent of the quality loss 
for a specific quantity. With regard to test evidence, in addition to 
meeting all the requirements of this section, tests must have been 
completed by January 1 of the year following harvest.



Sec.  760.650  Calculating SURE.

    (a) Subject to the provision of this subpart, SURE payments for crop 
losses in crop year 2008 and subsequent crop years will be calculated as 
the amount equal to 60 percent of the difference between:
    (1) The SURE guarantee, as specified in Sec.  760.631, Sec.  760.633 
or Sec.  760.634 of this subpart, and
    (2) The total farm revenue, as specified in Sec.  760.635.
    (b) In addition to the other provisions of this subpart and subpart 
B of this part, SURE payments may be adjusted downward as necessary to 
insure compliance with the payment limitations in subpart B and to 
insure that payments do not exceed the maximum amount specified in Sec.  
760.108(a)(1) or (b)(1) or otherwise exceed the perceived intent of 19 
U.S.C. 2497(j). Such adjustments can include, but are not limited to, 
adjustments to insure that there is no duplication of benefits as 
specified in Sec.  760.108(c).



                    Subpart H_Crop Assistance Program

    Authority: 7 U.S.C. 612c.

    Source: 75 FR 65428, Oct. 25, 2010, unless otherwise noted.



Sec.  760.701  Applicability.

    (a) This subpart specifies the eligibility requirements and payment 
calculations for the Crop Assistance Program (CAP), which will be 
administered using funds authorized by Section 32 of the Agricultural 
Adjustment Act of 1935 (7 U.S.C. 612c, as amended).
    (b) CAP, within the limits of the funds made available by the 
Secretary for this program, is intended to help reestablish purchasing 
power to producers of long grain rice, medium or short grain rice, 
upland cotton, soybeans, and sweet potatoes who suffered

[[Page 131]]

a five percent or greater loss in the 2009 crop year due to disaster.
    (c) Only producers who have a share in a farm located in a disaster 
county (a county that is the primary county that is the subject of a 
Secretarial disaster designation for 2009 crop year due to excessive 
moisture and related conditions, as determined by FSA) are eligible for 
CAP benefits.



Sec.  760.702  Definitions.

    The following definitions apply to CAP. The definitions in parts 
718, 760, and 1400 of this title also apply, except where they conflict 
with the definitions in this section.
    Acceptable production records means verifiable or reliable 
production records deemed acceptable by FSA.
    Application means the CAP application form.
    Application period means the 45-day period established by the Deputy 
Administrator for producers on farms in disaster counties to apply for 
CAP that ends December 9, 2010.
    Approved yield means the amount of production per acre, computed in 
accordance with FCIC's Actual Production History (APH) Program at part 
400, subpart G of this title or, for crops not included under part 400, 
subpart G of this title, the yield used to determine the guarantee. For 
crops covered under NAP, the approved yield is established according to 
part 1437 of this title.
    Considered planted means acreage approved as prevented planted or 
failed in accordance with Sec.  718.103 of this chapter.
    Crop means the reported or determined 2009 crop year planted and 
considered planted acres of long grain rice, medium or short grain rice, 
upland cotton, soybean, or sweet potatoes as reflected on 2009 crop year 
form FSA-578, Report of Acreage, for a producer in a disaster county as 
of October 22, 2010. Subsequent crops, replacement crops, reseeded 
crops, and replanted crops are not eligible crops under this part and no 
revision of the Report of Acreage that would increase an eligibility for 
payment will be permitted to produce that effect.
    Crop year means for 2009:
    (1) For insurable crops, the crop year as defined according to the 
applicable crop insurance policy;
    (2) For NAP covered crops, the crop year as provided in part 1437 of 
this title.
    Disaster means excessive moisture or related condition, resulting 
from any of the following: flood, flash flooding, excessive rain, 
moisture, humidity, severe storms, thunderstorms, ground saturation or 
standing water, hail, winter storms, ice storms, snow, blizzard, 
hurricane, typhoons, tropical storms, and cold wet weather. A disaster 
does not include brownouts or power failures.
    Disaster county means a county included in the geographic area 
covered by a qualifying natural disaster designation under section 
321(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 
1961(a)). For CAP, the term ``disaster county'' is limited to those 
primary counties declared a disaster by the Secretary for excessive 
moisture or a related condition, which are limited to designations based 
on any of the following: flood, flash flooding, excessive rain, 
moisture, humidity, severe storms, thunderstorms, ground saturation or 
standing water, hail, winter storms, ice storms, snow, blizzard, 
hurricane, typhoons, tropical storms, and cold wet weather.
    Expected production means, for a producer on a farm who attempts to 
determine what the producer might produce for an eligible crop on a 
farm, the historic yield multiplied by the producer's share of planted 
and considered planted acres of the crop for the farm. Expected 
production may be used to assist producers in determining whether the 
producer has a crop or crops that suffered a qualifying loss of five 
percent and to determine whether that crop is eligible for CAP benefits.
    Historic yield means, for a producer on a farm, the higher of the 
county average yield or the producer's approved yields for eligible 
crops on the farm.
    (1) An insured producer's yield will be the higher of the county 
average yield listed or the approved federal crop insurance APH, for the 
disaster year.
    (2) A NAP producer's yield will be the higher of the county average 
yield or

[[Page 132]]

NAP approved yield for the disaster year.
    Replacement crop means the planting or approved prevented planting 
of any crop for harvest following the failed planting or prevented 
planting of a crop of long grain rice, medium or short grain rice, 
upland cotton, soybeans, or sweet potatoes not in a recognized double-
cropping sequence. Replacement crops are not eligible for CAP.
    Reseeded or replanted crop means the second planting of a crop of 
long grain rice, medium or short grain rice, upland cotton, soybeans, or 
sweet potatoes on the same acreage after the first planting of that same 
crop that failed.



Sec.  760.703  Producer eligibility requirements.

    (a) A producer must meet all of the requirements in this subpart to 
be eligible for a CAP payment.
    (b) To be eligible, a producer must be an individual or entity who 
is entitled to an ownership share of an eligible crop and who has the 
production and market risks associated with the agricultural production 
of the crop on a farm. An eligible producer must be a:
    (1) Citizen of the United States;
    (2) Resident alien, which for purposes of this subpart means 
``lawful alien'' as defined in 7 CFR part 1400;
    (3) Partnership of citizens of the United States; or
    (4) Corporation, limited liability corporation, or other farm 
organizational structure organized under State law.
    (c) To be eligible, a producer must have:
    (1) Produced a 2009 crop year planted or considered planted long 
grain rice, medium or short grain rice, upland cotton, soybean, or sweet 
potato crop in a 2009 eligible disaster county, and
    (2) Suffered a five percent or greater loss in an eligible disaster 
county in 2009. A list of the disaster counties for CAP is available on 
the FSA Web site and at FSA county offices.



Sec.  760.704  Time and method of application.

    (a) To request a CAP payment, the producer must submit a CAP 
application on the form designated by FSA to the FSA county office 
responsible for administration of the farm.
    (b) Producers submitting an application for a crop must certify that 
they suffered a five percent or greater loss of the crop on the farm in 
a disaster county and that they have documentation to support that 
certification as required in Sec.  760.713.
    (c) Once submitted by a producer, the application is considered to 
contain information and certifications of and pertaining to the 
producer's crop and farm regardless of who entered the information on 
the application.
    (d) Producers requesting benefits under CAP must certify the 
accuracy and truthfulness of the information provided in the application 
as well as with any documentation that may be provided with the 
application or documentation that will be provided to FSA in 
substantiation of the application. All certifications and information 
are subject to verification by FSA.
    (e) Producers applying for CAP must certify that they have an 
eligible ownership share interest in the 2009 crop acreage that 
sustained a five percent or greater loss. The determination and 
certification by a producer that a crop suffered the requisite five 
percent or greater farm crop loss is the expected quantity of production 
of the crop less the actual production of the crop.
    (f) In the event that the producer does not submit documentation in 
response to any request of FSA to support the producer's application or 
documentation furnished does not show a crop loss of at least five 
percent as claimed, the application for that crop will be disapproved in 
its entirety. For quantity losses, producers need to apply a standard 
similar to the historic yield provisions used under previous ad hoc 
disaster programs. Those provisions provided that a historic yield was 
the higher of a county average yield or a producer's approved yield. 
Thus, if an applicant is determining whether a farm has a crop that 
suffered a loss of five percent or greater on the farm's planted and 
considered planted acreage, the applicant could compare the amount 
successfully produced in 2009 from those planted and considered planted 
acres to what the participant expected to produce from that acreage

[[Page 133]]

using either the county average yield (which may be obtained from FSA by 
request) or based on analysis of approved actual production history 
yields that may exist for producers of the crop on the farm.
    (g) Unless otherwise determined necessary by FSA, producers will not 
be required to submit documentation of farm crop production or loss at 
time of application. FSA's decision not to require proof, documentation, 
or evidence in support of any application at time of application is not 
to be construed as a determination of a producer's eligibility.
    (h) Producers who apply are required to retain documentation in 
support of their application for three years after the date of 
application in accordance with Sec.  760.713.
    (i) The application submitted in accordance with this section is not 
considered valid and complete for issuance of payment under this part 
unless FSA determines all the applicable eligibility provisions have 
been satisfied and the producer has submitted all the required forms. In 
addition to the completed, certified application form, if the 
information for the following forms or certifications is not on file in 
the FSA county office or is not current for 2009, the producer must also 
submit:
    (1) Farm operating plan for individual or legal entity;
    (2) Average adjusted gross income statement for 2009; and
    (3) Highly erodible land conservation (HELC) and wetland 
conservation certification.
    (j) Application approval and payment by FSA does not relieve a 
producer from having to submit any form, records, or documentation 
required, but not filed at the time of application or payment, according 
to paragraph (h) of this section.



Sec.  760.705  Payment rates and calculation of payments.

    (a) CAP payments will be calculated by multiplying the total number 
of reported or determined acres of an eligible crop by the per acre 
payment rate for that crop. Payment rates are as follows:
    (1) Long grain rice, $31.93 per acre;
    (2) Medium or short grain rice, $52.46 per acre;
    (3) Upland cotton, $17.70 per acre;
    (4) Soybeans, $15.62 per acre; and
    (5) Sweet potatoes, $155.41 per acre.
    (b) Payments will be calculated based on the 2009 crop year reported 
or determined planted or considered planted acres of an eligible crop on 
a farm in a disaster county as reflected on a form FSA-578, Report of 
Acreage, on file in FSA as of October 22, 2010.



Sec.  760.706  Availability of funds.

    (a) Payments specified in this subpart are subject to the 
availability of funds. The total available program funds are $550 
million. In order to keep payments within available funds, the Deputy 
Administrator may pro-rate payments, to the extent the Deputy 
Administrator determines that necessary.
    (b) Funds for CAP are being made available only for the 2009 crop 
year reported and determined eligible crop acreage in disaster counties 
as reflected on a form FSA-578, Report of Acreage, as of October 22, 
2010.



Sec.  760.707  Proof of loss.

    (a) All certifications, applications, and documentation are subject 
to spot check and verification by FSA. Producers must submit 
documentation to FSA if and when FSA requests documentation to 
substantiate any certified application.
    (b) Producers are responsible for retaining or providing, when 
required, verifiable or reliable production or loss records available 
for the crop. Producers are also responsible for summarizing all the 
production or loss evidence and providing the information in a manner 
that can be understood by the county committee.
    (c) Any producer receiving payment under this subpart agrees to 
maintain any books, records, and accounts supporting any information or 
certification made according to this part for 3 years after the end of 
the year following application.
    (d) Producers receiving payments or any other person who furnishes 
such information to FSA must permit FSA or authorized representatives of 
USDA

[[Page 134]]

and the General Accounting Office during regular business hours to 
inspect, examine, and to allow such persons to make copies of such 
books, records or other items for the purpose of confirming the accuracy 
of the information provided by the producer.



Sec.  760.708  Miscellaneous provisions and limitations.

    (a) A person ineligible under Sec.  1437.15(c) of this title 
concerning violations of the Noninsured Crop Disaster Assistance Program 
for the 2009 crop year is ineligible for benefits under this subpart.
    (b) A person ineligible under Sec.  400.458 of this title for the 
2009 crop year concerning violations of crop insurance regulations is 
ineligible for CAP.
    (c) In the event that any request for CAP payment resulted from 
erroneous information or a miscalculation, the payment will be 
recalculated and the producer must refund any excess to FSA with 
interest to be calculated from the date of the disbursement to the 
producer. If for whatever reason the producer signing a CAP application 
overstates the loss level of the crop when the actual loss level 
determined by FSA for the crop is less than the level claimed, or where 
the CAP payment would exceed the producer's actual loss, the application 
will be disapproved for the crop and the full CAP payment for that crop 
will be required to be refunded with interest from date of disbursement. 
The CAP payment cannot exceed the producer's actual loss.
    (d) The liability of anyone for any penalty or sanction under or in 
connection with this subpart, or for any refund to FSA or related charge 
is 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. 
714; and 31 U.S.C. 3729.
    (e) The regulations in parts 11 and 780 of this title apply to 
determinations under this subpart.
    (f) Any payment to any person under this subpart will be made 
without regard to questions of title under State law and without regard 
to any claim or lien against the crop, or its proceeds.
    (g) Any payment made under this subpart will be considered farm 
revenue for 2009 for the Supplemental Revenue Assistance Payments 
Program.
    (h) The average AGI limitation provisions in part 1400 of this title 
relating to limits on payments for persons or legal entities, excluding 
joint ventures and general partnerships, with certain levels of average 
adjusted gross income (AGI) apply to each applicant for CAP. 
Specifically, a person or legal entity with an average adjusted gross 
nonfarm income, as defined in Sec.  1404.3 of this title, that exceeds 
$500,000 is not eligible to receive CAP payments.
    (i) No person or legal entity, excluding a joint venture or general 
partnership, as determined by the rules in part 1400 of this title may 
receive, directly or indirectly, more than $100,000 in payments under 
this subpart.
    (j) The direct attribution provisions in part 1400 of this title 
apply to CAP. Under those rules, any payment to any legal entity will 
also be considered for payment limitation purposes to be a payment to 
persons or legal entities with an interest in the legal entity or in a 
sub-entity. If any such interested person or legal entity is over the 
payment limitation because of direct payment or their indirect interests 
or a combination thereof, then the payment to the actual payee will be 
reduced commensurate with the amount of the interest of the interested 
person in the payee. Likewise, by the same method, if anyone with a 
direct or indirect interest in a legal entity or sub-entity of a payee 
entity exceeds the AGI levels that would allow a producer to directly 
receive a CAP payment, then the payment to the actual payee will be 
reduced commensurately with that interest. For CAP, unless otherwise 
specified in part 1400 of this title, the AGI amount will be that 
person's or legal entity's average AGI for the three taxable years that 
precede the 2008 taxable year (that is 2005, 2006, and 2007).
    (k) For the purposes of the effect of lien on eligibility for 
Federal programs (28 U.S.C. 3201(e)), FSA waives the restriction on 
receipt of funds under CAP but only as to beneficiaries who, as a 
condition of such waiver, agree to apply the CAP payments to reduce the 
amount of the judgment lien.

[[Page 135]]

    (l) For CAP, producers are either eligible or ineligible. Therefore, 
the provisions of Sec.  718.304 of this chapter, ``Failure to Fully 
Comply,'' do not apply to this subpart.
    (m) The regulations in subpart B apply to CAP. In addition to those 
regulations that specifically include subpart H or apply to this part, 
the following sections specifically apply to this subpart: Sec. Sec.  
760.113(a), 760.114, and 760.116(a).



                Subpart I_2005	2007 Crop Disaster Program

    Source: 72 FR 72867, Dec. 21, 2007, unless otherwise noted.



Sec.  760.800  Applicability.

    This part sets forth the terms and conditions for the 2005-2007 Crop 
Disaster Program (2005-2007 CDP). CDP makes emergency financial 
assistance available to producers who have incurred crop losses in 
quantity or quality for eligible 2005, 2006, or 2007 crop years due to 
disasters as determined by the Secretary under provisions of Title IX of 
the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act, 2007 (Pub. L. 110-28). However, to be 
eligible for assistance, the crop subject to the loss must have been 
planted or existed before February 28, 2007, or, in the case of 
prevented planting, would have been planted before February 28, 2007.



Sec.  760.801  Administration.

    (a) The program will be administered under the general supervision 
of the Deputy Administrator for Farm Programs and will be carried out in 
the field by FSA State and county committees.
    (b) State and county committees and representatives do not have the 
authority to modify or waive any of the provisions of this part.
    (c) The State committee will take any action required by this part 
that has not been taken by a county committee. The State committee will 
also:
    (1) Correct, or require a county committee to correct, any action 
taken by that FSA county committee that is not in accordance with this 
part; and
    (2) Require a county committee to withhold taking or reverse any 
action that is not in accordance with this part.
    (d) No provision or delegation to a State or county committee will 
prevent the Deputy Administrator for Farm Programs 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 may authorize State 
and county committees to waive or modify non-statutory deadlines or 
other program requirements in cases where lateness or failure to meet 
such does not adversely affect the operation of the program.



Sec.  760.802  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.
    Actual production means the total quantity of the crop appraised, 
harvested, or assigned, as determined by the FSA State or county 
committee in accordance with instructions issued by the Deputy 
Administrator for Farm Programs.
    Administrative fee means an amount the producer must pay for 
Noninsured Crop Disaster Assistance Program (NAP) enrollment for non-
insurable crops.
    Affected production means, with respect to quality losses, the 
harvested production of an eligible crop that has a documented quality 
reduction of 25 percent or more on the verifiable production record.
    Appraised production means production determined by FSA, or a 
company reinsured by the Federal Crop Insurance Corporation (FCIC), that 
was unharvested but was determined to reflect the crop's yield potential 
at the time of appraisal.
    Approved yield means the amount of production per acre, computed in 
accordance with FCIC's Actual Production History (APH) Program at part 
400, subpart G of this title or, for crops not included under part 400, 
subpart G

[[Page 136]]

of this title, the yield used to determine the guarantee. For crops 
covered under NAP, the approved yield is established according to part 
1437 of this title. Only the approved yields based on production 
evidence submitted to FSA prior to May 25, 2007 will be used for 
purposes of the 2005-2007 CDP.
    Aquaculture means a value loss crop for the reproduction and rearing 
of aquatic species in controlled or selected environments including, but 
not limited to, ocean ranching, except private ocean ranching of Pacific 
salmon for profit in those States where such ranching is prohibited by 
law.
    Aquaculture facility means any land or structure including, but not 
limited to, a laboratory, concrete pond, hatchery, rearing pond, 
raceway, pen, incubator, or other equipment used in aquaculture.
    Aquaculture species means any aquaculture species as defined in part 
1437 of this title.
    Average market price means the price or dollar equivalent on an 
appropriate basis for an eligible crop established by FSA, or CCC, or 
RMA, as applicable, for determining payment amounts. Such price will be 
based on historical data of the harvest basis excluding transportation, 
storage, processing, packing, marketing, or other post-harvesting 
expenses. Average market prices are generally applicable to all 
similarly situated participants and are not established in response to 
individual participants. Accordingly, the established average market 
prices are not appealable under parts 11 or 780 of this title.
    Catastrophic risk protection means the minimum level of coverage 
offered by FCIC.
    CCC means the Commodity Credit Corporation.
    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 insurance means an insurance policy reinsured by FCIC under the 
provisions of the Federal Crop Insurance Act, as amended.
    Crop year means:
    (1) For insured crops, the crop year as defined according to the 
applicable crop insurance policy;
    (2) For NAP covered crops, as provided in part 1437 of this title.
    Damaging weather means drought, excessive moisture, hail, freeze, 
tornado, hurricane, typhoon, excessive wind, excessive heat, weather-
related saltwater intrusion, weather-related irrigation water rationing, 
and earthquake and volcanic eruptions, or any combination. It also 
includes a related condition that occurs as a result of the damaging 
weather and exacerbates the condition of the crop, such as crop disease, 
and insect infestation.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency, U.S. Department of Agriculture or 
designee.
    Eligible crop means a crop insured by FCIC as defined in part 400 of 
this title, or included under NAP as defined under part 1437 of this 
title for which insurance or NAP coverage was obtained timely for the 
year which CDP benefits are sought.
    End use means the purpose for which the harvested crop is used, such 
as grain, hay, or seed.
    Expected production means, for an agricultural unit, the historic 
yield multiplied by the number of planted or prevented acres of the crop 
for the unit.
    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government Corporation within USDA.
    Final planting date means the latest date, established by the Risk 
Management Agency (RMA) for insured crops, by which the crop must 
initially be planted in order to be insured for the full production 
guarantee or amount of insurance per acre. For NAP covered crops, the 
final planting date is as provided in part 1437 of this title.
    Flood prevention means:
    (1) For aquaculture species, placing the aquaculture facility in an 
area not prone to flood;

[[Page 137]]

    (2) In the case of raceways, devices or structures designed for the 
control of water level; and
    (3) With respect to nursery crops, placing containerized stock in a 
raised area above expected flood level and providing draining 
facilities, such as drainage ditches or tile, gravel, cinder, or sand 
base.
    Good nursery growing practices means utilizing flood prevention, 
growing media, fertilization to obtain expected production results, 
irrigation, insect and disease control, weed, rodent and wildlife 
control, and over winterization storage facilities.
    Ground water means aqueous supply existing in an aquifer subsurface 
that is brought to the surface and made available for irrigation by 
mechanical means such as by pumps and irrigation wells.
    Growing media means:
    (1) For aquaculture species, media that provides nutrients necessary 
for the production of the aquaculture species and protects the 
aquaculture species from harmful species or chemicals or
    (2) For nursery crops, a well-drained media with a minimum 20 
percent air pore space and pH adjustment for the type of plant produced 
designed to prevent ``root rot.''
    Harvested means:
    (1) For insured crops, harvested as defined according to the 
applicable crop insurance policy;
    (2) For NAP covered single harvest crops, that a crop has been 
removed from the field, either by hand or mechanically, or by grazing of 
livestock;
    (3) For NAP covered crops with potential multiple harvests in 1 year 
or harvested over multiple years, that the producer has, by hand or 
mechanically, removed at least one mature crop from the field during the 
crop year;
    (4) For mechanically-harvested NAP covered crops, that the crop has 
been removed from the field and placed in a truck or other conveyance, 
except hay is considered harvested when in the bale, whether removed 
from the field or not. Grazed land will not be considered harvested for 
the purpose of determining an unharvested or prevented planting payment 
factor. A crop that is intended for mechanical harvest, but subsequently 
grazed and not mechanically harvested, will have an unharvested factor 
applied.
    Historic yield means, for a unit, the higher of the county average 
yield or the participant's approved yield.
    (1) An insured participant's yield will be the higher of the county 
average yield listed or the approved federal crop insurance APH, for the 
disaster year.
    (2) NAP participant's yield will be the higher of the county average 
or approved NAP APH for the disaster year.
    Insurable crop means an agricultural crop (excluding livestock) for 
which the producer on a farm is eligible to obtain a policy or plan of 
insurance under the Federal Crop Insurance Act (7 U.S.C. 1501-1524).
    Marketing contract means a legally binding written contract between 
a purchaser and grower for the purpose of marketing a crop.
    Market value means:
    (1) The price(s) designated in the marketing contract; or
    (2) If not designated in a marketing contract, the rate established 
for quantity payments under Sec.  760.811.
    Maximum average loss level means the maximum average level of crop 
loss to be attributed to a participant without acceptable production 
records (verifiable or reliable). Loss levels are expressed in either a 
percent of loss or yield per acre, and are intended to reflect the 
amount of production that a participant would have been expected to make 
if not for the eligible disaster conditions in the area or county, as 
determined by the county committee in accordance with instructions 
issued by the Deputy Administrator.
    Multi-use crop means a crop intended for more than one end use 
during the calendar year such as grass harvested for seed, hay, and 
grazing.
    Multiple cropping means the planting of two or more different crops 
on the same acreage for harvest within the same crop year.
    Multiple planting means the planting for harvest of the same crop in 
more than one planting period in a crop year on different acreage.
    NASS means the National Agricultural Statistics Service.

[[Page 138]]

    Net crop insurance indemnity means the indemnity minus the producer 
paid premium.
    NAP covered means a crop for which the participants obtained 
assistance under section 196 of the Federal Agriculture Improvement and 
Reform Act of 1996 (7 U.S.C. 7333).
    Normal mortality means the percentage of dead aquaculture species 
that would normally occur during the crop year.
    Person means person as defined in part 1400 of this title, and all 
rules with respect to the determination of a person found in that part 
are applicable to this part. However, the determinations made in this 
part in accordance with part 1400, subpart B, Person Determinations, of 
this title will also take into account any affiliation with any entity 
in which an individual or entity has an interest, regardless of whether 
or not such entities are considered to be actively engaged in farming.
    Planted acreage means land in which seed, plants, or trees have been 
placed, appropriate for the crop and planting method, at a correct 
depth, into a seedbed that has been properly prepared for the planting 
method and production practice normal to the USDA plant hardiness zone 
as determined by the county committee.
    Prevented planting means the inability to plant an eligible crop 
with proper equipment during the planting period as a result of an 
eligible cause of loss, as determined by FSA.
    Production means quantity of the crop or commodity produced 
expressed in a specific unit of measure including, but not limited to, 
bushels or pounds.
    Rate means price per unit of the crop or commodity.
    Recording county means, for a producer with farming interests in 
only one county, the FSA county office in which the producer's farm is 
administratively located or, for a producer with farming interests that 
are administratively located in more than one county, the FSA county 
office designated by FSA to control the payments received by the 
producer.
    Related condition means, with respect to a disaster, a condition 
that causes deterioration of a crop, such as insect infestation, plant 
disease, or aflatoxin, that is accelerated or exacerbated as a result of 
damaging weather, as determined in accordance with instructions issued 
by the Deputy Administrator.
    Reliable production records means evidence provided by the 
participant that is used to substantiate the amount of production 
reported when verifiable records are not available, including copies of 
receipts, ledgers of income, income statements of deposit slips, 
register tapes, invoices for custom harvesting, and records to verify 
production costs, contemporaneous measurements, truck scale tickets, and 
contemporaneous diaries that are determined acceptable by the county 
committee.
    Repeat crop means, with respect to production, a commodity that is 
planted or prevented from being planted in more than one planting period 
on the same acreage in the same crop year.
    RMA means the Risk Management Agency.
    Salvage value means the dollar amount or equivalent for the quantity 
of the commodity that cannot be marketed or sold in any recognized 
market for the crop.
    Secondary use means the harvesting of a crop for a use other than 
the intended use.
    Secondary use value means the value determined by multiplying the 
quantity of secondary use times the FSA or CCC-established price for 
that use.
    State committee means the FSA State committee.
    Surface irrigation water means aqueous supply anticipated for 
irrigation of agricultural crops absent an eligible disaster condition 
impacting either the aquifer or watershed. Surface irrigation water may 
result from feral sources or from irrigation districts.
    Tropical crops has the meaning assigned in part 1437 of this title.
    Tropical region has the meaning assigned in part 1437 of this title.
    Unharvested factor means a percentage established for a crop and 
applied in a payment formula to reduce the payment for reduced expenses 
incurred because commercial harvest was not performed. Unharvested 
factors are generally applicable to all similarly

[[Page 139]]

situated participants and are not established in response to individual 
participants. Accordingly established unharvested factors are not 
appealable under parts 11 and 780 of this title.
    Unit means, unless otherwise determined by the Deputy Administrator, 
basic unit as defined in part 457 of this title that, for ornamental 
nursery production, includes all eligible plant species and sizes.
    Unit of measure means:
    (1) For all insured crops, the FCIC-established unit of measure;
    (2) For all NAP covered crops, the established unit of measure, if 
available, used for the 2005, 2006, or 2007 NAP price and yield;
    (3) For aquaculture species, a standard unit of measure such as 
gallons, pounds, inches, or pieces, established by the State committee 
for all aquaculture species or varieties;
    (4) For turfgrass sod, a square yard;
    (5) For maple sap, a gallon;
    (6) For honey, pounds; and
    (7) For all other crops, the smallest unit of measure that lends 
itself to the greatest level of accuracy with minimal use of fractions, 
as determined by the State committee.
    United States means all 50 States of the United States, the 
Commonwealth of Puerto Rico, the Virgin Islands of the United States, 
and to the extent the Deputy Administrator determines it to be feasible 
and appropriate, Guam, American Samoa, the Commonwealth of the Northern 
Mariana Islands, and the former Trust Territory of the Pacific Islands, 
which include Palau, Federated States of Micronesia, and the Marshall 
Islands.
    USDA means the United States Department of Agriculture.
    USDA Plant Hardiness Zone means 11 regions or planting zones as 
defined by a 10 degree Fahrenheit difference in the average annual 
minimum temperature.
    Value loss crop has the meaning assigned in part 1437 of this title.
    Verifiable production record means:
    (1) For quantity losses, evidence that is used to substantiate the 
amount of production reported and that can be verified by FSA through an 
independent source; or
    (2) For quality losses, evidence that is used to substantiate the 
amount of production reported and that can be verified by FSA through an 
independent source including determined quality factors and the specific 
quantity covered by those factors.
    Yield means unit of production, measured in bushels, pounds, or 
other unit of measure, per area of consideration, usually measured in 
acres.



Sec.  760.803  Eligibility.

    (a) Participants will be eligible to receive disaster benefits under 
this part only if they incurred qualifying quantity or quality losses 
for the 2005, 2006, or 2007 crops, as further specified in this part, as 
a result of damaging weather or any related condition. Participants may 
not receive benefits with respect to volunteer stands of crops.
    (b) Payments may be made for losses suffered by an eligible 
participant who, at the time of application, is a deceased individual or 
is a dissolved entity if a representative, who currently has authority 
to enter into a contract for the participant, signs the 2005, 2006, or 
2007 Crop Disaster Program application. Participants must provide proof 
of the authority to sign legal documents for the deceased individual or 
dissolved entity. If a participant is now a dissolved general 
partnership or joint venture, all members of the general partnership or 
joint venture at the time of dissolution or their duly authorized 
representatives must sign the application for payment.
    (c) As a condition to receive benefits under this part, the 
Participant must have been in compliance with the Highly Erodible Land 
Conservation and Wetland Conservation provisions of part 12 of this 
title for the 2005, 2006, or 2007 crop year, as applicable, and must not 
otherwise be precluded from receiving benefits under parts 12 or 1400 of 
this title or any law.



Sec.  760.804  Time and method of application.

    (a) The 2005, 2006, 2007 Crop Disaster Program application must be 
submitted on a completed FSA-840, or such other form designated for such 
application purpose by FSA, in the FSA county office in the 
participant's control county office before the close of

[[Page 140]]

business on a date that will be announced by the Deputy Administrator.
    (b) Once signed by a participant, the application for benefits is 
considered to contain information and certifications of and pertaining 
to the participant regardless of who entered the information on the 
application.
    (c) The participant 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 is subject to verification by FSA. For 
example, as specified in Sec.  760.818(f), the participant may be 
required to provide documentation to substantiate and validate quality 
standards and marketing contract prices. Refusal to allow FSA or any 
agency of the Department of Agriculture to verify any information 
provided will result in the participant's forfeiting eligibility under 
this program. Furnishing required information is voluntary; however 
without it, FSA is under no obligation to act on the application or 
approve benefits. Providing a false certification to the government is 
punishable by imprisonment, fines, and other penalties.
    (d) FSA may require the participant to submit any additional 
information it deems necessary to implement or determine any eligibility 
provision of this part. For example, as specified in Sec.  760.818(f), 
the participant may be required to provide documentation to substantiate 
and validate quality standards and marketing contract prices.
    (e) The application submitted in accordance with paragraph (a) of 
this section is not considered valid and complete for issuance of 
payment under this part unless FSA determines all the applicable 
eligibility provisions have been satisfied and the participant has 
submitted all of following completed forms:
    (1) If Item 16 on FSA-840 is answered ``YES,'' FSA-840M, Crop 
Disaster Program for Multiple Crop--Same Acreage Certification;
    (2) CCC-502, Farm Operating Plan for Payment Eligibility;
    (3) CCC-526, Payment Eligibility Average Adjusted Gross Income 
Certification;
    (4) AD-1026, Highly Erodible Land Conservation (HELC) and Wetland 
Conservation Certification; and
    (5) FSA-578, Report of Acreage.
    (f) Application approval and payment by FSA does not relieve a 
participant from having to submit any form required, but not filed, 
according to paragraph (e) of this section.



Sec.  760.805  Limitations on payments and other benefits.

    (a) A participant may receive benefits for crop losses for only one 
of the 2005, 2006, or 2007 crop years as specified under this part.
    (b) Payments will not be made under this part for grazing losses.
    (c) Payments determined to be issued are considered due and payable 
not later than 60 days after a participant's application is completed 
with all information necessary for FSA to determine producer eligibility 
for benefits.
    (d) FSA may divide and classify crops based on loss susceptibility, 
yield, and other factors.
    (e) No person, as defined by part 1400 subpart B of this title, may 
receive more than a total of $80,000 in disaster benefits under this 
part. In applying the $80,000 per person payment limitation, regardless 
of whether 2005, 2006, or 2007 crop year benefits are at issue or 
sought, the most restrictive ``person'' determination for the 
participant in the years 2005, 2006, and 2007, will be used to limit 
benefits.
    (f) No participant may receive disaster benefits under this part in 
an amount that exceeds 95 percent of the value of the expected 
production for the relevant period as determined by FSA. Accordingly, 
the sum of the value of the crop not lost, if any; the disaster payment 
received under this part; and any crop insurance payment or payments 
received under the NAP for losses to the same crop, cannot exceed 95 
percent of what the crop's value would have been if there had been no 
loss.
    (g) An individual or entity whose adjusted gross income is in excess 
of $2.5 million, as defined by and determined under part 1400 subpart G 
of this title,

[[Page 141]]

is not eligible to receive disaster benefits under this part.
    (h) Any participant in a county eligible for either of the following 
programs must complete a duplicate benefits certification. If the 
participant received a payment authorized by either of the following, 
the amount of that payment will be reduced from the calculated 2005-2007 
CDP payment:
    (1) The Hurricane Indemnity Program (subpart B of this part);
    (2) The Hurricane Disaster Programs (subparts D, E, F, and G of part 
1416 of this title);
    (3) The 2005 Louisiana Sugarcane Hurricane Disaster Assistance 
Program; or
    (4) The 2005 Crop Florida Sugarcane Disaster Program.



Sec.  760.806  Crop eligibility requirements.

    (a) A participant on a farm is eligible for assistance under this 
section with respect to losses to an insurable commodity or NAP if the 
participant:
    (1) In the case of an insurable commodity, obtained a policy or plan 
of insurance under the Federal Crop Insurance Act for the crop incurring 
the losses; or
    (2) In the case of a NAP covered crop, filed the required paperwork 
and paid the administrative fee by the applicable filing deadline, for 
the noninsurable commodity under section 196 of the Federal Agriculture 
Improvement and Reform Act of 1996 for the crop incurring the losses.
    (b) The reasons a participant either elected not to have coverage or 
did not have coverage mentioned in paragraphs (a)(1) or (2) of this 
section are not relevant to the determination of the participant's 
ineligibility under this section. In addition, such reasons for not 
having crop insurance coverage have no bearing for consideration under 
part 718, subpart D of this chapter.



Sec.  760.807  Miscellaneous provisions.

    (a) A person is not eligible to receive disaster assistance under 
this part if it is determined by FSA that the person has:
    (1) Adopted any scheme or other device that tends to defeat the 
purpose of this part;
    (2) Made any fraudulent representation;
    (3) Misrepresented any fact affecting a program determination;
    (4) Is ineligible under Sec.  1400.5 of this title; or
    (5) Does not have entitlement to an ownership share of the crop.
    (i) Growers growing eligible crops under contract for crop owners 
are not eligible unless the grower can be determined to have a share of 
the crop.
    (ii) Any verbal or written contract that precludes the grower from 
having an ownership share renders the grower ineligible for benefits 
under this part.
    (b) A person ineligible under Sec.  1437.15(c) of this title for any 
year is likewise ineligible for benefits under this part for that year 
or years.
    (c) A person ineligible under Sec.  400.458 of this title for any 
year is likewise ineligible for benefits under this part for that year 
or years.
    (d) All persons with a financial interest in the operation receiving 
benefits under this part are jointly and severally liable for any 
refund, including related charges, which is determined to be due FSA for 
any reason.
    (e) In the event that any request for assistance or payment under 
this part resulted from erroneous information or a miscalculation, the 
assistance or payment will be recalculated and any excess refunded to 
FSA with interest to be calculated from the date of the disbursement to 
the producer.
    (f) The liability of anyone for any penalty or sanction under or in 
connection with this part, or for any refund to FSA or related charge is 
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. 
714; and 31 U.S.C. 3729.
    (g) The regulations in parts 11 and 780 of this title apply to 
determinations under this part.
    (h) Any payment 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 its proceeds.
    (i) For the purposes of the effect of lien on eligibility for 
Federal programs

[[Page 142]]

(28 U.S.C. 3201(e)), FSA 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 received under 
this part to reduce the amount of the judgment lien.
    (j) Under this program, participants are either eligible or 
ineligible. Participants in general, do not render performance or need 
to comply. They either suffered eligible losses or they did not. 
Accordingly, the provisions of Sec.  718.304 of this chapter do not 
apply to this part.



Sec.  760.808  General provisions.

    (a) For calculations of loss, the participant's existing unit 
structure will be used as the basis for the calculation established in 
accordance with:
    (1) For insured crops, part 457 of this title; or
    (2) For NAP covered crops, part 1437 of this title.
    (b) County average yield for loss calculations will be the average 
of the 2001 through 2005 official county yields established by FSA, 
excluding the years with the highest and lowest yields, respectively.
    (c) County committees will assign production or reduce the historic 
yield when the county committee determines:
    (1) An acceptable appraisal or record of harvested production does 
not exist;
    (2) The loss is due to an ineligible cause of loss or practices, 
soil type, climate, or other environmental factors that cause lower 
yields than those upon which the historic yield is based;
    (3) The participant has a contract providing a guaranteed payment 
for all or a portion of the crop; or
    (4) The crop was planted beyond the normal planting period for the 
crop.
    (d) The county committee will establish a maximum average loss level 
that reflects the amount of production producers would have produced if 
not for the eligible damaging weather or related conditions in the area 
or county for the same crop. The maximum average loss level for the 
county will be expressed as either a percent of loss or yield per acre. 
The maximum average loss level will apply when:
    (1) Unharvested acreage has not been appraised by FSA, or a company 
reinsured by FCIC; or
    (2) Acceptable production records for harvested acres are not 
available from any source.
    (e) Assignment of production or reduction in yield will apply for 
practices that result in lower yields than those for which the historic 
yield is based.



Sec.  760.809  Eligible damaging conditions.

    (a) Except as provided in paragraphs (b) and (c) of this section, to 
be eligible for benefits under this part the loss of the crop, or 
reduction in quality, or prevented planting must be due to damaging 
weather or related conditions as defined in Sec.  760.802.
    (b) Benefits are not available under this part for any losses in 
quantity or quality, or prevented planting due to:
    (1) Poor farming practices;
    (2) Poor management decisions; or
    (3) Drifting herbicides.
    (c) With the exception of paragraph (d) of this section, in all 
cases, the eligible damaging condition must have directly impacted the 
specific crop or crop acreage during its planting or growing period.
    (d) If FSA has determined that there has been an eligible loss of 
surface irrigation water due to drought and such loss of surface 
irrigation water impacts eligible crop acreage, FSA may approve 
assistance to the extent permitted by section 760.814.



Sec.  760.810  Qualifying 2005, 2006, or 2007 quantity crop losses.

    (a) To receive benefits under this part, the county committee must 
determine that because of eligible damaging weather or related condition 
specifically impacting the crop or crop acreage, the participant with 
respect to the 2005, 2006, or 2007 crop:
    (1) Was prevented from planting a crop;
    (2) Sustained a loss in excess of 35 percent of the expected 
production of a crop; or
    (3) Sustained a loss in excess of 35 percent of the value for value 
loss crops.
    (b) Qualifying losses under this part do not include losses:

[[Page 143]]

    (1) For the 2007 crop, those acres planted, or in the case of 
prevented planting, would have been planted, on or after February 28, 
2007;
    (2) That are determined by FSA to be the result of poor management 
decisions, poor farming practices, or drifting herbicides;
    (3) That are the result of the failure of the participant to re-seed 
or replant the same crop in the county where it is customary to re-seed 
or replant after a loss;
    (4) That are not as a result of a damaging weather or a weather 
related condition specifically impacting the crop or crop acreage;
    (5) To crops not intended for harvest in crop year 2005, 2006, or 
2007;
    (6) Of by-products resulting from processing or harvesting a crop, 
such as cottonseed, peanut shells, wheat, or oat straw;
    (7) To home gardens;
    (8) That are a result of water contained or released by any 
governmental, public, or private dam or reservoir project if an easement 
exists on the acreage affected for the containment or release of the 
water; or
    (9) If losses could be attributed to conditions occurring outside of 
the applicable crop year growing season.
    (c) Qualifying losses under this part for nursery stock will not 
include losses:
    (1) For the 2007 crop, that nursery inventory acquired on or after 
February 28, 2007;
    (2) Caused by a failure of power supply or brownouts;
    (3) Caused by the inability to market nursery stock as a result of 
lack of compliance with State and local commercial ordinances and laws, 
quarantine, boycott, or refusal of a buyer to accept production;
    (4) Caused by fire unless directly related to an eligible natural 
disaster;
    (5) Affecting crops where weeds and other forms of undergrowth in 
the vicinity of the nursery stock have not been controlled; or
    (6) Caused by the collapse or failure of buildings or structures.
    (d) Qualifying losses under this part for honey, where the honey 
production by colonies or bees was diminished, will not include losses:
    (1) For the 2007 crop, for production from those bees acquired on or 
after February 28, 2007;
    (2) Where the inability to extract was due to the unavailability of 
equipment, the collapse or failure of equipment, or apparatus used in 
the honey operation;
    (3) Resulting from storage of honey after harvest;
    (4) To honey production because of bee feeding;
    (5) Caused by the application of chemicals;
    (6) Caused by theft, fire, or vandalism;
    (7) Caused by the movement of bees by the producer or any other 
person; or
    (8) Due to disease or pest infestation of the colonies.
    (e) Qualifying losses for other value loss crops, except nursery, 
will not include losses for the 2007 crop that were acquired on or after 
February 28, 2007.
    (f) Loss calculations will take into account other conditions and 
adjustments provided for in this part.



Sec.  760.811  Rates and yields; calculating payments.

    (a)(1) Payments made under this part to a participant for a loss of 
quantity on a unit with respect to yield-based crops are determined by 
multiplying the average market price times 42 percent, times the loss of 
production which exceeds 35 percent of the expected production, as 
determined by FSA, of the unit.
    (2) Payments made under this part to a participant for a quantity 
loss on a unit with respect to value-based crops are determined by 
multiplying the payment rate established for the crop by FSA times the 
loss of value that exceeds 35 percent of the expected production value, 
as determined by FSA, of the unit.
    (3) As determined by FSA, additional quality loss payments may be 
made using a 25 percent quality loss threshold. The quality loss 
threshold is determined according to Sec.  760.817.
    (b) Payment rates for the 2005, 2006, or 2007 year crop losses will 
be 42 percent of the average market price.
    (c) Separate payment rates and yields for the same crop may be 
established by the State committee as authorized by the Deputy 
Administrator,

[[Page 144]]

when there is supporting data from NASS or other sources approved by FSA 
that show there is a significant difference in yield or value based on a 
distinct and separate end use of the crop. Despite potential differences 
in yield or values, separate rates or yields will not be established for 
crops with different cultural practices, such as those grown organically 
or hydroponically.
    (d) Production from all end uses of a multi-use crop or all 
secondary uses for multiple market crops will be calculated separately 
and summarized together.
    (e) Each eligible participant's share of a disaster payment will be 
based on the participant's ownership entitlement share of the crop or 
crop proceeds, or, if no crop was produced, the share of the crop the 
participant would have received if the crop had been produced. If the 
participant has no ownership share of the crop, the participant is 
ineligible for assistance under this part.
    (f) When calculating a payment for a unit loss:
    (1) An unharvested payment factor will be applied to crop acreage 
planted but not harvested;
    (2) A prevented planting factor will be applied to any prevented 
planted acreage eligible for payment; and
    (3) Unharvested payment factors may be adjusted if costs normally 
associated with growing the crop are not incurred.



Sec.  760.812  Production losses; participant responsibility.

    (a) Where available and determined accurate by FSA, RMA loss records 
will be used for insured crops.
    (b) If RMA loss records are not available, or if the FSA county 
committee determines the RMA loss records are inaccurate or incomplete, 
or if the FSA county committee makes inquiry, participants are 
responsible for:
    (1) Retaining or providing, when required, the best verifiable or 
reliable production records available for the crop;
    (2) Summarizing all the production evidence;
    (3) Accounting for the total amount of unit production for the crop, 
whether or not records reflect this production;
    (4) Providing the information in a manner that can be easily 
understood by the county committee; and
    (5) Providing supporting documentation if the county committee has 
reason to question the damaging weather event or question whether all 
production has been accounted for.
    (c) In determining production under this section, the participant 
must supply verifiable or reliable production records to substantiate 
production to the county committee. If the eligible crop was sold or 
otherwise disposed of through commercial channels, production records 
include: commercial receipts; settlement sheets; warehouse ledger 
sheets; load summaries; or appraisal information from a loss adjuster 
acceptable to FSA. If the eligible crop was farm-stored, sold, fed to 
livestock, or disposed of in means other than commercial channels, 
production records for these purposes include: truck scale tickets; 
appraisal information from a loss adjuster acceptable to FSA; 
contemporaneous diaries; or other documentary evidence, such as 
contemporaneous measurements.
    (d) Participants must provide all records for any production of a 
crop that is grown with an arrangement, agreement, or contract for 
guaranteed payment.



Sec.  760.813  Determination of production.

    (a) Production under this part includes all harvested production, 
unharvested appraised production, and assigned production for the total 
planted acreage of the crop on the unit.
    (b) The harvested production of eligible crop acreage harvested more 
than once in a crop year includes the total harvested production from 
all these harvests.
    (c) If a crop is appraised and subsequently harvested as the 
intended use, the actual harvested production must be taken into account 
to determine benefits. FSA will analyze and determine whether a 
participant's evidence of actual production represents all that could or 
would have been harvested.
    (d) For all crops eligible for loan deficiency payments or marketing 
assistance loans with an intended use of

[[Page 145]]

grain but harvested as silage, ensilage, cobbage, hay, cracked, rolled, 
or crimped, production will be adjusted based on a whole grain 
equivalent as established by FSA.
    (e) For crops with an established yield and market price for 
multiple intended uses, a value will be calculated by FSA with respect 
to the intended use or uses for disaster purposes based on historical 
production and acreage evidence provided by the participant and FSA will 
determine the eligible acres for each use.
    (f) For crops sold in a market that is not a recognized market for 
the crop with no established county average yield and average market 
price, 42 percent of the salvage value received will be deducted from 
the disaster payment.
    (g) If a participant does not receive compensation based upon the 
quantity of the commodity delivered to a purchaser, but has an agreement 
or contract for guaranteed payment for production, the determination of 
the production will be the greater of the actual production or the 
guaranteed payment converted to production as determined by FSA.
    (h) Production that is commingled between units before it was a 
matter of record or combination of record and cannot be separated by 
using records or other means acceptable to FSA will be prorated to each 
respective unit by FSA. Commingled production may be attributed to the 
applicable unit, if the participant made the unit production of a 
commodity a matter of record before commingling and does any of the 
following, as applicable:
    (1) Provides copies of verifiable documents showing that production 
of the commodity was purchased, acquired, or otherwise obtained from 
beyond the unit;
    (2) Had the production measured in a manner acceptable to the county 
committee; or
    (3) Had the current year's production appraised in a manner 
acceptable to the county committee.
    (i) The county committee will assign production for the unit when 
the county committee determines that:
    (1) The participant has failed to provide adequate and acceptable 
production records;
    (2) The loss to the crop is because of a disaster condition not 
covered by this part, or circumstances other than natural disaster, and 
there has not otherwise been an accounting of this ineligible cause of 
loss;
    (3) The participant carries out a practice, such as multiple 
cropping, that generally results in lower yields than the established 
historic yields;
    (4) The participant has a contract to receive a guaranteed payment 
for all or a portion of the crop;
    (5) A crop was late-planted;
    (6) Unharvested acreage was not timely appraised; or
    (7) Other appropriate causes exist for such assignment as determined 
by the Deputy Administrator.
    (j) For peanuts, the actual production is all peanuts harvested for 
nuts, regardless of their disposition or use, as adjusted for low 
quality.
    (k) For tobacco, the actual production is the sum of the tobacco: 
marketed or available to be marketed; destroyed after harvest; and 
produced but unharvested, as determined by an appraisal.



Sec.  760.814  Calculation of acreage for crop losses other than 
prevented planted.

    (a) Payment acreage of a crop is limited to the lesser of insured 
acreage or NAP covered acreage of the crop, as applicable, or actual 
acreage of the crop planted for harvest.
    (b) In cases where there is a repeat crop or a multiple planted crop 
in more than one planting period, or if there is multiple cropped 
acreage meeting criteria established in paragraph (c) or (d) of this 
section, each of these crops may be considered separate crops if the 
county committee determines that all of the following conditions are 
met:
    (1) Were planted with the intent to harvest;
    (2) Were planted within the normal planting period for that crop;
    (3) Meet all other eligibility provisions of this part including 
good farming practices; and
    (4) Could reach maturity if each planting was harvested or would 
have been harvested.

[[Page 146]]

    (c) In cases where there is multiple-cropped acreage, each crop may 
be eligible for disaster assistance separately if both of the following 
conditions are met:
    (1) The specific crops are approved by the State committee as 
eligible multiple-cropping practices in accordance with procedures 
approved by the Deputy Administrator and separately meet all 
requirements, including insurance or NAP requirements ; and
    (2) The farm containing the multiple-cropped acreage has a history 
of successful multiple cropping more than one crop on the same acreage 
in the same crop year, in the year previous to the disaster, or at least 
2 of the 4 crop years immediately preceding the disaster crop year based 
on timely filed crop acreage reports.
    (d) A participant with multiple-cropped acreage not meeting the 
criteria in paragraph (c) of this section may be eligible for disaster 
assistance on more than one crop if the participant has verifiable 
records establishing a history of carrying out a successful multiple-
cropping practice on the specific crops for which assistance is 
requested. All required records acceptable to FSA as determined by the 
Deputy Administrator must be provided before payments are issued.
    (e) A participant with multiple-cropped acreage not meeting the 
criteria in paragraphs (c) or (d) of this section must select the crop 
for which assistance will be requested. If more than one participant has 
an interest in the multiple cropped acreage, all participants must agree 
to the crop designated for payment by the end of the application period 
or no payment will be approved for any crop on the multiple-cropped 
acreage.
    (f) Benefits under this part apply to irrigated crops where, in 
cases determined by the Deputy Administrator, acreage was affected by a 
lack of surface irrigation water due to drought or contamination of 
ground water or surface irrigation water due to saltwater intrusion. In 
no case is a loss of ground water, for any reason, an eligible cause of 
loss.



Sec.  760.815  Calculation of prevented planted acreage.

    (a) When determining losses under this part, prevented planted 
acreage will be considered separately from planted acreage of the same 
crop.
    (b) For insured crops, or NAP covered crops, as applicable, disaster 
payments under this part for prevented planted acreage will not be made 
unless RMA or FSA, as applicable, documentation indicates that the 
eligible participant received a prevented planting payment under either 
NAP or the RMA-administered program.
    (c) The participant must prove, to the satisfaction of the county 
committee, an intent to plant the crop and that such crop could not be 
planted because of an eligible disaster. The county committee must be 
able to determine the participant was prevented from planting the crop 
by an eligible disaster that:
    (1) Prevented other producers from planting on acreage with similar 
characteristics in the surrounding area;
    (2) Occurred after the previous planting period for the crop; and
    (3) Unless otherwise approved by the Deputy Administrator, began no 
earlier than the planting season for that crop.
    (d) Prevented planted disaster benefits under this part do not apply 
to:
    (1) Acreage not insured or NAP covered;
    (2) Any acreage on which a crop other than a cover crop was 
harvested, hayed, or grazed during the crop year;
    (3) Any acreage for which a cash lease payment is received for the 
use of the acreage the same crop year, unless the county committee 
determines the lease was for haying and grazing rights only and was not 
a lease for use of the land;
    (4) Acreage for which the participant or any other person received a 
prevented planted payment for any crop for the same acreage, excluding 
share arrangements;
    (5) Acreage for which the participant cannot provide verifiable 
proof to the county committee that inputs such as seed, chemicals, and 
fertilizer were available to plant and produce a crop with the 
expectation of producing at least a normal yield; and

[[Page 147]]

    (6) Any other acreage for which, for whatever reason, there is cause 
to question whether the crop could have been planted for a successful 
and timely harvest, or for which prevented planting credit is not 
allowed under the provisions of this part.
    (e) Prevented planting payments are not provided on acreage that had 
either a previous or subsequent crop planted in the same crop year on 
the acreage, unless the county committee determines that all of the 
following conditions are met:
    (1) There is an established practice of planting two or more crops 
for harvest on the same acreage in the same crop year;
    (2) Both crops could have reached maturity if each planting was 
harvested or would have been harvested;
    (3) Both the initial and subsequent planted crops were planted or 
prevented planting within the normal planting period for that crop;
    (4) Both the initial and subsequent planted crops meet all other 
eligibility provisions of this part including good farming practices; 
and
    (5) The specific crops meet the eligibility criteria for a separate 
crop designation as a repeat or approved multiple cropping practice set 
out in Sec.  760.814.
    (f)(1) Disaster benefits under this part do not apply to crops where 
the prevented planted acreage was affected by a disaster that was caused 
by drought unless on the final planting date or the late planting period 
for non-irrigated acreage, the area that was prevented from being 
planted had insufficient soil moisture for germination of seed and 
progress toward crop maturity because of a prolonged period of dry 
weather;
    (2) Verifiable information collected by sources whose business or 
purpose is to record weather conditions, including, but not limited to, 
local weather reporting stations of the U.S. National Weather Service.
    (g) Prevented planting benefits under this part apply to irrigated 
crops where adequate irrigation facilities were in place before the 
eligible disaster and the acreage was prevented from being planted due 
to a lack of water resulting from drought conditions or contamination by 
saltwater intrusion of an irrigation supply resulting from drought 
conditions.
    (h) For NAP covered crops, prevented planting provisions apply 
according to part 718 of this chapter.
    (i) Late-filed crop acreage reports for prevented planted acreage in 
previous years are not acceptable for CDP purposes.



Sec.  760.816  Value loss crops.

    (a) Notwithstanding any other provisions of this part, this section 
applies to value loss crops and tropical crops. Unless otherwise 
specified, all the eligibility provisions of part 1437 of this title 
apply to value loss crops and tropical crops under this part.
    (b) For value loss crops, benefits under this part are calculated 
based on the loss of value at the time of the damaging weather or 
related condition, as determined by FSA.
    (c) For tropical crops:
    (1) CDP benefits for 2005 are calculated according to general 
provisions of part 1437, but not subpart F, of this title.
    (2) CDP benefits for 2006 and 2007 are calculated according to part 
1437, subpart F of this title.



Sec.  760.817  Quality losses for 2005, 2006, and 2007 crops.

    (a) Subject to other provisions of this part, assistance will be 
made available to participants determined eligible under this section 
for crop quality losses of 25 percent or greater of the value that all 
affected production of the crop would have had if the crop had not 
suffered a quality loss.
    (b) The amount of payment for a quality loss will be equal to 65 
percent of the quantity of the crop affected by the quality loss, not to 
exceed expected production based on harvested acres, multiplied by 42 
percent of the per unit average market value based on percentage of 
quality loss for the crop as determined by the Deputy Administrator.
    (c) This section applies to all crops eligible for 2005, 2006, and 
2007 crop disaster assistance under this part, with the exceptions of 
value loss crops, honey, and maple sap, and applies to

[[Page 148]]

crop production that has a reduced economic value due to the reduction 
in quality.
    (d) Participants may not be compensated under this section to the 
extent that such participants have received assistance under other 
provisions of this part, attributable in whole or in part to diminished 
quality.



Sec.  760.818  Marketing contracts.

    (a) A marketing contract must meet all of the conditions outlined in 
paragraphs (b), (c), and (d) of this section.
    (b) A marketing contract, at a minimum, must meet all of the 
following conditions:
    (1) Be a legal contract in the State where executed;
    (2) Specify the commodity under contract;
    (3) Specify crop year;
    (4) Be signed by both the participant, or legal representative, and 
the purchaser of the specified commodity;
    (5) Include a commitment to deliver the contracted quantity;
    (6) Include a commitment to purchase the contracted quantity that 
meets specified minimum quality standards and other criteria as 
specified;
    (7) Define a determinable quantity by containing either a:
    (i) Specified production quantity or
    (ii) A specified acreage for which production quantity can be 
calculated;
    (8) Define a determinable price by containing either a:
    (i) Specified price or
    (ii) Method to determine such a price;
    (9) Contain a relationship between the price and the quality using 
either:
    (i) Specified quality standards or
    (ii) A method to determine such quality standards from published 
third party data; and
    (10) Have been executed within 10 days after:
    (i) End of insurance period for insured crops or
    (ii) Normal harvest date for NAP covered crops as determined by FSA.
    (c) The purchaser of the commodity specified in the marketing 
contract must meet at least one of the following:
    (1) Be a licensed commodity warehouseman;
    (2) Be a business enterprise regularly engaged in the processing of 
a commodity, that possesses all licenses and permits for marketing the 
commodity required by the State in which it operates, and that possesses 
or has contracted for facilities with enough equipment to accept and 
process the commodity within a reasonable amount of time after harvest; 
or
    (3) Is able to physically receive the harvested production.
    (d) In order for the commodity specified in the marketing contract 
to be considered sold pursuant to the marketing contract, the commodity 
must have been produced by the participant in the crop year specified in 
the contract, and at least one of the following conditions must be met:
    (1) Commodity was sold under the terms of the contract or
    (2) Participant attempted to deliver the commodity to the purchaser, 
but the commodity was rejected due to quality factors as specified in 
the contract.
    (e) The amount of payment for affected production, as determined in 
Sec.  760.817(b), sold pursuant to one or more marketing contracts will 
take into consideration the marketing contract price as determined by 
FSA.
    (f) County committees have the authority to require a participant to 
provide necessary documentation, which may include, but is not limited 
to, previous marketing contracts fulfilled, to substantiate and validate 
quality standards in paragraph (b)(9) of this section and marketing 
contract price received for the commodity for which crop quality loss 
assistance is requested. In cases where the county committee has reason 
to believe the participant lacks the capacity or history to fulfill the 
quality provisions of the marketing contract the county committee will 
require such documentation.



Sec.  760.819  Misrepresentation, scheme, or device.

    (a) A person is ineligible to receive assistance under this part if 
it is determined that such person has:

[[Page 149]]

    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program;
    (2) Made any fraudulent representation under this program;
    (3) Misrepresented any fact affecting a program or person 
determination; or
    (4) Has violated or been determined ineligible under Sec.  1400.5 of 
this title.



Sec.  760.820  Offsets, assignments, and debt settlement.

    (a) Except as provided in paragraph (b) of this section, any payment 
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, 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 title apply to any payments made under this 
part.
    (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 title.
    (c) A debt or claim may be settled according to part 792 of this 
chapter.



Sec.  760.821  Compliance with highly erodible land and wetland conservation.

    (a) The highly erodible land and wetland conservation provisions of 
part 12 of this title apply to the receipt of disaster assistance for 
2005, 2006, and 2007 crop losses made available under this authority.
    (b) Eligible participants must be in compliance with the highly 
erodible land and wetland conservation compliance provisions for the 
year for which financial assistance is requested.



             Subpart J_2005	2007 Livestock Indemnity Program

    Source: 72 FR 72867, Dec. 21, 2007, unless otherwise noted.



Sec.  760.900  Administration.

    (a) The regulations in this subpart specify the terms and conditions 
applicable to the 2005-2007 Livestock Indemnity Program (2005-2007 LIP), 
which will be administered under the general supervision and direction 
of the Administrator, FSA.
    (b) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this subpart.
    (c) The State FSA committee will take any action required by the 
regulations of this subpart that the county FSA committee has not taken. 
The State FSA committee will 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 subpart; or
    (2) Require a county committee to withhold taking any action that is 
not in accordance with this subpart.
    (d) No delegation to a State or county FSA committee will preclude 
the Deputy Administrator for Farm Programs from determining any question 
arising under the program or from reversing or modifying any 
determination made by a State or county FSA committee.



Sec.  760.901  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the 2005-2007 LIP will be administered under Title IX of the U.S. Troop 
Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act, 2007 (Pub. L. 110-28) for eligible counties as 
specified in Sec.  760.902(a).
    (b) Eligible livestock owners and contract growers will be 
compensated in accordance with Sec.  760.909 for eligible livestock 
deaths that occurred in eligible counties as a direct result of an 
eligible disaster event. Drought is not an eligible disaster event 
except when anthrax, as a related condition that occurs as a result of 
drought, results in the death of eligible livestock.



Sec.  760.902  Eligible counties and disaster periods.

    Counties are eligible for agricultural assistance under the 2005-
2007 LIP if they received a timely Presidential designation, a timely 
Secretarial declaration, or a qualifying Administrator's Physical Loss 
Notice (APLN) determination in a county otherwise the

[[Page 150]]

subject of a timely Presidential declaration, or are counties contiguous 
to such counties. Presidential designations and Secretarial declarations 
will be considered timely only if made after January 1, 2005, and before 
February 28, 2007. Eligible counties, disaster events, and disaster 
periods are listed at http://disaster.fsa.usda.gov.



Sec.  760.903  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.
    Adult beef bull means a male beef bovine animal that was at least 2 
years old and used for breeding purposes before it died.
    Adult beef cow means a female beef bovine animal that had delivered 
one or more offspring before dying. A first-time bred beef heifer is 
also 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 was 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 is also considered an adult buffalo or beefalo 
cow if it was pregnant at the time it died.
    Adult dairy bull means a male dairy breed bovine animal at least 2 
years old used primarily 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 is also 
considered an adult dairy cow if it was pregnant at the time it died.
    Agricultural operation means a farming operation.
    Application means the ``2005-2007 Livestock Indemnity Program'' 
form.
    Application period means the date established by the Deputy 
Administrator for Farm Programs for participants to apply for program 
benefits.
    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.
    Commercial use means used in the operation of a business activity 
engaged in as a means of livelihood for profit by the eligible producer 
to apply for program benefits.
    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 by the participant with structures, 
facilities, and growing media (including, but not limited to, water and 
nutrients) and was in fact controlled by the participant at the time of 
the disaster.
    Crawfish means crawfish grown as food for human consumption by a 
commercial operator on private property in water in a controlled 
environment.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency, U.S. Department of Agriculture or the 
designee.
    Doe means a female goat.
    Equine animal means a domesticated horse, mule, or donkey.
    Ewe means a female sheep.
    Farming operation means a business enterprise engaged in producing 
agricultural products.
    Goat means a domesticated, ruminant mammal of the genus Capra, 
including Angora goats. Goats are further defined 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.
    Livestock owner means one having legal ownership of the livestock 
for which benefits are being requested on the day such livestock died 
due to an eligible disaster.
    Non-adult beef cattle means a bovine that does not meet the 
definition of adult beef cow or bull. Non-adult beef cattle are further 
delineated by weight categories of less than 400 pounds, and

[[Page 151]]

400 pounds or more at the time they died.
    Non-adult buffalo or beefalo means an animal of those breeds that 
does not meet the definition of adult buffalo/beefalo cow or bull. Non-
adult buffalo or beefalo are 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 a bovine livestock, of a breed used for 
the purpose of providing milk for human consumption, that do not meet 
the definition of adult dairy cow or bull. Non-adult dairy cattle are 
further delineated by 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 are further delineated by sex, age, and purpose of production as 
determined by FSA.
    Ram means a male sheep.
    Sheep means a domesticated, ruminant mammal of the genus Ovis. Sheep 
are further defined by sex (rams and ewes) and age (lambs).
    Swine means a domesticated omnivorous pig, hog, and boar. Swine are 
further delineated by sex and weight as determined by FSA.



Sec.  760.904  Limitations on payments and other benefits.

    (a) A participant may receive benefits for livestock losses for only 
one of the 2005, 2006, or 2007 calendar years as specified under this 
part.
    (b) A ``person'' as determined under part 1400 of this title may 
receive no more than $80,000 under this subpart. In applying the $80,000 
per person payment limitation, regardless of whether 2005, 2006, or 2007 
calendar year benefits are at issue or sought, the most restrictive 
``person'' determination for the participant in the years 2005, 2006, 
and 2007, will be used to limit benefits.
    (c) The provisions of part 1400, subpart G, of this title relating 
to limits to payments for individuals or entities with certain levels of 
adjusted gross income apply to this program.
    (d) As a condition to receive benefits under this subpart, a 
participant must have been in compliance with the provisions of parts 12 
and 718 of this title and must not otherwise be precluded from receiving 
benefits under any law.
    (e) An individual or entity determined to be a foreign person under 
part 1400 of this title is not eligible to receive benefits under this 
subpart.



Sec.  760.905  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.  760.906(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.  
760.906(b), on the day the livestock died.



Sec.  760.906  Eligible livestock.

    (a) To be considered eligible livestock for livestock owners, 
livestock must be adult or non-adult dairy cattle, beef cattle, buffalo, 
beefalo, catfish, crawfish, equine, sheep, goats, swine, poultry, deer, 
or reindeer and meet all the conditions in paragraph (c) of this 
section.
    (b) To be considered eligible livestock for contract growers, 
livestock must be poultry or swine as defined in Sec.  760.903 and meet 
all the conditions in paragraph (c) of this section.
    (c) To be considered eligible, livestock must meet all of the 
following conditions:
    (1) Died in an eligible county as a direct result of an eligible 
disaster event;
    (i) After January 1, 2005, but before February 28, 2007;
    (ii) No later than 60 calendar days from the ending date of the 
applicable disaster period, but before February 28, 2007; and
    (iii) In the calendar year for which benefits are being requested.
    (2) The disaster event that caused the loss must be the same event 
for which a natural disaster was declared or designated.

[[Page 152]]

    (3) Been maintained for commercial use as part of a farming 
operation on the day they died; and
    (4) 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, roping, pets, or for 
show.
    (d) In those counties in Sec.  760.902, the following types of 
animals owned by a livestock owner are eligible livestock:
    (1) Adult beef bulls;
    (2) Adult beef cows;
    (3) Adult buffalo or beefalo bulls;
    (4) Adult buffalo or beefalo cows;
    (5) Adult dairy bulls;
    (6) Adult dairy cows;
    (7) Catfish;
    (8) Chickens, broilers, pullets;
    (9) Chickens, chicks;
    (10) Chickens, layers, roasters;
    (11) Crawfish;
    (12) Deer;
    (13) Ducks;
    (14) Ducks, ducklings;
    (15) Equine;
    (16) Geese, goose;
    (17) Geese, gosling;
    (18) Goats, bucks;
    (19) Goats, does;
    (20) Goats, kids;
    (21) Non-adult beef cattle;
    (22) Non-adult buffalo/beefalo;
    (23) Non-adult dairy cattle;
    (24) Reindeer
    (25) Sheep, ewes;
    (26) Sheep, lambs;
    (27) Sheep, rams;
    (28) Swine, feeder pigs under 50 pounds;
    (29) Swine, sows, boars, barrows, gilts 50 to 150 pounds;
    (30) Swine, sows, boars, barrows, gilts over 150 pounds;
    (31) Turkeys, poults; and
    (32) Turkeys, toms, fryers, and roasters.
    (e) In those counties in Sec.  760.902, the following types of 
animals are eligible livestock for contract growers:
    (1) Chickens, broilers, pullets;
    (2) Chickens, layers, roasters;
    (3) Geese, goose;
    (4) Swine, boars, sows;
    (5) Swine, feeder pigs;
    (6) Swine, lightweight barrows, gilts;
    (7) Swine, sows, boars, barrows, gilts; and
    (8) Turkeys, toms, fryers, and roasters.



Sec.  760.907  Application process.

    (a) To apply for 2005-2007 LIP, submit a completed application to 
the administrative county FSA office that maintains the farm records for 
your agricultural operation, a copy of your grower contract, if you are 
a contract grower, and other supporting documents required for 
determining your eligibility as an applicant. Supporting documents must 
show:
    (1) Evidence of loss,
    (2) Current physical location of livestock in inventory, and
    (3) Physical location of claimed livestock at the time of death.
    (b) The application must be filed during the application period 
announced by the Deputy Administrator.
    (c) A minor child is eligible to apply for program benefits if 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.
    (d) The participant must provide adequate proof that the death of 
the eligible livestock occurred in an eligible county as a direct result 
of an eligible disaster event during the applicable disaster period. The 
quantity and kind of livestock that died as a direct result of the 
eligible disaster event 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 FSA.
    (e) Certification of livestock deaths by third parties may be 
accepted only

[[Page 153]]

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 FSA, were in 
inventory at the time the applicable disaster event occurred; and
    (iii) Other details required for FSA 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 required by FSA to determine the certification 
acceptable.
    (f) Data furnished by the participant 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.  760.908  Deceased individuals or dissolved entities.

    (a) Payments may be made for eligible losses suffered by an eligible 
participant 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 participant, 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 participant 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.  760.909  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. Payments for the 
2005-2007 LIP 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 Sec.  760.906. Adjustments will be applied in accordance 
with paragraphs (d) and (e) of this section.
    (b) The 2005-2007 LIP national payment rate for eligible livestock 
owners is based on 26 percent of the average fair market value of the 
livestock.
    (c) The 2005-2007 LIP national payment rate for eligible livestock 
contract growers is based on 26 percent of the average income loss 
sustained by the contract grower with respect to the dead livestock.
    (d) The 2005 payment calculated under 2005-2007 LIP for eligible 
livestock owners will be reduced by the amount the participant received 
under:
    (1) The Livestock Indemnity Program (subpart E of this part);
    (2) The Aquaculture Grant Program (subpart G of this part); and
    (3) The Livestock Indemnity Program II (part 1416, subpart C of this 
title).
    (e) The 2005 payment calculated under 2005-2007 LIP for eligible 
livestock contract growers will be reduced by the amount the participant 
received:
    (1) Under the Livestock Indemnity Program (subpart E of this part);
    (2) For the loss of income from the dead livestock from the party 
who contracted with the producer to grow the livestock; and
    (3) Under the Livestock Indemnity Program II (part 1416, subpart C 
of this title).



Sec.  760.910  Appeals.

    The appeal regulations set forth at parts 11 and 780 of this title 
apply to determinations made pursuant to this subpart.



Sec.  760.911  Offsets, assignments, and debt settlement.

    (a) Any payment 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 commodity, or proceeds, in favor of

[[Page 154]]

the owner or any other creditor except agencies of the U.S. Government. 
The regulations governing offsets and withholdings found at part 792 of 
this chapter apply to payments made under this subpart.
    (b) Any participant entitled to any payment may assign any payment 
in accordance with regulations governing the assignment of payments 
found at part 1404 of this title.



Sec.  760.912  Records and inspections.

    Participants receiving payments under this subpart or any other 
person who furnishes information for the purposes of enabling such 
participant to receive a payment under this subpart must 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. Participants receiving payments or any other person 
who furnishes such information to FSA must allow authorized 
representatives of USDA and the General Accountability Office, during 
regular business hours, to inspect, examine, and make copies of such 
books or records, and to enter upon, inspect and verify all applicable 
livestock and acreage in which the participant has an interest for the 
purpose of confirming the accuracy of information provided by or for the 
participant.



Sec.  760.913  Refunds; joint and several liability.

    In the event there is a failure to comply with any term, 
requirement, or condition for payment or assistance arising under this 
subpart, and if any refund of a payment to FSA will otherwise become due 
in connection with this subpart, all payments made in regard to such 
matter must be refunded to FSA together with interest and late-payment 
charges as provided for in part 792 of this chapter.



 Subpart K_General Provisions for 2005	2007 Livestock Compensation and 
                         Catfish Grant Programs

    Source: 72 FR 72881, Dec. 21, 2007, unless otherwise noted.



Sec.  760.1000  Applicability.

    (a) This subpart establishes the terms and conditions under which 
the following programs will be administered under Title IX of the U.S. 
Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act, 2007 for participants affected by 
eligible disaster events and located in counties that are eligible as 
specified in Sec.  760.1001:
    (1) The 2005-2007 Livestock Compensation Program (2005-2007 LCP); 
and
    (2) The 2005-2007 Catfish Grant Program (2005-2007 CGP).
    (b) Farm Service Agency (FSA) funds as are necessary for the 
programs in subparts L and M of this part are available under Title IX 
of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act, 2007.



Sec.  760.1001  Eligible counties, disaster events, and disaster periods.

    (a) Except as provided in this subpart, FSA will provide assistance 
under the programs listed in Sec.  760.1000 to eligible participants who 
have suffered certain losses due to eligible disaster events in eligible 
disaster counties provided in paragraph (c) of this section.
    (b) The ``Disaster Period'' is the time period in which losses 
occurred for the particular disaster that may be considered eligible for 
the programs under subparts L and M of this part. The start and end 
dates for each eligible disaster period are specified at http://
disaster.fsa.usda.gov.
    (c) Eligible counties are those primary counties declared by the 
Secretary or designated for the applicable loss by the President, 
including counties contiguous to those counties, between January 1, 
2005, and February 28, 2007 (that is after January 1, 2005 and before 
February 28, 2007). The listing is provided at http://
disaster.fsa.usda.gov. For counties where there was an otherwise timely 
Presidential declaration, but the declarations do not cover agricultural 
physical loss, the subject counties may still be eligible if the 
counties were the subject of an approved Administrator's Physical Loss 
Notice (APLN) when the APLN applies to a natural disaster timely 
designated by the President.

[[Page 155]]



Sec.  760.1002  Definitions.

    The following definitions apply to the programs in subpart L and M 
of this part. The definitions in parts 718 and 1400 of this title also 
apply, except where they conflict with the definitions in this section.
    Commercial use means a use performed as part of the operation of a 
business activity engaged in as a means of livelihood for profit by the 
eligible producer.
    Farming operation means a business enterprise engaged in producing 
agricultural products.



Sec.  760.1003  Limitations on payments and other benefits.

    (a) A participant may receive benefits for eligible livestock feed 
losses, including additional feed costs, for only one of the 2005, 2006, 
or 2007 calendar years under 2005-2007 LCP, subpart L of this part, or 
under the CGP of subpart M of this part.
    (b) As specified in Sec.  760.1106(c), the payment under the 2005-
2007 LCP may not exceed the smaller of the calculated payment in Sec.  
760.1106(a) or the value of the producer's eligible feed loss, increased 
feed costs, or forage or grazing loss.
    (c) A person may receive no more than $80,000 under 2005-2007 LCP, 
subpart L of this part. In applying the $80,000 per person payment 
limitation, regardless of whether the 2005, 2006, or 2007 calendar year 
benefits are at issue or sought, the most restrictive ``person'' 
determination for the participant in the years 2005, 2006, and 2007, 
will be used to limit benefits. The rules and definitions of part 1400 
of this title apply in construing who is a qualified separate ``person'' 
for purposes of this limit. All payment eligibility requirements of part 
1400 as they apply to any other payments, also apply to payments under 
subpart L of this part.
    (d) For payments under 2005-2007 CGP, a farming operation may 
receive no more than $80,000, except for general partnerships and joint 
ventures, in which case assistance will not exceed $80,000 times the 
number of eligible members of the general partnership or joint venture. 
This limit must be enforced by the state government administering the 
grant program.
    (e) The provisions of part 1400, subpart G, of this title apply to 
these programs. That is the rules that limit the eligibility for 
benefits of those individuals or entities with an adjusted gross income 
greater than a certain limit will be applied in the same manner to 
payments under subparts L and M of this part.
    (f) As a condition to receive benefits under subparts L and M of 
this part, a participant must have been in compliance with the 
provisions of parts 12 and 718 of this title for the calendar year for 
which benefits are being requested and must not otherwise be precluded 
from receiving benefits under any law.
    (g) An individual or entity determined to be a foreign person under 
part 1400 of this title is not eligible to receive benefits under 
subparts L and M of this part.
    (h) In addition to limitations provided in subparts L and M of this 
part, participants cannot receive duplicate benefits under subparts L 
and M of this part for the same loss or any similar loss under:
    (1) An agricultural disaster assistance provision contained in the 
announcement of the Secretary on January 26, 2006, or August 29, 2006;
    (2) The Emergency Supplemental Appropriations Act for Defense, the 
Global War on Terror, and Hurricane Recovery, 2006 (Pub. L. 109-234; 120 
Stat. 418); or
    (3) Any other disaster assistance program.



           Subpart L_2005	2007 Livestock Compensation Program

    Source: 72 FR 72881, Dec. 21, 2007, unless otherwise noted.



Sec.  760.1100  Applicability.

    This subpart sets forth the terms and conditions applicable to the 
2005-2007 Livestock Compensation Program (LCP).



Sec.  760.1101  Administration.

    (a) This program is administered under the general supervision of 
the Administrator, Farm Service Agency (FSA).
    (b) FSA representatives do not have authority to modify or waive any 
of

[[Page 156]]

the provisions of the regulations of this subpart.
    (c) The State FSA committee must take any action required by the 
regulations of this subpart that the county FSA committee has not taken. 
The State committee must 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 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 to a State or county FSA committee 
will preclude the 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.
    (e) The Deputy Administrator for Farm Programs may authorize state 
and county committees to waive or modify nonstatutory deadlines or other 
program requirements in cases where lateness or failure to meet such 
does not adversely affect the operation of the program.



Sec.  760.1102  Definitions.

    The following definitions apply to this subpart.
    Adult beef bull means a male beef bovine animal that was at least 2 
years old and used for breeding purposes on the beginning date of the 
disaster period.
    Adult beef cow means a female beef bovine animal that had delivered 
one or more offspring before the disaster period. A first-time bred beef 
heifer is also considered an adult beef cow if it was pregnant on the 
beginning date of the disaster period.
    Adult buffalo and beefalo bull means a male animal of those breeds 
that was at least 2 years old and used for breeding purposes on the 
beginning date of the disaster period.
    Adult buffalo and beefalo cow means a female animal 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 is also considered to be an adult buffalo or beefalo cow if it 
was pregnant on the beginning date of the disaster period.
    Adult dairy bull means a male dairy bovine breed animal at least 2 
years old used primarily for breeding dairy cows on the beginning date 
of the disaster period.
    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 the beginning date of the applicable disaster period. A 
first-time bred dairy heifer is also 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 ``2005/2006/2007 Livestock Compensation 
Program'' form.
    Application period means the date established by the Deputy 
Administrator for Farm Programs for participants to apply for program 
benefits.
    Disaster period means the applicable disaster period specified in 
Sec.  760.1001.
    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 a bovine animal that weighed 500 pounds 
or more on the beginning date of the disaster period, but does not meet 
the definition of an adult beef cow or bull.
    Non-adult buffalo/beefalo means an animal of those breeds that 
weighed 500 pounds or more on the beginning date of the disaster period, 
but does not meet the definition of an adult buffalo or beefalo cow or 
bull.
    Non-adult dairy cattle means a 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 does 
not meet the definition of an adult dairy cow or bull.
    Owner means one who had legal ownership of the livestock for which 
benefits are being requested under this subpart on the beginning date of 
the applicable disaster period as set forth in Sec.  760.1001.

[[Page 157]]

    Poultry means a domesticated chicken, turkey, duck, or goose. 
Poultry are further delineated by sex, age and purpose of production, as 
determined by FSA.
    Sheep means a domesticated, ruminant mammal of the genus Ovis.
    Swine means a domesticated omnivorous pig, hog, and boar. Swine are 
further delineated by sex and weight as determined by FSA.



Sec.  760.1103  Eligible livestock and producers.

    (a) To be considered eligible livestock to generate benefits under 
this subpart, 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;
    (2) Been physically located in the eligible disaster county on the 
beginning date of the disaster period;
    (3) Been maintained for commercial use as part of the producer's 
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, roping, hunting, pets, 
or for show.
    (b) To be considered an eligible livestock producer, the 
participant's eligible livestock must have been located in the eligible 
disaster county on the beginning date of the disaster period. To be 
eligible, also, the livestock producer must have:
    (1) Owned or cash-leased eligible livestock on the beginning date of 
the disaster period (provided that if there is a cash lease, only the 
cash lessee and not the owner will be eligible); and
    (2) Suffered any of the following:
    (i) A grazing loss on eligible grazing lands physically located in 
the eligible disaster county, where the forage was damaged or destroyed 
by an eligible disaster event, and intended for use as feed for the 
participant's eligible livestock;
    (ii) A loss of feed from forage or feedstuffs physically located in 
the eligible disaster county, that was mechanically harvested and 
intended for use as feed for the participant's eligible livestock, that 
was damaged or destroyed after harvest as the result of an eligible 
disaster event;
    (iii) A loss of feed from purchased forage or feedstuffs physically 
located in the eligible disaster county, intended for use as feed for 
the participant's eligible livestock, that was damaged or destroyed by 
an eligible disaster event; or
    (iv) Increased feed costs incurred in the eligible disaster county, 
due to an eligible disaster event, to feed the participant's eligible 
livestock.
    (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.
    (d) Ineligible livestock include, but are not limited to, livestock:
    (1) Livestock that were or would have been in a feedlot regardless 
of whether there was a disaster or where such livestock were in a 
feedlot as part of a participant's normal business operation, as 
determined by FSA;
    (2) Emus;
    (3) Yaks;
    (4) Ostriches;
    (5) Llamas;
    (6) All beef and dairy cattle, and buffalo and beefalo that weighed 
less than 500 pounds on the beginning date of the disaster period;
    (7) Any wild free roaming livestock, including horses and deer;
    (8) Livestock produced or maintained for reasons other than 
commercial use as part of a farming operation, including, but not 
limited to, livestock produced or maintained for recreational purposes, 
such as:
    (i) Roping,
    (ii) Hunting,

[[Page 158]]

    (iii) Show,
    (iv) Pleasure,
    (v) Use as pets, or
    (vi) Consumption by owner.



Sec.  760.1104  Application for payment.

    (a) To apply for 2005-2007 LCP, an application and required 
supporting documentation must be submitted to the administrative county 
FSA office.
    (b) The application must be filed during the application period 
announced by the Deputy Administrator for Farm Programs.
    (c) Payments may be made for eligible losses suffered by an eligible 
livestock 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 livestock producer, signs the application for 
payment. Legal documents showing proof of authority to sign for the 
deceased individual or dissolved entity must be provided. If a 
participant 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 participant 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 is eligible to apply for program benefits if 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.  760.1105  Application process.

    (a) Participants must submit to FSA:
    (1) A completed application in accordance with Sec.  760.1104;
    (2) Adequate proof, as determined by FSA, that the feed lost:
    (i) Was for the claimed eligible livestock;
    (ii) Was lost as a direct result of an eligible disaster event 
during an eligible disaster period specified in Sec.  760.1001;
    (iii) Was lost after January 1, 2005, but before February 28, 2007; 
and
    (iv) Occurred in the calendar year for which benefits are being 
requested; and
    (3) Any other supporting documentation as determined by FSA to be 
necessary to make a determination of eligibility of the participant. 
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 determined acceptable by 
FSA.
    (b) [Reserved]



Sec.  760.1106  Payment calculation.

    (a) Preliminary, unadjusted LCP payments are calculated for a 
producer by multiplying the national payment rate for each livestock 
category, as provided in paragraph (c) of this section, by the number of 
eligible livestock for the producer 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 FSA. As 
provided in subpart K of this part, a producer may receive benefits for 
only one of the three program years, 2005, 2006, or 2007. The producer 
must indicate which year has been chosen. Payments are available only 
with respect to disaster-related fees losses in the period from January 
2, 2005 through February 27, 2007, in eligible counties for losses 
during the times specified for the disaster periods as specified in 
Sec.  760.1001(b).
    (b) The preliminary LCP payment calculated in accordance with 
paragraph (a) of this section:
    (1) For 2005 LCP provided for under this subpart will be reduced by 
the amount the participant received for the specific livestock under the 
Feed Indemnity Program in accordance with

[[Page 159]]

subpart D of this part and LCP for the 2005 hurricanes under subpart B 
of part 1416 of this title; and
    (2) For 2006 LCP under this subpart will be reduced by the amount 
the participant received for the same or similar loss under the 
Livestock Assistance Grant Program in accordance with subpart H of this 
part.
    (c) Subject to such other limitations as may apply, including those 
in paragraph (b) of this section, the payment under the 2005-2007 LCP 
may not exceed for the relevant year chosen by the producer the smaller 
of either the:
    (1) Payment calculated in paragraph (a) of this section for that 
year; or
    (2) Value of the producer's eligible feed loss, increased feed 
costs, or forage or grazing loss as determined by FSA for that year.
    (d) The actual payment to the producer will be the amount provided 
for in paragraph (c) of this section subject to the adjustments and 
limits provided for in this section or in this part.



Sec.  760.1107  Appeals.

    The appeal regulations in parts 11 and 780 of this title apply to 
determinations made under this subpart.



Sec.  760.1108  Offsets, assignments, and debt settlement.

    (a) Any payment to any participant will be made 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. The 
regulations governing offsets and withholdings in parts 792 and 1403 of 
this title apply to payments made under this subpart.
    (b) Any participant entitled to any payment may assign any payments 
in accordance with regulations governing the assignment of payments in 
part 1404 of this chapter.



Sec.  760.1109  Recordkeeping and inspections.

    Participants receiving payments under this subpart or any other 
person who furnishes information for the purposes of enabling the 
participant to receive a payment under this subpart must maintain any 
books, records, and accounts supporting that information for a minimum 
of 3 years following the end of the year during which the application 
for payment was filed. Participants receiving payments or any other 
person who furnishes the information to FSA must allow authorized 
representatives of USDA and the General Accounting Office, during 
regular business hours, and to enter upon, inspect, examine, and make 
copies of the books or records, and to inspect and verify all applicable 
livestock and acreage in which the participant has an interest for the 
purpose of confirming the accuracy of the information provided by or for 
the participant.



Sec.  760.1110  Refunds; joint and several liability.

    In the event there is a failure to comply with any term, 
requirement, or condition for payment or assistance arising under this 
subpart, and if any refund of a payment to FSA will otherwise become due 
in connection with this subpart, all payments made in regard to such 
matter must be refunded to FSA together with interest and late-payment 
charges as provided for in part 792 of this title, provided that 
interest will run from the date of the disbursement of the refund to the 
producer.



                Subpart M_2005	2007 Catfish Grant Program

    Source: 72 FR 72881, Dec. 21, 2007, unless otherwise noted.



Sec.  760.1200  Administration.

    FSA will administer a limited 2005-2007 CGP to provide assistance to 
catfish producers in eligible counties that suffered catfish feed and 
related losses between January 1, 2005, and February 28, 2007, that is 
after January 1, 2005, and before February 28, 2007. Under the 2005-2007 
CGP, FSA will provide grants to State governments in those States that 
have catfish producers that are located in eligible counties and that 
have agreed to participate in the 2005-2007 CGP. The amount of each 
grant will be based on the total value of catfish feed and related 
losses suffered in eligible counties in the subject state. Each State 
must submit a work plan providing a summary of how the State will 
implement the 2005-2007 CGP.

[[Page 160]]



Sec.  760.1201  Application for payment.

    Application procedures for 2005-2007 CGP will be as determined by 
the State governments.



Sec.  760.1202  Eligible producers.

    (a) To be considered an eligible catfish producer, an participant 
must:
    (1) Raise catfish in a controlled environment and be physically 
located in an eligible county on the beginning date of the disaster 
period;
    (2) Maintain the catfish for commercial use as part of a farming 
operation;
    (3) Have a risk in production of such catfish; and
    (4) Have suffered one of the following types of losses relating to 
catfish feed as a direct result of the county's disaster event that 
occurred in that year:
    (i) Physical loss of feed that was damaged or destroyed,
    (ii) Cost to the extent allowed by FSA, associated with lost feeding 
days, or
    (iii) Cost associated with increased feed prices.
    (b) [Reserved]



Sec.  760.1203  Payment calculation.

    (a) Producers must be paid for feed losses of higher costs only for 
one of the three years, 2005, 2006, or 2007, and the loss must be for 
eligible catfish feed losses in an eligible county, as determined 
pursuant to subpart K of this part. Further, the feed loss or higher 
costs must be caused by the disaster that caused the county to qualify 
as an eligible county. The loss, moreover, to qualify for payment, must 
have occurred during the allowable time period provided in this part, 
namely the period beginning on January 2, 2005 and ending February 27, 
2007. The producer must pick the year of the benefits sought.
    (b) Subject to all adjustments and limits provided for in this part 
the amount of assistance provided to each participant from the State 
will be equal to the smaller of:
    (1) Depending on the year chosen by the producer, the value of the 
participant's 2005, 2006, or 2007 catfish feed and related losses as a 
direct result of an eligible disaster event, as determined by the State 
or
    (2) Result of multiplying:
    (i) Total tons of catfish feed purchased by the participant in 
depending on the year chosen by the producer 2005 (entire year), 2006 
(entire year), or 2007 (through February 27, 2007, only), times,
    (ii) Catfish feed payment rate for 2005, 2006, or 2007, as 
applicable, as set by FSA.
    (c) The catfish feed rate represents 61 percent of the normal cost 
of a ton of feed for a year divided by six to reflect the normal feeding 
price for catfish.



        Subpart N_Dairy Economic Loss Assistance Payment Program

    Source: 74 FR 67808, Dec. 21, 2009, unless otherwise noted.



Sec.  760.1301  Administration.

    (a) This subpart establishes, subject to the availability of funds, 
the terms and conditions under which the Dairy Economic Loss Assistance 
Payments (DELAP) program as authorized by section 10104 of the Farm 
Security and Rural Investment Act of 2002 (Pub. L. 107-171) will be 
administered with respect to funds appropriated under Section 748 of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2010 (2010 Agriculture 
Appropriations Bill, Pub. L. 111-80).
    (b) The DELAP program will be administered under the general 
supervision of the Administrator, FSA, and the Deputy Administrator for 
Farm Programs, FSA (who is referred to as the ``Deputy Administrator'' 
in this part), and will be carried out by FSA's Price Support Division 
(PSD) and Kansas City Management Office (KCMO).
    (c) FSA representatives do not have authority to modify or waive any 
of the provisions of the regulations of this subpart, except as provided 
in paragraph (d) of this section.
    (d) The State committee will take any action required by the 
provisions of this subpart that has not been taken by the county 
committee. The State committee will also:
    (1) Correct or require the county committee to correct any action 
taken by the county committee that is not in compliance with the 
provisions of this subpart.

[[Page 161]]

    (2) Require a county committee to not take an action or implement a 
decision that is not in compliance with the provisions of this subpart.
    (e) No provision or delegation of this subpart to PSD, KCMO, a State 
committee, or a county committee will preclude the Administrator, FSA, 
or a designee, from determining any question arising under the program 
or from reversing or modifying any determination made by PSD, KCMO, a 
State committee, or a county committee.
    (f) The Deputy Administrator may waive or modify non-statutory 
deadlines and other program requirements of this part in cases where 
lateness or failure to meet other requirements does not adversely affect 
the operation of the program. Participants 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 the 
discretionary authority of this provision will not be considered an 
adverse decision and is not appealable.



Sec.  760.1302  Definitions and acronyms.

    The following definitions apply to this subpart. The definitions in 
parts 718 and 1400 of this title also apply, except where they may 
conflict with the definitions in this section.
    County office or FSA county office means the FSA offices responsible 
for administering FSA programs in a specific areas, sometimes 
encompassing more than one county, in a State.
    Dairy operation means any person or group of persons who, as a 
single unit, as determined by FSA, produce and market milk commercially 
produced from cows, and whose production facilities are located in the 
United States. In any case, however, dairy operation may be given by the 
agency the same meaning as the definition of dairy operation as found in 
part 1430 of this title for other dairy assistance programs.
    Department or USDA means the U. S. Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
programs (DAFP), FSA, or a designee.
    Eligible production means milk from cows that was produced during 
February through July 2009, by a dairy producer 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 
USDA.
    Fiscal year or FY means the year beginning October 1 and ending the 
following September 30. The fiscal year will be designated for this 
subpart by year reference to the calendar year in which it ends. For 
example, FY 2009 is from October 1, 2008, through September 30, 2009 
(inclusive).
    Marketed commercially means sold to the market to which the dairy 
operation normally delivers whole milk and receives a monetary amount 
and in any case this term will be construed to allow the use of MILC 
records in making DELAP payments.
    Milk handler means the marketing agency to or through which the 
dairy operation 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 quantity 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, as defined in 7 CFR 1400.3, 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 who is entitled to a share of 
the commercial production available for marketing from the dairy 
operation. This term, and other terms in this subpart, will in any case 
be applied in a way that allows MILC records to be used to make DELAP 
payments.
    United States means the 50 States of the United States of America, 
the District of Columbia, the Commonwealth

[[Page 162]]

of Puerto Rico, and any other territory or possession of the United 
States.
    Verifiable production records means evidence that is used to 
substantiate the amount of production marketed commercially by a dairy 
operation and its producers and that can be verified by FSA through an 
independent source.



Sec.  760.1303  Requesting benefits.

    (a) If as a dairy operation or producer, your records are currently 
available in the FSA county office from previous participation in a 
fiscal year 2009 dairy program administered by FSA, you do not need to 
request benefits under this subpart to receive payments. FSA will make 
payments as specified in this subpart to eligible dairy producers based 
on production data maintained by the FSA county office for the months of 
February through July 2009.
    (b) If records are not available in the FSA county office, dairy 
producers may request benefits. The request for benefits may be a letter 
or email; no specific form is required.
    (1) Submit your request for DELAP to: Deputy Administrator for Farm 
Programs, FSA, USDA, STOP 0512, 1400 Independence Avenue, SW., 
Washington, DC 20250-0512; Attention: DELAP Program. Or you may send 
your request for DELAP via fax to (202) 690-1536 or e-mail to 
[email protected].
    (2) The complete request as described in this subpart must be 
received by FSA by the close of business on January 19, 2010.
    (3) The complete request for benefits must include all of the 
following:
    (i) The name and location of the dairy operation;
    (ii) Contact information for the dairy operation, including 
telephone number;
    (iii) Name, percentage share, and tax identification number for the 
entity or individual producer's receiving a share of the payment; and
    (iv) Proof of production (acceptable documentation as specified in 
Sec.  760.1305).
    (4) Requests for benefits and related documents not provided to FSA 
as required by this subpart, will not be approved.
    (5) If not already provided and available to FSA, the dairy producer 
or dairy operation must provide documentation to support:
    (i) The amount (quantity in pounds) of milk produced by the dairy 
operation during the months of February 2009 through July 2009;
    (ii) Percentage share of milk production during February through 
July 2009 attributed to each producer in the dairy operation; and
    (iii) Average adjusted gross income for each individual or entity 
with a share in the operation and any additional entities or individuals 
as needed to apply the adjusted gross income rules of these regulations.
    (6) Each dairy producer requesting benefits under this subpart is 
responsible for providing accurate and truthful information and any 
supporting documentation. If the dairy operation provides the required 
information, each dairy producer who shares in the risk of a dairy 
operation's total production is responsible for the accuracy and 
truthfulness of the information submitted for the request for benefits 
before the request will be considered complete. Providing a false 
statement, request, or certification to the Government may be punishable 
by imprisonment, fines, other penalties, or sanctions.
    (c) All information provided by the dairy producer or dairy 
operation 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 necessary for FSA 
to verify provided information. Refusal to allow FSA or any other USDA 
agency to verify any information provided or the inability of FSA to 
verify such information will result in a determination of ineligibility 
for benefits under this subpart.
    (d) Data furnished by dairy producers and dairy operations, subject 
to verification, will be used to determine eligibility for program 
benefits. Although participation in the DELAP program is voluntary, 
program benefits will not be provided unless a producer or operation 
furnishes all requested data or such data is already recorded at the FSA 
county office.

[[Page 163]]



Sec.  760.1304  Eligibility.

    (a) Payment under DELAP will only be made to producers, but the 
dairy ``operation'' must first qualify its production within limits 
provided for in this subpart in order to have the individuals or 
entities that qualify as ``producers'' receive payment subject to 
whatever additional limits (such as the adjusted gross income provisions 
of these regulations) apply. As needed the agency may construe the terms 
of this regulation in any manner needed to facilitate and expedite 
payments using existing data and records from other assistance programs. 
Further, those parties (State and local governments and their political 
subdivisions and related agencies) excluded from the MILC program will 
not be eligible for DELAP payments notwithstanding any other provision 
of these regulation. That said, to be eligible to receive payments under 
this subpart, a dairy producer in the United States must:
    (1) Have produced milk in the United States and commercially 
marketed the milk produced any time during February 2009 through July 
2009;
    (2) Be a producer, as defined in Sec.  760.1302;
    (3) Provide FSA with proof of milk production commercially marketed 
by all dairy producers in the dairy operation during February 2009 
through July 2009; and
    (4) Submit an accurate and complete request for benefits as 
specified in Sec.  760.1303, if production data is not available in the 
FSA county office.
    (b) To be eligible to receive a payment, each producer in an 
eligible dairy operation must meet the average adjusted gross income 
eligibility requirements of 7 CFR part 1400. No person or entity will be 
eligible to receive any payment or direct or indirect benefit under this 
subpart if their annual average adjusted nonfarm income is over $500,000 
as determined under 7 CFR part 1400. In the case of indirect benefits, 
direct benefits to other parties will be reduced accordingly. This will 
mean that all of the attribution rules of part 1400 will apply. For 
example if Individual A is over the limit and owns 100 percent of 
Corporation C which had a 20 percent interest in Corporation B which had 
a 50 percent interest in milk producer Corporation A, the AGI of 
Individual A would result in a 10 percent (100 percent times 20 percent 
times 50 percent) loss in benefits to Corporation A. For DELAP, the 
relevant period for the annual average adjusted nonfarm income is 2005 
through 2007.
    (1) Individual dairy producers in a dairy operation that is an 
entity are only eligible for a payment based on their share of the dairy 
operation.
    (2) No payment will be made to any other producer based on the share 
of any dairy producer who exceeds the income limit or who, because of 
the attribution rules, has their payment reduced.



Sec.  760.1305  Proof of production.

    (a) Dairy producers requesting benefits must, as required by this 
subpart, provide adequate proof of the dairy operation's eligible 
production during the months of February through July 2009, if those 
records are not already available at the FSA county office. The dairy 
operation must also provide proof that the eligible production was also 
commercially marketed during the same period.
    (b) To be eligible for payment, dairy producers marketing milk 
during February through July 2009 must provide any required supporting 
documents to assist FSA in verifying production. Supporting 
documentation may be provided by either the dairy producer or by the 
dairy operation for each of its producers. Examples of supporting 
documentation may 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. Dairy operations and 
producers may also be required to allow FSA to examine the herd of 
cattle as production evidence. If supporting documentation requested is 
not presented to FSA, the request for benefits will be denied.



Sec.  760.1306  Availability of funds.

    (a) Payments under this subpart are subject to the availability of 
funds.

[[Page 164]]

The total available program funds are $290,000,000.
    (b) FSA will prorate the available funds by a national factor to 
ensure payments do not exceed $290,000,000. The payment will be made 
based on the national payment rate as determined by FSA. FSA will 
prorate the payments based on the amount of milk production eligible for 
payments in a fair and reasonable manner.
    (c) A reserve will be created to handle new applications, appeals, 
and errors.



Sec.  760.1307  Dairy operation payment quantity.

    (a) A dairy operation's payment quantity (the quantity of milk on 
which the ``operation'' can generate payments for ``producers'' involved 
in the operation) will be determined by FSA, based on the pounds of 
production of commercially marketed milk during the months of February 
2009 through July 2009, multiplied by two.
    (b) The maximum payment quantity for which a dairy operation can 
generate payments for its dairy producers under this subpart will be 
6,000,000 pounds.
    (c) The dairy operation's payment quantity will be used to determine 
the amount of DELAP payments made to dairy producers.



Sec.  760.1308  Payment rate.

    (a) A national per-hundredweight payment rate will be calculated by 
dividing the available funding, less a reserve established by FSA, by 
the total pounds of eligible production approved for payment.
    (b) Each eligible dairy producer's payment with respect to an 
operation will be calculated by multiplying the payment rate determined 
in paragraph (a) of this section by the dairy producer's share in the 
dairy operation's eligible production payment quantity as determined in 
accordance with section Sec.  760.1307.
    (c) In the event that approval of all eligible requests for benefits 
would result in expenditures in excess of the amount available, FSA will 
reduce the payment rate in a manner that FSA determines to be fair and 
reasonable.



Sec.  760.1309  Appeals.

    The appeal regulations set forth at 7 CFR parts 11 and 780 apply to 
determinations made under this subpart.



Sec.  760.1310  Misrepresentation and scheme or device.

    (a) In addition to other penalties, sanctions or remedies as may 
apply, a dairy producer or operation will be ineligible to receive 
benefits under this subpart if the producer or operation is determined 
by FSA to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this subpart;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any payment 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 receiving payment 
under this subpart will be jointly and severally liable with other 
producers 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 will be in addition to other civil, criminal, 
or administrative remedies that may apply.



Sec.  760.1311  Death, incompetence, or disappearance.

    (a) In the case of the death, incompetency, or disappearance of a 
person or the dissolution of an entity 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.
    (b) Payments may be made to an otherwise eligible dairy producer who 
is now deceased or to a dissolved entity if a representative who 
currently has authority to enter into an application for the producer or 
the producer's estate makes the request for benefits as specified in 
Sec.  760.1303. Proof of authority over the deceased producer's estate 
or a dissolved entity must be provided.

[[Page 165]]

    (c) If a dairy 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 
be identified in the request for benefits.



Sec.  760.1312  Maintaining records.

    (a) Persons requesting benefits under this subpart must maintain 
records and accounts to document all eligibility requirements specified 
in this subpart. Such records and accounts must be retained for 3 years 
after the date of payment to the dairy producer under this subpart.
    (b) Destruction of the records after 3 years from the date of 
payment will be at the decision and risk of the party undertaking the 
destruction.



Sec.  760.1313  Refunds; joint and several liability.

    (a) Any dairy producer that receives excess payment, payment as the 
result of erroneous information provided by any person, or payment 
resulting from a failure to comply with any requirement or condition for 
payment under this subpart, must refund the amount of that payment to 
FSA.
    (b) Any refund required will be due from the date of the 
disbursement by the agency with interest determined in accordance with 
paragraph (d) of this section and late payment charges as provided in 7 
CFR part 1403.
    (c) Each dairy producer that has an interest in the dairy operation 
will be jointly and severally liable for any refund and related charges 
found to be due to FSA.
    (d) Interest will be applicable to any refunds to FSA required in 
accordance with 7 CFR parts 792 and 1403. Such interest will be charged 
at the rate that the U.S. Department of the Treasury charges FSA for 
funds, and will accrue from the date FSA made the payment to the date 
the refund is repaid.
    (e) FSA may waive the accrual of interest if it determines that the 
cause of the erroneous payment was not due to any action of the person 
or entity, or was beyond the control of the person or entity committing 
the violation. Any waiver is at the discretion of FSA alone.



Sec.  760.1314  Miscellaneous provisions.

    (a) Offset. FSA may offset or withhold any amount due to FSA from 
any benefit provided under this subpart in accordance with the 
provisions of 7 CFR part 1403.
    (b) Claims. Claims or debts will be settled in accordance with the 
provisions of 7 CFR part 1403.
    (c) Other interests. Payments or any portion thereof due under this 
subpart will be made without regard to questions of title under State 
law and without regard to any claim or lien against the milk production, 
or proceeds thereof, in favor of the owner or any other creditor except 
agencies and instrumentalities of the U.S. Government.
    (d) Assignments. Any dairy producer entitled to any payment under 
this part may assign any payments in accordance with the provisions of 7 
CFR part 1404.
    (e) Violations of highly erodible land and wetland conservation 
provisions. The provisions of part 12 of this title apply to this 
subpart. That part sets out certain conservation requirements as a 
general condition for farm benefits.
    (f) 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 subpart.



PART 761_FARM LOAN PROGRAMS; GENERAL PROGRAM ADMINISTRATION
--Table of Contents



                      Subpart A_General Provisions

Sec.
761.1 Introduction.
761.2 Abbreviations and definitions.
761.3 Civil rights.
761.4 Conflict of interest.
761.5 Restrictions on lobbying.
761.6 Appeals.
761.7 Appraisals.
761.8 Loan limitations.
761.9 Interest rates for direct loans.
761.10 Planning and performing construction and other development.
761.11-761.50 [Reserved]

                   Subpart B_Supervised Bank Accounts

761.51 Establishing a supervised bank account.

[[Page 166]]

761.52 Deposits into a supervised bank account.
761.53 Interest bearing accounts.
761.54 Withdrawals from a supervised bank account.
761.55 Closing a supervised bank account.
761.56-761.100 [Reserved]

                       Subpart C_Supervised Credit

761.101 Applicability.
761.102 Borrower recordkeeping, reporting, and supervision.
761.103 Farm assessment.
761.104 Developing the farm operating plan.
761.105 Year-end analysis.
761.106-761.200 [Reserved]

    Subpart D_Allocation of Farm Loan Programs Funds to State Offices

761.201 Purpose.
761.202 Timing of allocations.
761.203 National reserves for Farm Ownership and Operating loans.
761.204 Methods of allocating funds to State Offices.
761.205 Computing the formula allocation.
761.206 Pooling of unobligated funds allocated to State Offices.
761.207 Distribution of loan funds by State Offices.
761.208 Target participation rates for socially disadvantaged groups.
761.209 Loan funds for beginning farmers.
761.210 CL funds.
761.211 Transfer of funds.

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

    Source: 72 FR 63285, Nov. 8, 2007, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  761.1  Introduction.

    (a) The Administrator delegates the responsibility to administer 
Farm Loan Programs of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1921 et seq.) to the Deputy Administrator for Farm Loan Programs 
subject to any limitations established in 7 CFR 2.16(a)(2) and 7 CFR 
2.42.
    (b) The Deputy Administrator may:
    (1) Redelegate authorities received under subparagraph (a); and
    (2) Establish procedures for further redelegation of authority.
    (c) Parts 761 through 767 describe the Agency's policies for its 
Farm Loan Programs. The objective of these programs is to provide 
supervised credit and management assistance to eligible farmers to 
become owners or operators, or both, of family farms, to continue such 
operations when credit is not available elsewhere, or to return to 
normal farming operations after sustaining substantial losses as a 
result of a designated or declared disaster. The programs are designed 
to allow those who participate to transition to private commercial 
credit or other sources of credit in the shortest period of time 
practicable through the use of supervised credit, including farm 
assessments, borrower training, market placement, and borrower 
graduation requirements. These regulations apply to loan applicants, 
borrowers, lenders, holders, Agency personnel, and other parties 
involved in making, guaranteeing, holding, servicing, or liquidating 
such loans.
    (d) This part describes the Agency's general and administrative 
policies for its guaranteed and direct Farm Loan Programs. In general, 
this part addresses issues that affect both guaranteed and direct loan 
programs.

[72 FR 63285, Nov. 8, 2007, as amended at 76 FR 5057, Jan. 28, 2011]



Sec.  761.2  Abbreviations and definitions.

    The following abbreviations and definitions are applicable to the 
Farm Loan Programs addressed in parts 761 through 767 and 769 unless 
otherwise noted.
    (a) Abbreviations.
    CL Conservation Loan.
    CLP Certified Lender Program.
    DSA Disaster Set-Aside.
    EE Economic Emergency loan.
    EM Emergency loan.
    FLP Farm Loan Programs.
    FO Farm Ownership loan.
    FSA Farm Service Agency, an Agency of the USDA, including its 
personnel and any successor Agency.
    LIBOR London Interbank Offered Rate.
    ML Microloan.
    MLP Micro Lender Program.
    NRCS National Resources and Conservation Service, USDA.
    OGC Office of the General Counsel of the USDA.
    OL Operating loan.
    PLP Preferred Lender Program.
    RHF Rural Housing loan for farm service buildings.
    RL Recreation loan.

[[Page 167]]

    SAA Shared Appreciation Agreement.
    SA Shared Appreciation loan.
    SEL Standard Eligible Lender.
    ST Softwood Timber loan.
    SW Soil and Water loan.
    USDA United States Department of Agriculture.
    USPAP Uniform Standards of Professional Appraisal Practice.
    (b) Definitions.
    Abandoned security property is security property that a borrower is 
not occupying, is not in possession of, or has relinquished control of 
and has not made arrangements for its care or sale.
    Accrued deferred interest is unpaid interest from past due 
installments posted to a borrower's loan account.
    Act is the Consolidated Farm and Rural Development Act (7 U.S.C. 
1921 et seq.).
    Additional security is property which provides security in excess of 
the amount of security value equal to the loan amount.
    Adequate security is property which is required to provide security 
value at least equal to the direct loan amount.
    Adjustment is a form of settlement that reduces the financial 
obligation to the Agency, conditioned upon the completion of payment of 
a specified amount at a future time. An adjustment is not a final 
settlement until all payments have been made under the agreement.
    Administrative appraisal review is a review of an appraisal to 
determine if the appraisal:
    (1) Meets applicable Agency requirements; and
    (2) Is accurate outside the requirements of standard 3 of USPAP.
    Agency is the FSA.
    Agreement for the use of proceeds is an agreement between the 
borrower and the Agency for each production cycle that reflects the 
proceeds from the sale of normal income security that will be used to 
pay scheduled FLP loan installments, including any past due 
installments, during the production cycle covered by the agreement.
    Agricultural commodity means livestock, grains, cotton, oilseeds, 
dry beans, tobacco, peanuts, sugar beets, sugar cane, fruit, vegetable, 
forage, nursery crops, nuts, aquacultural species, and the products 
resulting from: livestock, tree farming, and other plant or animal 
production as determined by the Agency.
    Allonge is an attachment or an addendum to a promissory note.
    Allowable costs are those costs for replacement or repair that are 
supported by acceptable documentation, including, but not limited to, 
written estimates, invoices, and bills.
    Applicant is the individual or entity applying for a loan or loan 
servicing under either the direct or guaranteed loan program.
    Apprentice means an individual who receives applied guidance and 
input from an individual with the skills and knowledge pertinent to the 
successful operation of the farm enterprise being financed.
    Aquaculture is the husbandry of any aquatic organisms (including 
fish, mollusks, crustaceans or other invertebrates, amphibians, 
reptiles, or aquatic plants) raised in a controlled or selected 
environment of which the applicant has exclusive rights to use.
    Assignment of guaranteed portion is a process by which the lender 
transfers the right to receive payments or income on a guaranteed loan 
to another party, usually in return for payment in the amount of the 
loan's guaranteed principal. The lender retains the unguaranteed portion 
in its portfolio and receives a fee from the purchaser or assignee to 
service the loan and receive and remit payments according to a written 
assignment agreement. This assignment can be reassigned or sold multiple 
times.
    Assignment of indemnity is the transfer of rights to compensation 
under an insurance contract.
    Assistance is financial assistance in the form of a direct or 
guaranteed loan or interest subsidy or servicing action.
    Assumption is the act of agreeing to be legally responsible for 
another party's indebtedness.
    Assumption agreement is a written agreement on the appropriate 
Agency form to pay the FLP debt incurred by another.
    Basic part of an applicant's total farming operation is any single 
agricultural

[[Page 168]]

commodity or livestock production enterprise of an applicant's farming 
operation which normally generates sufficient income to be considered 
essential to the success of such farming operation.
    Basic security is all farm machinery, equipment, vehicles, 
foundation and breeding livestock herds and flocks, including 
replacements, and real estate that serves as security for a loan made or 
guaranteed by the Agency.
    Beginning farmer is an individual or entity who:
    (1) Meets the loan eligibility requirements for a direct or 
guaranteed CL, FO, or OL, as applicable;
    (2) Has not operated a farm for more than 10 years. This requirement 
applies to all members of an entity;
    (3) Will materially and substantially participate in the operation 
of the farm:
    (i) In the case of a loan made to an individual, individually or 
with the family members, material and substantial participation requires 
that the individual provide substantial day-to-day labor and management 
of the farm, consistent with the practices in the county or State where 
the farm is located.
    (ii) In the case of a loan made to an entity, all members must 
materially and substantially participate in the operation of the farm. 
Material and substantial participation requires that the member provide 
some amount of the management, or labor and management necessary for 
day-to-day activities, such that if the individual did not provide these 
inputs, operation of the farm would be seriously impaired;
    (4) Agrees to participate in any loan assessment and borrower 
training required by Agency regulations;
    (5) Except for an OL applicant, does not own real farm property or 
who, directly or through interests in family farm entities owns real 
farm property, the aggregate acreage of which does not exceed 30 percent 
of the average farm acreage of the farms in the county where the 
property is located. If the farm is located in more than one county, the 
average farm acreage of the county where the applicant's residence is 
located will be used in the calculation. If the applicant's residence is 
not located on the farm or if the applicant is an entity, the average 
farm acreage of the county where the major portion of the farm is 
located will be used. The average county farm acreage will be determined 
from the most recent Census of Agriculture;
    (6) Demonstrates that the available resources of the applicant and 
spouse (if any) are not sufficient to enable the applicant to enter or 
continue farming on a viable scale; and
    (7) In the case of an entity:
    (i) All the members are related by blood or marriage; and
    (ii) All the members are beginning farmers.
    Borrower (or debtor) is an individual or entity that has an 
outstanding obligation to the Agency or to a lender under any direct or 
guaranteed FLP loan, without regard to whether the loan has been 
accelerated. The term ``borrower'' includes all parties liable for such 
obligation, including collection-only borrowers, except for debtors 
whose total loans and accounts have been voluntarily or involuntarily 
foreclosed, sold, or conveyed, or who have been discharged of all such 
obligations owed to the Agency or guaranteed lender.
    Cancellation is the final discharge of, and release of liability 
for, a financial obligation to the Agency on which no settlement amount 
has been paid.
    Cash flow budget is a projection listing all anticipated cash 
inflows (including all farm income, nonfarm income and all loan 
advances) and all cash outflows (including all farm and nonfarm debt 
service and other expenses) to be incurred during the period of the 
budget. Advances and principal repayments of lines of credit may be 
excluded from a cash flow budget. Cash flow budgets for guaranteed loans 
under $125,000 do not require income and expenses itemized by 
categories. A cash flow budget may be completed either for a 12-month 
period, a typical production cycle, or the life of the loan, as 
appropriate. It may also be prepared with a breakdown of cash inflows 
and outflows for each month of the review period and include the 
expected outstanding operating credit balance for the end of each month. 
The

[[Page 169]]

latter type is referred to as a ``monthly cash flow budget.''
    Chattel or real estate essential to the operation is chattel or real 
estate that would be necessary for the applicant to continue operating 
the farm after the disaster in a manner similar to the manner in which 
the farm was operated immediately prior to the disaster, as determined 
by the Agency.
    Chattel security is property that may consist of, but is not limited 
to: Crops; livestock; aquaculture species; farm equipment; inventory; 
accounts; contract rights; general intangibles; and supplies that are 
covered by financing statements and security agreements, chattel 
mortgages, and other security instruments.
    Civil action is a court proceeding to protect the Agency's financial 
interests. A civil action does not include bankruptcy and similar 
proceedings to impound and distribute the bankrupt's assets to 
creditors, or probate or similar proceedings to settle and distribute 
estates of incompetents or decedents, and pay claims of creditors.
    Closing agent is the attorney or title insurance company selected by 
the applicant and approved by the Agency to provide closing services for 
the proposed loan or servicing action. Unless a title insurance company 
provides loan closing services, the term ``title company'' does not 
include ``title insurance company.''
    Coastal barrier is an area of land identified as part of the 
national Coastal Barrier Resources System under the Coastal Barrier 
Resources Act of 1980.
    Compromise is the settlement of an FLP debt or claim by a lump-sum 
payment of less than the total amount owed in satisfaction of the debt 
or claim.
    Conditional commitment is the Agency's commitment to a lender that 
the material the lender has submitted is approved subject to the 
completion of all listed conditions and requirements.
    Conservation Contract is a contract under which a borrower agrees to 
set aside land for conservation, recreation or wildlife purposes in 
exchange for reduction of a portion of an outstanding FLP debt.
    Conservation Contract review team is comprised by the appropriate 
offices of FSA, the Natural Resources Conservation Service, U.S. Fish 
and Wildlife Service, State Fish and Wildlife Agencies, Conservation 
Districts, National Park Service, Forest Service, State Historic 
Preservation Officer, State Conservation Agencies, State Environmental 
Protection Agency, State Natural Resource Agencies, adjacent public 
landowner, and any other entity that may have an interest and qualifies 
to be a management authority for a proposed conservation contract.
    Conservation loan means a loan made to eligible applicants to cover 
the costs to the applicant of carrying out a qualified conservation 
project.
    Conservation plan means an NRCS-approved written record of the land 
user's decisions and supporting information, for treatment of a land 
unit or water as a result of the planning process, that meets NRCS Field 
Office Technical Guide (FOTG) quality criteria for each natural resource 
(soil, water, air, plants, and animals) and takes into account economic 
and social considerations. The conservation plan describes the schedule 
of operations and activities needed to solve identified natural resource 
problems and takes advantage of opportunities at a conservation 
management system level. This definition only applies to the direct 
loans and guaranteed loans for the Conservation Loan Program.
    Conservation practice means a specific treatment, such as a 
structural or vegetative measure, or management technique, commonly used 
to meet specific needs in planning and implementing conservation, for 
which standards and specifications have been developed. Conservation 
practices are contained in the appropriate NRCS Field Office Technical 
Guide (FOTG), which is based on the National Handbook of Conservation 
Practices (NHCP).
    Conservation project means conservation measures that address 
provisions of a conservation plan or Forest Stewardship Management Plan.
    Consolidation is the process of combining the outstanding principal 
and interest balance of two or more loans of the same type made for 
operating purposes.

[[Page 170]]

    Construction is work such as erecting, repairing, remodeling, 
relocating, adding to, or salvaging any building or structure, and the 
installing, repairing, or adding to heating and electrical systems, 
water systems, sewage disposal systems, walks, steps, and driveways.
    Controlled is when a director or an employee has more than a 50 
percent ownership in an entity or, the director or employee, together 
with relatives of the director or employee, have more than a 50 percent 
ownership.
    Controlled substance is the term as defined in 21 U.S.C. 812.
    Cooperative is an entity that has farming as its purpose, whose 
members have agreed to share the profits of the farming enterprise, and 
is recognized as a farm cooperative by the laws of the state in which 
the entity will operate a farm.
    Corporation is a private domestic corporation created and organized 
under the laws of the state in which it will operate a farm.
    Cosigner is a party, other than the applicant, who joins in the 
execution of a promissory note to assure its repayment. The cosigner 
becomes jointly and severally liable to comply with the repayment terms 
of the note, but is not authorized to severally receive loan servicing 
available under 7 CFR parts 765 and 766. In the case of an entity 
applicant, the cosigner cannot be a member of the entity.
    County is a local administrative subdivision of a State or similar 
political subdivision of the United States.
    County average yield is the historical average yield for an 
agricultural commodity in a particular political subdivision, as 
determined or published by a government entity or other recognized 
source.
    Criminal action is the prosecution by the United States to exact 
punishment in the form of fines or imprisonment for alleged violation of 
criminal statutes.
    Crop allotment or quota is a farm's share of an approved national 
tobacco or peanut allotment or quota.
    Current market value buyout is the termination of a borrower's loan 
obligations to the Agency in exchange for payment of the current 
appraised value of the borrower's security property and non-essential 
assets, less any prior liens.
    Debt forgiveness is a reduction or termination of a debt under the 
Act in a manner that results in a loss to the Agency.
    (1) Debt forgiveness may be through:
    (i) Writing down or writing off a debt pursuant to 7 U.S.C. 2001;
    (ii) Compromising, adjusting, reducing, or charging off a debt or 
claim pursuant to 7 U.S.C. 1981; or
    (iii) Paying a loss pursuant to 7 U.S.C. 2005 on a FLP loan 
guaranteed by the Agency.
    (2) Debt forgiveness does not include:
    (i) Debt reduction through a conservation contract;
    (ii) Any writedown provided as part of the resolution of a 
discrimination complaint against the Agency;
    (iii) Prior debt forgiveness that has been repaid in its entirety;
    (iv) Consolidation, rescheduling, reamortization, or deferral of a 
loan; or
    (v) Forgiveness of YL debt, due to circumstances beyond the 
borrower's control.
    The Agency will use the criteria in 7 CFR 766.104(a)(1) to determine 
if the circumstances were beyond the borrower's control.
    Debt settlement is a compromise, adjustment, or cancellation of an 
FLP debt.
    Debt service margin is the difference between all of the borrower's 
expected expenditures in a planning period (including farm operating 
expenses, capital expenses, essential family living expenses, and debt 
payments) and the borrower's projected funds available to pay all 
expenses and payments.
    Debt writedown is the reduction of the borrower's debt to that 
amount the Agency determines to be collectible based on an analysis of 
the security value and the borrower's ability to pay.
    Default is the failure of a borrower to observe any agreement with 
the Agency, or the lender in the case of a guaranteed loan, as contained 
in promissory notes, security instruments, and similar or related 
instruments.
    Deferral is a postponement of the payment of interest or principal, 
or both.
    Delinquent borrower, for loan servicing purposes, is a borrower who 
has

[[Page 171]]

failed to make all scheduled payments by the due date.
    Direct loan is a loan funded and serviced by the Agency as the 
lender.
    Disaster is an event of unusual and adverse weather conditions or 
other natural phenomena, or quarantine, that has substantially affected 
the production of agricultural commodities by causing physical property 
or production losses in a county, or similar political subdivision, that 
triggered the inclusion of such county or political subdivision in the 
disaster area as designated by the Agency.
    Disaster area is the county or counties declared or designated as a 
disaster area for EM loan assistance as a result of disaster related 
losses. This area includes counties contiguous to those counties 
declared or designated as disaster areas.
    Disaster set-aside is the deferral of payment of an annual loan 
installment to the Agency to the end of the loan term in accordance with 
part 766, subpart B of this chapter.
    Disaster yield is the per-acre yield of an agricultural commodity 
for the operation during the production cycle when the disaster 
occurred.
    Downpayment loan is a type of FO loan made to beginning farmers and 
socially disadvantaged farmers to finance a portion of a real estate 
purchase under part 764, subpart E of this chapter.
    Economic Emergency loan is a loan that was made or guaranteed to an 
eligible applicant to allow for continuation of the operation during an 
economic emergency which was caused by a lack of agricultural credit or 
an unfavorable relationship between production costs and prices received 
for agricultural commodities. EE loans are not currently funded; 
however, such outstanding loans are serviced by the Agency or the lender 
in the case of a guaranteed EE loan.
    Embedded entity means an entity that has a direct or indirect 
interest, as a stockholder, member, beneficiary, or otherwise, in 
another entity.
    Emergency loan is a loan made to eligible applicants who have 
incurred substantial financial losses from a disaster.
    Entity means a corporation, partnership, joint operation, 
cooperative, limited liability company, trust, or other legal business 
organization, as determined by the Agency, that is authorized to conduct 
business in the state in which the organization operates. Organizations 
operating as non-profit entities under Internal Revenue Code 501 (26 
U.S.C. 501) and estates are not considered eligible entities for Farm 
Loan Programs purposes.
    Entity member means all individuals and all embedded entities, as 
well as the individual members of the embedded entities, having an 
ownership interest in the assets of the entity.
    Essential family living and farm operating expenses:
    (1) Are those that are basic, crucial or indispensable.
    (2) Are determined by the Agency based on the following 
considerations:
    (i) The specific borrower's operation;
    (ii) What is typical for that type of operation in the area; and
    (iii) What is an efficient method of production considering the 
borrower's resources.
    (3) Include, but are not limited to, essential: Household operating 
expenses; food, including lunches; clothing and personal care; health 
and medical expenses, including medical insurance; house repair and 
sanitation; school and religious expenses; transportation; hired labor; 
machinery repair; farm building and fence repair; interest on loans and 
credit or purchase agreement; rent on equipment, land, and buildings; 
feed for animals; seed, fertilizer, pesticides, herbicides, spray 
materials and other necessary farm supplies; livestock expenses, 
including medical supplies, artificial insemination, and veterinarian 
bills; machinery hire; fuel and oil; taxes; water charges; personal, 
property and crop insurance; auto and truck expenses; and utility 
payments.
    Established farmer means a farmer who operates the farm (in the case 
of an entity, its members as a group) who meets all of the following 
conditions:
    (1) Actively participated in the operation and the management, 
including, but not limited to, exercising control over, making decisions 
regarding, and

[[Page 172]]

establishing the direction of, the farming operation at the time of the 
disaster;
    (2) Spends a substantial portion of time in carrying out the farming 
operation;
    (3) Planted the crop, or purchased or produced the livestock on the 
farming operation;
    (4) In the case of an entity, is primarily engaged in farming and 
has over 50 percent of its gross income from all sources from its 
farming operation based on the operation's projected cash flow for the 
next crop year or the next 12-month period, as mutually determined;
    (5) Is not an integrated livestock, poultry, or fish processor who 
operates primarily and directly as a commercial business through 
contracts or business arrangements with farmers, except a grower under 
contract with an integrator or processor may be considered an 
established farmer, provided the farming operation is not managed by an 
outside full-time manager or management service and Agency loans will be 
based on the applicant's share of the agricultural production as 
specified in the contract; and
    (6) Does not employ a full time farm manager.
    EZ Guarantee means a type of OL or FO of $100,000 or less made using 
a simplified loan application. As part of the simplified application 
process, EZ Guarantees are processed using a streamlined underwriting 
method to determine financial feasibility.
    False information is information provided by an applicant, borrower 
or other source to the Agency that the applicant or borrower knows to be 
incorrect.
    Family farm is a business operation that:
    (1) Produces agricultural commodities for sale in sufficient 
quantities so that it is recognized as a farm rather than a rural 
residence;
    (2) Has both physical labor and management provided as follows:
    (i) The majority of day-to-day, operational decisions, and all 
strategic management decisions are made by:
    (A) The borrower and persons who are either related to the borrower 
by blood or marriage, or are a relative, for an individual borrower; or
    (B) The members responsible for operating the farm, in the case of 
an entity.
    (ii) A substantial amount of labor to operate the farm is provided 
by:
    (A) The borrower and persons who are either related to the borrower 
by blood or marriage, or are a relative, for an individual borrower; or
    (B) The members responsible for operating the farm, in the case of 
an entity.
    (3) May use full-time hired labor in amounts only to supplement 
family labor.
    (4) May use reasonable amounts of temporary labor for seasonal peak 
workload periods or intermittently for labor intensive activities.
    Family living expenses are the costs of providing for the needs of 
family members and those for whom the borrower has a financial 
obligation, such as alimony, child support, and care expenses of an 
elderly parent.
    Family members are the immediate members of the family residing in 
the same household with the borrower.
    Farm is a tract or tracts of land, improvements, and other 
appurtenances that are used or will be used in the production of crops, 
livestock, or aquaculture products for sale in sufficient quantities so 
that the property is recognized as a farm rather than a rural residence. 
The term ``farm'' also includes the term ``ranch.'' It may also include 
land and improvements and facilities used in a non-eligible enterprise 
or the residence which, although physically separate from the farm 
acreage, is ordinarily treated as part of the farm in the local 
community.
    Farmer is an individual, corporation, partnership, joint operation, 
cooperative, trust, or limited liability company that is the operator of 
a farm.
    Farm income is the proceeds from the sale of agricultural 
commodities that are normally sold annually during the regular course of 
business, such as crops, feeder livestock, and other farm products.
    Farm Loan Programs are Agency programs to make, guarantee, and 
service loans to family farmers authorized under the Act or Agency 
regulations.

[[Page 173]]

    Farm Ownership loan is a loan made to eligible applicants to 
purchase, enlarge, or make capital improvements to family farms, or to 
promote soil and water conservation and protection. It also includes the 
Downpayment loan.
    Farm Program payments are benefits received from FSA for any 
commodity, disaster, or cost share program.
    Feasible plan is when an applicant or borrower's cash flow budget or 
farm operating plan indicates that there is sufficient cash inflow to 
pay all cash outflow. If a loan approval or servicing action exceeds one 
production cycle and the planned cash flow budget or farm operating plan 
is atypical due to cash or inventory on hand, new enterprises, carryover 
debt, atypical planned purchases, important operating changes, or other 
reasons, a cash flow budget or farm operating plan must be prepared that 
reflects a typical cycle. If the request is for only one cycle, a 
feasible plan for only one production cycle is required for approval.
    Financially distressed borrower is a borrower unable to develop a 
feasible plan for the current or next production cycle.
    Financially viable operation, for the purposes of considering a 
waiver of OL term limits under Sec.  764.252 of this chapter, is a 
farming operation that, with Agency assistance, is projected to improve 
its financial condition over a period of time to the point that the 
operator can obtain commercial credit without further Agency assistance. 
Such an operation must generate sufficient income to:
    (1) Meet annual operating expenses and debt payments as they become 
due;
    (2) Meet essential family living expenses to the extent they are not 
met by dependable non-farm income;
    (3) Provide for replacement of capital items; and
    (4) Provide for long-term financial growth.
    Fixture is an item of personal property attached to real estate in 
such a way that it cannot be removed without defacing or dismantling the 
structure, or damaging the item itself.
    Floodplains are lowland and relatively flat areas adjoining inland 
and coastal waters, including flood-prone areas of offshore islands, 
including at a minimum, that area subject to a one percent or greater 
chance of flooding in any given year. The base floodplain is used to 
designate the 100-year floodplain (one percent chance floodplain). The 
critical floodplain is defined as the 500-year floodplain (0.2 percent 
chance floodplain).
    Foreclosed is the completed act of selling security either under the 
power of sale in the security instrument or through judicial 
proceedings.
    Foreclosure sale is the act of selling security either under the 
power of sale in the security instrument or through judicial 
proceedings.
    Forest Stewardship Management Plan means a property-specific, long-
term, multi-resource plan that addresses private landowner objectives 
while recommending a set and schedule of management practices designed 
to achieve a desired future forest condition developed and approved 
through the USDA Forest Service or its agent.
    Good faith is when an applicant or borrower provides current, 
complete, and truthful information when applying for assistance and in 
all past dealings with the Agency, and adheres to all written agreements 
with the Agency including, but not limited to, loan agreement, security 
instruments, farm operating plans, and agreements for use of proceeds. 
The Agency considers a borrower to act in good faith, however, if the 
borrower's inability to adhere to all agreements is due to circumstances 
beyond the borrower's control. In addition, the Agency will consider 
fraud, waste, or conversion actions, when substantiated by a legal 
opinion from OGC, when determining if an applicant or borrower has acted 
in good faith.
    Graduation means the payment in full of all direct FLP loans, except 
for CLs, made for operating, real estate, or both purposes by 
refinancing with other credit sources either with or without an Agency 
guarantee.
    Guaranteed loan is a loan made and serviced by a lender for which 
the Agency has entered into a Lender's Agreement and for which the 
Agency has issued a Loan Guarantee. This term also includes guaranteed 
lines of credit except where otherwise indicated.

[[Page 174]]

    Guarantor is a party not included in the farming operation who 
assumes responsibility for repayment in the event of default.
    Hazard insurance is insurance covering fire, windstorm, lightning, 
hail, explosion, riot, civil commotion, aircraft, vehicles, smoke, 
builder's risk, public liability, property damage, flood or mudslide, 
workers compensation, or any similar insurance that is available and 
needed to protect the Agency security or that is required by law.
    Highly erodible land is land as determined by Natural Resources 
Conservation Service to meet the requirements provided in section 1201 
of the Food Security Act of 1985.
    Holder is a person or organization other than the lender that holds 
all or a part of the guaranteed portion of an Agency guaranteed loan but 
has no servicing responsibilities. When the lender assigns a part of the 
guaranteed loan by executing an Agency assignment form, the assignee 
becomes a holder.
    Homestead protection is the previous owner's right to lease with an 
option to purchase the principal residence and up to 10 acres of 
adjoining land which secured an FLP direct loan.
    Homestead protection property is the principal residence that 
secured an FLP direct loan and is subject to homestead protection.
    Household contents are essential household items necessary to 
maintain viable living quarters. Household contents exclude all luxury 
items such as jewelry, furs, antiques, paintings, etc.
    Inaccurate information is incorrect information provided by an 
applicant, borrower, lender, or other source without the intent of 
fraudulently obtaining benefits.
    Indian reservation is all land located within the limits of any 
Indian reservation under the jurisdiction of the United States, 
notwithstanding the issuance of any patent, and including rights-of-way 
running through the reservation; trust or restricted land located within 
the boundaries of a former reservation of a Federally recognized Indian 
Tribe in the State of Oklahoma; or all Indian allotments the Indian 
titles to which have not been extinguished if such allotments are 
subject to the jurisdiction of a Federally recognized Indian Tribe.
    In-house expenses are expenses associated with credit management and 
loan servicing by the lender and the lender's contractor. In-house 
expenses include, but are not limited to, employee salaries, staff 
lawyers, travel, supplies, and overhead.
    Interest Assistance Agreement is the appropriate Agency form 
executed by the Agency and the lender containing the terms and 
conditions under which the Agency will make interest assistance payments 
to the lender on behalf of the guaranteed loan borrower.
    Inventory property is real estate or chattel property and related 
rights that formerly secured an FLP loan and to which the Federal 
Government has acquired title.
    Joint financing arrangement is an arrangement in which two or more 
lenders make separate loans simultaneously to supply the funds required 
by one applicant.
    Joint operation is an operation run by individuals who have agreed 
to operate a farm or farms together as an entity, sharing equally or 
unequally land, labor, equipment, expenses, or income, or some 
combination of these items. The real and personal property is owned 
separately or jointly by the individuals.
    Land contract is an installment contract executed between a buyer 
and a seller for the sale of real property, in which complete fee title 
ownership of the property is not transferred until all payments under 
the contract have been made.
    Leasehold is a right to use farm property for a specific period of 
time under conditions provided for in a lease agreement.
    Lender is the organization making and servicing a loan, or advancing 
and servicing a line of credit that is guaranteed by the Agency. The 
lender is also the party requesting a guarantee.
    Lender's Agreement is the appropriate Agency form executed by the 
Agency and the lender setting forth their loan responsibilities when the 
Loan Guarantee is issued.

[[Page 175]]

    Lien is a legally enforceable claim against real or chattel property 
of another obtained as security for the repayment of indebtedness or an 
encumbrance on property to enforce payment of an obligation.
    Limited resource interest rate is an interest rate normally below 
the Agency's regular interest rate, which is available to applicants 
unable to develop a feasible plan at regular rates and are requesting:
    (1) FO or OL loan assistance under part 764 of this title; or
    (2) Primary loan servicing on an FO, OL, or SW loan under part 766 
of this title.
    Line of Credit Agreement is a contract between the borrower and the 
lender that contains certain lender and borrower conditions, 
limitations, and responsibilities for credit extension and acceptance 
where loan principal balance may fluctuate throughout the term of the 
contract.
    Liquidation is the act of selling security for recovery of amounts 
owed to the Agency or lender.
    Liquidation expenses are the costs of an appraisal, due diligence 
evaluation, environmental assessment, outside attorney fees, and other 
costs incurred as a direct result of liquidating the security for a 
direct or guaranteed loan. Liquidation expenses do not include internal 
Agency expenses for a direct loan or in-house expenses for a guaranteed 
loan.
    Livestock is a member of the animal kingdom, or product thereof, as 
determined by the Agency.
    Loan Agreement is a contract between the borrower and the lender 
that contains certain lender and borrower agreements, conditions, 
limitations, and responsibilities for credit extension and acceptance.
    Loan servicing programs include any primary loan servicing program, 
conservation contract, current market value buyout, and homestead 
protection.
    Loan transaction is any loan approval or servicing action.
    Loss claim is a request made to the Agency by a lender to receive a 
reimbursement based on a percentage of the lender's loss on a loan 
covered by an Agency guarantee.
    Loss rate is the net amount of loan loss claims paid on FSA 
guaranteed loans made in the previous 7 years divided by the total loan 
amount of all such loans guaranteed during the same period.
    Major deficiency is a deficiency that directly affects the soundness 
of the loan.
    Majority interest is more than a 50 percent interest in an entity 
held by an individual or group of individuals.
    Market value is the amount that an informed and willing buyer would 
pay an informed and willing, but not forced, seller in a completely 
voluntary sale.
    Microloan means a type of OL or FO of $50,000 or less made using a 
reduced loan application. Direct MLs are made under modified eligibility 
and security requirements.
    Mineral right is an ownership interest in minerals in land, with or 
without ownership of the surface of the land.
    Minor deficiency is a deficiency that violates Agency regulations, 
but does not affect the soundness of the loan.
    Mortgage is a legal instrument giving the lender a security interest 
or lien on real or personal property of any kind. The term ``mortgage'' 
also includes the terms ``deed of trust'' and ``security agreement.''
    Natural disaster is unusual and adverse weather conditions or 
natural phenomena that have substantially affected farmers by causing 
severe physical or production, or both, losses.
    Negligent servicing is servicing that fails to include those actions 
that are considered normal industry standards of loan management or 
comply with the lender's agreement or the guarantee. Negligent servicing 
includes failure to act or failure to act in a timely manner consistent 
with actions of a reasonable lender in loan making, servicing, and 
collection.
    Negotiated sale is a sale in which there is a bargaining of price or 
terms, or both.
    Net recovery value of security is the market value of the security 
property, assuming that the lender in the case of a guaranteed loan, or 
the Agency in the case of a direct loan, will acquire the property and 
sell it for its highest and best use, less the lender's or the

[[Page 176]]

Agency's costs of property acquisition, retention, maintenance, and 
liquidation.
    Net recovery value of non-essential assets is the appraised market 
value of the non-essential assets less any prior liens and any selling 
costs that may include such items as taxes due, commissions, and 
advertising costs. However, no deduction is made for maintenance of the 
property while in inventory.
    Non-capitalized interest is accrued interest on a loan that was not 
reclassified as principal at the time of restructuring. Between October 
10, 1988, and November 27, 1990, the Agency did not capitalize interest 
that was less than 90 days past due when restructuring a direct loan.
    Non-eligible enterprise is a business that meets the criteria in any 
one of the following categories:
    (1) Produces exotic animals, birds, or aquatic organisms or their 
products which may be agricultural in nature, but are not normally 
associated with agricultural production, e.g., there is no established 
or stable market for them or production is speculative in nature.
    (2) Produces non-farm animals, birds, or aquatic organisms 
ordinarily used for pets, companionship, or pleasure and not typically 
associated with human consumption, fiber, or draft use.
    (3) Markets non-farm goods or provides services which might be 
agriculturally related, but are not produced by the farming operation.
    (4) Processes or markets farm products when the majority of the 
commodities processed or marketed are not produced by the farming 
operation.
    Non-essential assets are assets in which the borrower has an 
ownership interest, that:
    (1) Do not contribute to:
    (i) Income to pay essential family living expenses, or
    (ii) The farming operation; and
    (2) Are not exempt from judgment creditors or in a bankruptcy 
action.
    Non-program loan is a loan on terms more stringent than terms for a 
program loan that is an extension of credit for the convenience of the 
Agency, because the applicant does not qualify for program assistance or 
the property to be financed is not suited for program purposes. Such 
loans are made or continued only when it is in the best interest of the 
Agency.
    Normal income security is all security not considered basic 
security, including crops, livestock, poultry products, other property 
covered by Agency liens that is sold in conjunction with the operation 
of a farm or other business, and FSA Farm Program payments.
    Normal production yield as used in 7 CFR part 764 for EM loans, is:
    (1) The per acre actual production history of the crops produced by 
the farming operation used to determine Federal crop insurance payments 
or payment under the Noninsured Crop Disaster Assistance Program for the 
production year during which the disaster occurred;
    (2) The applicant's own production records, or the records of 
production on which FSA Farm Program payments are made contained in the 
applicant's Farm Program file, if available, for the previous 3 years, 
when the actual production history in paragraph (1) of this definition 
is not available;
    (3) The county average production yield, when the production records 
outlined in paragraphs (1) and (2) of this definition are not available.
    Operating loan is a loan made to an eligible applicant to assist 
with the financial costs of operating a farm. The term also includes a 
Youth loan.
    Operator is the individual or entity that provides the labor, 
management, and capital to operate the farm. The operator can be either 
an owner-operator or tenant-operator. Under applicable State law, an 
entity may have to receive authorization from the State in which the 
farm is located to be the owner and/or operator of the farm. Operating-
only entities may be considered owner-operators when the individuals who 
own the farm real estate own at least 50 percent of the family farm 
operation.
    Participated in the business operations of a farm requires that an 
applicant has:
    (1) Been the owner, manager or operator of a farming operation for 
the year's complete production cycle as evidenced by tax returns, FSA 
farm records or similar documentation;

[[Page 177]]

    (2) Been employed as a farm manager or farm management consultant 
for the year's complete production cycle; or
    (3) Participated in the operation of a farm by virtue of being 
raised on a farm or having worked on a farm (which can include a farm-
related apprenticeship, internship, or similar educational program with 
applied work experience) with significant responsibility for the day-to-
day decisions for the year's complete production cycle, which may 
include selection of seed varieties, weed control programs, input 
suppliers, or livestock feeding programs or decisions to replace or 
repair equipment.
    Partnership is any entity consisting of two or more individuals who 
have agreed to operate a farm as one business unit. The entity must be 
recognized as a partnership by the laws of the State in which the 
partnership will operate a farm. It also must be authorized to own both 
real and personal property and to incur debt in its own name.
    Past due is when a payment is not made by the due date.
    Physical loss is verifiable damage or destruction with respect to 
real estate or chattel, excluding annual growing crops.
    Potential liquidation value is the amount of a lender's protective 
bid at a foreclosure sale. Potential liquidation value is determined by 
an independent appraiser using comparables from other forced liquidation 
sales.
    Present value is the present worth of a future stream of payments 
discounted to the current date.
    Presidentially-designated emergency is a major disaster or emergency 
designated by the President under the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
    Primary loan servicing programs include:
    (1) Loan consolidation and rescheduling, or reamortization;
    (2) Interest rate reduction, including use of the limited resource 
rate program;
    (3) Deferral;
    (4) Write-down of the principal or accumulated interest; or
    (5) Any combination of paragraphs (1) through (4) of this 
definition.
    Production cycle is the time it takes to produce an agricultural 
commodity from the beginning of the production process until it is 
normally disposed of or sold.
    Production loss is verifiable damage or destruction with respect to 
annual growing crops.
    Program loans include CL, FO, OL, and EM. In addition, for loan 
servicing purposes the term includes existing loans for the following 
programs no longer funded: SW, RL, EE, ST, and RHF.
    Promissory note is a written agreement to pay a specified sum on 
demand or at a specified time to the party designated. The terms 
``promissory note'' and ``note'' are interchangeable.
    Prospectus consists of a transmittal letter, a current balance sheet 
and projected year's budget which is sent to commercial lenders to 
determine their interest in financing or refinancing specific Agency 
direct loan applicants and borrowers.
    Protective advance is an advance made by the Agency or a lender to 
protect or preserve the collateral from loss or deterioration.
    Quarantine is a quarantine imposed by the Secretary under the Plant 
Protection Act or animal quarantine laws (as defined in section 2509 of 
the Food, Agriculture, Conservation and Trade Act of 1990).
    Reamortization is the rewriting of rates or terms, or both, of a 
loan made for real estate purposes.
    Reasonable rates and terms are those commercial rates and terms that 
other farmers are expected to meet when borrowing from a commercial 
lender or private source for a similar purpose and similar period of 
time. The ``similar period of time'' of available commercial loans will 
be measured against, but need not be the same as, the remaining or 
original term of the loan.
    Recoverable cost is a loan cost expense chargeable to either a 
borrower or property account.
    Recreation loan is a loan that was made to eligible applicants to 
assist in the conversion of all or a portion of the

[[Page 178]]

farm they owned or operated to outdoor income producing recreation 
enterprises to supplement or supplant farm income. RL's are no longer 
funded, however, such outstanding loans are serviced by the Agency.
    Redemption right is a Federal or state right to reclaim property for 
a period of time established by law, by paying the amount paid at the 
involuntary sale plus accrued interest and costs.
    Related by blood or marriage is being connected to one another as 
husband, wife, parent, child, brother, sister, uncle, aunt, or 
grandparent.
    Relative is the spouse and anyone having one of the following 
relationships to an applicant or borrower: parent, son, daughter, 
sibling, stepparent, stepson, stepdaughter, stepbrother, stepsister, 
half brother, half sister, uncle, aunt, nephew, niece, cousin, 
grandparent, grandson, granddaughter, or the spouses of the foregoing.
    Repossessed property is security property in the Agency's custody.
    Rescheduling is the rewriting of the rates or terms, or both, of a 
loan made for operating purposes.
    Restructuring is changing the terms of a debt through rescheduling, 
reamortization, deferral, writedown, or a combination thereof.
    Rural youth is a person who has reached the age of 10 but has not 
reached the age of 21 and resides in a rural area or any city or town 
with a population of 50,000 or fewer people.
    Security is property or right of any kind that is subject to a real 
or personal property lien. Any reference to ``collateral'' or ``security 
property'' will be considered a reference to the term ``security.''
    Security instrument includes any document giving the Agency a 
security interest on real or personal property.
    Security value is the market value of real estate or chattel 
property (less the value of any prior liens) used as security for an 
Agency loan.
    Shared Appreciation Agreement is an agreement between the Agency, or 
a lender in the case of a guaranteed loan, and a borrower on the 
appropriate Agency form that requires the borrower who has received a 
writedown on a direct or guaranteed loan to repay the Agency or the 
lender some or all of the writedown received, based on a percentage of 
any increase in the value of the real estate securing an SAA at a future 
date.
    Socially disadvantaged applicant or farmer is an individual or 
entity who is a member of a socially disadvantaged group. For an entity, 
the majority interest must be held by socially disadvantaged 
individuals. For married couples, the socially disadvantaged individual 
must have at least 50 percent ownership in the farm business and make 
most of the management decisions, contribute a significant amount of 
labor, and generally be recognized as the operator of the farm.
    Socially disadvantaged group is a group whose members have been 
subject to racial, ethnic, or gender 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, Hispanics, and women.
    Softwood Timber Program loan was available to eligible financially 
distressed borrowers who would take marginal land, including highly 
erodible land, out of production of agricultural commodities other than 
the production of softwood timber. ST loans are no longer available, 
however, such outstanding loans are serviced by the Agency.
    Soil and Water loan is a loan that was made to an eligible applicant 
to encourage and facilitate the improvement, protection, and proper use 
of farmland by providing financing for soil conservation, water 
development, conservation, and use; forestation; drainage of farmland; 
the establishment and improvement of permanent pasture; pollution 
abatement and control; and other related measures consistent with all 
Federal, State and local environmental standards. SW loans are no longer 
funded, however, such outstanding loans are serviced by the Agency.
    Streamlined Conservation Loan means a direct or guaranteed CL made 
to eligible applicants based on reduced documentation.

[[Page 179]]

    Subordination is a creditor's temporary relinquishment of all or a 
portion of its lien priority to another party providing the other party 
with a priority lien on the collateral.
    Subsequent loan is any FLP loan processed by the Agency after an 
initial loan of the same type has been made to the same borrower.
    Supervised bank account is an account with a financial institution 
established through a deposit agreement entered into between the 
borrower, the Agency, and the financial institution.
    Technical appraisal review is a review of an appraisal to determine 
if such appraisal meets the requirements of USPAP pursuant to standard 3 
of USPAP.
    Transfer and assumption is the conveyance by a debtor to an assuming 
party of the assets, collateral, and liabilities of a loan in return for 
the assuming party's binding promise to pay the debt outstanding or the 
market value of the collateral.
    Trust is an entity that under applicable state law meets the 
criteria of being a trust of any kind but does not meet the criteria of 
being a farm cooperative, private domestic corporation, partnership, or 
joint operation.
    Unaccounted for security is security for a direct or guaranteed loan 
that was misplaced, stolen, sold, or otherwise missing, where 
replacement security was not obtained or the proceeds from its sale have 
not been applied to the loan.
    Unauthorized assistance is any loan, loan servicing action, lower 
interest rate, loan guarantee, or subsidy received by a borrower, or 
lender, for which the borrower or lender was not eligible, which was not 
made in accordance with all Agency procedures and requirements, or which 
the Agency obligated from the wrong appropriation or fund. Unauthorized 
assistance may result from borrower, lender, or Agency error.
    Uniform Standards of Professional Appraisal Practice are standards 
governing the preparation, reporting, and reviewing of appraisals 
established by the Appraisal Foundation pursuant to the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989.
    United States is any of the 50 States, the Commonwealth of Puerto 
Rico, the Virgin Islands of the United States, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, Republic of Palau, 
Federated States of Micronesia, and the Republic of the Marshall 
Islands.
    U. S. Attorney is an attorney for the United States Department of 
Justice.
    Veteran is any person who served in the military, naval, or air 
service during any war as defined in section 101(12) of title 38, United 
States Code.
    Veteran farmer is a farmer who has served in the Armed Forces (as 
defined in 38 U.S.C. 101(10)) and who--
    (1) has not operated a farm; or
    (2) has operated a farm for not more than 10 years.
    Wetlands are those lands or areas of land as determined by the 
Natural Resources Conservation Service to meet the requirements provided 
in section 1201 of the Food Security Act of 1985.
    Working capital is cash available to conduct normal daily operations 
including, but not limited to, paying for feed, seed, fertilizer, 
pesticides, farm supplies, cooperative stock, and cash rent.
    Youth loan is an operating type loan made to an eligible rural youth 
applicant to finance a modest income-producing agricultural project.

[72 FR 63285, Nov. 8, 2007; 72 FR 74153, Dec. 31, 2007, as amended at 73 
FR 74344, Dec. 8, 2008; 75 FR 54012, Sept. 3, 2010; 76 FR 75430, Dec. 2, 
2011; 77 FR 15938, May 18, 2012; 78 FR 3834, Jan. 16, 2013; 78 FR 14005, 
Mar. 4, 2013; 78 FR 65529, Nov. 1, 2013; 79 FR 60743, Oct. 8, 2014; 79 
FR 78693, Dec. 31, 2014; 80 FR 74970, Dec. 1, 2015; 81 FR 3292, Jan. 21, 
2016; 81 FR 72690, Oct. 21, 2016]



Sec.  761.3  Civil rights.

    Part 15d of this title contains applicable regulations pertaining to 
civil rights and filing of discrimination complaints by program 
participants.



Sec.  761.4  Conflict of interest.

    The Agency enforces conflict of interest policies to maintain high 
standards of honesty, integrity, and impartiality in the making and 
servicing of direct and guaranteed loans. These requirements are 
established in 5 CFR parts 2635 and 8301.

[[Page 180]]



Sec.  761.5  Restrictions on lobbying.

    A person who applies for or receives a loan made or guaranteed by 
the Agency must comply with the restrictions on lobbying in 2 CFR part 
418.

[72 FR 63285, Nov. 8, 2007, as amended at 79 FR 75996, Dec. 19, 2014]



Sec.  761.6  Appeals.

    Except as provided in 7 CFR part 762, appeal of an adverse decision 
made by the Agency will be handled in accordance with 7 CFR parts 11 and 
780.



Sec.  761.7  Appraisals.

    (a) General. This section describes Agency requirements for:
    (1) Real estate and chattel appraisals made in connection with the 
making and servicing of direct FLP and Non-program loans; and
    (2) Appraisal reviews conducted on appraisals made in connection 
with the making and servicing of direct and guaranteed FLP and Non-
program loans.
    (b) Appraisal standards. (1) Real estate appraisals, technical 
appraisal reviews and their respective forms must comply with the 
standards contained in USPAP, as well as applicable Agency regulations 
and procedures for the specific FLP activity involved. Applicable 
appraisal procedures and regulations are available for review in each 
Agency State Office.
    (2) When a chattel appraisal is required, it must be completed on an 
applicable Agency form (available in each Agency State Office) or other 
format containing the same information.
    (c) Use of an existing real estate appraisal. Except where specified 
elsewhere, when a real estate appraisal is required, the Agency will use 
the existing real estate appraisal to reach loan making or servicing 
decisions under either of the following conditions:
    (1) The appraisal was completed within the previous 12 months and 
the Agency determines that:
    (i) The appraisal meets the provisions of this section and the 
applicable Agency loan making or servicing requirements; and
    (ii) Market values have remained stable since the appraisal was 
completed; or
    (2) The appraisal was not completed in the previous 12 months, but 
has been updated by the appraiser or appraisal firm that completed the 
appraisal, and both the update and the original appraisal were completed 
in accordance with USPAP.
    (d) Appraisal reviews. (1) With respect to a real estate appraisal, 
the Agency may conduct a technical appraisal review or an administrative 
appraisal review, or both.
    (2) With respect to a chattel appraisal, the Agency may conduct an 
administrative appraisal review.
    (e) Appraisal appeals. Challenges to an appraisal used by the Agency 
are limited as follows:
    (1) When an applicant or borrower challenges a real estate appraisal 
used by the Agency for any loan making or loan servicing decision, 
except primary loan servicing decisions as specified in Sec.  766.115 of 
this chapter, the issue for review is limited to whether the appraisal 
used by the Agency complies with USPAP. The applicant or borrower must 
submit a technical appraisal review prepared by a State Certified 
General Appraiser that will be used to determine whether the Agency's 
appraisal complies with USPAP. The applicant or borrower is responsible 
for obtaining and paying for the technical appraisal review.
    (2) When an applicant or borrower challenges a chattel appraisal 
used by the Agency for any loan making or loan servicing decision, 
except for primary loan servicing decisions as specified in Sec.  
766.115 of this chapter, the issue for review is limited to whether the 
appraisal used by the Agency is consistent with present market values of 
similar items in the area. The applicant or borrower must submit an 
independent appraisal review that will be used to determine whether the 
appraisal is consistent with present market values of similar items in 
the area. The applicant or borrower is responsible for obtaining and 
paying for the independent appraisal.

[72 FR 63285, Nov. 8, 2007, as amended at 78 FR 65529, Nov. 1, 2013; 79 
FR 78693, Dec. 31, 2014; 81 FR 72690, Oct. 21, 2016]

[[Page 181]]



Sec.  761.8  Loan Limitations.

    (a) Dollar limits. The outstanding principal balances for an 
applicant or anyone who will sign the promissory note cannot exceed any 
of the following at the time of loan closing or assumption of 
indebtedness. If the outstanding principal balance exceeds any of the 
limits at the time of approval, the farm operating plan must reflect 
that funds will be available to reduce the indebtedness prior to loan 
closing or assumption of indebtedness.
    (1) Farm Ownership, Downpayment loans, Conservation loans, and Soil 
and Water loans:
    (i) Direct--$300,000;
    (ii) Guaranteed--$700,000 (for fiscal year 2000 and increased at the 
beginning of each fiscal year in accordance with paragraph (b) of this 
section);
    (iii) Any combination of a direct Farm Ownership loan, direct 
Conservation loan, direct Soil and Water loan, guaranteed Farm Ownership 
loan, guaranteed Conservation loan, and guaranteed Soil and Water loan-
$700,000 (for fiscal year 2000 and increased each fiscal year in 
accordance with paragraph (b) of this section);
    (2) Operating loans:
    (i) Direct--$300,000;
    (ii) Guaranteed--$700,000 (for fiscal year 2000 and increased each 
fiscal year in accordance with paragraph (b) of this section);
    (iii) Any combination of a direct Operating loan and guaranteed 
Operating loan--$700,000 (for fiscal year 2000 and increased each fiscal 
year in accordance with paragraph (b) of this section);
    (3) Any combination of guaranteed Farm Ownership loan, guaranteed 
Conservation loan, guaranteed Soil and Water loan, and guaranteed 
Operating loan-$700,000 (for fiscal year 2000 and increased each fiscal 
year in accordance with paragraph (b) of this section);
    (4) Any combination of direct Farm Ownership loan, direct 
Conservation loan, direct Soil and Water loan, direct Operating loan, 
guaranteed Farm Ownership loan, guaranteed Conservation loan, guaranteed 
Soil and Water loan, and guaranteed Operating loan-the amount in 
paragraph (a)(1)(ii) of this section plus $300,000;
    (5) Emergency loans--$500,000;
    (6) Any combination of direct Farm Ownership loan, direct 
Conservation loan, direct Soil and Water loan, direct Operating loan, 
guaranteed Farm Ownership, guaranteed Conservation loan, guaranteed Soil 
and Water loan, guaranteed Operating loan, and Emergency loan-the amount 
in paragraph (a)(1)(ii) of this section plus $800,000.
    (b) Guaranteed loan limit. The dollar limits of guaranteed loans 
will be increased each fiscal year based on the percentage change in the 
Prices Paid by Farmers Index as compiled by the National Agricultural 
Statistics Service, USDA. The maximum loan limits for the current fiscal 
year are available in any FSA office and on the FSA website at http://
www.fsa.usda.gov.
    (c) Line of credit advances. The total dollar amount of guaranteed 
line of credit advances and income releases cannot exceed the total 
estimated expenses, less interest expense, as indicated on the 
borrower's cash flow budget, unless the cash flow budget is revised and 
continues to reflect a feasible plan.

[72 FR 63285, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 75 
FR 54012, Sept. 3, 2010]



Sec.  761.9  Interest rates for direct loans.

    Interest rates for all direct loans are set in accordance with the 
Act. A copy of the current interest rates may be obtained in any Agency 
office.



Sec.  761.10  Planning and performing construction and other development.

    (a) Purpose. This section describes Agency policies regarding the 
planning and performing of construction and other development work 
performed with:
    (1) Direct FLP loan funds; or
    (2) Insurance or other proceeds resulting from damage or loss to 
direct loan security.
    (b) Funds for development work. The applicant or borrower:
    (1) Must provide the Agency with an estimate of the total cash cost 
of all planned development prior to loan approval;
    (2) Must show proof of sufficient funds to pay for the total cash 
cost of all planned development at or before loan closing;

[[Page 182]]

    (3) Must not incur any debts for materials or labor or make any 
expenditures for development purposes prior to loan closing with the 
expectation of being reimbursed from Agency loan funds.
    (c) Scheduling, planning, and completing development work. The 
applicant or borrower:
    (1) Is responsible for scheduling and planning development work in a 
manner acceptable to the Agency and must furnish the Agency information 
fully describing the planned development, the proposed schedule, and the 
manner in which it will be accomplished;
    (2) Is responsible for obtaining all necessary State and local 
construction approvals and permits prior to loan closing;
    (3) Must ensure that all development work meets the environmental 
requirements established in part 799 of this chapter;
    (4) Must schedule development work to start as soon as feasible 
after the loan is closed and complete work as quickly as practicable;
    (5) Is responsible for obtaining any required technical services 
from qualified technicians, tradespeople, and contractors.
    (d) Construction and repair standards. (1) The construction of a new 
building and the alteration or repair of an existing building must 
conform with industry-acceptable construction practices and standards.
    (2) All improvements to a property must conform to applicable laws, 
ordinances, codes, and regulations.
    (3) The applicant or borrower is responsible for selecting a design 
standard that meets all applicable local and state laws, ordinances, 
codes, and regulations, including building, plumbing, mechanical, 
electrical, water, and waste management.
    (4) The Agency will require drawings, specifications, and estimates 
to fully describe the work as necessary to protect the Agency's 
financial interests. The drawings and specifications must identify any 
specific development standards being used. Such information must be 
sufficiently complete to avoid any misunderstanding as to the extent, 
kind, and quality of work to be performed.
    (5) The Agency will require technical data, tests, or engineering 
evaluations to support the design of the development as necessary to 
protect its financial interests.
    (6) The Agency will require the applicant or borrower to provide 
written certification that final drawings and specifications conform 
with the applicable development standard as necessary to protect its 
financial interests. Certification must be obtained from individuals or 
organizations trained and experienced in the compliance, interpretation, 
or enforcement of the applicable development standards, such as licensed 
architects, professional engineers, persons certified by a relevant 
national model code organization, authorized local building officials, 
or national code organizations.
    (e) Inspection. (1) The applicant or borrower is responsible for 
inspecting development work as necessary to protect their interest.
    (2) The applicant or borrower must provide the Agency written 
certification that the development conforms to the plans and good 
construction practices, and complies with applicable laws, ordinances, 
codes, and regulations.
    (3) The Agency will require the applicant or borrower to obtain 
professional inspection services during construction as necessary to 
protect its financial interests.
    (4) Agency inspections do not create or imply any duty or obligation 
of the Agency to the applicant or borrower.
    (f) Warranty and lien waivers. The applicant or borrower must obtain 
and submit all lien waivers on any construction before the Agency will 
issue final payment.
    (g) Surety. The Agency will require surety to guarantee both payment 
and performance for construction contracts as necessary to protect its 
financial interests.
    (h) Changing the planned development. An applicant or borrower must 
request, in writing, Agency approval for any change to a planned 
development. The Agency will approve a change if all of the following 
are met:
    (1) It will not reduce the value of the Agency's security;

[[Page 183]]

    (2) It will not adversely affect the soundness of the farming 
operation;
    (3) It complies with all applicable laws and regulations;
    (4) It is for an authorized loan purpose;
    (5) It is within the scope of the original loan proposal;
    (6) If required, documentation that sufficient funding for the full 
amount of the planned development is approved and available;
    (7) If required, surety to cover the full revised development amount 
has been provided; and
    (8) The modification is certified in accordance with paragraph (d) 
(6) of this section.

[72 FR 63285, Nov. 8, 2007, as amended at 81 FR 51284, Aug. 3, 2016]



Sec. Sec.  761.11-761.50  [Reserved]



                   Subpart B_Supervised Bank Accounts



Sec.  761.51  Establishing a supervised bank account.

    (a) Supervised bank accounts will be used to:
    (1) Assure correct use of funds planned for capital purchases or 
debt refinancing and perfection of the Agency's security interest in the 
assets purchased or refinanced when electronic funds transfer or 
treasury check processes are not practicable;
    (2) Protect the Agency's security interest in insurance indemnities 
or other loss compensation resulting from loss or damage to loan 
security; or
    (3) Assist borrowers with limited financial skills with cash 
management, subject to the following conditions:
    (i) Use of a supervised bank for this purpose will be temporary and 
infrequent;
    (ii) The need for a supervised bank account in this situation will 
be determined on a case-by-case basis; and
    (iii) The borrower agrees to the use of a supervised bank account 
for this purpose by executing the deposit agreement.
    (b) The borrower may select the financial institution in which the 
account will be established, provided the institution is Federally 
insured. If the borrower does not select an institution, the Agency will 
choose one.
    (c) Only one supervised bank account will be established for any 
borrower.
    (d) If both spouses sign an FLP note and security agreement, the 
supervised bank account will be established as a joint tenancy account 
with right of survivorship from which either borrower can withdraw 
funds.
    (e) If the funds to be deposited into the account cause the balance 
to exceed the maximum amount insurable by the Federal Government, the 
financial institution must agree to pledge acceptable collateral with 
the Federal Reserve Bank for the excess over the insured amount, before 
the deposit is made.
    (1) If the financial institution is not a member of the Federal 
Reserve System, the institution must pledge acceptable collateral with a 
correspondent bank that is a member of the Federal Reserve System. The 
correspondent bank must inform the Federal Reserve Bank that it is 
holding securities pledged for the supervised bank account in accordance 
with 31 CFR part 202 (Treasury Circular 176).
    (2) When the balance in the account has been reduced, the financial 
institution may request a release of part or all of the collateral, as 
applicable, from the Agency.

[72 FR 63285, Nov. 8, 2007, as amended at 76 FR 5057, Jan. 28, 2011]



Sec.  761.52  Deposits into a supervised bank account.

    (a) Checks or money orders may be deposited into a supervised bank 
account provided they are not payable:
    (1) Solely to the Federal Government or any agency thereof; or
    (2) To the Treasury of the United States as a joint payee.
    (b) Loan proceeds may be deposited electronically.



Sec.  761.53  Interest bearing accounts.

    (a) A supervised bank account, if possible, will be established as 
an interest bearing deposit account provided that the funds will not be 
immediately disbursed, and the account is held jointly by the borrower 
and the Agency if this arrangement will benefit the borrower.

[[Page 184]]

    (b) Interest earned on a supervised bank account will be treated as 
normal income security.



Sec.  761.54  Withdrawals from a supervised bank account.

    (a) The Agency will authorize a withdrawal from the supervised bank 
account for an approved purpose after ensuring that:
    (1) Sufficient funds in the supervised bank account are available;
    (2) No loan proceeds are disbursed prior to confirmation of proper 
lien position, except to pay for lien search if needed;
    (3) No checks are issued to ``cash;'' and
    (4) The use of funds is consistent with the current farm operating 
plan or other agreement with the Agency.
    (b) A check must be signed by the borrower with countersignature of 
the Agency, except as provided in paragraph (c) of this section. All 
checks must bear the legend ``countersigned, not as co-maker or 
endorser.''
    (c) The Agency will withdraw funds from a supervised bank account 
without borrower counter-signature only for the following purposes:
    (1) For application on Agency indebtedness;
    (2) To refund Agency loan funds;
    (3) To protect the Agency's lien or security;
    (4) To accomplish a purpose for which such advance was made; or
    (5) In the case of a deceased borrower, to continue to pay necessary 
farm expenses to protect Agency security in conjunction with the 
borrower's estate.



Sec.  761.55  Closing a supervised bank account.

    (a) If the supervised bank account is no longer needed and the loan 
account is not paid in full, the Agency will determine the source of the 
remaining funds in the supervised bank account. If the funds are 
determined to be:
    (1) Loan funds:
    (i) From any loan type, except Youth loan, and the balance is less 
than $1,000, the Agency will provide the balance to the borrower to use 
for authorized loan purposes;
    (ii) From a Youth loan, and the balance is less than $100, the 
Agency will provide the balance to the borrower to use for authorized 
loan purposes;
    (2) Loan funds:
    (i) From any loan type, except Youth loan, and the balance is $1,000 
or greater, the Agency will apply the balance to the FLP loan;
    (ii) From a Youth loan, and the balance is $100 or greater, the 
Agency will apply the balance to the FLP loan;
    (3) Normal income funds, the Agency will apply the balance to the 
remaining current year's scheduled payments and pay any remaining 
balance to the borrower; and
    (4) Basic security funds, the Agency will apply the balance to the 
FLP loan as an extra payment or the borrower may apply the balance 
toward the purchase of basic security, provided the Agency obtains a 
lien on such security and its security position is not diminished.
    (b) If the borrower is uncooperative in closing a supervised bank 
account, the Agency will make written demand to the financial 
institution for the balance and apply it in accordance with paragraph 
(a) of this section.
    (c) In the event of a borrower's death, the Agency may:
    (1) Apply the balance to the borrower's FLP loan;
    (2) Continue with a remaining borrower, provided the supervised bank 
account was established as a joint tenancy with right of survivorship 
account;
    (3) Refund unobligated balances from other creditors in the 
supervised bank account for specific operating purposes in accordance 
with any prior written agreement between the Agency and the deceased 
borrower; or
    (4) Continue to pay expenses from the supervised bank account in 
conjunction with the borrower's estate.



Sec. Sec.  761.56-761.100  [Reserved]



                       Subpart C_Supervised Credit



Sec.  761.101  Applicability.

    This subpart applies to all direct applicants and borrowers, except 
borrowers with only Non-program loans.

[[Page 185]]



Sec.  761.102  Borrower recordkeeping, reporting, and supervision.

    (a) A borrower must maintain accurate records sufficient to make 
informed management decisions and to allow the Agency to render loan 
making and servicing decisions in accordance with Agency regulations. 
These records must include the following:
    (1) Production (e.g., total and per unit for livestock and crops);
    (2) Revenues, by source;
    (3) Other sources of funds, including borrowed funds;
    (4) Operating expenses;
    (5) Interest;
    (6) Family living expenses;
    (7) Profit and loss;
    (8) Tax-related information;
    (9) Capital expenses;
    (10) Outstanding debt; and
    (11) Debt repayment.
    (b) A borrower also must agree in writing to:
    (1) Cooperate with the Agency and comply with all supervisory 
agreements, farm assessments, farm operating plans, year-end analyses, 
and all other loan-related requirements and documents;
    (2) Submit financial information and an updated farm operating plan 
when requested by the Agency;
    (3) Immediately notify the Agency of any proposed or actual 
significant change in the farming operation, any significant changes in 
family income, expenses, or the development of problem situations, or 
any losses or proposed significant changes in security.
    (c) If the borrower fails to comply with these requirements, unless 
due to reasons outside the borrower's control, the non-compliance may 
adversely impact future requests for assistance.



Sec.  761.103  Farm assessment.

    (a) The Agency, in collaboration with the applicant, will assess the 
farming operation to:
    (1) Determine the applicant's financial condition, organizational 
structure, and management strengths and weaknesses;
    (2) Identify and prioritize training and supervisory needs; and
    (3) Develop a plan of supervision to assist the borrower in 
achieving financial viability and transitioning to private commercial 
credit or other sources of credit in the shortest time practicable, 
except for CL.
    (b) Except for ML, the initial assessment must evaluate, at a 
minimum, the:
    (1) Farm organization and key personnel qualifications;
    (2) Type of farming operation;
    (3) Goals for the operation;
    (4) Adequacy of real estate, including facilities, to conduct the 
farming operation;
    (5) Adequacy of chattel property used to conduct the farming 
operation;
    (6) Historical performance, except for streamlined CL;
    (7) Farm operating plan;
    (8) Supervisory plan, except for streamlined CL;
    (9) Training plan; and
    (10) Graduation plan, except for CL.
    (c) For ML, the Agency will complete a narrative that will evaluate, 
at a minimum, the:
    (1) Type of farming operation and adequacy of resources;
    (2) Amount of assistance necessary to cover expenses to carry out 
the proposed farm operating plan, including building an adequate equity 
base;
    (3) The goals of the operation;
    (4) The financial viability of the entire operation, including a 
marketing plan, and available production history, as applicable;
    (5) Supervisory plan; and
    (6) Training plan.
    (d) An assessment update must be prepared for each subsequent loan. 
The update must include a farm operating plan and any other items 
discussed in paragraph (b) of this section that have significantly 
changed since the initial assessment.
    (e) The Agency reviews the assessment to determine a borrower's 
progress at least annually. The review will be in the form of an office 
visit, field visit, letter, phone conversation, or year-end analysis, as 
determined by the Agency. For streamlined CLs, the borrower must provide 
a current balance sheet and income tax records. Any negative trends 
noted between the previous years' and the current years' information 
must be evaluated and addressed in the assessment of the streamlined CL 
borrower.

[[Page 186]]

    (f) If a CL borrower becomes financially distressed, delinquent, or 
receives any servicing options available under part 766 of this chapter, 
all elements of the assessment in paragraph (b) of this section must be 
addressed.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54012, Sept. 3, 2010; 76 
FR 5057, Jan. 28, 2011; 78 FR 3835, Jan. 17, 2013; 78 FR 65529, Nov. 1, 
2013]



Sec.  761.104  Developing the farm operating plan.

    (a) An applicant or borrower must submit a farm operating plan to 
the Agency, upon request, for loan making or servicing purposes.
    (b) An applicant or borrower may request Agency assistance in 
developing the farm operating plan.
    (c) The farm operating plan will be based on accurate and verifiable 
information.
    (1) Historical information will be used as a guide.
    (2) Positive and negative trends, mutually agreed upon changes and 
improvements, and current input prices will be taken into consideration 
when arriving at reasonable projections.
    (3) Projected yields will be calculated according to the following 
priorities:
    (i) The applicant or borrower's own production records for the 
previous 3 years;
    (ii) The per-acre actual production history of the crops produced by 
the farming operation used to determine Federal crop insurance payments, 
if available;
    (iii) FSA Farm Program actual yield records;
    (iv) County averages;
    (v) State averages.
    (4) If the applicant or borrower's production history has been 
substantially affected by a disaster declared by the President or 
designated by the Secretary of Agriculture, or the applicant or borrower 
has had a qualifying loss from such disaster but the farming operation 
was not located in a declared or designated disaster area, the applicant 
or borrower may:
    (i) Use county average yields, or state average yields if county 
average yields are not available, in place of the disaster year yields; 
or
    (ii) Exclude the production year with the lowest actual or county 
average yield if their yields were affected by disasters during at least 
2 of the 3 years.
    (d) Unit prices for agricultural commodities established by the 
Agency will generally be used. Applicants and borrowers that provide 
evidence that they will receive a premium price for a commodity may use 
a price above the price established by the Agency.
    (e) For MLs, when projected yields and unit prices cannot be 
determined as specified in paragraphs (c) and (d) of this section 
because the data is not available or practicable, other documentation 
from other reliable sources may be used to assist in developing the 
applicant's farm operating plan.
    (f) Except as provided in paragraph (g) of this section, the 
applicant or borrower must sign the final farm operating plan prior to 
approval of any loan or servicing action.
    (g) If the Agency believes the applicant or borrower's farm 
operating plan is inaccurate, or the information upon which it is based 
cannot be verified, the Agency will discuss and try to resolve the 
concerns with the applicant or borrower. If an agreement cannot be 
reached, the Agency will make loan approval and servicing determinations 
based on the Agency's revised farm operating plan.

[72 FR 63285, Nov. 8, 2007, as amended at 78 FR 3835, Jan. 17, 2013]



Sec.  761.105  Year-end analysis.

    (a) The Agency conducts a year-end analysis at its discretion or if 
the borrower:
    (1) Has received any direct loan except for streamlined CLs, chattel 
subordination, or primary loan servicing action within the last year;
    (2) Is financially distressed or delinquent;
    (3) Has a loan deferred, excluding deferral of an installment under 
subpart B of part 766; or
    (4) Is receiving a limited resource interest rate on any loan.
    (b) To the extent practicable, the year-end analysis will be 
completed within 60 days after the end of the business year or farm 
budget planning period and must include:

[[Page 187]]

    (1) An analysis comparing actual income, expenses, and production to 
projected income, expenses, and production for the preceding production 
cycle; and
    (2) An updated farm operating plan.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec. Sec.  761.106-761.200  [Reserved]



    Subpart D_Allocation of Farm Loan Programs Funds to State Offices



Sec.  761.201  Purpose.

    (a) This subpart addresses:
    (1) The allocation of funds for direct and guaranteed FO, CL, and OL 
loans;
    (2) The establishment of socially disadvantaged target participation 
rates; and
    (3) The reservation of loan funds for beginning farmers.
    (b) The Agency does not allocate EM loan funds to State Offices but 
makes funds available following a designated or declared disaster. EM 
loan funds are available on a first-come first-served basis.
    (c) State funding information is available for review in any State 
Office.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.202  Timing of allocations.

    The Agency's National Office allocates funds for FO, CL, and OL 
loans to the State Offices on a fiscal year basis, as made available by 
the Office of Management and Budget. However, the National Office will 
retain control over the funds when funding or administrative constraints 
make allocation to State Offices impractical.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.203  National reserves for Farm Ownership and Operating loans.

    (a) Reservation of funds. At the start of each fiscal year, the 
National Office reserves a portion of the funds available for each 
direct and guaranteed loan program. These reserves enable the Agency to 
meet unexpected or justifiable program needs during the fiscal year.
    (b) Allocation of reserved funds. The National Office distributes 
funds from the reserve to one or more State Offices to meet a program 
need or Agency objective.



Sec.  761.204  Methods of allocating funds to State Offices.

    FO, CL, and OL loan funds are allocated to State Offices using one 
or more of the following allocation methods:
    (a) Formula allocation, if data, as specified in Sec.  761.205, is 
available to use the formula for the State.
    (b) Administrative allocation, if the Agency cannot adequately meet 
program objectives with a formula allocation. The National Office 
determines the amount of an administrative allocation on a case-by-case 
basis.
    (c) Base allocation, to ensure funding for at least one loan in each 
State, District, or County Office. In making a base allocation, the 
National Office may use criteria other than those used in the formula 
allocation, such as historical Agency funding information.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.205  Computing the formula allocation.

    (a) The formula allocation for FO, CL, or OL loan funds is equal to:
    (1) The amount available for allocation by the Agency minus the 
amounts held in the National Office reserve and distributed by base and 
administrative allocation, multiplied by
    (2) The State Factor, which represents the percentage of the total 
amount of the funds for a loan program that the National Office 
allocates to a State Office.

formula allocation = (amount available for allocation-national reserve-
          base allocation-administrative allocation) x State Factor

    (b) To calculate the State Factor, the Agency:
    (1) Uses the following criteria, data sources, and weights:

[[Page 188]]



----------------------------------------------------------------------------------------------------------------
                                                                                         Weight for   Weight for
              Criteria                 Loan type criterion is        Data source          FO loans     OL loans
                                              used for                                   (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
Farm operators with sales of $2,500-  FO, CL, and OL loans...  U.S. Census of                    15           15
 $39,999 and less than 200 days work                            Agriculture.
 off the farm.
Farm operators with sales of $40,000  FO, CL, and OL loans...  U.S. Census of                    35           35
 or more and less than 200 days work                            Agriculture.
 off farm.
Tenant farm operators...............  FO, CL, and OL loans...  U.S. Census of                    25           20
                                                                Agriculture.
3-year average net farm income......  FO, CL, and OL loans...  USDA Economic Research            15           15
                                                                Service.
Value of farm real estate assets....  FOs and CLs............  USDA Economic Research            10          N/A
                                                                Service.
Value of farm non-real estate assets  OL loans...............  USDA Economic Research           N/A           15
                                                                Service.
----------------------------------------------------------------------------------------------------------------

    (2) Determines each State's percentage of the national total for 
each criterion;
    (3) Multiplies the percentage for each State determined in paragraph 
(b)(2) of this section by the applicable weight for that criterion;
    (4) Sums the weighted criteria for each State to obtain the State 
factor.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.206  Pooling of unobligated funds allocated to State Offices.

    The Agency periodically pools unobligated FO, CL, and OL loan funds 
that have been allocated to State Offices. When pooling these funds, the 
Agency places all unobligated funds in the appropriate National Office 
reserve. The pooled funds may be retained in the national reserve or 
reallocated to the States.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.207  Distribution of loan funds by State Offices.

    A State Office may distribute its allocation of loan funds to 
District or County level using the same allocation methods that are 
available to the National Office. State Offices may reserve a portion of 
the funds to meet unexpected or justifiable program needs during the 
fiscal year.



Sec.  761.208  Target participation rates for socially disadvantaged groups.

    (a) General. (1) The Agency establishes target participation rates 
for providing FO, CL, and OL loans to members of socially disadvantaged 
groups.
    (2) The Agency sets the target participation rates for State and 
County levels annually.
    (3) When distributing loan funds in counties within Indian 
reservations, the Agency will allocate the funds on a reservation-wide 
basis.
    (4) The Agency reserves and allocates sufficient loan funds to 
achieve these target participation rates. The Agency may also use funds 
that are not reserved and allocated for socially disadvantaged groups to 
make or guarantee loans to members of socially disadvantaged groups.
    (b) FO and CL, loans based on ethnicity or race. The FO and CL, loan 
target participation rate based on ethnicity or race in each:
    (1) State is equal to the percent of the total rural population in 
the State who are members of such socially disadvantaged groups.
    (2) County is equal to the percent of rural population in the county 
who are members of such socially disadvantaged groups.
    (c) OL loans based on ethnicity or race. The OL loan target 
participation rate based on ethnicity or race in each:
    (1) State is equal to the percent of the total number of farmers in 
the State who are members of such socially disadvantaged groups.
    (2) County is equal to the percent of the total number of farmers in 
the county who are members of socially disadvantaged ethnic groups.
    (d) Women farmers. (1) The target participation rate for women 
farmers in each:
    (i) State is equal to the percent of farmers in the State who are 
women.

[[Page 189]]

    (ii) County is equal to the percent of farmers in the county who are 
women.
    (2) In developing target participation rates for women, the Agency 
will consider the number of women who are current farmers and potential 
farmers.

[72 FR 63285, Nov. 8, 2007, as amended at 75 FR 54013, Sept. 3, 2010]



Sec.  761.209  Loan funds for beginning farmers.

    Each fiscal year, the Agency reserves a portion of direct and 
guaranteed FO and OL loan funds for beginning farmers in accordance with 
section 346(b)(2) of the Act.



Sec.  761.210  CL funds.

    (a) The following applicants and conservation projects will receive 
priority for CL funding:
    (1) Beginning farmer or socially disadvantaged farmer,
    (2) An applicant who will use the loan funds to convert to a 
sustainable or organic agriculture production system as evidenced by one 
of the following:
    (i) A conservation plan that states the applicant is moving toward a 
sustainable or organic production system, or
    (ii) An organic plan, approved by a certified agent and the State 
organic certification program, or
    (iii) A grant awarded by the Sustainable Agriculture Research and 
Education (SARE) program of the National Institute of Food and 
Agriculture, USDA.
    (3) An applicant who will use the loan funds to build conservation 
structures or establish conservation practices to comply with 16 U.S.C. 
3812 (section 1212 of the Food Security Act of 1985) for highly erodible 
land.
    (b) [Reserved]

[75 FR 54013, Sept. 3, 2010]



Sec.  761.211  Transfer of funds.

    If sufficient unsubsidized guaranteed OL funds are available, then 
beginning on:
    (a) August 1 of each fiscal year, the Agency will use available 
unsubsidized guaranteed OL loan funds to make approved direct FO loans 
to beginning farmers and socially disadvantaged farmers under the 
Downpayment loan program; and
    (b) September 1 of each fiscal year the Agency will use available 
unsubsidized guaranteed OL loan funds to make approved direct FO loans 
to beginning farmers.

[72 FR 63285, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008. 
Redesignated at 75 FR 54013, Sept. 3, 2010]



PART 762_GUARANTEED FARM LOANS--Table of Contents



Sec.
762.1-762.100 [Reserved]
762.101 Introduction.
762.102 Abbreviations and definitions.
762.103 Full faith and credit.
762.104 Appeals.
762.105 Eligibility and substitution of lenders.
762.106 Preferred and certified lender programs.
762.107 Micro Lender Program.
762.108-762.109 [Reserved]
762.110 Loan application.
762.111-762.119 [Reserved]
762.120 Applicant eligibility.
762.121 Loan purposes.
762.122 Loan limitations.
762.123 Insurance and farm inspection requirements.
762.124 Interest rates, terms, charges, and fees.
762.125 Financial feasibility.
762.126 Security requirements.
762.127 Appraisal requirements.
762.128 Environmental and special laws.
762.129 Percent of guarantee and maximum loss.
762.130 Loan approval and issuing the guarantee.
762.131-762.139 [Reserved]
762.140 General servicing responsibilities.
762.141 Reporting requirements.
762.142 Servicing related to collateral.
762.143 Servicing distressed accounts.
762.144 Repurchase of guaranteed portion from a secondary market holder.
762.145 Restructuring guaranteed loans.
762.146 Other servicing procedures.
762.147 Servicing shared appreciation agreements.
762.148 Bankruptcy.
762.149 Liquidation.
762.150 Interest assistance program.
762.151-762.158 [Reserved]
762.159 Pledging of guarantee.
762.160 Assignment of guarantee.

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

    Source: 64 FR 7378, Feb. 12, 1999, unless otherwise noted.

[[Page 190]]


    Editorial Note: Nomenclature changes to part 762 appear at 72 FR 
63297, Nov. 8, 2007.



Sec. Sec.  762.1-762.100  [Reserved]



Sec.  762.101  Introduction.

    (a) Scope. This subpart contains regulations governing Operating 
loans, Farm Ownership loans, and Conservation loans guaranteed by the 
Agency. This subpart applies to lenders, holders, borrowers, Agency 
personnel, and other parties involved in making, guaranteeing, holding, 
servicing, or liquidating such loans.
    (b) Lender list. The Agency maintains a current list of lenders who 
express a desire to participate in the guaranteed loan program. This 
list is made available to farmers upon request.
    (c) Lender classification. Lenders who participate in the Agency 
guaranteed loan program will be classified into one of the following 
categories:
    (1) Standard Eligible Lender under Sec.  762.105;
    (2) Certified Lender;
    (3) Preferred Lender under Sec.  762.106; or
    (4) Micro Lender under Sec.  762.107.
    (d) Type of guarantee. Guarantees are available for both a loan note 
or a line of credit. A loan note is used for a loan of fixed amount and 
term. A line of credit has a fixed term, but no fixed amount. The 
principal amount outstanding at any time, however, may not exceed the 
line of credit ceiling contained in the contract. Both guarantees are 
evidenced by the same loan guarantee form.
    (e) Termination of loan guarantee. The loan guarantee will 
automatically terminate as follows:
    (1) Upon full payment of the guaranteed loan. A zero balance within 
the period authorized for advances on a line of credit will not 
terminate the guarantee;
    (2) Upon payment of a final loss claim; or
    (3) Upon written notice from the lender to the Agency that a 
guarantee is no longer desired provided the lender holds all of the 
guaranteed portion of the loan. The loan guarantee will be returned to 
the Agency office for cancellation within 30 days of the date of the 
notice by the lender.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007; 75 
FR 54013, Sept. 3, 2010; 81 FR 72690, Oct. 21, 2016]



Sec.  762.102  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are 
provided in Sec.  761.2 of this chapter.

[72 FR 63297, Nov. 8, 2007]



Sec.  762.103  Full faith and credit.

    (a) Fraud and misrepresentation. The loan guarantee constitutes an 
obligation supported by the full faith and credit of the United States. 
The Agency may contest the guarantee only in cases of fraud or 
misrepresentation by a lender or holder, in which:
    (1) The lender or holder had actual knowledge of the fraud or 
misrepresentation at the time it became the lender or holder, or
    (2) The lender or holder participated in or condoned the fraud or 
misrepresentation.
    (b) Lender violations. The loan guarantee cannot be enforced by the 
lender, regardless of when the Agency discovers the violation, to the 
extent that the loss is a result of:
    (1) Violation of usury laws;
    (2) Negligent servicing;
    (3) Failure to obtain the required security; or,
    (4) Failure to use loan funds for purposes specifically approved by 
the Agency.
    (c) Enforcement by holder. The guarantee and right to require 
purchase will be directly enforceable by the holder even if:
    (1) The loan guarantee is contestable based on the lender's fraud or 
misrepresentation; or
    (2) The loan note guarantee is unenforceable by the lender based on 
a lender violation.



Sec.  762.104  Appeals.

    (a) A decision made by the lender adverse to the borrower is not a 
decision by the Agency, whether or not concurred in by the Agency, and 
may not be appealed.

[[Page 191]]

    (b) The lender or Agency may request updated information from the 
borrower to implement an appeal decision.
    (c) Appeals will be handled in accordance with parts 11 and 780 of 
this title.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007]



Sec.  762.105  Eligibility and substitution of lenders.

    (a) General. To participate in FSA guaranteed farm loan programs, a 
lender must meet the eligibility criteria in this part. The standard 
eligible lender must demonstrate eligibility and provide such evidence 
as the Agency may request.
    (b) Standard eligible lender eligibility criteria. (1) A lender must 
have experience in making and servicing agricultural loans and have the 
capability to make and service the loan for which a guarantee is 
requested;
    (2) The lenders must not have losses or deficiencies in processing 
and servicing guaranteed loans above a level which would indicate an 
inability to properly process and service a guaranteed agricultural 
loan.
    (3) A lender must be subject to credit examination and supervision 
by an acceptable State or Federal regulatory agency;
    (4) The lender must maintain an office near enough to the 
collateral's location so it can properly and efficiently discharge its 
loan making and loan servicing responsibilities or use Agency approved 
agents, correspondents, branches, or other institutions or persons to 
provide expertise to assist in carrying out its responsibilities. The 
lender must be a local lender unless it:
    (i) Normally makes loans in the region or geographic location in 
which the applicant's operation being financed is located, or
    (ii) Demonstrates specific expertise in making and servicing loans 
for the proposed operation.
    (5) The lender, its officers, or agents must not be debarred or 
suspended from participation in Government contracts or programs or be 
delinquent on a Government debt.
    (c) Substitution of lenders. A new eligible lender may be 
substituted for the original lender, upon the original lender's 
concurrence, under the following conditions:
    (1) The Agency approves of the substitution in writing by executing 
a modification of the guarantee to identify the new lender, the amount 
of debt at the time of the substitution and any new loan terms if 
applicable.
    (2) The new lender agrees in writing to:
    (i) Assume all servicing and other responsibilities of the original 
lender and to acquire the unguaranteed portion of the loan;
    (ii) Execute a lender's agreement if one is not in effect;
    (iii) [Reserved]
    (iv) Give any holder written notice of the substitution. If the rate 
and terms are changed, written concurrence from the holder is required.
    (3) The original lender will:
    (i) Assign their promissory note, lien instruments, loan agreements, 
and other documents to the new lender.
    (ii) If the loan is subject to an existing interest assistance 
agreement, submit a request for subsidy for the partial year that it has 
owned the loan.
    (d) Lender name or ownership changes. (1) When a lender begins doing 
business under a new name or undergoes an ownership change the lender 
will notify the Agency.
    (2) The lender's CLP, PLP, or MLP status is subject to 
reconsideration when ownership changes.
    (3) The lender will execute a new lender's agreement when ownership 
changes.

[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 81 
FR 72690, Oct. 21, 2016]



Sec.  762.106  Preferred and certified lender programs.

    (a) General. (1) Lenders who desire PLP or CLP status must prepare a 
written request addressing:
    (i) The States in which they desire to receive PLP or CLP status and 
their branch offices which they desire to be considered by the Agency 
for approval; and
    (ii) Each item of the eligibility criteria for PLP or CLP approval 
in this section, as appropriate.

[[Page 192]]

    (2) The lender may include any additional supporting evidence or 
other information the lender believes would be helpful to the Agency in 
making its determination.
    (3) The lender must send its request to the Agency State office for 
the State in which the lender's headquarters is located.
    (4) The lender must provide any additional information requested by 
the Agency to process a PLP or CLP request if the lender continues with 
the approval process.
    (b) CLP criteria. The lender must meet the following requirements to 
obtain CLP status:
    (1) Qualify as a standard eligible lender under Sec.  762.105;
    (2) Have a lender loss rate not in excess of the maximum CLP loss 
rate established by the Agency and published periodically in a Federal 
Register Notice. The Agency may waive the loss rate criteria for those 
lenders whose loss rate was substantially affected by a disaster as 
defined in Sec.  761.2(b) and part 759 of this chapter.
    (3) Have proven an ability to process and service Agency guaranteed 
loans by showing that the lender:
    (i) Submitted substantially complete and correct guaranteed loan 
applications; and
    (ii) Serviced all guaranteed loans according to Agency regulations;
    (4) Have made the minimum number of guaranteed OL, FO, CL, or SW 
loans established by the Agency and published periodically in a Federal 
Register Notice.
    (5) Not be under any regulatory enforcement action such as a cease 
and desist order, written agreement, or an appointment of conservator or 
receiver, based upon financial condition;
    (6) Designate a qualified person or persons to process and service 
Agency guaranteed loans for each of the lender offices which will 
process CLP loans. To be qualified, the person must meet the following 
conditions:
    (i) Have attended Agency sponsored training in the past 12 months or 
will attend training in the next 12 months; and
    (ii) Agree to attend Agency sponsored training each year;
    (7) Use forms acceptable to the Agency for processing, analyzing, 
securing, and servicing Agency guaranteed loans and lines of credit;
    (c) PLP criteria. The lender must meet the following requirements to 
obtain PLP status:
    (1) Meet the CLP eligibility criteria under this section.
    (2) Have a credit management system, satisfactory to the Agency, 
based on the following:
    (i) The lender's written credit policies and underwriting standards;
    (ii) Loan documentation requirements;
    (iii) Exceptions to policies;
    (iv) Analysis of new loan requests;
    (v) Credit file management;
    (vi) Loan funds and collateral management system;
    (vii) Portfolio management;
    (viii) Loan reviews;
    (ix) Internal credit review process;
    (x) Loan monitoring system; and
    (xi) The board of director's responsibilities.
    (3) Have made the minimum number of guaranteed OL, FO, CL, or SW 
loans established by the Agency and published periodically in a Federal 
Register Notice.
    (4) Have a lender loss rate not in excess of the rate of the maximum 
PLP loss rate established by the Agency and published periodically in a 
Federal Register Notice. The Agency may waive the loss rate criteria for 
those lenders whose loss rate was substantially affected by a disaster 
as defined in Sec.  761.2(b) and part 759 of this chapter.
    (5) Show a consistent practice of submitting applications for 
guaranteed loans containing accurate information supporting a sound loan 
proposal.
    (6) Show a consistent practice of processing Agency guaranteed loans 
without recurring major or minor deficiencies.
    (7) Demonstrate a consistent, above average ability to service 
guaranteed loans based on the following:
    (i) Borrower supervision and assistance;
    (ii) Timely and effective servicing; and
    (iii) Communication with the Agency.

[[Page 193]]

    (8) Designate a person or persons, either by name, title, or 
position within the organization, to process and service PLP loans for 
the Agency.
    (d) CLP and PLP approval. (1) If a lender applying for CLP or PLP 
status is or has recently been involved in a merger or acquisition, all 
loans and losses attributed to both lenders will be considered in the 
eligibility calculations.
    (2) The Agency will determine which branches of the lender have the 
necessary experience and ability to participate in the CLP or PLP 
program based on the information submitted in the lender application and 
on Agency experience.
    (3) Lenders who meet the criteria will be granted CLP or PLP status 
for a period not to exceed 5 years.
    (4) PLP status will be conditioned on the lender carrying out its 
credit management system as proposed in its request for PLP status and 
any additional loan making or servicing requirements agreed to and 
documented the PLP lender's agreement. If the PLP lender's agreement 
does not specify any agreed upon process for a particular action, the 
PLP lender will act according to regulations governing CLP lenders.
    (e) Monitoring CLP and PLP lenders. CLP and PLP lenders will provide 
information and access to records upon Agency request to permit the 
Agency to audit the lender for compliance with these regulations.
    (f) Renewal of CLP or PLP status. (1) PLP or CLP status will expire 
within a period not to exceed 5 years from the date the lender's 
agreement is executed, unless a new lender's Agreement is executed.
    (2) Renewal of PLP or CLP status is not automatic. A lender must 
submit a written request for renewal of a lender's agreement with PLP or 
CLP status which includes information:
    (i) Updating the material submitted in the initial application; and,
    (ii) Addressing any new criteria established by the Agency since the 
initial application.
    (3) PLP or CLP status will be renewed if the applicable eligibility 
criteria under this section are met, and no cause exists for denying 
renewal under paragraph (g) of this section.
    (g) Revocation of PLP or CLP status. (1) The Agency may revoke the 
lender's PLP or CLP status at any time during the 5 year term for cause.
    (2) Any of the following instances constitute cause for revoking or 
not renewing PLP or CLP status:
    (i) Violation of the terms of the lender's agreement;
    (ii) Failure to maintain PLP or CLP eligibility criteria. The Agency 
may allow a PLP lender with a loss rate which exceeds the maximum PLP 
loss rate, to retain its PLP status for a two-year period, if:
    (A) The lender documents in writing why the excessive loss rate is 
beyond their control;
    (B) The lender provides a written plan that will reduce the loss 
rate to the PLP maximum rate within two years from the date of the plan, 
and
    (C) The Agency determines that exceeding the maximum PLP loss rate 
standard was beyond the control of the lender. Examples include, but are 
not limited to, a freeze with only local impact, economic downturn in a 
local area, drop in local land values, industries moving into or out of 
an area, loss of access to a market, and biological or chemical damage.
    (D) The Agency will revoke PLP status if the maximum PLP loss rate 
is not met at the end of the two-year period, unless a second two year 
extension is granted under this subsection.
    (iii) Knowingly submitting false or misleading information to the 
Agency;
    (iv) Basing a request on information known to be false;
    (v) Deficiencies that indicate an inability to process or service 
Agency guaranteed farm loan programs loans in accordance with this 
subpart;
    (vi) Failure to correct cited deficiencies in loan documents upon 
notification by the Agency;
    (vii) Failure to submit status reports in a timely manner;
    (viii) Failure to use forms, or follow credit management systems 
(for PLP lenders) accepted by the Agency; or
    (ix) Failure to comply with the reimbursement requirements of Sec.  
762.144(c)(7) and (c)(8).

[[Page 194]]

    (3) A lender which has lost PLP or CLP status must be reconsidered 
for eligibility to continue as a Standard Eligible Lender (for former 
PLP and CLP lenders), or as a CLP lender (for former PLP lenders) in 
submitting loan guarantee requests. They may reapply for CLP or PLP 
status when the problem causing them to lose their status has been 
resolved.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 70 
FR 56107, Sept. 26, 2005; 71 FR 43957, Aug. 3, 2006; 75 FR 54013, Sept. 
3, 2010; 77 FR 41256, July 13, 2012]



Sec.  762.107  Micro Lender Program.

    (a) General. The lenders must submit the following items:
    (1) To request MLP Status, a lender must submit an application form 
to any local FSA office.
    (2) The lender must provide any additional information requested by 
the Agency to process an MLP request, if the lender continues with the 
approval process.
    (3) MLP lender authorities are limited to originating and servicing 
EZ Guarantee loans.
    (b) MLP criteria. An MLP lender must satisfy the following 
requirements to obtain MLP Status:
    (1) Have experience in making and servicing business loans.
    (2) Have the staff and resources to properly and efficiently 
discharge its loan making and loan servicing responsibilities that may 
include use of Agency approved agents.
    (3) Be subject to oversight as established and announced by the 
Agency on the FSA Web site (www.fsa.usda.gov).
    (4) Have a loss rate not in excess of the maximum MLP loss rate 
established and announced by the Agency on the FSA Web site 
(www.fsa.usda.gov).
    (5) Have made the minimum number of loans as established and 
announced by the Agency on the FSA Web site (www.fsa.usda.gov).
    (6) Not be debarred or suspended from participation in Government 
contracts or programs or be delinquent on a Government debt. This 
includes the lender's officers and agents.
    (c) Renewal of MLP Status. MLP Status will expire within a period 
not to exceed 5 years from the date the lender's agreement is executed, 
unless a new lender's agreement is executed.
    (1) Renewal of MLP Status is not automatic. A lender must submit a 
new application for renewal.
    (2) MLP Status will be renewed if the applicable eligibility 
criteria under this section are met, and no cause exists for denying 
renewal under paragraph (d)(1) of this section.
    (d) Revocation of MLP Status. The Agency may revoke the lender's MLP 
Status at any time during the 5 year term for cause as specified in 
paragraph (d)(1) of this section.
    (1) Any of the following instances constitutes cause for revoking or 
not renewing MLP Status:
    (i) Violation of the terms of the lender's agreement;
    (ii) Failure to maintain MLP eligibility criteria;
    (iii) Knowingly submitting false or misleading information to the 
Agency;
    (iv) Deficiencies that indicate an inability to process or service 
Agency guaranteed farm loan programs loans in accordance with this 
subpart;
    (v) Failure to correct cited deficiencies in loan documents upon 
notification by the Agency;
    (vi) Failure to submit status reports in a timely manner; or
    (vii) Failure to comply with the reimbursement requirements of Sec.  
762.144(c)(7) and (c)(8).
    (2) A lender that has lost MLP Status may reapply for MLP Status 
once the problem that caused the MLP Status to be revoked has been 
resolved.

[81 FR 72690, Oct. 21, 2016]



Sec. Sec.  762.108-762.109  [Reserved]



Sec.  762.110  Loan application.

    (a) General. This paragraph (a) specifies the general requirements 
for guaranteed loan applications:
    (1) Lenders must perform at least the same level of evaluation and 
documentation for a guaranteed loan that the lender typically performs 
for non-guaranteed loans of a similar type and amount.
    (2) The application thresholds in this section apply to any single 
loan, or package of loans submitted for consideration at any one time. A 
lender must not split a loan into two or more parts

[[Page 195]]

in order to fall below the threshold in order to avoid additional 
documentation.
    (3) The Agency may require lenders with a lender loss rate in excess 
of the rate for CLP lenders to assemble additional documentation 
specified in paragraph (d) of this section.
    (b) EZ Guarantee loans. MLP lenders may submit an EZ Guarantee 
application for loans up to $50,000. All other lenders may submit EZ 
Guarantee applications for loans up to $100,000. Lenders must submit:
    (1) An EZ Guarantee application form.
    (2) If the loan fails to pass the underwriting criteria for EZ 
Guarantee approval in Sec.  762.125(d), or the responses in the 
application are insufficient for the Agency to make a loan decision, the 
lender must provide additional information as requested by the Agency.
    (c) Loans up to $125,000. Lenders must submit the following items 
for loans up to $125,000 (other than EZ Guarantees):
    (1) The application form;
    (2) Loan narrative, including a plan for servicing the loan;
    (3) Balance sheet;
    (4) Cash flow budget; and
    (5) Credit report.
    (d) Loans over $125,000. A complete application for loans over 
$125,000 will require items specified in paragraph (c) of this section, 
plus the following items:
    (1) Verification of income;
    (2) Verification of debts over $1,000;
    (3) Three years financial history;
    (4) Three years of production history (for standard eligible lenders 
only);
    (5) Proposed loan agreements; and,
    (6) If construction or development is planned, a copy of the plans, 
specifications, and development schedule.
    (e) Applications from PLP lenders. Notwithstanding paragraphs (c) 
and (d) of this section, a complete application for PLP lenders will 
consist of at least:
    (1) An application form;
    (2) A loan narrative;
    (3) Any other items agreed to during the approval of the PLP 
lender's status and contained in the PLP lender agreement.
    (f) CL Guarantees. In addition to the other requirements in this 
section, the following items apply when a lender is requesting a CL 
guarantee:
    (1) Lenders must submit a copy of the conservation plan or Forest 
Stewardship Management Plan;
    (2) Lenders must submit plans to transition to organic or 
sustainable agriculture when the funds requested will be used to 
facilitate the transition and the lender is requesting consideration for 
priority funding;
    (3) When CL guarantee applicants meet all the following criteria, 
the cash flow budget requirement in this section will be waived:
    (i) Be current on all payments to all creditors including the Agency 
(if currently an Agency borrower);
    (ii) Debt to asset ratio is 40 percent or less;
    (iii) Balance sheet indicates a net worth of 3 times the requested 
loan amount or greater; and
    (iv) FICO credit score is at least 700; for entity applicants, the 
FICO credit score of the majority of the individual members of the 
entity must be at least 700.
    (g) Submitting applications. (1) All lenders must compile and 
maintain in their files a complete application for each guaranteed loan.
    (2) The Agency will notify CLP lenders which items to submit to the 
Agency.
    (3) PLP lenders will submit applications in accordance with their 
agreement with the Agency for PLP status.
    (4) All lenders must certify that the required items, not submitted, 
are in their files.
    (5) The Agency may request additional information from any lender or 
review the lender's loan file as needed to make eligibility and approval 
decisions.
    (h) Incomplete applications. If the lender does not provide the 
information needed to complete its application by the deadline 
established in an Agency request for the information, the application 
will be considered withdrawn by the lender.
    (i) Conflict of interest. (1) When a lender submits the application 
for a guaranteed loan, the lender will inform the Agency in writing of 
any relationship which may cause an actual or potential conflict of 
interest.

[[Page 196]]

    (2) Relationships include:
    (i) The lender or its officers, directors, principal stockholders 
(except stockholders in a Farm Credit System institution that have stock 
requirements to obtain a loan), or other principal owners having a 
financial interest (other than lending relationships in the normal 
course of business) in the applicant or borrower.
    (ii) The applicant or borrower, a relative of the applicant or 
borrower, anyone residing in the household of the applicant or borrower, 
any officer, director, stockholder or other owner of the applicant or 
borrower holds any stock or other evidence of ownership in the lender.
    (iii) The applicant or borrower, a relative of the applicant or 
borrower, or anyone residing in the household of the applicant or 
borrower is an Agency employee.
    (iv) The officers, directors, principal stockholders (except 
stockholders in a Farm Credit System institution that have stock 
requirements to obtain a loan), or other principal owners of the lender 
have substantial business dealings (other than in the normal course of 
business) with the applicant or borrower.
    (v) The lender or its officers, directors, principal stockholders, 
or other principal owners have substantial business dealings with an 
Agency employee.
    (3) The lender must furnish additional information to the Agency 
upon request.
    (4) The Agency will not approve the application until the lender 
develops acceptable safeguards to control any actual or potential 
conflicts of interest.
    (j) Market placement program. Except for CL guarantees, when the 
Agency determines that a direct applicant or borrower may qualify for 
guaranteed credit, the Agency may submit the applicant or borrower's 
financial information to one or more guaranteed lenders. If a lender 
indicates interest in providing financing to the applicant or borrower 
through the guaranteed loan program, the Agency will assist in 
completing the application for a guarantee.

[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003; 72 
FR 63297, Nov. 8, 2007; 75 FR 54013, Sept. 3, 2010; 77 FR 15938, Mar. 
19, 2012; 81 FR 72691, Oct. 21, 2016]]



Sec. Sec.  762.111-762.119  [Reserved]



Sec.  762.120  Applicant eligibility.

    Unless otherwise provided, applicants must meet all of the following 
requirements to be eligible for a guaranteed OL, FO, or CL.
    (a) Agency loss. (1) Except as provided in paragraph (a)(2) of this 
section, the applicant, and anyone who will execute the promissory note, 
has not caused the Agency a loss by receiving debt forgiveness on all or 
a portion of any direct or guaranteed loan made under the authority of 
the Act by debt write-down or write-off; compromise, adjustment, 
reduction, or charge-off under the provisions of section 331 of the Act; 
discharge in bankruptcy; or through payment of a guaranteed loss claim 
on:
    (i) More than three occasions on or prior to April 4, 1996; or
    (ii) Any occasion after April 4, 1996.
    (2) The applicant may receive a guaranteed OL to pay annual farm 
operating and family living expenses, provided the applicant meets all 
other requirements for the loan, if the applicant and anyone who will 
execute the promissory note:
    (i) Received a write-down under section 353 of the Act;
    (ii) Is current on payments under a confirmed reorganization plan 
under chapter 11, 12, or 13 of title 11 of the United States Code; or
    (iii) Received debt forgiveness on not more than one occasion after 
April 4, 1996, resulting directly and primarily from a Presidentially-
designated emergency for a county or contiguous county in which the 
applicant operates. Only applicants who were current on all existing 
direct and guaranteed FSA loans prior to the beginning date of the 
incidence period for a Presidentially-designated emergency and received 
debt forgiveness on that debt within three years after the designation 
of such emergency meet this exception.
    (b) Delinquent Federal debt. The applicant, and anyone who will 
execute the

[[Page 197]]

promissory note, is not delinquent on any Federal debt, other than a 
debt under the Internal Revenue Code of 1986. (Any debt under the 
Internal Revenue Code of 1986 may be considered by the lender in 
determining cash flow and creditworthiness.)
    (c) Outstanding judgments. The applicant, and anyone who will 
execute the promissory note, have no outstanding unpaid judgment 
obtained by the United States in any court. Such judgments do not 
include those filed as a result of action in the United States Tax 
Courts.
    (d) Citizenship. (1) The applicant must be a citizen of the United 
States, a United States non-citizen national, or a qualified alien under 
applicable Federal immigration laws. For an entity applicant, the 
majority interest of the entity must be held by members who are United 
States citizens, United States non-citizen nationals, or qualified 
aliens under applicable Federal immigration laws.
    (2) United States non-citizen nationals and qualified aliens must 
provide the appropriate documentation as to their immigration status as 
required by the United States Department of Homeland Security, Bureau of 
Citizenship and Immigration Services.
    (e) Legal capacity. The applicant and all borrowers on the loan must 
possess the legal capacity to incur the obligations of the loan.
    (f) False or misleading information. The applicant, in past dealings 
with the Agency, must not have provided the Agency with false or 
misleading documents or statements.
    (g) Credit history. (1) The individual or entity applicant and all 
entity members must have acceptable credit history demonstrated by debt 
repayment.
    (2) A history of failures to repay past debts as they came due when 
the ability to repay was within their control will demonstrate 
unacceptable credit history.
    (3) Unacceptable credit history will not include:
    (i) Isolated instances of late payments which do not represent a 
pattern and were clearly beyond their control; or,
    (ii) Lack of credit history.
    (h) Test for credit. Except for CL guarantees,
    (1) The applicant is unable to obtain sufficient credit elsewhere 
without a guarantee to finance actual needs at reasonable rates and 
terms.
    (2) The potential for sale of any significant nonessential assets 
will be considered when evaluating the availability of other credit.
    (3) Ownership interests in property and income received by an 
individual or entity applicant, and any entity members as individuals 
will be considered when evaluating the availability of other credit to 
the applicant.
    (i) For OLs:
    (1) The individual or entity applicant must be an operator of not 
larger than a family farm after the loan is closed.
    (2) In the case of an entity borrower:
    (i) The entity must be authorized to operate, and own if the entity 
is also an owner, a farm in the State or States in which the farm is 
located; and
    (ii) If the entity members holding a majority interest are related 
by marriage or blood, at least one member of the entity must operate the 
family farm; or,
    (iii) If the entity members holding a majority interest are not 
related by marriage or blood, the entity members holding a majority 
interest must also operate the family farm.
    (j) For FOs:
    (1) The individual must be the operator of not larger than a family 
farm and the owner of a farm after the loan is closed. Ownership of the 
family farm operation or the farm real estate may be held either 
directly in the individual's name or indirectly through interest in a 
legal entity.
    (2) In the case of an entity borrower:
    (i) An ownership entity must be authorized to own a farm in the 
state or states in which the farm is located. An operating entity must 
be authorized to operate a farm in the state or states in which the farm 
is located; and
    (ii) If the entity members holding a majority interest are related 
by marriage or blood, at least one member of the entity must operate the 
family farm and at least one member of the entity or the entity must own 
the farm; or

[[Page 198]]

    (iii) If the entity members holding a majority interest are not 
related by marriage or blood, the entity members holding a majority 
interest must operate the family farm and the entity members holding a 
majority interest or the entity must own the farm.
    (3) If the entity is an operator-only entity, the individuals that 
own the farm (real estate) must own at least 50 percent of the family 
farm (operating entity).
    (4) All ownership may be held either directly in the individual's 
name or indirectly through interest in a legal entity.
    (k) For entity applicants. Except for CL, entity applicants must 
meet the following additional eligibility criteria:
    (1) Each entity member's ownership interest may not exceed the 
family farm definition limits;
    (2) The collective ownership interest of all entity members may 
exceed the family farm definition limits only if the following 
conditions are met:
    (i) All of the entity members are related by blood or marriage;
    (ii) All of the members are or will be operators of the entity; and,
    (iii) The majority interest holders of the entity must meet the 
requirements of paragraphs (d), (f), (g), and (i) through (j) of this 
section;
    (3) The entity must be controlled by farmers engaged primarily and 
directly in farming in the United States after the loan is made; and
    (4) If the applicant has one or more embedded entities, at least 75 
percent of the individual ownership interests of each embedded entity 
must be owned by members actively involved in managing or operating the 
family farm.
    (l) For CL entity applicants. Entity applicants for CL guarantees 
must meet the following eligibility criteria:
    (1) The majority interest holders of the entity must meet the 
requirements of paragraph (d), (f), and (g) of this section;
    (2) The entity must be controlled by farmers engaged primarily and 
directly in farming in the United States after the loan is made;
    (3) If the applicant has one or more embedded entities, at least 75 
percent of the individual ownership interests of each embedded entity 
must be owned by members actively involved in managing or operating the 
family farm; and
    (4) The entity must be authorized to operate a farm in the State or 
States in which the farm is located.
    (m) For CL individual applicants. Individual applicants for CL 
guarantees must be farmers in the United States.
    (n) Controlled substances. The applicant, and anyone who will sign 
the promissory note, must not be ineligible as a result of a conviction 
for controlled substances according to 7 CFR part 718 of this chapter. 
If the lender uses the lender's Agency approved forms, the certification 
may be an attachment to the form.

[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 62223, Nov. 3, 2003; 69 
FR 5262, Feb. 4, 2004; 72 FR 63297, Nov. 8, 2007; 75 FR 54013, Sept. 3, 
2010; 78 FR 65529, Nov. 1, 2013; 79 FR 60743, Oct. 8, 2014]



Sec.  762.121  Loan purposes.

    (a) Operating Loan purposes. (1) Loan funds disbursed under an OL 
guarantee may only be used for the following purposes:
    (i) Payment of costs associated with reorganizing a farm to improve 
its profitability;
    (ii) Purchase of livestock, including poultry, and farm equipment or 
fixtures, quotas and bases, and cooperative stock for credit, 
production, processing or marketing purposes;
    (iii) Payment of annual farm operating expenses, examples of which 
include feed, seed, fertilizer, pesticides, farm supplies, repairs and 
improvements which are to be expensed, cash rent and family subsistence;
    (iv) Payment of scheduled principal and interest payments on term 
debt provided the debt is for authorized FO or OL purposes;
    (v) Other farm needs;
    (vi) Payment of costs associated with land and water development for 
conservation or use purposes;
    (vii) Refinancing indebtedness incurred for any authorized OL 
purpose, when the lender and applicant can demonstrate the need to 
refinance;
    (viii) Payment of loan closing costs;

[[Page 199]]

    (ix) Payment of costs associated with complying with Federal or 
State-approved standards under the Occupational Safety and Health Act of 
1970 (29 U.S.C. 655, 667). This purpose is limited to applicants who 
demonstrate that compliance with the standards will cause them 
substantial economic injury; and
    (x) Payment of training costs required or recommended by the Agency.
    (2) Loan funds under a line of credit may be advanced only for the 
following purposes:
    (i) Payment of annual operating expenses, family subsistence, and 
purchase of feeder animals;
    (ii) Payment of current annual operating debts advanced for the 
current operating cycle; (Under no circumstances can carry-over 
operating debts from a previous operating cycle be refinanced);
    (iii) Purchase of routine capital assets, such as replacement of 
livestock, that will be repaid within the operating cycle;
    (iv) Payment of scheduled, non-delinquent, term debt payments 
provided the debt is for authorized FO or OL purposes.
    (v) Purchase of cooperative stock for credit, production, processing 
or marketing purposes; and
    (vi) Payment of loan closing costs.
    (b) Farm ownership loan purposes. Guaranteed FO are authorized only 
to:
    (1) Acquire or enlarge a farm; examples include, but are not limited 
to, providing down payments, purchasing easements for the applicant's 
portion of land being subdivided, and participating in the downpayment 
FO program under part 764 of this chapter;
    (2) Make capital improvements; examples include, but are not limited 
to, the construction, purchase, and improvement of a farm dwelling, 
service buildings and facilities that can be made fixtures to the real 
estate, (Capital improvements to leased land may be financed subject to 
the limitations in Sec.  762.122);
    (3) Promote soil and water conservation and protection; examples 
include the correction of hazardous environmental conditions, and the 
construction or installation of tiles, terraces and waterways;
    (4) Pay closing costs, including but not limited to, purchasing 
stock in a cooperative and appraisal and survey fees; and
    (5) Refinancing indebtedness incurred for authorized FO and OL 
purposes, provided the lender and applicant demonstrate the need to 
refinance the debt.
    (c) CL purposes. Loan funds disbursed under a CL guarantee may be 
used for any conservation activities included in a conservation plan or 
Forestry Stewardship Management Plan including, but not limited to:
    (1) The installation of conservation structures to address soil, 
water, and related resources;
    (2) The establishment of forest cover for sustained yield timber 
management, erosion control, or shelter belt purposes;
    (3) The installation of water conservation measures;
    (4) The installation of waste management systems;
    (5) The establishment or improvement of permanent pasture;
    (6) Other purposes including the adoption of any other emerging or 
existing conservation practices, techniques, or technologies; and
    (7) Refinancing indebtedness incurred for any authorized CL purpose, 
when refinancing will result in additional conservation benefits.
    (d) Highly erodible land or wetlands conservation. Loans may not be 
made for any purpose which contributes to excessive erosion of highly 
erodible land or to the conversion of wetlands to produce an 
agricultural commodity. A decision by the Agency to reject an 
application for this reason may be appealable. An appeal questioning 
whether the presence of a wetland, converted wetland, or highly erodible 
land on a particular property must be filed directly with the USDA 
agency making the determination in accordance with the agency's appeal 
procedures.
    (e) Judgment debts. Loans may not be used to satisfy judgments 
obtained in

[[Page 200]]

the United States District courts. However, Internal Revenue Service 
judgment liens may be paid with loan funds.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007; 73 
FR 74345, Dec. 8, 2008; 75 FR 54014, Sept. 3, 2010; 77 FR 15938, Mar. 
19, 2012; 78 FR 65529, Nov. 1, 2013]



Sec.  762.122  Loan limitations.

    (a) Dollar limits. The Agency will not guarantee any loan that would 
result in the applicant's total indebtedness exceeding the limits 
established in Sec.  761.8 of this chapter.
    (b) Leased land. When FO or CL funds are used for improvements to 
leased land the terms of the lease must provide reasonable assurance 
that the applicant will have use of the improvement over its useful 
life, or provide compensation for any unexhausted value of the 
improvement if the lease is terminated.
    (c) Tax-exempt transactions. The Agency will not guarantee any loan 
made with the proceeds of any obligation the interest on which is 
excluded from income under section 103 of the Internal Revenue Code of 
1986. Funds generated through the issuance of tax-exempt obligations may 
not be used to purchase the guaranteed portion of any Agency guaranteed 
loan. An Agency guaranteed loan may not serve as collateral for a tax-
exempt bond issue.
    (d) Floodplain restrictions. The Agency will not guarantee any loan 
to purchase, build, or expand buildings located in a special 100 year 
floodplain as defined by FEMA flood hazard area maps unless flood 
insurance is available and purchased.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 66 
FR 7567, Jan. 24, 2001; 72 FR 63297, Nov. 8, 2007; 73 FR 74345, Dec. 8, 
2008; 75 FR 54014, Sept. 3, 2010; 79 FR 78693, Dec. 31, 2014]



Sec.  762.123  Insurance and farm inspection requirements.

    (a) Insurance. (1) Lenders must require borrowers to maintain 
adequate property, public liability, and crop insurance to protect the 
lender and Government's interests.
    (2) By loan closing, applicants must either:
    (i) Obtain at least the catastrophic risk protection (CAT) level of 
crop insurance coverage, if available, for each crop of economic 
significance, as defined by part 402 of this title, or
    (ii) Waive eligibility for emergency crop loss assistance in 
connection with the uninsured crop. EM loan assistance under part 764 of 
this chapter is not considered emergency crop loss assistance for 
purposes of this waiver and execution of the waiver does not render the 
borrower ineligible for EM loans.
    (3) Applicants must purchase flood insurance if buildings are or 
will be located in a special flood hazard area as defined by FEMA flood 
hazard area maps and if flood insurance is available.
    (4) Insurance, including crop insurance, must be obtained as 
required by the lender or the Agency based on the strengths and 
weaknesses of the loan.
    (b) Farm inspections. Before submitting an application the lender 
must make an inspection of the farm to assess the suitability of the 
farm and to determine any development that is needed to make it a 
suitable farm.

[64 FR 7378, Feb. 12, 1999, as amended at 70 FR 56107, Sept. 26, 2005; 
72 FR 63297, Nov. 8, 2007]



Sec.  762.124  Interest rates, terms, charges, and fees.

    (a) Interest rates. (1) The interest rate on a guaranteed loan or 
line of credit may be fixed or variable as agreed upon between the 
borrower and the lender. The lender may charge different rates on the 
guaranteed and the non-guaranteed portions of the note. The guaranteed 
portion may be fixed while the unguaranteed portion may be variable, or 
vice versa. If both portions are variable, different bases may be used.
    (2) If a variable rate is used, it must be tied to an index or rate 
specifically agreed to between the lender and borrower in the loan 
instruments and the rate adjustments must be in accordance with normal 
practices of the lender for unguaranteed loans. Upon request, the lender 
must provide the Agency with copies of its written rate adjustment 
practices.
    (3) At the time of loan closing or loan restructuring, the interest 
rate on both the guaranteed portion and the

[[Page 201]]

unguaranteed portion of a fixed or variable rate OL or FO loan may not 
exceed the following, as applicable:
    (i) For lenders using risk-based pricing practices, the risk tier at 
least one tier lower (representing lower risk) than that borrower would 
receive without a guarantee. The lender must provide the Agency with 
copies of its written pricing practices, upon request.
    (ii) For lenders not using risk-based pricing practices, for 
variable rate loans or fixed rate loans with rates fixed for less than 
five years, 650 basis points (6.5 percentage points) above the 3-month 
LIBOR.
    (iii) For lenders not using risk-based pricing practices, for loans 
with rates fixed for five or more years, 550 basis points (5.5 
percentage points) above the 5-year Treasury note rate.
    (4) In the event the 3-month LIBOR is below 2 percent, the maximum 
rates specified in paragraph (a)(3) of this section do not apply. In 
that case, at the time of loan closing or loan restructuring, the 
interest rate on both the guaranteed portion and the unguaranteed 
portion of an OL or FO loan may not exceed 750 basis points above the 3-
month LIBOR for variable rate loans and 650 basis points above the 5-
year Treasury rate for fixed rate loans.
    (5) Interest must be charged only on the actual amount of funds 
advanced and for the actual time the funds are outstanding. Interest on 
protective advances made by the lender to protect the security will be 
charged at the note rate but limited to paragraph (a)(3) of this 
section.
    (6) The lender and borrower may collectively obtain a temporary 
reduction in the interest rate through the interest assistance program 
in accordance with Sec.  762.150.
    (b) OL terms. (1) Loan funds or advances on a line of credit used to 
pay annual operating expenses will be repaid when the income from the 
year's operation is received, except when the borrower is establishing a 
new enterprise, developing a farm, purchasing feed while feed crops are 
being established, or recovering from disaster or economic reverses.
    (2) The final maturity date for each loan cannot exceed 7 years from 
the date of the promissory note or line of credit agreement. Advances 
for purposes other than for annual operating expenses will be scheduled 
for repayment over the minimum period necessary considering the 
applicant's ability to repay and the useful life of the security, but 
not in excess of 7 years.
    (3) All advances on a line of credit must be made within 5 years 
from the date of the Loan Guarantee.
    (c) FO terms. Each loan must be scheduled for repayment over a 
period not to exceed 40 years from the date of the note or such shorter 
period as may be necessary to assure that the loan will be adequately 
secured, taking into account the probable depreciation of the security.
    (d) CL terms. Each loan must be scheduled for repayment over a 
period not to exceed 30 years from the date of the note or such shorter 
period as may be necessary to assure that the loan will be adequately 
secured, taking into account the probable depreciation of the security.
    (e) Balloon installments under loan note guarantee. Balloon payment 
terms are permitted on FO, OL, or CL subject to the following:
    (1) Extended repayment schedules may include equal, unequal, or 
balloon installments if needed on any guaranteed loan to establish a new 
enterprise, develop a farm, or recover from a disaster or an economical 
reversal.
    (2) Loans with balloon installments must have adequate collateral at 
the time the balloon installment comes due. Crops, livestock other than 
breeding livestock, or livestock products produced are not sufficient 
collateral for securing such a loan.
    (3) The borrower must be projected to be able to refinance the 
remaining debt at the time the balloon payment comes due based on the 
expected financial condition of the operation, the depreciated value of 
the collateral, and the principal balance on the loan.
    (f) Charges and fees. (1) The lender may charge the applicant and 
borrower fees for the loan provided they are no greater than those 
charged to unguaranteed customers for similar transactions. Similar 
transactions are those involving the same type of loan

[[Page 202]]

requested (for example, operating loans or farm real estate loans).
    (2) Late payment charges (including default interest charges) are 
not covered by the guarantee. These charges may not be added to the 
principal and interest due under any guaranteed note or line of credit. 
However, late payment charges may be made outside of the guarantee if 
they are routinely made by the lender in similar types of loan 
transactions.
    (3) Lenders may not charge a loan origination and servicing fee 
greater than 1 percent of the loan amount for the life of the loan when 
a guaranteed loan is made in conjunction with a down payment FO under 
part 764 of this chapter.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 17358, Apr. 9, 2007; 72 
FR 63297, Nov. 8, 2007; 73 FR 74345, Dec. 8, 2008; 75 FR 54014, Sept. 3, 
2010; 77 FR 15938, Mar. 19, 2012; 78 FR 14005, Mar. 4, 2013]



Sec.  762.125  Financial feasibility.

    (a) General. Except for streamlined CL guarantees (see Sec.  
762.110(f)), the following requirements must be met:
    (1) Notwithstanding any other provision of this section, PLP lenders 
will follow their internal procedures on financial feasibility as agreed 
to by the Agency during PLP certification.
    (2) The applicant's proposed operation must project a feasible plan.
    (3) For standard eligible lenders, the projected income and expenses 
of the borrower and operation used to determine a feasible plan must be 
based on the applicant's proven record of production and financial 
management.
    (4) For CLP lenders, the projected income and expenses of the 
borrower and the operation must be based on the applicant's financial 
history and proven record of financial management.
    (5) For those farmers without a proven history, a combination of any 
actual history and any other reliable source of information that are 
agreeable with the lender, the applicant, and the Agency will be used.
    (6) The cash flow budget analyzed to determine a feasible plan must 
represent the predicted cash flow of the operating cycle.
    (7) Lenders must use price forecasts that are reasonable and 
defensible. Sources must be documented by the lender and acceptable to 
the Agency.
    (8) When a feasible plan depends on income from other sources in 
addition to income from owned land, the income must be dependable and 
likely to continue.
    (9) The lender will analyze business ventures other than the farm 
operation to determine their soundness and contribution to the 
operation. Except for CL, guaranteed loan funds will not be used to 
finance a nonfarm enterprise. Nonfarm enterprises include, but are not 
limited to: raising earthworms, exotic birds, tropical fish, dogs, or 
horses for nonfarm purposes; welding shops; boarding horses; and riding 
stables.
    (10) When the applicant has or will have a cash flow budget 
developed in conjunction with a proposed or existing Agency direct loan, 
the two cash flow budgets must be consistent.
    (b) Estimating production. Except for streamlined CL guarantees (see 
Sec.  762.110(f)), the following requirements must be met:
    (1) Standard eligible lenders must use the best sources of 
information available for estimating production in accordance with this 
subsection when developing cash flow budgets.
    (2) Deviations from historical performance may be acceptable, if 
specific to changes in operation and adequately justified and acceptable 
to the Agency.
    (3) For existing farmers, actual production for the past 3 years 
will be utilized.
    (4) For those farmers without a proven history, a combination of any 
actual history and any other reliable source of information that are 
agreeable with the lender, the applicant, and the Agency will be used.
    (5) When the production of a growing commodity can be estimated, it 
must be considered when projecting yields.
    (6) When the applicant's production history has been so severely 
affected by a declared disaster that an accurate projection cannot be 
made, the following applies:
    (i) County average yields are used for the disaster year if the 
applicant's disaster year yields are less than the county average 
yields. If county average yields are not available, State average yields 
are used. Adjustments can

[[Page 203]]

be made, provided there is factual evidence to demonstrate that the 
yield used in the farm plan is the most probable to be realized.
    (ii) To calculate a historical yield, the crop year with the lowest 
actual or county average yield may be excluded, provided the applicant's 
yields were affected by disasters at least 2 of the previous 5 
consecutive years.
    (c) Refinancing. Loan guarantee requests for refinancing must ensure 
that a reasonable chance for success still exists. The lender must 
demonstrate that problems with the applicant's operation that have been 
identified, can be corrected, and the operation returned to a sound 
financial basis.
    (d) EZ Guarantee feasibility. Notwithstanding any other provision of 
this section:
    (1) The Agency will evaluate EZ Guarantee application financial 
feasibility using criteria determined and announced by the Agency on the 
FSA Web site (www.fsa.usda.gov).
    (2) EZ Guarantee applications that satisfy the criteria will be 
determined to meet the financial feasibility standards in this section.
    (3) EZ Guarantee applications that do not satisfy the criteria will 
require further documentation as determined by the Agency and announced 
on the FSA Web site (www.fsa.usda.gov).

[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 75 
FR 54014, Sept. 3, 2010; 81 FR 72691, Oct. 21, 2016]



Sec.  762.126  Security requirements.

    (a) General. (1) The lender is responsible for ensuring that proper 
and adequate security is obtained and maintained to fully secure the 
loan, protect the interest of the lender and the Agency, and assure 
repayment of the loan or line of credit.
    (2) The lender will obtain a lien on additional security when 
necessary to protect the Agency's interest.
    (b) Guaranteed and unguaranteed portions. (1) All security must 
secure the entire loan or line of credit. The lender may not take 
separate security to secure only that portion of the loan or line of 
credit not covered by the guarantee.
    (2) The lender may not require compensating balances or certificates 
of deposit as means of eliminating the lender's exposure on the 
unguaranteed portion of the loan or line of credit. However, 
compensating balances or certificates of deposit as otherwise used in 
the ordinary course of business are allowed for both the guaranteed and 
unguaranteed portions.
    (c) Identifiable security. The guaranteed loan must be secured by 
identifiable collateral. To be identifiable, the lender must be able to 
distinguish the collateral item and adequately describe it in the 
security instrument.
    (d) Type of security. (1) Guaranteed loans may be secured by any 
property if the term of the loan and expected life of the property will 
not cause the loan to be undersecured.
    (2) For loans with terms greater than 7 years, a lien must be taken 
on real estate.
    (3) Loans can be secured by a mortgage on leasehold properties if 
the lease has a negotiable value and is subject to being mortgaged.
    (4) The lender or Agency may require additional personal and 
corporate guarantees to adequately secure the loan. These guarantees are 
separate from, and in addition to, the personal obligations arising from 
members of an entity signing the note as individuals.
    (e) Lien position. All guaranteed loans will be secured by the best 
lien obtainable. Provided that:
    (1) Any chattel-secured guaranteed loan must have a higher lien 
priority (including purchase money interest) than an unguaranteed loan 
secured by the same chattels and held by the same lender.
    (2) Junior lien positions are acceptable only if the total amount of 
debt with liens on the security, including the debt in junior lien 
position, is less than or equal to 85 percent of the value of the 
security. Junior liens on crops or livestock products will not be relied 
upon for security unless the lender is involved in multiple guaranteed 
loans to the same borrower and also has the first lien on the 
collateral.
    (3) When taking a junior lien, prior lien instruments will not 
contain future advance clauses (except for taxes, insurance, or other 
reasonable costs to protect security), or cancellation, summary 
forfeiture, or other clauses that

[[Page 204]]

jeopardize the Government's or the lender's interest or the borrower's 
ability to pay the guaranteed loan, unless any such undesirable 
provisions are limited, modified, waived or subordinated by the 
lienholder for the benefit of the Agency and the lender.
    (f) Additional security, or any loan of $10,000 or less may be 
secured by the best lien obtainable on real estate without title 
clearance or legal services normally required, provided the lender 
believes from a search of the county records that the applicant can give 
a mortgage on the farm and provided that the lender would, in the normal 
course of business, waive the title search. This exception to title 
clearance will not apply when land is to be purchased.
    (g) Multiple owners. If security has multiple owners, all owners 
must execute the security documents for the loan.
    (h) Exceptions. The Deputy Administrator for Farm Loan Programs has 
the authority to grant an exception to any of the requirements involving 
security, if the proposed change is in the best interest of the 
Government and the collection of the loan will not be impaired.

[64 FR 7378, Feb. 12, 1999, as amended at 70 FR 56107, Sept. 26, 2005]



Sec.  762.127  Appraisal requirements.

    (a) General. The general requirements for an appraisal are:
    (1) Value of collateral. The lender is responsible for ensuring that 
the value of chattel and real estate pledged as collateral is sufficient 
to fully secure the guaranteed loan.
    (2) Additional security. The lender is not required to complete an 
appraisal or evaluation of collateral that will serve as additional 
security, but the lender must provide an estimated value.
    (3) Appraisal cost. Except for authorized liquidation expenses, the 
lender is responsible for all appraisal costs, which may be passed on to 
the borrower or transferee in the case of a transfer and assumption.
    (b) Chattel security. The requirements for chattel appraisals are:
    (1) Need for chattel appraisal. A current appraisal (not more than 
12 months old) of primary chattel security is required on all loans 
except loans or lines of credit for annual production purposes secured 
by crops, which require an appraisal only when the guarantee is 
requested late in the current production year and actual yields can be 
reasonably estimated. An appraisal is not required for loans of $50,000 
or less if a strong equity position exists.
    (2) Basis of value. The appraised value of chattel property will be 
based on public sales of the same or similar property in the market 
area. In the absence of such public sales, reputable publications 
reflecting market values may be used.
    (3) Appraisal form. Appraisal reports may be on the Agency's 
appraisal of chattel property form or on any other appraisal form 
containing at least the same information.
    (4) Experience and training. Chattel appraisals will be performed by 
appraisers who possess sufficient experience or training to establish 
market (not retail) values as determined by the Agency.
    (c) Real estate security. The requirements for real estate 
appraisals are:
    (1) Loans of $250,000 or less. The lender must document the value of 
the real estate by applying the same policies and procedures as their 
non-guaranteed loans.
    (2) Loans greater than $250,000. The lender must document the value 
of real estate using a current appraisal (not more than 12 months old) 
completed by a State Certified General Appraiser. Real estate appraisals 
must be completed in accordance with USPAP. Restricted reports as 
defined in USPAP are not acceptable. The Agency may allow an appraisal 
more than 12 months old to be used only if documentation provided by the 
lender reflects each of the following:
    (i) Market conditions have remained stable or improved based on 
sales of similar properties,
    (ii) The property in question remains in the same or better 
condition, and
    (iii) The value of the property has remained the same or increased.

[[Page 205]]

    (3) Agency determinations under paragraph (c)(2) of this section to 
permit appraisals more than 12 months old are not appealable.

[78 FR 65529, Nov. 1, 2013]



Sec.  762.128  Environmental and special laws.

    (a) Environmental requirements. The requirements found in part 799 
of this chapter must be met for guaranteed OL, FO, and CL. CLP, PLP, and 
MLP lenders may certify that they have documentation in their file to 
demonstrate compliance with paragraph (c) of this section. Standard 
eligible lenders must submit evidence supporting compliance with this 
section.
    (b) Determination. The Agency determination of whether an 
environmental problem exists will be based on:
    (1) The information supplied with the application;
    (2) The Agency Official's personal knowledge of the operation;
    (3) Environmental resources available to the Agency including, but 
not limited to, documents, third parties, and governmental agencies;
    (4) A visit to the farm operation when the available information is 
insufficient to make a determination;
    (5) Other information supplied by the lender or applicant upon 
Agency request. If necessary, information not supplied with the 
application will be requested by the Agency.
    (c) Special requirements. Lenders will assist in the environmental 
review process by providing environmental information. In all cases, the 
lender must retain documentation of their investigation in the 
applicant's case file.
    (1) A determination must be made as to whether there are any 
potential impacts to a 100 year floodplain as defined by Federal 
Emergency Management Agency floodplain maps, Natural Resources 
Conservation Service data, or other appropriate documentation.
    (2) The lender will assist the borrower in securing any applicable 
permits or waste management plans. The lender may consult with the 
Agency for guidance on activities which require consultation with State 
regulatory agencies, special permitting or waste management plans.
    (3) The lender will examine the security property to determine if 
there are any structures or archeological sites which are listed or may 
be eligible for listing in the National Register of Historic Places. The 
lender may consult with the Agency for guidance on which situations will 
need further review in accordance with the National Historical 
Preservation Act and part 799 of this chapter.
    (4) The applicant must certify they will not violate the provisions 
of Sec.  363 of the Act, the Food Security Act of 1985, and Executive 
Order 11990 relating to Highly Erodible Land and Wetlands.
    (5) All lenders are required to ensure that due diligence is 
performed in conjunction with a request for guarantee of a loan 
involving real estate. Due diligence is the process of evaluating real 
estate in the context of a real estate transaction to determine the 
presence of contamination from release of hazardous substances, 
petroleum products, or other environmental hazards and determining what 
effect, if any, the contamination has on the security value of the 
property. The Agency will accept as evidence of due diligence the most 
current version of the American Society of Testing Materials (ASTM) 
transaction screen questionnaire available from 100 Barr Harbor Drive, 
West Conshohocken, Pennsylvania 19428-2959, or similar documentation, 
approved for use by the Agency, supplemented as necessary by the ASTM 
phase I environmental site assessments form.
    (d) Equal opportunity and nondiscrimination. (1) With respect to any 
aspect of a credit transaction, the lender will not discriminate against 
any applicant on the basis of race, color, religion, national origin, 
sex, marital status, or age, provided the applicant can execute a legal 
contract. Nor will the lender discriminate on the basis of whether all 
or a part of the applicant's income derives from any public assistance 
program, or whether the applicant in good faith, exercises any rights 
under the Consumer Protection Act.
    (2) Where the guaranteed loan involves construction, the contractor 
or subcontractor must file all compliance reports, equal opportunity and 
nondiscrimination forms, and otherwise

[[Page 206]]

comply with all regulations prescribed by the Secretary of Labor 
pursuant to Executive Orders 11246 and 11375.
    (e) Other Federal, State and local requirements. Lenders are 
required to coordinate with all appropriate Federal, State, and local 
agencies and comply with special laws and regulations applicable to the 
loan proposal.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007; 75 
FR 54014, Sept. 3, 2010; 81 FR 51284, Aug. 3, 2016; 81 FR 72691, Oct. 
21, 2016]



Sec.  762.129  Percent of guarantee and maximum loss.

    (a) Percent of guarantee. The percent of guarantee will not exceed 
90 percent based on the credit risk to the lender and the Agency both 
before and after the transaction. The Agency will determine the 
percentage of guarantee. See paragraph (b) of this section for 
exceptions.
    (b) Exceptions. The guarantee will be determined by the Agency 
except:
    (1) For OLs and FOs, the guarantee will be issued at 95 percent if:
    (i) The sole purpose of a guaranteed FO or OL is to refinance an 
Agency direct farm loan. When only a portion of the loan is used to 
refinance a direct Agency loan, a weighted percentage of a guarantee 
will be provided; or
    (ii) When the purpose of a guaranteed FO is to participate in the 
downpayment loan program; or
    (iii) When a guaranteed OL is made to a farmer who is participating 
in the Agency's down payment loan program. The guaranteed OL must be 
made during the period that a borrower has the down payment loan 
outstanding; or
    (iv) When a guaranteed OL is made to a farmer whose farm land is 
subject to the jurisdiction of an Indian tribe and whose loan is secured 
by one or more security instruments that are subject to the jurisdiction 
of an Indian tribe.
    (2) For CLs, the guarantee will be issued at 80 percent; however, 
the guarantee will be issued at 90 percent if:
    (i) The applicant is a qualified SDA farmer; or
    (ii) The applicant is a qualified beginning farmer.
    (c) CLP and PLP guarantees. All guarantees issued to CLP or PLP 
lenders will not be less than 80 percent.
    (d) Maximum loss. The maximum amount the Agency will pay the lender 
under the loan guarantee will be any loss sustained by such lender on 
the guaranteed portion including:
    (1) The pro rata share of principal and interest indebtedness as 
evidenced by the note or by assumption agreement;
    (2) Any loan subsidy due and owing;
    (3) The pro rata share of principal and interest indebtedness on 
secured protective and emergency advances made in accordance with this 
subpart; and
    (4) Principal and interest indebtedness on recapture debt pursuant 
to a shared appreciation agreement. Provided that the lender has paid 
the Agency its pro rata share of the recapture amount due.

[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003; 72 
FR 63297, Nov. 8, 2007; 75 FR 54014, Sept. 3, 2010; 79 FR 78693, Dec. 
31, 2014]



Sec.  762.130  Loan approval and issuing the guarantee.

    (a) Processing timeframes. (1) Standard eligible lenders. Complete 
applications from Standard Eligible Lenders will be approved or 
rejected, and the lender notified in writing, no later than 30 calendar 
days after receipt.
    (2) CLP and PLP lenders.
    (i) Complete applications from CLP or PLP lenders will be approved 
or rejected not later than 14 calendar days after receipt.
    (ii) For PLP lenders, if the 14 day time frame is not met, the 
proposed guaranteed loan will automatically be approved, subject to 
funding, and receive an 80 or 95 percent guarantee for FO or OL loans, 
and 80 or 90 percent guarantee for CL, as appropriate.
    (3) Complete applications. For purposes of determining the 
application processing timeframes, an application will be not be 
considered complete until all information required to make an approval 
decision, including the information for an environmental review, is 
received by the Agency.
    (4) The Agency will confirm the date an application is received with 
a written notification to the lender.
    (b) Funding preference. Loans are approved subject to the 
availability of

[[Page 207]]

funding. When it appears that there are not adequate funds to meet the 
needs of all approved applicants, applications that have been approved 
will be placed on a preference list according to the date of receipt of 
a complete application. If approved applications have been received on 
the same day, the following will be given priority:
    (1) An application from a veteran
    (2) An application from an Agency direct loan borrower
    (3) An application from a applicant who:
    (i) Has a dependent family,
    (ii) Is an owner of livestock and farm implements necessary to 
successfully carry out farming operations, or
    (iii) Is able to make down payments.
    (4) Any other approved application.
    (c) Conditional commitment. (1) The lender must meet all of the 
conditions specified in the conditional commitment to secure final 
Agency approval of the guarantee.
    (2) The lender, after reviewing the conditions listed on the 
conditional commitment, will complete, execute, and return the form to 
the Agency. If the conditions are not acceptable to the lender, the 
Agency may agree to alternatives or inform the lender and the applicant 
of their appeal rights.
    (d) Lender requirements prior to issuing the guarantee--(1) Lender 
certification. The lender will certify as to the following on the 
appropriate Agency form:
    (i) No major changes have been made in the lender's loan or line of 
credit conditions and requirements since submission of the application 
(except those approved in the interim by the Agency in writing);
    (ii) Required hazard, flood, crop, worker's compensation, and 
personal life insurance (when required) are in effect;
    (iii) Truth in lending requirements have been met;
    (iv) All equal employment and equal credit opportunity and 
nondiscrimination requirements have been or will be met at the 
appropriate time;
    (v) The loan or line of credit has been properly closed, and the 
required security instruments have been obtained, or will be obtained, 
on any acquired property that cannot be covered initially under State 
law;
    (vi) The borrower has marketable title to the collateral owned by 
the borrower, subject to the instrument securing the loan or line of 
credit to be guaranteed and subject to any other exceptions approved in 
writing by the Agency. When required, an assignment on all USDA crop and 
livestock program payments has been obtained;
    (vii) When required, personal, joint operation, partnership, or 
corporate guarantees have been obtained;
    (viii) Liens have been perfected and priorities are consistent with 
requirements of the conditional commitment;
    (ix) Loan proceeds have been, or will be disbursed for purposes and 
in amounts consistent with the conditional commitment and as specified 
on the loan application. In line of credit cases, if any advances have 
occurred, advances have been disbursed for purposes and in amounts 
consistent with the conditional commitment and line of credit 
agreements;
    (x) There has been no material adverse change in the borrower's 
condition, financial or otherwise, since submission of the application; 
and
    (xi) All other requirements specified in the conditional commitment 
have been met.
    (2) Inspections. The lender must notify the Agency of any scheduled 
inspections during construction and after the guarantee has been issued. 
The Agency may attend these field inspections. Any inspections or review 
performed by the Agency, including those with the lender, are solely for 
the benefit of the Agency. Agency inspections do not relieve any other 
parties of their inspection responsibilities, nor can these parties rely 
on Agency inspections for any purpose.
    (3) Execution of lender's agreement. The lender must execute the 
Agency's lender's agreement and deliver it to the Agency.
    (4) Closing report and guarantee fees. (i) The lender must complete 
an Agency closing report form and return it to the Agency along with any 
guarantee fees.
    (ii) The guarantee fee is established by the Agency at the time the 
guarantee is obligated. The current fee

[[Page 208]]

schedule is available at http://www.fsa.usda.gov and any FSA office. 
Guaranteed fees may be adjusted annually based on factors that affect 
program costs. The nonrefundable fee is paid to the Agency by the 
lender. The fee may be passed on to the borrower and included in loan 
funds. The guarantee fee for the loan type will be calculated as 
follows:
    (A) FO guarantee fee = Loan Amount x % guaranteed x (FO percentage 
established by FSA).
    (B) OL guarantee fee = Loan Amount x % guaranteed x (OL percentage 
established by FSA).
    (C) CL guarantee fee = Loan Amount x % guaranteed x (CL percentage 
established by FSA).
    (iii) The following guaranteed loan transactions are not charged a 
fee:
    (A) Loans involving interest assistance;
    (B) Loans where a majority of the funds are used to refinance an 
Agency direct loan; and
    (C) Loans to beginning or socially disadvantaged farmers involved in 
the direct Downpayment Loan Program or beginning farmers participating 
in a qualified State Beginning Farmer Program.
    (e) Promissory notes, line of credit agreements, mortgages, and 
security agreements. The lender will use its own promissory notes, line 
of credit agreements, real estate mortgages (including deeds of trust 
and similar instruments), and security agreements (including chattel 
mortgages), provided:
    (1) The forms meet Agency requirements;
    (2) Documents comply with State law and regulation;
    (3) The principal and interest repayment schedules are stated 
clearly in the notes and are consistent with the conditional commitment;
    (4) The note is executed by the individual liable for the loan. For 
entity applicants, the promissory note will be executed to evidence the 
liability of the entity, any embedded entities, and the individual 
liability of all entity members. Individual liability can be waived by 
the Agency for members holding less than 10 percent ownership in the 
entity if the collectability of the loan will not be impaired; and
    (5) When the loan purpose is to refinance or restructure the 
lender's own debt, the lender may continue to use the existing debt 
instrument and attach an allonge that modifies the terms of the original 
note.
    (f) Replacement of loan guarantee, or assignment guarantee 
agreement. If the guarantee or assignment guarantee agreements are lost, 
stolen, destroyed, mutilated, or defaced, except where the evidence of 
debt was or is a bearer instrument, the Agency will issue a replacement 
to the lender or holder upon receipt of acceptable documentation 
including a certificate of loss and an indemnity bond.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007; 73 
FR 74345, Dec. 8, 2008; 75 FR 54014, Sept. 3, 2010; 76 FR 58094, Sept. 
20, 2011; 79 FR 60744, Oct. 8, 2014; 79 FR 78693, Dec. 31, 2014]



Sec. Sec.  762.131-762.139  [Reserved]



Sec.  762.140  General servicing responsibilities.

    (a) General. (1) Lenders are responsible for servicing the entire 
loan in a reasonable and prudent manner, protecting and accounting for 
the collateral, and remaining the mortgagee or secured party of record.
    (2) The lender cannot enforce the guarantee to the extent that a 
loss results from a violation of usury laws or negligent servicing.
    (b) Borrower supervision. The lender's responsibilities regarding 
borrower supervision include, but are not limited to the following:
    (1) Ensuring loan funds are not used for unauthorized purposes.
    (2) Ensuring borrower compliance with the covenants and provisions 
contained in the promissory note, loan agreement, mortgage, security 
instruments, any other agreements, and this part. Any violations which 
indicate non-compliance on the part of the borrower must be reported, in 
writing, to both the Agency and the borrower.
    (3) Ensuring the borrower is in compliance with all laws and 
regulations applicable to the loan, the collateral, and the operations 
of the farm.
    (4) Receiving all payments of principal and interest on the loan as 
they fall due and promptly disbursing to any

[[Page 209]]

holder its pro-rata share according to the amount of interest the holder 
has in the loan, less only the lender's servicing fee.
    (5) Performing an annual analysis of the borrower's financial 
condition to determine the borrower's progress for all term loans with 
aggregate balances greater than $100,000 and all line of credit loans. 
The annual analysis will include:
    (i) For loans secured by real estate only, the analysis for standard 
eligible lenders must include an analysis of the borrower's balance 
sheet. CLP lenders will determine the need for the annual analysis based 
on the financial strength of the borrower and document the file 
accordingly. PLP lenders will perform an annual analysis in accordance 
with the requirements established in the lender's agreement.
    (ii) For loans secured by chattels, all lenders will review the 
borrower's progress regarding business goals, trends and changes in 
financial performance, and compare actual to planned income and expenses 
for the past year.
    (iii) An account of the whereabouts or disposition of all 
collateral.
    (iv) A discussion of any observations about the farm business with 
the borrower.
    (v) For borrowers with an outstanding loan balance for existing term 
loans of $100,000 or less, the need for an annual analysis will be 
determined by the Agency for SEL, CLP, and MLP lenders. The annual 
analysis for PLP lenders will be in accordance with requirements in 
lender's credit management system (CMS).
    (c) Monitoring of development. The lender's responsibilities 
regarding the construction, repairs, or other development include, but 
are not limited to:
    (1) Determining that all construction is completed as proposed in 
the loan application;
    (2) Making periodic inspections during construction to ensure that 
any development is properly completed within a reasonable period of 
time; and
    (3) Verification that the security is free of any mechanic's, 
materialmen's, or other liens which would affect the lender's lien or 
result in a different lien priority from that proposed in the request 
for guarantee.
    (d) Loan installments. When a lender receives a payment from the 
sale of encumbered property, loan installments will be paid in the order 
of lien priority. When a payment is received from the sale of 
unencumbered property or other sources of income, loan installments will 
be paid in order of their due date. Agency approval is required for any 
other proposed payment plans.

[64 FR 7378, Feb. 12, 1999, as amended at 69 FR 44579, July 27, 2004; 81 
FR 72692, Oct. 21, 2016]



Sec.  762.141  Reporting requirements.

    Lenders are responsible for providing the local Agency credit 
officer with all of the following information on the loan and the 
borrower:
    (a) When the guaranteed loan becomes 30 days past due, and following 
the lender's meeting or attempts to meet with the borrower, all lenders 
will submit the appropriate Agency form showing guaranteed loan borrower 
default status. The form will be resubmitted every 60 days until the 
default is cured either through restructuring or liquidation.
    (b) All lenders will submit the appropriate guaranteed loan status 
reports as of March 31 and September 30 of each year;
    (c) CLP lenders also must provide the following:
    (1) A written summary of the lender's annual analysis of the 
borrower's operation. This summary should describe the borrower's 
progress and prospects for the upcoming operating cycle. This annual 
analysis may be waived or postponed if the borrower is financially 
strong. The summary will include a description of the reasons an 
analysis was not necessary.
    (2) For lines of credit, an annual certification stating that a cash 
flow projecting at least a feasible plan has been developed, that the 
borrower is in compliance with the provisions of the line of credit 
agreement, and that the previous year income and loan funds and security 
proceeds have been accounted for.

[[Page 210]]

    (d) In addition to the requirements of paragraphs (a), (b), and (c) 
of this section, the standard eligible lender also will provide:
    (1) Borrower's balance sheet, and income and expense statement for 
the previous year.
    (2) For lines of credit, the cash flow for the borrower's operation 
that projects a feasible plan or better for the upcoming operating 
cycle. The standard eligible lender must receive approval from the 
Agency before advancing future years' funds.
    (3) An annual farm visit report or collateral inspection.
    (e) PLP lenders will submit additional reports as required in their 
lender's agreement.
    (f) A lender receiving a final loss payment must complete and return 
an annual report on its collection activities for each unsatisfied 
account for 3 years following payment of the final loss claim.



Sec.  762.142  Servicing related to collateral.

    (a) General. The lender's responsibilities regarding servicing 
collateral include, but are not limited to, the following:
    (1) Obtain income and insurance assignments when required.
    (2) Ensure the borrower has or obtains marketable title to the 
collateral.
    (3) Inspect the collateral as often as deemed necessary to properly 
service the loan.
    (4) Ensure the borrower does not convert loan security.
    (5) Ensure the proceeds from the sale or other disposition of 
collateral are accounted for and applied in accordance with the lien 
priorities on which the guarantee is based or used for the purchase of 
replacement collateral.
    (6) Ensure the loan and the collateral are protected in the event of 
foreclosure, bankruptcy, receivership, insolvency, condemnation, or 
other litigation.
    (7) Ensure taxes, assessments, or ground rents against or affecting 
the collateral are paid.
    (8) Ensure adequate insurance is maintained.
    (9) Ensure that insurance loss payments, condemnation awards, or 
similar proceeds are applied on debts in accordance with lien priorities 
on which the guarantee was based, or used to rebuild or acquire needed 
replacement collateral.
    (b) Partial releases. (1) A lender may release guaranteed loan 
security without FSA concurrence as follows:
    (i) When the security item is being sold for market value and the 
proceeds will be applied to the loan in accordance with lien priorities. 
In the case of term loans, proceeds will be applied as extra payments 
and not as a regular installment on the loan.
    (ii) The security item will be used as a trade-in or source of down 
payment funds for a like item that will be taken as security.
    (iii) The security item has no present or prospective value.
    (2) A partial release of security may be approved in writing by the 
Agency upon the lender's request when:
    (i) Proceeds will be used to make improvements to real estate that 
increase the value of the security by an amount equal to or greater than 
the value of the security being released.
    (ii) Security will be released outright with no consideration, but 
the total unpaid balance of the guaranteed loan is less than or equal to 
75 percent of the value of the security for the loan after the release, 
excluding the value of growing crops or planned production, based on a 
current appraisal of the security.
    (iii) Significant income generating property will not be released 
unless it is being replaced and business assets will not be released for 
use as a gift or any similar purpose.
    (iv) Agency concurrence is provided in writing to the lender's 
written request. Standard eligible lenders and CLP lenders will submit 
the following to the Agency:
    (A) A current balance sheet on the borrower; and
    (B) A current appraisal of the security. Based on the level of risk 
and estimated equity involved, the Agency will determine what security 
needs to be appraised. Any required security appraisals must meet the 
requirements of Sec.  762.127; and

[[Page 211]]

    (C) A description of the purpose of the release; and
    (D) Any other information requested by the Agency to evaluate the 
proposed servicing action.
    (3) The lender will provide the Agency copies of any agreements 
executed to carry out the servicing action.
    (4) PLP lenders will request servicing approval in accordance with 
their agreement with the Agency at the time of PLP status certification.
    (c) Subordinations. (1) The Agency may subordinate its security 
interest on a direct loan when a guaranteed loan is being made if the 
requirements of the regulations governing Agency direct loan 
subordinations are met and only in the following circumstances:
    (i) To permit a guaranteed lender to advance funds and perfect a 
security interest in crops, feeder livestock, livestock offspring, or 
livestock products;
    (ii) When the lender requesting the guarantee needs the 
subordination of the Agency's lien position to maintain its lien 
position when servicing or restructuring;
    (iii) When the lender requesting the guarantee is refinancing the 
debt of another lender and the Agency's position on real estate security 
will not be adversely affected; or
    (iv) To permit a line of credit to be advanced for annual operating 
expenses.
    (2) The Agency may subordinate its basic security in a direct loan 
to permit guaranteed line of credit only when both of the following 
additional conditions are met:
    (i) The total unpaid balance of the direct loans is less than or 
equal to 75 percent of the value of all of the security for the direct 
loans, excluding the value of growing crops or planned production, at 
the time of the subordination. The direct loan security value will be 
determined by an appraisal. The lender requesting the subordination and 
guarantee is responsible for providing the appraisal and may charge the 
applicant a reasonable appraisal fee.
    (ii) The applicant cannot obtain sufficient credit through a 
conventional guaranteed loan without a subordination.
    (3) The lender may not subordinate its interest in property which 
secures a guaranteed loan except as follows:
    (i) The lender may subordinate its security interest in crops, 
feeder livestock, livestock offspring, or livestock products when no 
funds have been advanced from the guaranteed loan for their production, 
so a lender can make a loan for annual production expenses; or
    (ii) The lender may, with written Agency approval, subordinate its 
interest in basic security in cases where the subordination is required 
to allow another lender to refinance an existing prior lien, no 
additional debt is being incurred, and the lender's security position 
will not be adversely affected by the subordination.
    (iii) The Agency's national office may provide an exception to the 
subordination prohibition if such action is in the Agency's best 
interest. However, in no case can the loan made under the subordination 
include tax exempt financing.
    (d) Transfer and assumption. Transfers and assumptions are subject 
to the following conditions:
    (1) For standard eligible and CLP lenders, the servicing action must 
be approved by the Agency in writing.
    (2) For standard eligible and CLP lenders, the transferee must apply 
for a loan in accordance with Sec.  762.110, including a current 
appraisal, unless the lien position of the guaranteed loan will not 
change, and any other information requested by the Agency to evaluate 
the transfer and assumption.
    (3) PLP lenders may process transfers and assumptions in accordance 
with their agreement with the Agency.
    (4) Any required security appraisals must meet the requirements of 
Sec.  762.127.
    (5) The Agency will review, approve or reject the request in 
accordance with the time frames in Sec.  762.130.
    (6) The transferee must meet the eligibility requirements and loan 
limitations for the loan being transferred, all requirements relating to 
loan rates and terms, loan security, feasibility, and environmental and 
other laws applicable to a applicant under this part.
    (7) The lender will use its own assumption agreements or conveyance

[[Page 212]]

instruments, providing they are legally sufficient to obligate the 
transferee for the total outstanding debt. The lender will provide the 
Agency copies of any agreements executed to carry out the servicing 
action.
    (8) The Agency approves the transfer and assumption by executing a 
modification of the guarantee to designate the party that assumed the 
guaranteed debt, the amount of debt at the time of the assumption, 
including interest that is being capitalized, and any new loan terms, if 
applicable.
    (9) The lender must give any holder notice of the transfer. If the 
rate and terms are changed, written concurrence from the holder is 
required.
    (10) The Agency will agree to releasing the transferor or any 
guarantor from liability only if the requirements of Sec.  762.146(c) 
are met.

[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 69 
FR 44579, July 27, 2004]



Sec.  762.143  Servicing distressed accounts.

    (a) A borrower is in default when 30 days past due on a payment or 
in violation of provisions of the loan documents.
    (b) In the event of a borrower default, SEL and CLP lenders will:
    (1) Report to the Agency in accordance with Sec.  762.141.
    (2) Determine whether it will repurchase the guaranteed portion from 
the holder in accordance with Sec.  762.144, if the guaranteed portion 
of the loan was sold on the secondary market.
    (3) Arrange a meeting with the borrower within 15 days of default 
(45 days after payment due date for monetary defaults) to identify the 
nature of the delinquency and develop a course of action that will 
eliminate the delinquency and correct the underlying problems. Non-
monetary defaults will be handled in accordance with the lender's note, 
loan agreements and any other applicable loan documents.
    (i) The lender and borrower will prepare a current balance sheet and 
cash flow projection in preparation for the meeting. If the borrower 
refuses to cooperate, the lender will compile the best financial 
information available.
    (ii) The lender or the borrower may request the attendance of an 
Agency official. If requested, the Agency official will assist in 
developing solutions to the borrower's financial problems.
    (iii) The lender will summarize the meeting and proposed solutions 
on the Agency form for guaranteed loan borrower default status completed 
after the meeting. The lender will indicate the results on this form for 
the lender's consideration of the borrower for interest assistance in 
conjunction with rescheduling under Sec.  762.145(b).
    (iv) The lender must decide whether to restructure or liquidate the 
account within 90 days of default, unless the lender can document 
circumstances that justify an extension by the Agency.
    (v) The lender may not initiate foreclosure action on the loan until 
60 days after eligibility of the borrower to participate in the interest 
assistance programs has been determined by the Agency. If the lender or 
the borrower does not wish to consider servicing options under this 
section, this should be documented, and liquidation under Sec.  762.149 
should begin.
    (vi) If a borrower is current on a loan, but will be unable to make 
a payment, a restructuring proposal may be submitted in accordance with 
Sec.  762.145 prior to the payment coming due.
    (c) PLP lenders will service defaulted loans according to their 
lender's agreement.

[64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007]



Sec.  762.144  Repurchase of guaranteed portion from a secondary market holder.

    (a) Request for repurchase. The holder may request the lender to 
repurchase the unpaid guaranteed portion of the loan when:
    (1) The borrower has not made a payment of principal and interest 
due on the loan for at least 60 days; or
    (2) The lender has failed to remit to the holder its pro-rata share 
of any payment made by the borrower within 30 days of receipt of a 
payment.
    (b) Repurchase by the lender. (1) When a lender is requested to 
repurchase a loan from the holder, the lender must consider the request 
according to the

[[Page 213]]

servicing actions that are necessary on the loan. In order to facilitate 
servicing and simplified accounting of loan transactions, lenders are 
encouraged to repurchase the loan upon the holder's request.
    (2) The repurchase by the lender will be for an amount equal to the 
portion of the loan held by the holder plus accrued interest.
    (3) The guarantee will not cover separate servicing fees that the 
lender accrues after the repurchase.
    (c) Repurchase by the Agency. (1) If the lender does not repurchase 
the loan, the holder must inform the Agency in writing that demand was 
made on the lender and the lender refused. Following the lender's 
refusal, the holder may continue as holder of the guaranteed portion of 
the loan or request that the Agency purchase the guaranteed portion. 
Within 30 days after written demand to the Agency from the holder with 
required attachments, the Agency will forward to the holder payment of 
the unpaid principal balance, with accrued interest to the date of 
repurchase. If the holder does not desire repurchase or purchase of a 
defaulted loan, the lender must forward the holder its pro-rata share of 
payments, liquidation proceeds and Agency loss payments.
    (2) With its demand on the Agency, the holder must include:
    (i) A copy of the written demand made upon the lender.
    (ii) Originals of the guarantee and note properly endorsed to the 
Agency, or the original of the assignment of guarantee.
    (iii) A copy of any written response to the demand of the holder by 
the lender.
    (iv) An account to which the Agency can forward the purchase amount 
via electronic funds transfer.
    (3) The amount due the holder from the Agency includes unpaid 
principal, unpaid interest to the date of demand, and interest which has 
accrued from the date of demand to the proposed payment date.
    (i) Upon request by the Agency, the lender must furnish upon Agency 
request a current statement, certified by a bank officer, of the unpaid 
principal and interest owed by the borrower and the amount due the 
holder.
    (ii) Any discrepancy between the amount claimed by the holder and 
the information submitted by the lender must be resolved by the lender 
and the holder before payment will be approved by the Agency. The Agency 
will not participate in resolution of any such discrepancy. When there 
is a discrepancy, the 30 day Agency payment requirement to the holder 
will be suspended until the discrepancy is resolved.
    (iii) In the case of a request for Agency purchase, the Agency will 
only pay interest that accrues for up to 90 days from the date of the 
demand letter to the lender requesting the repurchase. However, if the 
holder requested repurchase from the Agency within 60 days of the 
request to the lender and for any reason not attributable to the holder 
and the lender, the Agency cannot make payment within 30 days of the 
holder's demand to the Agency, the holder will be entitled to interest 
to the date of payment.
    (4) At the time of purchase by the Agency, the original assignment 
of guarantee will be assigned by the holder to the Agency without 
recourse, including all rights, title, and interest in the loan.
    (5) Purchase by the Agency does not change, alter, or modify any of 
the lender's obligations to the Agency specified in the lender's 
agreement or guarantee; nor does the purchase waive any of the Agency's 
rights against the lender.
    (6) The Agency succeeds to all rights of the holder under the 
Guarantee including the right of set-off against the lender.
    (7) Within 180 days of the Agency's purchase, the lender will 
reimburse the Agency the amount of repurchase, with accrued interest, 
through one of the following ways:
    (i) By liquidating the loan security and paying the Agency its pro-
rata share of liquidation proceeds; or
    (ii) Paying the Agency the full amount the Agency paid to the holder 
plus any accrued interest.
    (8) The lender will be liable for the purchase amount and any 
expenses incurred by the Agency to maintain the

[[Page 214]]

loan in its portfolio or liquidate the security. While the Agency holds 
the guaranteed portion of the loan, the lender will transmit to the 
Agency any payment received from the borrower, including the pro-rata 
share of liquidation or other proceeds.
    (9) If the borrower files for reorganization under the provisions of 
the bankruptcy code or pays the account current while the purchase by 
the Government is being processed, the Agency may hold the loan as long 
it determines this action to be in the Agency's interest. If the lender 
is not proceeding expeditiously to collect the loan or reimbursement is 
not waived under this paragraph, the Agency will demand payment by the 
lender and collect the purchase amount through administrative offset of 
any claims due the lender.
    (10) The Agency may sell a purchased guaranteed loan on a non-
recourse basis if it determines that selling the portion of the loan 
that it holds is in the Government's best interest. A non-recourse 
purchase from the Agency requires a written request to the Agency from 
the party that wishes to purchase it, and written concurrence from the 
lender;
    (d) Repurchase for servicing. (1) If, due to loan default or 
imminent loan restructuring, the lender determines that repurchase is 
necessary to adequately service the loan, the lender may repurchase the 
guaranteed portion of the loan from the holder, with the written 
approval of the Agency.
    (2) The lender will not repurchase from the holder for arbitrage 
purposes. With its request for Agency concurrence, the lender will 
notify the Agency of its plans to resell the guaranteed portion 
following servicing.
    (3) The holder will sell the guaranteed portion of the loan to the 
lender for an amount agreed to between the lender and holder.

[64 FR 7378, Feb. 12, 1999, as amended at 69 FR 44579, July 27, 2004]



Sec.  762.145  Restructuring guaranteed loans.

    (a) General. (1) To restructure guaranteed loans standard eligible 
lenders must:
    (i) Obtain prior written approval of the Agency for all 
restructuring actions; and,
    (ii) Provide the items in paragraph (b) and (e) of this section to 
the Agency for approval.
    (2) If the standard eligible lender's proposal for servicing is not 
agreed to by the Agency, the Agency approval official will notify the 
lender in writing within 14 days of the lender's request.
    (3) To restructure guaranteed loans CLP lenders must:
    (i) Obtain prior written approval of the Agency only for debt write 
down under this section.
    (ii) Submit all calculations required in paragraph (e) of this 
section for debt writedown.
    (iii) For restructuring other than write down, provide FSA with a 
certification that each requirement of this section has been met, a 
narrative outlining the circumstances surrounding the need for 
restructuring, and copies of any applicable calculations.
    (4) PLP lenders will restructure loans in accordance with their 
lender's agreement.
    (5) All lenders will submit copies of any restructured notes or 
lines of credit to the Agency.
    (b) Requirements. For any restructuring action, the following 
conditions apply:
    (1) The borrower meets the eligibility criteria of Sec.  762.120, 
except the provisions regarding prior debt forgiveness and delinquency 
on a federal debt do not apply.
    (2) The borrower's ability to make the amended payment is documented 
by the following:
    (i) A feasible plan.
    (ii) Current financial statements from all liable parties.
    (iii) Verification of nonfarm income.
    (iv) Verification of all debts of $1,000 or more.
    (v) Applicable credit reports.
    (vi) Financial history (and production history for standard eligible 
lenders) for the past 3 years to support the cash flow projections.
    (3) A final loss claim may be reduced, adjusted, or rejected as a 
result of negligent servicing after the concurrence with a restructuring 
action under this section.

[[Page 215]]

    (4) Loans secured by real estate and/or equipment can be 
restructured using a balloon payment, equal installments, or unequal 
installments. Under no circumstances may livestock or crops alone be 
used as security for a loan to be rescheduled using a balloon payment. 
If a balloon payment is used, the projected value of the real estate 
and/or equipment security must indicate that the loan will be fully 
secured when the balloon payment becomes due. The projected value will 
be derived from a current appraisal adjusted for depreciation of 
depreciable property, such as buildings and other improvements, that 
occurs until the balloon payment is due. For equipment security, a 
current appraisal is required. The lender is required to project the 
security value of the equipment at the time the balloon payment is due 
based on the remaining life of the equipment, or the depreciation 
schedule on the borrower's Federal income tax return. Loans restructured 
with a balloon payment that are secured by real estate will have a 
minimum term of 5 years, and other loans will have a minimum term of 3 
years before the scheduled balloon payment. If statutory limits on terms 
of loans prevent the minimum terms, balloon payments may not be used. If 
the loan is rescheduled with unequal installments, a feasible plan, as 
defined in Sec.  762.2(b), must be projected for when installments are 
scheduled to increase.
    (5) If a borrower is current on a loan, but will be unable to make a 
payment, a restructuring proposal may be submitted prior to the payment 
coming due.
    (6) The lender may capitalize the outstanding interest when 
restructuring the loan as follows:
    (i) As a result of the capitalization of interest, a rescheduled 
promissory note may increase the amount of principal the borrower is 
required to pay. However, in no case will such principal amount exceed 
the statutory loan limits contained in Sec.  761.8 of this chapter.
    (ii) When accrued interest causes the loan amount to exceed the 
statutory loan limits, rescheduling may be approved without 
capitalization of the amount that exceeds the limit. Noncapitalized 
interest may be scheduled for repayment over the term of the rescheduled 
note.
    (iii) Only interest that has accrued at the rate indicated on the 
borrower's original promissory notes may be capitalized. Late payment 
fees or default interest penalties that have accrued due to the 
borrower's failure to make payments as agreed are not covered under the 
guarantee and may not be capitalized.
    (iv) The Agency will execute a modification of guarantee form to 
identify the new loan principal and the guaranteed portion if greater 
than the original loan amounts, and to waive the restriction on 
capitalization of interest, if applicable, to the existing guarantee 
documents. The modification form will be attached to the original 
guarantee as an addendum.
    (v) Approved capitalized interest will be treated as part of the 
principal and interest that accrues thereon, in the event that a loss 
should occur.
    (7) The lender's security position will not be adversely affected 
because of the restructuring. New security instruments may be taken if 
needed, but a loan does not have to be fully secured in order to be 
restructured, unless it is restructured with a balloon payment. When a 
loan is restructured using a balloon payment the lender must take a lien 
on all assets and project the loan to be fully secured at the time the 
balloon payment becomes due, in accordance with paragraph (b)(4) of this 
section.
    (8) Any holder agrees to any changes in the original loan terms. If 
the holder does not agree, the lender must repurchase the loan from the 
holder for any loan restructuring to occur.
    (9) After a guaranteed loan is restructured, the lender must provide 
the Agency with a copy of the restructured promissory note.
    (10) For CL, the lender must ensure that the borrower is maintaining 
the practice for which the CL was made.
    (c) Rescheduling. The following conditions apply when a guaranteed 
loan is rescheduled or reamortized:
    (1) Payments will be rescheduled within the following terms:
    (i) FO and existing SW may be amortized over the remaining term of 
the note or rescheduled with an uneven

[[Page 216]]

payment schedule. The maturity date cannot exceed 40 years from the date 
of the original note.
    (ii) OL notes must be rescheduled over a period not to exceed 15 
years from the date of the rescheduling. An OL line of credit may be 
rescheduled over a period not to exceed 7 years from the date of the 
rescheduling or 10 years from the date of the original note, whichever 
is less. Advances cannot be made against a line of credit loan that has 
had any portion of the loan rescheduled.
    (iii) CL will be amortized over the remaining term or rescheduled 
with an uneven payment schedule. The maturity date cannot exceed 30 
years from the date of the original note.
    (2) The interest rate for a rescheduled loan is the negotiated rate 
agreed upon by the lender and the borrower at the time of the action, 
subject to the loan limitations for each type of loan.
    (3) A new note is not necessary when rescheduling occurs. However, 
if a new note is not taken, the existing note or line of credit 
agreement must be modified by attaching an allonge or other legally 
effective amendment, evidencing the revised repayment schedule and any 
interest rate change. If a new note is taken, the new note must 
reference the old note and state that the indebtedness evidenced by the 
old note or line of credit agreement is not satisfied. The original note 
or line of credit agreement must be retained.
    (d) Deferrals. The following conditions apply to deferrals:
    (1) Payments may be deferred up to 5 years, but the loan may not be 
extended beyond the final due date of the note.
    (2) The principal portion of the payment may be deferred either in 
whole or in part.
    (3) Interest may be deferred only in part. Payment of a reasonable 
portion of accruing interest as indicated by the borrower's cash flow 
projections is required for multi-year deferrals.
    (4) There must be a reasonable prospect that the borrower will be 
able to resume full payments at the end of the deferral period.
    (e) Debt writedown. The following conditions apply to debt 
writedown:
    (1) A lender may only write down a delinquent guaranteed loan or 
line of credit in an amount sufficient to permit the borrower to develop 
a feasible plan as defined in Sec.  762.102(b).
    (2) The lender will request other creditors to negotiate their debts 
before a writedown is considered.
    (3) The borrower cannot develop a feasible plan after consideration 
is given to rescheduling and deferral under this section.
    (4) The present value of the loan to be written down, based on the 
interest rate of the rescheduled loan, will be equal to or exceed the 
net recovery value of the loan collateral.
    (5) The loan will be restructured with regular payments at terms no 
shorter than 5 years for a line of credit and OL term note; and no 
shorter than 20 years for FO and CL, unless required to be shorter by 
paragraphs (c)(1)(i) through (iii) of this section.
    (6) No further advances may be made on a line of credit that is 
written down.
    (7) Loans may not be written down with interest assistance. If a 
borrower's loan presently on interest assistance requires a writedown, 
the writedown will be considered without interest assistance.
    (8) The writedown is based on writing down the shorter-term loans 
first.
    (9) When a lender requests approval of a writedown for a borrower 
with multiple loans, the security for all of the loans will be cross-
collateralized and continue to serve as security for the loan that is 
written down. If a borrower has multiple loans and one loan is written 
off entirely through debt writedown, the security for that loan will not 
be released and will remain as security for the other written down debt. 
Additional security instruments will be taken if required to cross-
collateralize security and maintain lien priority.
    (10) The writedown will be evidenced by an allonge or amendment to 
the existing note or line of credit reflecting the writedown.
    (11) The borrower executes an Agency shared appreciation agreement 
for loans which are written down and secured by real estate.

[[Page 217]]

    (i) The lender will attach the original agreement to the 
restructured loan document.
    (ii) The lender will provide the Agency a copy of the executed 
agreement, and
    (iii) Security instruments must ensure future collection of any 
appreciation under the agreement.
    (12) The lender will prepare and submit the following to the Agency:
    (i) A current appraisal of all security in accordance with Sec.  
762.127.
    (ii) A completed report of loss on the appropriate Agency form for 
the proposed writedown loss claim.
    (iii) Detailed writedown calculations as follows:
    (A) Calculate the present value.
    (B) Determine the net recovery value.
    (C) If the net recovery value exceeds the present value, writedown 
is unavailable; liquidation becomes the next servicing consideration. If 
the present value equals or exceeds the net recovery value, the debt may 
be written down to the present value.
    (iv) The lender will make any adjustment in the calculations as 
requested by the Agency.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999, as amended at 66 
FR 7567, Jan. 24, 2001; 69 FR 44579, July 27, 2004; 70 FR 56107, Sept. 
26, 2005; 72 FR 17358, Apr. 9, 2007; 75 FR 54014, Sept. 1, 2010; 77 FR 
15938, Mar. 19, 2012; 78 FR 65530, Nov. 1, 2013]



Sec.  762.146  Other servicing procedures.

    (a) Additional loans and advances. (1) Notwithstanding any provision 
of this section, the PLP lender may make additional loans or advances in 
accordance with the lender's agreement with the Agency.
    (2) SEL and CLP lenders must not make additional loans or advances 
without prior written approval of the Agency, except as provided in the 
borrower's loan or line of credit agreement.
    (3) In cases of a guaranteed line of credit, lenders may make an 
emergency advance when a line of credit has reached its ceiling. The 
emergency advance will be made as an advance under the line and not as a 
separate note. The lender's loan documents must contain sufficient 
language to provide that any emergency advance will constitute a debt of 
the borrower to the lender and be secured by the security instrument. 
The following conditions apply:
    (i) The loan funds to be advanced are for authorized operating loan 
purposes;
    (ii) The financial benefit to the lender and the Government from the 
advance will exceed the amount of the advance; and
    (iii) The loss of crops or livestock is imminent unless the advance 
is made.
    (4) Protective advance requirements are found in Sec.  762.149.
    (b) Release of liability upon withdrawal. An individual who is 
obligated on a guaranteed loan may be released from liability by a 
lender, with the written consent of the Agency, provided the following 
conditions have been met:
    (1) The individual to be released has withdrawn from the farming 
operation;
    (2) A divorce decree or final property settlement does not hold the 
withdrawing party responsible for the loan payments;
    (3) The withdrawing party's interest in the security is conveyed to 
the individual or entity with whom the loan will be continued;
    (4) The ratio of the amount of debt to the value of the remaining 
security is less than or equal to .75, or the withdrawing party has no 
income or assets from which collection can be made; and
    (5) Withdrawal of the individual does not result in legal 
dissolution of the entity to which the loans are made. Individually 
liable members of a general or limited partnership may not be released 
from liability.
    (6) The remaining liable party projects a feasible plan (see Sec.  
761.2(b) of this chapter).
    (c) Release of liability after liquidation. After a final loss claim 
has been paid on the borrower's account, the lender may release the 
borrower or guarantor from liability if;
    (1) The Agency agrees to the release in writing;
    (2) The lender documents its consideration of the following factors 
concerning the borrower or guarantors:
    (i) The likelihood that the borrower or guarantor will have a 
sufficient level of income in the reasonably near

[[Page 218]]

future to contribute to a meaningful reduction of the debt;
    (ii) The prospect that the borrower or guarantor will inherit assets 
in the near term that may be attached by the Agency for payment of a 
significant portion of the debt;
    (iii) Whether collateral has been properly accounted for, and 
whether liability should be retained in order to take action against the 
borrower or a third party for conversion of security;
    (iv) The availability of other income or assets which are not 
security;
    (v) The possibility that assets have been concealed or improperly 
transferred;
    (vi) The effect of other guarantors on the loan; and
    (vii) Cash consideration or other collateral in exchange for the 
release of liability.
    (3) The lender will use its own release of liability documents.
    (d) Interest rate changes. (1) The lender may change the interest 
rate on a performing (nondelinquent) loan only with the borrower's 
consent.
    (2) If the loan has been sold on the secondary market, the lender 
must repurchase the loan or obtain the holder's written consent.
    (3) To change a fixed rate of interest to a variable rate of 
interest or vice versa, the lender and the borrower must execute a 
legally effective allonge or amendment to the existing note.
    (4) If a new note is taken, it will be attached to and refer to the 
original note.
    (5) The lender will inform the Agency of the rate change.
    (e) Consolidation. Two or more Agency guaranteed loans may be 
consolidated, subject to the following conditions:
    (1) The borrower must project a feasible plan after the 
consolidation. See Sec.  761.2(b) of this chapter for definition of 
feasible plan.
    (2) Only OL may be consolidated.
    (3) Existing lines of credit may only be consolidated with a new 
line of credit if the final maturity date and conditions for advances of 
the new line of credit are made the same as the existing line of credit.
    (4) Guaranteed OL may not be consolidated with a line of credit, 
even if the line of credit has been rescheduled.
    (5) Guaranteed loans made prior to October 1, 1991, cannot be 
consolidated with those loans made on or after October 1, 1991.
    (6) OL secured by real estate or with an outstanding interest 
assistance agreement or shared appreciation agreement cannot be 
consolidated.
    (7) A new note or line of credit agreement will be taken. The new 
note or line of credit agreement must describe the note or line of 
credit agreement being consolidated and must state that the indebtedness 
evidenced by the note or line of credit agreement is not satisfied. The 
original note or line of credit agreement must be retained.
    (8) The interest rate for a consolidated OL loan is the negotiated 
rate agreed upon by the lender and the borrower at the time of the 
action, subject to the loan limitations for each type of loan.
    (9) The Agency approves the consolidation by executing a 
modification of guarantee. The modification will indicate the 
consolidated loan amount, new terms, and percentage of guarantee, and 
will be attached to the originals of the guarantees being consolidated. 
If loans with a different guarantee percentage are consolidated, the new 
guarantee will be at the lowest percentage of guarantee being 
consolidated
    (10) Any holders must consent to the consolidation, or the 
guaranteed portion must be repurchased by the lender.

[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001; 78 
FR 65530, Nov. 1, 2013]



Sec.  762.147  Servicing shared appreciation agreements.

    (a) Lender responsibilities. The lender is responsible for:
    (1) Monitoring the borrower's compliance with the shared 
appreciation agreement;
    (2) Notifying the borrower of the amount of recapture due; and,
    (3) Beginning October 1, 1999, a notice of the agreement's 
provisions not later than 12 months before the end of the agreement; and

[[Page 219]]

    (4) Reimbursing the Agency for its pro-rata share of recapture due.
    (b) Recapture. (1) Recapture of any appreciation of real estate 
security will take place at the end of the term of the agreement, or 
sooner if the following occurs:
    (i) On the conveyance of the real estate security (or a portion 
thereof) by the borrower.
    (A) If only a portion of the real estate is conveyed, recapture will 
only be triggered against the portion conveyed. Partial releases will be 
handled in accordance with Sec.  762.142(b).
    (B) Transfer of title to the spouse of the borrower on the death of 
such borrower will not be treated as a conveyance under the agreement.
    (ii) On repayment of the loan; or
    (iii) If the borrower ceases farming.
    (2) Calculating recapture.
    (i) The amount of recapture will be based on the difference between 
the value of the security at the time recapture is triggered and the 
value of the security at the time of writedown, as shown on the shared 
appreciation agreement.
    (ii) Security values will be determined through appraisals obtained 
by the lender and meeting the requirements of Sec.  762.127.
    (iii) All appraisal fees will be paid by the lender.
    (iv) The amount of recapture will not exceed the amount of writedown 
shown on the shared appreciation agreement.
    (v) If recapture is triggered within 4 years of the date of the 
shared appreciation agreement, the lender shall recapture 75 percent of 
any positive appreciation in the market value of the property securing 
the loan or line of credit agreement.
    (vi) If recapture is triggered after 4 years from the date of the 
shared appreciation agreement, the lender shall recapture 50 percent of 
any positive appreciation in the market value of the property securing 
the loan or line of credit agreement.
    (3) Servicing recapture debt.
    (i) If recapture is triggered under the shared appreciation 
agreement and the borrower is unable to pay the recapture in a lump sum, 
the lender may:
    (A) Reschedule the recapture debt with the consent of the Agency, 
provided the lender can document the borrower's ability to make 
amortized payments on the recapture debt, plus pay all other 
obligations. In such case, the recapture debt will not be covered by the 
guarantee;
    (B) Pay the Agency its pro rata share of the recapture due. In such 
case, the recapture debt of the borrower will be covered by the 
guarantee; or
    (C) Service the account in accordance with Sec.  762.149.
    (ii) If recapture is triggered, and the borrower is able but 
unwilling to pay the recapture in a lump sum, the lender will service 
the account in accordance with Sec.  762.149.
    (4) Paying the Agency. Any shared appreciation recaptured by the 
lender will be shared on a pro-rata basis between the lender and the 
Agency.

[64 FR 7378, Feb. 12, 1999, as amended at 75 FR 54014, Sept. 3, 2010]



Sec.  762.148  Bankruptcy.

    (a) Lender responsibilities. The lender must protect the guaranteed 
loan debt and all collateral securing the loan in bankruptcy 
proceedings. The lender's responsibilities include, but are not limited 
to:
    (1) Filing a proof of claim where required and all the necessary 
papers and pleadings;
    (2) Attending, and where necessary, participating in meetings of the 
creditors and court proceedings;
    (3) Protecting the collateral securing the guaranteed loan and 
resisting any adverse changes that may be made to the collateral;
    (4) Seeking a dismissal of the bankruptcy proceeding when the 
operation as proposed by the borrower to the bankruptcy court is not 
feasible;
    (5) When permitted by the bankruptcy code, requesting a modification 
of any plan of reorganization if it appears additional recoveries are 
likely.
    (6) Monitor confirmed plans under chapters 11, 12 and 13 of the 
bankruptcy code to determine borrower compliance. If the borrower fails 
to comply, the lender will seek a dismissal of the reorganization plan; 
and
    (7) Keeping the Agency regularly informed in writing on all aspects 
of the proceedings.

[[Page 220]]

    (i) The lender will submit a default status report when the borrower 
defaults and every 60 days until the default is resolved or a final loss 
claim is paid.
    (ii) The default status report will be used to inform the Agency of 
the bankruptcy filing, the reorganization plan confirmation date and 
effective date, when the reorganization plan is complete, and when the 
borrower is not in compliance with the reorganization plan.
    (b) Bankruptcy expenses. (1) Reorganization.
    (i) Expenses, such as legal fees and the cost of appraisals incurred 
by the lender as a direct result of the borrower's chapter 11, 12, or 13 
reorganization, are covered under the guarantee, provided they are 
reasonable, customary, and provide a demonstrated economic benefit to 
the lender and the Agency.
    (ii) Lender's in-house expenses, which are those expenses which 
would normally be incurred for administration of the loan, including in-
house lawyers, are not covered by the guarantee.
    (2) Liquidation expenses in bankruptcy.
    (i) Reasonable and customary liquidation expenses may be deducted 
from the proceeds of the collateral in liquidation bankruptcy cases.
    (ii) In-house expenses are not considered customary liquidation 
expenses, may not be deducted from collateral proceeds, and are not 
covered by the guarantee.
    (c) Estimated loss claims in reorganization--(1) At confirmation. 
The lender may submit an estimated loss claim upon confirmation of the 
reorganization plan in accordance with the following:
    (i) The estimated loss payment will cover the guaranteed percentage 
of the principal and accrued interest written off, plus any allowable 
costs incurred as of the effective date of the plan.
    (ii) The lender will submit supporting documentation for the loss 
claim, and any additional information requested by the Agency, including 
justification for the legal fees included on the claim.
    (iii) The estimated loss payment may be revised as consistent with a 
court-approved reorganization plan.
    (iv) Protective advances made and approved in accordance with Sec.  
762.149 may be included in an estimated loss claim associated with a 
reorganization, if:
    (A) They were incurred in connection with the initiation of 
liquidation action prior to bankruptcy filing; or
    (B) The advance is required to provide repairs, insurance, etc. to 
protect the collateral as a result of delays in the case, or failure of 
the borrower to maintain the security.
    (2) Interest only losses. The lender may submit an estimated loss 
claim for interest only after confirmation of the reorganization plan in 
accordance with the following:
    (i) The loss claims may cover interest losses sustained as a result 
of a court-ordered, permanent interest rate reduction.
    (ii) The loss claims will be processed annually on the anniversary 
date of the effective date of the reorganization plan.
    (iii) If the borrower performs under the terms of the reorganization 
plan, annual interest reduction loss claims will be submitted on or near 
the same date, beyond the period of the reorganization plan.
    (3) Actual loss.
    (i) Once the reorganization plan is complete, the lender will 
provide the Agency with documentation of the actual loss sustained.
    (ii) If the actual loss sustained is greater than the prior 
estimated loss payment, the lender may submit a revised estimated loss 
claim to obtain payment of the additional amount owed by the Agency 
under the guarantee.
    (iii) If the actual loss is less than the prior estimated loss, the 
lender will reimburse the Agency for the overpayment plus interest at 
the note rate from the date of the payment of the estimated loss.
    (4) Payment to holder. In reorganization bankruptcy, if a holder 
makes demand upon the Agency, the Agency will pay the holder interest to 
the plan's effective date. Accruing interest thereafter will be based 
upon the provisions of the reorganization plan.
    (d) Liquidation under the bankruptcy code. (1) Upon receipt of 
notification

[[Page 221]]

that a borrower has filed for protection under Chapter 7 of the 
bankruptcy code, or a liquidation plan under chapter 11, the lender must 
proceed according to the liquidation procedures of this part.
    (2) If the property is abandoned by the trustee, the lender will 
conduct the liquidation according to Sec.  762.149.
    (3) Proceeds received from partial sale of collateral during 
bankruptcy may be used by the lender to pay reasonable costs, such as 
freight, labor and sales commissions, associated with the partial sale. 
Reasonable use of proceeds for this purpose must be documented with the 
final loss claim in accordance with Sec.  762.149(i)(4).

[64 FR 7378, Feb. 12, 1999, as amended at 71 FR 43957, Aug. 3, 2006; 73 
FR 32637, June 10, 2008; 75 FR 54014, Sept. 3, 2010]



Sec.  762.149  Liquidation.

    (a) Mediation. When it has been determined that default cannot be 
cured through any of the servicing options available, or if the lender 
does not wish to utilize any of the authorities provided in this part, 
the lender must:
    (1) Participate in mediation according to the rules and regulations 
of any State which has a mandatory farmer-creditor mediation program;
    (2) Consider private mediation services in those States which do not 
have a mandatory farmer-creditor mediation program; and
    (3) Not agree to any proposals to rewrite the terms of a guaranteed 
loan which do not comply with this part. Any agreements reached as a 
result of mediation involving defaults and or loan restructuring must 
have written concurrence from the Agency before they are implemented.
    (b) Liquidation plan. If a default cannot be cured after considering 
servicing options and mediation, the lender will proceed with 
liquidation of the collateral in accordance with the following:
    (1) Within 150 days after the payment due date, all lenders will 
prepare a liquidation plan. Standard eligible and CLP lenders will 
submit a written liquidation plan to the Agency which includes:
    (i) Current balance sheets from all liable parties or, if the 
parties are not cooperative, the best information available, or in 
liquidation bankruptcies, a copy of the bankruptcy schedules or 
discharge notice;
    (ii) A proposed method of maximizing the collection of debt which 
includes specific plans to collect any remaining loan balances on the 
guaranteed loan after loan collateral has been liquidated, including 
possibilities for judgment;
    (A) If the borrower has converted loan security, the lender will 
determine whether litigation is cost effective. The lender must address, 
in the liquidation plan, whether civil or criminal action will be 
pursued. If the lender does not pursue the recovery, the reason must be 
documented when an estimated loss claim is submitted.
    (B) Any proposal to release the borrower from liability will be 
addressed in the liquidation plan in accordance with Sec.  
762.146(c)(2);
    (iii) An independent appraisal report on all collateral securing the 
loan that meets the requirements of Sec.  762.127 and a calculation of 
the net recovery value of the security as defined in ;Sec.  761.2(b) of 
this chapter. The appraisal requirement may be waived by the Agency in 
the following cases:
    (A) The bankruptcy trustee is handling the liquidation and the 
lender has submitted the trustee's determination of value;
    (B) The lender's proposed method of liquidation rarely results in 
receipt of less than market value for livestock and used equipment; or
    (C) A purchase offer has already been received for more than the 
debt;
    (iv) An estimate of time necessary to complete the liquidation;
    (v) An estimated loss claim must be filed no later than 150 days 
past the payment due date unless the account has been completely 
liquidated and then a final loss claim must be filed.
    (vi) An estimate of reasonable liquidation expenses; and
    (vii) An estimate of any protective advances.
    (2) PLP lenders will submit a liquidation plan as required by their 
lender's agreement.
    (c) Agency approval of the liquidation plan. (1) CLP lender's or 
standard eligible lender's liquidation plan, and any

[[Page 222]]

revisions of the plan, must be approved by the Agency.
    (2) If, within 20 calendar days of the Agency's receipt of the 
liquidation plan, the Agency fails to approve it or fails to request 
that the lender make revisions, the lender may assume the plan is 
approved. The lender may then proceed to begin liquidation actions at 
its discretion as long as it has been at least 60 days since the 
borrower's eligibility for interest assistance was considered.
    (3) At its option, the Agency may liquidate the guaranteed loan as 
follows:
    (i) Upon Agency request, the lender will transfer to the Agency all 
rights and interests necessary to allow the Agency to liquidate the 
loan. The Agency will not pay the lender for any loss until after the 
collateral is liquidated and the final loss is determined; and
    (ii) If the Agency conducts the liquidation, interest accrual will 
cease on the date the Agency notifies the lender in writing that it 
assumes responsibility for the liquidation.
    (d) Estimated loss claims. An estimated loss claim must be submitted 
by all lenders no later than 150 days after the payment due date unless 
the account has been completely liquidated and then a final loss claim 
must be filed. The estimated loss will be based on the following:
    (1) The Agency will pay the lender the guaranteed percentage of the 
total outstanding debt, less the net recovery value of the remaining 
security, less any unaccounted for security; and
    (2) The lender will discontinue interest accrual on the defaulted 
loan at the time the estimated loss claim is paid by the Agency. The 
Agency will not pay interest beyond 210 days from the payment due date. 
If the lender estimates that there will be no loss after considering the 
costs of liquidation, an estimated loss of zero will be submitted and 
interest accrual will cease upon the approval of the estimated loss and 
never later than 210 days from the payment due date. The following 
exceptions apply:
    (i) In the case of a Chapter 7 bankruptcy, in cases where the lender 
filed an estimated loss claim, the Agency will pay the lender interest 
that accrues during and up to 45 days after the discharge on the portion 
of the chattel only secured debt that was estimated to be secured, but 
upon final liquidation was found to be unsecured, and up to 90 days 
after the date of discharge on the portion of real estate secured debt 
that was estimated to be secured, but was found to be unsecured upon 
final disposition.
    (ii) The Agency will pay the lender interest that accrues during and 
up to 90 days after the time period the lender is unable to dispose of 
acquired property due to state imposed redemption rights on any 
unsecured portion of the loan during the redemption period, if an 
estimated loss claim was paid by the Agency during the liquidation 
action.
    (3) Packager fees and outside consultant fees for servicing of 
guaranteed loans are not covered by the guarantee, and will not be paid 
in an estimated loss claim.
    (e) Protective advances. (1) Prior written authorization from the 
Agency is required for all protective advances in excess of $5,000 for 
CLP lenders and $3,000 for standard eligible lenders. The dollar amount 
of protective advances allowed for PLP lenders will be specified when 
PLP status is awarded by the Agency or as contained in the lender's 
agreement.
    (2) The lender may claim recovery for the guaranteed portion of any 
loss of monies advanced as protective advances as allowed in this part, 
plus interest that accrues on the protective advances.
    (3) Payment for protective advances is made by the Agency when the 
final loss claim is approved, except in bankruptcy actions.
    (4) Protective advances are used only when the borrower is in 
liquidation, liquidation is imminent, or when the lender has taken title 
to real property in a liquidation action.
    (5) Legal fees are not a protective advance.
    (6) Protective advances may only be made when the lender can 
demonstrate the advance is in the best interest of the lender and the 
Agency.
    (7) Protective advances must constitute a debt of the borrower to 
the

[[Page 223]]

lender and be secured by the security instrument.
    (8) Protective advances must not be made in lieu of additional 
loans.
    (f) Unapproved loans or advances. The amount of any payments made by 
the borrower on unapproved loans or advances outside of the guarantee 
will be deducted from any loss claim submitted by the lender on the 
guaranteed loan, if that loan or advance was paid prior to, and to the 
detriment of, the guaranteed loan.
    (g) Acceleration. (1) If the borrower is not in bankruptcy, the 
lender shall send the borrower notice that the loan is in default and 
the entire debt has been determined due and payable immediately after 
other servicing options have been exhausted.
    (2) The loan cannot be accelerated until after the borrower has been 
considered for interest assistance and the conclusion of mandatory 
mediation in accordance with Sec.  762.149.
    (3) The lender will submit a copy of the acceleration notice or 
other document to the Agency.
    (h) Foreclosure. (1) The lender is responsible for determining the 
necessary parties to any foreclosure action, or who should be named on a 
deed of conveyance taken in lieu of foreclosure.
    (2) When the property is liquidated, the lender will apply the net 
proceeds to the guaranteed loan debt.
    (3) When it is necessary to enter a bid at a foreclosure sale, the 
lender may bid the amount that it determines is reasonable to protect 
its and the Agency's interest. At a minimum, the lender will bid the 
lesser of the net recovery value or the unpaid guaranteed loan balance.
    (i) Final loss claims. (1) Lenders must submit a final loss claim 
when the security has been liquidated and all proceeds have been 
received and applied to the account. All proceeds must be applied to 
principal first and then toward accrued interest if the interest is 
still accruing. The application of the loss claim payment to the account 
does not automatically release the borrower of liability for any portion 
of the borrower's debt to the lender. The lender will continue to be 
responsible for collecting the full amount of the debt and sharing these 
future recoveries with the Agency in accordance with paragraph (j) of 
this section.
    (2) If a lender acquires title to property either through voluntary 
conveyance or foreclosure proceeding, the lender will submit a final 
loss claim after disposing of the property. The lender may pay 
reasonable maintenance expenses to protect the value of the property 
while it is owned by the lender. These may be paid as protective 
advances or deducted as liquidation expenses from the sales proceeds 
when the lender disposes of the property. The lender must obtain Agency 
written concurrence before incurring maintenance expenses which exceed 
the amounts allowed in Sec.  762.149(e)(1). Packager fees and outside 
consultant fees for servicing of guaranteed loans are not covered by the 
guarantee, and will not be paid in a final loss claim.
    (3) The lender will make its records available to the Agency for the 
Agency's audit of the propriety of any loss payment.
    (4) All lenders will submit the following documents with a final 
loss claim:
    (i) An accounting of the use of loan funds;
    (ii) An accounting of the disposition of loan security and its 
proceeds;
    (iii) A copy of the loan ledger indicating loan advances, interest 
rate changes, protective advances, and application of payments, rental 
proceeds, and security proceeds, including a running outstanding balance 
total; and
    (iv) Documentation, as requested by the Agency, concerning the 
lender's compliance with the requirements of this part.
    (5) The Agency will notify the lender of any discrepancies in the 
final loss claim or, approve or reject the claim within 40 days. Failure 
to do so will result in additional interest being paid to the lender for 
the number of days over 40 taken to process the claim.
    (6) The Agency will reduce a final loss claim based on its 
calculation of the dollar amount of loss caused by the lender's 
negligent servicing of the account. Loss claims may be reduced or 
rejected as a result of the following:

[[Page 224]]

    (i) A loss claim may be reduced by the amount caused by the lender's 
failure to secure property after a default, and will be reduced by the 
amount of interest that accrues when the lender fails to contact the 
borrower or takes no action to cure the default, once it occurs. Losses 
incurred as a result of interest accrual during excessive delays in 
collection, as determined by the Agency, will not be paid.
    (ii) Unauthorized release of security proceeds, failure to verify 
ownership or possession of security to be purchased, or failure to 
inspect collateral as often required so as to ensure its maintenance.
    (7) Losses will not be reduced for the following:
    (i) Servicing deficiencies that did not contribute materially to the 
dollar amount of the loss.
    (ii) Unaccounted security, as long as the lender's efforts to locate 
and recover the missing collateral was equal to that which would have 
been expended in the case of an unguaranteed loan in the lender's 
portfolio.
    (8) Default interest, late charges, and loan servicing fees are not 
payable under the loss claim.
    (9) The final loss will be the remaining outstanding balance after 
application of the estimated loss payment and the application of 
proceeds from the liquidation of the security.
    (10) If the final loss is less than the estimated loss, the lender 
will reimburse the Agency for the overpayment, plus interest at the note 
rate from the date of the estimated loss payment.
    (11) The lender will return the original guarantee marked paid after 
receipt of a final loss claim.
    (j) Future Recovery. The lender will remit any recoveries made on 
the account after the Agency's payment of a final loss claim to the 
Agency in proportion to the percentage of guarantee, in accordance with 
the lender's agreement, until the account is paid in full or otherwise 
satisfied.
    (k) Overpayments. The lender will repay any final loss overpayment 
determined by the Agency upon request.
    (l) Electronic funds transfer. The lender will designate one or more 
financial institutions to which any Agency payments will be made via 
electronic funds transfer.
    (m) Establishment of Federal debt. Any amounts paid by the Agency on 
account of liabilities of the guaranteed loan borrower will constitute a 
Federal debt owing to the Agency by the guaranteed loan borrower. In 
such case, the Agency may use all remedies available to it, including 
offset under the Debt Collection Improvement Act of 1996, to collect the 
debt from the borrower. Interest charges will be established at the note 
rate of the guaranteed loan on the date the final loss claim is paid.

[64 FR 7378, Feb. 12, 1999, as amended at 67 FR 44016, July 1, 2002; 69 
FR 44580, July 27, 2004; 71 FR 43957, Aug. 3, 2006; 73 FR 32637, June 
10, 2008; 78 FR 65530, Nov. 1, 2013]



Sec.  762.150  Interest assistance program.

    (a) Requests for interest assistance. In addition to the loan 
application items required by Sec.  762.110, to apply for interest 
assistance the lender's cash flow budget for the guaranteed applicant 
must reflect the need for interest assistance and the ability to cash 
flow with the subsidy. Interest assistance is available only on new 
guaranteed Operating Loans (OL).
    (b) Eligibility requirements. The lender must document that the 
following conditions have been met for the applicant to be eligible for 
interest assistance:
    (1) A feasible plan cannot be achieved without interest assistance, 
but can be achieved with interest assistance.
    (2) If significant changes in the borrower's cash flow budget are 
anticipated after the initial 12 months, then the typical cash flow 
budget must demonstrate that the borrower will still have a feasible 
plan following the anticipated changes, with or without interest 
assistance.
    (3) The typical cash flow budget must demonstrate that the borrower 
will have a feasible plan throughout the term of the loan.
    (4) The borrower, including members of an entity borrower, does not 
own any significant assets that do not contribute directly to essential 
family living or farm operations. The lender must determine the market 
value of

[[Page 225]]

any such non-essential assets and prepare a cash flow budget and 
interest assistance calculations based on the assumption that these 
assets will be sold and the market value proceeds used for debt 
reduction. If a feasible plan can then be achieved, the borrower is not 
eligible for interest assistance.
    (5) A borrower may only receive interest assistance if their total 
debts (including personal debts) prior to the new loan exceed 50 percent 
of their total assets (including personal assets). An entity's debt to 
asset ratio will be based upon a financial statement that consolidates 
business and personal debts and assets of the entity and its members. 
Beginning farmers Sec.  761.2(b) of this chapter, as defined in Sec.  
762.102, are excluded from this requirement.
    (c) Maximum assistance. The maximum total guaranteed OL debt on 
which a borrower can receive interest assistance is $400,000, regardless 
of the number of guaranteed loans outstanding. This is a lifetime limit.
    (d) Maximum time for which interest assistance is available. (1) A 
borrower may only receive interest assistance for one 5-year period. The 
term of the interest assistance agreement executed under this section 
shall not exceed 5 consecutive years from the date of the initial 
agreement signed by the applicant, including any entity members, or the 
outstanding term of the loan, whichever is less. This is a lifetime 
limit.
    (2) Beginning farmers Sec.  761.2(b) of this chapter, as defined in 
Sec.  762.102, however, may be considered for two 5-year periods. The 
applicant must meet the definition of a beginning farmer and meet the 
other eligibility requirements outlined in paragraph (b) of this section 
at the onset of each 5-year period. A needs test will be completed in 
the fifth year of IA eligibility for beginning farmers, to determine 
continued eligibility for a second 5-year period.
    (3) Notwithstanding the limitation of paragraph (d)(1) of this 
section, a new interest assistance agreement may be approved for 
eligible borrowers to provide interest assistance through June 8, 2009, 
provided the total period does not exceed 10 years from the effective 
date of the original interest assistance agreement.
    (e) Multiple loans. In the case of a borrower with multiple 
guaranteed loans with one lender, interest assistance can be applied to 
each loan, only to one loan or any distribution the lender selects, as 
necessary to achieve a feasible plan, subject to paragraph (c) of this 
section.
    (f) Terms. The typical term of scheduled loan repayment will not be 
reduced solely for the purpose of maximizing eligibility for interest 
assistance. A loan must be scheduled over the maximum term typically 
used by lenders for similar type loans within the limits in Sec.  
762.124. An OL for the purpose of providing annual operating and family 
living expenses will be scheduled for repayment when the income is 
scheduled to be received from the sale of the crops, livestock, and/or 
livestock products which will serve as security for the loan. An OL for 
purposes other than annual operating and family living expenses (i.e. 
purchase of equipment or livestock, or refinancing existing debt) will 
be scheduled over 7 years from the effective date of the proposed 
interest assistance agreement, or the life of the security, whichever is 
less.
    (g) Rate of interest. The lender interest rate will be set according 
to Sec.  762.124(a).
    (h) Agreement. The lender and borrower must execute an interest 
assistance agreement as prescribed by the Agency.
    (i) Interest assistance claims and payments. To receive an interest 
assistance payment, the lender must prepare and submit a claim on the 
appropriate Agency form. The following conditions apply:
    (1) Interest assistance payments will be four (4) percent of the 
average daily principal loan balance prorated over the number of days 
the loan has been outstanding during the payment period. For loans with 
a note rate less than four (4) percent, interest assistance payments 
will be the weighted average interest rate multiplied by the average 
daily principal balance.
    (2) The lender may select at the time of loan closing the date that 
they wish to receive an interest assistance payment. That date will be 
included in the interest assistance agreement.

[[Page 226]]

    (i) The initial and final claims submitted under an agreement may be 
for a period less than 12 months. All other claims will be submitted for 
a 12-month period, unless there is a lender substitution during the 12-
month period in accordance with this section.
    (ii) In the event of liquidation, the final interest assistance 
claim will be submitted with the estimated loss claim or the final loss 
claim if an estimated loss claim was not submitted. Interest will not be 
paid beyond the interest accrual cutoff dates established in the loss 
claims according to Sec.  762.149(d)(2).
    (3) A claim should be filed within 60 days of its due date. Claims 
not filed within 1 year from the due date will not be paid, and the 
amount due the lender will be permanently forfeited.
    (4) All claims will be supported by detailed calculations of average 
daily principal balance during the claim period.
    (5) Requests for continuation of interest assistance for agreements 
dated prior to June 8, 2007 will be supported by the lender's analysis 
of the applicant's farming operation and need for continued interest 
assistance as set out in their Interest Assistance Agreements. The 
following information will be submitted to the Agency:
    (i) A summary of the operation's actual financial performance in the 
previous year, including a detailed income and expense statement.
    (ii) A narrative description of the causes of any major differences 
between the previous year's projections and actual performance, 
including a detailed income and expense statement.
    (iii) A current balance sheet.
    (iv) A cash-flow budget for the period being planned. A monthly 
cash-flow budget is required for all lines of credit and operating loans 
made for annual operating purposes. All other loans may include either 
an annual or monthly cash-flow budget.
    (v) A copy of the interest assistance needs analysis portion of the 
application form which has been completed based on the planned period's 
cash-flow budget.
    (6) Interest Assistance Agreements dated June 8, 2007 or later do 
not require a request for continuation of interest assistance. The 
lender will only be required to submit an Agency IA payment form and the 
average daily principal balance for the claim period, with supporting 
documentation.
    (7) Lenders may not charge or cause a borrower with an interest 
assistance agreement to be charged a fee for preparation and submission 
of the items required for an annual interest assistance claim.
    (j) Transfer, consolidation, and writedown. Loans covered by 
interest assistance agreements cannot be consolidated. Such loans can be 
transferred only when the transferee was liable for the debt on the 
effective date of the interest assistance agreement. Loans covered by 
interest assistance can be transferred to an entity if the entity is 
eligible in accordance with Sec. Sec.  762.120 and 762.150(b) and at 
least one entity member was liable for the debt on the effective date of 
the interest assistance agreement. Interest assistance will be 
discontinued as of the date of any writedown on a loan covered by an 
interest assistance agreement.
    (k) Rescheduling and deferral. When a borrower defaults on a loan 
with interest assistance or the loan otherwise requires rescheduling or 
deferral, the interest assistance agreement will remain in effect for 
that loan at its existing terms. The lender may reschedule the loan in 
accordance with Sec.  762.145. For Interest Assistance Agreements dated 
June 8, 2007 or later increases in the restructured loan amount above 
the amount originally obligated do not require additional funding; 
however, interest assistance is not available on that portion of the 
loan as interest assistance is limited to the original loan amount.
    (l) Bankruptcy. In cases where the interest on a loan covered by an 
interest assistance agreement is reduced by court order in a 
reorganization plan under the bankruptcy code, interest assistance will 
be terminated effective on the date of the court order. Guaranteed loans 
which have had their interest reduced by bankruptcy court order are not 
eligible for interest assistance.
    (m) Termination of interest assistance payments. Interest assistance 
payments will cease upon termination of the loan

[[Page 227]]

guarantee, upon reaching the expiration date contained in the agreement, 
or upon cancellation by the Agency under the terms of the interest 
assistance agreement. In addition, for loan guarantees sold into the 
secondary market, Agency purchase of the guaranteed portion of a loan 
will terminate the interest assistance.
    (n) Excessive interest assistance. Upon written notice to the 
lender, borrower, and any holder, the Agency may amend or cancel the 
interest assistance agreement and collect from the lender any amount of 
interest assistance granted which resulted from incomplete or inaccurate 
information, an error in computation, or any other reason which resulted 
in payment that the lender was not entitled to receive.
    (o) Condition for cancellation. The Interest Assistance Agreement is 
incontestable except for fraud or misrepresentation, of which the lender 
or borrower have actual knowledge at the time the interest assistance 
agreement is executed, or which the lender or borrower participates in 
or condones.
    (p) Substitution. If there is a substitution of lender, the original 
lender will prepare and submit to the Agency a claim for its final 
interest assistance payment calculated through the effective date of the 
substitution. This final claim will be submitted for processing at the 
time of the substitution.
    (1) Interest assistance will continue automatically with the new 
lender.
    (2) The new lender must follow paragraph (i) of this section to 
receive their initial and subsequent interest assistance payments.
    (q) Exception Authority. The Deputy Administrator for Farm Loan 
Programs has the authority to grant an exception to any requirement 
involving interest assistance if it is in the best interest of the 
Government and is not inconsistent with other applicable law.

[72 FR 17358, Apr. 9, 2007, as amended at 78 FR 14005, Mar. 4, 2013; 78 
FR 65530, Nov. 1, 2013]



Sec. Sec.  762.151-762.158  [Reserved]



Sec.  762.159  Pledging of guarantee.

    A lender may pledge all or part of the guaranteed or unguaranteed 
portion of the loan as security to a Federal Home Loan Bank, a Federal 
Reserve Bank, a Farm Credit System Bank, or any other funding source 
determined acceptable by the Agency.

[70 FR 56107, Sept. 26, 2005]



Sec.  762.160  Assignment of guarantee.

    (a) The following general requirements apply to assigning guaranteed 
loans:
    (1) Subject to Agency concurrence, the lender may assign all or part 
of the guaranteed portion of the loan to one or more holders at or after 
loan closing, if the loan is not in default. However, a line of credit 
cannot be assigned. The lender must always retain the unguaranteed 
portion in their portfolio, regardless of how the loan is funded.
    (2) The Agency may refuse to execute the Assignment of Guarantee and 
prohibit the assignment in case of the following:
    (i) The Agency purchased and is holder of a loan that was assigned 
by the lender that is requesting the assignment.
    (ii) The lender has not complied with the reimbursement requirements 
of Sec.  762.144(c)(7), except when the 180 day reimbursement or 
liquidation requirement has been waived by the Agency.
    (3) The lender will provide the Agency with copies of all 
appropriate forms used in the assignment.
    (4) The guaranteed portion of the loan may not be assigned by the 
lender until the loan has been fully disbursed to the borrower.
    (5) The lender is not permitted to assign any amount of the 
guaranteed or unguaranteed portion of the loan to the applicant or 
borrower, or members of their immediate families, their officers, 
directors, stockholders, other owners, or any parent, subsidiary, or 
affiliate.
    (6) Upon the lender's assignment of the guaranteed portion of the 
loan, the lender will remain bound to all obligations indicated in the 
Guarantee, Lender's Agreement, the Agency program regulations, and to 
future program regulations not inconsistent with the provisions of the 
Lenders Agreement. The lender retains all rights under the security 
instruments for the protection of the lender and the United States.

[[Page 228]]

    (b) The following will occur upon the lender's assignment of the 
guaranteed portion of the loan:
    (1) The holder will succeed to all rights of the Guarantee 
pertaining to the portion of the loan assigned.
    (2) The lender will send the holder the borrower's executed note 
attached to the Guarantee.
    (3) The holder, upon written notice to the lender and the Agency, 
may assign the unpaid guaranteed portion of the loan. The holder must 
assign the guaranteed portion back to the original lender if requested 
for servicing or liquidation of the account.
    (4) The Guarantee or Assignment of Guarantee in the holder's 
possession does not cover:
    (i) Interest accruing 90 days after the holder has demanded 
repurchase by the lender, except as provided in the Assignment of 
Guarantee and Sec.  762.144(c)(3)(iii).
    (ii) Interest accruing 90 days after the lender or the Agency has 
requested the holder to surrender evidence of debt repurchase, if the 
holder has not previously demanded repurchase.
    (c) Negotiations concerning premiums, fees, and additional payments 
for loans are to take place between the holder and the lender. The 
Agency will participate in such negotiations only as a provider of 
information.

[70 FR 56107, Sept. 26, 2005]



PART 763_LAND CONTRACT GUARANTEE PROGRAM--Table of Contents



Sec.
763.1 Introduction.
763.2 Abbreviations and definitions.
763.3 Full faith and credit.
763.4 Authorized land contract purpose.
763.5 Eligibility.
763.6 Limitations.
763.7 Application requirements.
763.8 Incomplete applications.
763.9 Processing complete applications.
763.10 Feasibility.
763.11 Maximum loss amount, guarantee period, and conditions.
763.12 Down payment, rates, terms, and installments.
763.13 Fees.
763.14 Appraisals.
763.15 Taxes and insurance.
763.16 Environmental regulation compliance.
763.17 Approving application and executing guarantee.
763.18 General servicing responsibilities.
763.19 Contract modification.
763.20 Delinquent servicing and collecting on guarantee.
763.21 Establishment of Federal debt and Agency recovery of loss claim 
          payments.
763.22 Negligence and negligent servicing.
763.23 Terminating the guarantee.

    Authority: 5 U.S.C. 501 and 7 U.S.C. 1989.

    Source: 76 FR 75430, Dec. 2, 2011, unless otherwise noted.



Sec.  763.1  Introduction.

    (a) Purpose. The Land Contract Guaranteed Program provides certain 
financial guarantees to the seller of a farm through a land contract 
sale to a beginning farmer or a socially disadvantaged farmer.
    (b) Types of guarantee. The seller may request either of the 
following:
    (1) The prompt payment guarantee plan. The Agency will guarantee an 
amount not to exceed three amortized annual installments plus an amount 
equal to the total cost of any related real estate taxes and insurance 
incurred during the period covered by the annual installment; or
    (2) The standard guarantee plan. The Agency will guarantee an amount 
equal to 90 percent of the outstanding principal under the land 
contract.
    (c) Guarantee period. The guarantee period is 10 years for either 
plan regardless of the term of the land contract.



Sec.  763.2  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are in 
Sec.  761.2 of this chapter.



Sec.  763.3  Full faith and credit.

    (a) The land contract guarantee constitutes an obligation supported 
by the full faith and credit of the United States. The Agency may 
contest the guarantee only in cases of fraud or misrepresentation by the 
seller, in which:
    (1) The seller had actual knowledge of the fraud or 
misrepresentation at the time it because the seller, or
    (2) The seller participated in or condoned the fraud or 
misrepresentation.

[[Page 229]]

    (b) Loss claims also may be reduced or denied to the extent that any 
negligence contributed to the loss under Sec.  763.22.



Sec.  763.4  Authorized land contract purpose.

    The Agency will only guarantee the Contract installments, real 
estate taxes and insurance; or outstanding principal balance for an 
eligible seller of a family farm, through a land contract sale to an 
eligible beginning or socially disadvantaged farmer.



Sec.  763.5  Eligibility.

    (a) Seller eligibility requirements. The private seller, and each 
entity member in the case of an entity seller, must:
    (1) Possess the legal capacity to enter into a legally binding 
agreement;
    (2) Not have provided false or misleading documents or statements 
during past or present dealings with the Agency;
    (3) Not be ineligible due to disqualification resulting from Federal 
Crop Insurance violation, according to 7 CFR part 718; and
    (4) Not be suspended or debarred under 2 CFR parts 180 and 417.
    (b) Buyer eligibility requirements. The buyer must meet the 
following requirements to be eligible for the Land Contract Guarantee 
Program:
    (1) Is a beginning farmer or socially disadvantaged farmer engaged 
primarily in farming in the United States after the guarantee is issued.
    (2) Is the owner and operator of a family farm after the Contract is 
completed. Ownership of the family farm operation or the farm real 
estate may be held either directly in the individual's name or 
indirectly through interest in a legal entity. In the case of an entity 
buyer:
    (i) Each entity member's ownership interest may not exceed the 
amount specified in the family farm definition in Sec.  761.2 of this 
chapter.
    (ii) If the applicant has one or more embedded entities, at least 75 
percent of the individual ownership interests of each embedded entity 
must be owned by members actively involved in managing or operating the 
family farm.
    (iii) An ownership entity must be authorized to own a farm in the 
state or states in which the farm is located. An operating entity must 
be authorized to operate a farm in the state or states in which the farm 
is located.
    (iv) If the entity members holding a majority interest are related 
by blood or marriage, at least one member of the entity must:
    (A) Operate the family farm and
    (B) Own the farm after the contract is completed;
    (v) If the entity members holding a majority interest are not 
related by blood or marriage, the entity members holding a majority 
interest must:
    (A) Operate the family farm; and
    (B) Own the farm, or the entity itself must own the farm after the 
contract is completed;
    (vi) If the entity is an operator-only entity, the individuals that 
own the farm (real estate) must own at least 50 percent of the family 
farm (operating entity).
    (vii) All ownership may be held either directly in the individual's 
name or indirectly through interest in a legal entity.
    (3) Must have participated in the business operations of a farm or 
ranch for at least 3 years out of the last 10 years prior to the date 
the application is submitted. Of those 3 years, 1 year can be 
substituted with the following experience:
    (i) Postsecondary education in agriculture business, horticulture, 
animal science, agronomy, or other agricultural related fields,
    (ii) Significant business management experience, or
    (iii) Leadership or management experience while serving in any 
branch of the military.
    (4) The buyer, and all entity members in the case of an entity, must 
not have caused the Agency a loss by receiving debt forgiveness on all 
or a portion of any direct or guaranteed loan made under the authority 
of the Act by debt write-down or write-off; compromise, adjustment, 
reduction, or charge off under the provisions of section 331 of the Act; 
discharge in bankruptcy; or through payment of a guaranteed loss claim 
on more than three occasions on or prior to April 4, 1996 or any 
occasion after April 4, 1996. If the debt forgiveness is resolved by 
repayment of the

[[Page 230]]

Agency's loss, the Agency may still consider the debt forgiveness in 
determining the applicant's creditworthiness.
    (5) The buyer, and all entity members in the case of an entity, must 
not be delinquent on any Federal debt, other than a debt under the 
Internal Revenue Code of 1986, when the guarantee is issued.
    (6) The buyer, and all entity members in the case of an entity, may 
have no outstanding unpaid judgment awarded to the United States in any 
court. Such judgments do not include those filed as a result of action 
in the United States Tax Courts.
    (7) The buyer, and all entity members in the case of an entity, must 
be a citizen of the United States, United States non-citizen national, 
or a qualified alien under applicable Federal immigration laws. United 
States non-citizen nationals and qualified aliens must provide the 
appropriate documentation as to their immigration status as required by 
the United States Department of Homeland Security, Bureau of Citizenship 
and Immigration Services.
    (8) The buyer, and all entity members in the case of an entity, must 
possess the legal capacity to enter into a legally binding agreement.
    (9) The buyer, and all entity members in the case of an entity, must 
not have provided false or misleading documents or statements during 
past or present dealings with the Agency.
    (10) The buyer, and all entity members in the case of an entity, 
must not be ineligible as a result of a conviction for controlled 
substances according to 7 CFR part 718.
    (11) The buyer, and all entity members in the case of an entity, 
must have an acceptable credit history demonstrated by satisfactory debt 
repayment.
    (i) A history of failures to repay past debts as they came due when 
the ability to repay was within their control will demonstrate 
unacceptable credit history.
    (ii) Unacceptable credit history will not include:
    (A) Isolated instances of late payments which do not represent a 
pattern and were clearly beyond their control; or
    (B) Lack of credit history.
    (12) The buyer is unable to enter into a contract unless the seller 
obtains an Agency guarantee to finance the purchase of the farm at 
reasonable rates and terms.
    (13) The buyer, and all entity members in the case of an entity, 
must not be ineligible due to disqualification resulting from Federal 
Crop Insurance violation, according to 7 CFR part 718.
    (14) The buyer, and all entity members in the case of an entity, 
must not be suspended or debarred under 2 CFR parts 180 and 417.

[76 FR 75430, Dec. 2, 2011, as amended at 79 FR 60744, Oct. 8, 2014]



Sec.  763.6  Limitations.

    (a) To qualify for a guarantee, the purchase price of the farm to be 
acquired through the land contract sale cannot exceed the lesser of:
    (1) $500,000 or
    (2) The current market value of the property.
    (b) A guarantee will not be issued if the appraised value of the 
farm is greater than $500,000.
    (c) Existing land contracts are not eligible for the Land Contract 
Guarantee Program.
    (d) Guarantees may not be used to establish or support a non-
eligible enterprise.



Sec.  763.7  Application requirements.

    (a) Seller application requirements. A seller who contacts the 
Agency with interest in a guarantee under the Land Contract Guarantee 
Program will be sent the land contract letter of interest outlining 
specific program details. To formally request a guarantee on the 
proposed land contract, the seller, and each entity member in the case 
of an entity, must:
    (1) Complete, sign, date, and return the land contract letter of 
interest to the Agency, and
    (2) Provide the name, address, and telephone number of the chosen 
servicing or escrow agent.
    (b) Buyer application requirements. A complete application from the 
buyer will include:

[[Page 231]]

    (1) The completed Agency application form;
    (2) A current financial statement (not older than 90 days);
    (3) If the buyer is an entity:
    (i) A complete list of entity members showing the address, 
citizenship, principal occupation, and the number of shares and 
percentage of ownership or stock held in the entity by each member, or 
the percentage of interest in the entity held by each member;
    (ii) A current financial statement for each member of the entity;
    (iii) A current financial statement for the entity itself;
    (iv) A copy of the entity's charter or any entity agreement, any 
articles of incorporation and bylaws, any certificate or evidence of 
current registration (in good standing), and a resolution adopted by the 
Board of Directors or entity members authorizing specified officers of 
the entity to apply for and obtain the land contract guarantee and 
execute required debt, security, and other instruments and agreements; 
and
    (v) In the form of a married couple applying as a joint operation, 
items in paragraphs (b)(3)(i) and (b)(3)(iv) of this section will not be 
required. The Agency may request copies of the marriage license, 
prenuptial agreement, or similar documents as needed to verify loan 
eligibility and security. The information specified in paragraphs 
(b)(3)(ii) and (iii) of this section are only required to the extent 
needed to show the individual and joint finances of the husband and wife 
without duplication;
    (4) A brief written description of the buyer's proposed operation;
    (5) A farm operating plan;
    (6) A brief written description of the buyer's farm training and 
experience;
    (7) Three years of income tax and other financial records acceptable 
to the Agency, unless the buyer has been farming less than 3 years;
    (8) Three years of farm production records, unless the buyer has 
been farming less than 3 years;
    (9) Verification of income and off-farm employment if relied upon 
for debt repayment;
    (10) Verification of all debts;
    (11) Payment of the credit report fee;
    (12) Documentation of compliance with the environmental regulations 
in part 799 of this chapter;
    (13) A copy of the proposed land contract; and
    (14) Any additional information deemed necessary by the Agency to 
effectively evaluate the applicant's eligibility and farm operating 
plan.

[76 FR 75430, Dec. 2, 2011, as amended at 79 FR 60744, Oct. 8, 2014; 81 
FR 51284, Aug. 3, 2016]



Sec.  763.8  Incomplete applications.

    (a) Within 10 days of receipt of an incomplete application, the 
Agency will provide the seller and buyer written notice of any 
additional information that must be provided. The seller or buyer, as 
applicable, must provide the additional information within 20 calendar 
days of the date of the notice.
    (b) If the additional information is not received, the Agency will 
provide written notice that the application will be withdrawn if the 
information is not received within 10 calendar days of the date of the 
second notice.



Sec.  763.9  Processing complete applications.

    Applications will be approved or rejected and all parties notified 
in writing no later than 30 calendar days after application is 
considered complete.



Sec.  763.10  Feasibility.

    (a) The buyer's proposed operation as described in a form acceptable 
to the Agency must represent the operating cycle for the farm operation 
and must project a feasible plan as defined in Sec.  761.2(b) of this 
chapter.
    (b) The projected income, expenses, and production estimates:
    (1) Must be based on the buyer's last 3 years actual records of 
production and financial management unless the buyer has been farming 
less than 3 years;
    (2) For those farming less than 3 years, a combination of any actual 
history and other reliable sources of information may be used. Sources 
must be documented and acceptable to the Agency; and
    (3) May deviate from historical performance if deviations are the 
direct

[[Page 232]]

result of specific changes in the operation, reasonable, justified, 
documented, and acceptable to the Agency.
    (c) Price forecasts used in the plan must be reasonable, documented, 
and acceptable to the Agency.
    (d) The Agency will analyze the buyer's business ventures other than 
the farm operation to determine their soundness and contribution to the 
operation.
    (e) When a feasible plan depends on income from sources other than 
from owned land, the income must be dependable and likely to continue.
    (f) When the buyer's farm operating plan is developed in conjunction 
with a proposed or existing Agency direct loan, the two farm operating 
plans must be consistent.



Sec.  763.11  Maximum loss amount, guarantee period, and conditions.

    (a) Maximum loss amount. The maximum loss amount due to nonpayment 
by the buyer covered by the guarantee is based on the type of guarantee 
initially selected by the seller as follows:
    (1) The prompt payment guarantee will cover:
    (i) Three amortized annual installments; or
    (ii) An amount equal to three annual installments (including an 
amount equal to the total cost of any tax and insurance incurred during 
the period covered by the annual installments).
    (2) The standard guarantee will cover an amount equal to 90 percent 
of the outstanding principal balance.
    (b) Guarantee period. The period of the guarantee will be 10 years 
from the effective date of the guarantee unless terminated earlier under 
Sec.  763.23.
    (c) Conditions. The seller will select an escrow agent to service a 
Land Contract Agreement if selecting the prompt payment guarantee plan, 
and a servicing agent to service a Land Contract Agreement if selecting 
the standard guarantee plan.
    (1) An escrow agent must provide the Agency evidence of being a 
bonded title insurance company, attorney, financial institution or 
fiscally responsible institution.
    (2) A servicing agent must provide the Agency evidence of being a 
bonded commercial lending institution or similar entity, registered and 
authorized to provide escrow and collection services in the State in 
which the real estate is located.



Sec.  763.12  Down payment, rates, terms, and installments.

    (a) Down payment. The buyer must provide a minimum down payment of 
five percent of the purchase price of the farm.
    (b) Interest rate. The interest rate charged by the seller must be 
fixed at a rate not to exceed the Agency's direct FO loan interest rate 
in effect at the time the guarantee is issued, plus three percentage 
points. The seller and buyer may renegotiate the interest rate for the 
remaining term of the contract following expiration of the guarantee.
    (c) Land contract terms. The contract payments must be amortized for 
a minimum of 20 years and payments on the contract must be of equal 
amounts during the term of the guarantee.
    (d) Balloon installments. Balloon payments are prohibited during the 
10-year term of the guarantee.



Sec.  763.13  Fees.

    (a) Payment of fees. The seller and buyer will be responsible for 
payment of any expenses or fees necessary to process the Land Contract 
Agreement required by the State or County to ensure that proper title is 
vested in the seller including, but not limited to, attorney fees, 
recording costs, and notary fees.
    (b) [Reserved]



Sec.  763.14  Appraisals.

    (a) Standard guarantee plan. For the standard guarantee plan, the 
value of real estate to be purchased will be established by an appraisal 
obtained at Agency expense and completed as specified in Sec.  761.7 of 
this chapter. An appraisal is required prior to, or as a condition of, 
approval of the guarantee.
    (b) Prompt payment guarantee plan. The Agency may, at its option and 
expense, obtain an appraisal to determine value of real estate to be 
purchased under the Prompt Payment Guarantee plan.

[[Page 233]]



Sec.  763.15  Taxes and insurance.

    (a) The seller will ensure that taxes and insurance on the real 
estate are paid timely and will provide the evidence of payment to the 
escrow or servicing agent.
    (b) The seller will maintain flood insurance, if available, if 
buildings are located in a special 100-year floodplain as defined by 
FEMA flood hazard area maps.
    (c) The seller will report any insurance claim and use of proceeds 
to the escrow or servicing agent.



Sec.  763.16  Environmental regulation compliance.

    (a) Environmental compliance requirements. The environmental 
requirements contained in part 799 of this chapter must be met prior to 
approval of guarantee request.
    (b) Determination. The Agency determination of whether an 
environmental problem exists will be based on:
    (1) The information supplied with the application;
    (2) Environmental resources available to the Agency including, but 
not limited to, documents, third parties, and government agencies;
    (3) Other information supplied by the buyer or seller upon Agency 
request; and
    (4) A visit to the farm.

[76 FR 75430, Dec. 2, 2011, as amended at 81 FR 51284, Aug. 3, 2016]



Sec.  763.17  Approving application and executing guarantee.

    (a) Approval is subject to the availability of funds, meeting the 
requirements in this part, and the participation of an approved escrow 
or servicing agent, as applicable.
    (b) Upon approval of the guarantee, all parties (buyer, seller, 
escrow or servicing agent, and Agency official) will execute the 
Agency's guarantee agreement.
    (c) The ``Land Contract Agreement for Prompt Payment Guarantee'' or 
the ``Land Contract Agreement for Standard Guarantee'' will describe the 
conditions of the guarantee, outline the covenants and any agreements of 
the buyer, seller, escrow or servicing agent, and the Agency, and 
outline the process for payment of loss claims.



Sec.  763.18  General servicing responsibilities.

    (a) For the prompt payment guarantee plan, the seller must use a 
third party escrow agent approved by the Agency. The escrow agent will:
    (1) Provide the Agency a copy of the recorded Land Contract;
    (2) Handle transactions relating to the Land Contract between the 
buyer and seller;
    (3) Receive Land Contract installment payments from the buyer and 
send them to the seller;
    (4) Provide evidence to the Agency that property taxes are paid and 
insurance is kept current on the security property;
    (5) Send a notice of payment due to the buyer at least 30 days prior 
to the installment due date;
    (6) Notify the Agency and the seller if the buyer defaults;
    (7) Service delinquent accounts as specified in Sec.  763.20(a);
    (8) Make demand on the Agency to pay missed payments;
    (9) Send the seller any missed payment amount paid by the Agency 
under the guarantee;
    (10) Notify the Agency on March 31 and September 30 of each year of 
the outstanding balance on the Land Contract and the status of payment; 
and
    (11) Perform other duties as required by State law and as agreed to 
by the buyer and the seller;
    (b) For the standard guarantee plan, the seller must use a third 
party servicing agent approved by the Agency. The servicing agent will:
    (1) Provide the Agency a copy of the recorded Land Contract;
    (2) Handle transactions relating to the Land Contract between the 
buyer and seller;
    (3) Receive Land Contract installment payments from the buyer and 
send them to the seller;
    (4) Provide evidence to the Agency that property taxes are paid and 
insurance is kept current on the security property;
    (5) Perform a physical inspection of the farm each year during the 
term of the guarantee, and provide an annual inspection report to the 
Agency;
    (6) Obtain from the buyer a current balance sheet, income statement, 
cash

[[Page 234]]

flow budget, and any additional information needed, perform, and provide 
the Agency an analysis of the buyer's financial condition on an annual 
basis;
    (7) Notify the Agency on March 31 and September 30 of each year of 
the outstanding balance on the Land Contract and the status of payment;
    (8) Send a notice of payment due to the buyer at least 30 days prior 
to the installment due date;
    (9) Notify the Agency and the seller if the buyer defaults;
    (10) Service delinquent accounts as specified in Sec.  763.20(b); 
and
    (11) Perform other duties as required by State law and as agreed to 
by the buyer and the seller.



Sec.  763.19  Contract modification.

    (a) The seller and buyer may modify the land contract to lower the 
interest rate and corresponding amortized payment amount without Agency 
approval.
    (b) With prior written approval from the Agency, the seller and 
buyer may modify the land contract provided that, in addition to a 
feasible plan for the upcoming operating cycle, a feasible plan can be 
reasonably projected throughout the remaining term of the guarantee. 
Such modifications may include but are not limited to:
    (1) Deferral of installments,
    (2) Leasing or subleasing, and
    (3) Partial releases. All proceeds from a partial release or 
royalties from mineral extraction must be applied to a prior lien, if 
one exists, and in addition, the same amount must be credited to the 
principal balance of the land contract.
    (4) Transfer and assumption. If the guarantee is to remain in 
effect, any transfer of the property and assumption of the guaranteed 
debt must be made to an eligible buyer for the Land Contract Guarantee 
Program as specified in Sec.  763.5(b), and must be approved by the 
Agency in writing. If an eligible buyer for transfer and assumption 
cannot be found, the Deputy Administrator for Farm Loan Programs may 
make an exception to this requirement when in the Government's best 
financial interests.
    (5) Assignment. The seller may not assign the contract to another 
party without written consent of the Agency.
    (c) Any contract modifications other than those listed above must be 
approved by the Deputy Administrator for Farm Loan Programs, and will 
only be approved if such action is determined permissible by law and in 
the Government's best financial interests.



Sec.  763.20  Delinquent servicing and collecting on guarantee.

    (a) Prompt payment guarantee plan. If the buyer fails to pay an 
annual amortized installment or a portion of an installment on the 
contract or taxes or insurance when due, the escrow agent:
    (1) Must make a written demand on the buyer for payment of the 
defaulted amount within 30 days of the missed payment, taxes, or 
insurance and send a copy of the demand letter to the Agency and to the 
seller; and
    (2) Must make demand on the Agency within 90 days from the original 
payment, taxes, or insurance due date, for the missed payment in the 
event the buyer has not made the payment.
    (b) Standard guarantee plan. If the buyer fails to pay an annual 
amortized installment or a portion of an installment on the contract, 
then the seller has the option of either liquidating the real estate, or 
having the amount of the loss established by the Agency by an appraisal 
of the real estate. For either option, the servicing agent:
    (1) Must make a written demand on the buyer for payment of the 
defaulted amount within 30 days of the missed payment, and send a copy 
of the demand letter to the Agency and to the seller; and
    (2) Must immediately inform the Agency which option the seller has 
chosen for establishing the amount of the loss, in the event the buyer 
does not make the payment within 60 days of the demand letter.
    (i) Liquidation method. If the seller chooses the liquidation 
method, the servicing agent will:
    (A) Submit a liquidation plan to the Agency within 120 days from the 
missed payment for approval prior to any liquidation action. The Agency 
may require and pay for an appraisal

[[Page 235]]

prior to approval of the liquidation plan.
    (B) Complete liquidation within 12 months of the missed installment 
unless prevented by bankruptcy, redemption rights, or other legal 
action.
    (C) Credit an amount equal to the sale price received in a 
liquidation of the security property, with no deduction for expenses, to 
the principal balance of the land contract.
    (D) File a loss claim immediately after liquidation, which must 
include a complete loan ledger.
    (E) Base the loss claim amount on the appraisal method if the 
property is reacquired by the seller, through liquidation.
    (ii) Appraisal method. If the seller chooses to have the loss amount 
established by appraisal rather than liquidation, the Agency will 
complete an appraisal on the real estate, and the loss claim amount will 
be based on the difference between the appraised value at the time the 
loss is calculated and the unpaid principal balance of the land contract 
at that time.
    (A) The only administrative appeal allowed under Sec.  761.6 of this 
chapter related to the resulting appraisal amount will be a 
determination of whether the appraisal is Uniform Standards of 
Professional Appraisal Practice (USPAP) compliant.
    (B) The seller will give the Agency a lien on the security property 
in the amount of the loss claim payment. If the property sells within 5 
years from the date of the loss payment for an amount greater than the 
appraised value used to establish the loss claim amount, the seller must 
repay the difference, up to the amount of the loss claim. For purposes 
of determining the amount to be repaid (recapture), the market value of 
the property may be reduced by the value of certain capital 
improvements, as specified in Sec.  766.202(a)(1)-(3) of this chapter, 
made by the seller to the property in the time period from the loss 
claim to final disposition. If the property is not sold within 5 years 
from the date of the loss payment, the Agency will release the lien and 
the seller will have no further obligation to the Agency.



Sec.  763.21  Establishment of Federal debt and Agency recovery of loss
claim payments.

    (a) Any amount paid by FSA as a result of an approved loss claim is 
immediately due and payable by the buyer after FSA notifies the buyer 
that a loss claim has been paid to the seller. If the debt is not 
restructured into a repayment plan or the obligation otherwise cured, 
FSA may use all remedies available, including offset as authorized by 
the Debt Collection Improvement Act of 1996, to collect the debt.
    (1) Interest on the debt will be at the FLP non-program real 
property loan rate in effect at the time of the first Agency payment of 
a loss claim.
    (2) The debt may be scheduled for repayment consistent with the 
buyer's repayment ability, not to exceed 7 years. Before any payment 
plan can be approved, the buyer must provide the Agency with the best 
lien obtainable on all of the buyer's assets. This includes the buyer's 
ownership interest in the real estate under contract for guarantees 
using the prompt payment guarantee plan. When the buyer is an entity, 
the best lien obtainable will be taken on all of the entity's assets, 
and all assets owned by individual members of the entity, including 
their ownership interest in the real estate under contract.
    (b) Annually, buyers with an Agency approved repayment plan under 
this section will supply the Agency a current balance sheet, income 
statement, cash flow budget, complete copy of Federal income tax 
returns, and any additional information needed to analyze the buyer's 
financial condition.
    (c) If a buyer fails to make required payments to the Agency as 
specified in the approved repayment plan, the debt will be treated as a 
non-program loan debt, and servicing will proceed as specified in Sec.  
766.351(c) of this chapter.



Sec.  763.22  Negligence and negligent servicing.

    (a) The Agency may deny a loss claim in whole or in part due to 
negligence that contributed to the loss claim. This could include, but 
is not limited to:

[[Page 236]]

    (1) The escrow and servicing agent failing to seek payment of a 
missed installment from the buyer within the prescribed timeframe or 
otherwise does not enforce the terms of the land contract;
    (2) Losing the collateral to a third party, such as a taxing 
authority, prior lien holder, etc;
    (3) Not performing the duties and responsibilities required of the 
escrow or servicing agent;
    (4) The seller's failure to disclose environmental issues; or
    (5) Any other action in violation of the land contract or guarantee 
agreement that does not terminate the guarantee.
    (b) [Reserved]



Sec.  763.23  Terminating the guarantee.

    (a) The guarantee and the Agency's obligations will terminate at the 
earliest of the following circumstances:
    (1) Full payment of the land contract;
    (2) Agency payment to the seller of 3 annual installments plus 
property taxes and insurance, if applicable, under the prompt payment 
guarantee plan, if not repaid in full by the buyer. An Agency approved 
repayment plan will not constitute payment in full until such time as 
the entire amount due for the Agency approved repayment plan is paid in 
full;
    (3) Payment of a loss claim through the standard guarantee plan;
    (4) Sale of real estate without guarantee being properly assigned;
    (5) The seller terminates the land contract for reasons other than 
monetary default; or
    (6) If for any reason the land contract becomes null and void.
    (b) If none of the events in paragraph (a) of this section occur, 
the guarantee will automatically expire, without notice, 10 years from 
the effective date of the guarantee.



PART 764_DIRECT LOAN MAKING--Table of Contents



                           Subpart A_Overview

Sec.
764.1 Introduction.
764.2 Abbreviations and definitions.
764.3-764.50 [Reserved]

                   Subpart B_Loan Application Process

764.51 Loan application.
764.52 Processing an incomplete application.
764.53 Processing the complete application.
764.54 Preferences when there is limited funding.
764.55-764.100 [Reserved]

           Subpart C_Requirements for All Direct Program Loans

764.101 General eligibility requirements.
764.102 General limitations.
764.103 General security requirements.
764.104 General real estate security requirements.
764.105 General chattel security requirements.
764.106 Exceptions to security requirements.
764.107 General appraisal requirements.
764.108 General insurance requirements.
764.109-764.150 [Reserved]

                  Subpart D_Farm Ownership Loan Program

764.151 Farm Ownership loan uses.
764.152 Eligibility requirements.
764.153 Limitations.
764.154 Rates and terms.
764.155 Security requirements.
764.156-764.200 [Reserved]

                   Subpart E_Downpayment Loan Program

764.201 Downpayment loan uses.
764.202 Eligibility requirements.
764.203 Limitations.
764.204 Rates and terms.
764.205 Security requirements.
764.206-764.230 [Reserved]

                   Subpart F_Conservation Loan Program

764.231 Conservation loan uses.
764.232 Eligibility requirements.
764.233 Limitations.
764.234 Rates and terms.
764.235 Security requirements.
764.236-764.250 [Reserved]

                    Subpart G_Operating Loan Program

764.251 Operating loan uses.
764.252 Eligibility requirements.
764.253 Limitations.
764.254 Rates and terms.
764.255 Security requirements.
764.256-764.300 [Reserved]

                      Subpart H_Youth Loan Program

764.301 Youth loan uses.
764.302 Eligibility requirements.
764.303 Limitations.
764.304 Rates and terms.
764.305 Security requirements.

[[Page 237]]

764.306-764.350 [Reserved]

                    Subpart I_Emergency Loan Program

764.351 Emergency loan uses.
764.352 Eligibility requirements.
764.353 Limitations.
764.354 Rates and terms.
764.355 Security requirements.
764.356 Appraisal and valuation requirements.
764.357-764.400 [Reserved]

                   Subpart J_Loan Decision and Closing

764.401 Loan decision.
764.402 Loan closing.
764.403-764.450 [Reserved]

      Subpart K_Borrower Training and Training Vendor Requirements

764.451 Purpose.
764.452 Borrower training requirements.
764.453 Agency waiver of training requirements.
764.454 Actions that an applicant must take when training is required.
764.455 Potential training vendors.
764.456 Applying to be a vendor.
764.457 Vendor requirements.
764.458 Vendor approval.
764.459 Evaluation of borrower progress.

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted.



                           Subpart A_Overview



Sec.  764.1  Introduction.

    (a) Purpose. This part describes the Agency's policies for making 
direct FLP loans.
    (b) Types of loans. The Agency makes the following types of loans:
    (1) FO, including ML and Downpayment loans;
    (2) OL, including ML and Youth loans;
    (3) EM; and
    (4) CL.

[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 78 
FR 3835, Jan. 17, 2013; 81 FR 3292, Jan. 21, 2016]



Sec.  764.2  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are 
provided in Sec.  761.2 of this chapter.



Sec. Sec.  764.3-764.50  [Reserved]



                   Subpart B_Loan Application Process



Sec.  764.51  Loan application.

    (a) A loan application must be submitted in the name of the actual 
operator of the farm. Two or more applicants applying jointly will be 
considered an entity applicant. The Agency will consider tax filing 
status and other business dealings as indicators of the operator of the 
farm.
    (b) A complete loan application, except as provided in paragraphs 
(c) through (f) of this section, will include:
    (1) The completed Agency application form;
    (2) If the applicant is an entity:
    (i) A complete list of entity members showing the address, 
citizenship, principal occupation, and the number of shares and 
percentage of ownership or stock held in the entity by each member, or 
the percentage of interest in the entity held by each member;
    (ii) A current financial statement from each member of the entity;
    (iii) A current financial statement from the entity itself;
    (iv) A copy of the entity's charter or any entity agreement, any 
articles of incorporation and bylaws, any certificate or evidence of 
current registration (good standing), and a resolution adopted by the 
Board of Directors or entity members authorizing specified officers of 
the entity to apply for and obtain the desired loan and execute required 
debt, security and other loan instruments and agreements;
    (v) In the form of married couples applying as a joint operation, 
items (i) and (iv) will not be required. The Agency may request copies 
of the marriage license, prenuptial agreement or similar documents as 
needed to verify loan eligibility and security. Items (ii) and (iii) are 
only required to the extent needed to show the individual and joint 
finances of the husband and wife without duplication.
    (3) A written description of the applicant's farm training and 
experience, including each entity member who will be involved in 
managing or operating the farm. Farm experience of the applicant, 
without regard to any lapse of

[[Page 238]]

time between the farm experience and the new application, may be 
included in the applicant's written description. If farm experience 
occurred more than 5 years prior to the date of the new application, the 
applicant must demonstrate sufficient on-the-job training or education 
within the last 5 years to demonstrate managerial ability;
    (4) The last 3 years of farm financial records, including tax 
returns, unless the applicant has been farming less than three years;
    (5) The last 3 years of farm production records, unless the 
applicant has been farming less than 3 years;
    (6) Except for CL, documentation that the applicant and each member 
of an entity applicant cannot obtain sufficient credit elsewhere on 
reasonable rates and terms, including a loan guaranteed by the Agency;
    (7) Documentation of compliance with the Agency's environmental 
regulations contained in part 799 of this chapter;
    (8) Verification of all non-farm income;
    (9) A current financial statement and the operation's farm operating 
plan, including the projected cash flow budget reflecting production, 
income, expenses, and loan repayment plan;
    (10) A legal description of the farm property owned or to be 
acquired and, if applicable, any leases, contracts, options, and other 
agreements with regard to the property;
    (11) Payment to the Agency for ordering a credit report on the 
applicant;
    (12) Verification of all debts;
    (13) Any additional information deemed necessary by the Agency to 
effectively evaluate the applicant's eligibility and farm operating 
plan;
    (14) For EM loans, a statement of loss or damage on the appropriate 
Agency form;
    (15) For CL only, a conservation plan or Forest Stewardship 
Management Plan as defined in Sec.  761.2 of this chapter; and
    (16) For CL only, and if the applicant wishes to request 
consideration for priority funding, plans to transition to organic or 
sustainable agriculture when the funds requested will be used to 
facilitate the transition.
    (c) For an ML request for OL purposes, all of the following criteria 
must be met:
    (1) The loan requested for OL purposes is:
    (i) To pay annual or term operating expenses, and
    (ii) $50,000 or less and the applicant's total outstanding Agency OL 
debt at the time of loan closing will be $50,000 or less,
    (2) The applicant must submit the following:
    (i) Items (1), (2), (3), (6), (7), (9), and (11) of paragraph (b) of 
this section;
    (ii) Financial and production records for the most recent production 
cycle, if available, and practicable to project the cash flow of the 
operating cycle, and
    (iv) Verification of all non-farm income relied upon for repayment; 
and
    (3) The Agency may require an ML applicant to submit any other 
information listed in paragraph (b) of this section upon request when 
specifically needed to make a determination on the loan application.
    (d) For an ML request for FO purposes, all of the following criteria 
must be met:
    (1) The loan requested is:
    (i) To pay for any authorized purpose under the FO Program, which 
are specified in Sec.  764.151; and
    (ii) $50,000 or less and the applicant's total outstanding Agency FO 
debt at the time of loan closing will be $50,000 or less,
    (2) The applicant must submit the following:
    (i) Items specified in paragraphs (b)(1), (2), (3), (6), (7), (9), 
(10), and (11) of this section;
    (ii) Financial and production records for the most recent production 
cycle, if available and practicable to project the cash flow of the 
operating cycle; and
    (iv) Verification of all non-farm income relied upon for repayment; 
and
    (v) Verification of applicant's farm experience;
    (3) The Agency may require an ML applicant to submit any other 
information listed in paragraph (b) of this section upon request when 
necessary to make a determination on the loan application.

[[Page 239]]

    (e) For a CL Program streamlined application, the applicant must 
meet all of the following:
    (1) Be current on all payments to all creditors including the Agency 
(if currently an Agency borrower).
    (2) Have not received primary loan servicing on any FLP debt within 
the past 5 years.
    (3) Have a debt to asset ratio that is 40 percent or less.
    (4) Have a balance sheet that indicates a net worth of 3 times the 
requested loan amount or greater.
    (5) Have a FICO credit score from the Agency obtained credit report 
of at least 700. For entity applicants, the FICO credit score of the 
majority of the individual members of the entity must be at least 700.
    (6) Submit the following items:
    (i) Items specified in paragraphs (b)(1), (b)(2), (b)(3), (b)(7), 
(b)(11), (b)(15), and (b)(16) of this section,
    (ii) A current financial statement less than 90 days old, and
    (iii) Upon Agency request, other information specified in paragraph 
(b) of this section necessary to make a determination on the loan 
application.
    (f) For a youth loan request:
    (1) The applicant must submit items (1), (7), and (9) of paragraph 
(b) of this section.
    (2) Applicants 18 years or older, must also provide items (11) and 
(12) of paragraph (b) of this section.
    (3) The Agency may require a youth loan applicant to submit any 
other information listed in paragraph (b) of this section as needed to 
make a determination on the loan application.
    (g) The applicant need not submit any information under this section 
that already exists in the applicant's Agency file and is still current.

[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 
FR 75434, Dec. 2, 2011; 77 FR 15938, Mar. 19, 2012; 78 FR 3835, Jan. 17, 
2013; 79 FR 60744, Oct. 8, 2014; 81 FR 3292, Jan. 21, 2016; 81 FR 51284, 
Aug. 3, 2016]



Sec.  764.52  Processing an incomplete application.

    (a) Within 10 days of receipt of an incomplete application, the 
Agency will provide the applicant written notice of any additional 
information which must be provided. The applicant must provide the 
additional information within 20 calendar days of the date of this 
notice.
    (b) If the additional information is not received, the Agency will 
provide written notice that the application will be withdrawn if the 
information is not received within 10 calendar days of the date of this 
second notice.



Sec.  764.53  Processing the complete application.

    Upon receiving a complete loan application, the Agency will:
    (a) Consider the loan application in the order received, based on 
the date the application was determined to be complete.
    (b) Provide written notice to the applicant that the application is 
complete.
    (c) Within 60 calendar days after receiving a complete loan 
application, the Agency will complete the processing of the loan request 
and notify the applicant of the decision reached, and the reason for any 
disapproval.
    (d) Except for CL requests, if based on the Agency's review of the 
application, it appears the applicant's credit needs could be met 
through the guaranteed loan program, the Agency will assist the 
applicant in securing guaranteed loan assistance under the market 
placement program as specified in Sec.  762.110(h) of this chapter.
    (e) In the absence of funds for a direct loan, the Agency will keep 
an approved loan application on file until funding is available. At 
least annually, the Agency will contact the applicant to determine if 
the Agency should retain the application or if the applicant wants the 
application withdrawn.
    (f) If funding becomes available, the Agency will resume processing 
of approved loans in accordance with this part.

[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010]



Sec.  764.54  Preferences when there is limited funding.

    (a) First priority. When there is a shortage of loan funds, approved 
applications will be funded in the order of the date the application was 
received, whether or not complete.

[[Page 240]]

    (b) Secondary priorities. If two or more applications were received 
on the same date, the Agency will give preference to:
    (1) First, an applicant who is a veteran of any war;
    (2) Second, an applicant who is not a veteran, but:
    (i) Has a dependent family;
    (ii) Is able to make a downpayment; or
    (iii) Owns livestock and farm implements necessary to farm 
successfully.
    (3) Third, to other eligible applicants.



Sec. Sec.  764.55-764.100  [Reserved]



           Subpart C_Requirements for All Direct Program Loans



Sec.  764.101  General eligibility requirements.

    The following requirements must be met unless otherwise provided in 
the eligibility requirements for the particular type of loan.
    (a) Controlled substances. The applicant, and anyone who will sign 
the promissory note, must not be ineligible for loans as a result of a 
conviction for controlled substances according to 7 CFR part 718 of this 
chapter.
    (b) Legal capacity. The applicant, and anyone who will sign the 
promissory note, must possess the legal capacity to incur the obligation 
of the loan. A Youth loan applicant will incur full personal liability 
upon execution of the promissory note without regard to the applicant's 
minority status.
    (c) Citizenship. The applicant, and anyone who will sign the 
promissory note, must be a citizen of the United States, United States 
non-citizen national, or a qualified alien under applicable Federal 
immigration laws.
    (d) Credit history. The applicant must have acceptable credit 
history demonstrated by debt repayment.
    (1) As part of the credit history, the Agency will determine whether 
the applicant will carry out the terms and conditions of the loan and 
deal with the Agency in good faith. In making this determination, the 
Agency may examine whether the applicant has properly fulfilled its 
obligations to other parties, including other agencies of the Federal 
Government.
    (2) When the applicant caused the Agency a loss by receiving debt 
forgiveness, the applicant may be ineligible for assistance in 
accordance with eligibility requirements for the specific loan type. If 
the debt forgiveness is cured by repayment of the Agency's loss, the 
Agency may still consider the debt forgiveness in determining the 
applicant's credit worthiness.
    (3) A history of failures to repay past debts as they came due when 
the ability to repay was within the applicant's control will demonstrate 
unacceptable credit history. The following circumstances, for example, 
do not automatically indicate an unacceptable credit history:
    (i) Foreclosures, judgments, delinquent payments of the applicant 
which occurred more than 36 months before the application, if no recent 
similar situations have occurred, or Agency delinquencies that have been 
resolved through loan servicing programs available under 7 CFR part 766.
    (ii) Isolated incidents of delinquent payments which do not 
represent a general pattern of unsatisfactory or slow payment.
    (iii) ``No history'' of credit transactions by the applicant.
    (iv) Recent foreclosure, judgment, bankruptcy, or delinquent payment 
when the applicant can satisfactorily demonstrate that the adverse 
action or delinquency was caused by circumstances that were of a 
temporary nature and beyond the applicant's control; or the result of a 
refusal to make full payment because of defective goods or services or 
other justifiable dispute relating to the purchase or contract for goods 
or services.
    (e) Availability of credit elsewhere. Except for CL, the applicant, 
and all entity members in the case of an entity, must be unable to 
obtain sufficient credit elsewhere to finance actual needs at reasonable 
rates and terms. The Agency will evaluate the ability to obtain credit 
based on factors including, but not limited to:
    (1) Loan amounts, rates, and terms available in the marketplace; and
    (2) Property interests, income, and significant non-essential 
assets.

[[Page 241]]

    (f) Not in delinquent status on Federal debt. As provided in 31 CFR 
part 285, except for EM loan applicants, the applicant, and anyone who 
will sign the promissory note, must not be in delinquent status on any 
Federal debt, other than a debt under the Internal Revenue Code of 1986 
at the time of loan closing. All delinquent debts, however, will be 
considered in determining credit history and ability to repay under this 
part.
    (g) Outstanding judgments. The applicant, and anyone who will sign 
the promissory note, must have no outstanding unpaid judgments obtained 
by the United States in any court. Such judgments do not include those 
filed as a result of action in the United States Tax Courts.
    (h) Federal crop insurance violation. The applicant, and all entity 
members in the case of an entity, must not be ineligible due to 
disqualification resulting from Federal crop insurance violation 
according to 7 CFR part 718.
    (i) Managerial ability. The applicant must have sufficient 
managerial ability to assure reasonable prospects of loan repayment, as 
determined by the Agency. The applicant must demonstrate this managerial 
ability by:
    (1) Education. For example, the applicant obtained a 4-year college 
degree in agricultural business, horticulture, animal science, agronomy, 
or other agricultural-related field.
    (2) On-the-job training. For example, the applicant is currently 
working on a farm as part of an apprenticeship program.
    (3) Farming experience. For example, the applicant has been an 
owner, manager, or operator of a farm business for at least one entire 
production cycle or for MLs, made for OL purposes, the applicant may 
have obtained and successfully repaid one FSA Youth-OL. Farm experience 
of the applicant, without regard to any lapse of time between the farm 
experience and the new application, will be taken into consideration in 
determining loan eligibility. If farm experience occurred more than 5 
years prior to the date of the new application, the applicant must 
demonstrate sufficient on-the-job training or education within the last 
5 years to demonstrate managerial ability.
    (4) Alternatives for MLs made for OL purposes. Applicants for MLs 
made for OL purposes, also may demonstrate managerial ability by one of 
the following:
    (i) Certification of a past participation with an agriculture-
related organization, such as, but not limited to, 4-H Club, FFA, 
beginning farmer and rancher development programs, or Community Based 
Organizations, that demonstrates experience in a related agricultural 
enterprise; or
    (ii) A written description of a self-directed apprenticeship 
combined with either prior sufficient experience working on a farm or 
significant small business management experience. As a condition of 
receiving the loan, the self-directed apprenticeship requires that the 
applicant seek, receive, and apply guidance from a qualified person 
during the first cycle of production and marketing typical for the 
applicant's specific operation. The individual providing the guidance 
must be knowledgeable in production, management, and marketing practices 
that are pertinent to the applicant's operation, and agree to form a 
developmental partnership with the applicant to share knowledge, skills, 
information, and perspective of agriculture to foster the applicant's 
development of technical skills and management ability.
    (j) Borrower training. The applicant must agree to meet the training 
requirements in subpart K of this part.
    (k) Operator of a family farm. Except for CL:
    (1) The applicant must be the operator of a family farm after the 
loan is closed.
    (2) For an entity applicant, if the entity members holding a 
majority interest are:
    (i) Related by blood or marriage, at least one member must be the 
operator of a family farm;
    (ii) Not related by blood or marriage, the entity members holding a 
majority interest must be operators of a family farm.
    (3) Except for EM loans, the collective interests of the members may 
be larger than a family farm only if:
    (i) Each member's ownership interest is not larger than a family 
farm;

[[Page 242]]

    (ii) All of the members of the entity are related by blood or 
marriage; and
    (iii) All of the members are or will become operators of the family 
farm; and
    (4) If the entity applicant has an operator and ownership interest 
for farm ownership loans and emergency loans for farm ownership loan 
purposes, in any other farming operation, that farming operation must 
not exceed the requirements of a family farm.
    (l) Entity composition. If the applicant has one or more embedded 
entities, at least 75 percent of the individual ownnership interests of 
each embedded entity must be owned by members actively involved in 
managing or operating the family farm.

[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 
FR 75434, Dec. 2, 2011; 78 FR 3835, Jan. 17, 2013; 79 FR 60744, Oct. 8, 
2014; 81 FR 3293, Jan. 21, 2016; 81 FR 10063, Feb. 29, 2016]



Sec.  764.102  General limitations.

    (a) Limitations specific to each loan program are contained in 
subparts D through I of this part.
    (b) The total principal balance owed to the Agency at any one time 
by the applicant, or any one who will sign the promissory note, cannot 
exceed the limits established in Sec.  761.8 of this chapter.
    (c) The funds from the FLP loan must be used for farming operations 
located in the United States.
    (d) The Agency will not make a loan if the proceeds will be used:
    (1) For any purpose that contributes to excessive erosion of highly 
erodible land, or to the conversion of wetlands;
    (2) To drain, dredge, fill, level, or otherwise manipulate a 
wetland; or
    (3) To engage in any activity that results in impairing or reducing 
the flow, circulation, or reach of water, except in the case of activity 
related to the maintenance of previously converted wetlands as defined 
in the Food Security Act of 1985.
    (e) Any construction financed by the Agency must comply with the 
standards established in Sec.  761.10 of this chapter.
    (f) Loan funds will not be used to establish or support a non-
eligible enterprise, even if the non-eligible enterprise contributes to 
the farm. Notwithstanding this limitation, an EM loan may cover 
qualified equine losses as specified in subpart I of this part.

[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 
FR 75434, Dec. 2, 2011]



Sec.  764.103  General security requirements.

    (a) Security requirements specific to each loan program are outlined 
in subparts D through I of this part.
    (b) All loans must be secured by assets having a security value of 
at least 100 percent of the loan amount, except for EM loans as provided 
in subpart I of this part. If the applicant's assets do not provide 
adequate security, the Agency may accept:
    (1) A pledge of security from a third party; or
    (2) Interests in property not owned by the applicant (such as leases 
that provide a mortgageable value, water rights, easements, mineral 
rights, and royalties).
    (c) An additional amount of security up to 150 percent of the loan 
amount will be taken when available, except for downpayment loans, MLs 
made for purposes other than annual operating, and youth loans.
    (d) The Agency will choose the best security available when there 
are several alternatives that meet the Agency's security requirements.
    (e) The Agency will take a lien on all assets that are not essential 
to the farming operation and are not being converted to cash to reduce 
the loan amount when each such asset, or aggregate value of like assets 
(such as stocks), has a value in excess of $5,000. The value of this 
security is not included in the Agency's additional security requirement 
stated in paragraph (c) of this section. This requirement does not apply 
to downpayment loans, CL, ML, or youth loans.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 75 
FR 54015, Sept. 3, 2010; 78 FR 3835, Jan. 17, 2013]



Sec.  764.104  General real estate security requirements.

    (a) Agency lien position requirements. If real estate is pledged as 
security for a loan, the Agency must obtain a first

[[Page 243]]

lien, if available. When a first lien is not available, the Agency may 
take a junior lien under the following conditions:
    (1) The prior lien does not contain any provisions that may 
jeopardize the Agency's interest or the applicant's ability to repay the 
FLP loan;
    (2) Prior lienholders agree to notify the Agency prior to 
foreclosure;
    (3) The applicant must agree not to increase an existing prior lien 
without the written consent of the Agency; and
    (4) Equity in the collateral exists.
    (b) Real estate held under a purchase contract. If the real estate 
offered as security is held under a recorded purchase contract:
    (1) The applicant must provide a security interest in the real 
estate;
    (2) The applicant and the purchase contract holder must agree in 
writing that any insurance proceeds received for real estate losses will 
be used only for one or more of the following purposes:
    (i) To replace or repair the damaged real estate improvements which 
are essential to the farming operation;
    (ii) To make other essential real estate improvements; or
    (iii) To pay any prior real estate lien, including the purchase 
contract.
    (3) The purchase contract must provide the applicant with 
possession, control and beneficial use of the property, and entitle the 
applicant to marketable title upon fulfillment of the contract terms.
    (4) The purchase contract must not:
    (i) Be subject to summary cancellation upon default;
    (ii) Contain provisions which jeopardize the Agency's security 
position or the applicant's ability to repay the loan.
    (5) The purchase contract holder must agree in writing to:
    (i) Not sell or voluntarily transfer their interest without prior 
written consent of the Agency;
    (ii) Not encumber or cause any liens to be levied against the 
property;
    (iii) Not take any action to accelerate, forfeit, or foreclose the 
applicant's interest in the security property until a specified period 
of time after notifying the Agency of the intent to do so;
    (iv) Consent to the Agency making the loan and taking a security 
interest in the applicant's interest under the purchase contract as 
security for the FLP loan;
    (v) Not take any action to foreclose or forfeit the interest of the 
applicant under the purchase contract because the Agency has acquired 
the applicant's interest by foreclosure or voluntary conveyance, or 
because the Agency has subsequently sold or assigned the applicant's 
interest to a third party who will assume the applicant's obligations 
under the purchase contract;
    (vi) Notify the Agency in writing of any breach by the applicant; 
and
    (vii) Give the Agency the option to rectify the conditions that 
amount to a breach within 30 days after the date the Agency receives 
written notice of the breach.
    (6) If the Agency acquires the applicant's interest under the 
purchase contract by foreclosure or voluntary conveyance, the Agency 
will not be deemed to have assumed any of the applicant's obligations 
under the contract, provided that if the Agency fails to perform the 
applicant's obligations while it holds the applicant's interest is 
grounds for terminating the purchase contract.
    (c) Tribal lands held in trust or restricted. The Agency may take a 
lien on Indian Trust lands as security provided the applicant requests 
the Bureau of Indian Affairs to furnish Title Status Reports to the 
agency and the Bureau of Indian Affairs provides the reports and 
approves the lien.
    (d) Security for more than one loan. The same real estate may be 
pledged as security for more than one direct or guaranteed loan.
    (e) Loans secured by leaseholds. A loan may be secured by a mortgage 
on a leasehold, if the leasehold has negotiable value and can be 
mortgaged.



Sec.  764.105  General chattel security requirements.

    The same chattel may be pledged as security for more than one direct 
or guaranteed loan.

[[Page 244]]



Sec.  764.106  Exceptions to security requirements.

    Notwithstanding any other provision of this part, the Agency will 
not take a security interest:
    (a) When adequate security is otherwise available and the lien will 
prevent the applicant from obtaining credit from other sources;
    (b) When the property could have significant environmental problems 
or costs as described in part 799 of this chapter;
    (c) When the Agency cannot obtain a valid lien;
    (d) When the property is the applicant's personal residence and 
appurtenances and:
    (1) They are located on a separate parcel; and
    (2) The real estate that serves as security for the FLP loan plus 
crops and chattels are greater than or equal to 150 percent of the 
unpaid balance due on the loan;
    (e) When the property is subsistence livestock, cash, working 
capital accounts the applicant uses for the farming operation, 
retirement accounts, personal vehicles necessary for family living, 
household contents, or small equipment such as hand tools and lawn 
mowers; or
    (f) On marginal land and timber that secures an outstanding ST loan.

[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 51284, Aug. 3, 
2016{time} 



Sec.  764.107  General appraisal requirements.

    (a) Establishing value for real estate. The value of real estate 
will be established by an appraisal completed in accordance with Sec.  
761.7 of this chapter, except that for MLs made for FO purposes, the 
appraisal requirement may be satisfied by an evaluation by an authorized 
agency official that establishes the value of the real estate.
    (b) Establishing value for chattels. The value of chattels will be 
established as follows:
    (1) Annual production. The security value of annual livestock and 
crop production is presumed to be 100 percent of the amount loaned for 
annual operating and family living expenses, as outlined in the approved 
farm operating plan.
    (2) Livestock and equipment. The value of livestock and equipment 
will be established by an appraisal completed in accordance with Sec.  
761.7 of this chapter.

[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 3293, Jan. 21, 2016]



Sec.  764.108  General insurance requirements.

    The applicant must obtain and maintain insurance, equal to the 
lesser of the value of the security at the time of loan closing or the 
principal of all FLP and non-FLP loans secured by the property, subject 
to the following:
    (a) All security, except growing crops, must be covered by hazard 
insurance if it is readily available (sold by insurance agents in the 
applicant's normal trade area) and insurance premiums do not exceed the 
benefit. The Agency must be listed as loss payee for the insurance 
indemnity payment or as a beneficiary in the mortgagee loss payable 
clause.
    (b) Real estate security located in flood or mudslide prone areas 
must be covered by flood or mudslide insurance. The Agency must be 
listed as a beneficiary in the mortgagee loss payable clause.
    (c) Growing crops used to provide adequate security must be covered 
by crop insurance if such insurance is available. The Agency must be 
listed as loss payee for the insurance indemnity payment.
    (d) Prior to closing the loan, the applicant must have obtained at 
least the catastrophic risk protection level of crop insurance coverage 
for each crop which is a basic part of the applicant's total operation, 
if such insurance is available, unless the applicant executes a written 
waiver of any emergency crop loss assistance with respect to such crop. 
The applicant must execute an assignment of indemnity in favor of the 
Agency for this coverage.



Sec. Sec.  764.109-764.150  [Reserved]



                  Subpart D_Farm Ownership Loan Program



Sec.  764.151  Farm Ownership loan uses.

    FO loan funds may only be used to:
    (a) Acquire or enlarge a farm or make a down payment on a farm;

[[Page 245]]

    (b) Make capital improvements to a farm owned by the applicant, for 
construction, purchase or improvement of farm dwellings, service 
buildings or other facilities and improvements essential to the farming 
operation. In the case of leased property, the applicant must have a 
lease to ensure use of the improvement over its useful life or to ensure 
that the applicant receives compensation for any remaining economic life 
upon termination of the lease;
    (c) Promote soil and water conservation and protection;
    (d) Pay loan closing costs;
    (e) Refinance a bridge loan if the following conditions are met:
    (1) The applicant obtained the loan to be refinanced to purchase a 
farm after a direct FO was approved;
    (2) Direct FO funds were not available to fund the loan at the time 
of approval;
    (3) The loan to be refinanced is temporary financing; and
    (4) The loan was made by a commercial or cooperative lender.



Sec.  764.152  Eligibility requirements.

    The applicant:
    (a) Must comply with the general eligibility requirements 
established at Sec.  764.101;
    (b) And anyone who will sign the promissory note, must not have 
received debt forgiveness from the Agency on any direct or guaranteed 
loan;
    (c) Must be the owner-operator of the farm financed with Agency 
funds after the loan is closed. Ownership of the family farm operation 
and farm real estate may be held either directly in the individual's 
name or indirectly through interest in a legal entity. In the case of an 
entity:
    (1) The entity is controlled by farmers engaged primarily and 
directly in farming in the United States, after the loan is made;
    (2) An ownership entity must be authorized to own a farm in the 
state or states in which the farm is located. An operating entity must 
be authorized to operate a farm in the state or states in which the farm 
is located.
    (3) If the entity members holding majority interest are:
    (i) Related by blood or marriage, at least one member of the entity 
must operate the family farm and at least one member of the entity or 
the entity must own the farm; or,
    (ii) Not related by blood or marriage, the entity members holding a 
majority interest must operate the family farm and the entity members 
holding a majority interest or the entity must own the farm.
    (4) If the entity is an operator only entity, the individuals that 
own the farm (real estate) must own at least 50 percent of the family 
farm (operating entity).
    (d) And in the case of an entity, one or more members constituting a 
majority interest, must have participated in the business operations of 
a farm for at least 3 years out of the 10 years prior to the date the 
application is submitted. One of these three years can be substituted 
with the following experience:
    (1) Postsecondary education in agriculture business, horticulture, 
animal science, agronomy, or other agricultural related fields,
    (2) Significant business management experience, or
    (3) Leadership or management experience while serving in any branch 
of the military.
    (e) For an ML made for FO purposes, if an ML applicant has 
successfully repaid an FSA financed youth loan, the term of that loan 
may be used toward the 3 years of management experience required for a 
FO direct loan.
    (f) And anyone who will sign the promissory note, must satisfy at 
least one of the following conditions:
    (1) Meet the definition of a beginning farmer;
    (2) Have not had a direct FO loan outstanding for more than a total 
of 10 years prior to the date the new FO loan is closed;
    (3) Have never received a direct FO loan.

[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 60744, Oct. 8, 2014; 81 
FR 3293, Jan. 21, 2016]



Sec.  764.153  Limitations.

    The applicant must:
    (a) Comply with the general limitations established at Sec.  
764.102;

[[Page 246]]

    (b) Have dwellings and other buildings necessary for the planned 
operation of the farm available for use after the loan is made.



Sec.  764.154  Rates and terms.

    (a) Rates. (1) The interest rate is the Agency's Direct Farm 
Ownership rate, available in each Agency office.
    (2) The limited resource Farm Ownership interest rate is available 
to applicants who are unable to develop a feasible plan at regular 
interest rates.
    (3) If the FO loan is part of a joint financing arrangement and the 
amount of the Agency's loan does not exceed 50 percent of the total 
amount financed, the interest rate charged will be the greater of the 
following:
    (i) The Agency's Direct Farm Ownership rate, available in each 
Agency office, minus 2 percent; or
    (ii) 2.5 percent.
    (4) The interest rate charged will be the lower of the rate in 
effect at the time of loan approval or loan closing.
    (b) Terms. Except for MLs made for FO purposes, the Agency schedules 
repayment of an FO loan based on the applicant's ability to repay and 
the useful life of the security. In no event will the term be more than 
40 years from the date of the note.
    (1) For MLs made for FO purposes the Agency schedules repayment of 
an FO based on the applicant's ability to repay and the useful life of 
the security. In no event will the term be more than 25 years from the 
date of the note.
    (2) [Reserved]

[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 78693, Dec. 31, 2014; 81 
FR 3293, Jan. 21, 2016]



Sec.  764.155  Security requirements.

    An FO loan must be secured:
    (a) In accordance with Sec. Sec.  764.103 through 764.106;
    (b) At a minimum, by the real estate being purchased or improved.
    (1) An ML made for FO purposes, may be secured only by the real 
estate being purchased or improved, as long as its value is at least 100 
percent of the loan amount.
    (2) [Reserved]

[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 3293, Jan. 21, 2016]



Sec. Sec.  764.156-764.200  [Reserved]



                   Subpart E_Downpayment Loan Program



Sec.  764.201  Downpayment loan uses.

    Downpayment loan funds may be used to partially finance the purchase 
of a family farm by an eligible beginning farmer or socially 
disadvantaged farmer.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  764.202  Eligibility requirements.

    The applicant must:
    (a) Comply with the general eligibility requirements established at 
Sec.  764.101 and the FO eligibility requirements of Sec.  764.152; and
    (b) Be a beginning farmer or socially disadvantaged farmer.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  764.203  Limitations.

    (a) The applicant must:
    (1) Comply with the general limitations established at Sec.  
764.102; and
    (2) Provide a minimum downpayment of 5 percent of the purchase price 
of the farm.
    (b) Downpayment loans will not exceed 45 percent of the lesser of:
    (1) The purchase price,
    (2) The appraised value of the farm to be acquired, or
    (3) $667,000; subject to the direct FO dollar limit specified in 7 
CFR 761.8(a)(1)(i).
    (c) Downpayment loans made as an ML for FO purposes may not exceed 
$50,000.
    (d) Financing provided by the Agency and all other creditors must 
not exceed 95 percent of the purchase price. Financing provided by 
eligible lenders may be guaranteed by the Agency under part 762 of this 
chapter.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 79 
FR 78693, Dec. 31, 2014; 81 FR 3293, Jan. 21, 2016]



Sec.  764.204  Rates and terms.

    (a) Rates. The interest rate for Downpayment loans will be the 
regular direct FO rate minus 4 percent, but in no case less than 1.5 
percent.

[[Page 247]]

    (b) Terms. (1) The Agency schedules repayment of Downpayment loans 
in equal, annual installments over a term not to exceed 20 years.
    (2) The non-Agency financing must have an amortization period of at 
least 30 years and cannot have a balloon payment due within the first 20 
years of the loan.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  764.205  Security requirements.

    A Downpayment loan must:
    (a) Be secured in accordance with Sec. Sec.  764.103 through 
764.106;
    (b) Be secured by a lien on the property being acquired with the 
loan funds and junior only to the party financing the balance of the 
purchase price.

[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec. Sec.  764.206-764.230  [Reserved]



                   Subpart F_Conservation Loan Program

    Source: 75 FR 54015, Sept. 3, 2010, unless otherwise noted.



Sec.  764.231  Conservation loan uses.

    (a) CL funds may be used for any conservation activities included in 
a conservation or Forestry Service Stewardship Management Plan, 
including but not limited to:
    (1) The installation of conservation structures to address soil, 
water, and related resources;
    (2) The establishment of forest cover for sustained yield timber 
management, erosion control, or shelter belt purposes;
    (3) The installation of water conservation measures;
    (4) The installation of waste management systems;
    (5) The establishment or improvement of permanent pasture; and
    (6) Other purposes including the adoption of any other emerging or 
existing conservation practices, techniques, or technologies.
    (b) [Reserved]

[75 FR 54015, Sept. 3, 2010, as amended at 77 FR 15938, Mar. 19, 2012]



Sec.  764.232  Eligibility requirements.

    (a) The applicant:
    (1) Must comply with general eligibility requirements specified in 
Sec.  764.101 except paragraphs (e) and (k) of that section;
    (2) And anyone who will sign the promissory note, must not have 
received debt forgiveness from the Agency on any direct or guaranteed 
loan; and
    (3) Must be the owner-operator or tenant-operator of a farm and be 
engaged in agricultural production after the time of loan is closed. In 
the case of an entity:
    (i) The entity is controlled by farmers engaged primarily and 
directly in farming in the United States;
    (ii) The entity must be authorized to operate a farm in the State in 
which the farm is located.
    (b) [Reserved]



Sec.  764.233  Limitations.

    (a) The applicant must comply with the general limitations specified 
in Sec.  764.102 except Sec.  764.102(f), which does not apply to 
applicants for the CL Program.
    (b) The applicant must agree to repay any duplicative financial 
benefits or assistance to CL.



Sec.  764.234  Rates and terms.

    (a) Rates. The interest rate:
    (1) Will be the Agency's Direct Farm Ownership rate, available in 
each Agency office.
    (2) Charged will be the lower rate in effect either at the time of 
loan approval or loan closing.
    (b) Terms. The following terms apply to CLs:
    (1) The Agency schedules repayment of a CL based on the useful life 
of the security.
    (2) The maximum term for loans secured by chattels only will not 
exceed 7 years from the date of the note.
    (3) In no event will the term of the loan exceed 20 years from the 
date of the note.



Sec.  764.235  Security requirements.

    (a) The loan must be secured in accordance with requirements 
established in Sec. Sec.  764.103 through 764.106.

[[Page 248]]

    (b) Loans to purchase chattels will be secured by a first lien on 
chattels purchased with loan funds. Real estate may be taken as 
additional security if needed.
    (c) Loans of $25,000 of less for real estate purposes will be 
secured in the following order of priority:
    (1) By a lien on chattels determined acceptable by the Agency, and 
then
    (2) By a lien on real estate, if available and necessary. When real 
estate is taken as security a certification of ownership in real estate 
is required. Certification of ownership may be in the form of an 
affidavit that is signed by the applicant, names all of the record 
owners of the real estate in question and lists the balances due on all 
known debts against the real estate. Whenever the Agency is uncertain of 
the record owner or debts against the real estate security, a tile 
search is required.
    (d) Loans greater than $25,000 for real estate purposes will be 
secured in the following order of priority:
    (1) By a lien on real estate, if available, and then
    (2) By a lien on chattels, if needed and determined acceptable by 
the Agency.
    (e) For loans greater than $25,000 title clearance is required when 
real estate is taken as security.

[77 FR 15938, Mar. 19, 2012]



Sec. Sec.  764.236-764.250  [Reserved]



                    Subpart G_Operating Loan Program

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted. 
Redesignated at 75 FR 54015, Sept. 3, 2010.



Sec.  764.251  Operating loan uses.

    (a) Except as provided in paragraph (b), OL and ML used for OL 
purposes loan funds may only be used for:
    (1) Costs associated with reorganizing a farm to improve its 
profitability;
    (2) Purchase of livestock, including poultry, farm equipment, quotas 
and bases, and cooperative stock for credit, production, processing or 
marketing purposes;
    (3) Farm operating expenses, including, but not limited to, feed, 
seed, fertilizer, pesticides, farm supplies, repairs and improvements 
which are to be expensed, cash rent and family living expenses;
    (4) Scheduled principal and interest payments on term debt provided 
the debt is for authorized FO or OL purposes;
    (5) Other farm needs;
    (6) Costs associated with land and water development, use, or 
conservation;
    (7) Loan closing costs;
    (8) Costs associated with Federal or State-approved standards under 
the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) 
if the applicant can show that compliance or non-compliance with the 
standards will cause substantial economic injury;
    (9) Borrower training costs required or recommended by the Agency;
    (10) Refinancing farm-related debts other than real estate to 
improve the farm's profitability provided the applicant has refinanced 
direct or guaranteed OL loans four times or fewer and one of the 
following conditions is met:
    (i) A designated or declared disaster caused the need for 
refinancing; or
    (ii) The debts to be refinanced are owed to a creditor other than 
the USDA;
    (11) Costs for minor real estate repairs or improvements, provided 
the loan can be repaid within 7 years.
    (b) [Reserved]

[72 FR 63298, Nov. 8, 2007, as amended at 78 FR 3835, Jan. 17, 2013; 81 
FR 3293, Jan. 21, 2016]



Sec.  764.252  Eligibility requirements.

    (a) The applicant must comply with the general eligibility 
requirements established in Sec.  764.101.
    (b) The applicant and anyone who will sign the promissory note, 
except as provided in paragraph (c) of this section, must not have 
received debt forgiveness from the Agency on any direct or guaranteed 
loan.
    (c) The applicant and anyone who will sign the promissory note, may 
receive direct OL loans to pay annual farm operating and family living 
expenses, provided that the applicant meets all other applicable 
requirements under this part, if the applicant:

[[Page 249]]

    (1) Received a write-down under section 353 of the Act;
    (2) Is current on payments under a confirmed reorganization plan 
under Chapter 11, 12, or 13 of Title 11 of the United States Code; or
    (3) Received debt forgiveness on not more than one occasion after 
April 4, 1996, resulting directly and primarily from a Presidentially-
designated emergency for the county or contiguous county in which the 
applicant operates. Only applicants who were current on all existing 
direct and guaranteed FLP loans prior to the beginning date of the 
incidence period of a Presidentially-designated emergency and received 
debt forgiveness on that debt within 3 years after the designation of 
such emergency meet this exception.
    (d) In the case of an entity applicant, the entity must be:
    (1) Controlled by farmers engaged primarily and directly in farming 
in the United States; and
    (2) Authorized to operate the farm in the State in which the farm is 
located.
    (e) The applicant and anyone who will sign the promissory note, may 
close an OL in no more than 7 calendar years, either as an individual or 
as a member of an entity, except as provided in paragraphs (e)(1) 
through (4) of this section. The years may be consecutive or 
nonconsecutive, and there is no limit on the number of OLs closed in a 
year. Microloans made to a beginning farmer or a veteran farmer are not 
counted toward this limitation. Youth loans are not counted toward this 
limitation. The following exceptions apply:
    (1) This limitation does not apply if the applicant and anyone who 
will sign the promissory note is a beginning farmer.
    (2) This limitation does not apply if the applicant's land is 
subject to the jurisdiction of an Indian tribe, the loan is secured by 
one or more security instruments subject to the jurisdiction of an 
Indian tribe, and commercial credit is generally not available to such 
farm operations.
    (3) If the applicant, and anyone who will sign the promissory note, 
has closed direct OL loans in 4 or more previous calendar years as of 
April 4, 1996, the applicant is eligible to close OL loans in any 3 
additional years after that date.
    (4) On a case-by-case basis, may be granted a one-time waiver of OL 
term limits for a period of 2 years, not subject to administrative 
appeal, if the applicant:
    (i) Has a financially viable operation;
    (ii) And in the case of an entity, the members holding the majority 
interest, applied for commercial credit from at least two lenders and 
were unable to obtain a commercial loan, including an Agency-guaranteed 
loan; and
    (iii) Has successfully completed, or will complete within one year, 
borrower training. Previous waivers to the borrower training 
requirements are not applicable under this paragraph.

[79 FR 78693, Dec. 31, 2014]



Sec.  764.253  Limitations.

    The applicant must comply with the general limitations established 
at Sec.  764.102.



Sec.  764.254  Rates and terms.

    (a) Rates. (1) The interest rate is the Agency's Direct Operating 
Loan rate, available in each Agency office.
    (2) The limited resource Operating Loan interest rate is available 
to applicants who are unable to develop a feasible plan at regular 
interest rates.
    (3) The interest rate charged will be the lower rate in effect at 
the time of loan approval or loan closing.
    (4) The Agency's Direct ML OL interest rate on an ML to a beginning 
farmer or veteran farmer is available in each Agency office. ML 
borrowers in these groups have the option of choosing the ML OL interest 
rate or the Direct OL interest rate in effect at the time of approval, 
or if lower, the rate in effect at the time of closing.
    (b) Terms. (1) The Agency schedules repayment of annual OL loans 
made for family living and farm operating expenses when planned income 
is projected to be available.
    (i) The term of the loan may not exceed 18 months from the date of 
the note.
    (ii) The term of the loan may exceed 18 months in unusual situations 
such as establishing a new enterprise, developing a farm, purchasing 
feed while crops are being established, marketing

[[Page 250]]

plans, or recovery from a disaster or economic reverse. In no event will 
the term of the loan exceed 7 years from the date of the note. Crops and 
livestock produced for sale will not be considered adequate security for 
such loans.
    (2) The Agency schedules the repayment of all other OL loans based 
on the applicant's ability to repay and the useful life of the security. 
In no event will the term of the loan exceed 7 years from the date of 
the note. Repayment schedules may include equal, unequal, or balloon 
installments if needed to establish a new enterprise, develop a farm, or 
recover from a disaster or economic reversal. Loans with balloon 
installments:
    (i) Must have adequate security at the time the balloon installment 
comes due. Crops, livestock other than breeding stock, or livestock 
products produced are not adequate collateral for such loans;
    (ii) Are only authorized when the applicant can project the ability 
to refinance the remaining debt at the time the balloon payment comes 
due based on the expected financial condition of the operation, the 
depreciated value of the collateral, and the principal balance on the 
loan;
    (iii) Are not authorized when loan funds are used for real estate 
repairs or improvements.

[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 78694, Dec. 31, 2014]



Sec.  764.255  Security requirements.

    An OL loan must be secured:
    (a) In accordance with Sec. Sec.  764.103 through 764.106.
    (b) Except for MLs, by a:
    (1) First lien on all property or products acquired or produced with 
loan funds;
    (2) Lien of equal or higher position of that held by the creditor 
being refinanced with loan funds.
    (c) For MLs used for OL purposes:
    (1) For annual operating purposes, loans must be secured by a first 
lien on farm property or products having a security value of at least 
100 percent of the loan amount, and up to 150 percent, when available.
    (2) For loans made for purposes other than annual operating 
purposes, loans must be secured by a first lien on farm property or 
products purchased with loan funds and having a security value of at 
least 100 percent of the loan amount.
    (3) A lien on real estate is not required unless the value of the 
farm products, farm property, and other assets available to secure the 
loan is not at least equal to 100 percent of the loan amount.
    (4) Notwithstanding the provisions of paragraphs (c)(1), (c)(2), and 
(c)(3) of this section, FSA will not require a lien on a personal 
residence.

[72 FR 63298, Nov. 8, 2007, as amended at 78 FR 3835, Jan. 17, 2013; 81 
FR 3293, Jan. 21, 2016]



Sec. Sec.  764.256-764.300  [Reserved]



                      Subpart H_Youth Loan Program

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted. 
Redesignated at 75 FR 54015, Sept. 3, 2010.



Sec.  764.301  Youth loan uses.

    Youth loan funds may only be used to finance a modest, income-
producing, agriculture-related, educational project while participating 
in 4-H, FFA, or a similar organization.



Sec.  764.302  Eligibility requirements.

    The applicant:
    (a) Must comply with the general eligibility requirements 
established at Sec.  764.101(a) through (g);
    (b) And anyone who will sign the promissory note, must not have 
received debt forgiveness from the Agency on any direct or guaranteed 
loan;
    (c) Must be at least 10 but not yet 21 years of age at the time the 
loan is closed;
    (d) Must be recommended and continuously supervised by a project 
advisor, such as a 4-H Club advisor, a vocational teacher, a county 
extension agent, or other agriculture-related organizational sponsor; 
and
    (e) Must obtain a written recommendation and consent from a parent 
or guardian if the applicant has not

[[Page 251]]

reached the age of majority under state law.

[72 FR 63298, Nov. 8, 2007. Redesignated at 75 FR 54015, Sept. 3, 2010, 
as amended at 79 FR 78694, Dec. 31, 2014]



Sec.  764.303  Limitations.

    (a) The applicant must comply with the general limitations 
established at Sec.  764.102.
    (b) The total principal balance owed by the applicant to the Agency 
on all Youth loans at any one time cannot exceed $5,000.



Sec.  764.304  Rates and terms.

    (a) Rates. (1) The interest rate is the Agency's Direct Operating 
Loan rate, available in each Agency office.
    (2) The limited resource Operating Loan interest rate is not 
available for Youth loans.
    (3) The interest rate charged will be the lower rate in effect at 
the time of loan approval or loan closing.
    (b) Terms. Youth loan terms are the same as for an OL established at 
Sec.  764.254(b).



Sec.  764.305  Security requirements.

    A first lien will be obtained on property or products acquired or 
produced with loan funds.



Sec. Sec.  764.306-764.350  [Reserved]



                    Subpart I_Emergency Loan Program

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted. 
Redesignated at 75 FR 54015, Sept. 3, 2010.



Sec.  764.351  Emergency loan uses.

    (a) Physical losses--(1) Real estate losses. EM loan funds for real 
estate physical losses may only be used to repair or replace essential 
property damaged or destroyed as a result of a disaster as follows:
    (i) For any FO purpose, as specified in Sec.  764.151, except 
subparagraph (e) of that section;
    (ii) To establish a new site for farm dwelling and service buildings 
outside of a flood or mudslide area; and
    (iii) To replace land from the farm that was sold or conveyed, if 
such land is necessary for the farming operation to be effective.
    (2) Chattel losses. EM loan funds for chattel physical losses may 
only be used to repair or replace essential property damaged or 
destroyed as a result of a disaster as follows:
    (i) Purchase livestock, farm equipment, quotas and bases, and 
cooperative stock for credit, production, processing, or marketing 
purposes;
    (ii) Pay customary costs associated with obtaining and closing a 
loan that an applicant cannot pay from other sources (e.g., fees for 
legal, architectural, and other technical services, but not fees for 
agricultural management consultation, or preparation of Agency forms);
    (iii) Repair or replace household contents damaged in the disaster;
    (iv) Pay the costs to restore perennials, which produce an 
agricultural commodity, to the stage of development the damaged 
perennials had obtained prior to the disaster;
    (v) Pay essential family living and farm operating expenses, in the 
case of an operation that has suffered livestock losses not from 
breeding stock, or losses to stored crops held for sale; and
    (vi) Refinance farm-related debts other than real estate to improve 
farm profitability, if the applicant has refinanced direct or guaranteed 
loans four times or fewer and one of the following conditions is met:
    (A) A designated or declared disaster caused the need for 
refinancing; or
    (B) The debts to be refinanced are owed to a creditor other than the 
USDA.
    (b) Production losses. EM loan funds for production losses to 
agricultural commodities (except the losses associated with the loss of 
livestock) may be used to:
    (1) Pay costs associated with reorganizing the farm to improve its 
profitability except that such costs must not include the payment of 
bankruptcy expenses;
    (2) Pay annual operating expenses, which include, but are not 
limited to, feed, seed, fertilizer, pesticides, farm supplies, and cash 
rent;
    (3) Pay costs associated with Federal or State-approved standards 
under the

[[Page 252]]

Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if 
the applicant can show that compliance or non-compliance with the 
standards will cause substantial economic injury;
    (4) Pay borrower training costs required or recommended by the 
Agency;
    (5) Pay essential family living expenses;
    (6) Refinance farm-related debts other than real estate to improve 
farm profitability, if the applicant has refinanced direct or guaranteed 
loans four times or fewer and one of the following conditions is met:
    (i) A designated or declared disaster caused the need for 
refinancing; or
    (ii) The debts to be refinanced are owed to a creditor other than 
the USDA; and
    (7) Replace lost working capital.



Sec.  764.352  Eligibility requirements.

    The applicant:
    (a) Must comply with the general eligibility requirements 
established at Sec.  764.101;
    (b) Must be an established farmer;
    (c) Must be the owner-operator or tenant-operator as follows:
    (1) For a loan made under Sec.  764.351(a)(1), must have been:
    (i) The owner-operator of the farm at the time of the disaster; or
    (ii) The tenant-operator of the farm at the time of the disaster 
whose lease on the affected real estate exceeds the term of the loan. 
The operator will provide prior notification to the Agency if the lease 
is proposed to terminate during the term of the loan. The lessor will 
provide the Agency a mortgage on the real estate as security for the 
loan;
    (2) For a loan made under Sec.  764.351(a) (2) or (b), must have 
been the operator of the farm at the time of the disaster; and
    (3) In the case of an entity, the entity must be:
    (i) Engaged primarily and directly in farming in the United States;
    (ii) Authorized to operate and own the farm, if the funds are used 
for farm ownership loan purposes, in the State in which the farm is 
located;
    (d) Must demonstrate the intent to continue the farming operation 
after the designated or declared disaster;
    (e) And all entity members must be unable to obtain sufficient 
credit elsewhere at reasonable rates and terms. To establish this, the 
applicant must obtain written declinations of credit, specifying the 
reasons for declination, from legally organized commercial lending 
institutions within reasonable proximity of the applicant as follows:
    (1) In the case of a loan in excess of $300,000, two written 
declinations of credit are required;
    (2) In the case of a loan of $300,000 or less, one written 
declination of credit is required; and
    (3) In the case of a loan of $100,000 or less, the Agency may waive 
the requirement for obtaining a written declination of credit, if the 
Agency determines that it would pose an undue burden on the applicant, 
the applicant certifies that they cannot get credit elsewhere, and based 
on the applicant's circumstances credit is not likely to be available;
    (4) Notwithstanding the applicant's submission of the required 
written declinations of credit, the Agency may contact other commercial 
lending institutions within reasonable proximity of the applicant and 
make an independent determination of the applicant's ability to obtain 
credit elsewhere;
    (f) And all entity members in the case of an entity, must not have 
received debt forgiveness from the Agency on more than one occasion on 
or before April 4, 1996, or any time after April 4, 1996.
    (g) Must submit an application to be received by the Agency no later 
than 8 months after the date the disaster is declared or designated in 
the county of the applicant's operation.
    (h) For production loss loans, must have a disaster yield that is at 
least 30 percent below the normal production yield of the crop, as 
determined by the Agency, which comprises a basic part of an applicant's 
total farming operation.
    (i) For physical loss loans, must have suffered disaster-related 
damage to chattel or real estate essential to the farming operation, or 
to household contents that must be repaired or replaced, to harvested or 
stored crops, or to perennial crops.

[[Page 253]]

    (j) Must meet all of the following requirements if the ownership 
structure of the family farm changes between the time of a qualifying 
loss and the time an EM loan is closed:
    (1) The applicant, including all owners must meet all of the 
eligibility requirements;
    (2) The individual applicant, or all owners of a entity applicant, 
must have had an ownership interest in the farming operation at the time 
of the disaster; and
    (3) The amount of the loan will be based on the percentage of the 
former farming operation transferred to the applicant and in no event 
will the individual portions aggregated equal more than would have been 
authorized for the former farming operation.
    (k) Must agree to repay any duplicative Federal assistance to the 
agency providing such assistance. An applicant receiving Federal 
assistance for a major disaster or emergency is liable to the United 
States to the extent that the assistance duplicates benefits available 
to the applicant for the same purpose from another source.
    (l) Whose primary enterprise is to breed, raise, and sell horses may 
be eligible under this part.

[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011]



Sec.  764.353  Limitations.

    (a) EM loans must comply with the general limitations established at 
Sec.  764.102.
    (b) EM loans may not exceed the lesser of:
    (1) The amount of credit necessary to restore the farming operation 
to its pre-disaster condition;
    (2) In the case of a physical loss loan, the total eligible physical 
losses caused by the disaster; or
    (3) In the case of a production loss loan, 100 percent of the total 
actual production loss sustained by the applicant as calculated in 
paragraph (c) of this section.
    (c) For production loss loans, the applicant's actual crop 
production loss will be calculated as follows:
    (1) Subtract the disaster yield from the normal yield to determine 
the per acre production loss;
    (2) Multiply the per acre production loss by the number of acres of 
the farming operation devoted to the crop to determine the volume of the 
production loss;
    (3) Multiply the volume of the production loss by the market price 
for such crop as determined by the Agency to determine the dollar value 
for the production loss; and
    (4) Subtract any other disaster related compensation or insurance 
indemnities received or to be received by the applicant for the 
production loss.
    (d) For a physical loss loan, the applicant's total eligible 
physical losses will be calculated as follows:
    (1) Add the allowable costs associated with replacing or repairing 
chattel covered by hazard insurance (excluding labor, machinery, 
equipment, or materials contributed by the applicant to repair or 
replace chattel);
    (2) Add the allowable costs associated with repairing or replacing 
real estate, covered by hazard insurance;
    (3) Add the value of replacement livestock and livestock products 
for which the applicant provided:
    (i) Written documentation of inventory on hand immediately preceding 
the loss;
    (ii) Records of livestock product sales sufficient to allow the 
Agency to establish a value;
    (4) Add the allowable costs to restore perennials to the stage of 
development the damaged perennials had obtained prior to the disaster;
    (5) Add, in the case of an individual applicant, the allowable costs 
associated with repairing or replacing household contents, not to exceed 
$20,000; and
    (6) Subtract any other disaster related compensation or insurance 
indemnities received or to be received by the applicant for the loss or 
damage to the chattel or real estate.
    (e) EM loan funds may not be used for physical loss purposes unless:
    (1) The physical property was covered by general hazard insurance at 
the time that the damage caused by the natural disaster occurred. The 
level of the coverage in effect at the time of the disaster must have 
been the tax or cost depreciated value, whichever is less. Chattel 
property must have been

[[Page 254]]

covered at the tax or cost depreciated value, whichever is less, when 
such insurance was readily available and the benefit of the coverage was 
greater than the cost of the insurance; or
    (2) The loan is to a poultry farmer to cover the loss of a chicken 
house for which the applicant did not have hazard insurance at the time 
of the loss and the applicant:
    (i) Applied for, but was unable to obtain hazard insurance for the 
chicken house;
    (ii) Uses the loan to rebuild the chicken house in accordance with 
industry standards in effect on the date the applicant submits an 
application for the loan;
    (iii) Obtains, for the term of the loan, hazard insurance for the 
full market value of the chicken house; and
    (iv) Meets all other requirements for the loan.
    (f) EM loan funds may not be used to refinance consumer debt, such 
as automobile loans, or credit card debt unless such credit card debt is 
directly attributable to the farming operation.
    (g) Losses associated with horses used for racing, showing, 
recreation, or pleasure or loss of income derived from racing, showing, 
recreation, boarding, or pleasure are not considered qualified losses 
under this section.

[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011]



Sec.  764.354  Rates and terms.

    (a) Rates. (1) The interest rate is the Agency's Emergency Loan 
Actual Loss rate, available in each Agency office.
    (2) The interest rate charged will be the lower rate in effect at 
the time of loan approval or loan closing.
    (b) Terms. (1) The Agency schedules repayment of EM loans based on 
the useful life of the security, the applicant's repayment ability, and 
the type of loss.
    (2) The repayment schedule must include at least one payment every 
year.
    (3) EM loans for annual operating expenses, except expenses 
associated with establishing a perennial crop that are subject to 
paragraph (b)(4), must be repaid within 12 months. The Agency may extend 
this term to not more than 18 months to accommodate the production cycle 
of the agricultural commodities.
    (4) EM loans for production losses or physical losses to chattel 
(including, but not limited to, assets with an expected life between one 
and 7 years) may not exceed 7 years. The Agency may extend this term up 
to a total length not to exceed 20 years, if necessary to improve the 
applicant's repayment ability and real estate security is available.
    (5) The repayment schedule for EM loans for physical losses to real 
estate is based on the applicant's repayment ability and the useful life 
of the security, but in no case will the term exceed 40 years.



Sec.  764.355  Security requirements.

    (a) EM loans made under Sec.  764.351(a)(1) must comply with the 
general security requirements established at Sec. Sec.  764.103, 764.104 
and 764.155(b).
    (b) EM loans made as specified in Sec.  764.351(a)(2) and (b) must 
generally comply with the general security requirements established in 
Sec. Sec.  764.103, 764.104, and 764.255(b). These general security 
requirements, however, do not apply to equine loss loans to the extent 
that a lien is not obtainable or obtaining a lien may prevent the 
applicant from carrying on the normal course of business. Other security 
may be considered for an equine loss loan in the order of priority as 
follows:
    (1) Real estate,
    (2) Chattels and crops, other than horses,
    (3) Other assets owned by the applicant,
    (4) Third party pledges of property not owned by the applicant,
    (5) Repayment ability under paragraph (c) of this section.
    (c) Notwithstanding the requirements of paragraphs (a) and (b) of 
this section, when adequate security is not available because of the 
disaster, the loan may be approved if the Agency determines, based on an 
otherwise feasible plan, there is a reasonable assurance that the 
applicant has the ability to repay the loan provided:
    (1) The applicant has pledged as security for the loan all available 
personal and business security, except as provided in Sec.  764.106;

[[Page 255]]

    (2) The farm operating plan, approved by the Agency, indicates the 
loan will be repaid based upon the applicant's production and income 
history; addresses applicable pricing risks through the use of marketing 
contracts, hedging, options, or other revenue protection mechanisms, and 
includes a marketing plan or similar risk management practice;
    (3) The applicant has had positive net cash farm income in at least 
3 of the past 5 years; and
    (4) The applicant has provided the Agency an assignment on any USDA 
program payments to be received.
    (d) For loans over $25,000, title clearance is required when real 
estate is taken as security.
    (e) For loans of $25,000 or less, when real estate is taken as 
security, a certification of ownership in real estate is required. 
Certification of ownership may be in the form of an affidavit which is 
signed by the applicant, names the record owner of the real estate in 
question and lists the balances due on all known debts against the real 
estate. Whenever the Agency is uncertain of the record owner or debts 
against the real estate security, a title search is required.

[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011]



Sec.  764.356  Appraisal and valuation requirements.

    (a) In the case of physical losses associated with livestock, the 
applicant must have written documentation of the inventory of livestock 
and records of livestock product sales sufficient to allow the Agency to 
value such livestock or livestock products just prior to the loss.
    (b) In the case of farm assets damaged by the disaster, the value of 
such security shall be established as of the day before the disaster 
occurred.
    (c) In the case of an equine loss loan:
    (1) The applicant's Federal income tax and business records will be 
the primary source of financial information. Sales receipts, invoices, 
or other official sales records will document the sales price of 
individual animals.
    (2) If the applicant does not have 3 complete years of business 
records, the Agency will obtain the most reliable and reasonable 
information available from sources such as the Cooperative Extension 
Service, universities, and breed associations to document production for 
those years for which the applicant does not have a complete year of 
business records.

[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75435, Dec. 2, 2011]



Sec. Sec.  764.357-764.400  [Reserved]



                   Subpart J_Loan Decision and Closing

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted. 
Redesignated at 75 FR 54015, Sept. 3, 2010.



Sec.  764.401  Loan decision.

    (a) Loan approval. (1) The Agency will approve a loan only if it 
determines that:
    (i) The applicant's farm operating plan reflects a feasible plan, 
which includes repayment of the proposed loan and demonstrates that all 
other credit needs can be met;
    (ii) The proposed use of loan funds is authorized for the type of 
loan requested;
    (iii) The applicant has been determined eligible for the type of 
loan requested;
    (iv) All security requirements for the type of loan requested have 
been, or will be met before the loan is closed;
    (v) The applicant's total indebtedness to the Agency, including the 
proposed loan, will not exceed the maximum limits established in Sec.  
761.8 of this chapter;
    (vi) There have been no significant changes in the farm operating 
plan or the applicant's financial condition since the time the Agency 
received a complete application; and
    (vii) All other pertinent requirements have been, or will be met 
before the loan is closed.
    (2) The Agency will place conditions upon loan approval it 
determines necessary to protect its interest and maximize the 
applicant's potential for success.
    (b) Loan denial. The Agency will not approve a loan if it determines 
that:
    (1) The applicant's farm operating plan does not reflect a feasible 
plan;

[[Page 256]]

    (2) The proposed use of loan funds is not authorized for the type of 
loan requested;
    (3) The applicant does not meet the eligibility requirements for the 
type of loan requested;
    (4) There is inadequate security for the type of loan requested;
    (5) Approval of the loan would cause the applicant's total 
indebtedness to the Agency to exceed the maximum limits established in 
Sec.  761.8 of this chapter;
    (6) The applicant's circumstances may not permit continuous 
operation and management of the farm; or
    (7) The applicant, the farming operation, or other circumstances 
surrounding the loan are inconsistent with the authorizing statutes, 
other Federal laws, or Federal credit policies.
    (c) Overturn of an Agency decision by appeal. If an FLP loan denial 
is overturned on administrative appeal, the Agency will not 
automatically approve the loan. Unless prohibited by the final appeal 
determination or otherwise advised by the Office of General Counsel, the 
Agency will:
    (1) Request current financial information from the applicant as 
necessary to determine whether any changes in the applicant's financial 
condition or agricultural conditions which occurred after the Agency's 
adverse decision was made will adversely affect the applicant's farming 
operation;
    (2) Approve a loan for crop production:
    (i) Only if the Agency can determine that the applicant will be able 
to produce a crop in the production cycle for which the loan is 
requested; or
    (ii) For the next production cycle, upon review of current financial 
data and a farm operating plan for the next production cycle, if the 
Agency determines the loan can be repaid. The new farm operating plan 
must reflect any financial issues resolved in the appeal.
    (3) Determine whether the applicant's farm operating plan, as 
modified based on the appeal decision, reflects a feasible plan, which 
includes repayment of the proposed loan and demonstrates that all other 
credit needs can be met.



Sec.  764.402  Loan closing.

    (a) Signature requirements. Signatures on loan documents are 
required as follows:
    (1) For individual applicants, only the applicant is required to 
sign the promissory note.
    (2) For entity applicants, the promissory note will be executed to 
evidence the liability of the entity, any embedded entities, and the 
individual liability of all entity members.
    (3) Despite minority status, a youth executing a promissory note for 
a Youth loan will incur full personal liability for the debt.
    (4) A cosigner will be required to sign the promissory note if they 
assist the applicant in meeting the repayment requirements for the loan 
requested.
    (5) All signatures needed for the Agency to acquire the required 
security interests will be obtained according to State law.
    (b) Payment of fees. The applicant, or in the case of a real estate 
purchase, the applicant and seller, must pay all filing, recording, 
notary, lien search, and any other fees necessary to process and close a 
loan.
    (c) Chattel-secured loans. The following requirements apply to loans 
secured by chattel:
    (1) The Agency will close a chattel loan only when it determines the 
Agency requirements for the loan have been satisfied;
    (2) A financing statement is required for every loan except when a 
filed financing statement covering the applicant's property is still 
effective, covers all types of chattel property that will serve as 
security for the loan, describes the land on which crops and fixtures 
are or will be located, and complies with the law of the jurisdiction 
where filed;
    (3) A new security agreement is required for new loans, as necessary 
to secure the loan under State law, prior to the disbursement of loan 
funds.
    (d) Real estate-secured loans. (1) The Agency will close a real 
estate loan only when it determines that the Agency requirements for the 
loan have been satisfied and the closing agent can issue a policy of 
title insurance or final title opinion as of the date of closing.

[[Page 257]]

The title insurance or final title opinion requirement may be waived:
    (i) For loans of $10,000 or less;
    (ii) As provided in Sec.  764.235 for CLs and Sec.  764.355 for EMs;
    (iii) When the real estate is considered additional security by the 
Agency; or
    (iv) When the real estate is a non-essential asset.
    (2) The title insurance or final title opinion must show title 
vested as required by the Agency, the lien of the Agency's security 
instrument in the priority required by the Agency, and title to the 
security property, subject only to those exceptions approved in writing 
by the Agency.
    (3) The Agency must approve agents who will close FLP loans. Closing 
agents must meet all of the following requirements to the Agency's 
satisfaction:
    (i) Be licensed in the state where the loan will be closed;
    (ii) Not be debarred or suspended from participating in any Federal 
programs;
    (iii) Maintain liability insurance;
    (iv) Have a fidelity bond that covers all employees with access to 
loan funds;
    (v) Have current knowledge of the requirements of State law in 
connection with the loan closing and title clearance;
    (vi) Not represent both the buyer and seller in the transaction;
    (vii) Not be related as a family member or business associate with 
the applicant; and
    (viii) Act promptly to provide required services.
    (e) Disbursement of funds. (1) Loan funds will be made available to 
the applicant within 15 days of loan approval, subject to the 
availability of funding.
    (2) If the loan is not closed within 90 days of loan approval or if 
the applicant's financial condition changes significantly, the Agency 
must reconfirm the requirements for loan approval prior to loan closing. 
The applicant may be required to provide updated information for the 
Agency to reconfirm approval and proceed with loan closing.
    (3) The Agency or closing agent will be responsible for disbursing 
loan funds. The electronic funds transfer process, followed by Treasury 
checks, are the Agency's preferred methods of loan funds disbursement. 
The Agency will use these processes on behalf of borrowers to disburse 
loan proceeds directly to creditors being refinanced with loan funds or 
to sellers of chattel property that is being acquired with loan funds. A 
supervised bank account will be used according to subpart B of part 761 
of this chapter when these processes are not practicable.

[72 FR 63298, Nov. 8, 2007. Redesignated at 75 FR 54015, Sept. 3, 2010, 
as amended at 77 FR 15939, Mar. 19, 2012; 79 FR 60745, Oct. 8, 2014]



Sec. Sec.  764.403-764.450  [Reserved]



      Subpart K_Borrower Training and Training Vendor Requirements

    Source: 72 FR 63298, Nov. 8, 2007, unless otherwise noted. 
Redesignated at 75 FR 54015, Sept. 3, 2010.



Sec.  764.451  Purpose.

    The purpose of production and financial management training is to 
help an applicant develop and improve skills necessary to:
    (a) Successfully operate a farm;
    (b) Build equity in the operation; and
    (c) Become financially successful and prepared to graduate from 
Agency financing to commercial sources of credit.



Sec.  764.452  Borrower training requirements.

    (a) The applicant must agree to complete production and financial 
management training, unless the Agency provides a waiver in accordance 
with Sec.  764.453, or the applicant has previously satisfied the 
training requirements. In the case of an entity:
    (1) Any individual member holding a majority interest in the entity 
or who is operating the farm must complete training on behalf of the 
entity, except as provided in paragraph (a)(2) of this section;
    (2) If one entity member is solely responsible for production or 
financial management, then only that member will be required to complete 
training.
    (b) When the Agency determines that production training is required, 
the applicant must agree to complete course

[[Page 258]]

work covering production management in each crop or livestock enterprise 
the Agency determines necessary.
    (c) When the Agency determines that financial management training is 
required, the applicant must agree to complete course work covering all 
aspects of farm accounting and integrating accounting elements into a 
financial management system.
    (d) An applicant who applies for a loan to finance a new enterprise, 
such as a new crop or a new type of livestock, must agree to complete 
production training with regard to that enterprise, even if production 
training requirements were waived or satisfied under a previous loan 
request, unless the Agency provides a waiver in accordance with Sec.  
764.453.
    (e) Even if a waiver is granted, the borrower must complete borrower 
training as a condition for future loans if and when Agency supervision 
provided in 7 CFR part 761 subpart C reflects that such training is 
needed.
    (f) The Agency cannot reject a request for a direct loan based 
solely on an applicant's need for training.
    (g) The Agency will provide written notification of required 
training or waiver of training.



Sec.  764.453  Agency waiver of training requirements.

    (a) The applicant must request the waiver in writing.
    (b) The Agency will grant a waiver for training in production, 
financial management, or both, under the following conditions:
    (1) The applicant submits evidence of successful completion of a 
course similar to a course approved under section Sec.  764.457 and the 
Agency determines that additional training is not needed; or
    (2) The applicant submits evidence which demonstrates to the 
Agency's satisfaction the applicant's experience and training necessary 
for a successful and efficient operation.
    (c) If the production and financial functions of the operation are 
shared among individual entity members, the Agency will consider the 
collective knowledge and skills of those individuals when determining 
whether to waive training requirements.



Sec.  764.454  Actions that an applicant must take when training is required.

    (a) Deadline for completion of training. (1) If the Agency requires 
an applicant to complete training, at loan closing the applicant must 
agree in writing to complete all required training within 2 years.
    (2) The Agency will grant a one-year extension to complete training 
if the applicant is unable to complete training within the 2-year period 
due to circumstances beyond the applicant's control.
    (3) The Agency will grant an extension longer than one year for 
extraordinary circumstances as determined by the Agency.
    (4) An applicant who does not complete the required training within 
the specified time-period will be ineligible for additional direct FLP 
loans until the training is completed.
    (b) Arranging training with a vendor. The applicant must select and 
contact an Agency approved vendor and make all arrangements to begin 
training.
    (c) Payment of training fees. (1) The applicant is responsible for 
the cost of training and must include training fees in the farm 
operating plan as a farm operating expense.
    (2) The payment of training fees is an authorized use of OL funds.
    (3) The Agency is not a party to fee or other agreements between the 
applicant and the vendor.
    (d) Evaluation of a vendor. Upon completion of the required 
training, the applicant will complete an evaluation of the course and 
submit it to the vendor. The vendor will forward the completed 
evaluation forms to the Agency.



Sec.  764.455  Potential training vendors.

    The Agency will contract for training services with State or private 
providers of production and financial management training services.



Sec.  764.456  Applying to be a vendor.

    (a) A vendor for borrower training services must apply to the Agency 
for approval.
    (b) The vendor application must include:

[[Page 259]]

    (1) A sample of the course materials and a description of the 
vendor's training methods;
    (2) Specific training objectives for each section of the course;
    (3) A detailed course agenda specifying the topics to be covered, 
the time devoted to each topic, and the number of sessions to be 
attended;
    (4) A list of instructors and their qualifications;
    (5) The criteria by which additional instructors will be selected;
    (6) The proposed locations where training will take place;
    (7) The cost per participant, including cost for additional members 
of a farming operation;
    (8) The minimum and maximum class size;
    (9) The vendor's experience in developing and administering training 
to farmers;
    (10) The monitoring and quality control methods the vendor will use;
    (11) The policy on allowing Agency employees to attend the course 
for monitoring purposes;
    (12) A plan of how the needs of applicants with physical, mental, or 
learning disabilities will be met; and
    (13) A plan of how the needs of applicants who do not speak English 
as their primary language will be met.



Sec.  764.457  Vendor requirements.

    (a) Minimum experience. The vendor must demonstrate a minimum of 3 
years of experience in conducting training courses or teaching the 
subject matter.
    (b) Training objectives. The courses provided by a vendor must 
enable the applicant to accomplish one or more of the following 
objectives:
    (1) Describe the specific goals of the farming operation, any 
changes required to attain the goals, and outline how these changes will 
occur using present and projected cash flow budgets;
    (2) Maintain and use a financial management information system to 
make financial decisions;
    (3) Understand and use an income statement;
    (4) Understand and use a balance sheet;
    (5) Understand and use a cash flow budget; and
    (6) Use production records and other production information to 
identify problems, evaluate alternatives, and correct current production 
practices to improve efficiency and profitability.
    (c) Curriculum. At least one of the following subjects must be 
covered:
    (1) Business planning courses, covering general goal setting, risk 
management, and planning.
    (2) Financial management courses, covering all aspects of farm 
accounting and focusing on integrating accounting elements into a 
financial management system.
    (3) Crop and livestock production courses focusing on improving the 
profitability of the farm.
    (d) Instructor qualifications. All instructors must have:
    (1) Sufficient knowledge of the material and experience in adult 
education;
    (2) A bachelor's degree or comparable experience in the subject area 
to be taught; and
    (3) A minimum of 3 years experience in conducting training courses 
or teaching.



Sec.  764.458  Vendor approval.

    (a) Agreement to conduct training. (1) Upon approval, the vendor 
must sign an agreement to conduct training for the Agency's borrowers.
    (2) The agreement to conduct training is valid for 3 years.
    (3) Any changes in curriculum, instructor, or cost require prior 
approval by the Agency.
    (4) The vendor may revoke the agreement by giving the Agency a 
written 30-day notice.
    (5) The Agency may revoke the agreement if the vendor does not 
comply with the responsibilities listed in the agreement by giving the 
vendor a written 30-day notice.
    (b) Renewal of agreement to conduct training. (1) To renew the 
agreement to conduct training, the vendor must submit in writing to the 
Agency:
    (i) A request to renew the agreement;
    (ii) Any changes in curricula, instructor, or cost; and
    (iii) Documentation that the vendor is providing effective training.

[[Page 260]]

    (2) The Agency will review renewal requests in accordance with Sec.  
764.457.



Sec.  764.459  Evaluation of borrower progress.

    (a) The vendor must provide the Agency with a periodic progress 
report for each borrower enrolled in training in accordance with the 
agreement to complete training. The reports will indicate whether the 
borrower is attending sessions, completing the training program, and 
demonstrating an understanding of the course material.
    (b) Upon borrower completion of the training, the vendor must 
provide the Agency with an evaluation of the borrower's knowledge of the 
course material and assign a score. The following table lists the 
possible scores, the criteria used to assign each score, and Agency 
consideration of each score:

------------------------------------------------------------------------
                         Criteria used to
       Score             determine score          Agency consideration
------------------------------------------------------------------------
1.................  If the borrower:
                             Training requirement
                       Attended sessions as     associated with course
                       agreed,.                 is complete.
                    
                     Satisfactorily completed
                     all assignments, and.
                    
                     Demonstrated an
                     understanding of the
                     course material..
2.................  If the borrower:
                             Training requirement
                       Attended sessions as     associated with couse is
                       agreed, and.             complete. Additional
                              Agency supervision may
                     Attempted to complete      be necessary.
                     all assignments, but.
                     Does
                     not demonstrate an
                     understanding of the
                     course material..
3.................  If the borrower did not:
                             Training requirement
                       Attend sessions as       associated with course
                       agreed, or.              is not complete. The
                              borrower is ineligible
                     Attempt to complete        for future direct loans
                     assignments, or.           until the training is
                              completed.
                     Otherwise make a good
                     faith effort to complete
                     the training..
------------------------------------------------------------------------



PART 765_DIRECT LOAN SERVICING_REGULAR--Table of Contents



Sec.

                           Subpart A_Overview

765.1 Introduction.
765.2 Abbreviations and definitions.
765.3-765.50 [Reserved]

      Subpart B_Borrowers with Limited Resource Interest Rate Loans

765.51 Annual review.
765.52-765.100 [Reserved]

                      Subpart C_Borrower Graduation

765.101 Borrower graduation requirements.
765.102 Borrower noncompliance with graduation requirements.
765.103 Transfer and assignment of Agency liens.
765.104-765.150 [Reserved]

                       Subpart D_Borrower Payments

765.151 Handling payments.
765.152 Types of payments.
765.153 Application of payments.
765.154 Distribution of payments.
765.155 Final loan payments.
765.156-765.200 [Reserved]

           Subpart E_Protecting the Agency's Security Interest

765.201 General policy.
765.202 Borrower responsibilities.
765.203 Protective advances.
765.204 Notifying potential purchasers.
765.205 Subordination of liens.
765.206 Junior liens.
765.207 Conditions for severance agreements.
765.208-765.250 [Reserved]

         Subpart F_Required Use and Operation of Agency Security

765.251 General.
765.252 Lease of security.
765.253 Ceasing to operate security.
765.254-765.300 [Reserved]

                 Subpart G_Disposal of Chattel Security

765.301 General.
765.302 Use and maintenance of the agreement for the use of proceeds.
765.303 Use of proceeds from chattel security.
765.304 Unapproved disposition.
765.305 Release of security interest.
765.306-765.350 [Reserved]

[[Page 261]]

            Subpart H_Partial Release of Real Estate Security

765.351 Requirements to obtain Agency consent.
765.352 Use of proceeds.
765.353 Determining market value.
765.354-765.400 [Reserved]

          Subpart I_Transfer of Security and Assumption of Debt

765.401 Conditions for transfer of real estate and chattel security.
765.402 Transfer of security and loan assumption on same rates and 
          terms.
765.403 Transfer of security to and assumption of debt by eligible 
          applicants.
765.404 Transfer of security to and assumption of debt by ineligible 
          applicants.
765.405 Payment of costs associated with transfers.
765.406 Release of transferor from liability.
765.407-765.450 [Reserved]

                      Subpart J_Deceased Borrowers

765.451 Continuation of FLP debt and transfer of security.
765.452 Borrowers with Non-program loans.
765.453-765.500 [Reserved]

                      Subpart K_Exception Authority

765.501 Agency exception authority.

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

    Source: 72 FR 63309, Nov. 8, 2007, unless otherwise noted.



                           Subpart A_Overview



Sec.  765.1  Introduction.

    (a) Purpose. This part describes the policies for servicing direct 
FLP loans, except for borrowers who are delinquent, financially 
distressed, or otherwise in default on their loan.
    (b) Servicing actions. Servicing actions described in this part 
include:
    (1) Limited resource reviews;
    (2) Graduation to commercial credit;
    (3) Application of payments;
    (4) Maintaining and disposing of security;
    (5) Transfer of security and assumption of debt; and
    (6) Servicing accounts of deceased borrowers.
    (c) Loans covered. The Agency services direct FLP loans under the 
policies contained in this part. This part is not applicable to Non-
program loans, except where noted.



Sec.  765.2  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are 
provided in Sec.  761.2 of this chapter.



Sec. Sec.  765.3-765.50  [Reserved]



      Subpart B_Borrowers With Limited Resource Interest Rate Loans



Sec.  765.51  Annual review.

    (a) A borrower with limited resource interest rate loans is required 
to provide the Agency annually the operation's financial information to 
determine if the borrower can afford to pay a higher interest rate on 
the loan. The Agency will review the information provided in accordance 
with Sec.  761.105 of this chapter.
    (b) If the borrower's farm operating plan shows that the debt 
service margin exceeds 110 percent, the Agency will increase the 
interest rate on the loans with a limited resource interest rate until:
    (1) A further increase in the interest rate results in a debt 
service margin of less than 110 percent; or
    (2) The interest rate is equal to the interest rate currently in 
effect for the type of loan.
    (c) Except as provided in paragraph (d) of this section, the Agency 
will increase the limited resource interest rate to the current interest 
rate for the type of loan, if the borrower:
    (1) Purchases items not planned during the term of the loan;
    (2) Refuses to submit information the Agency requests for use in 
reviewing the borrower's financial condition;
    (3) Ceases farming, as described in Sec.  765.253; or
    (4) Is ineligible due to disqualification resulting from Federal 
crop insurance violation according to 7 CFR part 718.
    (d) If the borrower has limited resource interest rate loans that 
are deferred, the Agency will not change the interest rate during the 
deferral period.

[[Page 262]]



Sec. Sec.  765.52-765.100  [Reserved]



                      Subpart C_Borrower Graduation



Sec.  765.101  Borrower graduation requirements.

    (a) In accordance with the promissory note and security instruments, 
the borrower must graduate to another source of credit if the Agency 
determines that:
    (1) The borrower has the ability to obtain credit from other 
sources; and
    (2) Adequate credit is available from other sources at reasonable 
rates and terms.
    (b) The Agency may require partial or full graduation.
    (1) In a partial graduation, all FLP loans of one type (i.e. all 
chattel loans or all real estate loans) must be paid in full by 
refinancing with other credit with or without an Agency guarantee.
    (2) In a full graduation, all FLP loans are paid in full by 
refinancing with other credit with or without an Agency guarantee.
    (3) A loan made for chattel and real estate purposes will be 
categorized according to how the majority of the loan's funds are 
expended.
    (c) The borrower must submit all information that the Agency 
requests in conjunction with the review of the borrower's financial 
condition.
    (d) The Agency may provide a borrower's prospectus to lenders in an 
attempt to identify sources of non-Agency credit and assess the lenders' 
interest in refinancing the borrower's loan. The Agency will notify the 
borrower when the borrower's prospectus is provided to one or more 
lenders.
    (e) If a lender expresses an interest in refinancing the borrower's 
FLP loan, the borrower must:
    (1) Apply for a loan from the interested lender within 30 days of 
notice; or
    (2) Seek guaranteed loan assistance under the market placement 
program in accordance with Sec.  762.110(g) of this chapter.
    (f) The borrower will be responsible for any application fees or 
purchase of stock in conjunction with graduation.
    (g) CLs are not subject to graduation requirements under this part.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec.  765.102  Borrower noncompliance with graduation requirements.

    Borrower failure to fulfill all graduation requirements within the 
time-period specified by the Agency constitutes default on the loan. The 
Agency will accelerate the borrower's loan without offering servicing 
options provided in 7 CFR part 766.



Sec.  765.103  Transfer and assignment of Agency liens.

    The Agency may assign its lien to the new lender when the borrower 
is graduating and all FLP debt will be paid in full.



Sec. Sec.  765.104-765.150  [Reserved]



                       Subpart D_Borrower Payments



Sec.  765.151  Handling payments.

    (a) Borrower payments. Borrowers must submit their loan payments in 
a form acceptable to the Agency, such as checks, cash, and money orders. 
Forms of payment not acceptable to the Agency include, but are not 
limited to, foreign currency, foreign checks, and sight drafts.
    (b) Crediting account. The Agency credits the borrower's account as 
of the date the Agency receives payment.



Sec.  765.152  Types of payments.

    (a) Regular payments. Regular payments are derived from, but are not 
limited to:
    (1) The sale of normal income security;
    (2) The sale of farm products;
    (3) Lease income, including mineral lease signing bonus;
    (4) Program or disaster-related disbursements from USDA or crop 
insurance entities; and
    (5) Non-farm income.
    (b) Extra payments. Extra payments are derived from any of the 
following:
    (1) Sale of chattel security other than normal income security;
    (2) Sale of real estate security;
    (3) Refinancing of FLP debt;
    (4) Cash proceeds of insurance claims received on Agency security, 
if not being used to repair or replace the security;

[[Page 263]]

    (5) Any transaction that results in a loss in the value of any 
Agency basic security;
    (6) Refunds of duplicate program benefits or assistance to be 
applied on CL or EM loans; or
    (7) Refunds of unused loan funds.
    (c) Payments from sale of real estate. Notwithstanding any other 
provision of this section, payments derived from the sale of real estate 
security will be treated as regular payments at the Agency's discretion, 
if the FLP loans will be adequately secured after the transaction.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec.  765.153  Application of payments.

    (a) Regular payments. A regular payment is credited to a scheduled 
installment on program and non-program loans. Regular payments are 
applied to loans in the following order:
    (1) Annual operating loan;
    (2) Delinquent FLP installments, paying least secured loans first;
    (3) Non-delinquent FLP installments due in the current production 
cycle in order of security priority, paying least secured loans first;
    (4) Any future installments due.
    (b) Extra payments. An extra payment is not credited to a scheduled 
installment and does not relieve the borrower's responsibility to make 
scheduled loan installments, but will reduce the borrower's FLP 
indebtedness. Extra payments are applied to FLP loans in order of lien 
priority except for refunds of unused loan funds, which shall be applied 
to the loan for which the funds were advanced.



Sec.  765.154  Distribution of payments.

    The Agency applies both regular and extra payments to each loan in 
the following order, as applicable:
    (a) Recoverable costs and protective advances plus interest;
    (b) Deferred non-capitalized interest;
    (c) Accrued deferred interest;
    (d) Interest accrued to date of payment; and
    (e) Loan principal.



Sec.  765.155  Final loan payments.

    (a) General. (1) Unless the Agency has reservations regarding the 
validity of the payment, the Agency may release the borrower's security 
instruments at the time payment is made, if the borrower makes a final 
payment by one of the following methods:
    (i) Cash;
    (ii) U.S. Treasury check;
    (iii) Cashier's check; or
    (iv) Certified check.
    (2) Security instruments will only be released when all loans 
secured by the instruments have been paid in full or otherwise 
satisfied.
    (3) The Agency will return the paid note and satisfied security 
instruments to the borrower after the Agency processes the final payment 
and determines that the total indebtedness is paid in full.
    (b) Borrower refunds. If the borrower refunds the entire loan after 
the loan is closed, the borrower must pay interest from the date of the 
note to the date the Agency received the funds.
    (c) Overpayments. If an Agency miscalculation of a final payment 
results in an overpayment by the borrower of less than $10, the borrower 
must request a refund from the Agency in writing. Overpayments of $10 or 
more automatically will be refunded by the Agency.
    (d) Underpayments. If an Agency miscalculation of a final payment 
amount results in an underpayment, the Agency may collect all account 
balances resulting from its error. If the Agency cannot collect an 
underpayment from the borrower, the Agency will attempt to settle the 
debt in accordance with subpart B of 7 CFR part 1956.



Sec. Sec.  765.156-765.200  [Reserved]



           Subpart E_Protecting the Agency's Security Interest



Sec.  765.201  General policy.

    All Agency servicing actions regarding preservation and protection 
of Agency security will be consistent with the covenants and agreements 
contained in all loan agreements and security instruments.



Sec.  765.202  Borrower responsibilities.

    The borrower must:
    (a) Comply with all provisions of the loan agreements;

[[Page 264]]

    (1) Non-compliance with the provisions of loan agreements and 
documents, other than failure to meet scheduled loan repayment 
installments contained in the promissory note, constitutes non-monetary 
default on FLP loans by the borrower;
    (2) Borrower non-compliance will be considered by the Agency when 
making eligibility determinations for future requests for assistance and 
may adversely impact such requests;
    (b) Maintain, protect, and account for all security;
    (c) Pay the following, unless State law requires the Agency to pay:
    (1) Fees for executing, filing or recording financing statements, 
continuation statements or other security instruments; and
    (2) The cost of lien search reports;
    (d) Pay taxes on property securing FLP loans when they become due;
    (e) Maintain insurance coverage in an amount specified by the 
Agency;
    (f) Protect the interests of the Agency when a third party brings 
suit or takes other action that could affect Agency security.



Sec.  765.203  Protective advances.

    When necessary to protect the Agency's security interest, costs 
incurred for the following actions will be charged to the borrower's 
account:
    (a) Maintain abandoned security property;
    (b) Preserve inadequately maintained security;
    (c) Pay real estate taxes and assessments;
    (d) Pay property, hazard, or flood insurance;
    (e) Pay harvesting costs;
    (f) Maintain Agency security instruments;
    (g) Pay ground rents;
    (h) Pay expenses for emergency measures to protect the Agency's 
collateral; and
    (i) Protect the Agency from actions by third parties.



Sec.  765.204  Notifying potential purchasers.

    (a) States with Central Filing System (CFS). The Agency participates 
and complies with central filing systems in States where CFS has been 
organized. In a State with a CFS, the Agency is not required to 
additionally notify potential purchasers that the Agency has a lien on a 
borrower's chattel security, unless specifically required by State law.
    (b) States without CFS. In a State without CFS, the Agency follows 
the filing requirements specified for perfecting a lien on a borrower's 
chattel security under State law. The Agency will distribute the list of 
chattel and crop borrowers to sale barns, warehouses, and other 
businesses that buy or sell chattels or crops. In addition, the Agency 
may provide the list of borrowers to potential purchasers upon request.



Sec.  765.205  Subordination of liens.

    (a) Borrower application requirements. The borrower must submit the 
following, unless it already exists in the Agency's file and is still 
current as determined by the Agency:
    (1) Completed Agency application for subordination form;
    (2) A current financial statement, including, in the case of an 
entity, financial statements from all entity members;
    (3) Documentation of compliance with the Agency's environmental 
regulations contained in part 799 of this chapter;
    (4) Verification of all non-farm income;
    (5) The farm's operating plan, including a projected cash flow 
budget reflecting production, income, expenses, and debt repayment plan; 
and
    (6) Verification of all debts.
    (b) Subordination of real estate security. For loans secured by real 
estate, the Agency will approve a request for subordination subject to 
the following conditions:
    (1) If a lender requires that the Agency subordinate its lien 
position on the borrower's existing property in order for the borrower 
to acquire new property and the request meets the requirements in 
paragraph (b)(3) of this section, the request may be approved. The 
Agency will obtain a valid mortgage and the required lien position on 
the new property. The Agency will require title clearance and loan 
closing for the

[[Page 265]]

property in accordance with Sec.  764.402 of this chapter.
    (2) If the borrower is an entity and the Agency has taken real 
estate as additional security on property owned by a member, a 
subordination for any authorized loan purpose may be approved when it 
meets the requirements in paragraph (b)(3) of this section and it is 
needed for the entity member to finance a separate farming operation. 
The subordination must not cause the unpaid principal and interest on 
the FLP loan to exceed the value of loan security or otherwise adversely 
affect the security.
    (3) The Agency will approve a request for subordination of real 
estate to a creditor if:
    (i) The loan will be used for an authorized loan purpose or is to 
refinance a loan made for an authorized loan purpose by the Agency or 
another creditor;
    (ii) The credit is essential to the farming operation, and the 
borrower cannot obtain the credit without a subordination;
    (iii) The FLP loan is still adequately secured after the 
subordination, or the value of the loan security will be increased by an 
amount at least equal to the advance to be made under the subordination;
    (iv) Except as authorized by paragraph (c)(2) of this section, there 
is no other subordination outstanding with another lender in connection 
with the same security;
    (v) The subordination is limited to a specific amount;
    (vi) The loan made in conjunction with the subordination will be 
closed within a reasonable time and has a definite maturity date;
    (vii) If the loan is made in conjunction with a guaranteed loan, the 
guaranteed loan meets the requirements of Sec.  762.142(c) of this 
chapter;
    (viii) The borrower is not in default or will not be in default on 
FLP loans by the time the subordination closing is complete;
    (ix) The borrower can demonstrate, through a current farm operating 
plan, the ability to repay all debt payments scheduled, and to be 
scheduled, during the production cycle;
    (x) Except for CL, the borrower is unable to partially or fully 
graduate;
    (xi) The borrower must not be ineligible as a result of a conviction 
for controlled substances according to part 718 of this chapter;
    (xii) The borrower must not be ineligible due to disqualification 
resulting from Federal crop insurance violation according to part 718 of 
this chapter;
    (xiii) The borrower will not use loan funds in a way that will 
contribute to erosion of highly erodible land or conversion of wetlands 
as described in part 799 of this chapter;
    (xiv) Any planned development of real estate security will be 
performed as directed by the lessor or creditor, as approved by the 
Agency, and will comply with the terms and conditions of Sec.  761.10 of 
this chapter;
    (xv) If a borrower with an SAA mortgage is refinancing a loan held 
by a lender, subordination of the SAA mortgage may only be approved when 
the refinanced loan does not increase the amount of debt; and
    (xvi) In the case of a subordination of non-program loan security, 
the non-program loan security also secures a program loan with the same 
borrower.
    (4) The Agency will approve a request for subordination of real 
estate to a lessee if the conditions in paragraphs (b)(3)(viii) through 
(xvi) of this section are met.
    (c) Chattel security. The requirements for chattel subordinations 
are as follows:
    (1) For loans secured by chattel, the subordination must meet the 
conditions contained in paragraphs (b)(3)(i) through (xiii) of this 
section.
    (2) The Agency will approve a request for a second subordination to 
enable a borrower to obtain crop insurance, if the following conditions 
are met:
    (i) The creditor to whom the first subordination was given did not 
provide for payment of the current year's crop insurance premium, and 
consents in writing to the provisions of the second subordination to pay 
insurance premiums from the crop or insurance proceeds;
    (ii) The borrower assigns the insurance proceeds to the Agency or 
names the Agency in the loss payable clause of the policy; and

[[Page 266]]

    (iii) The subordination meets the conditions under paragraphs (b)(1) 
through (12) of this section.
    (d) Appraisals. An appraisal of the property that secures the FLP 
loan will be required when the Agency determines it necessary to protect 
its interest. Appraisals will be obtained in accordance with Sec.  761.7 
of this chapter.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 
FR 65530, Nov. 1, 2013; 81 FR 51284, Aug. 3, 2016]



Sec.  765.206  Junior liens.

    (a) General policy. The borrower will not give a lien on Agency 
security without the consent of the Agency. Failure to obtain Agency 
consent will be considered by the Agency when making eligibility 
determinations for future requests for assistance and may adversely 
impact such requests.
    (b) Conditions for consent. The Agency will consent to the terms of 
a junior lien if all of the following conditions are met:
    (1) The borrower's ability to make scheduled loan payments is not 
jeopardized;
    (2) The borrower provides the Agency a copy of the farm operating 
plan submitted to the junior lienholder, and the plan is consistent with 
the Agency operating plan;
    (3) The total debt against the security does not exceed the 
security's market value;
    (4) The junior lienholder agrees in writing not to foreclose the 
security instrument unless written notice is provided to the Agency;
    (5) The borrower is unable to graduate on any program except for CL; 
and
    (6) The junior lien will not otherwise adversely impact the Agency's 
financial interests.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec.  765.207  Conditions for severance agreements.

    For loans secured by real estate, a borrower may request Agency 
consent to a severance agreement or similar instrument so that future 
chattel acquired by the borrower will not become part of the real estate 
securing the FLP debt. The Agency will consent to severance agreements 
if all of the following conditions are met:
    (a) The financing arrangements are in the financial interest of the 
Agency and the borrower;
    (b) The transaction will not adversely affect the Agency's security 
position;
    (c) The borrower is unable to graduate on any program except for CL;
    (d) The transaction will not jeopardize the borrower's ability to 
pay all outstanding debts to the Agency and other creditors; and
    (e) The property acquired is consistent with authorized loan 
purposes.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec. Sec.  765.208-765.250  [Reserved]



         Subpart F_Required Use and Operation of Agency Security



Sec.  765.251  General.

    (a) A borrower is required to be the operator of Agency security in 
accordance with loan purposes, loan agreements, and security 
instruments.
    (b) A borrower who fails to operate the security without Agency 
consent is in violation of loan agreements and security instruments.
    (c) The Agency will consider a borrower's request to lease or cease 
to operate the security as provided in Sec. Sec.  765.252 and 765.253.



Sec.  765.252  Lease of security.

    (a) Real estate surface leases. The borrower must request prior 
approval to lease the surface of real estate security. The Agency will 
approve requests provided the following conditions are met:
    (1) The lease will not adversely affect the Agency's security 
interest;
    (2) The term of consecutive leases for agricultural purposes does 
not exceed 3 years, or 5 years if the borrower and the lessee are 
related by blood or marriage. The term of surface leases for farm 
property no longer in use, such as old barns, or for nonfarm purposes, 
such as wind turbines, communication towers, or similar installations 
can be for any term;
    (3) The lease does not contain an option to purchase; and

[[Page 267]]

    (4) The lease does not hinder the future operation or success of the 
farm, or, if the borrower has ceased to operate the farm, the 
requirements specified in Sec.  765.253 are met; and
    (5) The lease and any contracts or agreements in connection with the 
lease must be reviewed and approved by the Government.
    (b) Mineral leases. The borrower must request Agency consent to 
lease any mineral rights used as security for FLP loans.
    (1) For FO loans made from December 23, 1985, to February 7, 2014, 
and loans other than FO loans secured by real estate and made from 
December 23, 1985, to November 1, 2013, the value of the mineral rights 
must have been included in the original appraisal in order for the 
Agency to obtain a security interest in any oil, gas, and other mineral 
associated with the real estate security.
    (2) For all other loans not covered by paragraph (b)(1) of this 
section, the Agency will obtain a security interest in any oil, gas, and 
other mineral on or under the real estate pledged as collateral in 
accordance with the applicable security agreement, regardless of whether 
such minerals were included in the original appraisal.
    (3) The Agency may consent to a mineral lease if the proposed use of 
the leased rights will not adversely affect either:
    (i) The Agency's security interest; or
    (ii) Compliance with any applicable environmental requirements of 
part 799 of this chapter.
    (4) The term of the mineral lease is not limited.
    (c) Lease of chattel security. Lease of chattel security is not 
authorized.
    (d) Lease proceeds. Lease proceeds are considered normal income 
security and may be used in accordance with Sec.  765.303.
    (e) Lease of allotments. (1) The Agency will not approve any crop 
allotment lease that will adversely affect its security interest in the 
allotment.
    (2) The borrower must assign all rental proceeds from an allotment 
lease to the Agency.

[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013; 79 
FR 78694, Dec. 31, 2014; 81 FR 51284, Aug. 3, 2016]



Sec.  765.253  Ceasing to operate security.

    If the borrower requests Agency consent to cease operating the 
security or if the Agency discovers that the borrower is failing to 
operate the security, the Agency will give consent if:
    (a) Such action is in the Agency's best interests;
    (b) The borrower is unable to graduate on any program except for CL;
    (c) The borrower is not ineligible as a result of disqualification 
for Federal crop insurance violation according to 7 CFR part 718;
    (d) Any one of the following conditions is met:
    (1) The borrower is involved in the day-to-day operational 
activities, management decisions, costs and returns of the farming 
operation, and will continue to reside in the immediate farming 
community for reasonable management and operation involvement;
    (2) The borrower's failure to operate the security is due to age or 
poor health, and the borrower continues to reside in the immediate 
farming community for reasonable management and operation involvement; 
or
    (3) The borrower's failure to operate the security is beyond the 
borrower's control, and the borrower will resume the farming operation 
within 3 years.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 
FR 65531, Nov. 1, 2013]



Sec. Sec.  765.254-765.300  [Reserved]



                 Subpart G_Disposal of Chattel Security



Sec.  765.301  General.

    (a) The borrower must account for all chattel security, and maintain 
records of dispositions of chattel security and the actual use of 
proceeds. The borrower must make these records available to the Agency 
upon request.
    (b) The borrower may not dispose of chattel security for an amount 
less than its market value. All proceeds, including any amount in excess 
of the market value, must be distributed to lienholders for application 
to the borrower's account in the order of lien priority.

[[Page 268]]

    (1) The Agency considers the market value of normal income security 
to be the prevailing market price of the commodity in the area in which 
the farm is located.
    (2) The market value for basic security is determined by an 
appraisal obtained in accordance with Sec.  761.7 of this chapter.
    (c) When the borrower sells chattel security, the property and 
proceeds remain subject to the Agency lien until the lien is released by 
the Agency.
    (d) The Agency and all other lienholders must provide written 
consent before a borrower may use proceeds for a purpose other than 
payment of lienholders in the order of lien priority.
    (e) The transaction must not interfere with the borrower's farming 
operation or jeopardize the borrower's ability to repay the FLP loan.
    (f) The disposition must enhance the program objectives of the FLP 
loan.
    (g) When the borrower exchanges security property for other property 
or purchases new property with sale proceeds, the acquisition must be 
essential to the farming operation as well as meet the program 
objectives, purposes, and limitations for the type of loan.
    (h) All checks, drafts, or money orders which the borrower receives 
from the sale of Agency security must be payable to the borrower and the 
Agency. If all FLP loan installments and any past due installments, for 
the period of the agreement for the use of proceeds have been paid, 
however, these payments from the sale of normal income security may be 
payable solely to the borrower.

[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013]



Sec.  765.302  Use and maintenance of the agreement for the use of proceeds.

    (a) The borrower and the Agency will execute an agreement for the 
use of proceeds.
    (b) The borrower must report any disposition of basic or normal 
income security to the Agency as specified in the agreement for the use 
of proceeds.
    (c) If a borrower wants to dispose of normal income security in a 
way different than provided by the agreement for the use of proceeds, 
the borrower must obtain the Agency's consent before the disposition 
unless all FLP payments planned on the agreement have been paid.
    (d) If the borrower sells normal income security to a purchaser not 
listed in the agreement for the use of proceeds, the borrower must 
immediately notify the Agency of what property has been sold and of the 
name and business address of the purchaser.
    (e) The borrower must provide the Agency with the necessary 
information to update the agreement for the use of proceeds.
    (f) Changes to the agreement on the use of proceeds will be 
recorded, dated and initialed by the borrower and the Agency.

[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013]



Sec.  765.303  Use of proceeds from chattel security.

    (a) General. (1) Proceeds from the sale of basic security and normal 
income security must be remitted to lienholders in order of lien 
priority.
    (2) Proceeds remitted to the Agency may be used as follows:
    (i) Applied to the FLP loan;
    (ii) Pay customary costs appropriate to the transaction.
    (3) With the concurrence of all lienholders, proceeds may be used to 
preserve the security because of a natural disaster or other severe 
catastrophe, when funds cannot be obtained by other means in time to 
prevent the borrower and the Agency from suffering a substantial loss.
    (4) Security may be consumed as follows:
    (i) Livestock may be used by the borrower's family for subsistence;
    (ii) If crops serve as security and usually would be marketed, the 
Agency may allow such crops to be fed to the borrower's livestock, if 
this is preferable to marketing, provided the Agency obtains a lien or 
assignment on the livestock, and livestock products, at least equal to 
the lien on the crops.
    (b) Proceeds from the sale of normal income security. In addition to 
the uses specified in paragraph (a) of this section, the agreement for 
the use of proceeds will allow for release of proceeds

[[Page 269]]

from the sale of normal income security to be used to pay essential 
family living and farm operating expenses. Such releases will be 
terminated when an account is accelerated.
    (c) Proceeds from the sale of basic security. In addition to the 
uses specified in paragraph (a) of this section:
    (1) Proceeds from the sale of basic security may not be used for any 
family living and farm operating expenses.
    (2) Security may be exchanged for chattel property better suited to 
the borrower's needs if the Agency will acquire a lien on the new 
property at least equal in value to the lien held on the property 
exchanged.
    (3) Proceeds may be used to purchase chattel property better suited 
to the borrower's needs if the Agency will acquire a lien on the 
purchased property. The value of the purchased property, together with 
any proceeds applied to the FLP loan, must at least equal the value of 
the Agency lien on the old security.



Sec.  765.304  Unapproved disposition.

    (a) If a borrower disposes of chattel security without Agency 
approval, or misuses proceeds, the borrower must:
    (1) Make restitution to the Agency within 30 days of Agency 
notification; or
    (2) Provide disposition or use information to enable the Agency to 
consider post-approval within 30 days of Agency notification.
    (b) Failure to cure the first unauthorized disposition in accordance 
with paragraph (a) of this section, or a second unauthorized 
disposition, whether or not cured, constitutes a non-monetary default, 
will be considered by the Agency when making eligibility determinations 
for future requests for assistance, may adversely impact such requests, 
and may result in civil or criminal action.



Sec.  765.305  Release of security interest.

    (a) When Agency security is sold, exchanged, or consumed in 
accordance with the agreement for the use of proceeds, the Agency will 
release its security interest to the extent of the value of the security 
disposed.
    (b) Security interests on wool and mohair may be released when the 
security is marketed by consignment, provided all of the following 
conditions are met:
    (1) The borrower assigns to the Agency the proceeds of any advances 
made, or to be made, on the wool or mohair by the broker, less shipping, 
handling, processing, and marketing costs;
    (2) The borrower assigns to the Agency the proceeds of the sale of 
the wool or mohair, less any remaining costs in shipping, handling, 
processing, and marketing, and less the amount of any advance (including 
any interest which may have accrued on the advance) made by the broker 
against the wool or mohair; and
    (3) The borrower and broker agree that the net proceeds of any 
advances on, or sale of, the wool or mohair will be paid by checks made 
payable jointly to the borrower and the Agency.
    (c) The Agency will release its lien on chattel security without 
compensation, upon borrower request provided:
    (1) The borrower has not received primary loan servicing or Disaster 
Set-Aside within the last 3 years;
    (2) The borrower will retain the security and use it as collateral 
for other credit, including partial graduation as specified in Sec.  
765.101;
    (3) The security margin on each FLP direct loan will be 150 percent 
or more after the release. The value of the retained and released 
security will normally be based on appraisals obtained as specified in 
Sec.  761.7 of this chapter; however, well documented recent sales of 
similar properties can be used if the Agency determines a supportable 
decision can be made without current appraisals;
    (4) The release is approved by the FSA State Executive Director; and
    (5) Except for CL, the borrower is unable to fully graduate as 
specified in Sec.  765.101.

[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013]

[[Page 270]]



Sec. Sec.  765.306-765.350  [Reserved]



            Subpart H_Partial Release of Real Estate Security



Sec.  765.351  Requirements to obtain Agency consent.

    The borrower must obtain prior consent from the Agency for any 
transactions affecting the real estate security, including, but not 
limited to, sale or exchange of security, a right-of-way across 
security, and a partial release. The Agency may consent to such 
transactions provided the conditions in this section are met.
    (a) General. The following conditions apply to all transactions 
affecting real estate:
    (1) The transaction will enhance the objectives for which the FLP 
loan or loans were made;
    (2) The transaction will not jeopardize the borrower's ability to 
repay the FLP loan, or is necessary to place the borrower's farming 
operation on a sound basis;
    (3) Except for releases in paragraph (f) of this section, the amount 
received by the borrower for the security being disposed of, or the 
rights being granted, is not less than the market value and will be 
remitted to the lienholders in the order of lien priority;
    (4) The transaction must not interfere with the borrower's farming 
operation;
    (5) The market value of the remaining security is adequate to secure 
the FLP loans, or if the market value of the security before the 
transaction was inadequate to fully secure the FLP loans, the Agency's 
equity in the security is not diminished;
    (6) The environmental requirements of part 799 of this chapter must 
be met;
    (7) The borrower cannot graduate to other credit on any program 
except for CL;
    (8) The borrower must not be ineligible due to disqualification 
resulting from Federal crop insurance violation according to 7 CFR part 
718; and
    (9) The disposition of real estate security for an outstanding ST 
loan will only be authorized if the transaction will result in full 
repayment of the loan.
    (b) Sale of timber, gravel, oil, gas, coal, or other minerals. (1) 
Agency security instruments require that the borrower request and 
receive written consent from the Agency prior to certain transactions, 
including, but not limited to, cutting, removal, or lease of timber, 
gravel, oil, gas, coal, or other minerals, except small amounts used by 
the borrower for ordinary household purposes.
    (i) The sale of timber from real estate that secures an FLP loan 
will be considered a disposition of a portion of the security.
    (ii) When the Agency has a security interest in oil, gas, or other 
minerals as provided by Sec.  765.252(b), the sale of such products will 
be considered a disposition of a portion of the security by the Agency.
    (2) Any compensation the borrower may receive for damages to the 
surface of the real estate security resulting from exploration for, or 
recovery of, minerals must be assigned to the Agency. Such proceeds will 
be used to repair the damage, and any remaining funds must be remitted 
to lienholders in the order of lien priority or, with all lienholders' 
consent, used for an authorized loan purpose.
    (c) Exchange of security property. (1) When an exchange of security 
results in a balance owing to the borrower, the proceeds must be used in 
accordance with Sec.  765.352.
    (2) Property acquired by the borrower must meet program objectives, 
purposes and limitations relating to the type of loan involved as well 
as applicable requirements for appraisal, title clearance and security.
    (d) Sale under contract for deed. A borrower may sell a portion of 
the security for not less than its market value under a contract for 
deed subject to the following:
    (1) Not less than 10 percent of the purchase price will be paid as a 
down payment and remitted to lienholders in the order of lien priority;
    (2) Payments will not exceed 10 annual installments of principal 
plus interest or the remaining term of the FLP loan, whichever is less. 
The interest rate will be the current rate being charged on a regular FO 
loan plus 1 percent or the rate on the borrower's notes, whichever is 
greater. Payments

[[Page 271]]

may be in equal or unequal installments with a balloon final 
installment;
    (3) The Agency's security rights, including the right to foreclose 
on either the portion being sold or retained, will not be impaired;
    (4) Any subsequent payments must be assigned to the lienholders and 
remitted in order of lien priority, or with lienholder's approval, used 
in accordance with Sec.  765.352;
    (5) The mortgage on the property sold will not be released prior to 
either full payment of the borrower's account or receipt of the full 
amount of sale proceeds;
    (6) The sale proceeds applied to the borrower's loan accounts will 
not relieve the borrower from obligations under the terms of the note or 
other agreements approved by the Agency;
    (7) All other requirements of this section are met.
    (e) Transfer of allotments. (1) The Agency will not approve any crop 
allotment lease that will adversely affect its security interest.
    (2) The sale of an allotment must comply with all conditions of this 
subpart.
    (3) The borrower may transfer crop allotments to another farm owned 
or controlled by the borrower. Such transfer will be treated as a lease 
under Sec.  765.252.
    (f) Release without compensation. Real estate security may be 
released by FSA without compensation when the requirements of paragraph 
(a) of this section, except paragraph (a)(3) of this section, are met, 
and:
    (1) The borrower has not received primary loan servicing or Disaster 
Set-Aside within the last 3 years;
    (2) The security is:
    (i) To be retained by the borrower and used as collateral for other 
credit, including partial graduation as specified in Sec.  765.101; or
    (ii) No more than 10 acres, or the minimum size that meets all State 
and local requirements for a division into a separate legal lot, 
whichever is greater, and is transferred without compensation to a 
person who is related to the borrower by blood or marriage.
    (3) The property released will not interfere with access to or 
operation of the remaining farm;
    (4) Essential buildings and facilities will not be released if they 
reduce the utility or marketability of the remaining property;
    (5) Any issues arising due to legal descriptions, surveys, 
environmental concerns, utilities are the borrower's responsibility and 
no costs or fees will be paid by FSA;
    (6) The security margin on each FLP direct loan will be above 150 
percent after the release. The value of the retained and released 
security will normally be based on appraisals obtained as specified in 
Sec.  761.7 of this chapter; however, well documented recent sales of 
similar properties can be used if the Agency determines the criteria 
have been met and a sound decision can be made without current 
appraisals;
    (7) The release is approved by the FSA State Executive Director; and
    (8) Except for CL, the borrower is unable to fully graduate as 
specified in Sec.  765.101.

[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 
FR 65531, Nov. 1, 2013; 81 FR 51284, Aug. 3, 2016]



Sec.  765.352  Use of proceeds.

    (a) Proceeds from transactions affecting the real estate security 
may only be used as follows:
    (1) Applied on liens in order of priority;
    (2) To pay customary costs appropriate to the transaction, which 
meet the following conditions:
    (i) Are reasonable in amount;
    (ii) Cannot be paid by the borrower;
    (iii) Will not be paid by the purchaser;
    (iv) Must be paid to consummate the transaction; and
    (v) May include postage and insurance when it is necessary for the 
Agency to present the promissory note to the recorder to obtain a 
release of a portion of the real estate from the mortgage.
    (3) For development or enlargement of real estate owned by the 
borrower as follows:
    (i) Development or enlargement must be necessary to improve the 
borrower's debt repayment ability, place the borrower's farming 
operation on a sound basis, or otherwise enhance the objectives of the 
loan;

[[Page 272]]

    (ii) Such use will not conflict with the loan purposes, restrictions 
or requirements of the type of loan involved;
    (iii) Funds will be deposited in a supervised bank account in 
accordance with subpart B of part 761 of this chapter;
    (iv) The Agency has, or will obtain, a lien on the real estate 
developed or enlarged;
    (v) Construction and development will be completed in accordance 
with Sec.  761.10 of this chapter.
    (b) After acceleration, the Agency may approve transactions only 
when all the proceeds will be applied to the liens against the security 
in the order of their priority, after deducting customary costs 
appropriate to the transaction. Such approval will not cancel or delay 
liquidation, unless all loan defaults are otherwise cured.



Sec.  765.353  Determining market value.

    (a) Security proposed for disposition. (1) The Agency will obtain an 
appraisal of the security proposed for disposition.
    (2) The Agency may waive the appraisal requirement when the 
estimated value is less than $25,000.
    (b) Security remaining after disposition. The Agency will obtain an 
appraisal of the remaining security if it determines that the 
transaction will reduce the value of the remaining security.
    (c) Appraisal requirements. Appraisals, when required, will be 
conducted in accordance with Sec.  761.7 of this chapter.



Sec. Sec.  765.354-765.400  [Reserved]



          Subpart I_Transfer of Security and Assumption of Debt



Sec.  765.401  Conditions for transfer of real estate and chattel
security.

    (a) General conditions. (1) Approval of a security transfer and 
corresponding loan assumption obligates a new borrower to repay an 
existing FLP debt.
    (2) All transferees will become personally liable for the debt and 
assume the full responsibilities and obligations of the debt transferred 
when the transfer and assumption is complete. If the transferee is an 
entity, the entity and each entity member must assume personal liability 
for the loan.
    (3) A transfer and assumption will only be approved if the Agency 
determines it is in the Agency's financial interest.
    (b) Agency consent. A borrower must request and obtain written 
Agency consent prior to selling or transferring security to another 
party.

[72 FR 63309, Nov. 8, 2007, as amended at 79 FR 60745, Oct. 8, 2014]



Sec.  765.402  Transfer of security and loan assumption on same
rates and terms.

    An eligible applicant may assume an FLP loan on the same rates and 
terms as the original note if:
    (a) The original borrower has died and the spouse, other relative, 
or joint tenant who is not obligated on the note inherits the security 
property;
    (b) A family member of the borrower or an entity comprised solely of 
family members of the borrower assumes the debt along with the original 
borrower;
    (c) An individual with an ownership interest in the borrower entity 
buys the entire ownership interest of the other members and continues to 
operate the farm in accordance with loan requirements. The new owner 
must assume personal liability for the loan;
    (d) A new entity buys the borrower entity and continues to operate 
the farm in accordance with loan requirements; or
    (e) The original loan is an EM loan for physical or production 
losses and persons who were directly involved in the farm's operation at 
the time of the loss will assume the loan. If the original loan was made 
to:
    (1) An individual borrower, the transferee must be a family member 
of the original borrower or an entity in which the entity members are 
comprised solely of family members of the original borrower.
    (2) A trust, partnership or joint operation, the transferee must 
have been a member, partner or joint operator when the Agency made the 
original loan or remain an entity comprised solely of people who were 
original entity members, partners or joint operators when the entity 
received the original loan.
    (3) A corporation, limited liability company, cooperative, or other 
legal

[[Page 273]]

business organization, the transferee must:
    (i) Have been a corporate stockholder, cooperative member or other 
member of a legal business organization, when the Agency made the 
original loan or will be an entity comprised solely of entity members 
who were entity members when the entity received the loan; and
    (ii) Assume only the portion of the physical or production loss loan 
equal to the transferee's percentage of ownership. In the case of entity 
transferees, the transferee must assume that portion of the loan equal 
to the combined percentages of ownership of the individual stockholders 
or entity members in the transferee.

[72 FR 63309, Nov. 8, 2007, as amended at 79 FR 60745, Oct. 8, 2014]



Sec.  765.403  Transfer of security to and assumption of debt by
eligible applicants.

    (a) Transfer of real estate and chattel security. The Agency may 
approve transfers of security with assumption of FLP debt, other than EM 
loans for physical or production losses, by transferees eligible for the 
type of loan being assumed if:
    (1) The transferee meets all loan and security requirements in part 
764 of this chapter for the type of loan being assumed; and
    (2) The outstanding loan balance (principal and interest) does not 
exceed the maximum loan limit for the type of loan as contained in Sec.  
761.8 of this chapter.
    (b) Assumption of Non-program loans. Applicants eligible for FO 
loans under part 764 of this chapter may assume Non-program loans made 
for real estate purposes if the Agency determines the property meets 
program requirements. In such case, the Agency will reclassify the Non-
program loan as an FO loan.
    (c) Loan types that the Agency no longer makes. Real estate loan 
types the Agency no longer makes (i.e. EE, RL, RHF) may be assumed and 
reclassified as FO loans if the transferee is eligible for an FO loan 
under part 764 of this chapter and the property proposed for transfer 
meets program requirements.
    (d) Amount of assumption. The transferee must assume the lesser of:
    (1) The outstanding balance of the transferor's loan; or
    (2) The market value of the security, less prior liens and 
authorized costs, if the outstanding loan balance exceeds the market 
value of the property.
    (e) Rates and terms. The interest rate and loan term will be 
determined according to rates and terms established in part 764 of this 
chapter for the type of loan being assumed.



Sec.  765.404  Transfer of security to and assumption of debt by
ineligible applicants.

    (a) General. (1) The Agency will allow the transfer of real estate 
and chattel security property to applicants who are ineligible for the 
type of loan being assumed only on Non-program loan rates and terms.
    (2) The Agency will reclassify the assumed loan as a Non-program 
loan.
    (b) Eligibility. Transferees must:
    (1) Provide written documentation verifying their credit worthiness 
and debt repayment ability;
    (2) Not have received debt forgiveness from the Agency;
    (3) Not be ineligible for loans as a result of a conviction for 
controlled substances according to 7 CFR part 718; and
    (4) Not be ineligible due to disqualification resulting from Federal 
crop insurance violation according to 7 CFR part 718.
    (c) Assumption amount. The transferee must assume the total 
outstanding FLP debt or if the value of the property is less than the 
entire amount of debt, an amount equal to the market value of the 
security less any prior liens. The total outstanding FLP debt will 
include any unpaid deferred interest that accrued on the loan to the 
extent that the debt does not exceed the security's market value.
    (d) Downpayment. Non-program transferees must make a downpayment to 
the Agency of not less than 10 percent of the lesser of the market value 
or unpaid debt.
    (e) Interest rate. The interest rate will be the Non-program 
interest rate in effect at the time of loan approval.

[[Page 274]]

    (f) Loan terms. (1) For a Non-program loan secured by real estate, 
the Agency schedules repayment in 25 years or less, based on the 
applicant's repayment ability.
    (2) For a Non-program loan secured by chattel property only, the 
Agency schedules repayment in 5 years or less, based on the applicant's 
repayment ability.



Sec.  765.405  Payment of costs associated with transfers.

    The transferor and transferee are responsible for paying transfer 
costs such as real estate taxes, title examination, attorney's fees, 
surveys, and title insurance. When the transferor is unable to pay its 
portion of the transfer costs, the transferee, with Agency approval, may 
pay these costs provided:
    (a) Any cash equity due the transferor is applied first to payment 
of costs and the transferor does not receive any cash payment above 
these costs;
    (b) The transferee's payoff of any junior liens does not exceed 
$5,000;
    (c) Fees are customary and reasonable;
    (d) The transferee can verify that personal funds are available to 
pay transferor and transferee fees; and
    (e) Any equity due the transferor is held in escrow by an Agency 
designated closing agent and is disbursed at closing.



Sec.  765.406  Release of transferor from liability.

    (a) General. Agency approval of an assumption does not automatically 
release the transferor from liability.
    (b) Requirements for release. (1) The Agency may release the 
transferor from liability when all of the security is transferred and 
the total outstanding debt is assumed.
    (2) If an outstanding debt balance will remain and only part of the 
transferor's Agency security is transferred, the written request for 
release of liability will not be approved, unless the deficiency is 
otherwise resolved to the Agency's satisfaction.
    (3) If an outstanding balance will remain and all of the 
transferor's security has been transferred, the transferor may pay the 
remaining balance or request debt settlement in accordance with subpart 
B of 7 CFR part 1956.
    (4) Except for loans in default being serviced under 7 CFR part 766, 
if an individual who is jointly liable for repayment of an FLP loan 
withdraws from the farming operation and conveys all of their interest 
in the security to the remaining borrower, the withdrawing party may be 
released from liability under the following conditions:
    (i) A divorce decree or property settlement states that the 
withdrawing party is no longer responsible for repaying the loan;
    (ii) All of the withdrawing party's interests in the security are 
conveyed to the persons with whom the loan will be continued; and
    (iii) The persons with whom the loan will be continued can 
demonstrate the ability to repay all of the existing and proposed debt 
obligations.



Sec. Sec.  765.407-765.450  [Reserved]



                      Subpart J_Deceased Borrowers



Sec.  765.451  Continuation of FLP debt and transfer of security.

    (a) Individuals who are liable. Following the death of a borrower, 
the Agency will continue the loan with any individual who is liable for 
the indebtedness provided that the individual complies with the 
obligations of the loan and security instruments.
    (b) Individuals who are not liable. The Agency will continue the 
loan with a person who is not liable for the indebtedness in accordance 
with subpart I of this part.



Sec.  765.452  Borrowers with Non-program loans.

    (a) Loan continuation. (1) The Agency will continue the loan with a 
jointly liable borrower if the remaining borrower continues to pay the 
deceased borrower's loan in accordance with the loan and security 
instruments.
    (2) The Agency may continue the loan with an individual who inherits 
title to the property and is not liable for the indebtedness provided 
the individual makes payments as scheduled and fulfills all other 
responsibilities of the borrower according to the loan and security 
instruments.

[[Page 275]]

    (b) Loan assumption. A deceased borrower's loan may be assumed by an 
individual not liable for the indebtedness in accordance with subpart I 
of this part.
    (c) Loan discontinuation. (1) The Agency will not continue a loan 
for any subsequent transfer of title by the heirs, or sale of interests 
between heirs to consolidate title; and
    (2) The Agency treats any subsequent transfer of title as a sale 
subject to requirements listed in subpart I of this part.



Sec. Sec.  765.453-765.500  [Reserved]



                      Subpart K_Exception Authority



Sec.  765.501  Agency exception authority.

    On an individual case basis, the Agency may consider granting an 
exception to any regulatory requirement or policy of this part if:
    (a) The exception is not inconsistent with the authorizing statute 
or other applicable law; and
    (b) The Agency's financial interest would be adversely affected by 
acting in accordance with published regulations or policies and granting 
the exception would resolve or eliminate the adverse effect upon the 
Agency's financial interest.



PART 766_DIRECT LOAN SERVICING_SPECIAL--Table of Contents



                           Subpart A_Overview

Sec.
766.1 Introduction.
766.2 Abbreviations and definitions.
766.3-766.50 [Reserved]

                      Subpart B_Disaster Set-Aside

766.51 General.
766.52 Eligibility.
766.53 Disaster Set-Aside amount limitations.
766.54 Borrower application requirements.
766.55 Eligibility determination.
766.56 Security requirements.
766.57 Borrower acceptance of Disaster Set-Aside.
766.58 Installment to be set aside.
766.59 Payments toward set-aside installments.
766.60 Canceling a Disaster Set-Aside.
766.61 Reversal of a Disaster Set-Aside.
766.62-766.100 [Reserved]

                    Subpart C_Loan Servicing Programs

766.101 Initial Agency notification to borrower of loan servicing 
          programs.
766.102 Borrower application requirements.
766.103 Borrower does not respond or does not submit a complete 
          application.
766.104 Borrower eligibility requirements.
766.105 Agency consideration of servicing requests.
766.106 Agency notification of decision regarding a complete 
          application.
766.107 Consolidation and rescheduling.
766.108 Reamortization.
766.109 Deferral.
766.110 Conservation Contract.
766.111 Writedown.
766.112 Additional security for restructured loans.
766.113 Buyout of loan at current market value.
766.114 State-certified mediation and voluntary meeting of creditors.
766.115 Challenging the Agency appraisal.
766.116-766.150 [Reserved]

Appendix A to Subpart C of Part 766--FSA-2512, Notice of Availability of 
          Loan Servicing to Borrowers Who Are Current, Financially 
          Distressed, or Less Than 90 Days Past Due
Appendix B to Subpart C of Part 766--FSA-2510, Notice of Availability of 
          Loan Servicing to Borrowers Who Are 90 Days Past Due
Appendix C to Subpart C of Part 766--FSA-2514, Notice of Availability of 
          Loan Servicing to Borrowers Who Are in Non-Monetary Default

                 Subpart D_Homestead Protection Program

766.151 Applying for Homestead Protection.
766.152 Eligibility.
766.153 Homestead Protection transferability.
766.154 Homestead Protection leases.
766.155 Conflict with State law.
766.156-766.200 [Reserved]

  Subpart E_Servicing Shared Appreciation Agreements and Net Recovery 
                            Buyout Agreements

766.201 Shared Appreciation Agreement.
766.202 Determining the shared appreciation due.
766.203 Payment of recapture.
766.204 Amortization of recapture.
766.205 Shared Appreciation Payment Agreement rates and terms.
766.206 Net Recovery Buyout Recapture Agreement.
766.207-766.250 [Reserved]

[[Page 276]]

                    Subpart F_Unauthorized Assistance

766.251 Repayment of unauthorized assistance.
766.252 Unauthorized assistance resulting from submission of false 
          information.
766.253 Unauthorized assistance resulting from submission of inaccurate 
          information by borrower or Agency error.
766.254-766.300 [Reserved]

          Subpart G_Loan Servicing For Borrowers in Bankruptcy

766.301 Notifying borrower in bankruptcy of loan servicing.
766.302 Loan servicing application requirements for borrowers in 
          bankruptcy.
766.303 Processing loan servicing requests from borrowers in bankruptcy.
766.304-766.350 [Reserved]

                       Subpart H_Loan Liquidation

766.351 Liquidation.
766.352 Voluntary sale of real property and chattel.
766.353 Voluntary conveyance of real property.
766.354 Voluntary conveyance of chattel.
766.355 Acceleration of loans.
766.336 Acceleration of loans to American Indian borrowers.
766.357 Involuntary liquidation of real property and chattel.
766.358 Acceleration and foreclosure moratorium.
766.359-766.400 [Reserved]

                      Subpart I_Exception Authority

766.401 Agency exception authority.

    Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 1981d(c).

    Source: 72 FR 63316, Nov. 8, 2007, unless otherwise noted.



                           Subpart A_Overview



Sec.  766.1  Introduction.

    (a) This part describes the Agency's servicing policies for direct 
loan borrowers who:
    (1) Are financially distressed;
    (2) Are delinquent in paying direct loans or otherwise in default;
    (3) Have received unauthorized assistance;
    (4) Have filed bankruptcy or are involved in other civil or criminal 
cases affecting the Agency; or
    (5) Have loan security being liquidated voluntarily or 
involuntarily.
    (b) The Agency services direct FLP loans under the policies 
contained in this part.
    (1) Youth loans:
    (i) May not receive Disaster Set-Aside under subpart B of this part;
    (ii) Will only be considered for rescheduling according to Sec.  
766.107 and deferral according to Sec.  766.109.
    (2) The Agency does not service Non-program loans under this part 
except where noted.
    (c) The Agency requires the borrower to make every reasonable 
attempt to make payments and comply with loan agreements before the 
Agency considers special servicing.



Sec.  766.2  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are 
provided in Sec.  761.2 of this chapter.



Sec. Sec.  766.3-766.50  [Reserved]



                      Subpart B_Disaster Set-Aside



Sec.  766.51  General.

    (a) DSA is available to borrowers with program loans who suffered 
losses as a result of a natural disaster.
    (b) DSA is not intended to circumvent other servicing available 
under this part.
    (c) Non-program loans may be serviced under this subpart for 
borrowers who also have program loans.



Sec.  766.52  Eligibility.

    (a) Borrower eligibility. The borrower must meet all of the 
following requirements to be eligible for a DSA:
    (1) The borrower must have operated the farm in a county designated 
or declared a disaster area or a contiguous county at the time of the 
disaster. Farmers who have rented out their land base for cash are not 
operating the farm.
    (2) The borrower must have acted in good faith, and the borrower's 
inability to make the upcoming scheduled loan payments must be for 
reasons not within the borrower's control.
    (3) The borrower cannot have more than one installment set aside on 
each loan.
    (4) As a direct result of the natural disaster, the borrower does 
not have

[[Page 277]]

sufficient income available to pay all family living and farm operating 
expenses, other creditors, and debts to the Agency. This determination 
will be based on:
    (i) The borrower's actual production, income and expense records for 
the year the natural disaster occurred;
    (ii) Any other records required by the Agency;
    (iii) Compensation received for losses; and
    (iv) Increased expenses incurred because of the natural disaster.
    (5) For the next production cycle, the borrower must develop a 
feasible plan showing that the borrower will at least be able to pay all 
operating expenses and taxes due during the year, essential family 
living expenses, and meet scheduled payments on all debts, including FLP 
debts. The borrower must provide any documentation required to support 
the farm operating plan.
    (6) The borrower must not be in non-monetary default.
    (7) The borrower must not be ineligible due to disqualification 
resulting from Federal crop insurance violation according to 7 CFR part 
718.
    (8) The borrower must not become 165 days past due before the 
appropriate Agency DSA documents are executed.
    (b) Loan eligibility. (1) Any FLP loan to be considered for DSA must 
have been outstanding at the time the natural disaster occurred.
    (2) All of the borrower's program and non-program loans must be 
current after the Agency completes a DSA of the scheduled installment.
    (3) All FLP loans must be current or less than 90 days past due at 
the time the application for DSA is complete.
    (4) The Agency has not accelerated or applied any special servicing 
action under this part to the loan since the natural disaster occurred.
    (5) For any loan that will receive a DSA, the remaining term of the 
loan must equal or exceed 2 years from the due date of the installment 
set-aside.
    (6) The loan must not have a DSA in place.



Sec.  766.53  Disaster Set-Aside amount limitations.

    (a) The DSA amount is limited to the lesser of:
    (1) The first or second scheduled annual installment on the FLP 
loans due after the disaster occurred; or
    (2) The amount the borrower is unable to pay the Agency due to the 
disaster. Borrowers are required to pay any portion of an installment 
they are able to pay.
    (b) The amount set aside will be the unpaid balance remaining on the 
installment at the time the DSA is complete. This amount will include 
the unpaid interest and any principal that would be credited to the 
account as if the installment were paid on the due date, taking into 
consideration any payments applied to principal and interest since the 
due date.
    (c) Recoverable cost items may not be set aside.



Sec.  766.54  Borrower application requirements.

    (a) Requests for DSA. (1) A borrower must submit a request for DSA 
in writing within eight months from the date the natural disaster was 
designated.
    (2) All borrowers must sign the DSA request.
    (b) Required financial information. (1) The borrower must submit 
actual production, income, and expense records for the production cycle 
in which the disaster occurred unless the Agency already has this 
information.
    (2) The Agency may request other information needed to make an 
eligibility determination.



Sec.  766.55  Eligibility determination.

    Within 30 days of a complete DSA application, the Agency will 
determine if the borrower meets the eligibility requirements for DSA.



Sec.  766.56  Security requirements.

    If, prior to executing the appropriate DSA Agency documents, the 
borrower is not current on all FLP loans, the borrower must execute and 
provide to the Agency a best lien obtainable on all of their assets 
except those listed under Sec.  766.112(b).



Sec.  766.57  Borrower acceptance of Disaster Set-Aside.

    The borrower must execute the appropriate Agency documents within 45

[[Page 278]]

days after the borrower receives notification of Agency approval of DSA.



Sec.  766.58  Installment to be set aside.

    (a) The Agency will set-aside the first installment due immediately 
after the disaster occurred.
    (b) If the borrower has already paid the installment due immediately 
after the disaster occurred, the Agency will set-aside the next annual 
installment.



Sec.  766.59  Payments toward set-aside installments.

    (a) Interest accrual. (1) Interest will accrue on any principal 
portion of the set-aside installment at the same rate charged on the 
balance of the loan.
    (2) If the borrower's set-aside installment is for a loan with a 
limited resource rate and the Agency modifies that limited resource 
rate, the interest rate on the set-aside portion will be modified 
concurrently.
    (b) Due date. The amount set-aside, including interest accrued on 
the principal portion of the set-aside, is due on or before the final 
due date of the loan.
    (c) Applying payments. The Agency will apply borrower payments 
toward set-aside installments first to interest and then to principal.



Sec.  766.60  Canceling a Disaster Set-Aside.

    The Agency will cancel a DSA if:
    (a) The Agency takes any primary loan servicing action on the loan;
    (b) The borrower pays the current market value buyout in accordance 
with Sec.  766.113; or
    (c) The borrower pays the set-aside installment.



Sec.  766.61  Reversal of a Disaster Set-Aside.

    If the Agency determines that the borrower received an unauthorized 
DSA, the Agency will reverse the DSA after all appeals are concluded.



Sec. Sec.  766.62-766.100  [Reserved]



                    Subpart C_Loan Servicing Programs



Sec.  766.101  Initial Agency notification to borrower of loan
servicing programs.

    (a) Borrowers notified. The Agency will provide servicing 
information under this section to borrowers who:
    (1) Have a current farm operating plan that demonstrates the 
borrower is financially distressed;
    (2) Are 90 days or more past due on loan payments, even if the 
borrower has submitted an application for loan servicing as a 
financially distressed borrower;
    (3) Are in non-monetary default on any loan agreements;
    (4) Have filed bankruptcy;
    (5) Request this information;
    (6) Request voluntary conveyance of security;
    (7) Have only delinquent SA; or
    (8) Are subject to any other collection action, except when such 
action is a result of failure to graduate. Borrowers who fail to 
graduate when required and are able to do so, will be accelerated 
without providing notification of loan servicing options.
    (b) Form of notification. The Agency will notify borrowers of the 
availability of primary loan servicing programs, conservation contract, 
current market value buyout, debt settlement programs, and homestead 
protection as follows:
    (1) A borrower who is financially distressed, or current and 
requesting servicing will be provided FSA-2512 (Appendix A to this 
subpart);
    (2) A borrower who is 90 days past due will be sent FSA-2510 
(Appendix B to this subpart);
    (3) A borrower who is in non-monetary or both monetary and non-
monetary default will receive FSA-2514 (Appendix C to this subpart);
    (4) A borrower who has only delinquent SA will be notified of 
available loan servicing;
    (5) Notification to a borrower who files bankruptcy will be provided 
in accordance with subpart G of this part.

[[Page 279]]

    (c) Mailing. Notices to delinquent borrowers or borrowers in non-
monetary default will be sent by certified mail to the last known 
address of the borrower. If the certified mail is not accepted, the 
notice will be sent immediately by first class mail to the last known 
address. The appropriate response time will begin three days following 
the date of the first class mailing. For all other borrowers requesting 
the notices, the notices will be sent by regular mail or hand-delivered.
    (d) Borrower response timeframes. To be considered for loan 
servicing, a borrower who is:
    (1) Current or financially distressed may submit a complete 
application any time prior to becoming 90 days past due;
    (2) Ninety (90) days past due must submit a complete application 
within 60 days from receipt of FSA-2510;
    (3) In non-monetary default with or without monetary default must 
submit a complete application within 60 days from receipt of FSA-2514.



Sec.  766.102  Borrower application requirements.

    (a) Except as provided in paragraph (e) of this section, an 
application for primary loan servicing, conservation contract, current 
market value buyout, homestead protection, or some combination of these 
options, must include the following to be considered complete:
    (1) Completed acknowledgment form provided with the Agency 
notification and signed by all borrowers;
    (2) Completed Agency application form;
    (3) Financial records for the 3 most recent years, including income 
tax returns;
    (4) The farming operation's production records for the 3 most recent 
years or the years the borrower has been farming, whichever is less;
    (5) Documentation of compliance with the Agency's environmental 
regulations contained in subpart G of 7 CFR part 1940;
    (6) Verification of all non-farm income;
    (7) A current financial statement and the operation's farm operating 
plan, including the projected cash flow budget reflecting production, 
income, expenses, and debt repayment plan. In the case of an entity, the 
entity and all entity members must provide current financial statements; 
and
    (8) Verification of all debts and collateral.
    (b) In addition to the requirements contained in paragraph (a) of 
this section, the borrower must submit an aerial photo delineating any 
land to be considered for a conservation contract.
    (c) To be considered for debt settlement, the borrower must provide 
the appropriate Agency form, and any additional information required 
under subpart B of 7 CFR part 1956.
    (d) If a borrower who submitted a complete application while current 
or financially distressed is renotified as a result of becoming 90 days 
past due, the borrower must only submit a request for servicing in 
accordance with paragraph (a)(1) of this section, provided all other 
information is less than 90 days old and is based on the current 
production cycle. Any information 90 or more days old or not based on 
the current production cycle must be updated.
    (e) The borrower need not submit any information under this section 
that already exists in the Agency's file and is still current as 
determined by the Agency.
    (f) When jointly liable borrowers have been divorced and one has 
withdrawn from the farming operation, the Agency may release the 
withdrawing individual from liability, provided:
    (1) The remaining individual submits a complete application in 
accordance with this section;
    (2) Both parties have agreed in a divorce decree or property 
settlement that only the remaining individual will be responsible for 
all FLP loan payments;
    (3) The withdrawing individual has conveyed all ownership interest 
in the security to the remaining individual; and
    (4) The withdrawing individual does not have repayment ability and 
does not own any non-essential assets.

    Editorial Note: At 81 FR 51285, Aug. 3, 2016, Sec.  766.102, in 
paragraph (b)(3)(ii), the words ``subpart G of 7 CFR part 1940'' were 
removed and the words ``part 799 of this

[[Page 280]]

chapter'' were added in their place. However, paragraph (b)(3)(ii) does 
not exist, and this amendment could not be incorporated.



Sec.  766.103  Borrower does not respond or does not submit a complete
application.

    (a) If a borrower, who is financially distressed or current, 
requested loan servicing and received FSA-2512, but fails to respond 
timely and subsequently becomes 90 days past due, the Agency will notify 
the borrower in accordance with Sec.  766.101(a)(2).
    (b) If a borrower who is 90 days past due and received FSA-2510, or 
is in non-monetary, or both monetary and non-monetary default and 
received FSA-2514, and fails to timely respond or does not submit a 
complete application within the 60-day timeframe, the Agency will notify 
the borrower by certified mail of the following:
    (1) The Agency's intent to accelerate the loan; and
    (2) The borrower's right to request reconsideration, mediation and 
appeal in accordance with 7 CFR parts 11 and 780.



Sec.  766.104  Borrower eligibility requirements.

    (a) A borrower must meet the following eligibility requirements to 
be considered for primary loan servicing:
    (1) The delinquency or financial distress is the result of reduced 
repayment ability due to one of the following circumstances beyond the 
borrower's control:
    (i) Illness, injury, or death of a borrower or other individual who 
operates the farm;
    (ii) Natural disaster, adverse weather, disease, or insect damage 
which caused severe loss of agricultural production;
    (iii) Widespread economic conditions such as low commodity prices;
    (iv) Damage or destruction of property essential to the farming 
operation; or
    (v) Loss of, or reduction in, the borrower or spouse's essential 
non-farm income.
    (2) The borrower does not have non-essential assets for which the 
net recovery value is sufficient to resolve the financial distress or 
pay the delinquent portion of the loan.
    (3) If the borrower is in non-monetary default, the borrower will 
resolve the non-monetary default prior to closing the servicing action.
    (4) The borrower has acted in good faith.
    (5) Financially distressed or current borrowers requesting servicing 
must pay a portion of the interest due on the loans.
    (6) The borrower must not be ineligible due to disqualification 
resulting from Federal crop insurance violation according to 7 CFR part 
718.
    (b) Debtors with SA only must:
    (1) Be delinquent due to circumstances beyond their control;
    (2) Have acted in good faith.



Sec.  766.105  Agency consideration of servicing requests.

    (a) Order in which Agency considers servicing options. The Agency 
will consider loan servicing options and combinations of options to 
maximize loan repayment and minimize losses to the Agency. The Agency 
will consider loan servicing options in the following order for each 
eligible borrower who requests servicing:
    (1) Conservation Contract, if requested;
    (2) Consolidation and rescheduling or reamortization;
    (3) Deferral;
    (4) Writedown; and
    (5) Current market value buyout.
    (b) Debt service margin. (1) The Agency will attempt to achieve a 
110 percent debt service margin for the servicing options listed in 
paragraphs (a)(2) through (4) of this section.
    (2) If the borrower cannot develop a feasible plan with the 110 
percent debt service margin, the Agency will reduce the debt service 
margin by one percent and reconsider all available servicing 
authorities. This process will be repeated until a feasible plan has 
been developed or it has been determined that a feasible plan is not 
possible with a 100 percent margin.
    (3) The borrower must be able to develop a feasible plan with at 
least a 100 percent debt service margin to be considered for the 
servicing options listed in paragraphs (a)(1) through (4) of this 
section.

[[Page 281]]

    (c) Appraisal of borrower's assets. The Agency will obtain an 
appraisal on:
    (1) All Agency security, non-essential assets, and real property 
unencumbered by the Agency that does not meet the criteria established 
in Sec.  766.112(b), when:
    (i) A writedown is required to develop a feasible plan;
    (ii) The borrower will be offered current market value buyout.
    (2) The borrower's non-essential assets when their net recovery 
value may be adequate to bring the delinquent loans current.



Sec.  766.106  Agency notification of decision regarding a complete
application.

    The Agency will send the borrower notification of the Agency's 
decision within 60 calendar days after receiving a complete application 
for loan servicing.
    (a) Notification to financially distressed or current borrowers. (1) 
If the borrower can develop a feasible plan and is eligible for primary 
loan servicing, the Agency will offer to service the account.
    (i) The borrower will have 45 days to accept the offer of servicing. 
After accepting the Agency's offer, the borrower must execute loan 
agreements and security instruments, as appropriate.
    (ii) If the borrower does not accept the offer, the Agency will send 
the borrower another notification of the availability of loan servicing 
if the borrower becomes 90 days past due in accordance with Sec.  
766.101(a)(2).
    (2) If the borrower cannot develop a feasible plan, or is not 
eligible for loan servicing, the Agency will send the borrower the 
calculations used and the reasons for the adverse decision.
    (i) The borrower may request reconsideration, mediation and appeal 
in accordance with 7 CFR parts 11 and 780 of this title.
    (ii) The Agency will send the borrower another notification of the 
availability of loan servicing if the borrower becomes 90 days past due 
in accordance with Sec.  766.101(a)(2).
    (b) Notification to borrowers 90 days past due or in non-monetary 
default. (1) If the borrower can develop a feasible plan and is eligible 
for primary loan servicing, the Agency will offer to service the 
account.
    (i) The borrower will have 45 days to accept the offer of servicing. 
After accepting the Agency's offer, the borrower must execute loan 
agreements and security instruments, as appropriate.
    (ii) If the borrower does not timely accept the offer, or fails to 
respond, the Agency will notify the borrower of its intent to accelerate 
the account.
    (2) If the borrower cannot develop a feasible plan, or is not 
eligible for loan servicing, the Agency will send the borrower 
notification within 15 days, including the calculations used and reasons 
for the adverse decision, of its intent to accelerate the account in 
accordance with subpart H of this part, unless the account is resolved 
through any of the following options:
    (i) The borrower may request reconsideration, mediation or voluntary 
meeting of creditors, or appeal in accordance with 7 CFR parts 11 and 
780.
    (ii) The borrower may request negotiation of appraisal within 30 
days in accordance with Sec.  766.115.
    (iii) If the net recovery value of non-essential assets is 
sufficient to pay the account current, the borrower has 90 days to pay 
the account current.
    (iv) The borrower, if eligible in accordance with Sec.  766.113, may 
buy out the loans at the current market value within 90 days.
    (v) The borrower may request homestead protection if the borrower's 
primary residence was pledged as security by providing the information 
required under Sec.  766.151.



Sec.  766.107  Consolidation and rescheduling.

    (a) Loans eligible for consolidation. The Agency may consolidate OL 
loans if:
    (1) The borrower meets the loan servicing eligibility requirements 
in Sec.  766.104;
    (2) The Agency determines that consolidation will assist the 
borrower to repay the loans;
    (3) Consolidating the loans will bring the borrower's account 
current or prevent the borrower from becoming delinquent;

[[Page 282]]

    (4) The Agency has not referred the borrower's account to OGC or the 
U.S. Attorney, and the Agency does not plan to refer the account to 
either of these two offices in the near future;
    (5) The borrower is in compliance with the Highly Erodible Land and 
Wetland Conservation requirements of 7 CFR part 12, if applicable;
    (6) The loans are not secured by real estate;
    (7) The Agency holds the same lien position on each loan;
    (8) The Agency has not serviced the loans for unauthorized 
assistance under subpart F of this part; and
    (9) The loan is not currently deferred, as described in Sec.  
766.109, or set-aside, as described in subpart B of this part. The 
Agency may consolidate loans upon cancellation of the deferral or DSA.
    (b) Loans eligible for rescheduling. The Agency may reschedule loans 
made for chattel purposes, including OL, CL, SW, RL, EE, or EM if:
    (1) The borrower meets the loan servicing eligibility requirements 
in Sec.  766.104;
    (2) Rescheduling the loans will bring the borrower's account current 
or prevent the borrower from becoming delinquent;
    (3) The Agency determines that rescheduling will assist the borrower 
to repay the loans;
    (4) The Agency has not referred the borrower's account to OGC or the 
U.S. Attorney, and the Agency does not plan to refer the account to 
either of these two offices in the near future;
    (5) The borrower is in compliance with the Highly Erodible Land and 
Wetland Conservation requirements of 7 CFR part 12, if applicable; and
    (6) The loan is not currently deferred, as described in Sec.  
766.109, or set-aside, as described in subpart B of this part. The 
Agency may reschedule loans upon cancellation of the deferral or DSA.
    (c) Consolidated and rescheduled loan terms. (1) The Agency 
determines the repayment schedule for consolidated and rescheduled loans 
according to the borrower's repayment ability.
    (2) Except for CL and RL loans, the repayment period cannot exceed 
15 years from the date of the consolidation and rescheduling.
    (3) The repayment schedule for RL loans may not exceed 7 years from 
the date of rescheduling.
    (4) The repayment schedule for CLs may not exceed 20 years from the 
date of the original note or assumption agreement.
    (d) Consolidated and rescheduled loan interest rate. The interest 
rate of consolidated and rescheduled loans will be as follows:
    (1) The interest rate for loans made at the regular interest rate 
will be the lesser of:
    (i) The interest rate for that type of loan on the date a complete 
servicing application was received;
    (ii) The interest rate for that type of loan on the date of 
restructure; or
    (iii) The lowest original loan note rate on any of the original 
notes being consolidated and rescheduled.
    (2) The interest rate for loans made at the limited resource 
interest rate will be the lesser of:
    (i) The limited resource interest rate for that type of loan on the 
date a complete servicing application was received;
    (ii) The limited resource interest rate for that type of loan on the 
date of restructure; or
    (iii) The lowest original loan note rate on any of the original 
notes being consolidated and rescheduled.
    (3) At the time of consolidation and rescheduling, the Agency may 
reduce the interest rate to a limited resource rate, if available, if:
    (i) The borrower meets the requirements for the limited resource 
interest rate; and
    (ii) A feasible plan cannot be developed at the regular interest 
rate and maximum terms permitted in this section.
    (4) Loans consolidated and rescheduled at the limited resource 
interest rate will be subject to annual limited resource review in 
accordance with Sec.  765.51 of this chapter.
    (e) Capitalizing accrued interest and adding protective advances to 
the loan principal. (1) The Agency capitalizes the amount of outstanding 
accrued interest on the loan at the time of consolidation and 
rescheduling.
    (2) The Agency adds protective advances for the payment of real 
estate

[[Page 283]]

taxes to the principal balance at the time of consolidation and 
rescheduling.
    (3) The borrower must resolve all other protective advances not 
capitalized prior to closing the servicing actions.
    (f) Installments. If there are no deferred installments, the first 
installment payment under the consolidation and rescheduling will be at 
least equal to the interest amount which will accrue on the new 
principal between the date the promissory note is executed and the next 
installment due date.

[72 FR 63316, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec.  766.108  Reamortization.

    (a) Loans eligible for reamortization. The Agency may reamortize 
loans made for real estate purposes, including FO, SW, RL, SA, EE, RHF, 
CL, and EM if:
    (1) The borrower meets the loan servicing eligibility requirements 
in Sec.  766.104;
    (2) Reamortization will bring the borrower's account current or 
prevent the borrower from becoming delinquent;
    (3) The Agency determines that reamortization will assist the 
borrower to repay the loan;
    (4) The Agency has not referred the borrower's account to OGC or the 
U.S. Attorney, and the Agency does not plan to refer the account to 
either of these two offices in the near future;
    (5) The borrower is in compliance with the Highly Erodible Land and 
Wetland Conservation requirements of 7 CFR part 12, if applicable; and
    (6) The loan is not currently deferred, as described in Sec.  
766.109, or set-aside, as described in subpart B of this part. The 
Agency may reamortize loans upon cancellation of the deferral or DSA.
    (b) Reamortized loan terms. (1) Except as provided in paragraph 
(b)(2), the Agency will reamortize loans within the remaining term of 
the original loan or assumption agreement unless a feasible plan cannot 
be developed or debt forgiveness will be required to develop a feasible 
plan.
    (2) If the Agency extends the loan term, the repayment period from 
the original loan date may not exceed the maximum number of years for 
the type of loan being reamortized in paragraphs (2)(i) through (iv), or 
the useful life of the security, whichever is less.
    (i) FO, SW, RL, EE real estate-type, and EM loans made for real 
estate purposes may not exceed 40 years from the date of the original 
note or assumption agreement.
    (ii) EE real estate-type loans secured by chattels only may not 
exceed 20 years from the date of the original note or assumption 
agreement.
    (iii) RHF loans may not exceed 33 years from the date of the 
original note or assumption agreement.
    (iv) SA loans may not exceed 25 years from the date of the original 
Shared Appreciation note.
    (v) CLs may not exceed 20 years from the date of the original note 
or assumption agreement.
    (c) Reamortized loan interest rate. The interest rate will be as 
follows:
    (1) The interest rate for loans made at the regular interest rate 
will be the lesser of:
    (i) The interest rate for that type of loan on the date a complete 
servicing application was received;
    (ii) The interest rate for that type of loan on the date of 
restructure; or
    (iii) The original loan note rate of the note being reamortized.
    (2) The interest rate for loans made at the limited resource 
interest rate will be the lesser of:
    (i) The limited resource interest rate for that type of loan on the 
date a complete servicing application was received;
    (ii) The limited resource interest rate for that type of loan on the 
date of restructure; or
    (iii) The original loan note rate of the note being reamortized.
    (3) At the time of reamortization, the Agency may reduce the 
interest rate to a limited resource rate, if available, if:
    (i) The borrower meets the requirements for the limited resource 
interest rate; and
    (ii) A feasible plan cannot be developed at the regular interest 
rate and maximum terms permitted in this section.
    (4) Loans reamortized at the limited resource interest rate will be 
subject to annual limited resource review in accordance with Sec.  
765.51 of this chapter.

[[Page 284]]

    (5) SA payment agreements will be reamortized at the current SA 
amortization rate in effect on the date of approval or the rate on the 
original payment agreement, whichever is less.
    (d) Capitalizing accrued interest and adding protective advances to 
the loan principal. (1) The Agency capitalizes the amount of outstanding 
accrued interest on the loan at the time of reamortization.
    (2) The Agency adds protective advances for the payment of real 
estate taxes to the principal balance at the time of reamortization.
    (3) The borrower must resolve all other protective advances not 
capitalized prior to closing the reamortization.
    (e) Installments. If there are no deferred installments, the first 
installment payment under the reamortization will be at least equal to 
the interest amount which will accrue on the new principal between the 
date the promissory note is executed and the next installment due date.

[72 FR 63316, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]



Sec.  766.109  Deferral.

    (a) Conditions for approving deferrals. The Agency will only 
consider deferral of loan payments if:
    (1) The borrower meets the loan servicing eligibility requirements 
in Sec.  766.104;
    (2) Rescheduling, consolidation, and reamortization of all the 
borrower's loans, will not result in a feasible plan with 110 percent 
debt service margin;
    (3) The need for deferral is temporary; and
    (4) The borrower develops feasible first-year deferral and post-
deferral farm operating plans subject to the following:
    (i) The deferral will not create excessive net cash reserves beyond 
that necessary to develop a feasible plan.
    (ii) The Agency will consider a partial deferral if deferral of the 
total Agency payment would result in the borrower developing more cash 
availability than necessary to meet debt repayment obligations.
    (b) Deferral period. (1) The deferral term will not exceed 5 years 
and will be determined based on the post-deferral plan that results in 
the:
    (i) Greatest improvement over the first year cash available to 
service FLP debt;
    (ii) The shortest possible deferral period.
    (2) The Agency will distribute interest accrued on the deferred 
principal portion of the loan equally to payments over the remaining 
loan term after the deferral period ends.
    (c) Agency actions when borrower's repayment ability improves. (1) 
If during the deferral period the borrower's repayment ability has 
increased to allow the borrower to make payments on the deferred loans, 
the borrower must make supplemental payments, as determined by the 
Agency. If the borrower agrees to make supplemental payments, but does 
not do so, the borrower will be considered to be in non-monetary 
default.
    (2) If the Agency determines that the borrower's improved repayment 
ability will allow graduation, the Agency will require the borrower to 
graduate in accordance with part 765, subpart C of this chapter.
    (d) Associated loan servicing. (1) The Agency must cancel an 
existing deferral if the Agency approves any new primary loan servicing 
action.
    (2) Loans deferred will also be serviced in accordance with 
Sec. Sec.  766.107, 766.108 and 766.111, as appropriate.



Sec.  766.110  Conservation Contract.

    (a) General. (1) A debtor with only SA or Non-program loans is not 
eligible for a Conservation Contract. However, an SA or Non-program loan 
may be considered for a Conservation Contract if the borrower also has 
program loans.
    (2) A current or financially distressed borrower may request a 
Conservation Contract at any time prior to becoming 90 days past due.
    (3) A delinquent borrower may request a Conservation Contract during 
the same 60-day time period in which the borrower may apply for primary 
loan servicing. The borrower eligibility requirements in Sec.  766.104 
will apply.
    (4) A Conservation Contract may be established for conservation, 
recreation, and wildlife purposes.

[[Page 285]]

    (5) The land under a Conservation Contract cannot be used for the 
production of agricultural commodities during the term of the contract.
    (6) Only loans secured by the real estate that will be subject to 
the Conservation Contract may be considered for debt reduction under 
this section.
    (b) Eligible lands. The following types of lands are eligible to be 
considered for a Conservation Contract by the Conservation Contract 
review team:
    (1) Wetlands or highly erodible lands; and
    (2) Uplands that meet any one of the following criteria:
    (i) Land containing aquatic life, endangered species, or wildlife 
habitat of local, State, tribal, or national importance;
    (ii) Land in 100-year floodplains;
    (iii) Areas of high water quality or scenic value;
    (iv) Historic or cultural properties listed in or eligible for the 
National Register of Historic Places;
    (v) Aquifer recharge areas of local, regional, State, or tribal 
importance;
    (vi) Buffer areas necessary for the adequate protection of proposed 
Conservation Contract areas, or other areas enrolled in other 
conservation programs;
    (vii) Areas that contain soils generally not suited for cultivation; 
or
    (viii) Areas within or adjacent to Federal, State, tribal, or 
locally administered conservation areas.
    (c) Unsuitable acreage. Notwithstanding paragraph (b) of this 
section, acreage is unsuitable for a Conservation Contract if:
    (1) It is not suited or eligible for the program due to legal 
restrictions;
    (2) It has on-site or off-site conditions that prohibit the use of 
the land for conservation, wildlife, or recreational purposes; or
    (3) The Conservation Contract review team determines that the land 
is not suitable for conservation, wildlife, or recreational purposes.
    (3) The Conservation Contract review team determines that the land 
does not provide measurable conservation, wildlife, or recreational 
benefits;
    (4) There would be a duplication of benefits as determined by the 
Conservation Contract review team because the acreage is encumbered 
under another Federal, State, or local government program for which the 
borrower has been or is being compensated for conservation, wildlife, or 
recreation benefits;
    (5) The acreage subject to the proposed Conservation Contract is 
encumbered under a Federal, State, or local government cost share 
program that is inconsistent with the purposes of the proposed 
Conservation Contract, or the required practices of the cost share 
program are not identified in the conservation management plan;
    (6) The tract does not contain a legal right of way or other 
permanent access for the term of the contract that can be used by the 
Agency or its designee to carry out the contract; or
    (7) The tract, including any buffer areas, to be included in a 
Conservation Contract is less than 10 acres.
    (d) Conservation Contract terms. The borrower selects the term of 
the contract, which may be 10, 30, or 50 years.
    (e) Conservation management plan. The Agency, with the 
recommendations of the Conservation Contract review team, is responsible 
for developing a conservation management plan. The conservation 
management plan will address the following:
    (1) The acres of eligible land and the approximate boundaries, and
    (2) A description of the conservation, wildlife, or recreation 
benefits to be realized.
    (f) Management authority. The Agency has enforcement authority over 
the Conservation Contract. The Agency, however, may delegate contract 
management to another entity if doing so is in the Agency's best 
interest.
    (g) Limitations. The Conservation Contract must meet the following 
conditions:
    (1) Result in a feasible plan for current borrowers; or
    (2) Result in a feasible plan with or without primary loan servicing 
for financially distressed or delinquent borrowers; and
    (3) Improve the borrower's ability to repay the remaining balance of 
the loan.
    (h) Maximum debt reduction for a financially distressed or current 
borrower. The amount of debt reduction by a

[[Page 286]]

Conservation Contract is calculated as follows:
    (1) Divide the contract acres by the total acres that secure the 
borrower's FLP loans to determine the contract acres percentage.
[GRAPHIC] [TIFF OMITTED] TR08NO07.000

    (2) Multiply the borrower's total unpaid FLP loan balance 
(principal, interest, and recoverable costs already paid by the Agency) 
by the percentage calculated under paragraph (h)(1) of this section to 
determine the amount of FLP debt that is secured by the contract 
acreage.
[GRAPHIC] [TIFF OMITTED] TR08NO07.001

    (3) Multiply the borrower's total unpaid FLP loan balance 
(principal, interest, and recoverable costs already paid by the Agency) 
by 33 percent.
[GRAPHIC] [TIFF OMITTED] TR08NO07.002

    (4) The lesser of the amounts calculated in paragraphs (h)(2) and 
(h)(3) of this section is the maximum amount of debt reduction for a 50-
year contract.
    (5) The borrower will receive 60 percent of the amount calculated in 
paragraph (h)(4) of this section for a 30-year contract.
[GRAPHIC] [TIFF OMITTED] TR08NO07.003

    (6) The borrower will receive 20 percent of the amount calculated in 
paragraph (h)(4) of this section for a 10-year contract.
[GRAPHIC] [TIFF OMITTED] TR08NO07.004

    (i) Maximum debt reduction for a delinquent borrower. The amount of 
debt reduction by a Conservation Contract is calculated as follows:

[[Page 287]]

    (1) Divide the contract acres by the total acres that secure the 
borrower's FLP loans to determine the contract acres percentage.
[GRAPHIC] [TIFF OMITTED] TR08NO07.005

    (2) Multiply the borrower's total unpaid FLP loan balance 
(principal, interest, and recoverable costs already paid by the Agency) 
by the percentage calculated in paragraph (i)(1) of this section to 
determine the amount of FLP debt that is secured by the contract 
acreage.
[GRAPHIC] [TIFF OMITTED] TR08NO07.006

    (3) Multiply the market value of the total acres, less contributory 
value of any structural improvements, that secure the borrower's FLP 
loans by the percent calculated in paragraph (i)(1) of this section to 
determine the current value of the acres in the contract.
[GRAPHIC] [TIFF OMITTED] TR08NO07.007

    (4) Subtract the market value of the contract acres calculated in 
paragraph (i)(3) of this section from the FLP debt secured by the 
contract acres as calculated in paragraph (i)(2) of this section.
[GRAPHIC] [TIFF OMITTED] TR08NO07.008

    (5) Select the greater of the amounts calculated in either 
paragraphs (i)(3) and (i)(4) of this section.
    (6) The lesser of the amounts calculated in paragraphs (i)(2) and 
(i)(5) of this section will be the maximum amount of debt reduction for 
a 50-year contract term.
    (7) The borrower will receive 60 percent of the amount calculated in 
paragraph (i)(6) of this section for a 30-year contract term.
[GRAPHIC] [TIFF OMITTED] TR08NO07.009


[[Page 288]]


    (8) The borrower will receive 20 percent of the amount calculated in 
paragraph (i)(6) of this section for a 10-year contract term.
[GRAPHIC] [TIFF OMITTED] TR08NO07.010

    (j) Conservation Contract Agreement. The borrower must sign the 
Conservation Contract Agreement establishing the contract's terms and 
conditions.
    (k) Transferring title to land under Conservation Contract. If the 
borrower or any subsequent landowner transfers title to the property, 
the Conservation Contract will remain in effect for the duration of the 
contract term.
    (l) Borrower appeals of technical decisions. Borrower appeals of the 
Natural Resources Conservation Service's (NRCS) technical decisions made 
in connection with a Conservation Contract, will be handled in 
accordance with applicable NRCS regulations. Other aspects of the denial 
of a conservation contract may be appealed in accordance with 7 CFR 
parts 11 and 780.
    (m) Subordination. For real estate with a Conservation Contract:
    (1) Subordination will be required for all liens that are in a prior 
lien position to the Conservation Contract.
    (2) The Agency will not subordinate Conservation Contracts to liens 
of other lenders or other Governmental entities.
    (n) Breach of Conservation Contract. If the borrower or a subsequent 
owner of the land under the Conservation Contract fails to comply with 
any of its provisions, the Agency will declare the Conservation Contract 
breached. If the Conservation Contract is breached, the borrower or 
subsequent owner of the land must restore the land to be in compliance 
with the Conservation Contract and all terms of the conservation 
management plan within 90 days. If this cure is not completed, the 
Agency will take the following actions:
    (1) For borrowers who have or had a loan in which debt was exchanged 
for the Conservation Contract and breach the Conservation Contract, the 
Agency may reinstate the debt that was cancelled, plus interest to the 
date of payment at the rate of interest in the promissory note, and 
assess liquidated damages in the amount of 25 percent of the debt 
cancelled, plus any actual expenses incurred by the Agency in enforcing 
the terms of the Conservation Contract. The borrower's account will be 
considered in non-monetary default; and
    (2) Subsequent landowners who breach the Conservation Contract must 
pay the Agency the amount of the debt cancelled when the contract was 
executed, plus interest at the non-program interest rate to the date of 
payment, plus liquidated damages in the amount of 25 percent of the 
cancelled debt, plus any actual expenses incurred by the Agency in 
enforcing the terms of the Conservation Contract.

[72 FR 63316, Nov. 8, 2007, as amended at 78 FR 65532, Nov. 1, 2013]



Sec.  766.111  Writedown.

    (a) Eligibility. The Agency will only consider a writedown if the 
borrower:
    (1) Meets the eligibility criteria in Sec.  766.104;
    (2) Is delinquent;
    (3) Has not previously received debt forgiveness on any FLP direct 
loan; and
    (4) Complies with the Highly Erodible Land and Wetland Conservation 
requirements of 7 CFR part 12.
    (b) Conditions. (1) Rescheduling, consolidation, reamortization, 
deferral or some combination of these options on all of the borrower's 
loans would not result in a feasible plan with a 110 percent debt 
service margin. If a feasible plan, including writedown is achieved with 
a debt service margin of 101 percent or more, the Agency will determine 
if a feasible plan can be achieved without a writedown. If a feasible 
plan is achieved with and without a writedown and the borrower meets all

[[Page 289]]

the eligibility requirements, both options will be offered and the 
borrower may choose one option.
    (2) The present value of the restructured loan must be greater than 
or equal to the net recovery value of Agency security and any non-
essential assets.
    (3) The writedown amount, excluding debt reduction received through 
Conservation Contract, does not exceed $300,000.
    (4) A borrower who owns real estate must execute an SAA in 
accordance with Sec.  766.201.
    (c) Associated loan servicing. Loans written down will also be 
serviced in accordance with Sec. Sec.  766.107 and 766.108, as 
appropriate.



Sec.  766.112  Additional security for restructured loans.

    (a) If the borrower is delinquent prior to restructuring, the 
borrower, and all entity members in the case of an entity, must execute 
and provide to the Agency a lien on all of their assets, except as 
provided in paragraph (b) of this section, when the Agency is servicing 
a loan.
    (b) The Agency will take the best lien obtainable on all assets the 
borrower owns, except:
    (1) When taking a lien on such property will prevent the borrower 
from obtaining credit from other sources;
    (2) When the property could have significant environmental problems 
or costs as described in subpart G of 7 CFR part 1940;
    (3) When the Agency cannot obtain a valid lien;
    (4) When the property is subsistence livestock, cash, special 
collateral accounts the borrower uses for the farming operation, 
retirement accounts, personal vehicles necessary for family living, 
household contents, or small equipment such as hand tools and lawn 
mowers; or
    (5) When a contractor holds title to a livestock or crop enterprise, 
or the borrower manages the enterprise under a share lease or share 
agreement.

    Editorial Note: At 81 FR 51285, Aug. 3, 2016, Sec.  766.112, in 
paragraph (a)(6), the words ``subpart G of 7 CFR part 1940'' were 
removed and the words ``part 799 of this chapter'' were added in their 
place. However, paragraph (b)(3)(ii) does not exist, and this amendment 
could not be incorporated.



Sec.  766.113  Buyout of loan at current market value.

    (a) Borrower eligibility. A delinquent borrower may buy out the 
borrower's FLP loans at the current market value of the loan security, 
including security not in the borrower's possession, and all non-
essential assets if:
    (1) The borrower has not previously received debt forgiveness on any 
other FLP direct loan;
    (2) The borrower has acted in good faith;
    (3) The borrower does not have non-essential assets for which the 
net recovery value is sufficient to pay the account current;
    (4) The borrower is unable to develop a feasible plan through 
primary loan servicing programs or a Conservation Contract, if 
requested;
    (5) The present value of the restructured loans is less than the net 
recovery value of Agency security;
    (6) The borrower pays the amount required in a lump sum without 
guaranteed or direct credit from the Agency; and
    (7) The amount of debt forgiveness does not exceed $300,000.
    (b) Buyout time frame. After the Agency offers current market value 
buyout of the loan, the borrower has 90 days from the date of Agency 
notification to pay that amount.



Sec.  766.114  State-certified mediation or voluntary meeting of creditors.

    (a) A borrower who is unable to develop a feasible plan but is 
otherwise eligible for primary loan servicing may request:
    (1) State-certified mediation; or
    (2) Voluntary meeting of creditors when a State does not have a 
certified mediation program.
    (b) Any negotiation of the Agency's appraisal must be completed 
before State-certified mediation or voluntary meeting of creditors.



Sec.  766.115  Challenging the Agency appraisal.

    (a) A borrower considered for primary loan servicing who does not 
agree with the Agency's appraisal of the borrower's assets may:

[[Page 290]]

    (1) Obtain a USPAP compliant technical appraisal review prepared by 
a State Certified General Appraiser of the Agency's appraisal and 
provide it to the Agency prior to reconsideration or the appeal hearing;
    (2) Obtain an independent appraisal completed in accordance with 
Sec.  761.7 as part of the appeals process. The borrower must:
    (i) Pay for this appraisal;
    (ii) Choose which appraisal will be used in Agency calculations, if 
the difference between the two appraisals is five percent or less.
    (3) Negotiate the Agency's appraisal by obtaining a second 
appraisal.
    (i) If the difference between the two appraisals is five percent or 
less, the borrower will choose the appraisal to be used in Agency 
calculations.
    (ii) If the difference between the two appraisals is greater than 
five percent, the borrower may request a third appraisal. The Agency and 
the borrower will share the cost of the third appraisal equally. The 
average of the two appraisals closest in value will serve as the final 
value.
    (iii) A borrower may request a negotiated appraisal only once in 
connection with an application for primary loan servicing.
    (iv) The borrower may not appeal a negotiated appraisal.
    (b) If the appraised value of the borrower's assets change as a 
result of the challenge, the Agency will reconsider its previous primary 
loan servicing decision using the new appraisal value.
    (c) If the appeal process results in a determination that the 
borrower is eligible for primary loan servicing, the Agency will use the 
information utilized to make the appeal decision, unless stated 
otherwise in the appeal decision letter.

[72 FR 63316, Nov. 8, 2007, as amended at 78 FR 65532, Nov. 1, 2013]



Sec. Sec.  766.116-766.150  [Reserved]

[[Page 291]]



     Sec. Appendix A to Subpart C of Part 766--FSA-2512, Notice of 
Availability of Loan Servicing to Borrowers Who Are Current, Financially 
                Distressed, or Less Than 90 Days Past Due
[GRAPHIC] [TIFF OMITTED] TR01NO13.008


[[Page 292]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.009


[[Page 293]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.010


[[Page 294]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.011


[[Page 295]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.012


[[Page 296]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.013


[[Page 297]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.014


[[Page 298]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.015


[[Page 299]]


[GRAPHIC] [TIFF OMITTED] TR01NO13.016


[78 FR 65533, Nov. 1, 2013]

[[Page 300]]



     Sec. Appendix B to Subpart C of Part 766--FSA-2510, Notice of 
  Availability of Loan Servicing to Borrowers Who Are 90 Days Past Due
[GRAPHIC] [TIFF OMITTED] TR08NO07.011


[[Page 301]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.012


[[Page 302]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.013


[[Page 303]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.014


[[Page 304]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.015


[[Page 305]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.016


[[Page 306]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.017


[[Page 307]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.018


[[Page 308]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.019


[72 FR 74153, Dec. 31, 2007]

[[Page 309]]



     Sec. Appendix C to Subpart C of Part 766--FSA-2514, Notice of 
  Availability of Loan Servicing to Borrowers Who Are in Non-Monetary 
                                 Default
[GRAPHIC] [TIFF OMITTED] TR08NO07.029


[[Page 310]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.030


[[Page 311]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.031


[[Page 312]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.032


[[Page 313]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.033


[[Page 314]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.034


[[Page 315]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.035


[[Page 316]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.036


[[Page 317]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.037


[[Page 318]]


[GRAPHIC] [TIFF OMITTED] TR08NO07.038



                 Subpart D_Homestead Protection Program



Sec.  766.151  Applying for Homestead Protection.

    (a) Pre-acquisition--(1) Notification. If the borrower requested 
primary loan servicing but cannot develop a feasible plan, the Agency 
will notify the borrower of any additional information needed to process 
the homestead protection request. The borrower must provide this 
information within 30 days of Agency notification.
    (2) Borrower does not respond. If the borrower does not timely 
provide the information requested, the Agency will deny the homestead 
protection request and provide appeal rights.
    (3) Application requirements. A complete application for homestead 
protection will include:
    (i) Updates to items required under Sec.  766.102;
    (ii) Information required under Sec.  766.353; and
    (iii) Identification of land and buildings to be considered.
    (b) Post-acquisition--(1) Notification. After the Agency acquires 
title to the real estate property, the Agency will notify the borrower 
of the availability of homestead protection. The borrower must submit a 
complete application within 30 days of Agency notification.
    (2) Borrower does not respond. If the borrower does not respond to 
the Agency notice, the Agency will dispose of the property in accordance 
with 7 CFR part 767.
    (3) Application requirements. A complete application for homestead 
protection will include:
    (i) Updates to items required under Sec.  766.102; and
    (ii) Identification of land and buildings to be considered.



Sec.  766.152  Eligibility.

    (a) Property. (1) The principal residence and the adjoining land of 
up to 10 acres, must have served as real estate security for the FLP 
loan and may include existing farm service buildings. Homestead 
protection does not apply if the FLP loans were secured only by 
chattels.
    (2) The applicant may propose a homestead protection site. Any 
proposed site is subject to Agency approval.
    (3) The proposed homestead protection site must meet all State and 
local requirements for division into a separate legal lot.
    (4) Where voluntary conveyance of the property to the Agency is 
required to process the homestead protection request, the Agency will 
process any request for voluntary conveyance according to Sec.  766.353.
    (b) Applicant. To be eligible for homestead protection, the 
applicant:
    (1) Must be the owner, or former owner from whom the Agency acquired 
title of the property pledged as security for an FLP loan. For homestead 
protection purposes, an owner or former owner includes:
    (i) A member of an entity who is or was personally liable for the 
FLP loan secured by the homestead protection

[[Page 319]]

property when the applicant or entity held fee title to the property; or
    (ii) A member of an entity who is or was personally liable for the 
FLP loan that possessed and occupied a separate dwelling on the security 
property;
    (2) Must have earned gross farm income commensurate with:
    (i) The size and location of the farm; and
    (ii) The local agricultural conditions in at least 2 calendar years 
during the 6-year period immediately preceding the calendar year in 
which the applicant applied for homestead protection;
    (3) Must have received 60 percent of gross income from farming in at 
least two of the 6 years immediately preceding the year in which the 
applicant applied for homestead protection;
    (4) Must have lived in the home during the 6-year period immediately 
preceding the year in which the applicant applied for homestead 
protection. The applicant may have left the home for not more than 12 
months if it was due to circumstances beyond their control;
    (5) Must demonstrate sufficient income to make rental payments on 
the homestead property for the term of the lease, and maintain the 
property in good condition. The lessee will be responsible for any 
normal maintenance; and
    (6) Must not be ineligible due to disqualification resulting from 
Federal crop insurance violation according to 7 CFR part 718.



Sec.  766.153  Homestead Protection transferability.

    Homestead protection rights are not transferable or assignable, 
unless the eligible party dies or becomes legally incompetent, in which 
case the homestead protection rights may be transferred to the spouse 
only, upon the spouse's agreement to comply with the terms and 
conditions of the lease.



Sec.  766.154  Homestead Protection leases.

    (a) General. (1) The Agency may approve a lease-purchase agreement 
on the appropriate Agency form subject to obtaining title to the 
property.
    (2) If a third party obtains title to the property:
    (i) The applicant and the property are no longer eligible for 
homestead protection;
    (ii) The Agency will not implement any outstanding lease-purchase 
agreement.
    (3) The borrower may request homestead protection for property 
subject to third party redemption rights. In such case, homestead 
protection will not begin until the Agency obtains title to the 
property.
    (b) Lease terms and conditions. (1) The amount of rent will be based 
on equivalent rents charged for similar residential properties in the 
area in which the dwelling is located.
    (2) All leases will include an option to purchase the homestead 
protection property as described in paragraph (c) of this section.
    (3) The lease term will not be less than 3 years and will not exceed 
5 years.
    (4) The lessee must agree to make lease payments on time and 
maintain the property.
    (5) The lessee must cooperate with Agency efforts to sell the 
remaining portion of the farm.
    (c) Lease-purchase options. (1) The lessee may exercise in writing 
the purchase option and complete the homestead protection purchase at 
any time prior to the expiration of the lease provided all lease 
payments are current.
    (2) If the lessee is a member of a socially disadvantaged group, the 
lessee may designate a member of the lessee's immediate family (that is, 
parent, sibling, or child) (designee) as having the right to exercise 
the option to purchase.
    (3) The purchase price is the market value of the property when the 
option is exercised as determined by a current appraisal obtained by the 
Agency.
    (4) The lessee or designee may purchase homestead protection 
property with cash or other credit source.
    (5) The lessee or designee may receive Agency program or non-program 
financing provided:
    (i) The lessee or designee has not received previous debt 
forgiveness;
    (ii) The Agency has funds available to finance the purchase of 
homestead protection property;

[[Page 320]]

    (iii) The lessee or designee demonstrates an ability to repay such 
an FLP loan; and
    (iv) The lessee or designee is otherwise eligible for the FLP loan.
    (d) Lease terminations. The Agency may terminate the lease if the 
lessee does not cure any lease defaults within 30 days of Agency 
notification.
    (e) Appraisal of homestead protection property. The Agency will use 
an appraisal obtained within six months from the date of the application 
for considering homestead protection. If a current appraisal does not 
exist, the applicant will select an independent real estate appraiser 
from a list of appraisers approved by the Agency.

[72 FR 63316, Nov. 8, 2007, as amended at 76 FR 5058, Jan. 28, 2011]



Sec.  766.155  Conflict with State law.

    If there is a conflict between a borrower's homestead protection 
rights and any provisions of State law relating to redemption rights, 
the State law prevails.



Sec. Sec.  766.156-766.200  [Reserved]



  Subpart E_Servicing Shared Appreciation Agreements and Net Recovery 
                            Buyout Agreements



Sec.  766.201  Shared Appreciation Agreement.

    (a) When a SAA is required. The Agency requires a borrower to enter 
into a SAA with the Agency covering all real estate security when the 
borrower:
    (1) Owns any real estate that serves or will serve as loan security; 
and
    (2) Accepts a writedown in accordance with Sec.  766.111.
    (b) When SAA is due. The borrower must repay the calculated amount 
of shared appreciation after a term of 5 years from the date of the 
writedown, or earlier if:
    (1) The borrower sells or conveys all or a portion of the Agency's 
real estate security, unless real estate is conveyed upon the death of a 
borrower to a spouse who will continue farming;
    (2) The borrower repays or satisfies all FLP loans;
    (3) The borrower ceases farming; or
    (4) The Agency accelerates the borrower's loans.



Sec.  766.202  Determining the shared appreciation due.

    (a) The value of the real estate security at the time of maturity of 
the SAA (market value) will be the appraised value of the security at 
the highest and best use, less the increase in the value of the security 
resulting from capital improvements added during the term of the SAA 
(contributory value). The market value of the real estate security 
property will be determined based on a current appraisal completed 
within the previous 12 months in accordance with Sec.  761.7 of this 
chapter, and subject to the following:
    (1) Prior to completion of the appraisal, the borrower will identify 
any capital improvements that have been added to the real estate 
security since the execution of the SAA.
    (2) The appraisal must specifically identify the contributory value 
of capital improvements made to the real estate security during the term 
of the SAA to make deductions for that value.
    (3) For calculation of shared appreciation recapture, the 
contributory value of capital improvements added during the term of the 
SAA will be deducted from the market value of the property. Such capital 
improvements must also meet at least one of the following criteria:
    (i) It is the borrower's primary residence. If the new residence is 
affixed to the real estate security as a replacement for a residence 
which existed on the security property when the SAA was originally 
executed, or, the living area square footage of the original residence 
was expanded, only the value added to the real property by the new or 
expanded portion of the original residence (if it added value) will be 
deducted from the market value.
    (ii) It is an improvement to the real estate with a useful life of 
over one year and is affixed to the property, the following conditions 
must be met:
    (A) The item must have been capitalized and not taken as an annual 
operating expense on the borrower's Federal income tax returns. The 
borrower

[[Page 321]]

must provide copies of appropriate tax returns to verify that capital 
improvements claimed for shared appreciation recapture reduction are 
capitalized.
    (B) If the new item is affixed to the real estate as a replacement 
for an item that existed on the real estate at the time the SAA was 
originally executed, only the value added by the new item will be 
deducted from the market value.
    (b) In the event of a partial sale, an appraisal of the property 
being sold may be required to determine the market value at the time the 
SAA was signed if such value cannot be obtained through another method.



Sec.  766.203  Payment of recapture.

    (a) The borrower must pay on the due date or 30 days from Agency 
notification, whichever is later:
    (1) Seventy-five percent of the appreciation in the real estate 
security if the agreement is triggered within 4 years or less from the 
date of the writedown; or
    (2) Fifty percent of such appreciation if the agreement is triggered 
more than 4 years from the date of the writedown or when the agreement 
matures.
    (b) If the borrower sells a portion of the security, the borrower 
must pay shared appreciation only on the portion sold. Shared 
appreciation on the remaining portion will be due in accordance with 
paragraph (a) of this section.
    (c) The amount of recapture cannot exceed the amount of the debt 
written off through debt writedown.



Sec.  766.204  Amortization of recapture.

    (a) The Agency will amortize the recapture into a Shared 
Appreciation Payment Agreement provided the borrower:
    (1) Has not ceased farming and the borrower's account has not been 
accelerated;
    (2) Provides a complete application in accordance with Sec.  
764.51(b), by the recapture due date or within 60 days of Agency 
notification of the amount of recapture due, whichever is later;
    (3) Is unable to pay the recapture and cannot obtain funds from any 
other source;
    (4) Develops a feasible plan that includes repayment of the shared 
appreciation amount;
    (5) Provides a lien on all assets, except those listed in Sec.  
766.112(b); and
    (6) Signs loan agreements and security instruments as required.
    (b) If the borrower later becomes delinquent or financially 
distressed, reamortization of the Shared Appreciation Payment Agreement 
can be considered under subpart C of this part.



Sec.  766.205  Shared Appreciation Payment Agreement rates and terms.

    (a) The interest rate for Shared Appreciation Payment Agreements is 
the Agency's SA amortization rate.
    (b) The term of the Shared Appreciation Payment Agreement is based 
on the borrower's repayment ability and the useful life of the security. 
The term will not exceed 25 years.



Sec.  766.206  Net Recovery Buyout Recapture Agreement.

    (a) Servicing existing Net Recovery Buyout Recapture Agreements. 
Prior to July 3, 1996, the Agency was authorized to offer borrowers buy 
out their loans at the net recovery value. A Net Recovery Buyout 
Agreement was required for borrowers who bought out their loans at the 
net recovery value. The Agency services existing Net Recovery Buyout 
Recapture Agreements as described in this section.
    (b) Requirements and terms. (1) The term of a Net Recovery Buyout 
Recapture Agreement is 10 years. Net Recovery Buyout Recapture 
Agreements are secured by a lien on the former borrower's real estate.
    (2) If the former borrower sells or conveys real estate within the 
10-year term, the former borrower must repay the Agency the lesser of:
    (i) The market value of the real estate parcel at the time of sale 
or conveyance, as determined by an Agency appraisal, minus the portion 
of the recovery value of the real estate paid to the Agency in the 
buyout;
    (ii) The market value of the real estate parcel at the time of the 
sale or conveyance, as determined by an Agency appraisal, minus:

[[Page 322]]

    (A) The unpaid balance of prior liens at the time of the sale or 
conveyance; and
    (B) The net recovery value of the real estate the borrower paid to 
the Agency in the buyout if this amount has not been accounted for as a 
prior lien;
    (iii) The total amount of the FLP debt the Agency wrote off for 
loans secured by real estate.
    (3) If the former borrower does not pay the amount due, the Agency 
will liquidate the Net Recovery Buyout account in accordance with 
subpart H of this part.
    (4) If the former borrower does not sell or convey the real estate 
within the 10-year term, no recapture is due.



Sec. Sec.  766.207-766.250  [Reserved]



                    Subpart F_Unauthorized Assistance



Sec.  766.251  Repayment of unauthorized assistance.

    (a) Except where otherwise specified, the borrower is responsible 
for repaying any unauthorized assistance in full within 90 days of 
Agency notice. The Agency may reverse any unauthorized loan servicing 
actions, when possible.
    (b) The borrower has the opportunity to meet with the Agency to 
discuss or refute the Agency's findings.



Sec.  766.252  Unauthorized assistance resulting from submission of false
information.

    A borrower is ineligible for continued Agency assistance if the 
borrower, or a third party on the borrower's behalf, submits information 
to the Agency that the borrower knows to be false.



Sec.  766.253  Unauthorized assistance resulting from submission of 
inaccurate information by borrower or Agency error.

    (a) Borrower options. (1) The borrower may repay the amount of the 
unauthorized assistance in a lump sum within 90 days of Agency notice.
    (2) If the borrower is unable to repay the entire amount in a lump 
sum, the Agency will accept partial repayment of the unauthorized 
assistance within 90 days of Agency notice to the extent of the 
borrower's ability to repay.
    (3) If the borrower is unable to repay all or part of the 
unauthorized amount, the loan will be converted to a Non-program loan 
under the following conditions:
    (i) The borrower did not provide false information;
    (ii) It is in the interest of the Agency;
    (iii) The debt will be subject to the interest rate for Non-program 
loans;
    (iv) The debt will be serviced as a Non-program loan;
    (v) The term of the Non-program loan will be as short as feasible, 
but in no case will exceed:
    (A) The remaining term of the FLP loan;
    (B) Twenty-five (25) years for real estate loans; or
    (C) The life of the security for chattel loans.
    (b) Borrower refusal to pay. If the borrower is able to pay the 
unauthorized assistance amount but refuses to do so, the Agency will 
notify the borrower of the availability of loan servicing in accordance 
with subpart C of this part.



Sec. Sec.  766.254-766.300  [Reserved]



          Subpart G_Loan Servicing For Borrowers in Bankruptcy



Sec.  766.301  Notifying borrower in bankruptcy of loan servicing.

    If a borrower files for bankruptcy, the Agency will provide written 
notification to the borrower's attorney with a copy to the borrower as 
follows:
    (a) Borrower not previously notified. The Agency will provide notice 
of all loan servicing options available under subpart C of this part, if 
the borrower has not been previously notified of these options.
    (b) Borrower with prior notification. If the borrower received 
notice of all loan servicing options available under subpart C of this 
part prior to the time of bankruptcy filing but all loan servicing was 
not completed, the Agency will provide notice of any remaining loan 
servicing options available.

[[Page 323]]



Sec.  766.302  Loan servicing application requirements for borrowers in
bankruptcy.

    (a) Borrower not previously notified. To be considered for loan 
servicing, the borrower or borrower's attorney must sign and return the 
appropriate response form and any forms or information requested by the 
Agency within 60 days of the date of receipt of Agency notice on loan 
servicing options.
    (b) Borrower previously notified. To be considered for continued 
loan servicing, the borrower or borrower's attorney must sign and return 
the appropriate response form and any forms or information requested by 
the Agency within the greater of:
    (1) Sixty days after the borrower's attorney received the 
notification of any remaining loan servicing options; or
    (2) The remaining time from the Agency's previous notification of 
all servicing options that the Agency suspended when the borrower filed 
bankruptcy.
    (c) Court approval. The borrower is responsible for obtaining court 
approval prior to exercising any available servicing rights.



Sec.  766.303  Processing loan servicing requests from borrowers in
bankruptcy.

    (a) Considering borrower requests for servicing. Any request for 
servicing is the borrower's acknowledgment that the Agency will not 
interfere with any rights or protections under the Bankruptcy Code and 
its automatic stay provisions.
    (b) Borrowers with confirmed bankruptcy plans. If a plan is 
confirmed before servicing and any appeal is completed under 7 CFR part 
11, the Agency will complete the servicing or appeals process and may 
consent to a post-confirmation modification of the plan if it is 
consistent with the Bankruptcy Code and subpart C of this part, as 
appropriate.
    (c) Chapter 7 borrowers. A borrower filing for bankruptcy under 
chapter 7 of the Bankruptcy Code may not receive primary loan servicing 
unless the borrower reaffirms the entire FLP debt. A borrower who filed 
chapter 7 does not have to reaffirm the debt in order to be considered 
for homestead protection.



Sec. Sec.  766.304-766.350  [Reserved]



                       Subpart H_Loan Liquidation



Sec.  766.351  Liquidation.

    (a) General. (1) When a borrower cannot or will not meet a loan 
obligation, the Agency will consider liquidating the borrower's account 
in accordance with this subpart.
    (2) The Agency will charge protective advances against the 
borrower's account as necessary to protect the Agency's interests during 
liquidation in accordance with Sec.  765.203 of this chapter.
    (3) When no surviving family member or third party assumes or repays 
a deceased borrower's loan in accordance with part 765, subpart J, of 
this chapter, or when the estate does not otherwise fully repay or sell 
loan security to repay a deceased borrower's FLP loans, the Agency will 
liquidate the security as quickly as possible in accordance with State 
and local requirements.
    (b) Liquidation for Program borrowers. (1) If the borrower does not 
apply, does not accept, or is not eligible for primary loan servicing, 
conservation contract, market value buyout or homestead protection, and 
all administrative appeals are concluded, the Agency will accelerate the 
borrower's account in accordance with Sec. Sec.  766.355 and 766.356, as 
appropriate.
    (2) Borrowers may voluntarily liquidate their security in accordance 
with Sec. Sec.  766.352, 766.353 and 766.354. In such case, the Agency 
will:
    (i) Not delay involuntary liquidation action.
    (ii) Notify the borrower in accordance with subpart C of this part, 
prior to acting on the request for voluntary liquidation, if the 
conditions of paragraph (b)(1) of this section have not been met.
    (c) Liquidation for Non-program borrowers. If a borrower has both 
program and Non-program loans, the borrower's account will be handled in 
accordance with paragraph (b) of this section. If a borrower with only 
Non-program loans

[[Page 324]]

is in default, the borrower may liquidate voluntarily, subject to the 
following:
    (1) The Agency may delay involuntary liquidation actions when in the 
Agency's financial interest for a period not to exceed 60 days.
    (2) The borrower must obtain the Agency's consent prior to the sale 
of the property.
    (3) If the borrower will not pay the Agency in full, the minimum 
sales price must be the market value of the property as determined by 
the Agency.
    (4) The Agency will accept a conveyance offer only when it is in the 
Agency's financial interest.
    (5) If a Non-program borrower does not cure the default, or cannot 
or will not voluntarily liquidate, the Agency will accelerate the loan.



Sec.  766.352  Voluntary sale of real property and chattel.

    (a) General. A borrower may voluntarily sell real property or 
chattel security to repay FLP debt in lieu of involuntary liquidation if 
all applicable requirements of this section are met. Partial 
dispositions are handled in accordance with part 765, subparts G and H, 
of this chapter.
    (1) The borrower must sell all real property and chattel that secure 
FLP debt until the debt is paid in full or until all security has been 
liquidated.
    (2) The Agency must approve the sale and approve the use of 
proceeds.
    (3) The sale proceeds are applied in order of lien priority, except 
that proceeds may be used to pay customary costs appropriate to the 
transaction provided:
    (i) The costs are reasonable in amount;
    (ii) The borrower is unable to pay the costs from personal funds or 
have the purchaser pay;
    (iii) The costs must be paid to complete the sale;
    (iv) Costs are not for postage and insurance of the note while in 
transit when required for the Agency to present the promissory note to 
the recorder to obtain a release of a portion of the real property from 
the mortgage.
    (4) The Agency will approve the sale of property when the proceeds 
do not cover the borrower's full debt only if:
    (i) The sales price must be equal to or greater than the market 
value of the property; and
    (ii) The sale is in the Agency's financial interest.
    (5) If an unpaid loan balance remains after the sale, the Agency 
will continue to service the loan in accordance with subpart B of 7 CFR 
part 1956.
    (b) Voluntary sale of chattel. If the borrower complies with 
paragraph (a) of this section, the borrower may sell chattel security 
by:
    (1) Public sale if the borrower obtains the agreement of lienholders 
as necessary to complete the public sale; or
    (2) Private sale if the borrower:
    (i) Sells all of the security for not less than the market value;
    (ii) Obtains the agreement of lienholders as necessary to complete 
the sale;
    (iii) Has a buyer who is ready and able to purchase the property; 
and
    (iv) Obtains the Agency's agreement for the sale.



Sec.  766.353  Voluntary conveyance of real property.

    (a) Requirements for conveying real property. The borrower must 
supply the Agency with the following:
    (1) An Agency application form;
    (2) A current financial statement. If the borrower is an entity, all 
entity members must provide current financial statements;
    (3) Information on present and future income and potential earning 
ability;
    (4) A warranty deed or other deed acceptable to the Agency;
    (5) A resolution approved by the governing body that authorizes the 
conveyance in the case of an entity;
    (6) Assignment of all leases to the Agency. The borrower must put 
all oral leases in writing;
    (7) Title insurance or title record for the security, if available;
    (8) Complete debt settlement application in accordance with subpart 
B of 7 CFR part 1956 before or in conjunction with the voluntary 
conveyance offer if the value of the property to be conveyed is less 
than the FLP debt; and
    (9) Any other documentation required by the Agency to evaluate the 
request.

[[Page 325]]

    (b) Conditions for conveying real property. The Agency will accept 
voluntary conveyance of real property by a borrower if:
    (1) Conveyance is in the Agency's financial interest;
    (2) The borrower conveys all real property securing the FLP loan; 
and
    (3) The borrower has received prior notification of the availability 
of loan servicing in accordance with subpart C of this part.
    (c) Prior and junior liens. (1) The Agency will pay prior liens to 
the extent consistent with the Agency's financial interest.
    (2) Before conveyance, the borrower must pay or obtain releases of 
all junior liens, real estate taxes, judgments, and other assessments. 
If the borrower is unable to pay or obtain a release of the liens, the 
Agency may attempt to negotiate a settlement with the lienholder if it 
is in the Agency's financial interest.
    (d) Charging and crediting the borrower's account. (1) The Agency 
will charge the borrower's account for all recoverable costs incurred in 
connection with a conveyance.
    (2) The Agency will credit the borrower's account for the amount of 
the market value of the property less any prior liens, or the debt, 
whichever is less. In the case of an American Indian borrower whose 
loans are secured by real estate located within the boundaries of a 
Federally recognized Indian reservation, however, the Agency will credit 
the borrower's account with the greater of the market value of the 
security or the borrower's FLP debt.
    (e) Right of possession. After voluntary conveyance, the borrower or 
former owner retains no statutory, implied, or inherent right of 
possession to the property beyond those rights under an approved lease-
purchase agreement executed according to Sec.  766.154 or required by 
State law.



Sec.  766.354  Voluntary conveyance of chattel.

    (a) Requirements for conveying chattel. The borrower must supply the 
Agency with the following:
    (1) An Agency application form;
    (2) A current financial statement. If the borrower is an entity, all 
entity members must provide current financial statements;
    (3) Information on present and future income and potential earning 
ability;
    (4) A bill of sale including each item and titles to all vehicles 
and equipment, as applicable;
    (5) A resolution approved by the governing body that authorizes the 
conveyance in the case of an entity borrower;
    (6) Complete debt settlement application in accordance with subpart 
B of 7 CFR part 1956 before or in conjunction with the voluntary 
conveyance offer if the value of the property to be conveyed is less 
than the debt.
    (b) Conditions for conveying chattel. The Agency will accept 
conveyance of chattel only if:
    (1) The borrower has made every possible effort to sell the property 
voluntarily;
    (2) The borrower can convey the chattel free of other liens;
    (3) The conveyance is in the Agency's financial interest;
    (4) The borrower conveys all chattel securing the FLP loan; and
    (5) The borrower has received prior notification of the availability 
of loan servicing in accordance with subpart C of this part.
    (c) Charging and crediting the borrower's account. (1) The Agency 
will charge the borrower's account for all recoverable costs incurred in 
connection with the conveyance.
    (2) The Agency will credit the borrower's account in the amount of 
the market value of the chattel.



Sec.  766.355  Acceleration of loans.

    (a) General. (1) The Agency accelerates loans in accordance with 
this section, unless:
    (i) State law imposes separate restrictions on accelerations;
    (ii) The borrower is American Indian, whose real estate is located 
on an Indian reservation.
    (2) The Agency accelerates all of the borrower's loans at the same 
time, regardless of whether each individual loan is delinquent or not.
    (3) All borrowers must receive prior notification in accordance with 
subpart C of this part, except for borrowers who

[[Page 326]]

fail to graduate in accordance with Sec.  766.101(a)(8).
    (b) Time limitations. The borrower has 30 days from the date of the 
Agency acceleration notice to pay the Agency in full.
    (c) Borrower options. The borrower may:
    (1) Pay cash;
    (2) Transfer the security to a third party in accordance with part 
765, subpart I of this chapter;
    (3) Sell the security property in accordance with Sec.  766.352; or
    (4) Voluntarily convey the security to the Agency in accordance with 
Sec. Sec.  766.353 and 766.354, as appropriate.
    (d) Partial payments. The Agency may accept a payment that does not 
cover the unpaid balance of the accelerated loan if the borrower is in 
the process of selling security, unless acceptance of the payment would 
reverse the acceleration.
    (e) Failure to satisfy the debt. The Agency will liquidate the 
borrower's account in accordance with Sec.  766.357 if the borrower does 
not pay the account in full within the time period specified in the 
acceleration notice.



Sec.  766.356  Acceleration of loans to American Indian borrowers.

    (a) General. (1) The Agency accelerates loans to American Indian 
borrowers whose real estate is located on an Indian reservation in 
accordance with this section, unless State law imposes separate 
restrictions on accelerations.
    (2) The Agency accelerates all of the borrower's loans at the same 
time, regardless of whether each individual loan is delinquent or not.
    (3) All borrowers must receive prior notification in accordance with 
subpart C of this part, except for borrowers who fail to graduate in 
accordance with Sec.  766.101(a)(8).
    (4) At the time of acceleration, the Agency will notify the borrower 
and the Tribe that has jurisdiction over the Indian reservation of:
    (i) The possible outcomes of a foreclosure sale and the potential 
impacts of those outcomes on rights established under paragraphs 
(a)(4)(ii) and (iii) of this section;
    (ii) The priority for purchase of the property acquired by the 
Agency through voluntary conveyance or foreclosure;
    (iii) Transfer of acquired property to the Secretary of the Interior 
if the priority of purchase of the property established under paragraph 
(a)(4)(ii) of this section is not exercised.
    (b) Borrower options. The Agency will notify an American Indian 
borrower of the right to:
    (1) Request the Tribe, having jurisdiction over the Indian 
reservation in which the real property is located, be assigned the loan;
    (i) The Tribe will have 30 calendar days after the Agency 
notification of such request to accept the assignment of the loan.
    (ii) The Tribe must pay the Agency the lesser of the outstanding 
Agency indebtedness secured by the real estate or the market value of 
the property.
    (iii) The Tribe may pay the amount in a lump sum or according to the 
rates, terms and requirements established in part 770 of this chapter, 
subject to the following:
    (A) The Tribe must execute the promissory note and loan documents 
within 90 calendar days of receipt from the Agency;
    (B) Such loan may not be considered for debt writedown under 7 CFR 
part 770.
    (iv) The Tribe's failure to respond to the request for assignment of 
the loan or to finalize the assignment transaction within the time 
provided, shall be treated as the Tribe's denial of the request.
    (2) Request the loan be assigned to the Secretary of the Interior. 
The Secretary of the Interior's failure to respond to the request for 
assignment of the loan or to finalize the assignment transaction, shall 
be treated as denial of the request;
    (3) Voluntarily convey the real estate property to the Agency;
    (i) The Agency will conduct a environmental review before accepting 
voluntary conveyance.
    (ii) The Agency will credit the account with the greater of the 
market value of the real estate or the amount of the debt.
    (4) Sell the real estate;

[[Page 327]]

    (i) The buyer must have the financial ability to buy the property.
    (ii) The sale of the property must be completed within 90 calendar 
days of the Agency's notification.
    (iii) The loan can be transferred and assumed by an eligible buyer.
    (5) Pay the FLP debt in full.
    (6) Consult with the Tribe that has jurisdiction over the Indian 
reservation to determine if State or Tribal law provides rights and 
protections that are more beneficial than those provided under this 
section.
    (c) Tribe notification. At the time of acceleration, the Agency will 
notify the Tribe that has jurisdiction over the Indian reservation in 
which the property is located, of the:
    (1) Sale of the American Indian borrower's property;
    (2) Market value of the property;
    (3) Amount the Tribe would be required to pay the Agency for 
assignment of the loan.
    (d) Partial payments. The Agency may accept a payment that does not 
cover the unpaid balance of the accelerated loan if the borrower is in 
the process of selling security, unless acceptance of the payment would 
reverse the acceleration.
    (e) Failure to satisfy the debt. The Agency will liquidate the 
borrower's account in accordance with Sec.  766.357 if:
    (1) The borrower does not pay the account in full within the time 
period specified in the acceleration notice;
    (2) The borrower does not voluntarily convey the property to the 
Agency;
    (3) Neither the Tribe nor the Secretary of the Interior accepts 
assignment of the borrower's loan.



Sec.  766.357  Involuntary liquidation of real property and chattel.

    (a) General. The Agency will liquidate the borrower's security if:
    (1) The borrower does not satisfy the account in accordance with 
Sec. Sec.  766.355 and 766.356, as appropriate;
    (2) The involuntary liquidation is in the Agency's financial 
interest.
    (b) Foreclosure on loans secured by real property. (1) The Agency 
will charge the borrower's account for all recoverable costs incurred in 
connection with the foreclosure and sale of the property.
    (2) If the Agency acquires the foreclosed property, the Agency will 
credit the borrower's account in the amount of the Agency's bid except 
when incremental bidding was used, in which case the amount of credit 
will be the maximum bid that was authorized. If the Agency does not 
acquire the foreclosed property, the Agency will credit the borrower's 
account in accordance with State law and guidance from the Regional OGC.
    (3) Notwithstanding paragraph (b)(2), for an American Indian 
borrower whose real property secures an FLP loan and is located within 
the confines of a Federally-recognized Indian reservation, the Agency 
will credit the borrower's account in the amount that is the greater of:
    (i) The market value of the security; or
    (ii) The amount of the FLP debt against the property.
    (4) After the date of foreclosure, the borrower or former owner 
retains no statutory, implied, or inherent right of possession to the 
property beyond those rights granted by State law.
    (5) If an unpaid balance on the FLP loan remains after the 
foreclosure sale of the property, the Agency may debt settle the account 
in accordance with subpart B of 7 CFR part 1956.
    (c) Foreclosure of loans secured by chattel. (1) The Agency will 
charge the borrower's account for all recoverable costs incurred by the 
Agency as a result of the repossession and sale of the property.
    (2) The Agency will apply the proceeds from the repossession sale to 
the borrower's account less prior liens and all authorized liquidation 
costs.
    (3) If an unpaid balance on the FLP loan remains after the sale of 
the repossessed property, the Agency may debt settle the account in 
accordance with subpart B of 7 CFR part 1956.



Sec.  766.358  Acceleration and foreclosure moratorium.

    (a) Notwithstanding any other provisions of this subpart, borrowers 
who file or have filed a program discrimination complaint that is 
accepted by USDA Office of Adjudication or successor office (USDA), and 
have been serviced to the point of acceleration or

[[Page 328]]

foreclosure on or after May 22, 2008, will not have their account 
accelerated or liquidated until such complaint has been resolved by USDA 
or closed by a court of competent jurisdiction. This moratorium applies 
only to program loans made under subtitle A, B, or C of the Act (for 
example, CL, FO, OL, EM, SW, or RL). Interest will not accrue and no 
offsets will be taken on these loans during the moratorium. Interest 
accrual and offsets will continue on all other loans, including, but not 
limited to, non-program loans.
    (1) If the Agency prevails on the program discrimination complaint, 
the interest that would have accrued during the moratorium will be 
reinstated on the account when the moratorium terminates, and all 
offsets and servicing actions will resume.
    (2) If the borrower prevails on the program discrimination 
complaint, the interest that would have accrued during the moratorium 
will not be reinstated on the account unless specifically required by 
the settlement agreement or court order.
    (b) The moratorium will begin on:
    (1) May 22, 2008, if the borrower had a pending program 
discrimination claim that was accepted by USDA as valid and the account 
was at the point of acceleration or foreclosure on or before that date; 
or
    (2) The date after May 22, 2008, when the borrower has a program 
discrimination claim accepted by USDA as valid and the borrower's 
account is at the point of acceleration or foreclosure.
    (c) The point of acceleration under this section is the earliest of 
the following:
    (1) The day after all rights offered on the Agency notice of intent 
to accelerate expire if the borrower does not appeal;
    (2) The day after all appeals resulting from an Agency notice of 
intent to accelerate are concluded if the borrower appeals and the 
Agency prevails on the appeal;
    (3) The day after all appeal rights have been concluded relating to 
a failure to graduate and the Agency prevails on any appeal;
    (4) Any other time when, because of litigation, third party action, 
or other unforeseen circumstance, acceleration is the next step for the 
Agency in servicing and liquidating the account.
    (d) A borrower is considered to be in foreclosure status under this 
section anytime after acceleration of the account.
    (e) The moratorium will end on the earlier of:
    (1) The date the program discrimination claim is resolved by USDA or
    (2) The date that a court of competent jurisdiction renders a final 
decision on the program discrimination claim if the borrower appeals the 
decision of USDA.

[76 FR 5058, Jan. 28, 2011]



Sec. Sec.  766.359-766.400  [Reserved]



                      Subpart I_Exception Authority



Sec.  766.401  Agency exception authority.

    On an individual case basis, the Agency may consider granting an 
exception to any regulatory requirement or policy of this part if:
    (a) The exception is not inconsistent with the authorizing statute 
or other applicable law; and
    (b) The Agency's financial interest would be adversely affected by 
acting in accordance with published regulations or policies and granting 
the exception would resolve or eliminate the adverse effect upon its 
financial interest.



PART 767_INVENTORY PROPERTY MANAGEMENT--Table of Contents



                           Subpart A_Overview

Sec.
767.1 Introduction.
767.2 Abbreviations and definitions.
767.3-767.50 [Reserved]

      Subpart B_Property Abandonment and Personal Property Removal

767.51 Property abandonment.
767.52 Disposition of personal property from real estate inventory 
          property.
767.53-767.100 [Reserved]

            Subpart C_Lease of Real Estate Inventory Property

767.101 Leasing real estate inventory property.

[[Page 329]]

767.102 Leasing non-real estate inventory property.
767.103 Managing leased real estate inventory property.
767.104-767.150 [Reserved]

                Subpart D_Disposal of Inventory Property

767.151 General requirements.
767.152 Exceptions.
767.153 Sale of real estate inventory property.
767.154 Conveying easements, rights-of-way, and other interests in 
          inventory property.
767.155 Selling chattel property.
767.156-767.200 [Reserved]

 Subpart E_Real Estate Property with Important Resources or Located in 
                          Special Hazard Areas

767.201 Real estate inventory property with important resources.
767.202 Real estate inventory property located in special hazard areas.
767.203-767.250 [Reserved]

                      Subpart F_Exception Authority

767.251 Agency exception authority.

    Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.

    Source: 72 FR 63358, Nov. 8, 2007, unless otherwise noted.



                           Subpart A_Overview



Sec.  767.1  Introduction.

    (a) Purpose. This part describes the Agency's policies for:
    (1) Managing inventory property;
    (2) Selling inventory property;
    (3) Leasing inventory property;
    (4) Managing real and chattel property the Agency takes into custody 
after abandonment by the borrower;
    (5) Selling or leasing inventory property with important resources, 
or located in special hazard areas; and
    (6) Conveying interest in real property for conservation purposes.
    (b) Basic policy. The Agency maintains, manages and sells inventory 
property as necessary to protect the Agency's financial interest.



Sec.  767.2  Abbreviations and definitions.

    Abbreviations and definitions for terms used in this part are 
provided in Sec.  761.2 of this chapter.



Sec. Sec.  767.3-767.50  [Reserved]



      Subpart B_Property Abandonment and Personal Property Removal



Sec.  767.51  Property abandonment.

    The Agency will take actions necessary to secure, maintain, 
preserve, manage, and operate the abandoned security property, including 
marketing perishable security property on behalf of the borrower when 
such action is in the Agency's financial interest. If the security is in 
jeopardy, the Agency will take the above actions prior to completing 
servicing actions contained in 7 CFR part 766.



Sec.  767.52  Disposition of personal property from real estate inventory
property.

    (a) Preparing to dispose of personal property. If, at the time of 
acquisition, personal property has been left on the real estate 
inventory property, the Agency will notify the former real estate owner 
and any known lienholders that the Agency will dispose of the personal 
property. Property of value may be sold at a public sale.
    (b) Reclaiming personal property. The owner or lienholder may 
reclaim personal property at any time prior to the property's sale or 
disposal by paying all expenses incurred by the Agency in connection 
with the personal property.
    (c) Use of proceeds from sale of personal property. Proceeds from 
the public sale of personal property will be distributed as follows:
    (1) To lienholders in order of lien priority less a pro rata share 
of the sale expenses;
    (2) To the inventory account up to the amount of expenses incurred 
by the Agency in connection with the sale of personal property;
    (3) To the outstanding balance on the FLP loan; and
    (4) To the borrower, if the borrower's whereabouts are known.

[[Page 330]]



Sec. Sec.  767.53-767.100  [Reserved]



            Subpart C_Lease of Real Estate Inventory Property



Sec.  767.101  Leasing real estate inventory property.

    (a) The Agency may lease real estate inventory property:
    (1) To the former owner under the Homestead Protection Program;
    (2) To a beginning farmer or socially disadvantaged farmer selected 
to purchase the property but who was unable to purchase it because of a 
lack of Agency direct or guaranteed loan funds;
    (3) When the Agency is unable to sell the property because of 
lengthy litigation or appeal processes.
    (b) The Agency will lease real estate inventory property in an ``as 
is'' condition.
    (c) The Agency will lease property for:
    (1) Homestead protection in accordance with part 766, subpart D, of 
this chapter.
    (2) A maximum of 18 months to a beginning farmer or socially 
disadvantaged farmer the Agency selected as purchaser when no Agency 
loan funds are available; or
    (3) The shortest possible duration for all other cases subject to 
the following:
    (i) The maximum lease term for such a lease is 12 months.
    (ii) The lease is not subject to renewal or extension.
    (d) The lessee may pay:
    (1) A lump sum;
    (2) On an annual installment basis; or
    (3) On a crop-share basis, if the lessee is a beginning farmer or 
socially disadvantaged farmer under paragraph (a) of this section.
    (e) The Agency leases real estate inventory property for a market 
rent amount charged for similar properties in the area.
    (f) The Agency may require the lessee to provide a security deposit.
    (g) Only leases to a beginning farmer or socially disadvantaged 
farmer or Homestead Protection Program participant will contain an 
option to purchase the property.

[72 FR 63358, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  767.102  Leasing non-real estate inventory property.

    The Agency does not lease non-real estate property unless it is 
attached as a fixture to real estate inventory property that is being 
leased and it is essential to the farming operation.



Sec.  767.103  Managing leased real estate inventory property.

    (a) The Agency will pay for repairs to leased real estate inventory 
property only when necessary to protect the Agency's interest.
    (b) If the lessee purchases the real estate inventory property, the 
Agency will not credit lease payments to the purchase price of the 
property.



Sec. Sec.  767.104-767.150  [Reserved]



                Subpart D_Disposal of Inventory Property



Sec.  767.151  General requirements.

    Subject to Sec.  767.152, the Agency will attempt to sell its 
inventory property as follows:
    (a) The Agency will combine or divide inventory property, as 
appropriate, to maximize the opportunity for beginning farmers or 
socially disadvantaged farmersto purchase real property.
    (b) The Agency will advertise all real estate inventory property 
that can be used for any authorized FO loan purpose for sale to 
beginning farmers or socially disadvantaged farmers no later than 15 
days after the Agency obtains title to the property.
    (c) If more than one eligible beginning farmer or socially 
disadvantaged farmer applies, the Agency will select a purchaser by a 
random selection process open to the public.
    (1) All applicants will be advised of the time and place of the 
selection.
    (2) All drawn offers will be numbered.
    (3) Offers drawn after the first will be held in suspense pending 
sale to the successful applicant.
    (4) Random selection is final and not subject to administrative 
appeal.
    (d) If there are no offers from beginning farmers or socially 
disadvantaged farmers, the Agency will sell inventory property by 
auction or sealed bid to the general public no later than 165

[[Page 331]]

days after the Agency obtains title to the property. All bidders will be 
required to submit a 10 percent deposit with their bid.
    (e) If the Agency receives no acceptable bid through an auction or 
sealed bid, the Agency will attempt to sell the property through a 
negotiated sale at the best obtainable price.
    (f) If the Agency is not able to sell the property through 
negotiated sale, the Agency may list the property with a real estate 
broker. The broker must be properly licensed in the State in which the 
property is located.

[72 FR 63358, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  767.152  Exceptions.

    The Agency's disposition procedure under Sec.  767.151 is subject to 
the following:
    (a) If the Agency leases real estate inventory property to a 
beginning farmer or socially disadvantaged farmer in accordance with 
Sec.  767.101(a)(2), and the lease expires, the Agency will not 
advertise the property if the Agency has direct or guaranteed loan funds 
available to finance the transaction.
    (b) The Agency will not advertise a property for sale until the 
homestead protection rights have terminated in accordance with part 766, 
subpart D of this chapter.
    (c) The Agency may allow an additional 60 days if needed for 
conservation easements or environmental reviews.
    (d) If the property was owned by an American Indian borrower and is 
located on an Indian reservation, the Agency will:
    (1) No later than 90 days after acquiring the property, offer the 
opportunity to purchase or lease the property in accordance with:
    (i) The priorities established by the Indian Tribe having 
jurisdiction over the Indian reservation;
    (ii) In cases where priorities have not been established, the 
following order:
    (A) A member of the Indian Tribe that has jurisdiction over the 
Indian reservation;
    (B) An Indian entity;
    (C) The Indian Tribe.
    (2) Transfer the property to the Secretary of the Interior if the 
property is not purchased or leased under paragraph (1) of this section.
    (e) If Agency analysis of farm real estate market conditions 
indicates the sale of the Agency's inventory property will have a 
negative effect on the value of farms in the area, the Agency may 
withhold inventory farm properties in the affected area from the market 
until further analysis indicates otherwise.

[72 FR 63358, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  767.153  Sale of real estate inventory property.

    (a) Pricing. (1) The Agency will advertise property for sale at its 
market value, as established by an appraisal obtained in accordance with 
Sec.  761.7.
    (2) Property sold by auction or sealed bid will be sold for the best 
obtainable price. The Agency reserves the right to reject any and all 
bids.
    (b) Agency-financed sales. The Agency may finance sales to 
purchasers if:
    (1) The Agency has direct or guaranteed FO loan funds available;
    (2) All applicable loan making requirements are met; and
    (3) All purchasers who are not beginning farmers or socially 
disadvantaged farmers make a 10 percent down payment.
    (c) Taxes and assessments. (1) Property taxes and assessments will 
be prorated between the Agency and the purchaser based on the date the 
Agency conveys title to the purchaser.
    (2) The purchaser is responsible for paying all taxes and 
assessments after the Agency conveys title to the purchaser.
    (d) Loss or damage to property. If, through no fault of either 
party, the property is lost or damaged as a result of fire, vandalism, 
or act of God before the Agency conveys the property, the Agency may 
reappraise the property and set the sale price accordingly.
    (e) Termination of contract. Either party may terminate the sales 
contract. If the contract is terminated by the Agency, the Agency 
returns any deposit to the bidder. If the contract is terminated by the 
purchaser, any deposit will be retained by the Agency as full liquidated 
damages, except where

[[Page 332]]

failure to close is due to Agency non-approval of credit.
    (f) Warranty on title. The Agency will not provide any warranty on 
the title or on the condition of the property.

[72 FR 63358, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008]



Sec.  767.154  Conveying easements, rights-of-way, and other interests
in inventory property.

    (a) Appraisal of real property and real property interests. The 
Agency will determine the value of real property and real property 
interests being transferred in accordance with Sec.  761.7 of this 
chapter.
    (b) Easements and rights-of-way on inventory property. (1) The 
Agency may grant or sell an easement or right-of-way for roads, 
utilities, and other appurtenances if the conveyance is in the public 
interest and does not adversely affect the value of the real property.
    (2) The Agency may sell an easement or right-of-way by negotiation 
for market value to any purchaser for cash without giving public notice 
if:
    (i) The sale would not prevent the Agency from selling the property; 
and
    (ii) The sale would not decrease the value of the property by an 
amount greater than the price received.
    (3) In the case of condemnation proceedings by a State or political 
subdivision, the transfer of title will not be completed until adequate 
compensation and damages have been determined and paid.
    (c) Disposal of other interests in inventory property. (1) If 
applicable, the Agency will sell mineral and water rights, mineral lease 
interests, mineral royalty interests, air rights, and agricultural and 
other lease interests with the surface land except as provided in 
paragraph (b) of this section.
    (2) If the Agency sells the land in separate parcels, any rights or 
interests that apply to each parcel are included with the sale.
    (3) The Agency will assign lease or royalty interests not passing by 
deed to the purchaser at the time of sale.
    (4) Appraisals of property will reflect the value of such rights, 
interests, or leases.



Sec.  767.155  Selling chattel property.

    (a) Method of sale. (1) The Agency will use sealed bid or 
established public auctions for selling chattel. The Agency does not 
require public notice of sale in addition to the notice commonly used by 
the auction facility.
    (2) The Agency may sell chattel inventory property, including 
fixtures, concurrently with real estate inventory property if, by doing 
so, the Agency can obtain a higher aggregate price. The Agency may 
accept an offer for chattel based upon the combined final sales price of 
both the chattel and real estate.
    (b) Agency-financed sales. The Agency may finance the purchase of 
chattel inventory property if the Agency has direct or guaranteed OL 
loan funds available and all applicable loan making requirements are 
met.



Sec. Sec.  767.156-767.200  [Reserved]



 Subpart E_Real Estate Property With Important Resources or Located in 
                          Special Hazard Areas



Sec.  767.201  Real estate inventory property with important resources.

    In addition to the requirements established in part 799 of this 
chapter, the following apply to inventory property with important 
resources:
    (a) Wetland conservation easements. The Agency will establish 
permanent wetland conservation easements to protect and restore certain 
wetlands that exist on inventory property prior to the sale of such 
property, regardless of whether the sale is cash or credit.
    (1) The Agency establishes conservation easements on all wetlands or 
converted wetlands located on real estate inventory property that:
    (i) Were not considered cropland on the date the property was 
acquired by the Agency; and
    (ii) Were not used for farming at any time during the 5 years prior 
to the date of acquisition by the Agency.
    (A) The Agency will consider property to have been used for farming 
if it was used for agricultural purposes including, but not limited to, 
cropland,

[[Page 333]]

pastures, hayland, orchards, vineyards, and tree farming.
    (B) In the case of cropland, hayland, orchards, vineyards, or tree 
farms, the Agency must be able to demonstrate that the property was 
harvested for crops.
    (C) In the case of pastures, the Agency must be able to demonstrate 
that the property was actively managed for grazing by documenting 
practices such as fencing, fertilization, and weed control.
    (2) The wetland conservation easement will provide for access to 
other portions of the property as necessary for farming or other uses.
    (b) Mandatory conservation easements. The Agency will establish 
conservation easements to protect 100-year floodplains and other 
Federally-designated important resources. Federally-designated important 
resources include, but are not limited to:
    (1) Listed or proposed endangered or threatened species;
    (2) Listed or proposed critical habitats for endangered or 
threatened species;
    (3) Designated or proposed wilderness areas;
    (4) Designated or proposed wild or scenic rivers;
    (5) Historic or archeological sites listed or eligible for listing 
on the National Register of Historic Places;
    (6) Coastal barriers included in Coastal Barrier Resource Systems;
    (7) Natural landmarks listed on National Registry of Natural 
Landmarks; and
    (8) Sole source aquifer recharge areas as designated by EPA.
    (c) Discretionary easements. The Agency may grant or sell an 
easement, restriction, development right, or similar legal right to real 
property for conservation purposes to a State government, a political 
subdivision of a State government, or a private non-profit organization.
    (1) The Agency may grant or sell discretionary easements separate 
from the underlying fee or property rights.
    (2) The Agency may convey property interests under this paragraph by 
negotiation to any eligible recipient without giving public notice if 
the conveyance does not change the intended use of the property.
    (d) Conservation transfers. The Agency may transfer real estate 
inventory property to a Federal or State agency provided the following 
conditions are met:
    (1) The transfer of title must serve a conservation purpose;
    (2) A predominance of the property must:
    (i) Have marginal value for agricultural production;
    (ii) Be environmentally sensitive; or
    (iii) Have special management importance;
    (3) The homestead protection rights of the previous owner have been 
exhausted;
    (4) The Agency will notify the public of the proposed transfer; and
    (5) The transfer is in the Agency's financial interest.
    (e) Use restrictions on real estate inventory property with 
important resources. (1) Lessees and purchasers receiving Agency credit 
must follow a conservation plan developed with assistance from NRCS.
    (2) Lessees and purchasers of property with important resources or 
real property interests must allow the Agency or its representative to 
periodically inspect the property to determine if it is being used for 
conservation purposes.

[72 FR 63358, Nov. 8, 2007, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  767.202  Real estate inventory property located in special hazard
areas.

    (a) The Agency considers the following to be special hazard areas:
    (1) Mudslide hazard areas;
    (2) Special flood areas; and
    (3) Earthquake areas.
    (b) The Agency will use deed restrictions to prohibit residential 
use of properties determined to be unsafe in special hazard areas.
    (c) The Agency will incorporate use restrictions in its leases of 
property in special hazard areas.

[[Page 334]]



Sec. Sec.  767.203-767.250  [Reserved]



                      Subpart F_Exception Authority



Sec.  767.251  Agency exception authority.

    On an individual case basis, the Agency may consider granting an 
exception to any regulatory requirement or policy of this part if:
    (a) The exception is not inconsistent with the authorizing statute 
or other applicable law; and
    (b) The Agency's financial interest would be adversely affected by 
acting in accordance with published regulations or policies and granting 
the exception would reduce or eliminate the adverse effect upon the its 
financial interest.

                          PARTS 768 [RESERVED]



PART 769_HIGHLY FRACTIONATED INDIAN LAND LOAN PROGRAM--Table of Contents



Sec.
769.101 Purpose.
769.102 Abbreviations and definitions.
769.103 Eligibility requirements of the intermediary lender.
769.104 Requirements of the ultimate recipient.
769.105 Authorized loan purposes.
769.106 Limitations.
769.107 Rates and terms.
769.108 Security requirements for HFIL loans and ultimate recipients.
769.109 Intermediary lender's application.
769.110 Letter of conditions.
769.111 Loan approval and obligating funds.
769.120 Loan closing.
769.121 Maintenance and monitoring of HFIL revolving fund.
769.122 Loan servicing.
769.123 Transfer and assumption.
769.124 Appeals.
769.125 Exceptions.

    Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 25 U.S.C. 488.

    Source: 80 FR 74970, Dec. 1, 2015, unless otherwise noted.



Sec.  769.101  Purpose.

    (a) This part contains regulations for loans made by the Agency to 
eligible intermediary lenders and applies to intermediary lenders and 
ultimate recipient involved in making and servicing Highly Fractionated 
Indian Land (HFIL) loans.
    (b) The purpose of the HFIL Loan Program is to establish policies 
and procedures for a revolving loan fund through intermediary lenders 
for the purchase of HFIL by a Native American tribe, tribal entity, or 
member of either.



Sec.  769.102  Abbreviations and definitions

    (a) Abbreviations. The following abbreviations are used in this 
part:

BIA--The Department of the Interior's Bureau of Indian Affairs (BIA).
HFIL--Highly Fractionated Indian Land.

    (b) Definitions. The following definitions are used in this part:
    Administrator means the head of the Farm Service Agency or designee.
    Highly Fractionated Indian Land (HFIL) means for the purpose of this 
part only, Highly Fractionated Indian Land is undivided interests held 
by four or more individuals as a result of ownership or original 
allotments passing by state laws of intestate succession for multiple 
generations.
    Indian Country land, communities, and allotments means the 
following:
    (1) All land within the limits of any Indian reservation under the 
jurisdiction of the U.S. Government, notwithstanding the issuance of any 
patent, and, including rights-of-way running through the reservation,
    (2) All dependent Indian communities within the borders of the 
United States whether within the original or subsequently acquired 
territory thereof, and whether within or without the limits of a state, 
and
    (3) All Indian allotments, the Indian titles to which have not been 
extinguished, including rights-of-way running through the same; or
    (4) All land, communities, and allotments that meet the definition 
of 18 U.S.C. 1151.
    Intermediary lender means the entity requesting or receiving HFIL 
loan funds for establishing a revolving fund and relending to ultimate 
recipients.
    Intermediary relending agreement means the signed agreement between 
FSA and the intermediary that specifies the terms and conditions of the 
HFIL loan.
    Native American tribe means the following:

[[Page 335]]

    (1) An Indian tribe recognized by the U.S. Department of the 
Interior; or
    (2) A community in Alaska incorporated by the U.S. Department of the 
Interior pursuant to the Indian Reorganization Act.
    Revolving funds means a fund that has two types of deposit accounts, 
one of which will be HFIL funds from FSA and the other will be comprised 
of repayments of loans from the ultimate recipients, interest earned on 
funds in the account and cash, or other short-term marketable assets 
that the intermediary lender chooses to deposit. Revolving funds are not 
considered Federal funds.
    Tribal entity means an eligible entity established pursuant to the 
Indian Reorganization Act.
    Ultimate recipient means Native American tribe, tribal entity, or 
member of either that receives a loan from an intermediary lender's HFIL 
revolving fund.
    Undivided interest means a common interest in the whole parcel of 
land that is owned by two or more people. Owners of undivided interest 
do not own a specific piece of a parcel of land; rather they own a 
percentage interest in the whole.



Sec.  769.103  Eligibility requirements of the intermediary lender.

    (a) Eligible entity types. The types of entities that may become an 
intermediary lender are:
    (1) Private and Tribal operated nonprofit corporations;
    (2) Public agencies--Any State or local government, or any branch or 
agency of such government having authority to act on behalf of that 
government, borrow funds, and engage in activities eligible for funding 
under this part;
    (3) Indian tribes or tribal corporations; or
    (4) Lenders who are subject to credit examination and supervision by 
an acceptable State or Federal regulatory agency.
    (b) Intermediary lender requirements. The intermediary lender must:
    (1) Have the legal authority necessary for carrying out the proposed 
loan purposes and for obtaining, giving security for, and repaying the 
proposed loan;
    (2) Have a record of successful lending in Indian Country and 
knowledge and experience working with the BIA. The Agency will assess 
the applicant staff's training and experience in lending in Indian 
Country based on recent experience in loan making and servicing with 
loans that are similar in nature to the HFIL program. If consultants 
will be used, FSA will assess the staff's experience in choosing and 
supervising consultants; and
    (3) Have an adequate assurance of repayment of the loan based on the 
fiscal and managerial capabilities of the proposed intermediary lender.
    (c) The Intermediary Relending Agreement. The intermediary lender 
and the Agency will enter into an Intermediary Relending Agreement, 
satisfactory to the Agency based on:
    (1) Loan documentation requirements including planned application 
forms, security instruments, and loan closing documents;
    (2) List of proposed fees and other charges it will assess the 
ultimate recipients;
    (3) The plan for relending the loan funds. The plan must have 
sufficient detail to provide the Agency with a complete understanding of 
the complete mechanics of how the funds will get from the intermediary 
lender to the ultimate recipient. Included in the plan are the service 
area, eligibility criteria, loan purposes, rates, terms, collateral 
requirements, a process for addressing environmental issues on property 
to be purchased, limits, priorities, application process, analysis of 
new loan requests, and method of disbursement of the funds to the 
ultimate recipient;
    (4) Loan review plans that specify how the intermediary lender will 
review the loan request from the ultimate recipient and make an 
eligibility determination;
    (5) An explanation of the intermediary lender's established internal 
credit review process; and
    (6) An explanation of how the intermediary lender will monitor the 
loans to the ultimate recipients.

[[Page 336]]



Sec.  769.104  Requirements of the ultimate recipient.

    (a) Ultimate recipients must be individual Tribal members, Tribes or 
eligible Tribal entities, with authority to incur the debt and carry out 
the purpose of the loan.
    (b) The intermediary lender will make this determination in 
accordance with the Intermediary Relending Agreement.



Sec.  769.105  Authorized loan purposes.

    (a) Intermediary lender. Agency HFIL loan funds must be placed in 
the intermediary's HFIL revolving fund and used by the intermediary to 
provide direct loans to eligible ultimate recipients.
    (b) Ultimate recipient. Loans from the intermediary lender to the 
ultimate recipient using the HFIL revolving fund:
    (1) Must be used to acquire and consolidate at least 50 percent of 
the highly fractionated Indian land parcel and interests in the land. 
The interests include rights-of-way, water rights, easements, and other 
appurtenances that would normally pass with the land or are necessary 
for the proposed operation of the land located within the tribe's 
reservation;
    (2) Must finance land that will be used for agricultural purposes 
during the term of the loan;
    (3) May be used to pay costs incidental to land acquisition, 
including, but not limited to, title clearance, legal services, 
archeological or land surveys, and loan closing; and
    (4) May be used to pay for the costs of any appraisal conducted in 
accordance with this part.



Sec.  769.106  Limitations.

    (a) Loan funds may not be used for any land improvement or 
development purposes, acquisition or repair of buildings or personal 
property, payment of operating costs, payment of finders' fees, or 
similar costs, or for any purpose that will contribute to excessive 
erosion of highly erodible land or to the conversion of wetlands to 
produce an agricultural commodity as specified in 7 CFR part 12.
    (b) The amount of loan funds used to acquire land may not exceed the 
current market value of the land as determined by a current appraisal 
that meets the requirements as specified in 7 CFR 761.7(b)(1).
    (c) Agency HFIL loan funds may not be used for payment of the 
intermediary's administrative costs or expenses. The amount removed from 
the HFIL revolving fund for administrative costs in any year must be 
reasonable, must not exceed the actual cost of operating the HFIL 
revolving fund and must not exceed the amount approved by the Agency in 
the intermediary lender's annual loan monitoring report.
    (d) No loan to an intermediary lender may exceed the maximum amount 
the intermediary can reasonably expect to lend to eligible ultimate 
recipients, based on anticipated demand for loans to consolidate 
fractioned interests and capacity of the intermediary to effectively 
carry out the terms of the loan.



Sec.  769.107  Rates and terms.

    (a) Loans made by the Agency to the intermediary lender will bear 
interest at a fixed rate as determined by the Administrator, but not 
less than 1 percent per year over the term of the loan.
    (1) Interest rates charged by intermediary lender to ultimate 
recipients on loans from the HFIL revolving fund will be negotiated 
between the intermediary lender and ultimate recipient, but the rate 
must be within limits established by the Intermediary Relending 
Agreement.
    (2) The rate should normally be the lowest rate sufficient to cover 
the loan's proportional share of the revolving fund's debt service costs 
and administrative costs.
    (b) No loan to an intermediary lender will be extended for a period 
exceeding 30 years. Interest will be due annually but principal payments 
may be deferred by the Agency.
    (1) Loans made by an intermediary lender to an ultimate recipient 
from the HFIL revolving fund will be scheduled for repayment over a term 
negotiated by the intermediary lender and ultimate recipient but will 
not exceed 30 years or the date of the end of the term of the HFIL loan, 
whichever is sooner.
    (2) The term of an HFIL loan must be reasonable and prudent 
considering the

[[Page 337]]

purpose of the loan, expected repayment ability of the ultimate 
recipient, and the useful life of collateral, and must be within any 
limits established by the intermediary lender's Intermediary Relending 
Agreement.



Sec.  769.108  Security requirements for HFIL loans and the ultimate recipients.

    (a) HFIL loans. Security for all loans to intermediaries must be 
such that the repayment of the loan is reasonably assured, taking into 
consideration the intermediary's financial condition, Intermediary 
Relending Agreement, and management ability. The intermediary is 
responsible to make loans to ultimate recipients in such a manner that 
will fully protect the interest of the intermediary and the Government. 
The Agency will require adequate security, as determined by the Agency, 
to fully secure the loan, including but not limited to the following:
    (1) Assignments of assessments, taxes, levies, or other sources of 
revenue as authorized by law;
    (2) Investments and deposits of the intermediary; and
    (3) Capital assets or other property of the intermediary and its 
members.
    (b) Liens. In addition to normal security documents, a first lien 
interest in the intermediary's revolving fund account will be 
accomplished by a control agreement satisfactory to the Agency. The 
control agreement does not require the Agency's signature for 
withdrawals. The depository bank must waive its offset and recoupment 
rights against the depository account to the Agency and subordinate any 
liens it may have against the HFIL depository bank account.
    (c) Ultimate recipient. Security for a loan from an intermediary 
lender's HFIL revolving fund to an ultimate recipient will be adequate 
to fully secure the loan as specified in the relending agreement.
    (1) The Agency will only require concurrence in the intermediary 
lender's security requirement for a specific loan when security for the 
loan from the intermediary lender to the ultimate recipient will also 
serve as security for an Agency loan.
    (2) The ultimate recipient will take appropriate action to obtain 
and provide security for the loan.



Sec.  769.109  Intermediary lender's application.

    (a) The application will consist of:
    (1) An application form provided by the Agency;
    (2) A draft Intermediary Relending Agreement and other evidence the 
Agency requires to show the feasibility of the intermediary lender's 
program to meet the objectives of the HFIL Loan Program; and
    (3) Applications from intermediary lenders that already have an 
active HFIL loan may be streamlined by filing a new application and a 
statement that the new loan would be operated in accordance with the 
Intermediary Relending Agreement on file for the previous loan. This 
statement may be submitted at the time of application in lieu of a new 
Intermediary Relending Agreement.
    (4) Documentation of the intermediary lender's ability to administer 
HFIL in accordance with this part;
    (5) Submission of a completed Agency application form;
    (6) Prior to approval of a loan or advance of funds, certification 
of whether or not the intermediary lender is delinquent on any Federal 
debt, including, but not limited to, Federal income tax obligations or a 
loan or loan guarantee or from another Federal agency. If delinquent, 
the intermediate lender must explain the reasons for the delinquency, 
and the Agency will take such written explanation into consideration in 
deciding whether to approve the loan or advance of funds;
    (7) Prior to approval of a loan or advance of funds, certification 
as to whether the intermediary lender has been convicted of a felony 
criminal violation under Federal law in the 24 months preceding the date 
of application.
    (8) Certification of compliance with the restrictions and 
requirements in 31 U.S.C. 1352, and 2 CFR 200.450 and part 418.
    (9) Certification to having been informed of the collection options 
the Federal government may use to collect delinquent debt.

[[Page 338]]

    (b) An intermediary lender that has received one or more HFIL loans 
may apply for and be considered for subsequent HFIL loans provided:
    (1) The intermediary lender is relending all collections from loans 
made from its revolving fund in excess of what is needed for required 
debt service, approved administration costs, and a reserve for debt 
service;
    (2) The outstanding loans of the intermediary lender's HFIL 
revolving fund are performing; and
    (3) The intermediary lender is in compliance with all regulations 
and its loan agreements with the Agency.



Sec.  769.110  Letter of conditions.

    (a) The Agency will provide the intermediary lender a letter listing 
all requirements for the loan. After reviewing the conditions and 
requirements in the letter of conditions, the intermediary lender must 
complete, sign, and return the form provided by the Agency indicating 
the intermediary lender's intent to meet the conditions. If certain 
conditions cannot be met, the intermediary lender may propose alternate 
conditions in writing to the Agency. The Agency loan approval official 
must concur with any changes made to the initially issued or proposed 
letter of conditions prior to acceptance. The loan request will be 
withdrawn if the intermediary lender does not respond within 15 days.
    (b) At loan closing, the intermediary lender must certify that:
    (1) No major changes have been made in the Intermediary Relending 
Agreement except those approved in the interim by the Agency;
    (2) All requirements of the letter of conditions have been met; and
    (3) There has been no material change in the intermediary lender or 
its financial condition since the issuance of the letter of conditions. 
If there have been changes, the intermediary lender must explain the 
changes to the Agency. The changes may be waived, at the sole discretion 
of the Agency.



Sec.  769.111  Loan approval and obligating funds.

    (a) Loan requests will be processed based on the date the Agency 
receives the application. Loan approval is subject to the availability 
of funds.
    (b) The loan will be considered approved for the intermediary lender 
on the date the signed copy of the obligation of funds document is 
mailed to the intermediary lender.



Sec.  769.120  Loan closing.

    (a) Loan agreement. A loan agreement or supplement to a previous 
loan agreement must be executed by the intermediary lender and the 
Agency at loan closing for each loan setting forth, at a minimum,
    (1) The amount of the loan, the interest rate, the term and 
repayment schedule,
    (2) The requirement to maintain a separate ledger and segregated 
account for the HFIL revolving fund; and
    (3) It agrees to comply with Agency reporting requirements.
    (b) Loan closing. Intermediary lenders receiving HFIL loans will be 
governed by this part, the loan agreement, the approved Intermediary 
Relending Agreement, security instruments, and any other conditions that 
the Agency requires on loans made from the ``HFIL revolving fund.'' The 
requirement applies to all loans made by an intermediary lender to an 
ultimate recipient from the intermediary lender's HFIL revolving fund 
for as long as any portion of the intermediary lender's HFIL loan from 
the Agency remains unpaid.
    (c) Intermediary lender certification. The intermediary lender must 
include in their file a certification that:
    (1) The proposed ultimate recipient is eligible for the loan;
    (2) The proposed loan is for eligible purposes; and
    (3) The proposed loan complies with all applicable laws and 
regulations.



Sec.  769.121  Maintenance and monitoring of HFIL revolving fund.

    (a) Maintenance of revolving fund. The intermediary lender must 
maintain the HFIL revolving fund until all of its HFIL obligations have 
been paid in full. All HFIL loan funds received by an intermediary 
lender must be deposited into an HFIL revolving fund account. Such 
accounts must be fully covered by Federal deposit insurance

[[Page 339]]

or fully collateralized with U.S. Government obligations. All cash of 
the HFIL revolving fund must be deposited in a separate bank account or 
accounts so as not to be commingled with other financial assets of the 
intermediary lender. All money deposited in such bank account or 
accounts must be security assets of the HFIL revolving fund. Loans to 
ultimate recipients must be from the HFIL revolving fund.
    (1) The portion of the HFIL revolving fund that consists of Agency 
HFIL loan funds may only be used for making loans in accordance with 
Sec.  769.105. The portion of the HFIL revolving fund that consists of 
repayments from ultimate recipients may be used for debt service, 
reasonable administrative costs, or for making additional loans;
    (2) An intermediary lender may use revolving funds and HFIL loan 
funds to make loans to ultimate recipients without obtaining prior 
Agency concurrence in accordance with the Intermediary Relending 
Agreement;
    (3) Any funds in the HFIL revolving fund from any source that is not 
needed for debt service, approved administrative costs, or reasonable 
reserves must be available for additional loans to ultimate recipients;
    (4) All reserves and other funds in the HFIL revolving loan fund not 
immediately needed for loans to ultimate recipients or other authorized 
uses must be deposited in accounts in banks or other financial 
institutions. Such accounts must be fully covered by Federal deposit 
insurance or fully collateralized with U.S. Government obligations, and 
will be interest bearing. Any interest earned thereon remains a part of 
the HFIL revolving fund;
    (5) If an intermediary lender receives more than one HFIL loan, it 
does not need to establish and maintain a separate HFIL revolving loan 
fund for each loan; it may combine them and maintain only one HFIL 
revolving fund, unless the Agency requires separate HFIL revolving funds 
because there are significant differences in the loan purposes, 
Intermediary Relending Agreement, loan agreements, or requirements for 
the loans; and
    (6) A reasonable amount of revolved funds must be used to create a 
reserve for bad debts. Reserves should be accumulated over a period of 
years. The total amount should not exceed maximum expected losses, 
considering the quality of the intermediary lender's portfolio of loans. 
Unless the intermediary lender provides loss and delinquency records 
that, in the opinion of the Agency, justifies different amounts, a 
reserve for bad debts of 6 percent of outstanding loans must be 
accumulated over 5 years and then maintained.
    (b) Loan monitoring reviews. The intermediary lender must complete 
loan monitoring reviews, including annual and periodic reviews, and 
performance monitoring.
    (1) At least annually, the intermediary lender must provide the 
Agency documents for the purpose of reviewing the financial status of 
the intermediary Lender, assessing the progress of utilizing loan funds, 
and identifying any potential problems or concerns. Non-regulated 
intermediary lenders must furnish audited financial statements at least 
annually.
    (2) At any time the Agency determines it is necessary, the 
intermediary lender must allow the Agency or its representative to 
review the operations and financial condition of the intermediary 
lender. Upon the Agency requests, the Intermediary must submit financial 
or other information within 14 days unless the data requested is not 
available within that time frame.
    (c) Progress reports. Each intermediary lender will be monitored by 
the Agency based on progress reports submitted by the intermediary 
lender, audit findings, disbursement transactions, visitations, and 
other contact with the intermediary lender as necessary.



Sec.  769.122  Loan servicing.

    (a) Payments. Payments will be made to the Agency as specified in 
loan agreements and debt instruments. The funds from any extra payments 
will be applied entirely to loan principal.
    (b) Restructuring. The Agency may restructure the intermediary 
lender's loan debt, if:
    (1) The Government's interest will be protected;

[[Page 340]]

    (2) The restructuring will be performed within the Agency's budget 
authority; and
    (3) The loan objectives cannot be met unless the HFIL loan is 
restructured.
    (c) Default. In the event of monetary or non-monetary default, the 
Agency will take all appropriate actions to protect its interest, 
including, but not limited to, declaring the debt fully due and payable 
and may proceed to enforce its rights under the loan agreement or any 
other loan instruments relating to the loan under applicable law and 
regulations, and commencement of legal action to protect the Agency's 
interest. The Agency will work with the intermediary lender to correct 
any default, subject to the requirements of paragraph (b) of this 
section. Violation of any agreement with the Agency or failure to comply 
with reporting or other program requirements will be considered non-
monetary default.



Sec.  769.123  Transfer and assumption.

    (a) All transfers and assumptions must be approved in advance in 
writing by the Agency. The assuming entity must meet all eligibility 
criteria for the HFIL Loan Program.
    (b) Available transfer and assumption options to eligible 
intermediary lenders include the following:
    (1) The total indebtedness may be transferred to another eligible 
intermediary lender on the same terms; or
    (2) The total indebtedness may be transferred to another eligible 
intermediary lender on different terms not to exceed the term for which 
an initial loan can be made. The assuming entity must meet all 
eligibility criteria for the HFIL Loan Program.
    (c) The transferor must prepare the transfer document for the Agency 
review prior to the transfer and assumption.
    (d) The transferee must provide the Agency with information required 
in the application as specified in Sec.  769.109.
    (e) The Agency prepared assumption agreement will contain the Agency 
case number of the transferor and transferee.
    (f) The transferee must complete an application as specified in 
Sec.  769.109(a).
    (g) When the transferee makes a cash down-payment in connection with 
the transfer and assumption, any proceeds received by the transferor 
will be credited on the transferor's loan debt in order of maturity 
date.
    (h) The Administrator or designee will approve or decline all 
transfers and assumptions.



Sec.  769.124  Appeals.

    Any appealable adverse decision made by the Agency may be appealed 
upon written request of the intermediary as specified in 7 CFR part 11.



Sec.  769.125  Exceptions.

    The Agency may grant an exception to any of the requirements of this 
part if the proposed change is in the best financial interest of the 
Government and not inconsistent with the authorizing law or any other 
applicable law.



PART 770_INDIAN TRIBAL LAND ACQUISITION LOANS--Table of Contents



Sec.
770.1 Purpose.
770.2 Abbreviations and definitions.
770.3 Eligibility requirements.
770.4 Authorized loan uses.
770.5 Loan limitations.
770.6 Rates and terms.
770.7 Security requirements.
770.8 Use of acquired land.
770.9 Appraisals.
770.10 Servicing..

    Authority: 5 U.S.C. 301 and 25 U.S.C. 488.

    Source: 66 FR 1567, Jan. 9, 2001, unless otherwise noted.



Sec.  770.1  Purpose.

    This part contains the Agency's policies and procedures for making 
and servicing loans to assist a Native American tribe or tribal 
corporation with the acquisition of land interests within the tribal 
reservation or Alaskan community.



Sec.  770.2  Abbreviations and definitions.

    (a) Abbreviations.
    FSA Farm Service Agency, an Agency of the United States Department 
of Agriculture, including its personnel and any successor Agency.
    ITLAP Indian Tribal Land Acquisition Program.
    USPAP Uniform Standards of Professional Appraisal Practice.

[[Page 341]]

    (b) Definitions.
    Administrator is the head of the Farm Service Agency.
    Agency is Farm Service Agency (FSA).
    Appraisal is an appraisal for the purposes of determining the market 
value of land (less value of any existing improvements that pass with 
the land) that meets the requirements of part 761 of this chapter.
    Applicant is a Native American tribe or tribal corporation 
established pursuant to the Indian Reorganization Act seeking a loan 
under this part.
    Loan funds refers to money loaned under this part.
    Native American tribe is:
    (1) An Indian tribe recognized by the Department of the Interior; or
    (2) A community in Alaska incorporated by the Department of the 
Interior pursuant to the Indian Reorganization Act.
    Rental value for the purpose of rental value write-downs, equals the 
average actual rental proceeds received from the lease of land acquired 
under ITLAP. If there are no rental proceeds, then rental value will be 
based on market data according to Sec.  770.10(e)(4).
    Reservation is lands or interests in land within:
    (1) The Native American tribe's reservation as determined by the 
Department of the Interior; or
    (2) A community in Alaska incorporated by the Department of the 
Interior pursuant to the Indian Reorganization Act.
    Reserve is an account established for loans approved in accordance 
with regulations in effect prior to February 8, 2001 which required that 
an amount equal to 10 percent of the annual payment be set aside each 
year until at least one full payment is available.
    Tribal corporation is a corporation established pursuant to the 
Indian Reorganization Act.

[66 FR 1567, Jan. 9, 2001, as amended at 70 FR 7167, Feb. 11, 2005; 72 
FR 51990, Sept. 12, 2007]



Sec.  770.3  Eligibility requirements.

    An applicant must:
    (a) Submit a completed Agency application form;
    (b) Except for refinancing activities authorized in Sec.  770.4(c), 
obtain an option or other acceptable purchase agreement for land to be 
purchased with loan funds;
    (c) Be a Native American tribe or a tribal corporation of a Native 
American tribe without adequate uncommitted funds, based on Generally 
Accepted Accounting Principles, or another financial accounting method 
acceptable to Secretary of Interior to acquire lands or interests 
therein within the Native American tribe's reservation for the use of 
the Native American tribe or tribal corporation or the members of 
either;
    (d) Be unable to obtain sufficient credit elsewhere at reasonable 
rates and terms for purposes established in Sec.  770.4;
    (e) Demonstrate reasonable prospects of success in the proposed 
operation of the land to be purchased with funds provided under this 
part by providing:
    (1) A feasibility plan for the use of the Native American tribe's 
land and other enterprises and funds from any other source from which 
payment will be made;
    (2) A satisfactory management and repayment plan; and
    (3) A satisfactory record for paying obligations.
    (f) Unless waived by the FSA Administrator, not have any outstanding 
debt with any Federal Agency (other than debt under the Internal Revenue 
Code of 1986) which is in a delinquent status.
    (g) Not be subject to a judgment lien against the tribe's property 
arising out of a debt to the United States.
    (h) Have not received a write-down as provided in Sec.  770.10(e) 
within the preceding 5 years.

[66 FR 1567, Jan. 9, 2001, as amended at 70 FR 7167, Feb. 11, 2005]



Sec.  770.4  Authorized loan uses.

    Loan funds may only be used to:
    (a) Acquire land and interests therein (including fractional 
interests, rights-of-way, water rights, easements, and other 
appurtenances (excluding improvements) that would normally pass with the 
land or are necessary for the proposed operation of the land) located 
within the Native American tribe's reservation which will be used for 
the benefit of the tribe or its members.

[[Page 342]]

    (b) Pay costs incidental to land acquisition, including but not 
limited to, title clearance, legal services, land surveys, and loan 
closing.
    (c) Refinance non-United States Department of Agriculture 
preexisting debts the applicant incurred to purchase the land provided 
the following conditions exist:
    (1) Prior to the acquisition of such land, the applicant filed a 
loan application regarding the purchase of such land and received the 
Agency's approval for the land purchase;
    (2) The applicant could not acquire an option on such land;
    (3) The debt for such land is a short term debt with a balloon 
payment that cannot be paid by the applicant and that cannot be extended 
or modified to enable the applicant to satisfy the obligation; and
    (4) The purchase of such land is consistent with all other 
applicable requirements of this part.
    (d) Pay for the costs of any appraisal conducted pursuant to this 
part.



Sec.  770.5  Loan limitations.

    (a) Loan funds may not be used for any land improvement or 
development purposes, acquisition or repair of buildings or personal 
property, payment of operating costs, payment of finder's fees, or 
similar costs, or for any purpose that will contribute to excessive 
erosion of highly erodible land or to the conversion of wetlands to 
produce an agriculture commodity as further established in part 799 of 
this chapter.
    (b) The amount of loan funds used to acquire land may not exceed the 
market value of the land (excluding the value of any improvements) as 
determined by a current appraisal.
    (c) Loan funds for a land purchase must be disbursed over a period 
not to exceed 24 months from the date of loan approval.
    (d) The sale of assets that are not renewable within the life of the 
loan will require a reduction in loan principal equal to the value of 
the assets sold.

[66 FR 1567, Jan. 9, 2001, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  770.6  Rates and terms.

    (a) Term. Each loan will be scheduled for repayment over a period 
not to exceed 40 years from the date of the note.
    (b) Interest rate. The interest rate charged by the Agency will be 
the lower of the interest rate in effect at the time of the loan 
approval or loan closing, which is the current rate available in any FSA 
office. Except as provided in Sec.  770.10(b) the interest rate will be 
fixed for the life of the loan.



Sec.  770.7  Security requirements.

    (a) The applicant will take appropriate action to obtain and provide 
security for the loan.
    (b) A mortgage or deed of trust on the land to be purchased by the 
applicant will be taken as security for a loan, except as provided in 
paragraph (c) of this section.
    (1) If a mortgage or deed of trust is to be obtained on trust or 
restricted land and the applicant's constitution or charter does not 
specifically authorize mortgage of such land, the mortgage must be 
authorized by tribal referendum.
    (2) All mortgages or deeds of trust on trust or restricted land must 
be approved by the Department of the Interior.
    (c) The Agency may take an assignment of income in lieu of a 
mortgage or deed of trust provided:
    (1) The Agency determines that an assignment of income provides as 
good or better security; and
    (2) Prior approval of the Administrator has been obtained.



Sec.  770.8  Use of acquired land.

    (a) General. Subject to Sec.  770.5(d) land acquired with loan 
funds, or other property serving as the security for a loan under this 
part, may be leased, sold, exchanged, or subject to a subordination of 
the Agency's interests, provided:
    (1) The Agency provides prior written approval of the action;
    (2) The Agency determines that the borrower's loan obligations to 
the Agency are adequately secured; and
    (3) The borrower's ability to repay the loan is not impaired.
    (b) Title. Title to land acquired with a loan made under this part 
may, with

[[Page 343]]

the approval of the Secretary of the Interior, be taken by the United 
States in trust for the tribe or tribal corporation.



Sec.  770.9  Appraisals.

    (a) The applicant or the borrower, as appropriate, will pay the cost 
of any appraisal required under this part.
    (b) Appraisals must be completed in accordance with Sec.  761.7 of 
this chapter.



Sec.  770.10  Servicing.

    (a) Reamortization--(1) Eligibility. The Agency may consider 
reamortization of a loan provided:
    (i) The borrower submits a completed Agency application form; and
    (ii) The account is delinquent due to circumstances beyond the 
borrower's control and cannot be brought current within 1 year; or
    (iii) The account is current, but due to circumstances beyond the 
borrower's control, the borrower will be unable to meet the annual loan 
payments.
    (2) Terms. The term of a loan may not be extended beyond 40 years 
from the date of the original note.
    (i) Reamortization within the remaining term of the loan will be 
predicated on a projection of the tribe's operating expenses indicating 
the ability to meet the new payment schedule; and
    (ii) No intervening lien exists on the security for the loan which 
would jeopardize the Government's security priority.
    (3) Consolidation of notes. If one or more notes are to be 
reamortized, consolidation of the notes is authorized.
    (b) Interest rate reduction. The Agency may consider a reduction of 
the interest rate for an existing loan to the current interest rate as 
available from any Agency office provided:
    (1) The borrower submits a completed Agency application form;
    (2) The loan was made more than 5 years prior to the application for 
the interest reduction; and
    (3) The Department of the Interior and the borrower certify that the 
borrower meets at least one of the criteria contained in paragraph 
(e)(2) of this section.
    (c) Deferral. The Agency may consider a full or partial deferral for 
a period not to exceed 5 years provided:
    (1) The borrower submits a completed Agency application form;
    (2) The borrower presents a plan which demonstrates that due to 
circumstances beyond their control, they will be unable to meet all 
financial commitments unless the Agency payment is deferred; and
    (3) The borrower will be able to meet all financial commitments, 
including the Agency payments, after the deferral period has ended.
    (d) Land exchanges. In the cases where a borrower proposes to 
exchange any portion of land securing a loan for other land, title 
clearance and a new mortgage on the land received by the borrower in 
exchange, which adequately secures the unpaid principal balance of the 
loan, will be required unless the Agency determines any remaining land 
or other loan security is adequate security for the loan.
    (e) Debt write-down--(1) Application. The Agency will consider debt 
write-down under either the land value option or rental value option, as 
requested by the borrower.
    (i) The borrower must submit a completed Agency application form;
    (ii) If the borrower applies and is determined eligible for a land 
value and a rental value write-down, the borrower will receive a write-
down based on the write-down option that provides the greatest debt 
reduction.
    (2) Eligibility. To be eligible for debt write-down, the borrower 
(in the case of a tribal corporation, the Native American tribe of the 
borrower) must:
    (i) Be located in a county which is identified as a persistent 
poverty county by the United States Department of Agriculture, Economic 
Research Service pursuant to the most recent data from the Bureau of the 
Census; and
    (ii) Have a socio-economic condition over the immediately preceding 
5 year period that meets the following two factors as certified by the 
Native American tribe and the Department of the Interior:
    (A) The Native American tribe has a per capita income for individual 
enrolled tribal members which is less

[[Page 344]]

than 50 percent of the Federally established poverty income rate 
established by the Department of Health and Human Services;
    (B) The tribal unemployment rate exceeds 50 percent;
    (3) Land value write-down. The Agency may reduce the unpaid 
principal and interest balance on any loan made to the current market 
value of the land that was purchased with loan funds provided:
    (i) The market value of such land has declined by at least 25 
percent since the land was purchased as established by a current 
appraisal;
    (ii) Land value decrease is not attributed to the depletion of 
resources contained on or under the land;
    (iii) The loan was made more than 5 years prior to the application 
for land value write-down;
    (iv) The loan has not previously been written down under paragraph 
(e)(4) of this section and has not been written down within the last 5 
years under this paragraph, and
    (v) The borrower must meet the eligibility requirements of 
paragraphs (a)(1)(ii) or (iii) of this section.
    (4) Rental value write-down. The Agency may reduce the unpaid 
principal and interest on any loan, so the annual loan payment for the 
remaining term of each loan equals the average of annual rental value of 
the land purchased by each such loan for the immediately preceding 5-
year period provided:
    (i) The loan was made more than 5 years prior to the rental value 
writedown;
    (ii) The description of the land purchased with the loan funds and 
the rental values used to calculate the 5 year average annual rental 
value of the land have been certified by the Department of the Interior;
    (iii) The borrower provides a record of any actual rents received 
for the land for the preceding 5 years, which will be used to calculate 
the average rental value. This record must be certified by the 
Department of the Interior. For land that has not been leased or has not 
received any rental income, the borrower must provide a market value 
rent study report for the preceding 5 years, which identifies the 
average annual rental value based on the market data. The market value 
rent study report must be prepared by a certified general appraiser and 
meet the requirements of USPAP.
    (iv) The borrower has not previously received a write-down under 
this paragraph and has not had a loan written down within the last 5 
years under paragraph (e)(3) of this section, and
    (v) The borrower must meet the eligibility requirements of paragraph 
(a)(1)(ii) or (iii) of this section.
    (f) Release of reserve. Existing reserve accounts may be released 
for the purpose of making ITLAP loan payments or to purchase additional 
lands, subject to the following:
    (1) A written request is received providing details of the use of 
the funds;
    (2) The loan is not delinquent;
    (3) The loan adequately secured by a general assignment of tribal 
income.

[66 FR 1567, Jan. 9, 2001; 66 FR 47877, Sept. 14, 2001, as amended at 70 
FR 7167, Feb. 11, 2005; 72 FR 51990, Sept. 12, 2007]



PART 771_BOLL WEEVIL ERADICATION LOAN PROGRAM--Table of Contents



Sec.
771.1 Introduction.
771.2 Abbreviations and definitions.
771.3 [Reserved]
771.4 Eligibility requirements.
771.5 Loan purposes.
771.6 Environmental requirements.
771.7 Equal opportunity and non-discrimination requirements.
771.8 Other Federal, State, and local requirements.
771.9 Interest rates, terms, security requirements, and repayment.
771.10 [Reserved]
771.11 Application.
771.12 Funding applications.
771.13 Loan closing.
771.14 Loan monitoring.
771.15 Loan servicing.

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; and Pub. L. 104-180, 110 
Stat. 1569.

    Source: 67 FR 59771, Sept. 24, 2002, unless otherwise noted.



Sec.  771.1  Introduction.

    The regulations in this part set forth the terms and conditions 
under which loans are made through the Boll Weevil Eradication Loan 
Program. The regulations in this part are applicable to applicants, 
borrowers, and other parties

[[Page 345]]

involved in the making, servicing, and liquidation of these loans. The 
program's objective is to assist producers and state government agencies 
in the eradication of boll weevils from cotton producing areas.



Sec.  771.2  Abbreviations and definitions.

    The following abbreviations and definitions apply to this part:
    (a) Abbreviations:
    APHIS means the Animal and Plant Health Inspection Service of the 
United States Department of Agriculture, or any successor Agency.
    FSA means the Farm Service Agency, its employees, and any successor 
agency.
    (b) Definitions:
    Extra payment means a payment derived from the sale of property 
serving as security for a loan, such as real estate or vehicles. 
Proceeds from program assessments and other normal operating income, 
when remitted for payment on a loan, will not be considered as an extra 
payment.
    Non-profit corporation means a private domestic corporation created 
and organized under the laws of the State(s) in which the entity will 
operate whose net earnings are not distributable to any private 
shareholder or individual, and which qualifies under the Internal 
Revenue Service code.
    Restructure means to modify the terms of a loan. This may include a 
modification of the interest rate and/or repayment terms of the loan.
    Security means assets pledged as collateral to assure repayment of a 
loan in the event of default on the loan.
    State organization means a quasi-state run public operation 
exclusively established and managed by state and/or non-state employees, 
with all employees currently dedicated to the specific task of 
eliminating the boll weevil from the cotton growing area of the state.



Sec.  771.3  [Reserved]



Sec.  771.4  Eligibility requirements.

    (a) An eligible applicant must:
    (1) Meet all requirements prescribed by APHIS to qualify for cost-
share grant funds as determined by APHIS, (FSA will accept the 
determination by APHIS as to an organization's qualification);
    (2) Have the appropriate charter and/or legal authority as a non-
profit corporation or as a State organization specifically organized to 
operate the boll weevil eradication program in any State, biological, or 
geographic region of any State in which it operates;
    (3) Possess the legal authority to enter into contracts, including 
debt instruments;
    (4) Operate in an area in which producers have approved a referendum 
authorizing producer assessments and in which an active eradication or 
post-eradication program is underway or scheduled to begin no later than 
the fiscal year following the fiscal year in which the application is 
submitted;
    (5) Have the legal authority to pledge producer assessments as 
security for loans from FSA.
    (b) Individual producers are not eligible for loans.



Sec.  771.5  Loan purposes.

    (a) Loan funds may be used for any purpose directly related to boll 
weevil eradication activities, including, but not limited to:
    (1) Purchase or lease of supplies and equipment;
    (2) Operating expenses, including but not limited to, travel and 
office operations;
    (3) Salaries and benefits.
    (b) Loan funds may not be used to pay expenses incurred for 
lobbying, public relations, or related activities, or to pay interest on 
loans from the Agency.



Sec.  771.6  Environmental requirements.

    No loan will be made until all Federal and state statutory and 
regulatory environmental requirements have been complied with.



Sec.  771.7  Equal opportunity and non-discrimination requirements.

    No recipient of a boll weevil eradication loan shall directly, or 
through contractual or other arrangement, subject any person or cause 
any person to be subjected to discrimination on the basis of race, 
religion, color, national origin, gender, or other prohibited basis. 
Borrowers must comply with all

[[Page 346]]

applicable Federal laws and regulations regarding equal opportunity in 
hiring, procurement, and related matters.



Sec.  771.8  Other Federal, State, and local requirements.

    (a) In addition to the specific requirements in this subpart, loan 
applications will be coordinated with all appropriate Federal, State, 
and local agencies.
    (b) Borrowers are required to comply with all applicable:
    (1) Federal, State, or local laws;
    (2) Regulatory commission rules; and
    (3) Regulations which are presently in existence, or which may be 
later adopted including, but not limited to, those governing the 
following:
    (i) Borrowing money, pledging security, and raising revenues for 
repayment of debt;
    (ii) Accounting and financial reporting; and
    (iii) Protection of the environment.



Sec.  771.9  Interest rates, terms, security requirements, and repayment.

    (a) Interest rate. The interest rate will be fixed for the term of 
the loan. The rate will be established by FSA, based upon the cost of 
Government borrowing for instruments on terms similar to that of the 
loan requested.
    (b) Term. The loan term will be based upon the needs of the 
applicant to accomplish the objectives of the loan program as determined 
by FSA, but may not exceed 10 years.
    (c) Security requirements. (1) Loans must be adequately secured as 
determined by FSA. FSA may require certain security, including but not 
limited to the following:
    (i) Assignments of assessments, taxes, levies, or other sources of 
revenue as authorized by State law;
    (ii) Investments and deposits of the applicant; and
    (iii) Capital assets or other property of the applicant or its 
members.
    (2) In those cases in which FSA and another lender will hold 
assignments of the same revenue as collateral, the other lender must 
agree to a prorated distribution of the assigned revenue. The 
distribution will be based upon the proportionate share of the 
applicant's debt the lender holds for the eradication zone from which 
the revenue is derived at the time of loan closing.
    (d) Repayment. The applicant must demonstrate that income sources 
will be sufficient to meet the repayment requirements of the loan and 
pay operating expenses.



Sec.  771.10  [Reserved]



Sec.  771.11  Application.

    A complete application will consist of the following:
    (a) An application for Federal assistance (available in any FSA 
office);
    (b) Applicant's financial projections including a cash flow 
statement showing the plan for loan repayment;
    (c) Copies of the applicant's authorizing State legislation and 
organizational documents;
    (d) List of all directors and officers of the applicant;
    (e) Copy of the most recent audited financial statements along with 
updates through the most recent quarter;
    (f) Copy of the referendum used to establish the assessments and a 
certification from the Board of Directors that the referendum passed;
    (g) Evidence that the officers and employees authorized to disburse 
funds are covered by an acceptable fidelity bond;
    (h) Evidence of acceptable liability insurance policies;
    (i) Statement from the applicant addressing any current or pending 
litigation against the applicant as well as any existing judgments;
    (j) A copy of a resolution passed by the Board of Directors 
authorizing the officers to incur debt on behalf of the borrower;
    (k) Any other information deemed to be necessary by FSA to render a 
decision.



Sec.  771.12  Funding applications.

    Loan requests will be processed based on the date FSA receives the 
application. Loan approval is subject to the availability of funds. 
However, when multiple applications are received on the same date and 
available funds will not cover all applications received, applications 
from active eradication areas, which FSA determines to be

[[Page 347]]

most critical for the accomplishment of program objectives, will be 
funded first.



Sec.  771.13  Loan closing.

    (a) Conditions. The applicant must meet all conditions specified by 
the loan approval official in the notification of loan approval prior to 
closing.
    (b) Loan instruments and legal documents. The borrower, through its 
authorized representatives will execute all loan instruments and legal 
documents required by FSA to evidence the debt, perfect the required 
security interest in property and assets securing the loan, and protect 
the Government's interest, in accordance with applicable State and 
Federal laws.
    (c) Loan agreement. A loan agreement between the borrower and FSA 
will be required. The agreement will set forth performance criteria and 
other loan requirements necessary to protect the Government's financial 
and programmatic interest and accomplish the objectives of the loan. 
Specific provisions of the agreement will be developed on a case-by-case 
basis to address the particular situation associated with the loan being 
made. However, all loan agreements will include at least the following 
provisions:
    (1) The borrower must submit audited financial statements to FSA at 
least annually;
    (2) The borrower will immediately notify FSA of any adverse actions 
such as:
    (i) Anticipated default on FSA debt;
    (ii) Potential recall vote of an assessment referendum; or
    (iii) Being named as a defendant in litigation;
    (3) Submission of other specific financial reports for the borrower;
    (4) The right of deferral under 7 U.S.C. 1981a; and
    (5) Applicable liquidation procedures upon default.
    (d) Fees. The borrower will pay all fees for recording any legal 
instruments determined to be necessary and all notary, lien search, and 
similar fees incident to loan transactions. No fees will be assessed for 
work performed by FSA employees.



Sec.  771.14  Loan monitoring.

    (a) Annual and periodic reviews. At least annually, the borrower 
will meet with FSA representatives to review the financial status of the 
borrower, assess the progress of the eradication program utilizing loan 
funds, and identify any potential problems or concerns.
    (b) Performance monitoring. At any time FSA determines it necessary, 
the borrower must allow FSA or its representative to review the 
operations and financial condition of the borrower. This may include, 
but is not limited to, field visits, and attendance at Foundation Board 
meetings. Upon FSA request, a borrower must submit any financial or 
other information within 14 days unless the data requested is not 
available within that time frame.



Sec.  771.15  Loan servicing.

    (a) Advances. FSA may make advances to protect its financial 
interests and charge the borrower's account for the amount of any such 
advances.
    (b) Payments. Payments will be made to FSA as set forth in loan 
agreements and debt instruments. The funds from extra payments will be 
applied entirely to loan principal.
    (c) Restructuring. The provisions of 7 CFR part 766 are not 
applicable to loans made under this section. However, FSA may 
restructure loan debts; provided:
    (1) The Government's interest will be protected;
    (2) The restructuring will be performed within FSA budgetary 
restrictions; and
    (3) The loan objectives cannot be met unless the loan is 
restructured.
    (d) Default. In the event of default, FSA will take all appropriate 
actions to protect its interest.

[67 FR 59771, Sept. 24, 2002, as amended at 72 FR 64121, Nov. 15, 2007]



PART 772_SERVICING MINOR PROGRAM LOANS--Table of Contents



Sec.
772.1 Policy.
772.2 Abbreviations and definitions.
772.3 Compliance.
772.4 Environmental requirements.
772.5 Security maintenance.

[[Page 348]]

772.6 Subordination of security.
772.7 Leasing minor program loan security.
772.8 Sale or exchange of security property.
772.9 Releases.
772.10 Transfer and assumption--AMP loans.
772.11 Transfer and assumption--IMP loans.
772.12 Graduation.
772.13 Delinquent account servicing.
772.14 Reamortization of AMP loans.
772.15 Protective advances.
772.16 Liquidation.
772.17 Equal Opportunity and non-discrimination requirements.
772.18 Exception authority.

    Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 25 U.S.C. 490.

    Source: 68 FR 69949, Dec. 16, 2003, unless otherwise noted.



Sec.  772.1  Policy.

    (a) Purpose. This part contains the Agency's policies and procedures 
for servicing Minor Program loans which include: Grazing Association 
loans, Irrigation and Drainage Association loans, and Non-Farm 
Enterprise and Recreation loans to individuals.
    (b) Appeals. The regulations at 7 CFR parts 11 and 780 apply to 
decisions made under this part.



Sec.  772.2  Abbreviations and Definitions.

    (a) Abbreviations.

AMP Association-Type Minor Program loan;
CFR Code of Federal Regulations;
FO Farm Ownership Loan;
FSA Farm Service Agency;
IMP Individual-Type Minor Program loan;
OL Operating Loan;
USDA United States Department of Agriculture.

    (b) Definitions.
    Association-Type Minor Program loans (AMP): Loans to Grazing 
Associations and Irrigation and Drainage Associations.
    Entity: Cooperative, corporation, partnership, joint operation, 
trust, or limited liability company.
    Graduation: The requirement contained in loan documents that 
borrowers pay their FSA loan in full with funds received from a 
commercial lending source as a result of improvement in their financial 
condition.
    Individual-type Minor Program loans (IMP): Non-Farm Enterprise or 
Recreation loans to individuals.
    Member: Any individual who has an ownership interest in the entity 
which has received the Minor Program loan.
    Minor Program: Non-Farm Enterprise, Individual Recreation, Grazing 
Association, or Irrigation and Drainage loan programs administered or to 
be administered by FSA
    Review official: An agency employee, contractor or designee who is 
authorized to conduct a compliance review of a Minor Program borrower 
under this part.



Sec.  772.3  Compliance.

    (a) Requirements. No Minor Program borrower shall directly, or 
through contractual or other arrangement, subject any person or cause 
any person to be subjected to discrimination on the basis of race, 
color, national origin, or disability. Borrowers must comply with all 
applicable Federal laws and regulations regarding equal opportunity in 
hiring, procurement, and related matters. AMP borrowers are subject to 
the nondiscrimination provisions applicable to Federally assisted 
programs contained in 7 CFR part 15, subparts A and C, and part 15b. IMP 
loans are subject to the nondiscrimination provisions applicable to 
federally conducted programs contained in 7 CFR parts 15d and 15e.
    (b) Reviews. In accordance with Title VI of the Civil Rights Act of 
1964, the Agency will conduct a compliance review of all Minor Program 
borrowers, to determine if a borrower has directly, or through 
contractual or other arrangement, subjected any person or caused any 
person to be subjected to discrimination on the basis of race, color, or 
national origin. The borrower must allow the review official access to 
their premises and all records necessary to carry out the compliance 
review as determined by the review official.
    (c) Frequency and timing. Compliance reviews will be conducted no 
later than October 31 of every third year until the Minor Program loan 
is paid in full or otherwise satisfied.
    (d) Violations. If a borrower refuses to provide information or 
access to their premises as requested by a review official during a 
compliance review, or is determined by the Agency to be not in

[[Page 349]]

compliance in accordance with this section or Departmental regulations 
and procedures, the Agency will service the loan in accordance with the 
provisions of Sec.  772.16 of this part.



Sec.  772.4  Environmental requirements.

    Servicing activities such as transfers, assumptions, subordinations, 
sale or exchange of security property, and leasing of security will be 
reviewed for compliance with 7 CFR part 799.

[68 FR 69949, Dec. 16, 2003, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  772.5  Security maintenance.

    (a) General. Borrowers are responsible for maintaining the 
collateral that is serving as security for their Minor Program loan in 
accordance with their lien instruments, security agreement and 
promissory note.
    (b) Security inspection. The Agency will inspect real estate that is 
security for a Minor Program loan at least once every 3 years, and 
chattel security at least annually. More frequent security inspections 
may be made as determined necessary by the Agency. Borrowers will allow 
representatives of the Agency, or any agency of the U.S. Government, in 
accordance with statutes and regulations, such access to the security 
property as the agency determines is necessary to document compliance 
with the requirements of this section.
    (c) Violations. If the Agency determines that the borrower has 
failed to adequately maintain security, made unapproved dispositions of 
security, or otherwise has placed the repayment of the Minor Program 
loan in jeopardy, the Agency will:
    (1) For chattel security, service the account according to part 765 
of this chapter. If any normal income security as defined in that 
subpart secures a Minor Program loan, the reporting, approval and 
release provisions in that subpart shall apply.
    (2) For real estate security for AMP loans, contact the Regional 
Office of General Counsel for advice on the appropriate servicing 
including liquidation if warranted.
    (3) For real estate security for IMP loans, service the account 
according to part 765 of this chapter.

[68 FR 69949, Dec. 16, 2003, as amended at 78 FR 65541, Nov. 1, 2013]



Sec.  772.6  Subordination of security.

    (a) Eligibility. The Agency shall grant a subordination of Minor 
Program loan security when the transaction will further the purposes for 
which the loan was made, and all of the following are met:
    (1) The loan will still be adequately secured after the 
subordination, or the value of the loan security will be increased by 
the amount of advances to be made under the terms of the subordination.
    (2) The borrower can document the ability to pay all debts including 
the new loan.
    (3) The action does not change the nature of the borrower's 
activities to the extent that they would no longer be eligible for a 
Minor Program loan.
    (4) The subordination is for a specific amount.
    (5) The borrower is unable, as determined by the Agency, to 
refinance its loan and graduate in accordance with this subpart.
    (6) The loan funds will not be used in such a way that will 
contribute to erosion of highly erodible land or conversion of wetlands 
for the production of an agricultural commodity according to part 799 of 
this chapter.
    (7) The borrower has not been convicted of planting, cultivating, 
growing, producing, harvesting or storing a controlled substance under 
Federal or state law. ``Borrower,'' for purposes of this subparagraph, 
specifically includes an individual or entity borrower and any member of 
an entity borrower. ``Controlled substance,'' for the purpose of this 
subparagraph, is defined at 21 CFR part 1308. The borrower will be 
ineligible for a subordination for the crop year in which the conviction 
occurred and the four succeeding crop years. An applicant must attest on 
the Agency application form that it, and its members if an entity, have 
not been convicted of such a crime.
    (b) Application. To request a subordination, a Minor Program 
borrower

[[Page 350]]

must make the request in writing and provide the following:
    (1) The specific amount of debt for which a subordination is needed;
    (2) An appraisal prepared in accordance with Sec.  761.7 of this 
chapter, if the request is for a subordination of more than $10,000, 
unless a sufficient appraisal report, as determined by the Agency, that 
is less than one year old, is on file with the Agency; and
    (3) Consent and subordination, as necessary, of all other creditors' 
security interests.

[68 FR 69949, Dec. 16, 2003, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  772.7  Leasing minor program loan security.

    (a) Eligibility. The Agency may consent to the borrower leasing all 
or a portion of security property for Minor Program loans to a third 
party when:
    (1) Leasing is the only feasible way to continue to operate the 
enterprise and is a customary practice;
    (2) The lease will not interfere with the purpose for which the loan 
was made;
    (3) The borrower retains ultimate responsibility for the operation, 
maintenance and management of the facility or service for its continued 
availability and use at reasonable rates and terms;
    (4) The lease prohibits amendments to the lease or subleasing 
arrangements without prior written approval from the Agency;
    (5) The lease terms provide that the Agency is a lienholder on the 
subject property and, as such, the lease is subordinate to the rights 
and claims of the Agency as lienholder; and
    (6) The lease is for less than 3 years and does not constitute a 
lease/purchase arrangement, unless the transfer and assumption 
provisions of this subpart are met.
    (b) Application. The borrower must submit a written request for 
Agency consent to lease the property.



Sec.  772.8  Sale or exchange of security property.

    (a) For AMP loans.
    (1) Sale of all or a portion of the security property may be 
approved when all of the following conditions are met:
    (i) The property is sold for market value based on a current 
appraisal prepared in accordance with Sec.  761.7 of this chapter.
    (ii) The sale will not prevent carrying out the original purpose of 
the loan. The borrower must execute an Assurance Agreement as prescribed 
by the Agency. The covenant involved will remain in effect as long as 
the property continues to be used for the same or similar purposes for 
which the loan was made. The instrument of conveyance will contain the 
following nondiscrimination covenant:

The property described herein was obtained or improved with Federal 
financial assistance and is subject to the non-discrimination provisions 
of title VI of the Civil Rights Act of 1964, title IX of the Education 
Amendments of 1972, section 504 of the Rehabilitation Act of 1973, and 
other similarly worded Federal statutes, and the regulations issued 
pursuant thereto that prohibit discrimination on the basis of race, 
color, national origin, handicap, religion, age, or sex in programs or 
activities receiving Federal financial assistance. Such provisions apply 
for as long as the property continues to be used for the same or similar 
purposes for which the Federal assistance was extended, or for so long 
as the purchaser owns it, whichever is later.
    (iii) The remaining security for the loan is adequate or will not 
change after the transaction.
    (iv) Sale proceeds remaining after paying any reasonable and 
necessary selling expenses are applied to the Minor Program loan 
according to lien priority.
    (2) Exchange of all or a portion of security property for an AMP 
loan may be approved when:
    (i) The Agency will obtain a lien on the property acquired in the 
exchange;
    (ii) Property more suited to the borrower's needs related to the 
purposes of the loan is to be acquired in the exchange;
    (iii) The AMP loan will be as adequately secured after the 
transaction as before; and
    (iv) It is necessary to develop or enlarge the facility, improve the 
borrower's debt-paying ability, place the operation on a more sound 
financial basis or otherwise further the loan objectives and purposes, 
as determined by the Agency.

[[Page 351]]

    (b) For IMP loans, a sale or exchange of real estate or chattel that 
is serving as security must be done as specified in part 765 of this 
chapter.

[68 FR 69949, Dec. 16, 2003, as amended at 69 FR 18741, Apr. 8, 2004; 78 
FR 65533, Nov. 1, 2013]



Sec.  772.9  Releases.

    (a) Security. Minor Program liens may be released when:
    (1) The debt is paid in full;
    (2) Security property is sold for market value and sale proceeds are 
received and applied to the borrower's creditors according to lien 
priority; or
    (3) An exchange in accordance with Sec.  772.8 has been concluded.
    (b) Borrower liability. The Agency may release a borrower from 
liability when the Minor Program loan, plus all administrative 
collection costs and charges are paid in full. IMP borrowers who have 
had previous debt forgiveness on a farm loan program loan as defined in 
7 CFR part 761, however, cannot be released from liability by FSA until 
the previous loss to the Agency has been repaid with interest from the 
date of debt forgiveness. An AMP borrower may also be released in 
accordance with Sec.  772.10 in conjunction with a transfer and 
assumption.
    (c) Servicing of debt not satisfied through liquidation. Balances 
remaining after sale or liquidation of the security will be subject to 
administrative offset in accordance with 7 CFR part 3, Department of 
Treasury Offset Program (TOP) and Treasury Cross-Servicing regulations 
at 31 CFR part 285 and Federal Claims Collections Standards at 31 CFR 
parts 900-904. Thereafter the debt settlement provisions in 7 CFR part 
1956, subpart B of chapter XVIII of the Code of Federal Regulations or 
successor regulation apply.

[68 FR 69949, Dec. 16, 2003, as amended at 69 FR 7679, Feb. 19, 2004; 72 
FR 64121, Nov. 15, 2007]



Sec.  772.10  Transfer and assumption--AMP loans.

    (a) Eligibility. The Agency may approve transfers and assumptions of 
AMP loans when:
    (1) The present borrower is unable or unwilling to accomplish the 
objectives of the loan;
    (2) The transfer will not harm the Government or adversely affect 
the Agency's security position;
    (3) The transferee will continue with the original purpose of the 
loan;
    (4) The transferee will assume an amount at least equal to the 
present market value of the loan security;
    (5) The transferee documents the ability to pay the AMP loan debt as 
provided in the assumption agreement and has the legal capacity to enter 
into the contract;
    (6) If there is a lien or judgment against the Agency security being 
transferred, the transferee is subject to such claims. The transferee 
must document the ability to repay the claims against the land; and
    (7) If the transfer is to one or more members of the borrower's 
organization and there is no new member, there must not be a loss to the 
Government.
    (b) Withdrawal. Withdrawal of a member and transfer of the 
withdrawing member's interest in the Association to a new eligible 
member may be approved by the Agency if all of the following conditions 
are met:
    (1) The entire unpaid balance of the withdrawing member's share of 
the AMP loan must be assumed by the new member;
    (2) In accordance with the Association's governing articles, the 
required number of remaining members must agree to accept any new 
member; and
    (3) The transfer will not adversely affect collection of the AMP 
loan.
    (c) Requesting a transfer and assumption. The transferor/borrower 
and transferee/applicant must submit:
    (1) The written consent of any other lienholder, if applicable.
    (2) A current balance sheet and cash flow statement.
    (d) Terms. The interest rate and term of the assumed AMP loan will 
not be changed. Any delinquent principal and interest of the AMP loan 
must be paid current before the transfer and assumption will be approved 
by the Agency.
    (e) Release of liability. Transferors may be released from liability 
with respect to an AMP loan by the Agency when:
    (1) The full amount of the loan is assumed; or

[[Page 352]]

    (2) Less than the full amount of the debt is assumed, and the 
balance remaining will be serviced in accordance with Sec.  772.9(c).



Sec.  772.11  Transfer and assumption--IMP loans.

    Transfers and assumptions for IMP loans are processed in accordance 
with 7 CFR part 765. Any remaining transferor liability will be serviced 
in accordance with Sec.  772.9(c) of this subpart.

[68 FR 69949, Dec. 16, 2003, as amended at 72 FR 64121, Nov. 15, 2007]



Sec.  772.12  Graduation.

    (a) General. This section only applies to Minor Program borrowers 
with promissory notes which contain provisions requiring graduation.
    (b) Graduation reviews. Borrowers shall provide current financial 
information when requested by the Agency or its representatives to 
conduct graduation reviews.
    (1) AMP loans shall be reviewed at least every two years. In the 
year to be reviewed, each borrower must submit, at a minimum, a year-end 
balance sheet and cash flow projection for the current year.
    (2) All IMP borrowers classified as ``commercial'' or ``standard'' 
by the agency must be reviewed at least every 2 years. In the year to be 
reviewed, each borrower must submit a year-end balance sheet, actual 
financial performance for the most recent year, and a projected budget 
for the current year.
    (c) Criteria. Borrowers must graduate from the Minor Programs as 
follows:
    (1) Borrowers with IMP loans that are classified as ``commercial'' 
or ``standard'' must apply for private financing within 30 days from the 
date the borrower is notified of lender interest, if an application is 
required by the lender. For good cause, the Agency may grant the 
borrower a reasonable amount of additional time to apply for 
refinancing.
    (2) Borrowers with AMP loans will be considered for graduation at 
least every two years or more frequently if the Agency determines that 
the borrower's financial condition has significantly improved.

[68 FR 69949, Dec. 16, 2003, as amended at 72 FR 64121, Nov. 15, 2007]



Sec.  772.13  Delinquent account servicing.

    (a) AMP loans. If the borrower does not make arrangements to cure 
the default after notice by the Agency and is not eligible for 
reamortization in accordance with Sec.  772.14, the Agency will 
liquidate the account according to Sec.  772.16.
    (b) IMP loans. Delinquent IMP borrowers will be serviced according 
to 7 CFR part 3, part 766, and part 1951, subpart C, concerning internal 
agency offset and referral to the Department of the Treasury Offset 
Program and Treasury Cross-Servicing (or successor regulations).

[68 FR 69949, Dec. 16, 2003, as amended at 72 FR 64121, Nov. 15, 2007]



Sec.  772.14  Reamortization of AMP loans.

    The Agency may approve reamortization of AMP loans provided:
    (a) There is no extension of the final maturity date of the loan;
    (b) No intervening lien exists on the security for the loan which 
would jeopardize the Government's security position;
    (c) If the account is delinquent, it cannot be brought current 
within one year and the borrower has presented a cash flow budget which 
demonstrates the ability to meet the proposed new payment schedule; and
    (d) If the account is current, the borrower will be unable to meet 
the annual loan payments due to circumstances beyond the borrower's 
control.



Sec.  772.15  Protective advances.

    (a) The Agency may approve, without regard to any loan or total 
indebtedness limitation, vouchers to pay costs, including insurance and 
real estate taxes, to preserve and protect the security, the lien, or 
the priority of the lien securing the debt owed to the Agency if the 
debt instrument provides that the Agency may voucher the account to 
protect its lien or security.
    (b) The Agency may pay protective advances only when it determines 
it to

[[Page 353]]

be in the Government's best financial interest.
    (c) Protective advances are immediately due and payable.



Sec.  772.16  Liquidation.

    When the Agency determines that continued servicing will not 
accomplish the objectives of the loan and the delinquency or financial 
distress cannot be cured by the options in Sec.  772.13, or the loan is 
in non-monetary default, the borrower will be encouraged to dispose of 
the Agency security voluntarily through sale or transfer and assumption 
in accordance with this part. If such a transfer or voluntary sale is 
not carried out, the loan will be liquidated according to 7 CFR part 
766. For AMP loans, appeal rights under 7 CFR part 11 are provided in 
the notice of acceleration. For IMP loans, appeal rights must be 
exhausted before acceleration, and the notice of acceleration is not 
appealable.

[68 FR 69949, Dec. 16, 2003, as amended at 72 FR 64121, Nov. 15, 2007]



Sec.  772.17  Equal opportunity and non-discrimination requirements.

    With respect to any aspect of a credit transaction, the Agency will 
comply with the requirements of the Equal Credit Opportunity Act and the 
Department's civil rights policy in 7 CFR part 15d.

[72 FR 64121, Nov. 15, 2007]



Sec.  772.18  Exception authority.

    Exceptions to any requirement in this subpart can be approved in 
individual cases by the Administrator if application of any requirement 
or failure to take action would adversely affect the Government's 
financial interest. Any exception must be consistent with the 
authorizing statute and other applicable laws.



PART 773_SPECIAL APPLE LOAN PROGRAM--Table of Contents



Sec.
773.1 Introduction.
773.2 Definitions.
773.3 Appeals.
773.4-773.5 [Reserved]
773.6 Eligibility requirements.
773.7 Loan uses.
773.8 Limitations.
773.10 Other Federal, State, and local requirements.
773.11-773.17 [Reserved]
773.18 Loan application.
773.19 Interest rate, terms, security requirements, and repayment.
773.20 Funding applications.
773.21 Loan decision, closing and fees.
773.22 Loan servicing.
773.23 Exception.

    Authority: Pub. L. 106-224.

    Source: 65 FR 76117, Dec. 6, 2000, unless otherwise noted.



Sec.  773.1  Introduction.

    This part contains the terms and conditions for loans made under the 
Special Apple Loan Program. These regulations are applicable to 
applicants, borrowers, and other parties involved in making, servicing, 
and liquidating these loans. The program objective is to assist 
producers of apples suffering from economic loss as a result of low 
apple prices.



Sec.  773.2  Definitions.

    As used in this part, the following definitions apply:
    Agency is the Farm Service Agency, its employees, and any successor 
agency.
    Apple producer is a farmer in the United States or its territories 
that produced apples, on not less than 10 acres, for sale in 1999 or 
2000.
    Applicant is the individual or business entity applying for the 
loan.
    Business entity is a corporation, partnership, joint operation, 
trust, limited liability company, or cooperative.
    Cash flow budget is a projection listing all anticipated cash 
inflows (including all farm income, nonfarm income and all loan 
advances) and all cash outflows (including all farm and nonfarm debt 
service and other expenses) to be incurred by the borrower during the 
period of the budget. A cash flow budget may be completed either for a 
12 month period, a typical production cycle or the life of the loan, as 
appropriate.
    Domestically owned enterprise is an entity organized in the United 
States under the law of the state or states in which the entity operates 
and a majority of the entity is owned by members meeting the citizenship 
test.

[[Page 354]]

    False information is information provided by an applicant, borrower, 
or other source to the Agency which information is known by the provider 
to be incorrect, and was given to the Agency in order to obtain benefits 
for which the applicant or borrower would not otherwise have been 
eligible.
    Feasible plan is a plan that demonstrates that the loan will be 
repaid as agreed, as determined by the Agency.
    Security is real or personal property pledged as collateral to 
assure repayment of a loan in the event there is a default on the loan.
    USPAP is Uniform Standards of Professional Appraisal Practice.



Sec.  773.3  Appeals.

    A loan applicant or borrower may request an appeal or review of an 
adverse decision made by the Agency in accordance with 7 CFR part 11.



Sec. Sec.  773.4-773.5  [Reserved]



Sec.  773.6  Eligibility requirements.

    Loan applicants must meet all of the following requirements to be 
eligible for a Special Apple Program Loan:
    (a) The loan applicant must be an apple producer;
    (b) The loan applicant must be a citizen of the United States or an 
alien lawfully admitted to the United States for permanent residence 
under the Immigration and Nationalization Act. For a business entity 
applicant, the majority of the business entity must be owned by members 
meeting the citizenship test or, other entities that are domestically 
owned. Aliens must provide the appropriate Immigration and 
Naturalization Service forms to document their permanent residency;
    (c) The loan applicant and anyone who will execute the promissory 
note must possess the legal capacity to enter into contracts, including 
debt instruments;
    (d) At loan closing the loan applicant and anyone who will execute 
the promissory note must not be delinquent on any Federal debt, other 
than a debt under the Internal Revenue Code of 1986;
    (e) At loan closing the loan applicant and anyone who will execute 
the promissory note must not have any outstanding unpaid judgments 
obtained by the United States in any court. Such judgments do not 
include those filed as a result of action in the United States Tax 
Courts;
    (f) The loan applicant, in past or present dealings with the Agency, 
must not have provided the Agency with false information; and
    (g) The individual or business entity loan applicant and all entity 
members must have acceptable credit history demonstrated by debt 
repayment. A history of failure to repay past debts as they came due 
(including debts to the Internal Revenue Service) when the ability to 
repay was within their control will demonstrate unacceptable credit 
history. Unacceptable credit history will not include isolated instances 
of late payments which do not represent a pattern and were clearly 
beyond the applicant's control or lack of credit history.



Sec.  773.7  Loan uses.

    Loan funds may be used for any of the following purposes related to 
the production or marketing of apples:
    (a) Payment of costs associated with reorganizing a farm to improve 
its profitability;
    (b) Payment of annual farm operating expenses;
    (c) Purchase of farm equipment or fixtures;
    (d) Acquiring, enlarging, or leasing a farm;
    (e) Making capital improvements to a farm;
    (f) Refinancing indebtedness;
    (g) Purchase of cooperative stock for credit, production, processing 
or marketing purposes; or
    (h) Payment of loan closing costs.



Sec.  773.8  Limitations.

    (a) The maximum loan amount any individual or business entity may 
receive under the Special Apple Loan Program is limited to $500,000.
    (b) The maximum loan is further limited to $300 per acre of apple 
trees in production in 1999 or 2000, whichever is greater.
    (c) Loan funds may not be used to pay expenses incurred for lobbying 
or related activities.

[[Page 355]]

    (d) Loans may not be made for any purpose which contributes to 
excessive erosion of highly erodible land or to the conversion of 
wetlands to produce an agricultural commodity.



Sec.  773.10  Other Federal, State, and local requirements.

    Borrowers are required to comply with all applicable:
    (a) Federal, State, or local laws;
    (b) Regulatory commission rules; and
    (c) Regulations which are presently in existence, or which may be 
later adopted including, but not limited to, those governing the 
following:
    (1) Borrowing money, pledging security, and raising revenues for 
repayment of debt;
    (2) Accounting and financial reporting; and
    (3) Protection of the environment.



Sec. Sec.  773.11-773.17  [Reserved]



Sec.  773.18  Loan application.

    (a) A complete application will consist of the following:
    (1) A completed Agency application form;
    (2) If the applicant is a business entity, any legal documents 
evidencing the organization and any State recognition of the entity;
    (3) Documentation of compliance with the Agency's environmental 
regulations contained in part 799 of this chapter;
    (4) A balance sheet on the applicant;
    (5) The farm's operating plan, including the projected cash flow 
budget reflecting production, income, expenses, and loan repayment plan;
    (6) The last 3 years of production and income and expense 
information;
    (7) Payment to the Agency for ordering a credit report; and
    (8) Any additional information required by the Agency to determine 
the eligibility of the applicant, the feasibility of the operation, or 
the adequacy and availability of security.
    (b) Except as required in Sec.  773.19(e), the Agency will waive 
requirements for a complete application, listed in paragraphs (a)(5) and 
(a)(6) of this section, for requests of $30,000 or less.

[65 FR 76117, Dec. 6, 2000, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  773.19  Interest rate, terms, security requirements, and repayment.

    (a) Interest rate. The interest rate will be fixed for the term of 
the loan. The rate will be established by the Agency and available in 
each Agency Office, based upon the cost of Government borrowing for 
loans of similar maturities.
    (b) Terms. The loan term will be for up to 3 years, based upon the 
useful life of the security offered.
    (c) Security requirements. The Agency will take a lien on the 
following security, if available, as necessary to adequately secure the 
loan:
    (1) Real estate;
    (2) Chattels;
    (3) Crops;
    (4) Other assets owned by the applicant; and
    (5) Assets owned and pledged by a third party.
    (d) Documentation of security value. (1) For loans that are for 
$30,000 or less, collateral value will be based on the best available, 
verifiable information.
    (2) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of three times the loan amount or greater, 
collateral value will be based on tax assessment of real estate and 
depreciation schedules of chattels, as applicable, less any existing 
liens.
    (3) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of less than three times the loan amount, 
collateral value will be based on an appraisal. Such appraisals must be 
obtained by the applicant, at the applicant's expense and acceptable to 
the Agency. Appraisals of real estate must be completed in accordance 
with USPAP.
    (e) Repayment. (1) All loan applicants must demonstrate that the 
loan can be repaid.
    (2) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of three times the loan amount or 
greater, repayment ability will be considered adequate without further 
documentation.
    (3) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of less than three times the loan 
amount, repayment ability must be demonstrated

[[Page 356]]

using the farm's operating plan, including a projected cash flow budget 
based on historical performance. Such operating plan is required 
notwithstanding Sec.  773.18 of this part.
    (4) For loans that are for more than $30,000, repayment ability must 
be demonstrated using the farm's operating plan, including a projected 
cash flow budget based on historical performance.
    (f) Creditworthiness. All loan applicants must have an acceptable 
credit history demonstrated by debt repayment. A history of failure to 
repay past debts as they came due (including debts to the Internal 
Revenue Service) when the ability to repay was within their control will 
demonstrate unacceptable credit history. Unacceptable credit history 
will not include isolated instances of late payments which do not 
represent a pattern and were clearly beyond the applicant's control or 
lack of credit history.



Sec.  773.20  Funding applications.

    Loan requests will be funded based on the date the Agency approves 
the application. Loan approval is subject to the availability of funds.



Sec.  773.21  Loan decision, closing, and fees.

    (a) Loan decision. (1) The Agency will approve a loan if it 
determines that:
    (i) The loan can be repaid;
    (ii) The proposed use of loan funds is authorized;
    (iii) The applicant has been determined eligible;
    (iv) All security requirements have been, or will be met at closing;
    (vi) All other pertinent requirements have been, or will be met at 
closing.
    (2) The Agency will place conditions upon loan approval as necessary 
to protect its interest.
    (b) Loan closing. (1) The applicant must meet all conditions 
specified by the loan approval official in the notification of loan 
approval prior to loan closing;
    (2) There must have been no significant changes in the plan of 
operation or the applicant's financial condition since the loan was 
approved; and
    (2) The applicant will execute all loan instruments and legal 
documents required by the Agency to evidence the debt, perfect the 
required security interest in property securing the loan, and protect 
the Government's interests, in accordance with applicable State and 
Federal laws. In the case of an entity applicant, all officers or 
partners and any board members also will be required to execute the 
promissory notes as individuals.
    (c) Fees. The applicant will pay all loan closing fees including 
credit report fees, fees for appraisals, fees for recording any legal 
instruments determined to be necessary, and all notary, lien search, and 
similar fees incident to loan transactions. No fees will be assessed for 
work performed by Agency employees.



Sec.  773.22  Loan servicing.

    Loans will be serviced as a Non-program loan in accordance with 7 
CFR part 766 during the term of the loan. If the loan is not paid in 
full during this term, servicing will proceed in accordance with 7 CFR 
part 766, subpart H.

[72 FR 64121, Nov. 15, 2007]



Sec.  773.23  Exception.

    The Agency may grant an exception to the security requirements of 
this section, if the proposed change is in the best financial interest 
of the Government and not inconsistent with the authorizing statute or 
other applicable law.



PART 774_EMERGENCY LOAN FOR SEED PRODUCERS PROGRAM--Table of Contents



Sec.
774.1 Introduction.
774.2 Definitions.
774.3 Appeals.
774.4-774.5 [Reserved]
774.6 Eligibility requirements.
774.7 [Reserved]
774.8 Limitations.
774.10 Other Federal, State, and local requirements.
774.11-774.16 [Reserved]
774.17 Loan application.
774.18 Interest rate, terms, and security requirements.
774.19 Processing applications.
774.20 Funding applications.
774.21 [Reserved]
774.22 Loan closing.
774.23 Loan servicing.

[[Page 357]]

774.24 Exception.

    Authority: Pub. L. 106-224

    Source: 65 FR 76119, Dec. 6, 2000, unless otherwise noted.



Sec.  774.1  Introduction.

    The regulations of this part contain the terms and conditions under 
which loans are made under the Emergency Loan for Seed Producers 
Program. These regulations are applicable to applicants, borrowers, and 
other parties involved in making, servicing, and liquidating these 
loans. The program objective is to assist certain seed producers 
adversely affected by the bankruptcy filing of AgriBiotech.



Sec.  774.2  Definitions.

    As used in this part, the following definitions apply:
    Agency is the Farm Service Agency, its employees, and any successor 
agency.
    Applicant is the individual or business entity applying for the 
loan.
    Business entity is a corporation, partnership, joint operation, 
trust, limited liability company, or cooperative.
    Domestically owned enterprise is an entity organized in the United 
States under the law of the state or states in which the entity operates 
and a majority of the entity is owned by members meeting the citizenship 
test.
    False information is information provided by an applicant, borrower 
or other source to the Agency that the borrower knows to be incorrect, 
and that the borrower or other source provided in order to obtain 
benefits for which the borrower would not otherwise have been eligible.
    Seed producer is a farmer that produced a 1999 crop of grass, 
forage, vegetable, or sorghum seed for sale to AgriBiotech under 
contract.



Sec.  774.3  Appeals.

    A loan applicant or borrower may request an appeal or review of an 
adverse decision made by the Agency in accordance with 7 CFR part 11.



Sec. Sec.  774.4-774.5  [Reserved]



Sec.  774.6  Eligibility requirements.

    Loan applicants must meet all of the following requirements to be 
eligible under the Emergency Loan for Seed Producers Program;
    (a) The loan applicant must be a seed producer;
    (b) The individual or entity loan applicant must have a timely filed 
proof of claim in the Chapter XI bankruptcy proceedings involving 
AgriBiotech and the claim must have arisen from acontract to grow seeds 
in the United States;
    (c) The loan applicant must be a citizen of the United States or an 
alien lawfully admitted to the United States for permanent residence 
under the Immigration and Nationalization Act. For a business entity 
applicant, the majority of the business entity must be owned by members 
meeting the citizenship test or, other entities that are domestically 
owned. Aliens must provide the appropriate Immigration and 
Naturalization Service forms to document their permanent residency;
    (d) The loan applicant and anyone who will execute the promissory 
note must possess the legal capacity to enter into contracts, including 
debt instruments;
    (e) At loan closing, the applicant and anyone who will execute the 
promissory note must not be delinquent on any Federal debt, other than a 
debt under the Internal Revenue Code of 1986;
    (f) At loan closing, the applicant and anyone who will execute the 
promissory note must not have any outstanding unpaid judgments obtained 
by the United States in any court. Such judgments do not include those 
filed as a result of action in the United States Tax Courts;
    (g) The loan applicant, in past and current dealings with the 
Agency, must not have provided the Agency with false information.



Sec.  774.7  [Reserved]



Sec.  774.8  Limitations.

    (a) The maximum loan amount any individual or business entity may 
receive will be 65% of the value of the timely filed proof of claim 
against AgriBiotech in the bankruptcy proceeding as determined by the 
Agency.

[[Page 358]]

    (b) Loan funds may not be used to pay expenses incurred for lobbying 
or related activities.
    (c) Loans may not be made for any purpose which contributes to 
excessive erosion of highly erodible land or to the conversion of 
wetlands to produce an agricultural commodity.



Sec.  774.10  Other Federal, State, and local requirements.

    Borrowers are required to comply with all applicable:
    (a) Federal, State, or local laws;
    (b) Regulatory commission rules; and
    (c) Regulations which are presently in existence, or which may be 
later adopted including, but not limited to, those governing the 
following:
    (1) Borrowing money, pledging security, and raising revenues for 
repayment of debt;
    (2) Accounting and financial reporting; and
    (3) Protection of the environment.



Sec. Sec.  774.11-774.16  [Reserved]



Sec.  774.17  Loan application.

    A complete application will consist of the following:
    (a) A completed Agency application form;
    (b) Proof of a bankruptcy claim in the AgriBiotech bankruptcy 
proceedings;
    (c) If the applicant is a business entity, any legal documents 
evidencing the organization and any State recognition of the entity;
    (d) Documentation of compliance with the Agency's environmental 
regulations contained in part 799 of this chapter;
    (e) A balance sheet on the applicant; and
    (f) Any other additional information the Agency needs to determine 
the eligibility of the applicant and the application of any Federal, 
State or local laws.

[65 FR 76119, Dec. 6, 2000, as amended at 81 FR 51285, Aug. 3, 2016]



Sec.  774.18  Interest rate, terms and security requirements.

    (a) Interest rate. (1) The interest rate on the loan will be zero 
percent for 36 months or until the date of settlement of, completion of, 
or final distribution of assets in the bankruptcy proceeding involving 
AgriBiotech, whichever comes first.
    (2) Thereafter interest will begin to accrue at the regular rate for 
an Agency Farm operating-direct loan (available in any Agency office).
    (b) Terms. (1) Loans shall be due and payable upon the earlier of 
the settlement of the bankruptcy claim or 36 months from the date of the 
note.
    (2) However, any principal remaining thereafter will be amortized 
over a term of 7 years at the Farm operating-direct loan interest rate 
(available in any Agency office). If the loan is not paid in full during 
this time and default occurs, servicing will proceed in accordance with 
7 CFR part 766, subpart H.
    (c) Security requirements. (1) The Agency will require a first 
position pledge and assignment of the applicant's monetary claim in the 
AgriBiotech bankruptcy estate to secure the loan.
    (2) If the applicant has seed remaining in their possession that was 
produced under contract to AgriBiotech, the applicant also will provide 
the Agency with a first lien position on this seed. It is the 
responsibility of the applicant to negotiate with any existing 
lienholders to secure the Agency's first lien position.

[65 FR 76119, Dec. 6, 2000, as amended at 68 FR 7696, Feb. 18, 2003; 72 
FR 64121, Nov. 15, 2007]



Sec.  774.19  Processing applications.

    Applications will be processed until such time that funds are 
exhausted, or all claims have been paid and the bankruptcy involving 
AgriBiotech has been discharged. When all loan funds have been exhausted 
or the bankruptcy is discharged, no further applications will be 
accepted and any pending applications will be considered withdrawn.



Sec.  774.20  Funding applications.

    Loan requests will be funded based on the date the Agency approves 
an application. Loan approval is subject to the availability of funds.

[[Page 359]]



Sec.  774.21  [Reserved]



Sec.  774.22  Loan closing.

    (a) Conditions. The applicant must meet all conditions specified by 
the loan approval official in the notification of loan approval prior to 
closing.
    (b) Loan instruments and legal documents. The applicant will execute 
all loan instruments and legal documents required by the Agency to 
evidence the debt, perfect the required security interest in the 
bankruptcy claim, and protect the Government's interest, in accordance 
with applicable State and Federal laws. In the case of an entity 
applicant, all officers or partners and any board members also will be 
required to execute the promissory notes as individuals.
    (c) Fees. The applicant will pay all loan closing fees for recording 
any legal instruments determined to be necessary and all notary, lien 
search, and similar fees incident to loan transactions. No fees will be 
assessed for work performed by Agency employees.



Sec.  774.23  Loan servicing.

    Loans will be serviced as a Non-program loan in accordance with 7 
CFR part 766. If the loan is not repaid as agreed and default occurs, 
servicing will proceed in accordance with 7 CFR part 766, subpart H.

[72 FR 64121, Nov. 15, 2007]



Sec.  774.24  Exception.

    The Agency may grant an exception to any of the requirements of this 
section, if the proposed change is in the best financial interest of the 
Government and not inconsistent with the authorizing statute or other 
applicable law.



PART 780_APPEAL REGULATIONS--Table of Contents



Sec.
780.1 General.
780.2 Definitions.
780.3 Reservations of authority.
780.4 Applicability.
780.5 Decisions that are not appealable.
780.6 Appeal procedures available when a decision is appealable.
780.7 Reconsideration.
780.8 County committee appeals.
780.9 Mediation.
780.10 State committee appeals.
780.11 Appeals of NRCS determinations.
780.12 Appeals of penalties assessed under the Agricultural Foreign 
          Investment Disclosure Act of 1978.
780.13 Verbatim transcripts.
780.14 [Reserved]
780.15 Time limitations.
780.16 Implementation of final agency decisions.
780.17 Judicial review.

    Authority: 5 U.S.C. 301 and 574; 7 U.S.C. 6995; 15 U.S.C. 714b and 
714c; 16 U.S.C. 590h.

    Source: 70 FR 43266, July 27, 2005, unless otherwise noted.



Sec.  780.1  General.

    This part sets forth rules applicable to appealability reviews, 
reconsiderations, appeals and alternative dispute resolution procedures 
comprising in aggregate the informal appeals process of FSA. FSA will 
apply these rules to facilitate and expedite participants' submissions 
and FSA reviews of documentary and other evidence material to resolution 
of disputes arising under agency program regulations.



Sec.  780.2  Definitions.

    For purposes of this part:
    1994 Act means the Federal Crop Insurance Reform and Department of 
Agriculture Reorganization Act of 1994 (Pub. L. 103-354).
    Adverse decision means a program decision by an employee, officer, 
or committee of FSA that is adverse to the participant. The term 
includes any denial of program participation, benefits, written 
agreements, eligibility, etc., that results in a participant receiving 
less funds than the participant believes should have been paid or not 
receiving a program benefit to which the participant believes the 
participant was entitled.
    Agency means FSA and its county and State committees and their 
personnel, CCC, NRCS, and any other agency or office of the Department 
which the Secretary may designate, or any successor agency.
    Agency record means all documents and materials maintained by FSA 
that are related to the adverse decision under review that are compiled 
and reviewed by the decision-maker or that are compiled in the record 
provided to the next level reviewing authority.

[[Page 360]]

    Appeal means a written request by a participant asking the next 
level reviewing authority within FSA to review a decision. However, 
depending on the context, the term may also refer to a request for 
review by NAD.
    Appealability review means review of a decision-maker's 
determination that a decision is not appealable under this part. That 
decision is, however, subject to review according to Sec.  780.5 or 7 
CFR part 11 to determine whether the decision involves a factual dispute 
that is appealable or is, instead, an attempt to challenge generally 
applicable program policies, provisions, regulations, or statutes that 
were not appealable.
    Appellant means any participant who appeals or requests 
reconsideration or mediation of an adverse decision in accordance with 
this part or 7 CFR part 11.
    Authorized representative means a person who has obtained a Privacy 
Act waiver and is authorized in writing by a participant to act for the 
participant in a reconsideration, mediation, or appeal.
    CCC means the Commodity Credit Corporation, a wholly owned 
Government corporation within USDA.
    Certified State means, in connection with mediation, a State with a 
mediation program, approved by the Secretary, that meets the 
requirements of 7 CFR part 785.
    Confidential mediation means a mediation process in which neither 
the mediator nor parties participating in mediation will disclose to any 
person oral or written communications provided to the mediator in 
confidence, except as allowed by 5 U.S.C. 574 or 7 CFR part 785.
    County committee means an FSA county or area committee established 
in accordance with section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)).
    Determination of NRCS means a decision by NRCS made pursuant to 
Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et seq.), as 
amended.
    FSA means the Farm Service Agency, an agency within USDA.
    Final decision means a program decision rendered by an employee or 
officer of FSA pursuant to delegated authority, or by the county or 
State committee upon written request of a participant. A decision that 
is otherwise final shall remain final unless the decision is timely 
appealed to the State committee or NAD. A decision of FSA made by 
personnel subordinate to the county committee is considered ``final'' 
for the purpose of appeal to NAD only after that decision has been 
appealed to the county committee under the provisions of this part.
    Hearing means an informal proceeding on an appeal to afford a 
participant opportunity to present testimony, documentary evidence, or 
both to show why an adverse decision is in error and why the adverse 
decision should be reversed or modified.
    Implement means the taking of action by FSA, NRCS, or CCC that is 
necessary to effectuate fully and promptly a final decision.
    Mediation means a technique for resolution of disputes in which a 
mediator assists disputing parties in voluntarily reaching mutually 
agreeable settlement of issues within the laws, regulations, and the 
agency's generally applicable program policies and procedures, but in 
which the mediator has no authoritative decision making power.
    Mediator means a neutral individual who functions specifically to 
aid the parties in a dispute during a mediation process.
    NAD means the USDA National Appeals Division established pursuant to 
the 1994 Act.
    NAD rules means the NAD rules of procedure published at 7 CFR part 
11, implementing title II, subtitle H of the 1994 Act.
    Non-certified State means a State that is not approved to 
participate in the certified mediation program under 7 CFR part 785, or 
any successor regulation.
    NRCS means the Natural Resources Conservation Service of USDA.
    Participant means any individual or entity who has applied for, or 
whose right to participate in or receive, a payment, loan, loan 
guarantee, or other benefit in accordance with any program of FSA to 
which the regulations in this part apply is affected by a decision of 
FSA. The term includes

[[Page 361]]

anyone meeting this definition regardless of whether, in the particular 
proceeding, the participant is an appellant or a third party respondent. 
The term does not include individuals or entities whose claim(s) arise 
under the programs excluded in the definition of ``participant'' 
published at 7 CFR 11.1.
    Qualified mediator means a mediator who meets the training 
requirements established by State law in the State in which mediation 
services will be provided or, where a State has no law prescribing 
mediator qualifications, an individual who has attended a minimum of 40 
hours of core mediator knowledge and skills training and, to remain in a 
qualified mediator status, completes a minimum of 20 hours of additional 
training or education during each 2-year period. Such training or 
education must be approved by USDA, by an accredited college or 
university, or by one of the following organizations: State Bar of a 
qualifying State, a State mediation association, a State approved 
mediation program, or a society of dispute resolution professionals.
    Reconsideration means a subsequent consideration of a program 
decision by the same level of decision-maker or reviewing authority.
    Reviewing authority means a person or committee assigned the 
responsibility of making a decision on reconsideration or an appeal 
filed by a participant in accordance with this part.
    State committee means an FSA State committee established in 
accordance with Section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)) including, where appropriate, the 
Director of the Caribbean Area FSA office for Puerto Rico and the Virgin 
Islands.
    State Conservationist means the NRCS official in charge of NRCS 
operations within a State, as set forth in part 600 of this title.
    State Executive Director means the executive director of an FSA 
State office with administrative responsibility for a FSA State office 
as established under the Reorganization Act.
    USDA means the U.S. Department of Agriculture.
    Verbatim transcript means an official, written record of proceedings 
in an appeal hearing or reconsideration of an adverse decision 
appealable under this part.



Sec.  780.3  Reservations of authority.

    (a) Representatives of FSA and CCC may correct all errors in data 
entered on program contracts, loan agreements, and other program 
documents and the results of the computations or calculations made 
pursuant to the contract or agreement. FSA and CCC will furnish 
appropriate notice of such corrections when corrections are deemed 
necessary.
    (b) Nothing contained in this part shall preclude the Secretary, or 
the Administrator of FSA, Executive Vice President of CCC, the Chief of 
NRCS, if applicable, or a designee, from determining at any time any 
question arising under the programs within their respective authority or 
from reversing or modifying any decision made by a subordinate employee 
of FSA or its county and State committees, or CCC.



Sec.  780.4  Applicability.

    (a)(1) Except as provided in other regulations, this part applies to 
decisions made under programs and by agencies, as set forth herein:
    (i) Decisions in programs administered by FSA to make, guarantee or 
service farm loans set forth in chapters VII and XVIII of this title 
relating to farm loan programs;
    (ii) Decisions in those domestic programs administered by FSA on 
behalf of CCC through State and county committees, or itself, which are 
generally set forth in chapters VII and XIV of this title, or in part 
VII relating to conservation or commodities;
    (iii) Appeals from adverse decisions, including technical 
determinations, made by NRCS under title XII of the Food Security Act of 
1985, as amended;
    (iv) Penalties assessed by FSA under the Agricultural Foreign 
Investment Disclosure Act of 1978, 5 U.S.C. 501 et seq.;
    (v) Decisions on equitable relief made by a State Executive Director 
or State Conservationist pursuant to section 1613 of the Farm Security 
and Rural Investment Act of 2002, Pub. L. 107-171; and

[[Page 362]]

    (vi) Other programs to which this part is made applicable by 
specific program regulations or notices in the Federal Register.
    (2) The procedures contained in this part may not be used to seek 
review of statutes or regulations issued under Federal law or review of 
FSA's generally applicable interpretations of such laws and regulations.
    (3) For covered programs, this part is applicable to any decision 
made by an employee of FSA or of its State and county committees, CCC, 
the personnel of FSA, or CCC, and by the officials of NRCS to the extent 
otherwise provided in this part, and as otherwise may be provided in 
individual program requirements or by the Secretary.
    (b) With respect to matters identified in paragraph (a) of this 
section, participants may request appealability review, reconsideration, 
mediation, or appeal under the provisions of this part, of decisions 
made with respect to:
    (1) Denial of participation in a program;
    (2) Compliance with program requirements;
    (3) Issuance of payments or other program benefits to a participant 
in a program; and
    (4) Determinations under Title XII of the Food Security Act of 1985, 
as amended, made by NRCS.
    (c) Only a participant directly affected by a decision may seek 
administrative review under Sec.  780.5(c).



Sec.  780.5  Decisions that are not appealable.

    (a) Decisions that are not appealable under this part shall include 
the following:
    (1) Any general program provision or program policy or any statutory 
or regulatory requirement that is applicable to similarly situated 
participants;
    (2) Mathematical formulas established under a statute or program 
regulation and decisions based solely on the application of those 
formulas;
    (3) Decisions made pursuant to statutory provisions that expressly 
make agency decisions final or their implementing regulations;
    (4) Decisions on equitable relief made by a State Executive Director 
or State Conservationist pursuant to Section 1613 of the Farm Security 
and Rural Investment Act of 2002, Pub. L. 107-171;
    (5) Decisions of other Federal or State agencies;
    (6) Requirements and conditions designated by law to be developed by 
agencies other than FSA.
    (7) Disapprovals or denials because of a lack of funding.
    (8) Decisions made by the Administrator or a Deputy Administrator.
    (b) A participant directly affected by an adverse decision that is 
determined not to be subject to appeal under this part may request an 
appealability review of the determination by the State Executive 
Director of the State from which the underlying decision arose in 
accordance with Sec.  780.15.
    (c) Decisions that FSA renders under this part may be reviewed by 
NAD under part 11 of this title to the extent otherwise allowed by NAD 
under its rules and procedures. An appealability determination of the 
State Executive Director in an administrative review is considered by 
FSA to be a new decision.



Sec.  780.6  Appeal procedures available when a decision is appealable.

    (a) For covered programs administered by FSA for CCC, the following 
procedures are available:
    (1) Appeal to the county committee of decisions of county committee 
subordinates;
    (2) Reconsideration by the county committee;
    (3) Appeal to the State committee;
    (4) Reconsideration by the State committee;
    (5) Appeal to NAD;
    (6) Mediation under guidelines specified in Sec.  780.9.
    (b) For decisions in agricultural credit programs administered by 
FSA, the following procedures are available:
    (1) Reconsideration under Sec.  780.7;
    (2) Mediation under Sec.  780.9;
    (3) Appeal to NAD.
    (c) For programs and regulatory requirements under Title XII of the 
Food Security Act of 1985, as amended, to the extent not covered by 
paragraph (a) of this section, the following procedures are available:
    (1) Appeal to the county committee;
    (2) Appeal to the State committee;

[[Page 363]]

    (3) Mediation under Sec.  780.9;
    (4) Appeal to NAD.



Sec.  780.7  Reconsideration.

    (a) A request for reconsideration must be submitted in writing by a 
participant or by a participant's authorized representative and 
addressed to the FSA decision maker as will be instructed in the adverse 
decision notification.
    (b) A participant's right to request reconsideration is waived if, 
before requesting reconsideration, a participant:
    (1) Has requested and begun mediation of the adverse decision;
    (2) Has appealed the adverse decision to a higher reviewing 
authority in FSA; or
    (3) Has appealed to NAD.
    (c) Provided a participant has not waived the right to request 
reconsideration, FSA will consider a request for reconsideration of an 
adverse decision under these rules except when a request concerns a 
determination of NRCS appealable under the procedures in Sec.  780.11, 
the decision has been mediated, the decision has previously been 
reconsidered, or the decision-maker is the Administrator, Deputy 
Administrator, or other FSA official outside FSA's informal appeals 
process.
    (d) A request for reconsideration will be deemed withdrawn if a 
participant requests mediation or appeals to a higher reviewing 
authority within FSA or requests an appeal by NAD before a request for 
reconsideration has been acted upon.
    (e) The Federal Rules of Evidence do not apply to reconsiderations. 
Proceedings may be confined to presentations of evidence to material 
facts, and evidence or questions that are irrelevant, unduly 
repetitious, or otherwise inappropriate may be excluded.
    (f) The official decision on reconsideration will be the decision 
letter that is issued following disposition of the reconsideration 
request.
    (g) A decision on reconsideration is a new decision that restarts 
applicable time limitations periods under Sec.  780.15 and part 11 of 
this title.

[70 FR 43266, July 27, 2005, as amended at 71 FR 30573, May 30, 2006]



Sec.  780.8  County committee appeals.

    (a) A request for appeal to a county committee concerning a decision 
of a subordinate of the county committee must be submitted by a 
participant or by a participant's authorized representative in writing 
and must be addressed to the office in which the subordinate is 
employed.
    (b) The Federal Rules of Evidence do not apply to appeals to a 
county committee. However, a county committee may confine presentations 
of evidence to material facts and may exclude evidence or questions that 
are irrelevant, unduly repetitious, or otherwise inappropriate.
    (c) The official county committee decision on an appeal will be the 
decision letter that is issued following disposition of the appeal.
    (d) Deliberations shall be in confidence except to the extent that a 
county committee may request the assistance of county committee or FSA 
employees during deliberations.



Sec.  780.9  Mediation.

    (a) Any request for mediation must be submitted after issuance of an 
adverse decision but before any hearing in an appeal of the adverse 
decision to NAD.
    (b) An adverse decision and any particular issues of fact material 
to an adverse decision may be mediated only once:
    (1) If resolution of an adverse decision is not achieved in 
mediation, a participant may exercise any remaining appeal rights under 
this part or appeal to NAD in accordance with part 11 of this title and 
NAD procedures.
    (2) If an adverse decision is modified as a result of mediation, a 
participant may exercise any remaining appeal rights as to the modified 
decision under this part or appeal to NAD, unless such appeal rights 
have been waived pursuant to agreement in the mediation.
    (c) Any agreement reached during, or as a result of, the mediation 
process shall conform to the statutory and regulatory provisions 
governing the program and FSA's generally applicable interpretation of 
those statutes and regulatory provisions.

[[Page 364]]

    (d) FSA will participate in mediation in good faith and to do so 
will take steps that include the following:
    (1) Designating a representative in the mediation;
    (2) Instructing the representative that any agreement reached 
during, or as a result of, the mediation process must conform to the 
statutes, regulations, and FSA's generally applicable interpretations of 
statutes and regulations governing the program;
    (3) Assisting as necessary in making pertinent records available for 
review and discussion during the mediation; and
    (4) Directing the representative to forward any written agreement 
proposed in mediation to the appropriate FSA official for approval.
    (e) Mediations will be treated in a confidential manner consistent 
with the purposes of the mediation.
    (f) For requests for mediation in a Certified State, if the factual 
issues implicated in an adverse decision have not previously been 
mediated, notice to a participant of an adverse decision will include 
notice of the opportunity for mediation, including a mailing address and 
facsimile number, if available, that the participant may use to submit a 
written request for mediation.
    (1) If the participant desires mediation, the participant must 
request mediation in writing by contacting the certified mediation 
program or such other contact as may be designated by FSA in an adverse 
decision letter. The request for mediation must include a copy of the 
adverse decision to be mediated.
    (2) Participants in mediation may be required to pay fees 
established by the mediation program.
    (3) A listing of certified State mediation programs and means for 
contact may be found on the FSA Web site at http://www.usda.gov/fsa/
disputemediation.htm.
    (g) For requests for mediation in a Non-certified State, if the 
factual issues implicated in an adverse decision have not previously 
been mediated, notice to a participant of an adverse decision will, as 
appropriate, include notice of the opportunity for mediation, including 
the mailing address of the State Executive Director and a facsimile 
number, if available, that the participant may use to submit a written 
request for mediation.
    (1) It is the duty of the participant to contact the State Executive 
Director in writing to request mediation. The request for mediation must 
include a copy of the adverse decision to be mediated.
    (2) If resources are available for mediation, the State Executive 
Director will select a qualified mediator and provide written notice to 
the participant that mediation is available and the fees that the 
participant will incur for mediation.
    (3) If the participant accepts such mediation, FSA may give notice 
of the mediation to interested parties and third parties whose interests 
are known to FSA.
    (h) Mediation will be considered to be at an end on that date set 
out in writing by the mediator or mediation program, as applicable, or 
when the participant receives written notice from the State Executive 
Director that the State Executive Director believes the mediation is at 
an impasse, whichever is earlier.
    (i) To provide for mediator impartiality:
    (1) No person shall be designated as mediator in an adverse program 
dispute who has previously served as an advocate or representative for 
any party in the mediation.
    (2) As a condition of retention to mediate in an adverse program 
dispute under this part, the mediator shall agree not to serve 
thereafter as an advocate or representative for a participant or party 
in any other proceeding arising from or related to the mediated dispute, 
including, without limitation, representation of a mediation participant 
before an administrative appeals entity of USDA, or any other Federal 
Government department.

[70 FR 43266, July 27, 2005, as amended at 71 FR 30573, May 30, 2006]



Sec.  780.10  State committee appeals.

    (a) A request for appeal to the State committee from a decision of a 
county

[[Page 365]]

committee must be submitted by a participant or by a participant's 
authorized representative in writing and addressed to the State 
Executive Director.
    (b) A participant's right to appeal a decision to a State committee 
is waived if a participant has appealed the adverse decision to NAD 
before requesting an appeal to the State Committee.
    (c) If a participant requests mediation or requests an appeal to NAD 
before a request for an appeal to the State Committee has been acted 
upon, the appeal to the State Committee will be deemed withdrawn. The 
deemed withdrawal of a participant's appeal to the State Committee will 
not preclude a subsequent request for a State Committee hearing on 
appealable matters not resolved in mediation.
    (d) The Federal Rules of Evidence do not apply in appeals to a State 
committee. Notwithstanding, a State committee may confine presentations 
of evidence to material facts and exclude evidence or questions as 
irrelevant, unduly repetitious, or otherwise inappropriate.
    (e) The official record of a State committee decision on an appeal 
will be the decision letter that is issued following disposition of the 
appeal.
    (f) Deliberations shall be in confidence except to the extent that a 
State committee may request the assistance of FSA employees during 
deliberations.

[70 FR 43266, July 27, 2005, as amended at 71 FR 30573, May 30, 2006]



Sec.  780.11  Appeals of NRCS determinations.

    (a) Notwithstanding any other provision of this part, a 
determination of NRCS issued to a participant pursuant to Title XII of 
the Food Security Act of 1985, as amended, including a wetland 
determination, may be appealed to the county committee in accordance 
with the procedures in this part.
    (b) If the county committee hears the appeal and believes that the 
challenge to the NRCS determination is not frivolous, the county 
committee shall refer the case with its findings on other issues to the 
NRCS State Conservationist to review the determination, or may make such 
a referral in advance of resolving other issues.
    (c) A decision of the county committee not to refer the case with 
its findings to the NRCS State Conservationist may be appealed to the 
State Committee.
    (d) The county or State committee decision must incorporate, and be 
based upon, the results of the NRCS State Conservationist's review and 
subsequent determination.



Sec.  780.12  Appeals of penalties assessed under the Agricultural 
Foreign Investment Disclosure Act of 1978.

    (a) Requests for appeals of penalties assessed under the 
Agricultural Foreign Investment Disclosure Act of 1978 must be addressed 
to: Administrator, Farm Service Agency, Stop 0572, 1400 Independence 
Avenue, SW., Washington, DC 20250-0572.
    (b) Decisions in appeals under this section are not subject to 
reconsideration and are administratively final.



Sec.  780.13  Verbatim transcripts.

    (a) Appellants and their representatives are precluded from making 
any electronic recording of any portion of a hearing or other proceeding 
conducted in accordance with this part. Appellants interested in 
obtaining an official recording of a hearing or other proceeding may 
request a verbatim transcript in accordance with paragraph (b) of this 
section.
    (b) Any party to an appeal or request for reconsideration under this 
part may request that a verbatim transcript be made of the hearing 
proceedings and that such transcript be made the official record of the 
hearing. The party requesting a verbatim transcript shall pay for the 
transcription service, provide a copy of the transcript to FSA free of 
charge, and allow any other party in the proceeding desiring to purchase 
a copy of the transcript to order it from the transcription service.



Sec.  780.14  [Reserved]



Sec.  780.15  Time limitations.

    (a) To the extent practicable, no later than 10 business days after 
an

[[Page 366]]

agency decision maker renders an adverse decision that affects a 
participant, FSA will provide the participant written notice of the 
adverse decision and available appeal rights.
    (b) A participant requesting an appealability review by the State 
Executive Director of an agency decision made at the county, area, 
district or State level that is otherwise determined by FSA not to be 
appealable must submit a written request for an appealability review to 
the State Executive Director that is received no later than 30 calendar 
days from the date a participant receives written notice of the 
decision.
    (c) A participant requesting reconsideration, mediation or appeal 
must submit a written request as instructed in the notice of decision 
that is received no later than 30 calendar days from the date a 
participant receives written notice of the decision. A participant that 
receives a determination made under part 1400 of this title will be 
deemed to have consented to an extension of the time limitation for a 
final determination as provided in part 1400 of this title if the 
participant requests mediation.
    (d) Notwithstanding the time limits in paragraphs (b) and (c) of 
this section, a request for an appealability review, reconsideration, or 
appeal may be accepted if, in the judgment of the reviewing authority 
with whom such request is filed, exceptional circumstances warrant such 
action. A participant does not have the right to seek an exception under 
this paragraph. FSA's refusal to accept an untimely request is not 
appealable.
    (e) Decisions appealable under this part are final unless review 
options available under this part or part 11 are timely exercised.
    (1) Whenever the final date for any requirement of this part falls 
on a Saturday, Sunday, Federal holiday, or other day on which the 
pertinent FSA office is not open for the transaction of business during 
normal working hours, the time for submission of a request will be 
extended to the close of business on the next working day.
    (2) The date when an adverse decision or other notice pursuant to 
these rules is deemed received is the earlier of physical delivery by 
hand, by facsimile with electronic confirmation of receipt, actual 
stamped record of receipt on a transmitted document, or 7 calendar days 
following deposit for delivery by regular mail.

[70 FR 43266, July 27, 2005, as amended at 71 FR 30574, May 30, 2006]



Sec.  780.16  Implementation of final agency decisions.

    To the extent practicable, no later than 30 calendar days after an 
agency decision becomes a final administrative decision of USDA, FSA 
will implement the decision.



Sec.  780.17  Judicial review.

    (a) Decisions of the Administrator in appeals under this part from 
Agriculture Foreign Investment Disclosure Act penalties are 
administratively final decisions of USDA.
    (b) The decision of a State Executive Director or State 
Conservationist on equitable relief made under Sec.  718.307 of this 
title is administratively final and also not subject to judicial review.



PART 781_DISCLOSURE OF FOREIGN INVESTMENT IN AGRICULTURAL LAND
--Table of Contents



Sec.
781.1 General.
781.2 Definitions.
781.3 Reporting requirements.
781.4 Assessment of penalties.
781.5 Penalty review procedure.
781.6 Paperwork Reduction Act assigned number.

    Authority: Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501 et seq.).

    Source: 49 FR 35074, Sept. 6, 1984, unless otherwise noted.



Sec.  781.1  General.

    The purpose of these regulations is to set forth the requirements 
designed to implement the Agricultural Foreign Investment Disclosure Act 
of 1978. The regulations require that a foreign person who acquires, 
disposes of, or holds an interest in United States agricultural land 
shall disclose such transactions and holdings to the Secretary

[[Page 367]]

of Agriculture. In particular, the regulations establish a system for 
the collection of information by the Agricultural Stablization and 
Conservation Service (FSA) pertaining to foreign investment in United 
States agricultural land. The information collected will be utilized in 
the preparation of periodic reports to Congress and the President by the 
Economic Research Service (ERS) concerning the effect of such holdings 
upon family farms and rural communities.



Sec.  781.2  Definitions.

    In determining the meaning of the provisions of this part, unless 
the context indicates otherwise, words importing the singular include 
and apply to several persons or things, words importing the plural 
include the singular, and words used in the present tense include the 
future as well as the present. The following terms shall have the 
following meanings:
    (a) AFIDA. AFIDA means the Agricultural Foreign Investment 
Disclosure Act of 1978.
    (b) Agricultural land. Agricultural land means land in the United 
States used for forestry production and land in the United States 
currently used for, or, if currently idle, land last used within the 
past five years, for farming, ranching, or timber production, except 
land not exceeding ten acres in the aggregate, if the annual gross 
receipts from the sale of the farm, ranch, or timber products produced 
thereon do not exceed $1,000. Farming, ranching, or timber production 
includes, but is not limited to, activities set forth in the Standard 
Industrial Classification Manual (1987), Division A, exclusive of 
industry numbers 0711-0783, 0851, and 0912-0919 which cover animal 
trapping, game management, hunting carried on as a business enterprise, 
trapping carried on as a business enterprise, and wildlife management. 
Land used for forestry production means, land exceeding 10 acres in 
which 10 percent is stocked by trees of any size, including land that 
formerly had such tree cover and that will be naturally or artificially 
regenerated.
    (c) Any interest. Any interest means all interest acquired, 
transferred or held in agricultural lands by a foreign person, except:
    (1) Security interests;
    (2) Leaseholds of less than 10 years;
    (3) Contingent future interests;
    (4) Noncontingent future interests which do not become possessory 
upon the termination of the present possessory estate;
    (5) Surface or subsurface easements and rights of way used for a 
purpose unrelated to agricultural production; and
    (6) An interest solely in mineral rights.
    (d) County. County means a political subdivision of a State 
identified as a County or parish. In Alaska, the term means an area so 
designated by the State Agricultural Stabilization and Conservation 
committee.
    (e) Foreign government. Foreign government means any government 
other than the United States government, the government of a State, or a 
political subdivision of a State.
    (f) Foreign individual. Foreign individual means foreign person as 
defined in paragraph (g)(1) of this section.
    (g) Foreign person. Foreign person means:
    (1) Any individual:
    (i) Who is not a citizen or national of the United States; or
    (ii) Who is not a citizen of the Northern Mariana Islands or the 
Trust Territory of the Pacific Islands; or
    (iii) Who is not lawfully admitted to the United States for 
permanent residence or paroled into the United States under the 
Immigration and Nationality Act;
    (2) Any person, other than an individual or a government, which is 
created or organized under the laws of a foreign government or which has 
its principal place of business located outside of all the States;
    (3) Any foreign government;
    (4) Any person, other than an individual or a government:
    (i) Which is created or organized under the laws of any State; and
    (ii) In which a significant interest or substantial control is 
directly or indirectly held:
    (A) By any individual referred to in paragraph (g)(1) of this 
section; or

[[Page 368]]

    (B) By any person referred to in paragraph (g)(2) of this section; 
or
    (C) By any foreign government referred to in paragraph (g)(3) of 
this section; or
    (D) By any numerical combination of such individuals, persons, or 
governments, which combination need not have a common objective.
    (h) Person. Person means any individual, corporation, company, 
association, partnership, society, joint stock company, trust, estate, 
or any other legal entity.
    (i) Secretary. Secretary means the Secretary of Agriculture.
    (j) Security interest. Security interest means a mortgage or other 
debt securing instrument.
    (k) Significant interest of substantial control. Significant 
interest or substantial control means:
    (1) An interest of 10 percent or more held by a person referred to 
in paragraph (g)(4) of this section, by a single individual referred to 
in paragraph (g)(1) of this section, by a single person referred to in 
paragraph (g)(2) of this section, by a single government referred to in 
paragraph (g)(3) of this section; or
    (2) An interest of 10 percent or more held by persons referred to in 
paragraph (g)(4) of this section, by individuals referred to in 
paragraph (g)(1) of this section, by persons referred to in paragraph 
(g)(2) of this section, or by governments referred to in paragraph 
(g)(3) of this section, whenever such persons, individuals, or 
governments are acting in concert with respect to such interest even 
though no single individual, person, or government holds an interest of 
10 percent or more; or
    (3) An interest of 50 percent or more, in the aggregate, held by 
persons referred to in paragraph (g)(4) of this section, by individuals 
referred to in paragraph (g)(1) of this section, by persons referred to 
in paragraph (g)(2) of this section, or by governments referred to in 
paragraph (g)(3) of this section, even though such individuals, persons, 
or governments may not be acting in concert.
    (l) State. State means any of the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, 
Guam, the Virgin Islands, American Samoa, the Trust Territory of the 
Pacific Islands or any other territory or possession of the United 
States.

[49 FR 35074, Sept. 6, 1984, as amended at 58 FR 48274, Sept. 15, 1993]



Sec.  781.3  Reporting requirements.

    (a) All reports required to be filed pursuant to this part shall be 
filed with the FSA County office in the county where the land with 
respect to which such report must be filed is located or where the FSA 
County office administering programs carried out on such land is 
located; Provided, that the FSA office in Washington, DC, may grant 
permission to foreign persons to file reports directly with its 
Washington office when complex filings are involved, such as where the 
land being reported is located in more than one county.
    (b) Any foreign person who held, holds, acquires, or transfers any 
interest in United States agricultural land is subject to the 
requirement of filing a report on form FSA-153 by the following dates:
    (1) August 1, 1979, if the interest in the agricultural land was 
held on the day before February 2, 1979, or
    (2) Ninety days after the date of acquisition or transfer of the 
interest in the agricultural land, if the interest was acquired or 
transferred on or after February 2, 1979.
    (c) Any person who holds or acquires any interest in United States 
agricultural land at a time when such person is not a foreign person and 
who subsequently becomes a foreign person must submit, not later than 90 
days after the date on which such person becomes a foreign person, a 
report containing the information required to be submitted under 
paragraph (e) of this section.
    (d) Any foreign person who holds or acquires any interest in United 
States land at a time when such land is not agricultural land and such 
land subsequently becomes agricultural land must submit, not later than 
90 days after the date on which such land becomes agricultural, a report 
containing the information required to be submitted under paragraph (e) 
of this section.
    (e) Any foreign person required to submit a report under this 
regulation,

[[Page 369]]

except under paragraph (g) of this section, shall file an FSA-153 report 
containing the following information:
    (1) The legal name and the address of such foreign person;
    (2) In any case in which such foreign person is an individual, the 
citizenship of such foreign person;
    (3) In any case in which such foreign person is not an individual or 
a government, the nature and name of the person holding the interest, 
the country in which such foreign person is created or organized, and 
the principal place of business of such foreign person;
    (4) The type of interest held by a foreign person who acquired or 
transferred an interest in agricultural land;
    (5) The legal description and acreage of such agricultural land;
    (6) The purchase price paid for, or any other consideration given 
for, such interest; the amount of the purchase price or the value of the 
consideration yet to be given; the current estimated value of the land 
reported;
    (7) In any case in which such foreign person transfers such 
interest, the legal name and the address of the person to whom such 
interest is transferred; and
    (i) In any case in which such transferee is an individual, the 
citizenship of such transferee; and
    (ii) In any case in which such transferee is not an individual, or a 
government, the nature of the person holding the interest, the country 
in which such transferee is created or organized, and the principal 
place of business;
    (8) The agricultural purposes for which such foreign person intends, 
on the date on which such report is submitted, to use such agricultural 
land;
    (9) When applicable, the name, address and relationship of the 
representative of the foreign person who is completing the FSA-153 form 
for the foreign person;
    (10) How the tract of land was acquired or transferred, the 
relationship of the foreign person to the previous owner, producer, 
manager, tenant or sharecropper, and the rental agreement; and
    (11) The date the interest in the land was acquired or transferred.
    (f)(1) Any foreign person, other than an individual or government, 
required to submit a report under paragraphs (b), (c), and (d) of this 
section, must submit, in addition to the report required under paragraph 
(e) of this section, a report containing the following information:
    (i) The legal name and the address of each foreign individual or 
government holding significant interest or substantial control in such 
foreign person;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of significant interest or 
substantial control in such foreign person is not an individual or a 
government, the nature and name of the foreign person holding such 
interest, the country in which such holder is created or organized, and 
the principal place of business of such holder.
    (2) In addition, any such foreign person required to submit a report 
under paragraph (f)(1) of this section may also be required, upon 
request, to submit a report containing:
    (i) The legal name and the address of each individual or government 
whose legal name and address did not appear on the report required to be 
submitted under paragraph (f)(1) of this section, if such individual or 
government holds any interest in such foreign person:
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of such interest is not an 
individual or a government, the nature and name of the person holding 
the interest, the country in which such holder is created or organized, 
and the principal place of business of such holder.
    (g) Any foreign person, other than an individual or a government, 
whose legal name is contained on any report submitted in satisfaction of 
paragraph (f) of this section may also be required, upon request, to:
    (1) Submit a report containing:
    (i) The legal name and the address of each foreign individual or 
government holding significant interest or substantial control in such 
foreign person;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and

[[Page 370]]

    (iii) In any case in which the holder of such interest in such 
foreign person is not an individual or a government, the nature and name 
of the foreign person holding such interest, the country in which each 
holder is created or organized, and the principal place of business of 
such holder.
    (2) Submit a report containing:
    (i) The legal name and address of each individual or government 
whose legal name and address did not appear on the report required to be 
submitted under paragraph (g)(1) of this section if such individual or 
government holds any interest in such foreign person and, except in the 
case of a request which involves a foreign person, a report was required 
to be submitted pursuant to paragraph (f)(2) of this section, disclosing 
information relating to nonforeign interest holders;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of such interest is not an 
individual or government and, except in a situation where the 
information is requested from a foreign person, a report was required to 
be submitted pursuant to paragraph (f)(2) of this section disclosing 
information relating to nonforeign interest holders, the nature and name 
of the person holding the interest, the country in which such holder is 
created or organized, and the principal place of business of such 
holder.
    (h)(1) Any person which has issued fewer than 100,000 shares of 
common and preferred stock and instruments convertible into equivalents 
thereof shall be considered to have satisfactorily determined that it 
has no obligation to file a report pursuant to Sec.  781.3 if, in 
addition to information within its knowledge, a quarterly examination of 
its business records fails to reveal that persons with foreign mailing 
addresses hold significant interest or substantial control in such 
person.
    (2) Any person which has issued 100,000 or more shares of common and 
preferred stock and instruments convertible into equivalents thereof 
shall be considerd to have satisfactorily determined that it has no 
obligation to file a report pursuant to Sec.  781.3 if, in addition to 
information within its knowledge, a quarterly examination of its 
business records fails to reveal that the percentage of shares held in 
such person both by persons with foreign mailing addresses and 
investment institutions which manage shares does not equal or exceed 
significant interest or substantial control in such person.
    (3) If the person in paragraph (h)(2) of this section determines 
that the percentage of shares, which is held in it both by persons with 
foreign mailing addresses and investment institutions which manage 
shares, equals or exceeds significant interest or substantial control in 
such persons, then such person shall be considered to have 
satisfactorily attempted to determine whether it has an obligation to 
file a report pursuant to Sec.  781.3 if it sends questionnaires to each 
such investment institution holding an interest in it inquiring as to 
whether the persons for which they are investing are foreign persons and 
the percentage of shares reflected by the affirmative responses from 
each such investment institution plus the percentage of shares held by 
persons listed on the business records with foreign mailing addresses 
does not reveal that foreign persons hold significant interest or 
substantial control in such person.
    (i) Any foreign person, who submitted a report under paragraph (b), 
(c), or (d) of this section at a time when such land was agricultural, 
and such agricultural land later ceases to be agricultural, must submit, 
not later than 90 days after the date on which such land ceases being 
agricultural, a revised report from FSA-153 or a written notification of 
the change of status of the land to the FSA office where the report form 
was originally filed. The report form and notification must contain the 
following information:
    (1) The legal name and the address of such foreign person;
    (2) The legal description, which includes the State and county where 
the land is located, and the acreage of such land;
    (3) The date the land ceases to be agricultural;
    (4) The use of the land while agricultural.
    (j) If any foreign person who submitted a report under paragraph 
(b),

[[Page 371]]

(c), or (d) of this section ceases to be a foreign person, such person 
must submit, not later than 90 days after the date such person ceases 
being a foreign person, a written notification of the change of status 
of the person to the FSA office where the report form FSA-153 was 
originally filed. The notification must contain the following 
information:
    (1) The legal name of such person;
    (2) The legal description and acreage of such land;
    (3) The date such person ceases to be foreign.
    (k) Any foreign person who submitted a report under paragraph (b), 
(c), or (d) of this section must submit, not later than 90 days after 
the change of information contained on the report, a written 
notification of the change to the FSA office where the report form FSA-
153 was originally filed. The following information must be kept current 
on the report:
    (1) The legal address of such foreign person;
    (2) The legal name and the address required to be submitted under 
(f)(1) of this section;
    (3) The legal name and the address required to be submitted under 
(g)(1) of this section.

[49 FR 35074, Sept. 6, 1984, as amended at 51 FR 25993, July 18, 1986]



Sec.  781.4  Assessment of penalties.

    (a) Violation of the reporting obligations will consist of:
    (1) Failure to submit any report in accordance with Sec.  781.3;
    (2) Failure to maintain any submitted report with accurate 
information; or
    (3) Submission of a report which the foreign person knows:
    (i) Does not contain, initially or within thirty days from the date 
of a letter returning for completion such incomplete report, all the 
information required to be in such report; or
    (ii) Contains misleading or false information.
    (b) Any foreign person who violates the reporting obligation as 
described in paragraph (a) of this section shall be subject to the 
following penalties:
    (1) Late-filed reports: One-tenth of one percent of the fair market 
value, as determined by the Farm Service Agency, of the foreign person's 
interest in the agricultural land, with respect to which such violation 
occurred, for each week or portion thereof that such violation 
continues, but the total penalty imposed shall not exceed 25 percent of 
the fair market value of the foreign person's interest in such land.
    (2) Submission of an incomplete report or a report containing 
misleading or false information, failure to submit a report or failure 
to maintain a submitted report with accurate information: 25 percent of 
the fair market value, as determined by the Farm Service Agency, of the 
foreign person's interest in the agricultural land with respect to which 
such violation occurred.
    (3) Penalties prescribed above are subject to downward adjustments 
based on factors including:
    (i) Total time the violation existed.
    (ii) Method of discovery of the violation.
    (iii) Extenuating circumstances concerning the violation.
    (iv) Nature of the information misstated or not reported.
    (c) The fair market value for the land, with respect to which such 
violation occurred, shall be such value on the date the penalty is 
assessed, or if the land is no longer agricultural, on the date it was 
last used as agricultural land. The price or current estimated value 
reported by the foreign person, as verified and/or adjusted by the 
County Agricultural Stabilization and Conservation Committee for the 
County where the land is located, will be considered to be the fair 
market value.



Sec.  781.5  Penalty review procedure.

    (a) Whenever it appears that a foreign person has violated the 
reporting obligation as described in paragraph (a) of Sec.  781.4, a 
written notice of apparent liability will be sent to the foreign 
person's last known address by the Farm Service Agency. This notice will 
set forth the facts which indicate apparent liability, identify the type 
of violation listed in paragraph (a) of Sec.  781.4 which is involved, 
state the amount of the penalty to be imposed, include a statement of 
fair market value of the foreign person's interest in the subject

[[Page 372]]

land, and summarize the courses of action available to the foreign 
person.
    (b) The foreign person involved shall respond to a notice of 
apparent liability within 60 days after the notice is mailed. If a 
foreign person fails to respond to the notice of apparent liability, the 
proposed penalty shall become final. Any of the following actions by the 
foreign person shall constitute a response meeting the requirements of 
this paragraph.
    (1) Payment of the proposed penalty in the amount specified in the 
notice of apparent liability and filing of a report, if required, in 
compliance with Sec.  781.3. The amount shall be paid by check or money 
order drawn to the Treasurer of the United States and shall be mailed to 
the U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013. 
The Department is not responsible for the loss of currency sent through 
the mails.
    (2) Submission of a written statement denying liability for the 
penalty in whole or in part. Allegations made in any such statement must 
be supported by detailed factual data. The statement should be mailed to 
the Administrator, Farm Service Agency, U.S. Department of Agriculture, 
P.O. Box 2415, Washington, DC 20013.
    (3) A request for a hearing on the proposed penalty may be filed in 
accordance with part 780 of this title.
    (c) After a final decision is issued pursuant to an appeal under 
part 780 of this title, the Administrator or Administrator's designee 
shall mail the foreign person a notice of the determination on appeal, 
stating whether a report must be filed or amended in compliance with 
Sec.  781.3, the amount of the penalty (if any), and the date by which 
it must be paid. The foreign person shall file or amend the report as 
required by the Administrator. The penalty in the amount stated shall be 
paid by check or money order drawn to the Treasurer of the United States 
and shall be mailed to the United States Department of Agriculture, P.O. 
Box 2415, Washington, DC 20013. The Department is not responsible for 
the loss of currency sent through the mails.
    (d) If the foreign person contests the notice of apparent liability 
by submitting a written statement or a request for a hearing thereon, 
the foreign person may elect either to pay the penalty or decline to pay 
the penalty pending resolution of the matter by the Administrator. If 
the Administrator determines that the foreign person is not liable for 
the penalty or is liable for less than the amount paid, the payment will 
be wholly or proportionally refunded. If the Administrator ultimately 
determines that the foreign person is liable, the penalty finally 
imposed shall not exceed the amount imposed in the notice of apparent 
liability.
    (e) If a foreign person fails to respond to the notice of apparent 
liability as required by paragraph (b) of this section, or fails to pay 
the penalty imposed by the Administrator under paragraph (d) of this 
section, the case will, without further notice, be referred by the 
Department to the Department of Justice for prosecution in the 
appropriate District Court to recover the amount of the penalty.
    (f) Any amounts approved by the U.S. Department of Agriculture for 
disbursement to a foreign person under the programs administered by the 
Department may be setoff against penalties assessed hereunder against 
such person, in accordance with the provisions of 7 CFR part 13.

[49 FR 35074, Sept. 6, 1984, as amended at 60 FR 67318, Dec. 29, 1995]



Sec.  781.6  Paperwork Reduction Act assigned number.

    The information collection requirements contained in these 
regulations (7 CFR part 781) have been approved by the Office of 
Management and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 
and have been assigned OMB control number 0560-0097.



PART 782_END-USE CERTIFICATE PROGRAM--Table of Contents



                            Subpart A_General

Sec.
782.1 Basis and purpose.
782.2 Definitions.
782.3 Administration.
782.4 OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.

[[Page 373]]

       Subpart B_Implementation of the End-Use Certificate Program

782.10 Identification of commodities subject to end-use certificate 
          regulations.
782.11 Extent to which commodities are subject to end-use certificate 
          regulations.
782.12 Filing FSA-750, End-Use Certificate for Wheat.
782.13 Importer responsibilities.
782.14 Identity preservation.
782.15 Filing FSA-751, Wheat Consumption and Resale Report.
782.16 Designating end use on form FSA-751.
782.17 Wheat purchased for resale.
782.18 Wheat purchased for export.
782.19 Penalty for noncompliance.

                      Subpart C_Records and Reports

782.20 Importer records and reports.
782.21 End-user and exporter records and reports.
782.22 Subsequent buyer records and reports.
782.23 Failure to file end-use certificates or consumption and resale 
          reports.
782.24 Recordkeeping and examination of records.
782.25 Length of time records are to be kept.

    Authority: 19 U.S.C. 3391(f).

    Source: 60 FR 5089, Jan. 26, 1995, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 782 appear at 61 FR 
32643, June 25, 1996.

    Effective Date Note: At 77 FR 51459, Aug. 24, 2012, part 782 was 
suspended, effective Aug. 31, 2012.



                            Subpart A_General



Sec.  782.1  Basis and purpose.

    The regulations contained in this part are issued pursuant to and in 
accordance with Section 321(f) of the North American Free Trade 
Agreement Implementation Act. These regulations govern the establishment 
of the end-use certificate program, the completion of end-use 
certificates, the identification of commodities requiring end-use 
certificates, the submission of reports, and the keeping of records and 
making of reports incident thereto.



Sec.  782.2  Definitions.

    As used in this part and in all instructions, forms, and documents 
in connection therewith, the words and phrases defined in this section 
shall have the meanings herein assigned to them unless the context or 
subject matter requires otherwise. References contained herein to other 
parts of this chapter or title shall be construed as references to such 
parts and amendments now in effect or later issued.
    Date of entry means the effective time of entry of the merchandise, 
as defined in 19 CFR part 101.
    End Use means the actual manner in which Canadian-produced wheat was 
used, including, among other uses, milling, brewing, malting, 
distilling, manufacturing, or export.
    End user means the entity that uses Canadian-produced wheat for, 
among other uses, milling, brewing, malting, distilling, manufacturing, 
or other use, except resale.
    Entity means a legal entity including, but not limited to, an 
individual, joint stock company, corporation, association, partnership, 
cooperative, trust, and estate.
    Entry means that documentation required by 19 CFR part 142 to be 
filed with the appropriate U.S. Customs officer to secure the release of 
imported merchandise from U.S. Customs custody, or the act of filing 
that documentation.
    Grain handler means an entity other than the importer, exporter, 
subsequent buyer, or end user that handles wheat on behalf of an 
importer, exporter, subsequent buyer, or end user.
    Importer means a party qualifying as an Importer of Record pursuant 
to 19 U.S.C. 1484(a).
    Metric ton means a unit of measure that equals 2,204.6 pounds.
    Subsequent buyer means an entity other than the end user or importer 
which owns wheat originating in Canada.
    Workdays means days that the Federal government normally conducts 
business, which excludes Saturdays, Sundays, and Federal holidays.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 
FR 12885, Mar. 16, 1999]



Sec.  782.3  Administration.

    The end-use certificate program will be administered under the 
general supervision and direction of the Administrator, Farm Service 
Agency (FSA), U.S. Department of Agriculture

[[Page 374]]

(USDA), through the Office of the Deputy Administrator for Commodity 
Operations (DACO), FSA, Washington, D.C., and the Kansas City Commodity 
Office (KCCO), FSA, Kansas City, MO, in coordination with the 
Commissioner of Customs pursuant to a Memorandum of Understanding.



Sec.  782.4  OMB control numbers assigned pursuant to the Paperwork
Reduction Act.

    The information collection requirements in this part have been 
approved by the Office of Management and Budget and assigned OMB control 
number 0560-0151.

[61 FR 32643, June 25, 1996]



       Subpart B_Implementation of the End-Use Certificate Program



Sec.  782.10  Identification of commodities subject to end-use certificate
regulations.

    (a) The regulations in this part are applicable to wheat and barley, 
respectively, imported into the U.S. from any foreign country, as 
defined in 19 CFR 134.1, or instrumentality of such foreign country 
that, as of April 8, 1994, required end-use certificates for imports of 
U.S.-produced wheat or barley.
    (b) Because Canada is the only country with such requirements on 
wheat, and no country has an end-use certificate requirement for barley, 
only wheat originating in Canada is affected by the regulations in this 
part.



Sec.  782.11  Extent to which commodities are subject to end-use 
certificate regulations.

    (a) In the event that Canada eliminates the requirement for end-use 
certificates on imports from the U.S., the provisions of the regulations 
in this part shall be suspended 30 calendar days following the date 
Canada eliminates its end-use certificate requirement, as determined by 
the Secretary.
    (b) The provisions of the regulations in this part may be suspended 
if the Secretary, after consulting with domestic producers, determines 
that the program has directly resulted in the:
    (1) Reduction of income to U.S. producers of agricultural 
commodities, or
    (2) Reduction of the competitiveness of U.S. agricultural 
commodities in world export markets.



Sec.  782.12  Filing FSA-750, End-Use Certificate for Wheat.

    (a) Each entity that imports wheat originating in Canada shall, for 
each entry into the U.S., obtain form FSA-750, End-Use Certificate for 
Wheat, from Kansas City Commodity Office, Warehouse Contract Division, 
P.O. Box 419205, Kansas City, MO 64141-6205, and submit the completed 
original form FSA-750 to KCCO within 10 workdays following the date of 
entry or release. Each form FSA-750 shall set forth, among other things, 
the:
    (1) Name, address, and telephone number of the importer,
    (2) Customs entry number,
    (3) Date of entry,
    (4) Importer number,
    (5) Class of wheat being imported,
    (6) Grade, protein content, moisture content, and dockage level of 
wheat being imported,
    (7) If imported as a result of a contract for sale, the date of such 
contract.
    (8) Quantity imported, in net metric tons, rounded to the nearest 
hundredth of a metric ton, per conveyance,
    (9) Storage location of the wheat,
    (10) Mode of transportation and the name of the transportation 
company used to import the wheat, and
    (11) A certification that the identity of the Canadian-produced 
wheat will be preserved until such time as the wheat is either delivered 
to a subsequent buyer or end-user, or loaded onto a conveyance for 
direct delivery to an end user.
    (b) Importers may provide computer generated form FSA-750, provided 
such computer generated forms:
    (1) Are approved in advance by KCCO,
    (2) Contain a KCCO-assigned serial number, and
    (3) Contain all of the information required in paragraphs (a)(1) 
through (a)(9).
    (c) KCCO will accept form FSA-750 submitted through the following 
methods:
    (1) Mail service, including express mail,
    (2) Facsimile machine, and

[[Page 375]]

    (3) Other electronic transmissions, provided such transmissions are 
approved in advance by KCCO. The importer remains responsible for 
ensuring that electronically transmitted forms are received in 
accordance with paragraph (a).
    (d) The original form FSA-750 and one copy of form FSA-750 shall be 
signed and dated by the importer.
    (e) Distribution of form FSA-750 will be as follows:
    (1) If form FSA-750 is submitted to KCCO in accordance with 
paragraph (c)(1);
    (i) The original shall be forwarded to Kansas City Commodity Office, 
Warehouse License and Contract Division, P.O. Box 419205, Kansas City, 
MO 64141-6205, by the importer,
    (ii) One copy shall be retained by the importer.
    (2) If form FSA-750 is submitted to KCCO in accordance with 
paragraphs (c)(2) or (c)(3), the original form FSA-750 that is signed 
and dated by the importer in accordance with paragraph (d) shall be 
maintained by the importer,
    (3) The importer shall provide a photocopy to the end user or, if 
the wheat is purchased for purposes of resale, the subsequent buyer(s).
    (f) The completion and filing of an end-use certificate does not 
relieve the importer of other legal requirements, such as those imposed 
by other U.S. agencies, pertaining to the importation.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 
FR 12885, Mar. 16, 1999]



Sec.  782.13  Importer responsibilities.

    The importer shall:
    (a) File form FSA-750 in accordance with Sec.  782.12.
    (b) Immediately notify each subsequent buyer, grain handler, or end 
user that the wheat being purchased or handled originated in Canada and 
may only be commingled with U.S.-produced wheat by the end user or when 
loaded onto a conveyance for direct delivery to the end user or a 
foreign country.
    (c) Provide each subsequent buyer or end user with a copy of form 
FSA-750 that was filed when the Canadian wheat entered the U.S.
    (d) Submit to KCCO, within 15 workdays following the date of sale, 
form FSA-751, Wheat Consumption and Resale Report, in accordance with 
Sec.  782.15.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]



Sec.  782.14  Identity preservation.

    (a) The importer and all subsequent buyers of the imported wheat 
shall preserve the identity of the Canadian-produced wheat.
    (b) Canadian-produced wheat may only be commingled with U.S.-
produced wheat by the end user, or when loaded onto a conveyance for 
direct delivery to the end user or foreign country.
    (c) Failure to meet the requirements in paragraphs (a) and (b) of 
this section shall constitute noncompliance by the importer or 
subsequent buyer for the purposes of this part.



Sec.  782.15  Filing FSA-751, Wheat Consumption and Resale Report.

    (a) For purposes of providing information relating to the 
consumption and resale of Canadian-produced wheat, form FSA-751, Wheat 
Consumption and Resale Report, shall be filed with KCCO by each:
    (1) Importer and subsequent buyer, for each sale to a subsequent 
buyer or end user, within 15 workdays following the date of sale.
    (2) End user and exporter, for full and partial consumption or 
export, within 15 workdays following:
    (i) March 31,
    (ii) June 30,
    (iii) September 30, and
    (iv) December 31.
    (b) Each form FSA-751 shall set forth, among other things, the:
    (1) Name, address, and telephone number of the filer,
    (2) Storage location of the wheat,
    (3) Name and address of the importer,
    (4) Form FSA-750, End-Use Certificate for Wheat, serial number,
    (5) Class of wheat,
    (6) Date the wheat was received at the filer's facility,
    (7) Quantity of wheat received, in net metric tons, rounded to the 
nearest hundredth of a metric ton,

[[Page 376]]

    (8) Certification to be completed by end users and exporters that 
requires the end user or exporter to provide, among other things:
    (i) A certification of compliance with these regulations,
    (ii) The quantity consumed or exported,
    (iii) The quantity remaining,
    (iv) The manner in which the commodity was used.
    (v) The signature of an authorized representative of the end user or 
exporter.
    (9) Certification to be completed by subsequent buyers and importers 
that requires the subsequent buyer or importer to provide, among other 
things:
    (i) A certification of compliance with the regulations in this part,
    (ii) The quantity resold,
    (iii) The name, address, and telephone number of the buyer, and
    (iv) The signature of an authorized representative of the subsequent 
buyer or importer.
    (c) End user and exporter shall submit form FSA-751 to KCCO 
quarterly until the wheat has been fully utilized or exported in 
accordance with the regulations in this part.
    (d) Importers and subsequent buyers shall, for each individual sale, 
submit form FSA-751 to KCCO until the imported wheat has been fully 
resold.
    (e) Filers may provide computer generated form FSA-751, provided 
such computer generated forms:
    (1) Are approved in advance by KCCO, and
    (2) Contain the information required in paragraphs (b)(1) through 
(b)(9) of this section.
    (f) KCCO will accept form FSA-751 submitted through the following 
methods:
    (1) Mail service, including express mail,
    (2) Facsimile machine, and
    (3) Other electronic transmissions, provided such transmissions are 
approved in advance by KCCO. The importer, end user, exporter, or 
subsequent buyer remains responsible for ensuring that electronically 
transmitted forms are received in accordance with this section.
    (g) Distribution of form FSA-751 will be as follows:
    (1) If form FSA-751 is submitted to KCCO in accordance with 
paragraph (f)(1) of this section:
    (i) The original shall be forwarded to Kansas City Commodity Office, 
Warehouse License and Contract Division, P.O. Box 419205, Kansas City, 
MO 64141-6205, by the importer, end user, exporter, or subsequent buyer.
    (ii) One copy shall be retained by the importer, end user, exporter, 
or subsequent buyer.
    (2) If form FSA-751 is submitted to KCCO in accordance with 
paragraphs (f)(2) or (f)(3) of this section, the original form FSA-751 
shall be maintained by the importer, end user, exporter, or subsequent 
buyer.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]



Sec.  782.16  Designating end use on form FSA-751.

    (a) If the end use specified on the applicable form FSA-751, Wheat 
Consumption and Resale Report, is ``export,'' the exporter must specify 
the final destination, by country, on form FSA-751.
    (b) If the end user utilizes the wheat for purposes other than 
milling, brewing, malting, distilling, export, or manufacturing, such 
use must be specifically designated on form FSA-751.



Sec.  782.17  Wheat purchased for resale.

    (a) This section applies to an importer or subsequent buyer who 
imports or purchases Canadian-produced wheat for the purpose of 
reselling the wheat.
    (b) The importer or subsequent buyer shall immediately notify each 
subsequent buyer, grain handler, exporter, or end user that the wheat 
being purchased or handled originated in Canada and may only be 
commingled with U.S.-produced wheat by the end user or when loaded onto 
a conveyance for direct delivery to the end user or a foreign country.
    (c) The importer or subsequent buyer shall provide all purchasers of 
Canadian-produced wheat with a photocopy of the form FSA-750 submitted 
to

[[Page 377]]

KCCO by the importer in accordance with Sec.  782.12(a).

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]



Sec.  782.18  Wheat purchased for export.

    (a) This section applies to an importer or subsequent buyer who 
imports or purchases Canadian-produced wheat for the purpose of export 
to a foreign country or instrumentality.
    (b) Wheat that is purchased for the purpose of export must be stored 
identity preserved while the importer or subsequent buyer maintains 
control of the wheat, except that such wheat may be commingled when 
loaded onto a conveyance for delivery to the foreign country or 
instrumentality.
    (c) Importers or subsequent buyers that purchase wheat for export to 
a foreign country or instrumentality must complete form FSA-751 
quarterly, in accordance with Sec.  782.15.



Sec.  782.19  Penalty for noncompliance.

    It shall be a violation of 18 U.S.C. 1001 for any entity to engage 
in fraud with respect to, or to knowingly violate, the provisions set 
forth in this part.



                      Subpart C_Records and Reports



Sec.  782.20  Importer records and reports.

    (a) The importer shall retain a copy of each form:
    (1) FSA-750, End-Use Certificate for Wheat, that is submitted to 
KCCO in accordance with Sec.  782.12(a); and
    (2) FSA-751, Wheat Consumption and Resale Report, that is submitted 
to KCCO in accordance with Sec.  782.15(a)(1).
    (b) The importer shall maintain records to verify that the wheat was 
identity preserved until such time as the wheat was:
    (1) Loaded onto the conveyance for direct delivery to an end user, 
or
    (2) Delivered to an end user, or
    (3) Delivered to a subsequent buyer.
    (c) Copies of the documents, information, and records required in 
paragraphs (a) and (b) of this section shall be kept on file at the 
importer's headquarters office or other location designated by the 
importer for the period specified in Sec.  782.25.



Sec.  782.21  End-user and exporter records and reports.

    (a) The end user or exporter shall retain a copy of each form FSA-
751, Wheat Consumption and Resale Report, that is filed with KCCO in 
accordance with Sec.  782.15(a)(2).
    (b) The end user or exporter shall retain a copy of each form FSA-
750, End-Use Certificate for Wheat, provided to the end-user or exporter 
in accordance with Sec.  782.17(b).
    (c) The exporter shall maintain records to verify that wheat 
purchased for the purpose of export was stored identity preserved until 
such time as the wheat was loaded onto a conveyance for delivery to the 
foreign country or instrumentality.
    (d) Copies of the documents required in paragraphs (a), (b), and (c) 
of this section shall be kept on file at the end-user's or exporter's 
headquarters office or other location designated by the end user or 
exporter for the period specified in Sec.  782.25.



Sec.  782.22  Subsequent buyer records and reports.

    (a) The subsequent buyer shall retain a copy of each form FSA-751, 
Wheat Consumption and Resale Report, that is filed with KCCO in 
accordance with Sec.  782.15(a)(1).
    (b) The subsequent buyer shall retain a copy of each form FSA-750, 
End-Use Certificate for Wheat, provided to the subsequent buyer in 
accordance with Sec.  782.17(b).
    (c) The subsequent buyer shall maintain records to verify that the 
wheat specified on the end-use certificate was identity preserved during 
the time that the subsequent buyer maintained control of the wheat, or 
until the wheat was loaded onto a conveyance for direct delivery to an 
end user.
    (d) Copies of the documents and records required in paragraphs (a) 
through (c) of this section shall be kept on file at the subsequent 
buyer's headquarters office or other location designated by the 
subsequent buyer for the period specified in Sec.  782.25.

[[Page 378]]



Sec.  782.23  Failure to file end-use certificates or consumption and
resale reports.

    Failure by importers, end users, exporters, and subsequent buyers to 
file form FSA-750, End-Use Certificate for Wheat, and form FSA-751, 
Wheat Consumption and Resale Report, as applicable, and retain or 
maintain related copies and records shall constitute noncompliance for 
the purposes of Sec.  782.19.



Sec.  782.24  Recordkeeping and examination of records.

    (a) Examination. For the purpose of verifying compliance with the 
requirements of this part, each importer, end-user, exporter, and 
subsequent buyer shall make available at one place at all reasonable 
times for examination by representatives of USDA, all books, papers, 
records, contracts, scale tickets, settlement sheets, invoices, written 
price quotations, or other documents related to the importation of the 
Canadian-produced wheat that is within the control of such entity.
    (b) Orderly retention of records. To facilitate examination and 
verification of the records and reports required by this part, copies of 
form FSA-750, End-Use Certificate for Wheat, and form FSA-751, Wheat 
Consumption and Resale Report, shall be filed in an orderly manner, and 
must be made available for inspection by representatives of USDA.



Sec.  782.25  Length of time records are to be kept.

    The records required to be kept under this part shall be retained 
for 3 years following the filing date of the applicable record. Records 
shall be kept for such longer period of time as may be requested in 
writing by USDA representatives.



PART 784_2004 EWE LAMB REPLACEMENT AND RETENTION PAYMENT PROGRAM
--Table of Contents



Sec.
784.1 Applicability.
784.2 Administration.
784.3 Definitions.
784.4 Time and method of application.
784.5 Payment eligibility.
784.6 Rate of payment and limitations on funding.
784.7 Availability of funds.
784.8 Appeals.
784.9 Misrepresentation and scheme or device.
784.10 Estates, trusts, and minors.
784.11 Death, incompetence, or disappearance.
784.12 Maintaining records.
784.13 Refunds; joint and several liability.
784.14 Offsets and withholdings.
784.15 Assignments.
784.16 Termination of program.

    Authority: Clause (3) of section 32 of the Act of August 24, 1935, 
as amended; 7 U.S.C. 612c.

    Source: 69 FR 76837, Dec. 23, 2004, unless otherwise noted.



Sec.  784.1  Applicability.

    (a) Subject to the availability of funds, this part establishes 
terms and conditions under which the 2004 Ewe Lamb Replacement and 
Retention Payment Program will be administered.
    (b) Unless otherwise determined by the Farm Service Agency (FSA) in 
accordance with the provisions of this part, the amount that may be 
expended under this part for program payments shall not exceed $18 
million. Claims that exceed that amount will be prorated in accordance 
with Sec.  784.7.
    (c) To be eligible for payments, producers must comply with all 
provisions of this part and with any other conditions imposed by FSA.



Sec.  784.2  Administration.

    (a) This part shall be administered by FSA under the general 
direction and supervision of the Deputy Administrator for Farm Programs, 
FSA. The program shall be carried out in the field by FSA State and 
county committees (State and county committees) in accordance with their 
assigned duties and the regulations of this part.
    (b) The Deputy Administrator for Farm Programs, FSA, or a designee, 
may reverse or modify a determination made by a State or county 
committee.
    (c) The Deputy Administrator for Farm Programs, FSA, may 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.

[[Page 379]]

    (d) The program described under this part is a one-time program to 
be administered with respect to eligibility and qualifying factors 
occurring during or related to the base period of August 1, 2003 through 
July 31, 2004, as specified in this part.



Sec.  784.3  Definitions.

    The definitions in this section shall apply to the 2004 Ewe Lamb 
Replacement and Retention Payment Program and this part.
    Agricultural Marketing Service or AMS means the Agricultural 
Marketing Service of the Department.
    Application means the Ewe Lamb Replacement and Retention Payment 
Program Application.
    Application period means the date established by the Deputy 
Administrator for producers to apply for program benefits. Unless 
otherwise announced, that period will end January 13, 2005.
    Base period means the period from August 1, 2003, through July 31, 
2004, during and after which ewe lambs must meet all qualifying 
eligibility criteria.
    Ewe lamb means a female lamb no more than 18 months of age that has 
not produced an offspring.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Foot rot means an infectious, contagious disease of sheep that 
causes severe lameness and economic loss from decreased flock 
production.
    Lambing cycle means the period of time from birth to weaning.
    Parrot mouth means a genetic defect resulting in the failure of the 
incisor teeth to meet the dental pad correctly.
    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.
    Sheep and lamb operation means any self-contained, separate 
enterprise operated as an independent unit exclusively within the United 
States in which a person or group of persons raise sheep and/or lambs.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.



Sec.  784.4  Time and method of application.

    (a) A request for benefits under this part must be submitted on the 
Ewe Lamb Replacement and Retention Program Application. The application 
form may be obtained in person, by mail, by telephone, or by facsimile 
from any county FSA office. In addition, applicants may download a copy 
of the form at http://www.usda.gov/dafp/psd/.
    (b) The form may be obtained from and must be submitted to the FSA 
county office serving the county where the sheep and lamb operation is 
located. The completed form must be received by the FSA county office by 
the date established by FSA. Applications not received by that date will 
be disapproved and returned as not having been timely filed and the 
sheep and lamb operation filing the application will not be eligible for 
benefits under this program.
    (c) The sheep and lamb operation requesting benefits under this part 
must certify to the accuracy of the information provided in their 
application for benefits. All information provided is subject to 
verification and spot checks by FSA. Refusal to allow FSA or any other 
agency of the Department of Agriculture to verify any information 
provided will result in a determination of ineligibility. Data furnished 
by the applicant will be used to determine eligibility for program 
benefits. Providing a false certification will lead to ineligibility for 
payments and may be subject to additional civil and criminal sanctions.
    (d) The sheep and lamb operation requesting benefits under this part 
must maintain accurate records that document that they meet all 
eligibility requirements specified herein, as may be requested by FSA. 
Acceptable forms of supporting documentation include, but are not 
limited to: Sales receipts, farm management records, veterinarian 
certifications, scrapie program forms and identification numbers, as 
well as, other types of documents that prove the eligibility of the 
qualifying ewe

[[Page 380]]

lambs and the sheep and lamb operation. The supporting documentation 
provided must, at a minimum, include: date of lamb purchase or date of 
birth, date of lamb death (if applicable), lamb identification and 
control information, number of ewe lambs purchased or retained, and 
scrapie program identification numbers.



Sec.  784.5  Payment eligibility.

    (a) Payments can be made, as agreed to by FSA and subject to the 
availability of funds, for eligible ewe lambs considered by FSA, as 
determined by FSA only, to have been acquired or held during the base 
period by eligible sheep and lamb operations for breeding purposes. 
Payments may be made for eligible ewe lambs held continuously by the 
operation, through the end of the compliance period, from the time of 
the first possession of the ewe lamb in the base period. The payment 
rate cannot exceed the rate provided for in Sec.  784.6 and may be 
prorated pursuant to Sec.  784.7. For purposes of this section, the 
``base period'' is the period from August 1, 2003, through July 31, 
2004. A purchase in the base period without possession in the base 
period will not be considered an acquisition in the base period for 
purposes of this section unless otherwise allowed by FSA.
    (b) For the ewe lamb to be eligible, a sheep and lamb operation must 
certify that the ewe lamb:
    (1) During at least part of the base period was a ewe lamb which was 
both, at the same time, not older than 18 months of age and had not 
produced an offspring; and
    (2) At the time of certification, does not possess any of the 
following characteristics:
    (i) Parrot mouth; or
    (ii) Foot rot.
    (c) The sheep and lamb operation must certify and agree to:
    (1) Maintain the qualifying ewe lambs in the herd for at least one 
complete, normal offspring lambing cycle, the end of which shall 
constitute the end of the compliance period for the purposes of 
paragraph (a) of this section, and actually maintain the lambs for that 
period in accord with that certification. The ``offspring'' lambing 
cycle refers to the time in which the qualifying ewe lamb's own 
offspring would be weaned, in a normal course, from that qualifying ewe 
if the ewe were to have offspring, irrespective of whether the ewe 
actually produces offspring.
    (2) Upon request by an AMS agent or FSA representative, allow the 
AMS agent or FSA Representative to verify that the ewe lambs meet 
qualifying characteristics. Spot checks will be conducted by FSA within 
30 days of the end of the sign-up period. Any animal showing evidence of 
parrot mouth, foot rot, or scrapie in such spot checks will be 
considered to have had those conditions at the time of certification. 
Other spot checks may be conducted as needed.
    (3) Maintain documentation of any death loss of qualifying ewe 
lambs.
    (4) Agree to refund any payments made with respect to any ewe lamb 
or offspring that has died before completing the full program 
requirements where said deaths for the operation exceed 10 percent.
    (5) Be in compliance with all requirements relating to scrapie, as 
described in 9 CFR parts 54 and 79.
    (d) To be eligible for any payments addressed under this section, a 
sheep and lamb operation must be engaged in the business of producing 
and marketing agricultural products at the time of filing the 
application.
    (e) In addition, to be eligible for payment, a sheep and lamb 
operation must submit a timely application during the application period 
for benefits and comply with all other terms and conditions of this part 
or that are contained in the application for such benefits, and such 
other conditions as may be imposed by FSA.
    (f) Proof that each lamb was held during and through the end of the 
base period as required by paragraph (a) of this section, as must be 
determined individually for each lamb, shall be provided in such manner, 
and with such access to the operation and the documents and information 
related to the operation, as FSA may request.



Sec.  784.6  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds and to the proration 
provisions

[[Page 381]]

of Sec.  784.7, payments for qualifying operations shall be $18 for each 
qualifying ewe lamb retained or purchased for breeding purposes.



Sec.  784.7  Availability of funds.

    Total payments under this part, unless otherwise determined by the 
FSA, cannot exceed $18 million. In the event that approval of all 
eligible applications would result in expenditures in excess of the 
amount available, FSA shall prorate the available funds by a national 
factor to reduce the expected payments to be made to the amount 
available. The payment shall be made based on the national factored rate 
as determined by FSA. FSA shall prorate the payments in such manner as 
it, in its sole discretion, finds appropriate and reasonable.



Sec.  784.8  Appeals.

    The appeal regulations set forth at parts 11 and 780 of this title 
apply to determinations made pursuant to this part.



Sec.  784.9  Misrepresentation and scheme or device.

    (a) A sheep and lamb operation shall be ineligible to receive 
assistance under this program if it is determined by the State committee 
or the county committee to have:
    (1) Adopted any scheme or device 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 sheep and lamb operation or person engaged in acts prohibited by 
this section and any sheep and lamb operation or person receiving 
payment under this part shall be jointly and severally liable with other 
persons or operations involved in such claim for benefits for any refund 
due under this section and for related charges. The remedies provided in 
this part shall be in addition to other civil, criminal, or 
administrative remedies that may apply.



Sec.  784.10  Estates, trusts, and minors.

    (a) Program documents executed by persons legally authorized to 
represent estates or trusts will be accepted only if such person 
furnishes evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible for assistance under this part 
must, also:
    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show a guardian has been appointed to manage the minor's 
property and the applicable program documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec.  784.11  Death, incompetence, or disappearance.

    In the case of death, incompetence, disappearance or dissolution of 
a person that is eligible to receive benefits in accordance with this 
part, such person or persons specified in 7 CFR part 707 may receive 
such benefits, as determined appropriate by FSA.



Sec.  784.12  Maintaining records.

    Persons making application for benefits under this program must 
maintain accurate records and accounts that will document that they meet 
all eligibility requirements specified herein. Such records and accounts 
must be retained for 3 years after the date of payment to the sheep and 
lamb operations under this program. Destruction of the records after 
such date shall be at the risk of the party undertaking the destruction.



Sec.  784.13  Refunds; joint and several liability.

    (a) In the event there is an inaccurate certification or a failure 
to comply with any term, requirement, or condition for payment arising 
under the application, or this part, and if any refund of a payment to 
FSA shall otherwise become due in connection with the application, or 
this part, all related payments made under this part to any

[[Page 382]]

sheep and lamb operation shall be refunded to FSA together with interest 
as determined in accordance with paragraph (c) of this section and late 
payment charges as provided in part 1403 of this title.
    (b) All persons signing a sheep and lamb operation's application for 
payment as having an interest in the operation shall be jointly and 
severally liable for any refund, including related charges, that is 
determined to be due for any reason under the terms and conditions of 
the application or this part with respect to such operation.
    (c) Interest shall be charged on refunds required of any person 
under this part if FSA determines that payments or other assistance was 
provided to a person who was not eligible for such assistance. Such 
interest shall be charged at the rate of interest that the United States 
Treasury charges the Commodity Credit Corporation for funds, from the 
date FSA made such benefits available to the date of repayment or the 
date interest increases as determined in accordance with applicable 
regulations. FSA may waive the accrual of interest if FSA determines 
that the cause of the erroneous determination was not due to any action 
of the person.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived at the discretion of FSA alone for refunds 
resulting from those violations determined by FSA to have been beyond 
the control of the person committing the violation.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in 7 CFR part 792.
    (f) Any excess payments made by FSA with respect to any application 
under this part must be refunded.
    (g) In the event that a benefit under this subpart was provided as 
the result of erroneous information provided by any person, the benefit 
must be repaid with any applicable interest.



Sec.  784.14  Offsets and withholdings.

    FSA may offset or withhold any amounts due FSA under this subpart in 
accordance with the provisions of 7 CFR part 792, or successor 
regulations, as designated by the Department.



Sec.  784.15  Assignments.

    Any person who may be entitled to a payment may assign his rights to 
such payment in accordance with 7 CFR part 1404, or successor 
regulations, as designated by the Department.



Sec.  784.16  Termination of program.

    This program will be terminated after payment has been made to those 
applications certified as eligible pursuant to the application period 
established in Sec.  784.4.



PART 785_CERTIFIED STATE MEDIATION PROGRAM--Table of Contents



Sec.
785.1 General.
785.2 Definitions.
785.3 Annual certification of State mediation programs.
785.4 Grants to certified State mediation programs.
785.5 Fees for mediation services.
785.6 Deadlines and address.
785.7 Distribution of Federal grant funds.
785.8 Reports by qualifying States receiving mediation grant funds.
785.9 Access to program records.
785.10 Penalties for non-compliance.
785.11 Reconsideration by the Administrator.
785.12 Nondiscrimination.
785.13 OMB control number.

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; and 7 U.S.C. 5101-5104.

    Source: 67 FR 57315, Sept. 10, 2002, unless otherwise noted.



Sec.  785.1  General.

    (a) States meeting conditions specified in this part may have their 
mediation programs certified by the Farm Service Agency (FSA) and 
receive Federal grant funds for the operation and administration of 
agricultural mediation programs.
    (b) USDA agencies participate in mediations pursuant to agency rules 
governing their informal appeals processes. Where mediation of an agency 
decision by a certified State mediation program is available to 
participants in an agency program as part of the agency's informal 
appeal process, the agency will offer a participant receiving notice of 
an agency decision the opportunity to mediate the decision under

[[Page 383]]

the State's certified mediation program, in accordance with the agency's 
informal appeals regulations.
    (c) USDA agencies making mediation available as part of the agency 
informal appeals process may execute memoranda of understanding with a 
certified mediation program concerning procedures and policies for 
mediations during agency informal appeals that are not inconsistent with 
this part or other applicable regulations. Each such memorandum of 
understanding will be deemed part of the grant agreement governing the 
operation and administration of a State certified mediation program 
receiving Federal grant funds under this part.
    (d) A mediator in a program certified under this part has no 
authority to make decisions that are binding on parties to a dispute.
    (e) No person may be compelled to participate in mediation provided 
through a mediation program certified under this part. This provision 
shall not affect a State law requiring mediation before foreclosure on 
agricultural land or property.



Sec.  785.2  Definitions.

    Administrator means the Administrator, FSA, or authorized designee.
    Certified State mediation program means a program providing 
mediation services that has been certified in accordance with Sec.  
785.3.
    Confidential mediation means a mediation process in which the 
mediator will not disclose to any person oral or written communications 
provided to the mediator in confidence, except as allowed by 5 U.S.C. 
574 or Sec.  785.9.
    Covered persons means producers, their creditors (as applicable), 
and other persons directly affected by actions of the USDA involving one 
or more of the following issues:
    (1) Wetlands determinations;
    (2) Compliance with farm programs, including conservation programs;
    (3) Agricultural loans (regardless of whether the loans are made or 
guaranteed by the USDA or are made by a third party);
    (4) Rural water loan programs;
    (5) Grazing on National Forest System lands;
    (6) Pesticides; or
    (7) Such other issues as the Secretary may consider appropriate.
    Fiscal year means the period of time beginning October 1 of one year 
and ending September 30 of the next year and designated by the year in 
which it ends.
    FSA means the Farm Service Agency of the U.S. Department of 
Agriculture, or a successor agency.
    Mediation services means all activities relating to the intake and 
scheduling of mediations; the provision of background and selected 
information regarding the mediation process; financial advisory and 
counseling services (as reasonable and necessary to prepare parties for 
mediation) performed by a person other than a State mediation program 
mediator; and mediation sessions in which a mediator assists disputing 
parties in voluntarily reaching mutually agreeable settlement of issues 
within the laws, regulations, and the agency's generally applicable 
program policies and procedures, but has no authoritative decision 
making power.
    Mediator means a neutral individual who functions specifically to 
aid the parties in a dispute during a mediation process.
    Qualified mediator means a mediator who meets the training 
requirements established by State law in the State in which mediation 
services will be provided or, where a State has no law prescribing 
mediator qualifications, an individual who has attended a minimum of 40 
hours of core mediator knowledge and skills training and, to remain in a 
qualified mediator status, completes a minimum of 20 hours of additional 
training or education during each 2-year period. Such training or 
education must be approved by the USDA, by an accredited college or 
university, or by one of the following organizations: State Bar of a 
qualifying State, a State mediation association, a State approved 
mediation program, or a society of professionals in dispute resolution.
    Qualifying State means a State with a State mediation program 
currently certified by FSA.

[[Page 384]]



Sec.  785.3  Annual certification of State mediation programs.

    To obtain FSA certification of the State's mediation program, the 
State must meet the requirements of this section.
    (a) New request for certification. A new request for certification 
of a State mediation program must include descriptive and supporting 
information regarding the mediation program and a certification that the 
mediation program meets certain requirements as prescribed in this 
subsection. If a State is also qualifying its mediation program to 
request a grant of Federal funds under the certified State mediation 
program, the State must submit with its request for certification 
additional information in accordance with Sec.  785.4.
    (1) Description of mediation program. The State must submit a 
narrative describing the following with supporting documentation:
    (i) A summary of the program;
    (ii) An identification of issues available for mediation under the 
program;
    (iii) Management of the program;
    (iv) Mediation services offered by the program;
    (v) Program staffing and staffing levels;
    (vi) Uses of contract mediation services in the program describing 
both services provided by contractors and costs of such services;
    (vii) State statutes and regulations in effect that are applicable 
to the State's mediation program; and
    (viii) A description of the State program's education and training 
requirements for mediators including:
    (A) Training in mediation skills and in USDA programs;
    (B) Identification and compliance with any State law requirements; 
and
    (C) Other steps by the State's program to recruit and deploy 
qualified mediators.
    (ix) Any other information requested by FSA;
    (2) Certification. The Governor, or head of a State agency 
designated by the Governor, must certify in writing to the Administrator 
that the State's mediation program meets the following program 
requirements:
    (i) That the State's mediation program provides mediation services 
to covered persons with the aim of reaching mutually agreeable decisions 
between the parties under the program;
    (ii) That the State's mediation program is authorized or 
administered by an agency of the State government or by the Governor of 
the State;
    (iii) That the State's mediation program provides for training of 
mediators in mediation skills and in all issues covered by the State's 
mediation program;
    (iv) That the State's mediation program shall provide confidential 
mediation as defined in Sec.  785.2;
    (v) That the State's mediation program ensures, in the case of 
agricultural loans, that all lenders and borrowers of agricultural loans 
receive adequate notification of the mediation program;
    (vi) That the State's mediation program ensures, in the case of 
other issues covered by the mediation program, that persons directly 
affected by actions of the USDA receive adequate notification of the 
mediation program; and
    (vii) That the State's mediation program prohibits discrimination in 
its programs on the basis of race, color, national origin, sex, 
religion, age, disability, political beliefs, and marital or familial 
status.
    (b) Request for re-certification by qualifying State. If a State is 
a qualifying State at the time its request is made, the written request 
need only describe the changes made in the program since the previous 
year's request, together with such documents and information as are 
necessary concerning such changes, and a written certification that the 
remaining elements of the program will continue as described in the 
previous request.



Sec.  785.4  Grants to certified State mediation programs.

    (a) Eligibility. To be eligible to receive a grant, a State 
mediation program must:
    (1) Be certified as described in Sec.  785.3; and

[[Page 385]]

    (2) Submit an application for a grant with its certification or re-
certification request as set forth in this section.
    (b) Application for grant. A State requesting a grant will submit 
the following to the Administrator:
    (1) Application for Federal Assistance, Standard Form 424 (available 
in any FSA office and on the Internet, http://www.whitehouse.gov/omb/
grants/);
    (2) A budget with supporting details providing estimates of the cost 
of operation and administration of the program. Proposed direct 
expenditures will be grouped in the categories of allowable direct costs 
under the program as set forth in paragraph (c)(1) of this section;
    (3) Other information pertinent to the funding criteria specified in 
Sec.  785.7(b); and
    (4) Any additional supporting information requested by FSA in 
connection with its review of the grant request.
    (c) Grant purposes. Grants made under this part will be used only to 
pay the allowable costs of operation and administration of the 
components of a qualifying State's mediation program that have been 
certified as set forth in Sec.  785.3(b)(2). Costs of services other 
than mediation services to covered persons within the State are not 
considered part of the cost of operation and administration of the 
mediation program for the purpose of determining the amount of a grant 
award.
    (1) Allowable costs. Subject to applicable cost principles in 2 CFR 
part 200, subpart E, allowable costs for operations and administration 
are limited to those that are reasonable and necessary to carry out the 
State's certified mediation program in providing mediation services for 
covered persons within the State. Specific categories of costs allowable 
under the certified State mediation program include, and are limited to:
    (i) Staff salaries and fringe benefits;
    (ii) Reasonable fees and costs of mediators;
    (iii) Office rent and expenses, such as utilities and equipment 
rental;
    (iv) Office supplies;
    (v) Administrative costs, such as workers' compensation, liability 
insurance, employer's share of Social Security, and travel that is 
necessary to provide mediation services;
    (vi) Education and training of participants and mediators involved 
in mediation;
    (vii) Security systems necessary to assure confidentiality of 
mediation sessions and records of mediation sessions;
    (viii) Costs associated with publicity and promotion of the program; 
and
    (ix) Financial advisory and counseling services for parties 
requesting mediation (as reasonable and necessary to prepare parties for 
mediation) that are performed by a person other than a state mediation 
program mediator and as approved under guidelines established by the 
state mediation program and reported to FSA.
    (2) Prohibited expenditures. Expenditures of grant funds are not 
allowed for:
    (i) Purchase of capital assets, real estate, or vehicles and repair, 
or maintenance of privately-owned property;
    (ii) Political activities;
    (iii) Routine administrative activities not allowable under 2 CFR 
part 200, subpart E; and
    (iv) Services provided by a State mediation program that are not 
consistent with the features of the mediation program certified by the 
State, including advocacy services on behalf of a mediation participant, 
such as representation of a mediation client before an administrative 
appeals entity of the USDA or other Federal Government department or 
Federal or State Court proceeding.

[67 FR 57315, Sept. 10, 2002, as amended at 79 FR 75996, Dec. 19, 2014]



Sec.  785.5  Fees for mediation services.

    A requirement that non-USDA parties who elect to participate in 
mediation pay a fee for mediation services will not preclude 
certification of a certified State mediation program or its eligibility 
for a grant; however, if participation in mediation is mandatory for a 
USDA agency, a certified State mediation program may not require the 
USDA agency to pay a fee to participate in a mediation.

[[Page 386]]



Sec.  785.6  Deadlines and address.

    (a) Deadlines. (1) To be a qualifying State as of the beginning of a 
fiscal year and to be eligible for grant funding as of the beginning of 
the fiscal year, the Governor of a State or head of a State agency 
designated by the Governor of a State must submit a request for 
certification and application for grant on or before August 1 of the 
calendar year in which the fiscal year begins.
    (2) Requests received after August 1. FSA will accept requests for 
re-certifications and for new certifications of State mediation programs 
after August 1 in each calendar year; however, such requests will not be 
considered for grant funding under Sec.  785.7(c) until after March 1.
    (3) Requests for additional grant funds during a fiscal year. Any 
request by a State mediation program that is eligible for grant funding 
as of the beginning of the fiscal year for additional grant funds during 
that fiscal year for additional, unbudgeted demands for mediation 
services must be submitted on or before March 1 of the fiscal year.
    (b) Address. The request for certification or re-certification and 
any grant request must be mailed or delivered to: Administrator, Farm 
Service Agency, U.S. Department of Agriculture, Stop 0501, 1400 
Independence Avenue, SW., Washington, DC 20250-0501.



Sec.  785.7  Distribution of Federal grant funds.

    (a) Maximum grant award. A grant award shall not exceed 70 percent 
of the budgeted allowable costs of operation and administration of the 
certified State mediation program. In no case will the sum granted to a 
State exceed $500,000 per fiscal year.
    (b) Funding criteria. FSA will consider the following in determining 
the grant award to a qualifying State:
    (1) Demand for and use of mediation services (historical and 
projected);
    (2) Scope of mediation services;
    (3) Service record of the State program, as evidenced by:
    (i) Number of inquiries;
    (ii) Number of requests for and use of mediation services, 
historical and projected, as applicable;
    (iii) Number of mediations resulting in signed mediation agreements;
    (iv) Timeliness of mediation services; and
    (v) Activities promoting awareness and use of mediation;
    (4) Historic use of program funds (budgeted versus actual); and
    (5) Material changes in the State program.
    (c) Disbursements of grant funds. (1) Grant funds will be paid in 
advance, in installments throughout the Federal fiscal year as requested 
by a certified State mediation program and approved by FSA. The initial 
payment to a program in a qualifying State eligible for grant funding as 
of the beginning of a fiscal year shall represent at least one-fourth of 
the State's annual grant award. The initial payment will be made as soon 
as practicable after certification, or re-certification, after grant 
funds are appropriated and available.
    (2) Payment of grant funds will be by electronic funds transfer to 
the designated account of each certified State mediation program, as 
approved by FSA.
    (d) Administrative reserve fund. After funds are appropriated, FSA 
will set aside 5 percent of the annual appropriation for use as an 
administrative reserve.
    (1) Subject to paragraph (a) of this section and the availability of 
funds, the Administrator will allocate and disburse sums from the 
administrative reserve in the following priority order:
    (i) Disbursements to cover additional, unbudgeted demands for 
mediation services in qualifying States eligible for grant funding as of 
the beginning of the fiscal year;
    (ii) Grants to qualifying States whose requests for new 
certification or re-certification were received between August 2 and 
March 1. A previously qualifying State that submits a request for re-
certification received after August 1 may receive a grant award 
effective as of the beginning of the fiscal year. A newly qualifying 
State that submits a request for certification received after August 1 
may receive a grant award effective March 31 of the fiscal year.

[[Page 387]]

    (iii) Any balance remaining in the administrative reserve will be 
allocated pro rata to certified State mediation programs based on their 
initial fiscal year grant awards.
    (2) All funds from the administrative reserve will be made available 
on or before March 31 of the fiscal year.
    (e) Period of availability of funds. (1) Certified State mediation 
programs receiving grant funds are encouraged to obligate award funds 
within the Federal fiscal year of the award. A State may, however, carry 
forward any funds disbursed to its certified State mediation program 
that remain unobligated at the end of the fiscal year of award for use 
in the next fiscal year for costs resulting from obligations in the 
subsequent funding period. Any carryover balances plus any additional 
obligated fiscal year grant will not exceed the lesser of 70 percent of 
the State's budgeted allowable costs of operation and administration of 
the certified State mediation program for the subsequent fiscal year, or 
$500,000.
    (2) Grant funds not spent in accordance with this part will be 
subject to de-obligation and must be returned to the USDA.



Sec.  785.8  Reports by qualifying States receiving mediation grant funds.

    (a) Annual report by certified State mediation program. No later 
than 30 days following the end of a fiscal year during which a 
qualifying State received a grant award under this part, the State must 
submit to the Administrator an annual report on its certified State 
mediation program. The annual report must include the following:
    (1) A review of mediation services provided by the certified State 
mediation program during the preceding Federal fiscal year providing 
information concerning the following matters:
    (i) A narrative review of the goals and accomplishments of the 
certified State mediation program in providing intake and scheduling of 
cases; the provision of background and selected information regarding 
the mediation process; financial advisory and counseling services, 
training, notification, public education, increasing resolution rates, 
and obtaining program funding from sources other than the grant under 
this part.
    (ii) A quantitative summary for the preceding fiscal year, and for 
prior fiscal years, as appropriate, for comparisons of program 
activities and outcomes of the cases opened and closed during the 
reporting period; mediation services provided to clients grouped by 
program and subdivided by issue, USDA agency, types of covered persons 
and other participants; and the resolution rate for each category of 
issue reported for cases closed during the year;
    (2) An assessment of the performance and effectiveness of the 
State's certified mediation program considering:
    (i) Estimated average costs of mediation services per client with 
estimates furnished in terms of the allowable costs set forth in Sec.  
785.4(b)(1).
    (ii) Estimated savings to the State as a result of having the State 
mediation program certified including:
    (A) Projected costs of avoided USDA administrative appeals based on 
projections of the average costs of such appeals furnished to the State 
by FSA, with the assistance of the USDA National Appeals Division and 
other agencies as appropriate;
    (B) In agricultural credit mediations that do not result from a USDA 
adverse program decision, projected cost savings to the various parties 
as a result of resolution of their dispute in mediation. Projected cost 
savings will be based on such reliable statistical data as may be 
obtained from State statistical sources including the certified State's 
bar association, State Department of Agriculture, State court system or 
Better Business Bureau, or other reliable State or Federal sources;
    (iii) Recommendations for improving the delivery of mediation 
services to covered persons, including:
    (A) Increasing responsiveness to needs for mediation services.
    (B) Promoting increases in dispute resolution rates.
    (C) Improving assessments of training needs.
    (D) Improving delivery of training.
    (E) Reducing costs per mediation.
    (3) Such other matters relating to the program as the State may 
elect to include, or as the Administrator may require.

[[Page 388]]

    (b) Audits. Any qualifying State receiving a grant under this part 
is required to submit an audit report in compliance with 2 CFR part 200, 
subpart F.

[67 FR 57315, Sept. 10, 2002, as amended at 79 FR 75996, Dec. 19, 2014]



Sec.  785.9  Access to program records.

    The regulations in 2 CFR 200.333 through 200.337 provide general 
record retention and access requirements for records pertaining to 
grants. In addition, the State must maintain and provide the Government 
access to pertinent records regarding services delivered by the 
certified State mediation program for purposes of evaluation, audit and 
monitoring of the certified State mediation program as follows:
    (a) For purposes of this section, pertinent records consist of: the 
names and addresses of applicants for mediation services; dates 
mediations opened and closed; issues mediated; dates of sessions with 
mediators; names of mediators; mediation services furnished to 
participants by the program; the sums charged to parties for each 
mediation service; records of delivery of services to prepare parties 
for mediation (including financial advisory and counseling services); 
and the outcome of the mediation services including formal settlement 
results and supporting documentation.
    (b) State mediators will notify all participants in writing at the 
beginning of the mediation session that the USDA, including the USDA 
Inspector General, the Comptroller General of the United States, the 
Administrator, and any of their representatives will have access to 
pertinent records as necessary to monitor and to conduct audits, 
investigations, or evaluations of mediation services funded in whole or 
in part by the USDA.
    (c) All participants in a mediation must sign and date an 
acknowledgment of receipt of such notice from the mediator. The 
certified State mediation program shall maintain originals of such 
acknowledgments in its mediation files for at least 5 years.

[67 FR 57315, Sept. 10, 2002, as amended at 79 FR 75996, Dec. 19, 2014]



Sec.  785.10  Penalty for non-compliance.

    (a) The Administrator is authorized to withdraw certification of a 
State mediation program, terminate or suspend the grant to such program, 
require a return of unspent grant funds, a reimbursement of grant funds 
on account of expenditures that are not allowed, and may impose any 
other penalties or sanctions authorized by law if the Administrator 
determines that:
    (1) The State's mediation program, at any time, does not meet the 
requirements for certification;
    (2) The mediation program is not being operated in a manner 
consistent with the features of the program certified by the State, with 
applicable regulations, or the grant agreement;
    (3) Costs that are not allowed under Sec.  785.4(b) are being paid 
out of grant funds;
    (4) The mediation program fails to grant access to mediation records 
for purposes specified in Sec.  785.8; or
    (5) Reports submitted by the State pursuant to Sec.  785.7 are 
false, contain misrepresentations or material omissions, or are 
otherwise misleading.
    (b) In the event that FSA gives notice to the State of its intent to 
enforce any withdrawal of certification or other penalty for non-
compliance, USDA agencies will cease to participate in any mediation 
conducted by the State's mediation program immediately upon delivery of 
such notice to the State.



Sec.  785.11  Reconsideration by the Administrator.

    (a) A State mediation program may request that the Administrator 
reconsider any determination that a State is not a qualifying State 
under Sec.  785.3 and any penalty decision made under Sec.  785.10. The 
decision of the Administrator upon reconsideration shall be the final 
administrative decision of FSA.
    (b) Nothing in this part shall preclude action to suspend or debar a 
State mediation program or administering entity under 2 CFR parts 180

[[Page 389]]

and 417 following a withdrawal of certification of the State mediation 
program.

[67 FR 57315, Sept. 10, 2002, as amended at 79 FR 75996, Dec. 19, 2014]



Sec.  785.12  Nondiscrimination.

    The provisions of parts 15, 15b and 1901, subpart E, of this title 
and part 90 of title 45 apply to activities financed by grants made 
under this part.



Sec.  785.13  OMB Control Number.

    The information collection requirements in this regulation have been 
approved by the Office of Management and Budget and assigned OMB control 
number 0560-0165.



PART 786_DAIRY DISASTER ASSISTANCE PAYMENT PROGRAM (DDAP-III)
--Table of Contents



Sec.
786.100 Applicability.
786.101 Administration.
786.102 Definitions.
786.103 Time and method of application.
786.104 Eligibility.
786.105 Proof of production.
786.106 Determination of losses incurred.
786.107 Rate of payment and limitations on funding.
786.108 Availability of funds.
786.109 Appeals.
786.110 Misrepresentation, scheme, or device.
786.111 Death, incompetence, or disappearance.
786.112 Maintaining records.
786.113 Refunds; joint and several liability.
786.114 Miscellaneous provisions.
786.115 Termination of program.

    Authority: Sec. 9007, Pub. L. 110-28, 121 Stat. 112; and Sec. 743, 
Pub. L. 110-161.

    Source: 73 FR 11522, Mar. 4, 2008, unless otherwise noted.



Sec.  786.100  Applicability.

    (a) Subject to the availability of funds, this part specifies the 
terms and conditions applicable to the Dairy Disaster Assistance Payment 
Program (DDAP-III) authorized by section 9007 of Public Law 110-28 
(extended by Pub. L. 110-161). Benefits are available to eligible United 
States producers who have suffered dairy production losses in eligible 
counties as a result of a natural disaster declared during the period 
between January 1, 2005, and December 31, 2007, (that is, after January 
1, 2005, and before December 31, 2007).
    (b) To be eligible for this program, a producer must have been a 
milk producer anytime during the period of January 2, 2005, through 
December 30, 2007, in a county declared a natural disaster by the 
Secretary of Agriculture, declared a major disaster or emergency 
designated by the President of the United States. For a county for which 
there was a timely Presidential declaration, but the declaration did not 
cover the loss, the county may still be eligible if the county is one 
for which an appropriate determination of a Farm Service Agency (FSA) 
Administrator's Physical Loss Notice applies. Counties contiguous to a 
county that is directly eligible by way of a natural disaster 
declaration are also eligible. Only losses occurring in eligible 
counties are eligible for payment in this program.
    (c) Subject to the availability of funds, FSA will provide benefits 
to eligible dairy producers. Additional terms and conditions may be 
specified in the payment application that must be completed and 
submitted by producers to receive a disaster assistance payment for 
dairy production losses.
    (d) To be eligible for payments, producers must meet the provisions 
of, and their losses must meet the conditions of, this part and any 
other conditions imposed by FSA.



Sec.  786.101  Administration.

    (a) DDAP-III will be administered under the general supervision of 
the Administrator, FSA, or a designee, and 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 part.
    (c) The State committee will take any action required by the 
regulations of this part that has not been taken by the county 
committee. The State committee will also:
    (1) Correct, or require the county committee to correct, any action 
taken

[[Page 390]]

by such county committee that is not in accordance with the regulations 
of this part; and
    (2) Require a county committee to withhold taking any action that is 
not in accordance with the regulations of this part.
    (d) No provision of delegation in this part to a State or county 
committee will preclude 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 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 DDAP-III and does not violate statutory limitations 
of the program.
    (f) Data furnished by the applicants is used to determine 
eligibility for program benefits. Although participation in DDAP-III is 
voluntary, program benefits will not be provided unless the producer 
furnishes all requested data.



Sec.  786.102  Definitions.

    The definitions in 7 CFR part 718 apply to this part except to the 
extent they are inconsistent with the provisions of this part. In 
addition, for the purpose of this part, the following definitions apply.
    Administrator means the FSA Administrator, or a designee.
    Application means DDAP-III application.
    Application period means the time period established by the Deputy 
Administrator for producers to apply for program benefits.
    Base annual production means the pounds of production determined by 
multiplying the average annual production per cow calculated from base 
period information times the average number of cows in the dairy herd 
during each applicable disaster year.
    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 FSA, 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 claim period means the calendar year(s) applicable to the 
disaster declaration during the eligible period in which the production 
losses occurred.
    Disaster county means a county included in the geographic area 
covered by a natural disaster declaration, and any county contiguous to 
a county that qualifies by a natural disaster declaration.
    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 sale or delivery record of milk marketed for commercial use.
    Natural disaster declaration means a natural disaster declaration 
issued by the Secretary of Agriculture after January 1, 2005, but before 
December 31, 2007, under section 321(a) of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1961(a)), a major disaster or emergency 
designation by the President of the United States in that period under 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act, or 
a determination of a Farm Service Agency Administrator's Physical Loss 
Notice for a county covered in an otherwise eligible Presidential 
declaration.
    Payment pounds means the pounds of milk production from a dairy 
operation for which the dairy producer is eligible to be paid under this 
part.

[[Page 391]]

    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 a legal resident alien in, the United States, and who directly or 
indirectly, as determined by the Secretary, have a share entitlement or 
ownership interest in a commercial dairy's milk production and who 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 evidence means records provided by the producer 
subject to a determination of acceptability by the county committee that 
are used to substantiate the amount of production reported when 
verifiable records are not available; the records may include copies of 
receipts, ledgers of income, income statements of deposit slips, 
register tapes, and records to verify production costs, contemporaneous 
measurements, and contemporaneous diaries.
    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 FSA through an independent 
source.



Sec.  786.103  Time and method of application.

    (a) Dairy 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 at http://
www.sc.egov.usda.gov.
    (b) A request for benefits under this part must be submitted on a 
completed DDAP-III application. Applications and any other supporting 
documentation must 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. 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 milk production of the dairy 
operation and risk of the dairy operation's total production must 
certify to the information on the application before the application 
will be considered complete.
    (d) Each dairy producer requesting benefits under this part must 
certify to the accuracy and truthfulness of the information provided in 
their application and any supporting documentation. Any information 
entered on the application will be considered information from the 
applicant regardless of who entered the information on the application. 
All information provided is subject to verification by FSA. Refusal to 
allow FSA or any other agency of the Department of Agriculture to verify 
any information provided may 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.  786.104  Eligibility.

    (a) Producers in the United States will be eligible to receive dairy 
disaster benefits under this part only if they have suffered dairy 
production losses, previously uncompensated by disaster payments 
including any previous dairy disaster payment program, during the claim 
period applicable to a natural disaster declaration in a disaster 
county. To be eligible to receive payments under this part, producers in 
a dairy operation must:
    (1) Have produced and commercially marketed milk in the United 
States and commercially marketed the milk produced anytime during the 
period of January 2, 2005 through December 30, 2007;
    (2) Be a producer on a dairy farm operation physically located in an 
eligible county where dairy production losses were incurred as a result 
of a disaster for which an applicable natural disaster declaration was 
issued between January 1, 2005 and December 31, 2007, and limit their 
claims to losses that occurred in those counties, specific to conditions 
resulting from the

[[Page 392]]

declared disaster as described in the natural disaster declaration;
    (3) Provide adequate proof, to the satisfaction of the FSA county 
committee, of the average number of cows in the dairy herd and annual 
milk production commercially marketed by all persons in the eligible 
dairy operation during the years of the base period (2003 and 2004 
calendar years) and applicable disaster year that corresponds with the 
issuance date of the applicable natural disaster declaration, or other 
period as determined by FSA, 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 satisfy the terms and conditions of this part, 
instructions issued by FSA, and instructions contained in the 
application to be eligible for benefits under this part.
    (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 calendar 
year applicable to the natural disaster declaration and loss claim 
period, 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 
disaster years.
    (f) All payments under this part are subject to the availability of 
funds.
    (g) Eligible losses are determined from the applicable base annual 
production, as defined in Sec.  786.102, that corresponds to the natural 
disaster declaration and must have occurred during that same period as 
follows:
    (1) For disaster declarations for disasters during a calendar year 
(2005, 2006, or 2007), the disaster claim period is the full calendar 
year and
    (2) For disaster declarations issued during one calendar year that 
ends in another calendar year, the producer will be eligible for both 
disaster years.
    (h) Deductions in eligibility will be made for any disaster payments 
previously received for the loss including any made under a previous 
dairy disaster assistance payment program for 2005.



Sec.  786.105  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 losses can be computed in accordance with Sec.  786.106.
    (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 dairy herd inventory records 
available for the operation, for the years of the base period (2003 and 
2004 calendar years) and disaster claim period that corresponds with the 
issuance date of the applicable natural disaster declaration.
    (1) A producer must certify and provide such proof as requested that 
losses for which compensation is claimed were related to the disaster 
declaration issued and occurred in an eligible county during the 
eligible claim period.
    (2) A producer must certify to the average number of cows in the 
dairy herd during the base period and applicable disaster claim period 
when there is insufficient documentation available for verification.
    (3) Additional supporting documentation may be requested by FSA as 
necessary to verify production losses to the satisfaction of FSA.
    (c) Adequate proof of production history of the dairy operation 
under paragraph (b) of this section must be based

[[Page 393]]

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 losses, or any other documents available to confirm or adjust 
the production history losses incurred by the dairy operation. All 
information provided is subject to verification, spot check, and audit 
by FSA.
    (d) As specified in Sec.  786.106, loss calculations will be based 
on comparing the expected base annual production consistent with this 
part and the actual production during the applicable disaster claim 
year. Such calculations are subject to adjustments as may be appropriate 
such as a correction for losses not due to the disaster. If adequate 
proof of normally marketed production and any other production for 
relevant periods is not presented to the satisfaction of FSA, the 
request for benefits will be rejected. Special adjustments for new 
producers may be made as determined necessary by the Administrator.



Sec.  786.106  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 disaster claim period, as provided by Sec.  786.104(g), that 
corresponds with the applicable natural disaster declaration. 
Specifically, dairy production losses incurred by producers under this 
part are determined on the established history of the dairy operation's 
average number of cows in the dairy herd and actual commercial 
production marketed during the base period and applicable disaster claim 
period that corresponds with the applicable natural disaster 
declaration, as provided by the dairy operation consistent with Sec.  
786.105. Except as otherwise provided in this part, the base annual 
production, as defined in Sec.  786.102 and established in Sec.  
786.104(g) is determined for each applicable disaster year based on the 
average annual production per cow determined according to the following:
    (1) The average of annual marketed production during the base period 
calendar years of 2003 and 2004, divided by;
    (2) The average number of cows in the dairy operation's herd during 
the base period calendar years of 2003 and 2004.
    (b) If relevant information to calculate the average annual 
production per cow for one or both of the base period calendar years of 
2003 and 2004, is not available, an alternative method of determining 
the average annual production per cow may be established by the FSA 
Administrator. For example, for new dairies not in operation during 2003 
and 2004, information from three similar farms may be obtained by FSA to 
estimate base annual production.
    (c) The average annual production per cow, as determined according 
to paragraphs (a)(1) and (a)(2) of this section, is multiplied by the 
average number of cows in the dairy operation's herd during the 
applicable disaster year (excluding cow losses resulting from the 
disaster occurrence), to determine base annual production for the dairy 
operation for each applicable disaster claim period year.
    (d) The eligible dairy production losses for a dairy operation for 
each of the authorized disaster claim period years will be:
    (1) The relevant period's base annual production for the dairy 
operation calculated under paragraph (c) of this section less,
    (2) For each such disaster claim period for each dairy operation the 
actual commercially-marketed production relevant to that period.
    (e) Spoiled or dumped milk, disposed of for reasons unrelated to the 
disaster occurrence, must be counted as production for the relevant 
disaster claim period. 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 disaster identified in the natural disaster 
declaration or is determined by FSA not to be related to the natural 
disaster identified in the natural disaster declaration. FSA county 
committees will determine production losses that are not caused by the 
disaster associated with the natural disaster declaration.

[[Page 394]]

The calculated production loss determined in Sec.  786.106(d) will be 
adjusted to account for pounds of production losses determined by the 
FSA county committee to not have been associated with the declared 
natural disaster for an eligible disaster county. The FSA county 
committee may convert cow numbers to actual pounds of production used in 
the adjustment, by multiplying the average annual production per cow 
determined from base period information, by the applicable number of 
cows determined to be ineligible to generate claims for benefits. Other 
appropriate adjustments will be made on such basis as the Deputy 
Administrator finds to be consistent with the objectives of the program.
    (f) Actual production, as adjusted, that exceeds the base annual 
production will mean that the dairy operation incurred no eligible 
production losses for the corresponding claim period as a result of the 
natural disaster.
    (g) Eligible production losses as otherwise determined under 
paragraphs (a) through (f) of this section for each authorized year of 
the program are added together to determine total eligible losses 
incurred by the dairy operation under DDAP-III subject to all other 
eligibility requirements as may be included in this part or elsewhere, 
including the deduction for previous payments including those made under 
a previous DDAP program.
    (h) Payment on eligible dairy operation losses will be 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 dairy operation's eligible 
production loss among the producers of the dairy operation according to 
Sec.  786.107(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, marketing cooperative, or any other 
private party; however, produced milk that was dumped or spoiled for 
reasons unrelated to the disaster occurrence will still count as 
production.



Sec.  786.107  Rate of payment and limitations on funding.

    (a) Subject to the availability of funds, the payment rate for 
eligible production losses determined according to Sec.  786.106 is, 
depending on the State, the annual average Mailbox milk price for the 
Marketing Order, applicable to the State where the eligible disaster 
county is located, as reported by the Agricultural Marketing Service 
during the relevant period. States not regulated under a Marketing Order 
will be assigned a payment rate based on contiguous or nearby State's 
Mailbox milk price. Maximum per pound payment rates for eligible losses 
for dairy operations located in specific states during the relevant 
period are as follows:

------------------------------------------------------------------------
                                                                Mailbox
                State                   Mailbox     Mailbox   price 2007
                                      price 2005  price 2006       *
------------------------------------------------------------------------
Alabama.............................      0.1596      0.1443
Alaska..............................      0.2040      0.2010
Arizona.............................      0.1388      0.1128
Arkansas............................      0.1596      0.1443
California..........................      0.1388      0.1128
Colorado............................      0.1403      0.1214
Connecticut.........................      0.1539      0.1344
Delaware............................      0.1539      0.1344
Florida.............................      0.1758      0.1603
Georgia.............................      0.1596      0.1443
Hawaii..............................      0.2700      0.2600
Idaho...............................      0.1402      0.1215
Illinois............................      0.1514      0.1283
Indiana.............................      0.1503      0.1294
Iowa................................      0.1507      0.1285
Kansas..............................      0.1403      0.1214
Kentucky............................      0.1527      0.1349
Louisiana...........................      0.1596      0.1443
Maine...............................      0.1539      0.1344
Maryland............................      0.1539      0.1344
Massachusetts.......................      0.1539      0.1344
Michigan............................      0.1478      0.1264
Minnesota...........................      0.1512      0.1277
Mississippi.........................      0.1596      0.1443
Missouri (Northern).................      0.1403      0.1214
Missouri (Southern).................      0.1467      0.1254
Montana.............................      0.1512      0.1277
Nebraska............................      0.1403      0.1214
Nevada..............................      0.1388      0.1128
New Hampshire.......................      0.1539      0.1344
New Jersey..........................      0.1539      0.1344
New Mexico..........................      0.1323      0.1108
New York............................      0.1539      0.1303
North Carolina......................      0.1527      0.1349
North Dakota........................      0.1512      0.1277
Ohio................................      0.1506      0.1302
Oklahoma............................      0.1596      0.1443
Oregon..............................      0.1402      0.1215
Pennsylvania (Eastern)..............      0.1539      0.1340
Pennsylvania (Western)..............      0.1539      0.1302
Puerto Rico.........................      0.2550      0.2570
Rhode Island........................      0.1539      0.1344
South Carolina......................      0.1527      0.1349
South Dakota........................      0.1512      0.1277
Tennessee...........................      0.1527      0.1349

[[Page 395]]

 
Texas...............................      0.1405      0.1194
Vermont.............................      0.1539      0.1344
Virginia............................      0.1527      0.1349
Washington..........................      0.1402      0.1215
West Virginia.......................      0.1506      0.1302
Wisconsin...........................      0.1535      0.1305
Wyoming.............................      0.1403      0.1214
------------------------------------------------------------------------
Note: Calculations are rounded to 7 decimal places.
* Payment rates for 2007 are currently unavailable, but will be based on
  the annual average Mailbox milk price for the Marketing Order,
  applicable to the State where the eligible disaster county is located,
  as reported by the Agricultural Marketing Service, consistent with
  payment rates provided for 2005 and 2006.

    (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 as adjusted pursuant to this part. 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 nationwide under paragraph 
(b) of this section exceeds the $16 million available for the DDAP-III, 
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 each full disaster claim period 
applicable to the disaster declaration, are greater than 20 percent of 
the total base annual production 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 months during the applicable 
disaster claim period does not of itself qualify for the maximum per-
pound payment. Rather, the priority level must be reached as an average 
over the whole disaster claim period for the relevant calendar year. 
Total eligible losses for a producer, as calculated under Sec.  786.106, 
of less than or equal to 20 percent during the eligible claim period 
will then be paid at a rate, not to exceed the rate allowed in paragraph 
(a) of this section, 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 will the payment exceed the value determined by 
multiplying the producer's total eligible loss times the average price 
received for commercial milk production in the producer's area as 
defined in paragraph (a) of this section.
    (e) No participant will receive disaster benefits under this part 
that in combination with the value of production not lost would result 
in an amount that exceeds 95 percent of the value of the expected 
production for the relevant period as estimated by the Secretary. Unless 
otherwise program funds would not be fully expended, the sum of the 
value of the production not lost, if any; and the disaster payment 
received under this part, cannot exceed 95 percent of what the 
production's value would have been if there had been no loss. In no 
case, however, may the value of production and the payment exceed the 
value the milk would have without the loss.
    (f) A reserve may be created to handle pending or disputed claims, 
but claims will not be payable once the available funding is expended.



Sec.  786.108  Availability of funds.

    The total available program funds are $16 million as provided by 
section 9007 of Title IX of Public Law 110-28.



Sec.  786.109  Appeals.

    Provisions of the appeal regulations set forth at 7 CFR parts 11 and 
780 apply to this part. Appeals of determinations of ineligibility or 
payment amounts are subject to the limitations in Sec. Sec.  786.107 and 
786.108 and other limitations that may apply.



Sec.  786.110  Misrepresentation, scheme, or device.

    (a) In addition to other penalties, sanctions, or remedies that may 
apply, a dairy producer is ineligible to receive assistance under this 
program if the producer is determined by FSA to have:
    (1) Adopted any scheme or device that tends to defeat the purpose of 
this program,
    (2) Made any fraudulent representation,

[[Page 396]]

    (3) Misrepresented any fact affecting a program determination, or
    (4) Violated 7 CFR 795.17 and thus be ineligible for the year(s) of 
violation and the subsequent year.
    (b) Any funds disbursed pursuant to this part to any person or dairy 
operation engaged in a misrepresentation, scheme, or device, must be 
refunded with interest together with such other sums as may become due. 
Interest will run from the date of the disbursement to the producer or 
other recipient of the payment from FSA. Any person or dairy operation 
engaged in acts prohibited by this section and any person or dairy 
operation receiving payment under this part is jointly and severally 
liable with other persons or dairy operations involved in such claim for 
benefits for any refund due under this section and for related charges. 
The remedies provided in this part are in addition to other civil, 
criminal, or administrative remedies that may apply.



Sec.  786.111  Death, incompetence, or disappearance.

    In the case of death, incompetency, disappearance, or dissolution of 
an individual or entity that is eligible to receive benefits in 
accordance with this part, such alternate person or persons specified in 
7 CFR part 707 may receive such benefits, as determined appropriate by 
FSA.



Sec.  786.112  Maintaining records.

    Persons applying for benefits under this program must maintain 
records and accounts to document all eligibility requirements specified 
herein and must keep such records and accounts for 3 years after the 
date of payment to their dairy operations under this program. 
Destruction of the records after such date is at the risk of the party 
required, by this part, to keep the records.



Sec.  786.113  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 meet any requirement or condition for payment under the application 
or this part, must be refunded to FSA.
    (b) A refund required under this section is due with interest 
determined in accordance with paragraph (d) of this section and late 
payment charges as provided in 7 CFR part 792. Notwithstanding any other 
regulation, interest will be due from the date of the disbursement to 
the producer or other recipient of the funds.
    (c) Persons signing a dairy operation's application as having an 
interest in the operation will be jointly and severally liable for any 
refund and related charges found to be due under this section.
    (d) In the event FSA determines a participant owes a refund under 
this part, FSA will charge program interest from the date of 
disbursement of the erroneous payment. Such interest will accrue at the 
rate that the United States Department of the Treasury charges FSA for 
funds plus additional charges as deemed appropriate by the Administrator 
or provided for by regulation or statute.
    (e) The debt collection provisions of part 792 of this chapter 
applies to this part except as is otherwise provided in this part.



Sec.  786.114  Miscellaneous provisions.

    (a) Payments or any portion thereof due under this part must 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.
    (b) Any producer entitled to any payment under this part may assign 
any payments in accordance with the provisions of 7 CFR part 1404.



Sec.  786.115  Termination of program.

    This program will be terminated after payment has been made to those 
applicants certified as eligible pursuant to the application period 
established in Sec.  786.104. All eligibility determinations will be 
final except as otherwise determined by the Deputy Administrator. Any 
claim for payment may be denied once the allowed funds are expended, 
irrespective of any other provision of this part.

[[Page 397]]



PART 789_AGRICULTURE PRIORITIES AND ALLOCATIONS SYSTEM (APAS)
--Table of Contents



                            Subpart A_General

Sec.
789.1 Purpose.
789.2 Priorities and allocations authority.
789.3 Program eligibility.

                          Subpart B_Definitions

789.8 Definitions.

                   Subpart C_Placement of Rated Orders

789.10 Delegations of authority.
789.11 Priority ratings.
789.12 Elements of a rated order.
789.13 Acceptance and rejection of rated orders.
789.14 Preferential scheduling.
789.15 Extension of priority ratings.
789.16 Changes or cancellations of priority ratings and rated orders.
789.17 Use of rated orders.
789.18 Limitations on placing rated orders.

                 Subpart D_Special Priorities Assistance

789.20 General provisions.
789.21 Requests for priority rating authority.
789.22 Examples of assistance.
789.23 Criteria for assistance.
789.24 Instances where assistance must not be provided.

                      Subpart E_Allocations Actions

789.30 Policy.
789.31 General procedures.
789.32 Precedence over priority rated orders.
789.33 Controlling the general distribution of a material in the 
          civilian market.
789.34 Types of allocations orders.
789.35 Elements of an allocations order.
789.36 Mandatory acceptance of allocations orders.
789.37 Changes or cancellations of allocations orders.

                       Subpart F_Official Actions

789.40 General provisions.
789.41 Rating authorizations.
789.42 Directives.
789.43 Letters of understanding.

                          Subpart G_Compliance

789.50 General provisions.
789.51 Audits and investigations.
789.52 Compulsory process.
789.53 Notification of failure to comply.
789.54 Violations, penalties, and remedies.
789.55 Compliance conflicts.

             Subpart H_Adjustments, Exceptions, and Appeals

789.60 Adjustments or exceptions.
789.61 Appeals.

                   Subpart I_Miscellaneous Provisions

789.70 Protection against claims.
789.71 Records and reports.
789.72 Applicability of this part and official actions.
789.73 Communications.

Schedule I to Part 789--Approved Programs and Delegate Agencies

    Authority: 50 U.S.C. App. 2061-2170, 2171, and 2172; 42 U.S.C. 5195-
5197h.

    Source: 80 FR 63898, Oct. 22, 2015, unless otherwise noted.



                            Subpart A_General



Sec.  789.1  Purpose.

    This part provides guidance and procedures for use of the Defense 
Production Act priorities and allocations authority by the United States 
Department of Agriculture (USDA) with respect to food resources, food 
resource facilities, livestock resources, veterinary resources, plant 
health resources, and the domestic distribution of farm equipment and 
commercial fertilizer in this part. (The guidance and procedures in this 
part are consistent with the guidance and procedures provided in other 
regulations issued under Executive Order 13603. Guidance and procedures 
for use of the Defense Production Act priorities and allocations 
authority with respect to other types of resources are as follows: For 
all forms of energy, refer to the Department of Energy's Energy 
Priorities and Allocations System (EPAS) regulation in 10 CFR part 217; 
for all forms of civil transportation, refer to the Department of 
Transportation's Transportation Priorities and Allocations System (TPAS) 
regulation in 49 CFR part 33; for water resources, refer to the 
Department of Defense; for health resources, refer to the Department of 
Health and Human Services' Health Resources Priorities and Allocations 
System in 45 CFR part 101; and for all other materials, services, and 
facilities, including construction materials,

[[Page 398]]

refer to the Department of Commerce's Defense Priorities and Allocations 
System (DPAS) regulation in 15 CFR part 700.)



Sec.  789.2  Priorities and allocations authority.

    (a) Section 201 of Executive Order 13603 (3 CFR, 2012 Comp., p. 225) 
delegates the President's authority under section 101 of the Defense 
Production Act to require acceptance and priority performance of 
contracts and orders (other than contracts of employment) to promote the 
national defense over performance of any other contracts or orders, and 
to allocate materials, services, and facilities as deemed necessary or 
appropriate to promote the national defense to the following agencies. 
Essentially, this allows the following agencies to place priority on the 
performance of contracts for items and materials under their 
jurisdiction as required for national defense initiatives including 
emergency preparedness activities:
    (1) The Secretary of Agriculture with respect to food resources, 
food resource facilities, livestock resources, veterinary resources, 
plant health resources, and the domestic distribution of farm equipment 
and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to 
health resources;
    (4) The Secretary of Transportation with respect to all forms of 
civil transportation;
    (5) The Secretary of Defense with respect to water resources; and
    (6) The Secretary of Commerce with respect to all other materials, 
services, and facilities, including construction materials.
    (b) Section 202 of Executive Order 13603 specifies that the 
priorities and allocations authority may be used only to support 
programs that have been determined in writing as necessary or 
appropriate to promote the national defense by:
    (1) The Secretary of Defense with respect to military production and 
construction, military assistance to foreign nations, military use of 
civil transportation, stockpiles managed by the Department of Defense, 
space, and directly related activities;
    (2) The Secretary of Energy with respect to energy production and 
construction, distribution and use, and directly related activities; or
    (3) The Secretary of Homeland Security with respect to all other 
national defense programs, including civil defense and continuity of 
Government.



Sec.  789.3  Program eligibility.

    Certain programs that promote the national defense are eligible for 
priorities and allocations support. These include programs for military 
and energy production or construction, military or critical 
infrastructure assistance to any foreign nation, homeland security, 
stockpiling, space, and any directly related activity. Other eligible 
programs include emergency preparedness activities conducted pursuant to 
Title VI of the Stafford Act and critical infrastructure protection and 
restoration.



                          Subpart B_Definitions



Sec.  789.8  Definitions.

    Allocations means the control of the distribution of materials, 
services, or facilities for a purpose deemed necessary or appropriate to 
promote the national defense.
    Allocations order means an official action to control the 
distribution of materials, services, or facilities for a purpose deemed 
necessary or appropriate to promote the national defense.
    Allotment means an official action that specifies the maximum 
quantity for a specific use of a material, service, or facility 
authorized to promote the national defense.
    Animal means any member of the animal kingdom (except a human).
    APAS means the Agriculture Priorities and Allocations System 
established by this part.
    Applicant means the person applying for assistance under APAS. (See 
definition of ``person.'')
    Approved program means a program determined by the Secretary of 
Defense, the Secretary of Energy, or the Secretary of Homeland Security 
to be necessary or appropriate to promote the national defense, as 
specified in section 202 of Executive Order 13603.

[[Page 399]]

    Civil transportation includes movement of persons and property by 
all modes of transportation in interstate, intrastate, or foreign 
commerce within the United States, its territories and possessions, and 
the District of Columbia, and related public storage and warehousing, 
ports, services, equipment and facilities, such as transportation 
carrier shop and repair facilities. ``Civil transportation'' also 
includes direction, control, and coordination of civil transportation 
capacity regardless of ownership. ``Civil transportation'' does not 
include transportation owned or controlled by the Department of Defense, 
use of petroleum and gas pipelines, and coal slurry pipelines used only 
to supply energy production facilities directly.
    Construction means the erection, addition, extension, or alteration 
of any building, structure, or project, using materials or products that 
are to be an integral and permanent part of the building, structure, or 
project. Construction does not include maintenance and repair.
    Critical infrastructure means any systems and assets, whether 
physical or cyber-based, so vital to the United States that the 
degradation or destruction of such systems and assets would have a 
debilitating impact on national security, including, but not limited to, 
national economic security and national public health or safety.
    Defense Production Act means the Defense Production Act of 1950, as 
amended (50 U.S.C. App. 2061 to 2170, 2171, and 2172).
    Delegate agency means a government agency authorized by delegation 
from USDA to place priority ratings on contracts or orders needed to 
support approved programs.
    Directive means an official action that requires a person to take or 
refrain from taking certain actions in accordance with the provisions.
    Emergency preparedness means all those activities and measures 
designed or undertaken to prepare for or minimize the effects of a 
hazard upon the civilian population, to deal with the immediate 
emergency conditions that would be created by the hazard, and to make 
emergency repairs to, or the emergency restoration of, vital utilities 
and facilities destroyed or damaged by the hazard. Emergency 
preparedness includes the following:
    (1) Measures to be undertaken in preparation for anticipated hazards 
(including the establishment of appropriate organizations, operational 
plans, and supporting agreements, the recruitment and training of 
personnel, the conduct of research, the procurement and stockpiling of 
necessary materials and supplies, the provision of suitable warning 
systems, the construction or preparation of shelters, shelter areas, and 
control centers, and, when appropriate, the non-military evacuation of 
the civilian population).
    (2) Measures to be undertaken during a hazard (including the 
enforcement of passive defense regulations prescribed by duly 
established military or civil authorities, the evacuation of personnel 
to shelter areas, the control of traffic and panic, and the control and 
use of lighting and civil communications).
    (3) Measures to be undertaken following a hazard (including 
activities for fire fighting, rescue, emergency medical, health and 
sanitation services, monitoring for specific dangers of special weapons, 
unexploded bomb reconnaissance, essential debris clearance, emergency 
welfare measures, and immediately essential emergency repair or 
restoration of damaged vital facilities).
    Energy means all forms of energy including petroleum, gas (both 
natural and manufactured), electricity, solid fuels (including all forms 
of coal, coke, coal chemicals, coal liquefaction and coal gasification), 
solar, wind, other types of renewable energy, atomic energy, and the 
production, conservation, use, control, and distribution (including 
pipelines) of all of these forms of energy.
    Facilities includes all types of buildings, structures, or other 
improvements to real property (but excluding farms, churches or other 
places of worship, and private dwelling houses), and services relating 
to the use of any such building, structure, or other improvement.
    Farm equipment means equipment, machinery, and repair parts 
manufactured for use on farms in connection

[[Page 400]]

with the production or preparation for market use of food resources.
    Feed is a nutritionally adequate manufactured food for animals 
(livestock and poultry raised for agriculture production); and by 
specific formula is compounded to be fed as the sole ration and is 
capable of maintaining life and promoting production without any 
additional substance being consumed except water.
    Fertilizer means any product or combination of products that contain 
one or more of the elements--nitrogen, phosphorus, and potassium--for 
use as a plant nutrient.
    Food resources means all commodities and products (simple, mixed, or 
compound), or complements to such commodities or products, that are 
capable of being ingested by either human beings or animals, 
irrespective of other uses to which such commodities or products may be 
put, at all stages of processing from the raw commodity to the products 
suitable for sale for human or animal consumption. Food resources also 
means potable water packaged in commercially marketable containers, all 
starches, sugars, vegetable and animal or marine fats and oils, seed, 
cotton, hemp, and flax fiber, but does not mean any such material after 
it loses its identity as an agricultural commodity or agricultural 
product.
    Food resource facilities means plants, machinery, vehicles 
(including on-farm), and other facilities required for the production, 
processing, distribution, and storage (including cold storage) of food 
resources, and for the domestic distribution of farm equipment and 
fertilizer (excluding transportation for that distribution).
    Hazard means an emergency or disaster resulting from a natural 
disaster; or from an accidental or man-caused event.
    Health resources means drugs, biological products, medical devices, 
materials, facilities, health supplies, services, and equipment required 
to diagnose, mitigate, or prevent the impairment of, improve, treat, 
cure, or restore the physical or mental health conditions of the 
population.
    Homeland security includes efforts:
    (1) To prevent terrorist attacks within the United States;
    (2) To reduce the vulnerability of the United States to terrorism;
    (3) To minimize damage from a terrorist attack in the United States; 
and
    (4) To recover from a terrorist attack in the United States.
    Industrial resources means all materials, services, and facilities, 
including construction materials, but not including: Food resources, 
food resource facilities, livestock resources, veterinary resources, 
plant health resources, and the domestic distribution of farm equipment 
and commercial fertilizer; all forms of energy; health resources; all 
forms of civil transportation; and water resources.
    Item means any raw, in process, or manufactured material, article, 
commodity, supply, equipment, component, accessory, part, assembly, or 
product of any kind, technical information, process, or service.
    Letter of understanding means an official action that may be issued 
in resolving special priorities assistance cases to reflect an agreement 
reached by all parties (USDA, the Department of Commerce (if 
applicable), a delegate agency (if applicable), the supplier, and the 
customer).
    Livestock means all farm-raised animals.
    Livestock resources means materials, facilities, vehicles, health 
supplies, services, and equipment required for the production and 
distribution of livestock.
    Maintenance and repair and operating supplies (MRO) means:
    (1) Maintenance is the upkeep necessary to continue any plant, 
facility, or equipment in working condition.
    (2) Repair is the restoration of any plant, facility, or equipment 
to working condition when it has been rendered unsafe or unfit for 
service by wear and tear, damage, or failure of parts.
    (3) Operating supplies are any resources carried as operating 
supplies according to a person's established accounting practice. 
Operating supplies may include hand tools and expendable

[[Page 401]]

tools, jigs, dies, fixtures used on production equipment, lubricants, 
cleaners, chemicals, and other expendable items.
    (4) MRO does not include items produced or obtained for sale to 
other persons or for installation upon or attachment to the property of 
another person, or items required for the production of such items; 
items needed for the replacement of any plant, facility, or equipment; 
or items for the improvement of any plant, facility, or equipment by 
replacing items that are still in working condition with items of a new 
or different kind, quality, or design.
    Materials includes:
    (1) Any raw materials (including minerals, metals, and advanced 
processed materials), commodities, articles, components (including 
critical components), products, and items of supply; and
    (2) Any technical information or services ancillary to the use of 
any such materials, commodities, articles, components, products, or 
items.
    National defense means programs for military and energy production 
or construction, military or critical infrastructure assistance to any 
foreign nation, homeland security, stockpiling, space, and any directly 
related activity. Such term includes emergency preparedness activities 
conducted pursuant to Title VI of the Stafford Act and critical 
infrastructure protection and restoration.
    Official action means an action taken by USDA or another resource 
agency under the authority of the Defense Production Act, Executive 
Order 13603, or this part. Such actions include the issuance of rating 
authorizations, directives, set-asides, allotments, letters of 
understanding, demands for information, inspection authorizations, and 
administrative subpoenas.
    Person includes an individual, corporation, partnership, 
association, or any other organized group of persons, or legal successor 
or representative thereof, or any State or local government or agency 
thereof, or any Federal agency.
    Plant health resources means biological products, materials, 
facilities, vehicles, supplies, services, and equipment required to 
prevent the impairment of, improve, or restore plant health conditions.
    Rated order means a prime contract, a subcontract, or a purchase 
order in support of an approved program issued as specified in the 
provisions of this part. Persons may request an order (contract) be 
rated in response to a need that is defined in this part. However, an 
order does not become rated until the request is approved by USDA. USDA 
will assign a rating priority for each rating request approved that 
designates the priority of that order over other orders that have 
similar order specifics.
    Resource agency means any agency that is delegated priorities and 
allocations authority as specified in Sec.  789.2.
    Secretary means the Secretary of Agriculture.
    Seed is used with its commonly understood meaning and includes all 
seed grown for and customarily sold to users for planting for the 
production of agriculture crops.
    Services includes any effort that is needed for or incidental to:
    (1) The development, production, processing, distribution, delivery, 
or use of an industrial resource or a critical technology item;
    (2) The construction of facilities;
    (3) The movement of individuals and property by all modes of civil 
transportation; or
    (4) Other national defense programs and activities.
    Set-aside means an official action that requires a person to reserve 
materials, services, or facilities capacity in anticipation of the 
receipt of rated orders.
    Stafford Act means the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, as amended (42 U.S.C. 5195-5197h).
    USDA means the U.S. Department of Agriculture.
    Veterinary resources means drugs, biological products, medical 
devices, materials, facilities, vehicles, health supplies, services, and 
equipment required to diagnose, mitigate or prevent the impairment of, 
improve, treat, cure, or restore the health conditions of the animal 
population.

[[Page 402]]

    Water resources means all usable water, from all sources, within the 
jurisdiction of the United States, that can be managed, controlled, and 
allocated to meet emergency requirements, except water resources does 
not include usable water that qualifies as food resources.



                   Subpart C_Placement of Rated Orders



Sec.  789.10  Delegations of authority.

    (a) [Reserved]
    (b) Within USDA, authority to administer APAS has been delegated to 
the Administrator, Farm Service Agency, through the Under Secretary for 
Farm and Foreign Agricultural Services. (See Sec. Sec.  2.16(a)(6) and 
2.42(a)(5) of this title.) The Farm Service Agency Administrator will 
coordinate APAS implementation and administration through the Director, 
USDA Office of Homeland Security and Emergency Coordination, as 
delegated by the Assistant Secretary for Administration. (See Sec. Sec.  
2.24(a)(8)(ii)(A) and 2.24(a)(8)(v); 2.95(b)(1)(i) and 2.95(b)(4) of 
this title.)



Sec.  789.11  Priority ratings.

    (a) Levels of priority. Priority levels designate differences 
between orders based on national defense including emergency 
preparedness requirements.
    (1) There are two levels of priority established by APAS, identified 
by the rating symbols ``DO'' and ``DX.''
    (2) All DO-rated orders have equal priority with each other and take 
precedence over unrated orders. All DX-rated orders have equal priority 
with each other and take precedence over DO-rated orders and unrated 
orders. (For resolution of conflicts among rated orders of equal 
priority, see Sec.  789.14(c).)
    (3) In addition, a directive regarding priority treatment for a 
given item issued by the resource agency with priorities jurisdiction 
for that item takes precedence over any DX-rated order, DO-rated order, 
or unrated order, as stipulated in the directive. (For more information 
on directives, see Sec.  789.42.)
    (b) Program identification symbols. Program identification symbols 
indicate which approved program is being supported by a rated order. The 
list of currently approved programs and their identification symbols are 
listed in Schedule I. For example, P1 identifies a program involving 
food and food resources processing and storage. Program identification 
symbols, in themselves, do not connote any priority. Additional programs 
may be approved under the procedures of Executive Order 13603 at any 
time.
    (c) Priority ratings. A priority rating consists of the rating 
symbol DO or DX followed by the program identification symbol, such as 
P1 or P2. Thus, a contract for the supply of livestock feed will contain 
a DO-P1 or DX-P1 priority rating.



Sec.  789.12  Elements of a rated order.

    (a) Each rated order must include:
    (1) The appropriate priority rating (for example, DO-P1 for food and 
food resources processing and storage);
    (2) A required delivery date or dates. The words ``immediately'' or 
``as soon as possible'' do not constitute a delivery date. Some purchase 
orders, such as a ``requirements contract,'' ``basic ordering 
agreement,'' ``prime vendor contract,'' or similar procurement document, 
bearing a priority rating may contain no specific delivery date or dates 
if it provides for the furnishing of items or services from time-to-time 
or within a stated period against specific purchase orders, such as 
calls, requisitions, and delivery orders. Specific purchase orders must 
specify a required delivery date or dates and are to be considered as 
rated as of the date of their receipt by the supplier and not as of the 
date of the original procurement document;
    (3) The written signature on a manually placed order, or the digital 
signature or name on an electronically placed order, of an individual 
authorized to sign rated orders for the person placing the order. The 
signature or use of the name certifies that the rated order is 
authorized under this part and that the requirements of this part are 
being followed; and
    (4) A statement as follows:
    (i) A statement that reads:

    This is a rated order certified for national defense use, and you 
are required to follow

[[Page 403]]

all the provisions of the Agriculture Priorities and Allocations System 
regulation in 7 CFR part 789.

    (ii) If the rated order is placed in support of emergency 
preparedness requirements and expedited action is necessary and 
appropriate to meet these requirements, the following sentences should 
be added following the statement specified in paragraph (a)(4)(i) of 
this section:

    This rated order is placed for the purpose of emergency 
preparedness. It must be accepted or rejected within six (6) hours after 
receipt of the order if the order is issued in response to a hazard that 
has occurred; or within the greater of twelve (12) hours or the time 
specified in the order, if the order is issued to prepare for an 
imminent hazard, in accordance with 7 CFR 789.13(e).

    (b) [Reserved]



Sec.  789.13  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance. A person must accept a rated order in 
accordance with the following requirements:
    (1) Except as otherwise specified in this section, a person must 
accept every rated order received and must fill such orders regardless 
of any other rated or unrated orders that have been accepted.
    (2) A person must not discriminate against rated orders in any 
manner such as by charging higher prices or by imposing different terms 
and conditions than for comparable unrated orders.
    (b) Mandatory rejection. Unless otherwise directed by USDA for a 
rated order involving food resources, food resource facilities, 
livestock resources, veterinary resources, plant health resources, or 
the domestic distribution of farm equipment and commercial fertilizer:
    (1) A person must not accept a rated order for delivery on a 
specific date if unable to fill the order by that date. However, the 
person must inform the customer of the earliest date on which delivery 
can be made and offer to accept the order on the basis of that date. 
Scheduling conflicts with previously accepted lower rated or unrated 
orders are not sufficient reason for rejection in this section.
    (2) A person must not accept a DO-rated order for delivery on a date 
that would interfere with delivery of any previously accepted DO- or DX-
rated orders. However, the person must offer to accept the order based 
on the earliest delivery date otherwise possible.
    (3) A person must not accept a DX-rated order for delivery on a date 
that would interfere with delivery of any previously accepted DX-rated 
orders, but must offer to accept the order based on the earliest 
delivery date otherwise possible.
    (4) If a person is unable to fill all of the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders that can be filled, 
and reject the other orders. For example, a person must accept order A 
requiring delivery on December 15 before accepting order B requiring 
delivery on December 31. However, the person must offer to accept the 
rejected orders based on the earliest delivery dates otherwise possible.
    (5) A person must reject the rated order if the person is prohibited 
by Federal law from meeting the terms of the order.
    (c) Optional rejection. Unless otherwise directed by USDA for a 
rated order involving food resources, food resource facilities, 
livestock resources, veterinary resources, plant health resources, or 
the domestic distribution of farm equipment and commercial fertilizer, 
rated orders may be rejected in any of the following cases as long as a 
supplier does not discriminate among customers:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
capable of being performed;
    (3) If the order is for an item or service produced, acquired, or 
provided only for the supplier's own use for which no orders have been 
filled for 2 years prior to the date of receipt of the rated order. If, 
however, a supplier has sold some of these items or provided similar 
services, the supplier is obligated to accept rated orders up to that 
quantity or portion of production or

[[Page 404]]

service, whichever is greater, sold or provided within the past 2 years;
    (4) If the person placing the rated order, other than the Federal 
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated 
order would violate any other regulation, official action, or order of 
USDA, issued under the authority of the Defense Production Act or 
another relevant law.
    (d) Customer notification requirements. A person in receipt of a 
rated order is required to provide to the customer placing the order 
written or electronic notification of acceptance or rejection of the 
order.
    (1) Except as provided in paragraph (e) of this section, a person 
must accept or reject a rated order in writing or electronically within 
fifteen (15) working days after receipt of a DO-rated order and within 
ten (10) working days after receipt of a DX-rated order. If the order is 
rejected, the person must give reasons in writing or electronically for 
the rejection.
    (2) If a person has accepted a rated order and subsequently finds 
that shipment or performance will be delayed, the person must notify the 
customer immediately, give the reasons for the delay, and advise of a 
new shipment or performance date. If notification is given verbally, 
written or electronic confirmation must be provided within 5 working 
days.
    (e) Exception for emergency preparedness conditions. If the rated 
order is placed for the purpose of emergency preparedness and includes 
the additional statement as specified in Sec.  789.12(a)(4)(ii), a 
person must accept or reject a rated order and send the acceptance or 
rejection in writing or in an electronic format:
    (1) Within 6 hours after receipt of the order if the order is issued 
in response to a hazard that has occurred; or
    (2) Within the greater of 12 hours or the time specified in the 
order, if the order is issued to prepare for an imminent hazard.



Sec.  789.14  Preferential scheduling.

    (a) A person must schedule operations, including the acquisition of 
all needed production items or services, in a timely manner to satisfy 
the delivery requirements of each rated order. Modifying production or 
delivery schedules is necessary only when required delivery dates for 
rated orders cannot otherwise be met.
    (b) DO-rated orders must be given production preference over unrated 
orders, if necessary to meet required delivery dates, even if this 
requires the diversion of items being processed or ready for delivery or 
services being performed against unrated orders. Similarly, DX-rated 
orders must be given preference over DO-rated orders and unrated orders. 
(Examples: If a person receives a DO-rated order with a delivery date of 
June 3 and if meeting that date would mean delaying production or 
delivery of an item for an unrated order, the unrated order must be 
delayed. If a DX-rated order is received calling for delivery on July 15 
and a person has a DO-rated order requiring delivery on June 2 and 
operations can be scheduled to meet both deliveries, there is no need to 
alter production schedules to give any additional preference to the DX-
rated order.)
    (c) For conflicting rated orders:
    (1) If a person finds that delivery or performance against any 
accepted rated orders conflicts with the delivery or performance against 
other accepted rated orders of equal priority status, the person must 
give precedence to the conflicting orders in the sequence in which they 
are to be delivered or performed (not to the receipt dates). If the 
conflicting orders are scheduled to be delivered or performed on the 
same day, the person must give precedence to those orders that have the 
earliest receipt dates.
    (2) If a person is unable to resolve rated order delivery or 
performance conflicts as specified in this section, the person should 
promptly seek special priorities assistance as provided in Sec. Sec.  
789.20 through 789.24. If the person's customer objects to the 
rescheduling of delivery or performance of a rated order, the customer 
should promptly seek special priorities assistance as specified in 
Sec. Sec.  789.20 through 789.24. For any rated order against which 
delivery or performance will be delayed, the

[[Page 405]]

person must notify the customer as provided in Sec.  789.13(d)(2).
    (d) If a person is unable to purchase needed production items in 
time to fill a rated order by its required delivery date, the person 
must fill the rated order by using inventoried production items. A 
person who uses inventoried items to fill a rated order may replace 
those items with the use of a rated order as provided in Sec.  
789.17(b).



Sec.  789.15  Extension of priority ratings.

    (a) A person must use rated orders as necessary with suppliers to 
obtain items or services needed to fill a rated order. The person must 
use the priority rating indicated on the customer's rated order, except 
as otherwise provided in this part or as directed by USDA.
    (b) The priority rating must be included as necessary on each 
successive order placed to obtain items or services needed to fill a 
customer's rated order. This continues from contractor to subcontractor 
to supplier throughout the entire procurement chain.



Sec.  789.16  Changes or cancellations of priority ratings and rated orders.

    (a) The priority rating on a rated order may be changed or canceled 
by:
    (1) An official action of USDA; or
    (2) Written notification from the person who placed the rated order.
    (b) If an unrated order is amended so as to make it a rated order, 
or a DO rating is changed to a DX rating, the supplier must give the 
appropriate preferential treatment to the order as of the date the 
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a 
supplier's original production or delivery schedule constitutes a new 
rated order as of the date of its receipt. The supplier must accept or 
reject the amended order according to the provisions of Sec.  789.13.
    (d) The following amendments do not constitute a new rated order:
    (1) A change in shipping destination;
    (2) A reduction in the total amount of the order;
    (3) An increase in the total amount of the order that has a 
negligible impact upon deliveries;
    (4) A minor variation in size or design; or
    (5) A change that is agreed upon between the supplier and the 
customer.
    (e) If a person no longer needs items or services to fill a rated 
order, any rated orders placed with suppliers for the items or services, 
or the priority rating on those orders, must be canceled.
    (f) When a priority rating is added to an unrated order, or is 
changed or canceled, all suppliers must be promptly notified in writing.



Sec.  789.17  Use of rated orders.

    (a) A person must use rated orders as necessary to obtain:
    (1) Items that will be physically incorporated into other items to 
fill rated orders, including that portion of such items normally 
consumed or converted into scrap or by-products in the course of 
processing;
    (2) Containers or other packaging materials required to make 
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill 
rated orders; and
    (4) MRO needed to produce the finished items to fill rated orders.
    (b) A person may use a rated order to replace inventoried items 
(including finished items) if such items were used to fill rated orders, 
as follows:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (2) A DO rating and the program identification symbol indicated on 
the customer's rated order must be used on the order. A DX rating must 
not be used even if the inventory was used to fill a DX-rated order.
    (3) If the priority ratings on rated orders from one customer or 
several customers contain different program identification symbols, the 
rated orders may be combined. In this case, the program identification 
symbol P4 must be used (that is DO-P4).
    (c) A person may combine DX- and DO-rated orders from one customer 
or several customers if the items or services covered by each level of 
priority are identified separately and clearly. If different program 
identification symbols are indicated on those rated orders

[[Page 406]]

of equal priority, the person must use the program identification symbol 
P4 (that is DO-P4 or DX-P4).
    (d) For combining rated and unrated orders:
    (1) A person may combine rated and unrated order quantities on one 
purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec.  
789.12, are included on the order with the statement required in Sec.  
789.12(a)(4)(i) modified to read:

    This purchase order contains rated order quantities certified for 
national defense use, and you are required to follow all the provisions 
of the Agriculture Priorities and Allocations System regulation in 7 CFR 
part 789 only as it pertains to the rated quantities.

    (2) A supplier must accept or reject the rated portion of the 
purchase order as provided in Sec.  789.13 and give preferential 
treatment only to the rated quantities as required by this part. This 
part must not be used to require preferential treatment for the unrated 
portion of the order.
    (3) Any supplier who believes that rated and unrated orders are 
being combined in a manner contrary to the intent of this part or in a 
fashion that causes undue or exceptional hardship may submit a request 
for adjustment or exception as specified in Sec.  789.60.
    (e) A person may place a rated order for the minimum commercially 
procurable quantity even if the quantity needed to fill a rated order is 
less than that minimum. However, a person must combine rated orders as 
provided in paragraph (c) of this section, if possible, to obtain 
minimum procurable quantities.
    (f) A person is not required to place a priority rating on an order 
for less than $75,000 or one-half of the Simplified Acquisition 
Threshold (as established in the Federal Acquisition Regulation (FAR) 
(see 48 CFR 2.101) or in other authorized acquisition regulatory or 
management systems) whichever amount is greater, provided that delivery 
can be obtained in a timely fashion without the use of the priority 
rating.



Sec.  789.18  Limitations on placing rated orders.

    (a) General limitations. Rated orders may be placed only by persons 
with the proper authority for items and services that are needed to 
support approved programs.
    (1) A person must not place a DO- or DX-rated order unless 
authorized by USDA to do so under this part.
    (2) Rated orders must not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item or services than needed, except 
to obtain a minimum procurable quantity. Separate rated orders must not 
be placed solely for the purpose of obtaining minimum procurable 
quantities on each order;
    (iii) Items or services in advance of the receipt of a rated order, 
except as specifically authorized by USDA (see Sec.  789.21(c) for 
information on obtaining authorization for a priority rating in advance 
of a rated order);
    (iv) Items that are not needed to fill a rated order, except as 
specifically authorized by USDA or as otherwise permitted by this part;
    (v) Any of the following items unless specific priority rating 
authority has been obtained from USDA or the Department of Commerce, as 
appropriate:
    (A) Items for plant improvement, expansion, or construction, unless 
they will be physically incorporated into a construction project covered 
by a rated order; and
    (B) Production or construction equipment or items to be used for the 
manufacture of production equipment. For information on requesting 
priority rating authority, see Sec.  789.21; or
    (vi) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons, unless such development or production has been authorized by 
the President or the Secretary of Defense.
    (b) Jurisdictional limitations. (1) Unless authorized by the 
resource agency with jurisdiction (see Sec.  789.10), the provisions of 
this part are not applicable to the following resources:

[[Page 407]]

    (i) All forms of energy (Resource agency with jurisdiction--
Department of Energy);
    (ii) Health resources (Resource agency with jurisdiction--Department 
of Health and Human Services);
    (iii) All forms of civil transportation (Resource agency with 
jurisdiction--Department of Transportation);
    (iv) Water resources (Resource agency with jurisdiction--Department 
of Defense, U.S. Army Corps of Engineers);
    (v) All materials, services, and facilities, including construction 
materials for which the authority has not been delegated to other 
agencies under Executive Order 13603 (Resource agency with 
jurisdiction--Department of Commerce); and
    (2) The priorities and allocations authority in this part may not be 
applied to communications services subject to Executive Order 13618 of 
July 6, 2012 (3 CFR, 2012 Comp., p. 273).



                 Subpart D_Special Priorities Assistance



Sec.  789.20  General provisions.

    (a) APAS is designed to be largely self-executing. However, if 
production or delivery problems arise, a person should immediately 
contact the Farm Service Agency Administrator for special priorities 
assistance pursuant to Sec. Sec.  789.20 through 789.24 and as directed 
by Sec.  789.73. If the Farm Service Agency is unable to resolve the 
problem or to authorize the use of a priority rating and believes 
additional assistance is warranted, USDA may forward the request to 
another resource agency, as appropriate, for action. Special priorities 
assistance is a service provided to alleviate problems.
    (b) Special priorities assistance is available for any reason 
consistent with this part. Generally, special priorities assistance is 
provided to expedite deliveries, resolve delivery conflicts, place rated 
orders, locate suppliers, or verify information supplied by customers 
and vendors. Special priorities assistance may also be used to request 
rating authority for items that are not normally eligible for priority 
treatment.
    (c) A request for special priorities assistance or priority rating 
authority must be submitted on Form AD-2102 (OMB Control Number 0560-
0280) to the Farm Service Agency as provided in paragraph (a) of this 
section. Form AD-2102 may be obtained from USDA by downloading the form 
and instructions from http://forms.sc.egov.usda.gov/eForms/
welcomeAction.do?Home or by contacting the Administrator of the Farm 
Service Agency as specified in Sec.  789.73. Either mail or fax the form 
to USDA, using the address or fax number shown on the form.



Sec.  789.21  Requests for priority rating authority.

    (a) Rating authority for items or services not normally rated. If a 
rated order is likely to be delayed because a person is unable to obtain 
items or services not normally rated under this part, the person may 
request the authority to use a priority rating in ordering the needed 
items or services.
    (b) Rating authority for production or construction equipment. For a 
rated order for production or construction equipment not under the 
resource jurisdiction of USDA, follow the regulation in 15 CFR part 700.
    (1) A request for priority rating authority for production or 
construction equipment must be submitted to the U.S. Department of 
Commerce on Form BIS-999 (see 15 CFR 700.51). Form BIS-999 may be 
obtained from USDA as specified in Sec.  789.20(c) or from the 
Department of Commerce as specified in 15 CFR 700.50.
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment, a rated order may 
be used either to purchase or to lease such equipment. However, in the 
latter case, the equipment may be leased only from a person engaged in 
the business of leasing such equipment or from a person willing to lease 
rather than sell.
    (c) For rating authority in advance of a rated prime contract:
    (1) In certain cases and upon specific request, USDA, in order to 
promote the national defense, may authorize a person to place a priority 
rating on an order to a supplier in advance of the issuance of a rated 
prime contract. In

[[Page 408]]

these instances, the person requesting advance rating authority must 
obtain sponsorship of the request from USDA. The person assumes any 
business risk associated with the placing of a rated order if the order 
has to be canceled in the event the rated prime contract is not issued.
    (2) The person must state the following in the request:

    It is understood that the authorization of a priority rating in 
advance of our receiving a rated prime contract from USDA and our use of 
that priority rating with our suppliers in no way commits USDA or any 
other government agency to enter into a contract or order or to expend 
funds. Further, we understand that the Federal Government will not be 
liable for any cancellation charges, termination costs, or other damages 
that may accrue if a rated prime contract is not eventually placed and, 
as a result, we must subsequently cancel orders placed with the use of 
the priority rating authorized as a result of this request.

    (3) In reviewing requests for rating authority in advance of a rated 
prime contract, USDA will consider, among other things, the following 
criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time; and
    (v) The time period for which the rating is being requested.
    (4) USDA may require periodic reports on the use of the rating 
authority granted through paragraph (c) of this section.
    (5) If a rated prime contract is not issued, the person will 
promptly notify each supplier who has received any rated order related 
to the advanced rating authority that the priority rating on the order 
is canceled.



Sec.  789.22  Examples of assistance.

    (a) While special priorities assistance may be provided for any 
reason in support of this part, it is usually provided in situations in 
which:
    (1) A person is experiencing difficulty in obtaining delivery 
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item or service needed 
to fill a rated order.
    (b) Other examples of special priorities assistance include:
    (1) Ensuring that rated orders receive preferential treatment by 
suppliers;
    (2) Resolving production or delivery conflicts between various rated 
orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.



Sec.  789.23  Criteria for assistance.

    (a) Requests for special priorities assistance should be timely (for 
example, the request has been submitted promptly and enough time exists 
for USDA to meaningfully resolve the problem), and must establish that:
    (1) There is an urgent need for the item; and
    (2) The applicant has made a reasonable effort to resolve the 
problem.
    (b) [Reserved]



Sec.  789.24  Instances in which assistance must not be provided.

    (a) Special priorities assistance is provided at the discretion of 
USDA when it is determined that such assistance is warranted to meet the 
objectives of this part. Examples in which assistance must not be 
provided include situations in which a person is attempting to:
    (1) Secure a price advantage;
    (2) Obtain delivery prior to the time required to fill a rated 
order;
    (3) Gain competitive advantage;
    (4) Disrupt an industry apportionment program in a manner designed 
to provide a person with an unwarranted share of scarce items; or
    (5) Overcome a supplier's regularly established terms of sale or 
conditions of doing business.
    (b) [Reserved]



                      Subpart E_Allocations Actions



Sec.  789.30  Policy.

    (a) It is the policy of the Federal Government that the allocations 
authority under Title I of the Defense Production Act may:

[[Page 409]]

    (1) Only be used when there is insufficient supply of a material, 
service, or facility to satisfy national defense supply requirements 
through the use of the priorities authority or when the use of the 
priorities authority would cause a severe and prolonged disruption in 
the supply of materials, services, or facilities available to support 
normal U.S. economic activities; and
    (2) Not be used to ration materials or services at the retail level.
    (b) Allocations orders, when used, will be distributed equitably 
among the suppliers of the materials, services, or facilities being 
allocated and not require any person to relinquish a disproportionate 
share of the civilian market.



Sec.  789.31  General procedures.

    (a) When USDA plans to execute its allocations authority to address 
a supply problem within its resource jurisdiction, USDA will develop a 
plan that includes the following information:
    (1) A copy of the written determination made in accordance with 
section 202 of Executive Order 13603, that the program or programs that 
would be supported by the allocations action are necessary or 
appropriate to promote the national defense;
    (2) A detailed description of the situation to include any unusual 
events or circumstances that have created the requirement for an 
allocations action;
    (3) A statement of the specific objective(s) of the allocations 
action;
    (4) A list of the materials, services, or facilities to be 
allocated;
    (5) A list of the sources of the materials, services, or facilities 
that will be subject to the allocations action;
    (6) A detailed description of the provisions that will be included 
in the allocations orders, including the type(s) of allocations orders, 
the percentages or quantity of capacity or output to be allocated for 
each purpose, and the duration of the allocations action (for example, 
anticipated start and end dates);
    (7) An evaluation of the impact of the proposed allocations action 
on the civilian market; and
    (8) Proposed actions, if any, to mitigate disruptions to civilian 
market operations.
    (b) [Reserved]



Sec.  789.32  Precedence over priority rated orders.

    If a conflict occurs between an allocations order and an unrelated 
rated order or priorities directive, the allocations order takes 
precedence.



Sec.  789.33  Controlling the general distribution of a material in the
civilian market.

    (a) No allocations by USDA may be used to control the general 
distribution of a material in the civilian market, unless the Secretary 
has:
    (1) Made a written finding that:
    (i) Such material is a scarce and critical material essential to the 
national defense; and
    (ii) The requirements of the national defense for such material 
cannot otherwise be met without creating a significant dislocation of 
the normal distribution of such material in the civilian market to such 
a degree as to create appreciable hardship;
    (2) Submitted the finding for the President's approval through the 
Assistant to the President and National Security Advisor and the 
Assistant to the President for Homeland Security and Counterterrorism; 
and
    (3) The President has approved the finding.
    (b) [Reserved]



Sec.  789.34  Types of allocations orders.

    (a) The three types of allocations orders that may be used for 
allocations actions are:
    (1) Set-asides;
    (2) Directives; and
    (3) Allotments.
    (b) [Reserved]



Sec.  789.35  Elements of an allocations order.

    (a) Each allocations order will include:
    (1) A detailed description of the required allocations action(s);
    (2) Specific start and end calendar dates for each required 
allocations action;
    (3) The Secretary's written signature on a manually placed order, or 
the digital signature or name on an electronically placed order, of the 
Secretary.

[[Page 410]]

The signature or use of the name certifies that the order is authorized 
as specified in this part and that the requirements of this part are 
being followed;
    (4) A statement that reads: ``This is an allocations order certified 
for national defense use. [Insert the legal name of the person receiving 
the order] is required to comply with this order, in accordance with the 
provisions of 7 CFR part 789;'' and
    (5) A current copy of the APAS regulation (7 CFR part 789).
    (b) [Reserved]



Sec.  789.36  Mandatory acceptance of allocations orders.

    (a) A person must accept every allocations order received that the 
person is capable of fulfilling, and must comply with such orders 
regardless of any rated order that the person may be in receipt of or 
other commitments involving the resource(s) covered by the allocations 
order.
    (b) A person must not discriminate against an allocations order in 
any manner such as by charging higher prices for resources covered by 
the order or by imposing terms and conditions for contracts and orders 
involving allocated resources(s) that differ from the person's terms and 
conditions for contracts and orders for the resource(s) prior to 
receiving the allocations order.
    (c) If circumstances prevent a person from being able to accept an 
allocations order, the person must comply with the provisions specified 
in Sec.  789.60 upon realization of the inability to accept the order.



Sec.  789.37  Changes or cancellations of allocations orders.

    An allocations order may be changed or canceled by an official 
action of USDA.



                       Subpart F_Official Actions



Sec.  789.40  General provisions.

    (a) USDA may take specific official actions to implement the 
provisions of this part.
    (b) Several of these official actions (rating authorizations, 
directives, and letters of understanding) are discussed in this subpart. 
Other official actions that pertain to compliance (administrative 
subpoenas, demands for information, and inspection authorizations) are 
discussed in Sec.  789.51(c).



Sec.  789.41  Rating authorizations.

    (a) A rating authorization is an official action granting specific 
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an 
item or service not normally ratable under this part; or
    (2) Authorizes a person to modify a priority rating on a specific 
order or series of contracts or orders.
    (b) To request priority rating authority, see section Sec.  789.21.



Sec.  789.42  Directives.

    (a) A directive is an official action that requires a person to take 
or refrain from taking certain actions in accordance with the provisions 
of the directive.
    (b) A person must comply with each directive issued. However, a 
person may not use or extend a directive to obtain any items from a 
supplier, unless expressly authorized to do so in the directive.
    (c) A priorities directive takes precedence over all DX-rated 
orders, DO-rated orders, and unrated orders previously or subsequently 
received, unless a contrary instruction appears in the directive.
    (d) An allocations directive takes precedence over all priorities 
directives, DX-rated orders, DO-rated orders, and unrated orders 
previously or subsequently received, unless a contrary instruction 
appears in the directive.



Sec.  789.43  Letters of understanding.

    (a) A letter of understanding is an official action that may be 
issued in resolving special priorities assistance cases to reflect an 
agreement reached by all parties (USDA, the Department of Commerce (if 
applicable), a delegate agency (if applicable), the supplier, and the 
customer).
    (b) A letter of understanding is not used to alter scheduling 
between rated orders, to authorize the use of priority ratings, to 
impose restrictions under

[[Page 411]]

this part, or to take other official actions. Rather, letters of 
understanding are used to confirm production or shipping schedules that 
do not require modifications to other rated orders.



                          Subpart G_Compliance



Sec.  789.50  General provisions.

    (a) USDA may take specific official actions for any reason necessary 
or appropriate to the enforcement or the administration of the Defense 
Production Act and other applicable statutes, this part, or an official 
action. Such actions include administrative subpoenas, demands for 
information, and inspection authorizations.
    (b) Any person who places or receives a rated order or an 
allocations order must comply with the provisions of this part.
    (c) Willful violation of the provisions of Title I or section 705 of 
the Defense Production Act and other applicable statutes, this part, or 
an official action of USDA, is a criminal act, punishable as provided in 
the Defense Production Act and other applicable statutes, and as 
specified in Sec.  789.54.



Sec.  789.51  Audits and investigations.

    (a) Audits and investigations are official examinations of books, 
records, documents, other writings, and information to ensure that the 
provisions of the Defense Production Act and other applicable statutes, 
this part, and official actions have been properly followed. An audit or 
investigation may also include interviews and a systems evaluation to 
detect problems or failures in the implementation of this part.
    (b) When undertaking an audit, investigation, or other inquiry, USDA 
will:
    (1) Scope and purpose. Define the scope and purpose in the official 
action given to the person under investigation; and
    (2) Information not available. Have ascertained that the information 
sought or other adequate and authoritative data are not available from 
any Federal or other responsible agency.
    (c) In administering this part, USDA may issue the following 
documents that constitute official actions:
    (1) Administrative subpoenas. An administrative subpoena requires a 
person to appear as a witness before an official designated by USDA to 
testify under oath on matters of which that person has knowledge 
relating to the enforcement or the administration of the Defense 
Production Act and other applicable laws, this part, or official 
actions. An administrative subpoena may also require the production of 
books, papers, records, documents, and physical objects or property.
    (2) Demands for information. A demand for information requires a 
person to furnish to a duly authorized representative of USDA any 
information necessary or appropriate to the enforcement or the 
administration of the Defense Production Act and other applicable 
statutes, this part, or official actions.
    (3) Inspection authorizations. An inspection authorization requires 
a person to permit a duly authorized representative of USDA to interview 
the person's employees or agents, to inspect books, records, documents, 
other writings, and information, including electronically-stored 
information, in the person's possession or control at the place where 
that person usually keeps them or otherwise, and to inspect a person's 
property when such interviews and inspections are necessary or 
appropriate to the enforcement or the administration of the Defense 
Production Act and other related laws, this part, or official actions.
    (d) The production of books, records, documents, other writings, and 
information will not be required at any place other than where they are 
usually kept if, prior to the return date specified in the 
administrative subpoena or demand for information, a duly authorized 
official of USDA is furnished with copies of such material that are 
certified under oath to be true copies. As an alternative, a person may 
enter into a stipulation with a duly authorized official of USDA as to 
the content of the material.
    (e) An administrative subpoena, demand for information, or 
inspection authorization will include the name, title, or official 
position of the person to be served, the evidence sought, and its 
general relevance to the scope and

[[Page 412]]

purpose of the audit, investigation, or other inquiry. If employees or 
agents are to be interviewed; if books, records, documents, other 
writings, or information are to be produced; or if property is to be 
inspected; the administrative subpoena, demand for information, or 
inspection authorization will describe the requirements.
    (f) Service of documents will be made in the following manner:
    (1) In person. Service of a demand for information or inspection 
authorization will be made personally, or by certified mail-return 
receipt requested at the person's last known address. Service of an 
administrative subpoena will be made personally. Personal service may 
also be made by leaving a copy of the document with someone at least 18 
years old at the person's last known dwelling or place of business.
    (2) Other than to the named individual. Service upon other than an 
individual may be made by serving a partner, corporate officer, or a 
managing or general agent authorized by appointment or by law to accept 
service of process. If an agent is served, a copy of the document will 
be mailed to the person named in the document.
    (3) Delivering individual and documentation. Any individual 18 years 
of age or over may serve an administrative subpoena, demand for 
information, or inspection authorization. When personal service is made, 
the individual making the service must prepare an affidavit specifying 
the manner in which service was made and the identity of the person 
served, and return the affidavit, and in the case of subpoenas, the 
original document, to the issuing officer. In case of failure to make 
service, the reasons for the failure will be stated on the original 
document.



Sec.  789.52  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative 
of USDA to have access to any premises or source of information 
necessary to the administration or the enforcement of the Defense 
Production Act and other applicable laws, this part, or official 
actions, the USDA representative may seek compulsory process. Compulsory 
process is the institution of appropriate legal action, including ex 
parte application for an inspection warrant or its equivalent, in any 
forum of appropriate jurisdiction.
    (b) Compulsory process may be sought in advance of an audit, 
investigation, or other inquiry, if, in the judgment of USDA, there is 
reason to believe that a person will refuse to permit an audit, 
investigation, or other inquiry, or that other circumstances exist that 
make such process desirable or necessary.



Sec.  789.53  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry, 
or at any other time, USDA may inform the person in writing when 
compliance with the requirements of the Defense Production Act and other 
applicable laws, this part, or an official action was not met.
    (b) In cases in which USDA determines that failure to comply with 
the provisions of the Defense Production Act and other applicable laws, 
this part, or an official action was inadvertent, the person may be 
informed in writing of the particulars involved and the corrective 
action to be taken. Failure to take corrective action may then be 
construed as a willful violation of the Defense Production Act and other 
applicable laws, this part, or an official action.



Sec.  789.54  Violations, penalties, and remedies.

    (a) Willful violation of the Defense Production Act, the priorities 
provisions of the Military Selective Service Act (50 U.S.C. App. 468), 
this part, or an official action, is a crime and upon conviction, a 
person may be punished by fine or imprisonment, or both. The maximum 
penalty provided by the Defense Production Act is a $10,000 fine, or 1 
year in prison, or both. The maximum penalty provided by the Military 
Selective Service Act is a $50,000 fine, or 3 years in prison, or both.
    (b) The Government may also seek an injunction from a court of 
appropriate jurisdiction to prohibit the continuance of any violation 
of, or to enforce compliance with, the Defense Production Act, this 
part, or an official action.

[[Page 413]]

    (c) In order to secure the effective enforcement of the Defense 
Production Act and other applicable laws, this part, and official 
actions, certain actions as follows are prohibited:
    (1) Soliciting, influencing, or permitting another person to perform 
any act prohibited by, or to omit any act required by, the Defense 
Production Act and other applicable laws, this part, or an official 
action.
    (2) Conspiring or acting in concert with any other person to perform 
any act prohibited by, or to omit any act required by, the Defense 
Production Act and other applicable laws, this part, or an official 
action.
    (3) Delivering any item if the person knows or has reason to believe 
that the item will be accepted, redelivered, held, or used in violation 
of the Defense Production Act and other applicable laws, this part, or 
an official action. In such instances, the person must immediately 
notify USDA that, in accordance with this provision, delivery has not 
been made.



Sec.  789.55  Compliance conflicts.

    If compliance with any provision of the Defense Production Act and 
other applicable laws, this part, or an official action would prevent a 
person from filling a rated order or from complying with another 
provision of the Defense Production Act and other applicable laws, this 
part, or an official action, the person must immediately notify USDA for 
resolution of the conflict.



             Subpart H_Adjustments, Exceptions, and Appeals



Sec.  789.60  Adjustments or exceptions.

    (a) A person may submit a request to the Farm Service Agency Deputy 
Administrator for Management, as directed in Sec.  789.73, for an 
adjustment or exception on the ground that:
    (1) A provision of this part or an official action results in an 
undue or exceptional hardship on that person not suffered generally by 
others in similar situations and circumstances; or
    (2) The consequences of following a provision of this part or an 
official action is contrary to the intent of the Defense Production Act 
and other applicable laws, or this part.
    (b) Each request for adjustment or exception must be in writing and 
contain a complete statement of all the facts and circumstances related 
to the provision of this part or official action from which adjustment 
is sought and a full and precise statement of the reasons why relief 
should be provided.
    (c) The submission of a request for adjustment or exception will not 
relieve any person from the obligation of complying with the provision 
of this part or official action in question while the request is being 
considered unless such interim relief is granted in writing by the Farm 
Service Agency Deputy Administrator for Management.
    (d) A decision of the Farm Service Agency Deputy Administrator for 
Management under this section may be appealed to the Farm Service Agency 
Administrator. (For information on the appeal procedure, see Sec.  
789.61.)



Sec.  789.61  Appeals.

    (a) Any person whose request for adjustment or exception has been 
denied by the Farm Service Agency Deputy Administrator for Management as 
specified in Sec.  789.60, may appeal to the Farm Service Agency 
Administrator who will review and reconsider the denial.
    (b) A person must submit the appeal in writing to the Farm Service 
Agency Administrator as follows:
    (1) Except as provided in paragraph (b)(2) of this section, an 
appeal must be received by the Farm Service Agency Administrator no 
later than 45 days after receipt of a written notice of denial from the 
Farm Service Agency Deputy Administrator for Management. After the 45-
day period, an appeal may be accepted at the discretion of the Farm 
Service Agency Administrator if the person shows good cause.
    (2) For requests for adjustment or exception involving rated orders 
placed for the purpose of emergency preparedness (see Sec.  789.13(e)), 
an appeal must be received by the Farm Service Agency Administrator no 
later than 15 days after receipt of a written notice of denial from the 
Farm Service Agency Deputy Administrator for Management.

[[Page 414]]

    (c) Contract performance under the order may not be stayed pending 
resolution of the appeal.
    (d) Each appeal must be in writing and contain a complete statement 
of all the facts and circumstances related to the appealed action and a 
full and precise statement of the reasons the decision should be 
modified or reversed.
    (e) In addition to the written materials submitted in support of an 
appeal, an appellant may request, in writing, an opportunity for an 
informal hearing. This request may be granted or denied at the 
discretion of the Farm Service Agency Administrator.
    (f) When a hearing is granted, the Farm Service Agency Administrator 
may designate an employee of the Farm Service Agency to conduct the 
hearing and to prepare a report. The hearing officer will determine all 
procedural questions and impose such time or other limitations deemed 
reasonable. If the hearing officer decides that a printed transcript is 
necessary, the transcript expenses must be paid by the appellant.
    (g) When determining an appeal, the Farm Service Agency 
Administrator may consider all information submitted during the appeal 
as well as any recommendations, reports, or other relevant information 
and documents available to USDA, or consult with any other person or 
group.
    (h) The submission of an appeal under this section will not relieve 
any person from the obligation of complying with the provision of this 
part or official action in question while the appeal is being considered 
unless such relief is granted in writing by the Farm Service Agency 
Administrator.
    (i) The decision of the Farm Service Agency Administrator will be 
made within 5 days after receipt of the appeal, or within 1 day for 
appeals pertaining to emergency preparedness, and will be the final 
administrative action. The Administrator will issue a written statement 
of the reasons for the decision to the appellant.



                   Subpart I_Miscellaneous Provisions



Sec.  789.70  Protection against claims.

    A person will not be held liable for damages or penalties for any 
act or failure to act resulting directly or indirectly from compliance 
with any provision of this part, or an official action, even if such 
provision or action is subsequently declared invalid by judicial or 
other competent authority.



Sec.  789.71  Records and reports.

    (a) Persons are required to make and preserve for at least 3 years, 
accurate and complete records of any transaction covered by this part or 
an official action.
    (b) Records must be maintained in sufficient detail to permit the 
determination, upon examination, of whether each transaction complies 
with the provisions of this part or any official action. However, this 
part does not specify any particular method or system to be used.
    (c) Records required to be maintained by this part must be made 
available for examination on demand by duly authorized representatives 
of USDA as provided in Sec.  789.51.
    (d) In addition, persons must develop, maintain, and submit any 
other records and reports to USDA that may be required for the 
administration of the Defense Production Act and other applicable 
statutes, and this part.
    (e) Section 705(d) of the Defense Production Act, as implemented by 
Executive Order 13603, provides that information obtained under that 
section which the Secretary deems confidential, or with reference to 
which a request for confidential treatment is made by the person 
furnishing such information, will not be published or disclosed unless 
the Secretary determines that the withholding of this information is 
contrary to the interest of the national defense. Information required 
to be submitted to USDA in connection with the enforcement or 
administration of the Defense Production Act, this part, or an official 
action, is deemed to be confidential under section 705(d) of the Defense 
Production Act and will be handled in accordance with applicable Federal 
law.

[[Page 415]]



Sec.  789.72  Applicability of this part and official actions.

    (a) This part and all official actions, unless specifically stated 
otherwise, apply to transactions in any State, territory, or possession 
of the United States and the District of Columbia.
    (b) This part and all official actions apply not only to deliveries 
to other persons but also include deliveries to affiliates and 
subsidiaries of a person and deliveries from one branch, division, or 
section of a single entity to another branch, division, or section under 
common ownership or control.
    (c) This part and its schedules will not be construed to affect any 
administrative actions taken by USDA, or any outstanding contracts or 
orders placed based on any of the regulations, orders, schedules, or 
delegations of authority previously issued by USDA based on authority 
granted to the President in the Defense Production Act. Such actions, 
contracts, or orders will continue in full force and effect under this 
part unless modified or terminated by proper authority.



Sec.  789.73  Communications.

    Except as otherwise provided, all communications concerning this 
part, including requests for copies of this part and explanatory 
information, requests for guidance or clarification, and submission of 
appeals as specified in Sec.  789.61 will be addressed to the 
Administrator, Farm Service Agency, Room 4752, Mail Stop 0512, USDA, 
1400 Independence Ave. SW., Washington, DC 20250-0512 or email: 
[email protected]. This address is also to be used for requests for 
adjustments or exceptions to the Farm Service Agency Deputy 
Administrator for Management as specified in Sec.  789.60.



  Sec. Schedule I to Part 789--Approved Programs and Delegate Agencies

    The programs listed in this schedule have been approved for 
priorities and allocations support under this part by the Department of 
Defense, Department of Energy, or Department of Homeland Security as 
required by section 202 of Executive Order 13603. They have equal 
preferential status. USDA has authorized the delegate agencies to use 
the authorities in this part in support of those programs assigned to 
them, as indicated below.

------------------------------------------------------------------------
   Program identification                            Authorized delegate
           symbol               Approved program           agency
------------------------------------------------------------------------
Agriculture programs:
    P1......................  Food and food         USDA, Department of
                               resources             Homeland Security,
                               (civilian).           Federal Emergency
                                                     Management Agency
    P2......................  Agriculture and food  USDA
                               critical
                               infrastructure
                               protection and
                               restoration.
    P3......................  Food resources        Department of
                               (combat rations).     Defense \1\
    P4......................  Certain combined      USDA
                               orders (see Sec.
                               789.17).
------------------------------------------------------------------------
\1\ Department of Defense includes: The Office of the Secretary of
  Defense, the Military Departments, the Joint Staff, the Combatant
  Commands, the Defense Agencies, the Defense Field Activities, all
  other organizational entities in the Department of Defense, and for
  purpose of this part, the Central Intelligence Agency, and the
  National Aeronautics and Space Administration as Associated Agencies.


[[Page 416]]



         SUBCHAPTER E_PROVISIONS COMMON TO MORE THAN ONE PROGRAM





PART 792_DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents



Sec.
792.1 Applicability.
792.2 Administration.
792.3 Definitions.
792.4 Demand for payment of debts.
792.5 Collection by payment in full.
792.6 Collection by installment payments.
792.7 Collection by administrative offset.
792.8 Priorities of offsets versus assignments.
792.9 Withholding.
792.10 Late payment interest, penalty and administrative charges.
792.11 Waiver of late payment interest, penalty charge and 
          administrative charges.
792.12 Administrative appeal.
792.13 Additional administrative collection action.
792.14 Contact with debtor's employing agency.
792.15 Prior provision of rights with respect to debt.
792.16 Discharge of debts.
792.17 Referral of delinquent debts to credit reporting agencies.
792.18 Referral of debts to Department of Justice.
792.19 Referral of delinquent debts to IRS for tax refund offset.
792.20 Reporting discharged debts to IRS.
792.21 Referral of debts to private collection agencies.
792.22 Collection and compromise.

    Authority: 31 U.S.C. 3701, 3711, 3716-3719, 3728; 4 CFR parts 101-
105; 7 CFR 3.21(b).

    Source: 59 FR 15829, Apr. 5, 1994, unless otherwise noted.



Sec.  792.1  Applicability.

    Except as may otherwise be provided by statute, this part sets forth 
the manner in which the Farm Service Agency (FSA) will settle and 
collect debts by FSA. The provisions of part 1403 of this title are 
applicable to actions of FSA regarding the settlement and collection of 
debts on the behalf of the Commodity Credit Corporation (CCC).



Sec.  792.2  Administration.

    The regulations in this part will be administered under the general 
supervision and direction of the Administrator, FSA.



Sec.  792.3  Definitions.

    The following definitions shall be applicable to this part:
    Administrative charges means the additional costs of processing 
delinquent debts against the debtor, to the extent such costs are 
attributable to the delinquency. Such costs include, but are not limited 
to, costs incurred in obtaining a credit report, costs of employing 
commercial firms to locate debtor, costs of employing contractors for 
collection services, costs of selling collateral or property to satisfy 
the debt.
    Administrative offset means deducting money payable or held by the 
United States Government, or any agency thereof, to satisfy in whole or 
in part a debt owed the Government, or any agency thereof.
    FSA means the Farm Service Agency of the United States Department of 
Agriculture (USDA).
    CCC means the Commodity Credit Corporation.
    Certified financial statement means an account of the assets, 
liabilities, income and expenses of a debtor, executed in accordance 
with generally accepted accounting principles and attested to as 
accurate by the debtor and preparer, under penalty of perjury.
    Claim means an amount of money or property which has been determined 
by FSA, after a notice of delinquency and a demand for the payment of 
the debt has been made by FSA, to be owed to FSA by any person other 
than a Federal agency.
    Credit reporting agency means: (1) A reporting agency as defined at 
4 CFR 102.5(a), or
    (2) Any entity which has entered into an agreement with USDA 
concerning the referral of credit information.
    Debt means any amount owed to FSA which has not been satisfied 
through payment or otherwise.
    Debt record refers to the account, register, balance sheet, file, 
ledger, data

[[Page 417]]

file, or similar record of debts owed to FSA, CCC, or any other 
Government Agency with respect to which collection action is being 
pursued, and which is maintained in an FSA office.
    Delinquent debt means: (1) Any debt owed to FSA that has not been 
paid by the date specified in the applicable statute, regulation, 
contract, or agreement; or
    (2) Any debt that has not been paid by the date of an initial 
notification of indebtedness mailed or hand-delivered pursuant to Sec.  
792.4.
    Discharged debt means any debt, or part thereof, which FSA has 
determined is uncollectible and has closed out, and if the amount in 
controversy exceeds $100,000.00, excluding interest and administrative 
charges, or such higher amount as may be prescribed, in which the 
Department of Justice has concurred in such determination.
    IRS means the Internal Revenue Service.
    Late payment interest rate means the amount of interest charged on 
delinquent debts and claims. The late payment interest rate shall be 
determined as of the date a debt becomes delinquent and shall be equal 
to the higher of the Prompt Payment Act interest rate or the standard 
late payment rate prescribed by 31 U.S.C. 3717, which is based on the 
Treasury Department's current value of funds rate.
    Person means an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable, the Federal Government or a State government, or 
any agency thereof.
    Salary offset means the deduction of money from the current pay 
account of a present or former Government employee payable by the United 
States Government to, or held by the Government for, such person to 
satisfy a debt that person owes the Government.
    Settlement means any final disposition of a debt or claim.
    System of records means a group of any records under the control of 
FSA or CCC from which information is retrieved by the name of the 
individual, organization or other entity or by some identifying number, 
symbol, or other identification assigned to the individual, organization 
or other entity.
    Withholding means the taking of action to temporarily prevent the 
payment of some or all amounts to a debtor under one or more contracts 
or programs.



Sec.  792.4  Demand for payment of debts.

    (a) When a debt is due FSA, an initial written demand for payment of 
such amount shall be mailed or hand-delivered to the debtor. If the debt 
is not paid in full by the date specified in the initial demand letter, 
or if a repayment schedule acceptable to FSA has not been arranged with 
the debtor, the initial demand may be followed by two subsequent written 
demands at approximately 30-day intervals, unless it is determined by 
FSA that further demands would be futile and the debtor's response does 
not require rebuttal. The initial or subsequent demand letters shall 
specify the following:
    (1) The basis for and the amount of the debt determined to be due 
FSA, including the principal, applicable interest, costs, and other 
charges;
    (2) FSA' intent to establish an account on a debt record 30 days 
after the date of the letter, or other applicable period of time, if the 
debt is not paid within that time;
    (3) The applicable late payment interest rate.
    (i) If a late payment interest rate is specified in the contract, 
agreement or program regulation, the debtor shall be informed of that 
rate and the date from which the late payment interest has been 
accruing;
    (ii) If a late payment interest rate is not specified in the 
contract, agreement or program regulation, the debtor shall be informed 
of the applicable late payment interest rate set out in Sec.  792.10.
    (4) FSA' intent, if applicable, to collect the debt 30 days from the 
date of the initial demand letter, or other applicable period of time, 
by administrative offset from any CCC or FSA payments due or to become 
due to the debtor, and that the claim may be reported to other agencies 
of the Federal government for offset from any amounts due or to become 
due to the debtor;

[[Page 418]]

    (5) FSA' intent, if applicable, under Sec.  792.17, to report any 
delinquent debt to a credit reporting agency no sooner than 60 days from 
the date of the letter;
    (6) FSA' intent, if applicable, under Sec.  792.19, to refer any 
delinquent debt to the IRS, no sooner than 60 days from the date of the 
letter, to be considered for offset against any tax refund due or to 
become due the debtor.
    (7) If not previously provided, the debtor's right to request 
administrative review by an authorized FSA official, and the proper 
procedure for making such request. If the request relates to the:
    (i) Existence or amount of the debt, it must be made within 15 days 
from the date of the letter, unless a different time period is specified 
in the contract, agreement or program regulation;
    (ii) Appropriateness of reporting to a credit reporting agency, it 
must be made within 30 days from the date of the letter; or
    (iii) Appropriateness of referral to IRS for tax refund offset, it 
must be made within 60 days from the date of the letter, if applicable.
    (8) The debtor's right to a full explanation of the debt and to 
dispute any information in the records of FSA concerning the debt;
    (9) The opportunity afforded the debtor to enter into a written 
agreement which is acceptable to FSA for the repayment of the debt;
    (10) That FSA maintains the right to initiate legal action to 
collect the amount of the debt;
    (11) That if any portion of the debt remains unpaid or if a 
repayment schedule satisfactory to FSA has not been arranged 90 days 
after the due date, a penalty charge shall be assessed on the unpaid 
balance of the debt as prescribed in Sec.  792.10(e);
    (b) When FSA deems it necessary to protect the Government's 
interest, written demand may be preceded by other appropriate actions.



Sec.  792.5  Collection by payment in full.

    Except as FSA may provide, FSA shall collect debts owed to the 
Government, including applicable interest, penalties, and administrative 
costs, in full, whenever feasible whether the debt is being collected by 
administrative offset or by another method, including voluntary payment. 
If a debt is paid in one lump sum after the due date, FSA will impose 
late payment interest, as provided in Sec.  792.10, unless such interest 
is waived as provided in Sec.  792.11.



Sec.  792.6  Collection by installment payments.

    (a) Payments in installments may be arranged, at FSA' discretion, if 
a debtor furnishes satisfactory evidence of inability to pay a claim in 
full by the specified date. The size and frequency of installment 
payments shall:
    (1) Bear a reasonable relation to the size of the debt and the 
debtor's ability to pay; and
    (2) Normally be of sufficient size and frequency to liquidate the 
debt in not more than three years.
    (b) Except as otherwise determined by FSA, no installment 
arrangement will be considered unless the debtor submits a certified 
financial statement which reflects the debtor's assets, liabilities, 
income, and expenses. The financial statement shall not be required to 
be submitted sooner than 15 workdays following its request by FSA.
    (c) All installment payment agreements shall be in writing and 
require the payment of interest at the late payment interest rate in 
effect on the date such agreement is executed, unless such interest is 
waived or reduced by FSA. The installment agreement shall specify all 
the terms of the arrangement and include provision for accelerating the 
debt in the event the debtor defaults.
    (d) FSA may deem a repayment plan to be abrogated if the debtor 
fails to comply with its terms.
    (e) If the debtor's financial statement or other information 
discloses the ownership of assets which are not encumbered, the debtor 
may be required to secure the payment of an installment note by 
executing a security agreement and financing agreement which provides 
FSA a security interest in the assets until the debt is paid in full.
    (f) If the debtor owes more than one debt to FSA, FSA may allow the 
debtor to designate the manner in which a voluntary installment payment 
is to be

[[Page 419]]

applied. If the debtor does not designate the application of a voluntary 
installment or partial payment, the payment will be applied to such 
debts as determined by FSA.



Sec.  792.7  Collection by administrative offset.

    (a) The provisions of this section shall apply to all debts due FSA 
except as otherwise provided in this part and part 1404 of this title. 
This section is not applicable to:
    (1) FSA requests for administrative offset against money payable to 
a debtor from the Civil Service Retirement and Disability Fund and FSA 
requests for salary offset against a present, former or retired employee 
of the Federal Government which shall be made in accordance with 
regulations at part 3 of this title;
    (2) FSA requests for administrative offset against a Federal income 
tax refund payable to a debtor which shall be made in accordance with 
Sec.  792.19;
    (3) Cases in which FSA must adjust, by increasing or decreasing, a 
payment which is to be paid under a contract in order to properly make 
other payments due by FSA; and
    (4) Any case in which a statute explicitly provides for or prohibits 
using administrative offset to collect the debt for the type of debt 
involved.
    (b) Debts due FSA or CCC may be collected by administrative offset 
from amounts payable by FSA when:
    (1) The debtor has been provided written notification of the basis 
and amount of the debt and has been given an opportunity to make 
payment. Such written notification and opportunity includes notice of 
the right to pursue an administrative appeal in accordance with part 780 
of this chapter or any other applicable appeal procedures, if not 
previously provided;
    (2) The debtor has been provided an opportunity to request to 
inspect and copy the records of FSA related to the debt;
    (3) The debtor has been given the opportunity to enter into a 
written agreement which is acceptable to FSA for repayment of the debt;
    (4) The debtor has been notified in writing that the debt will be 
collected by administrative offset if not paid; and
    (5) The debt has not been delinquent for more than ten years or 
legal action to enforce the debt has not been barred by an applicable 
period of limitation, whichever is later.
    (c) Administrative offset shall also be effected against amounts 
payable by FSA:
    (1) When requested or approved by the Department of Justice; or
    (2) When a person is indebted under a judgment in favor of FSA or 
the United States.
    (d) A payment due any person may be offset when there is a breach of 
a contract or a violation of FSA program requirements, and offset is 
considered necessary by FSA to protect the financial interests of the 
Government.
    (e) FSA may effect administrative offset against a payment to be 
made to a debtor prior to completion of the procedures required by 
paragraphs (b)(1) through (b)(4) of this section if:
    (1) Failure to take the offset would substantially prejudice FSA' 
ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (f)(1) Judgments in favor of the United States may be offset against 
any amounts payable by FSA based on information provided by or obtained 
from the Department of Justice. Debts due any agency other than FSA 
which have not been reduced to judgment shall be offset against amounts 
payable by FSA to a debtor when an agency of the U.S. Government has 
submitted a written request for offset which is mailed or hand-delivered 
to the appropriate FSA State office, Kansas City Financial Management 
Office, Kansas City Management Office, or Kansas City Commodity Office. 
Such written request must:
    (i) Bear the signature of an authorized representative of the 
requesting agency;
    (ii) Include a certification that all requirements of the law and 
the regulations for collection of the debt and for requesting offset 
have been complied with;

[[Page 420]]

    (iii) State the name, address (including county), and, where legally 
available, the Social Security number or employer ID number of the 
debtor, and a brief description of the basis of the debt, including 
identification of the judgment, if any;
    (iv) State the amount of the debt separately as to principal, 
interest, penalties, and administrative costs. Interest, if any, shall 
be computed on a daily basis to a date shown in the request. The amount 
to be offset shall not exceed the principal sum owed by the debtor, plus 
interest computed in accordance with the request, and any late payment 
interest, penalties and administrative costs that have been assessed;
    (v) Certify that the debtor has not filed for bankruptcy. If the 
debtor has filed for bankruptcy, a copy of the order of the bankruptcy 
court relieving the agency from the automatic stay must be included; and
    (vi) State the name, address, and telephone number of a contact 
person within the agency and the address to which payment should be 
sent.
    (2) Unless prohibited by law, the head of an agency, or a designee, 
may defer or subordinate in whole or in part the right of the agency to 
recover through offset all or part of any indebtedness to such agency, 
or may withdraw a request for offset. Notice of such action must be sent 
to the appropriate FSA office.
    (g)(1) After FSA has complied with the provisions of this part, FSA 
may request other agencies of the Government to offset amounts payable 
by them to persons indebted to FSA.
    (2) In the case of a request to IRS for a tax refund offset, the 
provisions at Sec.  792.19 shall apply.
    (h)(1) Debts shall be collected by offset in the following order of 
priority without regard to the date of the request for such collection:
    (i) Debts to FSA.
    (ii) Debts to other agencies of USDA as determined by FSA.
    (iii) Debts to other government agencies as determined by FSA.
    (2) In the case of multiple debts involving the same debtor, FSA 
may, at its discretion, deviate from the usual order of priority in 
applying recovered amounts to debts owed other agencies when considered 
to be in the Government's best interest. Such decision shall be made by 
FSA based on the facts and circumstances of the particular case.
    (i) Amounts recovered by offset for FSA and CCC debts but later 
found not to be owed to the Government shall be promptly refunded.
    (j) The debtor shall be notified whenever any offset action has been 
taken.
    (k) Offsets made pursuant to this section shall not deprive a debtor 
of any right he or she might otherwise have to contest the debt involved 
in the offset action either by administrative appeal or by legal action.
    (l) Any action authorized by the provisions of this section may be 
taken:
    (1) Against a debtor's pro rata share of payments due any entity 
which the debtor participates in, either directly or indirectly, as 
determined by FSA.
    (2) When FSA determines that the debtor has established an entity, 
or reorganized, transferred ownership of, or changed in some other 
manner, their operation, for the purpose of avoiding the payment of the 
claim or debt.
    (m) The amount to be offset shall not exceed the actual or estimated 
amount of the debt, including interest, administrative charges, and 
penalties, unless the Department of Justice requests that a larger 
specified amount be offset.
    (n) Offset action will not be taken against payments when:
    (1) A debt has been discharged as provided in Sec.  792.16.
    (2) FSA determines such action will unduly interfere with the 
administration of an FSA or CCC program.
    (3) The debt has been delinquent for more than ten years or legal 
action to enforce the debt due FSA is barred by an applicable period of 
limitation, whichever is later.

[59 FR 15829, Apr. 5, 1994, as amended at 60 FR 43706, Aug. 23, 1995]



Sec.  792.8  Priorities of offsets versus assignments.

    (a) No amounts payable to a debtor by FSA shall be paid to an 
assignee until there have been collected any amounts owed by the debtor 
except as provided in this section.

[[Page 421]]

    (b) A payment which is assigned in accordance with part 1404 of this 
title by execution of Form CCC-36 shall be subject to offset for any 
debt owed to FSA or CCC or any judgment in favor of the United States 
without regard to the date notice of assignment was accepted by FSA or 
CCC.
    (c) A payment which is assigned in accordance with part 1404 of this 
title by execution of Form CCC-252 shall be offset:
    (1) Against any debt of the assignor entered on the debt record of 
the applicable FSA office prior to the filing of such form with FSA or 
CCC, or
    (2) At anytime, regardless of the date of filing of such form with 
FSA or CCC, if the debt which is the basis for the offset arises from a 
judgment in favor of the United States, or under the same contract under 
which the payment is earned by the assignor.
    (d) With respect to all other Federal agencies, offset shall be made 
of any amounts due any other Federal agency which have not been reduced 
to judgment, and which are entered on the debt record of the appropriate 
FSA office prior to the date the notice of assignment was accepted by 
FSA or CCC.
    (e) Any amount due and payable to the assignor which remains after 
deduction of amounts paid to the assignee shall be available for offset.



Sec.  792.9  Withholding.

    (a) Withholding of a payment prior to the completion of an 
applicable offset procedure may be made from amounts payable to a debtor 
by FSA to ensure that the interests of FSA and the United States will be 
protected as provided in this section.
    (b) A payment may be withheld to protect the interests of FSA or the 
United States only if FSA determines that:
    (1) There has been a serious breach of contract or violation of 
program requirements and the withholding action is considered necessary 
to protect the financial interests of FSA;
    (2) There is substantial evidence of violations of criminal or civil 
frauds statutes and criminal prosecution or civil frauds action is of 
primary importance to program operations of FSA;
    (3) Prior experience with the debtor indicates that collection will 
be difficult if amounts payable to the debtor are not withheld;
    (4) There is doubt that the debtor will be financially able to pay a 
judgment on the claim of FSA;
    (5) The facts available to FSA are insufficient to determine the 
amount to be offset or the proper payee;
    (6) A judgment on a claim of FSA has been obtained; or
    (7) Such action has been requested by the Department of Justice.
    (c) Except for debts due FSA or CCC, withholding action by FSA on 
amounts payable to debtors of other Government agencies may not be made 
unless requested by the Department of Justice.



Sec.  792.10  Late payment interest, penalty and administrative charges.

    (a) Late payment interest provisions of this section shall not 
apply:
    (1) To debts owed by Federal agencies and State and local 
governments. Interest on debts owed by such entities shall be charged to 
the extent authorized under the common law or applicable statutory 
authority.
    (2) If an applicable statute, regulation, agreement, or contract 
either prohibits the charging of such interest or specifies the interest 
or charges applicable to the debt involved;
    (3) If the late payment interest is waived by FSA in accordance with 
Sec.  792.11.
    (4) To administrative charges as set forth in paragraph (f) of this 
section.
    (b) FSA will assess late payment interest on the full amount of 
delinquent debts. For purposes of this section, the term ``full amount 
of the delinquent debt'' means the sum of the principal, accrued program 
interest, and any other charges which are otherwise due and owing to FSA 
on the delinquent debt at the time the late payment interest is 
assessed, except as provided in paragraphs (a)(2) and (d)(3) of this 
section.
    (c) The late payment interest shall be expressed as an annual rate 
of interest which FSA charges on delinquent debts. The late payment 
interest rate shall be equal to the higher of the Treasury Department's 
current value

[[Page 422]]

of funds rate or the rate of interest assessed under the Prompt Payment 
Act, determined as of the date specified in paragraphs (d)(1) and (d)(2) 
of this section. The rate of interest assessed under the Prompt Payment 
Act was chosen as an alternative rate to ensure that the Government 
would recoup interest at a rate which was at least as high as that which 
it pays for late payments.
    (d)(1) When a debt results from a statute, regulation, contract, or 
other agreement with specific provisions for late payment interest and 
payment due date, late payment interest shall accrue on the amount of 
the debt from the first day the debt became delinquent, unless otherwise 
provided by statute.
    (2) With respect to debts not resulting from a statute, regulation, 
contract, or agreement containing specific provisions for late payment 
interest and payment due date, late payment interest shall begin to 
accrue from the date on which notice of the debt, including notice of 
late payment interest, is first mailed or hand-delivered to the debtor.
    (3) The rate of late payment interest initially assessed will be 
fixed for the duration of the indebtedness, except when a debtor has 
defaulted on a repayment agreement and seeks to enter into a new 
agreement. FSA may then set a new rate of interest which reflects the 
late payment interest rate in effect at the time the new agreement is 
executed. All charges which accrued, but which were not collected under 
the defaulted agreement, shall be added to the principal to be paid 
under a new repayment agreement.
    (4) The late payment interest on delinquent debts will accrue on a 
daily basis.
    (e) Except as specified in paragraph (a)(2) of this section, a 
penalty charge of three (3) percent per annum will be assessed on any 
portion of a debt which remains unpaid ninety (90) days after the date 
described in paragraph (d)(1) or (d)(2) of this section, if no repayment 
schedule satisfactory to FSA has been agreed upon. Such penalty charge 
will be assessed retroactively from the date late payment interest began 
to accrue and applied on a daily basis. Such rate shall continue to 
accrue until the delinquent debt has been paid.
    (f) FSA shall assess as administrative charges the additional costs 
of processing delinquent debts against the debtor, to the extent such 
costs are attributable to the delinquency. Such costs include, but are 
not limited to, costs incurred in obtaining a credit report, costs of 
employing commercial firms to locate debtor, costs of employing 
contractors for collection services, costs of selling collateral or 
property to satisfy the debt.
    (g) When a debt is paid in partial or installment payments, payments 
will be applied first to administrative charges, second to the penalty 
charge assessed in accordance with paragraph (e) of this section and 
late payment interest, and third to outstanding principal.



Sec.  792.11  Waiver of late payment interest, penalty charge and 
administrative charges.

    (a) FSA shall waive the collection of late payment interest and 
administrative charges on a debt or any portion of a debt which is paid 
within 30 days after the date on which late payment interest began to 
accrue.
    (b) FSA may waive the assessment and collection of all or a portion 
of the penalty charge on debts which are appealed in accordance with 7 
CFR part 780 or other applicable appeal procedures from either the date 
of the appeal or the date such interest began to accrue, whichever is 
later, until the date a final administrative determination is issued. 
Such waiver shall not apply for any delay due to:
    (1) The appellant's request for a postponement of the scheduled 
hearing;
    (2) The appellant's request for an additional time following the 
hearing to present additional information or a written closing 
statement; or
    (3) The appellant's failure to timely present information to the 
reviewing authority.
    (c) Assessment and collection of late payment interest, the penalty 
charge and administrative charges under this part may be waived by FSA 
in full, or in part, if it is determined by the Controller, FSA, or his 
or her designee,

[[Page 423]]

that such action is in the best interest of FSA.



Sec.  792.12  Administrative appeal.

    If the opportunity to appeal the determination has not previously 
been provided under part 24 of this title or part 780 of this chapter or 
any other appeal procedure, a debtor may obtain an administrative review 
under part 780 of this chapter, or other applicable appeal procedures, 
of FSA' determination concerning the existence or amount of a debt, if a 
request is filed with the authority who made the determination within 15 
days of the date of FSA' initial demand letter, unless a longer period 
is specified in the initial demand letter.



Sec.  792.13  Additional administrative collection action.

    Nothing contained in this part shall preclude the use of any other 
administrative or contractual remedy which may be available to FSA to 
collect debts owed to the Government.



Sec.  792.14  Contact with debtor's employing agency.

    When a debtor is employed by the Federal Government or is a member 
of the military establishment or the Coast Guard, and collection by 
offset cannot be accomplished in accordance with 5 U.S.C. 5514, FSA may 
contact the employing agency to arrange for payment of the debt by 
allotment or otherwise, in accordance with section 206 of Executive 
Order No. 11222, May 8, 1965, 30 FR 6469, 3 CFR, 1964-1965 Comp., p 306.



Sec.  792.15  Prior provision of rights with respect to debt.

    FSA will not provide an administrative appeal with respect to issues 
which were raised or should have been raised at any administrative 
review requested by the debtor as provided under another statute or 
regulation before:
    (a) Effecting administrative offset;
    (b) Referring the debt to private collection or credit reporting 
agencies;
    (c) Referring the debt for salary offset against the current pay of 
a present or former Government employee; or
    (d) Referring the debt to IRS for tax refund offset.



Sec.  792.16  Discharge of debts.

    (a) Except as required by other applicable regulation or statute, a 
debt or part thereof owed FSA shall be discharged with the concurrence 
of the Department of Justice, if applicable, and the records and 
accounts on that debt closed in the following situations:
    (1) When an obligation or part thereof is discharged in bankruptcy;
    (2) When an obligation or part thereof is the subject of a final 
judgment entered by a court of competent jurisdiction which is adverse 
to FSA and no appeal will be taken by FSA;
    (3) When a debt or part thereof is compromised and paid, the amount 
of such compromise;
    (4) When collection of a debt by administrative offset is barred in 
accordance with Sec.  792.7(b)(5).
    (b) Debts discharged in accordance with this section may be reported 
to the Internal Revenue Service pursuant to Sec.  792.20.



Sec.  792.17  Referral of delinquent debts to credit reporting agencies.

    (a) This section specifies the procedures that will be followed by 
FSA and the rights that will be afforded to debtors when FSA reports 
delinquent debts to credit reporting agencies.
    (b) Before disclosing information to a credit reporting agency in 
accordance with this part, FSA shall review the claim and determine that 
it is valid and delinquent.
    (c) Before a debt may be referred to a credit reporting agency, the 
debtor must be notified, pursuant to Sec.  792.4, of FSA' intent to make 
such a report. Such notification shall include:
    (1) FSA' intent to disclose to a credit reporting agency that the 
debtor is responsible for the debt, and that such disclosure will be 
made not less than 60 days after notification to such debtor.
    (2) The information intended to be disclosed to the credit reporting 
agency under paragraph (g)(1) of this section.
    (3) The debtor's right to enter a repayment agreement on the debt, 
including, at the discretion of FSA, installment payments, and that if 
such

[[Page 424]]

an agreement is reached, the debt will not be referred to a credit 
reporting agency.
    (4) The debtor's right to review of this action in accordance with 
paragraph (i) of this section.
    (d) The debtor shall be notified, in writing at the debtor's last 
known address, when FSA has reported any delinquent debt to a credit 
reporting agency.
    (e)(1) FSA shall notify each credit reporting agency to which an 
original disclosure of delinquent debt information was made of any 
substantial change in the condition or amount of the claim.
    (2) FSA shall promptly verify or correct, as appropriate, 
information about the debt on request of a credit reporting agency. The 
records of the debtor shall reflect any correction resulting from such 
request.
    (f) Information reported to a credit reporting agency on delinquent 
debts shall be derived from the system of records maintained by FSA.
    (g) FSA shall limit delinquent debt information disclosed to credit 
reporting agencies to:
    (1) The name, address, taxpayer identification number, and other 
information necessary to establish the identity of the debtor;
    (2) The amount, status, and history of the claim; and
    (3) The program under which the claim arose.
    (h) Reasonable action shall be taken to locate a debtor for whom FSA 
does not have a current address before reporting delinquent debt 
information to a credit reporting agency.
    (i)(1) Before disclosing delinquent debt information to a credit 
reporting agency, FSA shall, upon request of the debtor, provide for a 
review of the debt in accordance with Sec.  792.12. This review shall 
only consider defenses or arguments which were not available or could 
not have been available at any previous appeal proceeding permitted 
under Sec.  792.12.
    (2) Upon receipt of a request for review within 30 days from the 
date of notice to the debtor of intent to refer delinquent debt 
information to a credit reporting agency, FSA shall suspend its schedule 
for disclosure to a credit reporting agency until a final decision 
regarding the appropriateness of disclosure to a credit reporting agency 
is made.
    (3) Upon completion of the review, the reviewing official shall 
transmit to the debtor a written notification of the decision. If 
appropriate, the debtor shall be notified of the scheduled date on or 
after which the debt will be referred to the credit reporting agency. 
The debtor will also be notified of any changes from the initial 
notification in the information to be disclosed.
    (j)(1) In accordance with guidelines established by the 
Administrator, FSA, the responsible claims official shall report to 
credit reporting agencies delinquent debt information specified in 
paragraph (g) of this section.
    (2) The agreements entered into by USDA and credit reporting 
agencies shall provide the necessary assurances to FSA that the credit 
reporting agencies to which information will be provided are in 
compliance with the provisions of all the laws and regulations of the 
United States relating to providing credit information.
    (3) FSA shall not report delinquent debt information to credit 
reporting agencies when:
    (i) The debtor has entered a repayment agreement covering the debt 
with FSA, and such agreement is still valid; or
    (ii) FSA has suspended its schedule for disclosure of delinquent 
debt information pursuant to paragraph (i)(2) of this section.
    (k) Disclosures made under this section shall be in accordance with 
the requirements of the Privacy Act, as amended (5 U.S.C. 552a).
    (l) The provisions of paragraphs (a) through (k) of this section 
apply to commercial debts owed by farm producers and all personal debts. 
All commercial debts owed by debtors other than farm producers may be 
reported to credit reporting agencies without following the provisions 
of paragraphs (a) through (k) of this section.



Sec.  792.18  Referral of debts to Department of Justice.

    (a) Debts that exceed $100,000.00 exclusive of interest, penalties, 
and administrative charges, or such higher

[[Page 425]]

amount as may be prescribed, shall be referred to the Department of 
Justice before they can be discharged.
    (b) Debts which cannot be compromised or on which collection action 
cannot be suspended or terminated, may be referred to the Department of 
Justice for collection action. Claims of less than $600.00 exclusive of 
interest, penalties, and administrative costs will not be referred to 
the Department of Justice unless:
    (1) Referral is important to a significant enforcement policy, or
    (2) The debtor not only has the clear ability to pay the claim, but 
the Government can effectively enforce payment, having due regard for 
the exemptions available to the debtor under State and Federal law and 
the judicial remedies available to the Government.



Sec.  792.19  Referral of delinquent debts to IRS for tax refund offset.

    FSA may refer legally enforceable delinquent debts to IRS to be 
offset against tax refunds due to debtors under 26 U.S.C. 6402, in 
accordance with the provisions of 31 U.S.C. 3720A and Treasury 
Department regulations.



Sec.  792.20  Reporting discharged debts to IRS.

    (a) In accordance with IRS regulations, FSA may report to IRS as 
discharged debts on IRS Form 1099-G the amounts specified in paragraph 
(b) of this section.
    (b) The following discharged debts may be reported to IRS:
    (1) The amount of a debt discharged under a compromise agreement 
between FSA and the debtor, except for compromises made due to doubt 
about the Government's ability to prove its case in court for the full 
amount of the debt.
    (2) The amount of a debt discharged by the running of the statutory 
period of limitation for collecting the debt by administrative offset 
specified in 31 U.S.C. 3716.



Sec.  792.21  Referral of debts to private collection agencies.

    If FSA' collection efforts have been unsuccessful after 90 days from 
the date of delinquency, the head of the agency or his designee may 
enter into a contract with any person or organization, under such terms 
and conditions as the head of the agency or his designee considers 
appropriate for collection services to recover debts owed to FSA.



Sec.  792.22  Collection and compromise.

    The Administrator, FSA, or his designee may compromise any claim of 
the Government of not more than $100,000.00 exclusive of interest, 
penalties, and administrative charges, or such higher amount as may be 
prescribed, that has not been referred to another executive or 
legislative agency for further collection action.



PART 795_PAYMENT LIMITATION--Table of Contents



                                 General

Sec.
795.1 [Reserved]
795.2 Applicability.
795.3 Definitions.
795.4 Family members.
795.5 Timing for determining status of persons.
795.6 Multiple individuals or other entities.
795.7 Entities or joint operations not considered as a person.
795.8 Corporations and stockholders.
795.9 Estate or trust.
795.10 Club, society, fraternal or religious organization.
795.11 Husband and wife.
795.12 Minor children.
795.13 Other cases.
795.14 Changes in farming operations.
795.15 Determination whether agreement is a share lease or a cash lease.
795.16 Custom farming.
795.17 Scheme or device.
795.20 Joint and several liability.
795.21 Appeals.
795.22 Interpretations.
795.23 Paperwork Reduction Act assigned number.
795.24 Relief.

    Authority: Sec. 1001 of the Food Security Act of 1985, as amended, 
99 Stat, 1444, as amended, 7 U.S.C 1308; Pub. L. 99-500 and Pub. L. 99-
591.

    Source: 43 FR 9784, Mar. 10, 1978, unless otherwise noted.

[[Page 426]]

                                 General



Sec.  795.1  [Reserved]



Sec.  795.2  Applicability.

    (a) The provisions of this part are applicable to payments when so 
provided by the individual program regulations under which the payments 
are made. The amount of the limitation shall be as specified in the 
individual program regulations.
    (b) The limitation shall be applied to the payments for a commodity 
for a crop year.
    (c) The limitation shall not be applicable to payments made to 
States, political subdivisions, or agencies thereof for participation in 
the programs on lands owned by such States, political subdivisions, or 
agencies thereof so long as such lands are farmed primarily in the 
direct furtherance of a public function. However, the limitation is 
applicable to persons who rent or lease land owned by States, political 
subdivisions, or agencies thereof.
    (d) The limitation shall not be applicable to payments made to 
Indian tribal ventures participating in the programs where a responsible 
official of the Bureau of Indian Affairs or the Indian Tribal Council 
certifies that no more than the program payment limitation shall accrue 
directly or indirectly to any individual Indian and the State committee 
reviews and approves the exemption.
    (e) Except as provided in part 1497 of this title, this part shall 
not be applicabie to contracts entered into on or after August 1, 1988 
in accordance with part 704 of this chapter.

[49 FR 14719, Apr. 13, 1984, as amended at 51 FR 8453, Mar. 11, 1986; 51 
FR 36905, Oct. 16, 1986; 53 FR 29570, Aug. 5, 1988]



Sec.  795.3  Definitions.

    (a) The terms defined in part 719 of this chapter, governing 
reconstitutions of farms, shall be applicable to this part and all 
documents issued in accordance with this part, except as otherwise 
provided in this section.
    (b)(1) Subject to the provisions of this part, the term ``person'' 
shall mean an individual, joint stock company, corporation, association, 
trust, estate, or other legal entity. In order to be considered to be a 
separate person for the purposes of this part with respect to any crop, 
in addition to any other provision of this part, an individual or other 
legal; entity must:
    (i) Have a separate and distinct interest in the crop or the land on 
which the crop is produced;
    (ii) Exercise separate responsibility for such interest; and
    (iii) Be responsible for payment of the cost of farming related to 
such interest from a fund or account separate from that of any other 
individual or entity.
    (2) The term ``person'' shall not include any cooperative 
association of producers that markets commodities for producers with 
respect to the commodities so marketed for producers.
    (c) The term ``family member'' shall mean the individual, the great-
grandparent, grand-parent, child, grandchild, and great-grandchild of 
such individual and the spouses of all such individuals.
    (d) The term ``separate unit'' shall mean an individual who, prior 
to December 31, 1985: (1) Had been engaged in a separate farming 
operation and (2) in accordance with the provisions of this part, had 
been determined to be a separate person or could have so determined 
under the circumstances existing at such time.

[52 FR 26295, July 14, 1987]



Sec.  795.4  Family members.

    Effective for the 1987 through 1990 crops, an individual shall not 
be denied a determination that such individual was a ``person'' solely 
on the basis that:
    (a) A family member cosigns for, or makes a loan to, such individual 
and leases, loans or gives equipment, land or labor to such an 
individual; and
    (b) Such family members were organized as separate units prior to 
December 31, 1985.

[52 FR 26295, July 14, 1987]



Sec.  795.5  Timing for determining status of persons.

    Except as otherwise set forth in this part, the status of 
individuals or entities as of March 1, or such other date as may be 
determined and announced by the Administrator shall be the basis

[[Page 427]]

on which determinations are made in accordance with this part for the 
year for which the determination is made.

[51 FR 21836, June 16, 1986; 51 FR 36905, Oct. 16, 1986]



Sec.  795.6  Multiple individuals or other entities.

    The rules in Sec. Sec.  795.5 through 795.16 shall be used to 
determine whether certain multiple individuals or legal entities are to 
be treated as one person or as separate persons for the purpose of 
applying the limitation. In cases in which more than one rule would 
appear to be applicable, the rule which is most restrictive on the 
number of persons shall apply.



Sec.  795.7  Entities or joint operations not considered as a person.

    A partnership, joint venture, tenants-in-common, or joint tenants 
shall not be considered as a person but, notwithstanding the provisions 
of Sec.  795.3, each individual or other legal entity who shares in the 
proceeds derived from farming by such joint operations shall be 
considered a separate person, except as otherwise provided in this part, 
and shall be listed as a producer for payment purposes on program 
documents. The payment shares listed on the program documents for each 
individual or other legal entity shall be the same as each individual or 
other legal entity shares in the proceeds derived from farming by such 
joint operation. Notwithstanding the foregoing, each individual or other 
legal entity who shares in the proceeds derived from farming by such 
joint operation shall not be considered as a separate person unless the 
individual or other legal entity is actively engaged in the farming 
operations of the partnership or other joint operation. An individual or 
other legal entity shall be considered as actively engaged in the 
farming operation only if its contribution to the joint operation is 
commensurate with its share in the proceeds derived from farming by such 
joint operation. Members of the partnership or joint venture must 
furnish satisfactory evidence that their contributions of land, labor, 
management, equipment, or capital to the joint operation are 
commensurate with their claimed shares of the proceeds. A capital 
contribution may be a direct out-of-pocket input of a specified sum or 
an amount borrowed by the individual. If the contribution consists 
substantially of capital, such capital must have been contributed 
directly to the joint operation by the individual or other legal entity 
and not acquired as a result of (a) a loan made to the joint operation, 
(b) a loan which was made to such individual or other legal entity by 
the joint operation or any of its members or related entities, or (c) a 
loan made to such individual or other legal entity which was guaranteed 
by the joint operation or any of its members or related entities.



Sec.  795.8  Corporations and stockholders.

    (a) A corporation (including a limited partnership) shall be 
considered as one person, and an individual stockholder of the 
corporation may be considered as a separate person to the extent that 
such stockholder is engaged in the production of the crop as a separate 
producer and otherwise meets the requirements of Sec.  795.3, except 
that a corporation in which more than 50 percent of the stock is owned 
by an individual (including the stock owned by the individual's spouse, 
minor children, and trusts for the benefit of such minor children), or 
by a legal entity, shall not be considered as a separate person from 
such individual or legal entity.
    (b) Where the same two or more individuals or other legal entities 
own more than 50 percent of the stock in each of two or more 
corporations, all such corporations shall be considered as one person.
    (c) The percentage share of the value of the stock owned by an 
individual or other legal entity shall be determined as of March 1 of 
the crop year, except that where a stockholder voluntarily acquires 
stock after March 1 and before the harvest of the crop, the amount of 
any stock so acquired shall be included in determining the percentage 
share of the value of the stock owned by the stockholder. Where there is 
only one class of stock, a stockholder's percentage share of the value 
of the outstanding stock shall be equal to the percentage of the 
outstanding stock owned by the stockholder. If the corporation has more 
than one class of

[[Page 428]]

stock the percentage share of the value of the stock owned by a 
stockholder shall be determined by the Deputy Administrator on the basis 
of market quotations, and if market quotations are lacking or too scarce 
to be recognized the percentage share of the value of the stock shall be 
determined by the Deputy Administrator on the basis of all relevant 
factors affecting the fair market value, including the rights and 
privileges of the various stock issues.

(Title I, Agricultural Act of 1970, as amended by the Agriculture and 
Consumer Protection Act of 1973, Pub. L. 93-86, 87 Stat. 221 (7 U.S.C. 
1307) and under Title I, Rice Production Act of 1975, Pub. L. 94-214, 90 
Stat. 181 (7 U.S.C. 428c note), and Pub. L. 95-156, 91 Stat. 1264 (7 
U.S.C. 1307 note, 7 U.S.C. 1307, 7 U.S.C. 1441))

[43 FR 9784, Mar. 10, 1978, as amended at 45 FR 10311, Feb. 15, 1980; 45 
FR 11795, Feb. 22, 1980]



Sec.  795.9  Estate or trust.

    (a) An estate or irrevocable trust shall be considered as one person 
except that, where two or more estates or irrevocable trusts have common 
beneficiaries or heirs (including spouses and minor children) with more 
than a 50-percent interest, all such estates or irrevocable trusts shall 
be considered as one person.
    (b) An individual heir of an estate or beneficiary of a trust may be 
considered as a separate person to the extent that such heir or 
beneficiary is engaged in the production of crops as a separate producer 
and otherwise meets the requirements of Sec.  795.3, except that an 
estate or irrevocable trust which has a sole heir or beneficiary shall 
not be considered as a separate person from such heir or beneficiary.
    (c) Where an irrevocable trust or an estate is a producer on a farm 
and one or more of the beneficiaries or heirs of such trust or estate 
are minor children, the minor children's pro rata share of the program 
payments to the trust or estate shall be attributed to the parent of the 
minor children except as otherwise provided in Sec.  795.12.
    (d) A revocable trust shall not be considered as a separate person 
from the grantor.



Sec.  795.10  Club, society, fraternal or religious organization.

    Each individual club, society, fraternal or religious organization 
may be considered as a separate person to the extent that each such 
club, society, fraternal or religious organization is engaged in the 
production of crops as a separate producer and otherwise meets the 
requirements of Sec.  795.3.



Sec.  795.11  Husband and wife.

    With respect to the 1988 crop year, a husband and wife shall be 
considered to be one person except that such individuals who, prior to 
their marriage, were separately engaged in unrelated farming operations 
will be determined to be separate persons with respect to such farming 
operations so long as the operations remain separate and distinct from 
any farming operation conducted by the other spouse if such individuals 
have executed a Contract to Participate in the 1988 Price Support and 
Production Adjustment Programs by April 15, 1988. Such individuals must 
file a form FSA-561 with the county committee for each such farming 
operation by July 8, 1988, if they desire to be considered as separate 
persons under this section.

[53 FR 21410, June 8, 1988]



Sec.  795.12  Minor children.

    (a) A minor child and his parents or guardian (or other person 
responsible for him) shall be considered as one person, except that the 
minor child may be considered as a separate person if such minor child 
is a producer on a farm in which the parents or guardian or other person 
responsible for him (including any entity in which the parents or 
guardian or other person responsible for him has a substantial interest, 
i.e., more than a 20-percent interest) takes no part in the operation of 
the farm (including any activities as a custom farmer) and owns no 
interest in the farm or allotment or in any portion of the production on 
the farm, and if such minor child:
    (1) Is represented by a court-appointed guardian who is required by 
law to make a separate accounting for the minor and ownership of the 
farm is vested in the minor, or

[[Page 429]]

    (2) Has established and maintains a different household from his 
parents or guardian and personally carries out the actual farming 
operations on the farm for which there is a separate accounting, or
    (3) Has a farming operation resulting from his being the beneficiary 
of an irrevocable trust and ownership of the property is vested in the 
trust or the minor.
    (b) A person shall be considered a minor until he reaches 18 years 
of age. Court proceedings conferring majority on a person under 18 years 
of age will not change such person's status as a minor for purposes of 
applying the regulations.



Sec.  795.13  Other cases.

    Where the county committee is unable to determine whether certain 
individuals or legal entities involved in the production of a commodity 
are to be treated as one person or separate persons, all the facts 
regarding the arrangement under which the commodity is produced shall be 
submitted to the State committee for decision. Where the State committee 
is unable to determine whether such individuals or legal entities are to 
be treated as one person or separate persons, all the facts regarding 
the arrangement under which the farming operation is conducted shall be 
submitted to the Deputy Administrator for decision.



Sec.  795.14  Changes in farming operations.

    (a) Subject to the provisions of this part, a person may exercise 
his or her right heretofore existing under law, to divide, sell, 
transfer, rent, or lease his or her property if such division, sale, 
transfer, rental arrangement, or lease is legally binding as between the 
parties thereto. However, any document representing a division, sale, 
transfer, rental arrangement, or lease which is fictitious or not 
legally binding as between the parties thereto shall be considered to be 
for the purpose of evading the payment limitation and shall be 
disregarded for the purpose of applying the payment limitation. Any 
change in farming operations that would otherwise serve to increase the 
number of persons for application of the payment limitation must be bona 
fide and substantive.
    (b) A substantive change includes, for example, a substantial 
increase or decrease in the size of the farm by purchase, sale, or 
lease; a substantial increase or decrease in the size of allotment by 
purchase, sale, or lease; a change from a cash lease to a share lease or 
vice versa; and dissolution of an entity such as a corporation or 
partnership.
    (c) Examples of the types of changes that would not be considered as 
substantive are the following:

    Example 1. A corporation is owned equally by four shareholders. The 
corporation owns land, buildings, and equipment and in the prior year 
carried out substantial farming operations. Three of the shareholders 
propose forming a partnership which they would own equally. The 
partnership would cash lease land and equipment from the corporation 
with the objective of having the three partners considered as separate 
persons for purposes of applying the payment limitation under the 
provisions of Sec.  795.7 of the regulations.
    The formation of such a partnership and the leasing of land from a 
corporation in which they hold a major interest would not constitute a 
substantive and bona fide change in operations. Therefore, the 
corporation and the partners would be limited to a single payment 
limitation.
    Example 2. Three individuals each have individual farming operations 
which, if continued unchanged, would permit them to have a total of 
three payment limitations.
    The three individuals propose forming a corporation which they would 
own equally. The corporation would then cash lease a portion of the 
farmland owned and previously operated by the individuals with the 
objective of having the corporation considered as a separate person for 
purposes of applying the payment limitation under the provisions of 
Sec.  795.8 of the regulations. The formation of such a corporation and 
the leasing of land from the stockholders would not constitute a 
substantive and bona fide change in operations. Therefore, the 
corporation and the three individuals would be limited to three payment 
limitations.



Sec.  795.15  Determining whether agreement is a share lease or a cash
lease.

    (a) Cash lease. If a rental agreement contains provisions for a 
guaranteed minimum rental with respect to the amount of rent to be paid 
to the landlord by a tenant, such agreement shall

[[Page 430]]

be considered to be a cash rental agreement. In addition, the rental 
agreement must be customary and reasonable for the area.
    (b) Share lease. If a rental agreement contains provisions that 
require the payment of rent on the basis of the amount of the crop 
produced or the proceeds derived from the crop, such agreement shall be 
considered to be a share rental agreement. In addition, the rental 
agreement must be customary and reasonable for the area.

[51 FR 8454, Mar. 11, 1986]



Sec.  795.16  Custom farming.

    (a) Custom farming is the performance of services on a farm such as 
land preparation, seeding, cultivating, applying pesticides, and 
harvesting for hire with remuneration on a unit of work basis, except 
that, for the purpose of applying the provisions of this section, the 
harvesting of crops and the application of agricultural chemicals by 
firms regularly engaged in such businesses shall not be regarded as 
custom farming. A person performing custom farming shall be considered 
as being separate from the person for whom the custom farming is 
performed only if:
    (1) The compensation for the custom farming is paid at a unit of 
work rate customary in the area and is in no way dependent upon the 
amount of the crop produced, and
    (2) The person performing the custom farming (and any other entity 
in which such person has more than a 20-percent interest) has no 
interest, directly or indirectly,
    (i) In the crop on the farm by taking any risk in the production of 
the crop, sharing in the proceeds of the crop, granting or guaranteeing 
the financing of the crop,
    (ii) In the allotment on the farm, or
    (iii) In the farm as landowner, landlord, mortgage holder, trustee, 
lienholder, guarantor, agent, manager, tenant, sharecropper, or any 
other similar capacity.
    (b) A person having more than a 20-percent interest in any legal 
entity performing custom farming shall be considered as being separate 
from the person for whom the custom farming is performed only if:
    (1) The compensation for the custom farming service is paid at a 
unit of work rate customary in the area and is in no way dependent upon 
the amount of the crop produced, and
    (2) The person having such interest in the legal entity performing 
the custom farming has no interest, directly or indirectly,
    (i) In the crop on the farm by taking any risk in the production of 
the crop, sharing in the proceeds of the corp, granting or guaranteeing 
the financing of the crop,
    (ii) In the allotment on the farm, or
    (iii) In the farm as landowner, landlord, mortgage holder, trustee, 
lienholder, guarantor, agent, manager, tenant, sharecropper, or in any 
other similar capacity.



Sec.  795.17  Scheme or device.

    All or any part of the payments otherwise due a person under the 
upland cotton, wheat, feed grain and rice programs on all farms in which 
the person has an interest may be withheld or required to be refunded if 
the person adopts or participates in adopting any scheme or device 
designed to evade or which has the effect of evading the rules of this 
part. Such acts shall include, but are not limited to, concealing from 
the county committee any information having a bearing on the application 
of the rules of this part or submitting false information to the county 
committee (for example, a set-aside agreement which is entered into that 
differs from information furnished to the county committee concerning 
the manner in which program payments are actually shared, concerning the 
actual facts of a sale, or concerning the transfer of property) or 
creating fictitious entities for the purpose of concealing the interest 
of a person in a farming operation.



Sec.  795.20  Joint and several liability.

    Where two or more individuals or legal entities, who are treated as 
one person hereunder, receive payments which in the aggregate exceed the 
limitation, such individuals or legal entities shall be liable, jointly 
and severally, for any liability arising therefrom. The provisions of 
this part requiring the refund of payments shall be

[[Page 431]]

applicable in addition to any liability under criminal and civil fraud 
statutes.



Sec.  795.21  Appeals.

    Any person may obtain reconsideration and review of determinations 
made under this part in accordance with the appeal regulations, part 780 
of this chapter, as amended.



Sec.  795.22  Interpretations.

    In interpretations previously issued pursuant to the payment 
limitation regulations and published at 36 FR 16569, 37 FR 3049, 39 FR 
15021 and 41 FR 17527 shall be applicable in construing the provisions 
of this part.



Sec.  795.23  Paperwork Reduction Act assigned number.

    The information collection requirements contained in these 
regulations (7 CFR part 795) have been approved by the Office of 
Management and Budget under the provisions of 44 U.S.C. Chapter 35 and 
have been assigned OMB control number 0560-0096.

[49 FR 14719, Apr. 13, 1984]



Sec.  795.24  Relief.

    If a producer relied on a county committee and/or State committee 
``person'' determination for a crop year and higher reviewing authority 
makes a more restrictive determination, the Deputy Administrator may 
grant relief only for such crop year if the producer was not afforded an 
opportunity to exercise other alternatives with respect to the 
producer's farming operation and the program provisions and the county 
committee has determined that the producers acted in good faith based 
upon the original ``person'' determination.

[51 FR 8454, Mar. 11, 1986; 51 FR 36905, Oct. 16, 1986]

[[Page 432]]



                       SUBCHAPTER F_PUBLIC RECORDS





PART 798_AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents



Sec.
798.1 General statement.
798.2 Public inspection and copying.
798.3 Index.
798.4 Requests for records.
798.5 Appeals.
798.6 Fees.

    Authority: 5 U.S.C. 301, 552; 7 CFR 1.1 through 1.16.

    Source: 44 FR 10353, Feb. 20, 1979, unless otherwise noted.



Sec.  798.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture at 7 CFR 1.1 through 1.16, and appendix A, 
implementing the Freedom of Information Act (5 U.S.C. 552). The 
Secretary's regulations as implemented by the regulations in this part, 
govern the availability of records of the FSA and Commodity Credit 
Corporation (CCC) to the public.



Sec.  798.2  Public inspection and copying.

    5 U.S.C. 552(a)(2) requires that certain materials be made available 
for public inspection and copying. Members of the public may request 
access to such materials maintained by FSA and/or CCC at the Office of 
the Director, Information Division, Farm Service Agency, Room 3608 South 
Building, P.O. Box 2415, Washington, DC 20013, between the hours of 8:15 
and 4:45 p.m., Monday through Friday.

[50 FR 53259, Dec. 31, 1985]



Sec.  798.3  Index.

    5 U.S.C. 552(a)(2) requires that each agency publish or otherwise 
make available a current index of all materials required to be made 
available for public inspection and copying. FSA maintains an index of 
FSA National Handbooks, CCC Board Dockets, decisions of the Board of 
Contract Appeals of the Department of Agriculture affecting FSA or CCC, 
and Marketing Quota Review Committee determinations. In view of the 
small number of public requests for such index, publication of the index 
is unnecessary and impractical. The index is maintained and available to 
the public at the office shown in Sec.  798.2 and copies of the index 
are available upon request in person or by mail to that office.



Sec.  798.4  Request for records.

    Request for records under 5 U.S.C. 552(a)(3) shall be made in 
accordance with 7 CFR 1.3. Reasonable requests for material not in 
existence may also be honored where their compilation will not unduly 
interfere with FSA operations and programs. Each FSA office in the field 
and each FSA office and division in Washington (see statement of 
Organization and Functions of FSA, 40 FR 18815, and of CCC, 35 FR 14951, 
and any amendments thereto) is designated as an ``information center'' 
and shall make space available to inspect and copy records in their 
custody not exempted from disclosure. Copies of records shall also be 
made available upon request. The head of each office or division is 
authorized to receive requests for records and to make determinations 
regarding requests for records in the office's custody in accordance 
with 7 CFR 1.4(c). Requests to Washington divisions and offices shall be 
addressed to USDA, FSA, P.O. Box 2415, Washington, D.C. 20013. The heads 
of FSA field offices shall be addressed as listed in the local telephone 
directory under ``U.S. Government, Department of Agriculture, FSA''. 
Names and addresses of heads of field offices may also be obtained from 
the office indicated in Sec.  798.2.



Sec.  798.5  Appeals.

    Any person whose request under Sec.  798.4 of this part is denied 
shall have the right to appeal such denial. This appeal shall be 
submitted in accordance with 7 CFR 1.3(e) and addressed to the 
Administrator, FSA (Executive Vice-President, CCC), USDA, FSA, P.O. Box 
2415, Washington, D.C. 20013.



Sec.  798.6  Fees.

    This schedule supplements the fee schedule in 7 CFR, part 1, subpart 
A,

[[Page 433]]

appendix A and sets forth the fees to be charged by FSA for providing 
copies of records, materials, and services not covered in appendix A:
    (a) Records, materials and services furnished without cost.
    (1) One copy each of related directives, or blank forms required by 
FSA for program participation, if requester is a program participant.
    (2) List of names and addresses of county and/or community committee 
members, and names of county employees in the county.
    (3) One copy of an investigation report furnished to an appellant 
for a program appeal.
    (b) Records, materials and services for which fees are charged.
    (1) National handbooks. Three dollars for the first copy. One dollar 
for each additional copy. (The term ``copy'' includes all national 
amendments to date. They will be furnished separately for the requester 
to assemble).
    (2) Field supplementation to national handbooks. Five cents per 
page, not to exceed $3, for each supplement.
    (3) Computerized records. The requester shall furnish the necessary 
reels when computerized records are furnished on magnetic tape.

[[Page 434]]



                  SUBCHAPTER G_ENVIRONMENTAL PROTECTION





PART 799_COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT
--Table of Contents



         Subpart A_General FSA Implementing Regulations for NEPA

Sec.
799.1 Purpose.
799.2 FSA environmental policy.
799.3 Applicability.
799.4 Abbreviations and definitions.

         Subpart B_FSA and Program Participant Responsibilities

799.5 National office environmental responsibilities.
799.6 FSA State office environmental responsibilities.
799.7 FSA program participant responsibilities.
799.8 Significant environmental effect.
799.9 Environmental review documents.
799.10 Administrative records.
799.11 Actions during NEPA reviews.
799.12 Emergency circumstances.
799.13 FSA as lead agency.
799.14 FSA as cooperating agency.
799.15 Public involvement in environmental review.
799.16 Scoping.
799.17 Public meetings.
799.18 Overview of FSA NEPA process.

               Subpart C_Environmental Screening Worksheet

799.20 Purpose of the ESW.

                    Subpart D_Categorical Exclusions

799.30 Purpose of categorical exclusion process.
799.31 Categorical exclusions to be recorded on an ESW.
799.32 Categorical exclusions requiring review with an ESW.
799.33 Extraordinary circumstances.
799.34 Establishing and revising categorical exclusions.

                   Subpart E_Environmental Assessments

799.40 Purpose of an EA.
799.41 When an EA is required.
799.42 Contents of an EA.
799.43 Tiering.
799.44 Adoption of an EA prepared by another entity.
799.45 Finding of No Significant Impact (FONSI).

                Subpart F_Environmental Impact Statements

799.50 Purpose of an Environmental Impact Statement (EIS).
799.51 When an EIS is required.
799.52 Notice of intent to prepare an EIS.
799.53 Contents of an EIS.
799.54 Draft EIS.
799.55 Final EIS.
799.56 Supplemental EIS.
799.57 Tiering.
799.58 Adoption of an EIS prepared by another entity.
799.59 Record of Decision.

    Authority: 42 U.S.C. 4321-4370.

    Source: 81 FR 51285, Aug. 3, 2016, unless otherwise noted.



         Subpart A_General FSA Implementing Regulations for NEPA



Sec.  799.1  Purpose.

    (a) This part:
    (1) Explains major U.S. Department of Agriculture (USDA) Farm 
Service Agency (FSA) environmental policies.
    (2) Establishes FSA procedures to implement the:
    (i) National Environmental Policy Act (NEPA) of 1969, as amended (42 
U.S.C. 4321 through 4370);
    (ii) Council on Environmental Quality (CEQ) regulations (40 CFR 
parts 1500 through 1518); and
    (iii) USDA NEPA regulations (Sec. Sec.  1b.1 through 1b.4 of this 
title).
    (3) Establishes procedures to ensure that FSA complies with other 
applicable laws, regulations, and Executive Orders, including, but not 
limited to, the following:
    (i) American Indian Religious Freedom Act (42 U.S.C. 1996);
    (ii) Archaeological and Historic Preservation Act (16 U.S.C. 469 
through 469c);
    (iii) Archaeological Resources Protection Act of 1979 (16 U.S.C. 
470aa through 470mm);
    (iv) Clean Air Act (42 U.S.C. 7401 through 7671q);
    (v) Clean Water Act (33 U.S.C. 1251 through 1387);
    (vi) Coastal Barrier Resources Act (16 U.S.C. 3501 through 3510);

[[Page 435]]

    (vii) Coastal Zone Management Act of 1972 (CZMA) (16 U.S.C. 1451 
through 1466);
    (viii) Comprehensive Environmental Response, Compensation, and 
Liability Act (42 U.S.C. 9601 through 9675);
    (ix) Endangered Species Act (ESA) (16 U.S.C. 1531 through 1544);
    (x) Farmland Protection Policy Act (7 U.S.C. 4201 through 4209);
    (xi) Migratory Bird Treaty Act (16 U.S.C. 703 through 712);
    (xii) National Historic Preservation Act (NHPA) of 1966, as amended 
(54 U.S.C. 300101 through 307101),
    (xiii) Native American Graves Protection and Repatriation Act (25 
U.S.C. 3001 through 3013);
    (xiv) Resource Conservation and Recovery Act (42 U.S.C. 6901 through 
6992k);
    (xv) Safe Drinking Water Act (42 U.S.C. 300h through 300h.8);
    (xvi) Wild and Scenic Rivers Act (16 U.S.C. 1271 through 1287);
    (xvii) Wilderness Act (16 U.S.C. 1131 through 1136);
    (xviii) Advisory Council on Historic Preservation regulations in 36 
CFR part 800 ``Protection of Historic Properties;''
    (xix) USDA, Office of Environmental Quality regulations in part 3100 
of this title, ``Cultural and Environmental Quality'' (see part 190, 
subpart F, of this title, ``Procedures for the Protection of Historic 
and Archaeological Properties,'' for more specific implementation 
procedures);
    (xx) USDA, Natural Resources Conservation Service regulations in 
part 658 of this title, ``Farmland Protection Policy Act;''
    (xxi) USDA regulations in part 12 of this title, ``Highly Erodible 
Land and Wetland Conservation;''
    (xxii) U.S. Department of the Interior, National Park Service 
regulations in 36 CFR part 60, ``National Register of Historic Places;''
    (xxiii) U.S. Department of the Interior, National Park Service 
regulations in 36 CFR part 63, ``Determinations of Eligibility for 
Inclusion in the National Register of Historic Places;''
    (xxiv) USDA, Departmental Regulation 9500-3, ``Land Use Policy;''
    (xxv) USDA, Departmental Regulation 9500-4, ``Fish and Wildlife 
Policy;''
    (xxvi) Executive Order 11514, ``Protection and Enhancement of 
Environmental Quality;''
    (xxvii) Executive Order 11593, ``Protection and Enhancement of the 
Cultural Environment;''
    (xxviii) Executive Order 11988, ``Floodplain Management;''
    (xxix) Executive Order 11990, ``Protection of Wetlands;''
    (xxx) Executive Order 11991, ``Relating to Protection and 
Enhancement of Environmental Quality;''
    (xxxi) Executive Order 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations;''
    (xxxii) Executive Order 13007, ``Indian Sacred Sites;''
    (xxxiii) Executive Order 13175, ``Consultation and Coordination with 
Indian Tribal Governments;''
    (xxxiv) Executive Order 13186, ``Responsibilities of Federal 
Agencies to Protect Migratory Birds;''
    (xxxv) Executive Order 13287, ``Preserve America;'' and
    (xxxvi) Executive Order 13690, ``Establishing a Federal Flood Risk 
Management Standard and a Process for Further Soliciting and Considering 
Stakeholder Input.''
    (b) The procedures and requirements in this part supplement CEQ and 
USDA regulations; they do not replace or supersede them.



Sec.  799.2  FSA environmental policy.

    (a) FSA will:
    (1) Use all practical means to protect and, where possible, improve 
the quality of the human environment and avoid or minimize any adverse 
environmental effects of FSA actions;
    (2) Ensure protection of basic resources, including important 
farmlands and forestlands, prime rangelands, wetlands, floodplains, and 
other protected resources. Consistent with Departmental Regulations and 
related Executive Orders, it is FSA policy not to approve or fund 
proposed actions that, as a result of their identifiable impacts, 
direct, indirect, or cumulative, would lead to or accommodate either the 
conversion of these land uses or encroachment upon them.

[[Page 436]]

    (3) Ensure that the requirements of NEPA and other State and 
national environmental policies designed to protect and manage impacts 
on the human environment are addressed:
    (i) As required by 40 CFR 1501.2, at the earliest feasible stage in 
the planning of any FSA action,
    (ii) Concurrently and in a coordinated manner,
    (iii) During all stages of the decision making process,
    (iv) Using professional and scientific integrity in their 
discussions and analyses, identifying applicable methodologies, and 
explaining the use of the best available information, and
    (v) In consultation with all interested parties, including Federal, 
State, and Tribal governments;
    (4) As appropriate, make environmental review available to the 
public through various means, which can include, but are not limited to: 
Posting on the National FSA Web site or a State FSA Web site, publishing 
in the Federal Register, or publishing in a newspaper in the area of 
interest; and
    (5) Ensure that, if an FSA proposed action represents one of several 
phases of a larger action, the entire action is the subject of an 
environmental review independent of the phases of funding. If the FSA 
proposed action is one segment of a larger action, the entire action 
will be used in determining the appropriate level of FSA environmental 
review.
    (b) A proposed action that consists of more than one categorically 
excluded proposed action may be categorically excluded only if all 
components of the proposed action are included within one or more 
categorical exclusions and trigger no extraordinary circumstances. The 
component of a proposed action that requires the highest level of NEPA 
review will be used to determine the required level of the NEPA review.



Sec.  799.3  Applicability.

    (a) Except as provided for in paragraph (b) of this section, this 
part applies to:
    (1) The development or revision of FSA rules, regulations, plans, 
policies, or procedures;
    (2) New or continuing FSA proposed actions and programs, including, 
on behalf of the Commodity Credit Corporation (CCC), CCC programs, Farm 
Loan Programs, and Farm Programs; and
    (3) FSA legislative proposals, not including appropriations 
requests, developed by FSA or with significant FSA cooperation and 
support.
    (b) This part does not apply to FSA programs specifically exempted 
from environmental review by the authorizing legislation for those 
programs.



Sec.  799.4  Abbreviations and definitions.

    (a) The following abbreviations apply to this part:

CAAP Concentrated Aquatic Animal Production Facilities.
CAFO Concentrated Animal Feeding Operation.
CCC Commodity Credit Corporation.
CEQ Council on Environmental Quality.
EA Environmental Assessment.
EIS Environmental Impact Statement.
ESA Endangered Species Act.
ESW Environmental Screening Worksheet.
FONSI Finding of No Significant Impact.
FPO Federal Preservation Officer.
FSA Farm Service Agency.
MOA Memorandum of Agreement.
MOU Memorandum of Understanding.
NECM National Environmental Compliance Manager.
NEPA National Environmental Policy Act.
NHPA National Historic Preservation Act.
NOA Notice of Availability.
NOI Notice of Intent.
PEA Programmatic Environmental Assessment.
PEIS Programmatic Environmental Impact Statement.
RAO Responsible Approving Official.
RFO Responsible Federal Officer
ROD Record of Decision.
SEC State Environmental Coordinator.
SED State Executive Director for FSA.
SEIS Supplemental Environmental Impact Statement.
SHPO State Historic Preservation Officer.
THPO Tribal Historic Preservation Officer.
USDA United States Department of Agriculture.

    (b) The definitions in 40 CFR part 1508 apply and are supplemented 
by parts 718 and 1400 of this title; in the event of a conflict the 
definitions in this section will be controlling. In addition, the 
following definitions apply to this part:

[[Page 437]]

    Administrator means the Administrator, Farm Service Agency, 
including designees.
    Application means the formal process of requesting FSA assistance.
    Construction means actions that include building, rehabilitation, 
modification, repair, and demolition of facilities, and earthmoving.
    Consultation means the process of soliciting, discussing, and 
considering the views of other participants in the environmental review 
process and working toward agreement where feasible.
    Environmental screening worksheet, or ESW, means the FSA screening 
procedure used to record the use of categorical exclusions, review if a 
proposed action that can be categorically excluded involves 
extraordinary circumstances, and evaluate the appropriate level and 
extent of environmental review needed in an EA or EIS when a categorical 
exclusion is not available or not appropriate. For the purposes of this 
part, the ESW may be represented by alternate documentation comparable 
to the ESW, and that has been approved in advance by the NECM, such as 
related environmental documentation, including, but not limited to, the 
related documentation from another agency.
    Financial assistance means any form of loan, loan guarantee, grant, 
guaranty, insurance, payment, rebate, subsidy, or any other form of 
direct or indirect Federal monetary assistance.
    Floodplains means the lowland and relatively flat areas adjoining 
inland and coastal waters, including flood-prone areas of offshore 
islands, including, at a minimum, those that are subject to a l-percent 
or greater chance of flooding in any given year.
    Historic property means any prehistoric or historic district, site, 
building, structure, or object included in, or eligible for inclusion 
in, the National Register of Historic Places maintained by the Secretary 
of the Interior as defined in 36 CFR 800.16.
    Memorandum of Agreement means a document that records the terms and 
conditions agreed upon to resolve the potential effects of a Federal 
agency proposed action or program. Often used interchangeably with 
Memorandum of Understanding.
    Plow zone means the depth of previous tillage or disturbance.
    Programmatic Environmental Assessment (PEA) means an assessment 
prepared when the significance of impacts of a program are uncertain to 
assist in making this determination.
    Programmatic Environmental Impact Statement (PEIS) means an analysis 
of the potential impacts that could be associated with various 
components of a program or proposed action that may not yet be clearly 
defined or even known, to determine if the program or its various 
components have the potential to significantly affect the quality of the 
human environment.
    Program participant means any person, agency, or other entity that 
applies for or receives FSA program benefits or assistance.
    Protected resources means environmentally sensitive resources that 
are protected by laws, regulations, or Executive Orders for which FSA 
proposed actions may pose potentially significant environmental effects.
    State Historic Preservation Officer (SHPO) means the state official 
appointed or designated under the NHPA to administer a State historic 
preservation program, or a representative to act for the SHPO.
    Tribal Historic Preservation Officer (THPO) means the Tribal 
official appointed by a Tribe's chief governing authority or designated 
by a Tribal ordinance or preservation program, who has assumed the 
responsibilities of the SHPO on Tribal lands under the NHPA.
    Wetlands means areas that are inundated by surface or ground water 
with a frequency sufficient to support and, under normal circumstances, 
do support or would support a prevalence of vegetative or aquatic life 
that requires saturated or seasonally saturated soil conditions for 
growth and reproduction. Wetlands generally include swamps, marshes, 
bogs, and similar areas, such as sloughs, prairie potholes, wet meadows, 
river overflows, mudflats, and natural ponds.

[[Page 438]]



         Subpart B_FSA and Program Participant Responsibilities



Sec.  799.5  National office environmental responsibilities.

    (a) The FSA Administrator or designee:
    (1) Is the Responsible Federal Officer (RFO) for FSA compliance with 
applicable environmental laws, regulations, and Executive Orders, 
including NEPA, and unless otherwise specified, will make all 
determinations under this part;
    (2) Will ensure responsibilities for complying with NEPA are 
adequately delegated to FSA personnel within their areas of 
responsibility at the Federal, State, and county levels;
    (3) Will appoint a National Environmental Compliance Manager (NECM), 
as required by 40 CFR 1507.2(a), who reports directly to the FSA 
Administrator; and
    (4) Will appoint a qualified Federal Preservation Officer (FPO), as 
required by Executive Order 13287 ``Preserve America'' section 3(e) and 
by section 110 of NHPA (54 U.S.C. 306101). This individual must meet the 
National Park Service professional qualification standards requirements 
referenced in 36 CFR part 61 and will report directly to the NECM.
    (b) The NECM or designee coordinates FSA environmental policies and 
reviews under this part on a national basis and is responsible for:
    (1) Ensuring FSA legislative proposals and multistate and national 
programs are in compliance with NEPA and other applicable environmental 
and cultural resource laws, regulations, and Executive Orders;
    (2) Providing education and training on implementing NEPA and other 
environmental compliance requirements to appropriate FSA personnel;
    (3) Serving as the principal FSA advisor to the FSA Administrator on 
NEPA and other environmental compliance requirements;
    (4) Representing FSA, and serving as an intra- and inter-agency 
liaison, on NEPA- and environmental compliance-related matters on a 
national basis;
    (5) Maintaining a record of FSA environmental compliance actions; 
and
    (6) Ensuring State and county office compliance with NEPA and other 
applicable environmental laws, regulations, and Executive Orders.
    (c) The FPO or designee coordinates NHPA compliance under this part 
and is responsible for:
    (1) Serving as the principal FSA advisor to the NECM on NHPA 
requirements;
    (2) Representing FSA, and serving as FSA intra- and inter-agency 
liaison, on all NHPA-related matters on a national basis;
    (3) Maintaining current FSA program guidance on NHPA requirements;
    (4) Maintaining a record of FSA environmental actions related to the 
NHPA; and
    (5) Ensuring State and county office compliance with the NHPA and 
other cultural resource-related requirements.



Sec.  799.6  FSA State office environmental responsibilities.

    (a) FSA State Executive Directors (SEDs) or designees are the 
responsible approving officials (RAOs) in their respective States and 
are responsible for:
    (1) Ensuring FSA proposed actions within their State comply with 
applicable environmental laws, regulations, and Executive Orders, 
including NEPA; and
    (2) Appointing two or more collateral duty State Environmental 
Coordinators (SECs) or at least one full time SEC.
    (b) An SED will not appoint more than one SEC for Farm Programs and 
one SEC for Farm Loan Programs in a State unless approved in writing by 
the NECM.
    (c) SECs or designees are responsible for:
    (1) Serving as the environmental compliance coordinators on all 
environmental-related matters within their respective State;
    (2) Advising SEDs on environmental issues;
    (3) Providing training, in coordination with the NECM, on NEPA and 
other environmental compliance requirements to appropriate FSA State and 
county office personnel;
    (4) Providing assistance on environmental-related matters on a 
proposed

[[Page 439]]

action-by-action basis to State and county office personnel, as needed;
    (5) When feasible, developing controls for avoiding or mitigating 
adverse environmental impacts and monitoring the implementation of those 
controls;
    (6) Reviewing FSA proposed actions that are not categorically 
excluded from documentation in an environmental assessment or 
environmental impact statement, or that otherwise require State office 
approval or clearance, and making appropriate recommendations to the 
approving official;
    (7) Providing assistance to resolve post-approval environmental 
issues at the State office level;
    (8) Maintaining decision records for State office environmental 
compliance matters;
    (9) Monitoring their respective State's compliance with 
environmental laws, regulations, and Executive Orders;
    (10) Acting as a liaison on FSA State office environmental 
compliance matters with the public and other Federal, State, and Tribal 
governments;
    (11) Representing the SED on environmental issues, as requested;
    (12) Delegating duties under this section with the approval of both 
the SED and NECM; and
    (13) Other NEPA and environmental compliance-related duties as 
assigned.
    (d) County Executive Directors, District Directors, and Farm Loan 
Programs loan approval officers or designees are responsible for 
compliance with this part within their geographical areas.



Sec.  799.7  FSA program participant responsibilities.

    (a) Potential FSA program participants requesting FSA assistance 
must do all of the following:
    (1) Consult with FSA early in the process about potential 
environmental concerns associated with program participation. The 
program participation information required to start participation in an 
FSA program varies by FSA program and may be in the form of an offer, 
enrollment, sign-up, contract, note and security agreement, or other as 
is required by the relevant FSA program.
    (2) Submit applications for all Federal, regional, State, and local 
approvals and permits early in the planning process.
    (3) Coordinate the submission of program participation information 
to FSA and other agencies (for example, if a conservation plan is 
required, then the program participation information is also submitted 
to USDA's Natural Resources Conservation Service).
    (4) Work with other appropriate Federal, State, and Tribal 
governments to ensure all environmental factors are identified and 
impacts addressed and, to the extent possible, mitigated, consistent 
with how mitigation is defined in 40 CFR 1508.20.
    (5) Inform FSA of other Federal, State, and Tribal government 
environmental reviews that have previously been completed or required of 
the program participant.
    (6) Provide FSA with a list of all parties affected by or interested 
in the proposed action.
    (7) If requested by FSA, provide information necessary for FSA to 
evaluate a proposed action's potential environmental impacts and 
alternatives.
    (8) Ensure that all compliance documentation provided is current, 
sufficiently detailed, complete, and submitted in a timely fashion.
    (9) Be in compliance with all relevant laws, regulations, and 
policies regarding environmental management and protection.
    (10) Not implement any component of the proposed action prior to the 
completion of FSA's environmental review and final decision, or FSA's 
approval for that proposed action, consistent with 40 CFR 1506.1.
    (b) When FSA receives program participation information for 
assistance or notification that program participation information will 
be filed, FSA will contact the potential program participant about the 
environmental information the program participant must provide as part 
of the process. This required information may include:
    (1) Design specifications;
    (2) Topographical, aerial, and location maps;
    (3) Surveys and assessments necessary for determining the impact on

[[Page 440]]

protected resources listed in Sec.  799.33(a)(2);
    (4) Nutrient management plans; and
    (5) Applications, plans, and permits for all Federal, regional, 
State and local approvals including construction permits, storm water 
run-off and operational plans and permits, and engineering designs and 
plans.



Sec.  799.8  Significant environmental effect.

    (a) In determining whether a proposed action will have a significant 
effect on the quality of the human environment, FSA will consider the 
proposed action's potential effects in the context of society as a 
whole, the affected region and interests, the locality, and the 
intensity of the potential impact as specified in 40 CFR 1508.27.
    (b) [Reserved]



Sec.  799.9  Environmental review documents.

    (a) FSA may prepare the following documents during the environmental 
review process:
    (1) ESW;
    (2) Programmatic Environmental Assessment (PEA);
    (3) Environmental Assessment (EA);
    (4) Supplemental Environmental Assessment;
    (4) Programmatic Environmental Impact Statement (PEIS);
    (5) Environmental Impact Statement (EIS);
    (6) Supplemental Environmental Impact Statement (SEIS);
    (7) Finding of No Significant Impact (FONSI);
    (8) Record of Decision (ROD);
    (9) Notice of Intent (NOI) to prepare any type of EIS;
    (10) Notice of Availability (NOA) of environmental documents;
    (11) Notice of public scoping meetings;
    (12) Other notices, including those required under Executive Order 
11988, ``Floodplain Management,'' Executive Order 13690, ``Establishing 
a Federal Flood Risk Management Standard and a Process for Further 
Soliciting and Considering Stakeholder Input,'' and Executive Order 
11990, ``Protection of Wetlands;''
    (13) Memorandums of Agreement or Understanding (MOA or MOU), such as 
those for mitigation of adverse effects on historic properties as 
specified in 36 CFR part 800, ``Protection of Historic Properties;'' and
    (14) Environmental studies, as indicated and appropriate.
    (b) [Reserved]



Sec.  799.10  Administrative records.

    (a) FSA will maintain an administrative record of documents and 
materials that FSA created or considered during its NEPA decision making 
process for a proposed action and referenced as such in the NEPA 
documentation, which can include any or all the following:
    (1) Any NEPA environmental review documents listed in Sec.  799.9, 
as applicable;
    (2) Technical information, permits, plans, sampling results, survey 
information, engineering reports, and studies, including environmental 
impact studies and assessments;
    (3) Policies, guidelines, directives, and manuals;
    (4) Internal memorandums or informational papers;
    (5) Contracts or agreements;
    (6) Notes of professional telephone conversations and meetings;
    (7) Meeting minutes;
    (8) Correspondence with agencies and stakeholders;
    (9) Communications to and from the public;
    (10) Documents and materials that contain any information that 
supports or conflicts with the FSA decision;
    (11) Maps, drawings, charts, and displays; and
    (12) All public comments received during the NEPA comment periods.
    (b) The administrative record may be used, among other purposes, to 
facilitate better decision making, as determined by FSA.



Sec.  799.11  Actions during NEPA reviews.

    (a) Except as specified in paragraphs (b) and (c) of this section, 
FSA or a program participant must not take any action, implement any 
component of a proposed action, or make any final decision during FSA's 
NEPA and environmental compliance review process that could have an 
adverse environmental

[[Page 441]]

impact or limit the range of alternatives until FSA completes its 
environmental review by doing one of the following:
    (1) Determines that the proposed action is categorically excluded 
under NEPA under subpart D of this part and does not trigger any 
extraordinary circumstances; or
    (2) Issues a FONSI or ROD under subpart E or F of this part.
    (b) FSA may approve interim actions related to proposed actions 
provided the:
    (1) Interim actions will not have an adverse environmental impact;
    (2) Expenditure is necessary to maintain a schedule for the proposed 
action;
    (3) Interim actions and expenditures will not compromise FSA's 
environmental compliance review and decision making process for the 
larger action;
    (4) Interim actions and expenditures will not segment otherwise 
connected actions; and
    (5) NEPA and associated environmental compliance review has been 
completed for the interim action or expenditure.
    (c) FSA and program participants may develop preliminary plans or 
designs, or perform work necessary to support an application for 
Federal, State, or local permits or assistance, during the NEPA review 
process, provided all requirements in paragraphs (a) and (b) of this 
section are met.



Sec.  799.12  Emergency circumstances.

    (a) If emergency circumstances exist that make it necessary to take 
action to mitigate harm to life, property, or important natural, 
cultural, or historic resources, FSA may take an action with significant 
environmental impact without complying with the requirements of this 
part.
    (b) If emergency circumstances exist, the NECM will consult with CEQ 
as soon as feasible about alternative NEPA arrangements for controlling 
the immediate impact of the emergency, as specified in 40 CFR 1506.11.
    (c) If emergency circumstances exist, the FPO will follow the 
emergency procedures specified in 36 CFR 800.12 regarding preservation 
of historic properties, if applicable.
    (d) FSA assistance provided in response to a Presidentially-declared 
disaster under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, 42 U.S.C. 5121--5207, is exempt from NEPA 
requirements, as specified in 42 U.S.C. 5159. Under a Presidentially-
declared disaster, the following actions to specifically address 
immediate post-emergency health or safety hazards are exempt from 
environmental compliance requirements:
    (1) Clearing roads and constructing temporary bridges necessary for 
performing emergency tasks and essential community services;
    (2) Emergency debris removal in support of performing emergency 
tasks and essential community services;
    (3) Demolishing unsafe structures that endanger the public or could 
create a public health hazard if not demolished;
    (4) Disseminating public information and assistance for health and 
safety measures;
    (5) Providing technical assistance to State, regional, local, or 
Tribal governments on disaster management control;
    (6) Reducing immediate threats to life, property, and public health 
and safety; and
    (7) Warning of further risks and hazards.
    (c) Proposed actions other than those specified in paragraph (d) of 
this section that are not specifically to address immediate post-
emergency health or safety hazards require the full suite of 
environmental compliance requirements and are not exempt.



Sec.  799.13  FSA as lead agency.

    (a) When FSA acts as the lead agency in a NEPA review as specified 
in 40 CFR 1501.5, FSA will:
    (1) Coordinate its review with other appropriate Federal, State, and 
Tribal governments; and
    (2) Request other agencies to act as cooperating agencies as 
specified in 40 CFR 1501.6, and defined in 40 CFR 1508.5, as early in 
the review process as possible.
    (b) If FSA acts as a lead agency for a proposed action that affects 
more than

[[Page 442]]

one State, the NECM will designate one SEC to act as RAO.
    (c) If the role of lead agency is disputed, the NECM will refer the 
matter to the FSA Administrator, who will attempt to resolve the matter 
with the other agency. If the Federal agencies cannot agree which will 
serve as the lead agency, the FSA Administrator will follow the 
procedures specified in 40 CFR 1501.5(e) to request that CEQ determine 
the lead agency.



Sec.  799.14  FSA as cooperating agency.

    (a) FSA will act as a cooperating agency if requested by another 
agency, as specified in 40 CFR 1501.6 and defined in 40 CFR 1508.5. 
However, FSA may decline another agency's request if FSA determines the 
proposed action does not fall within FSA's area of expertise or FSA does 
not have jurisdiction by law. If FSA declines such a request to 
cooperate, that will be documented in writing to the requesting agency 
and a copy will be provided to CEQ.
    (b) FSA may request to be designated as a cooperating agency if 
another agency's proposed action falls within FSA's area of expertise.



Sec.  799.15  Public involvement in environmental review.

    (a) FSA will involve the public in the environmental review process 
as early as possible and in a manner consistent with 40 CFR 1506.6. To 
determine the appropriate level of public participation, FSA will 
consider:
    (1) The scale of the proposed action and its probable effects;
    (2) The likely level of public interest and controversy; and
    (3) Advice received from knowledgeable parties and experts.
    (b) Depending upon the scale of the proposed action, FSA will:
    (1) Coordinate public notices and consultation with the U.S. Fish 
and Wildlife Service, USDA's Natural Resources Conservation Service, 
Federal Emergency Management Agency, the National Marine Fisheries 
Service, the U.S. Army Corps of Engineers, and other agencies, as 
appropriate, if wetlands, floodplains, ESA-listed species, or other 
protected resources have the potential to be impacted;
    (2) Make appropriate environmental documents available to interested 
partiesby request;
    (3) Publish a Notice of Intent (NOI) to prepare an EIS, as specified 
in subpart F of this part; and
    (4) Publish a Notice of Availability (NOA) of draft and final EISs 
and RODs, as specified in subpart F of this part.
    (c) If the effects of a proposed action are local in nature and the 
scale of the proposed action is likely to generate interest and 
controversy at the local level, then in addition to the proposed actions 
specified in paragraphs (a) and (b) of this section, FSA will:
    (1) Notify appropriate State, local, regional, and Tribal 
governments and clearinghouses, and parties and organizations, including 
the State Historic Preservation Officer (SHPO) and Tribal Historic 
Preservation Officer (THPO), known to have environmental, cultural, and 
economic interests in the locality affected by the proposed action; and
    (2) Publish notice of the proposed action in the local media.
    (d) Public review for 30 days for a FONSI is necessary if any of the 
limited circumstances specified in 40 CFR 1501.4(e)(2)(i) or (ii) 
applies.



Sec.  799.16  Scoping.

    (a) FSA will determine the appropriate scoping process for the 
environmental review of a proposed action based on the nature, 
complexity, potential significance of effects, and level of controversy 
of the proposed action.
    (b) As part of its scoping process, FSA will:
    (1) Invite appropriate Federal, State, and Tribal governments, and 
other interested parties to participate in the process, if determined 
necessary by FSA;
    (2) Identify the significant issues to be analyzed;
    (3) Identify and eliminate from further review issues that were 
determined not significant or have been adequately addressed in any 
prior environmental reviews;
    (4) Determine the roles of lead and cooperating agencies, if 
appropriate;
    (5) Identify any related EAs or EISs;

[[Page 443]]

    (6) Identify other environmental reviews and consultation 
requirements, including NHPA requirements and State, local, regional, 
and Tribal requirements, so they are integrated into the NEPA process;
    (7) Identify the relationship between the timing of the 
environmental review process and FSA's decision making process;
    (8) Determine points of contact within FSA; and
    (9) Establish time limits for the environmental review process.
    (c) FSA may hold public meetings as part of the scoping process, if 
appropriate and as time permits. The process that FSA will use to 
determine if a public scoping meeting is needed, and how such meetings 
will be announced, is specified in Sec.  799.17.



Sec.  799.17  Public meetings.

    (a) In consultation with the NECM, the SEC will determine if public 
meetings will be held on a proposed action to:
    (1) Inform the public about the details of a proposed action and its 
possible environmental effects;
    (2) Gather information about the public concerns; and
    (3) Resolve, address, or respond to issues raised by the public.
    (b) In determining whether to hold a public meeting, FSA will 
consider and determine whether:
    (1) There is substantial controversy concerning the environmental 
impact of the proposed action;
    (2) There is substantial interest in holding a public meeting;
    (3) Another Federal agency or Tribal government has requested a 
public scoping meeting and their request is warranted; or
    (4) The FSA Administrator has determined that a public meeting is 
needed.
    (c) FSA will publish notice of a public meeting, including the time, 
date and location of the meeting, in the local media or Federal 
Register, as appropriate, at least 15 days before the first meeting. A 
notice of a public scoping meeting may be included in a Notice of Intent 
to prepare an EIS.
    (d) If a NEPA document is to be considered at a public meeting, FSA 
will make the appropriate documentation available to the public at least 
15 days before the meeting.



Sec.  799.18  Overview of FSA NEPA process.

------------------------------------------------------------------------
        If the proposed action:                        FSA:
------------------------------------------------------------------------
Is an emergency action.................  Follows the procedures in Sec.
                                           799.12
Is exempt from section 102(2)(C) of      Implements the action.
 NEPA (42 U.S.C. 4332(2)(C)) by
 authorizing legislation for the
 program.
Is categorically excluded under Sec.     Implements the action after
 799.31(b) or Sec.   1b.3 of this title.  recording the specific
                                          categorical exclusion on the
                                          ESW (no review needed).
Is a proposed action that has the        Completes an ESW to determine
 potential to impact historic             if there will be an impact on
 properties as specified in Sec.          historic properties. FSA will
 799.33(e) and therefore requires the     prepare an EA or EIS, as
 completion of an ESW.                    indicated, before implementing
                                          the action.
Is a categorically excluded proposed     Completes an ESW to determine
 action listed in Sec.   799.32 that      whether extraordinary
 requires the completion of an ESW.       circumstances are present, as
                                          defined in Sec.   799.33. This
                                          review includes a
                                          determination of whether the
                                          proposed action will
                                          potentially impact protected
                                          resources. If there are no
                                          extraordinary circumstances,
                                          FSA implements the action; if
                                          there are extraordinary
                                          circumstances, FSA will
                                          prepare an EA or EIS, as
                                          indicated, before implementing
                                          the action.
Involves a category of proposed actions  Prepares an EA.
 requiring an EA listed in Sec.
 799.41.
Involves a category of proposed actions  Prepares an EIS.
 requiring an EIS listed in Sec.
 799.51.
------------------------------------------------------------------------



               Subpart C_Environmental Screening Worksheet



Sec.  799.20  Purpose of the ESW.

    (a) FSA uses the ESW as an initial screening tool to evaluate record 
the use of a categorical exclusion for a proposed action and to 
determine the required type of environmental review.
    (b) Review with the ESW is not required for proposed actions that 
are categorically excluded as specified in Sec.  799.31(b) or Sec.  1b.3 
of this title, or for

[[Page 444]]

proposed actions where FSA determines at an early stage that there is a 
need to prepare an EA or EIS.



                    Subpart D_Categorical Exclusions



Sec.  799.30  Purpose of categorical exclusion process.

    (a) FSA has determined that the categories of proposed actions 
listed in Sec. Sec.  799.31 and 799.32 do not normally individually or 
cumulatively have a significant effect on the human environment and do 
not threaten a violation of applicable statutory, regulatory, or permit 
requirements for environment, safety, and health, including requirements 
of Executive Orders and other USDA regulations in this chapter. Based on 
FSA's previous experience implementing these actions and similar actions 
through the completion of EAs, these proposed actions are categorically 
excluded.
    (b) If a proposed action falls within one of the categories of 
proposed actions listed in Sec.  1b.3 of this title, Sec.  799.31, or 
Sec.  799.32, and there are no extraordinary circumstances present as 
specified in Sec.  799.33, then the proposed action is categorically 
excluded from the requirements to prepare an EA or an EIS.
    (c) Those proposed actions in categories in Sec.  799.31 or Sec.  
799.32 will be considered categorical exclusions unless it is determined 
there are extraordinary circumstances, as specified in Sec.  799.33.



Sec.  799.31  Categorical exclusions to be recorded on an ESW.

    (a) Proposed actions listed in this section involve no new ground 
disturbance below the existing plow zone (does not exceed the depth of 
previous tillage or disturbance) and therefore only need to be recorded 
on the ESW; no further review will be required. Unless otherwise noted, 
the proposed actions in this section also do not have the potential to 
cause effects to historic properties, and will therefore not be reviewed 
for compliance with section 106 of NHPA (54 U.S.C. 306108) or its 
implementing regulations, 36 CFR part 800. However, some proposed 
actions may require other Federal consultation to determine if there are 
extraordinary circumstances as specified in Sec.  799.33.
    (b) The following proposed actions are categorically excluded. These 
proposed actions are grouped into broader categories of similar types of 
proposed actions. Those proposed actions that are similar in scope 
(purpose, intent, and breadth) and the potential significance of impacts 
to those listed in this section, but not specifically listed in Sec.  
799.31 or Sec.  799.32, will be considered categorical exclusions in 
this category, unless it is determined that extraordinary circumstances 
exist, as specified in Sec.  799.33:
    (1) Loan actions. The following list includes categorical exclusions 
for proposed actions related to FSA loans:
    (i) Closing cost payments;
    (ii) Commodity loans;
    (iii) Debt set asides;
    (iv) Deferral of loan payments;
    (v) Youth loans;
    (vi) Loan consolidation;
    (vii) Loans for annual operating expenses, except livestock;
    (viii) Loans for equipment;
    (ix) Loans for family living expenses;
    (x) Loan subordination, with no or minimal construction below the 
depth of previous tillage or ground disturbance, and no change in 
operations, including, but not limited to, an increase in animal numbers 
to exceed the current CAFO designation (as defined by the U.S. 
Environmental Protection Agency in 40 CFR 122.23);
    (xi) Loans to pay for labor costs;
    (xii) Loan (debt) transfers and assumptions with no new ground 
disturbance;
    (xiii) Partial or complete release of loan collateral;
    (xiv) Re-amortization of loans;
    (xv) Refinancing of debt;
    (xvi) Rescheduling loans;
    (xvii) Restructuring of loans; and
    (xvii) Writing down of debt;
    (2) Repair, improvement, or minor modification actions. The 
following list includes categorical exclusions for repair, improvement, 
or minor modification proposed actions:
    (i) Existing fence repair;
    (ii) Improvement or repair of farm-related structures under 50 years 
of age; and

[[Page 445]]

    (iii) Minor amendments or revisions to previously approved projects, 
provided such proposed actions do not substantively alter the purpose, 
operation, location, impacts, or design of the project as originally 
approved;
    (3) Administrative actions. The following list includes 
categorically excluded administrative proposed actions:
    (i) Issuing minor technical corrections to regulations, handbooks, 
and internal guidance, as well as amendments to them;
    (ii) Personnel actions, reduction-in-force, or employee transfers; 
and
    (iii) Procurement actions for goods and services conducted in 
accordance with Executive Orders;
    (4) Planting actions. The following list includes categorical 
exclusions for planting proposed actions:
    (i) Bareland planting or planting without site preparation;
    (ii) Bedding site establishment for wildlife;
    (iii) Chiseling and subsoiling;
    (iv) Clean tilling firebreaks;
    (v) Conservation crop rotation;
    (vi) Contour farming;
    (vii) Contour grass strip establishment;
    (viii) Cover crop and green manure crop planting;
    (ix) Critical area planting;
    (x) Firebreak installation;
    (xi) Grass, forbs, or legume planting;
    (xii) Heavy use area protection;
    (xiii) Installation and maintenance of field borders or field 
strips;
    (xiv) Pasture, range, and hayland planting;
    (xv) Seeding of shrubs;
    (xvi) Seedling shrub planting;
    (xvii) Site preparation;
    (xviii) Strip cropping;
    (xix) Wildlife food plot planting; and
    (xx) Windbreak and shelterbelt establishment;
    (5) Management actions. The following list includes categorical 
exclusions of land and resource management proposed actions:
    (i) Forage harvest management;
    (ii) Integrated crop management;
    (iii) Mulching, including plastic mulch;
    (iv) Netting for hard woods;
    (v) Obstruction removal;
    (vi) Pest management (consistent with all labelling and use 
requirements);
    (vii) Plant grafting;
    (viii) Plugging artesian wells;
    (ix) Residue management including seasonal management;
    (x) Roof runoff management;
    (xi) Thinning and pruning of plants;
    (xii) Toxic salt reduction; and
    (xiii) Water spreading; and
    (6) Other FSA actions. The following list includes categorical 
exclusions for other FSA proposed actions:
    (i) Conservation easement purchases with no construction planned;
    (ii) Emergency program proposed actions (including Emergency 
Conservation Program and Emergency Forest Restoration Program) that have 
a total cost share of less than $5,000;
    (iii) Financial assistance to supplement income, manage the supply 
of agricultural commodities, or influence the cost and supply of such 
commodities or programs of a similar nature or intent (that is, price 
support programs);
    (iv) Individual farm participation in FSA programs where no ground 
disturbance or change in land use occurs as a result of the proposed 
action or participation;
    (v) Inventory property disposal or lease with protective easements 
or covenants;
    (vi) Safety net programs administered by FSA;
    (vii) Site characterization, environmental testing, and monitoring 
where no significant alteration of existing ambient conditions would 
occur, including air, surface water, groundwater, wind, soil, or rock 
core sampling; installation of monitoring wells; installation of small 
scale air, water, or weather monitoring equipment;
    (viii) Stand analysis for forest management planning;
    (ix) Tree protection including plastic tubes; and
    (x) Proposed actions involving another agency that are fully covered 
by one or more of that agency's categorical exclusions (on the ESW, to 
record the categorical exclusion, FSA will name the other agency and 
list the specific categorical exclusion(s) that applies).

[[Page 446]]



Sec.  799.32  Categorical exclusions requiring review with an ESW.

    (a) Proposed actions listed in this section may be categorically 
excluded after completion of a review with an ESW to document that a 
proposed action does not involve extraordinary circumstances as 
specified in Sec.  799.33.
    (b) This section has two types of categorical exclusions, one 
without construction and ground disturbance and one with construction 
and ground disturbance that will require additional environmental review 
and consultation in most cases.
    (c) Consultations under NHPA, ESA, and other relevant environmental 
mandates, may be required to document that no extraordinary 
circumstances exist.
    (d) The following proposed actions are grouped into broader 
categories of similar types of proposed actions without ground 
disturbance. Those proposed actions that are similar in scope (purpose, 
intent, and breadth) and the potential significance of impacts to those 
listed in this section, but not specifically listed in this section, 
will be considered categorical exclusions in this category, unless it is 
determined that extraordinary circumstances exist, as specified in Sec.  
799.33:
    (1) Loan actions. The following list includes categorical exclusions 
for proposed actions related to FSA loans:
    (i) Farm storage and drying facility loans for added capacity;
    (ii) Loans for livestock purchases;
    (iii) Release of loan security for forestry purposes;
    (iv) Reorganizing farm operations; and
    (v) Replacement building loans;
    (2) Minor management, construction, or repair actions. The following 
list includes categorical exclusions for minor construction or repair 
proposed actions:
    (i) Minor construction, such as a small addition;
    (ii) Drain tile replacement;
    (iii) Erosion control measures;
    (iv) Grading, leveling, shaping, and filling;
    (v) Grassed waterway establishment;
    (vi) Hillside ditches;
    (vii) Land-clearing operations of no more than 15 acres, provided 
any amount of land involved in tree harvesting (without stump removal) 
is to be conducted on a sustainable basis and according to a Federal, 
State, Tribal, or other governmental unit approved forestry management 
plan;
    (viii) Nutrient management;
    (ix) Permanent establishment of a water source for wildlife (not 
livestock);
    (x) Restoring and replacing property;
    (xi) Soil and water development;
    (xii) Spring development;
    (xiii) Trough or tank installation; and
    (xiv) Water harvesting catchment; and
    (3) Other FSA actions. The following list includes categorical 
exclusions for other FSA proposed actions:
    (i) Fence installation and replacement;
    (ii) Fish stream improvement;
    (iii) Grazing land mechanical treatment; and
    (iv) Inventory property disposal or lease without protective 
easements or covenants (this proposed action, in particular, has the 
potential to cause effects to historic properties and therefore requires 
analysis under section 106 of NHPA (54 U.S.C. 306108), as well as under 
the ESA and wetland protection requirements).
    (e) The following proposed actions are grouped into broader 
categories of similar types of proposed actions with ground disturbance, 
each of the listed proposed actions has the potential for extraordinary 
circumstances because they include construction or ground disturbance. 
Therefore, additional environmental review and consultation will be 
necessary in most cases. Those proposed actions that are similar in 
scope (purpose, intent, and breadth) and the potential significance of 
impacts to those listed in this section, but not specifically listed in 
this section, will be considered categorical exclusions in this 
category, unless it is determined that extraordinary circumstances 
exist, as specified in Sec.  799.33:
    (1) Loan actions. The following list includes categorical exclusions 
for proposed actions related to FSA loans:

[[Page 447]]

    (i) Loans and loan subordination with construction, demolition, or 
ground disturbance planned;
    (ii) Real estate purchase loans with new ground disturbance planned; 
and
    (iii) Term operating loans with construction or demolition planned;
    (2) Construction or ground disturbance actions. The following list 
includes categorical exclusions for construction or ground disturbance 
proposed actions:
    (i) Bridges;
    (ii) Chiseling and subsoiling in areas not previously tilled;
    (iii) Construction of a new farm storage facility;
    (iv) Dams;
    (v) Dikes and levees;
    (vi) Diversions;
    (vii) Drop spillways;
    (viii) Dugouts;
    (ix) Excavation;
    (x) Grade stabilization structures;
    (xi) Grading, leveling, shaping and filling in areas or to depths 
not previously disturbed;
    (xii) Installation of structures designed to regulate water flow 
such as pipes, flashboard risers, gates, chutes, and outlets;
    (xiii) Irrigation systems;
    (xiv) Land smoothing;
    (xv) Line waterways or outlets;
    (xvi) Lining;
    (xvii) Livestock crossing facilities;
    (xviii) Pesticide containment facility;
    (xix) Pipe drop;
    (xx) Pipeline for watering facility;
    (xxi) Ponds, including sealing and lining;
    (xxii) Precision land farming with ground disturbance;
    (xxiii) Riparian buffer establishment;
    (xxiv) Roads, including access roads;
    (xxv) Rock barriers;
    (xxvi) Rock filled infiltration trenches;
    (xxvii) Sediment basin;
    (xxviii) Sediment structures;
    (xxix) Site preparation for planting or seeding in areas not 
previously tilled;
    (xxx) Soil and water conservation structures;
    (xxxi) Stream bank and shoreline protection;
    (xxxii) Structures for water control;
    (xxxiii) Subsurface drains;
    (xxxiv) Surface roughening;
    (xxxv) Terracing;
    (xxxvi) Underground outlets;
    (xxxvii) Watering tank or trough installation, if in areas not 
previously disturbed;
    (xxxviii) Wells; and
    (xxxix) Wetland restoration.
    (3) Management and planting type actions. The following list 
includes categorical exclusions for resource management and planting 
proposed actions:
    (i) Establishing or maintaining wildlife plots in areas not 
previously tilled or disturbed;
    (ii) Prescribed burning;
    (iii) Tree planting when trees have root balls of one gallon 
container size or larger; and
    (iv) Wildlife upland habitat management.



Sec.  799.33  Extraordinary circumstances.

    (a) As specified in 40 CFR 1508.4, in the definition of categorical 
exclusion, procedures are required to provide for extraordinary 
circumstances in which a normally categorically excluded action may have 
a significant environmental effect. The presence and impacts of 
extraordinary circumstances require heightened review of proposed 
actions that would otherwise be categorically excluded. Extraordinary 
circumstances include, but are not limited to:
    (1) Scientific controversy about environmental effects of the 
proposed action;
    (2) Impacts that are potentially adverse, significant, uncertain, or 
involve unique or unknown risks, including, but not limited to, impacts 
to protected resources. Protected resources include, but are not limited 
to:
    (i) Property (for example, sites, buildings, structures, and 
objects) of historic, archeological, or architectural significance, as 
designated by Federal, Tribal, State, or local governments, or property 
eligible for listing on the National Register of Historic Places;
    (ii) Federally-listed threatened or endangered species or their 
habitat (including critical habitat), or Federally-proposed or candidate 
species or their habitat;

[[Page 448]]

    (iii) Important or prime agricultural, forest, or range lands, as 
specified in part 657 of this chapter and in USDA Departmental 
Regulation 9500-3;
    (iv) Wetlands, waters of the United States, as regulated under the 
Clean Water Act (33 U.S.C. 1344), highly erodible land, or floodplains;
    (v) Areas having a special designation, such as Federally- and 
State-designated wilderness areas, national parks, national natural 
landmarks, wild and scenic rivers, State and Federal wildlife refuges, 
and marine sanctuaries; and
    (vi) Special sources of water, such as sole-source aquifers, 
wellhead protection areas, or other water sources that are vital in a 
region;
    (3) A proposed action that is also ``connected'' (as specified in 40 
CFR 1508.25(a)(1)) to other actions with potential impacts;
    (4) A proposed action that is related to other proposed actions with 
cumulative impacts (40 CFR 1508.25(a)(2));
    (5) A proposed action that does not comply with 40 CFR 1506.1, 
``Limitations on actions during NEPA process;'' and
    (6) A proposed action that violates any existing Federal, State, or 
local government law, policy, or requirements (for example, wetland 
laws, Clean Water Act-related requirements, water rights).
    (b) FSA will use the ESW to review proposed actions that are 
eligible for categorical exclusion to determine if extraordinary 
circumstances exist that could impact protected resources. If an 
extraordinary circumstance exists, and cannot be avoided or 
appropriately mitigated, an EA or EIS will be prepared, as specified in 
this part. Specifically, FSA will complete a review with the ESW for 
proposed actions that fall within the list of categorical exclusions 
specified in Sec.  799.32 to determine whether extraordinary 
circumstances are present.
    (c) For any proposed actions that have the potential to cause 
effects to historic properties, endangered species, waters of the United 
States, wetlands, and other protected resources, FSA will ensure 
appropriate analyses is completed to comply with the following mandates:
    (1) For section 106 of the NHPA (54 U.S.C. 306108), the regulations 
in 36 CFR part 800, ``Protection of Historic Properties;'' if an 
authorized technical representative from another Federal agency assists 
with compliance with 36 CFR part 800, FSA will remain responsible for 
any consultation with SHPO, THPO, or Tribal governments;
    (2) For section 7 of the ESA that governs the protection of 
Federally proposed, threatened and endangered species and their 
designated and proposed critical habitats; and
    (3) For the Clean Water Act and related Executive Order provisions 
for avoiding impacts to wetlands and waters of the United States, 
including impaired waters listed under Section 303(d) of the Clean Water 
Act.
    (d) If technical assistance is provided by another Federal agency, 
FSA will ensure that the environmental documentation provided is 
commensurate to or exceeds the requirements of the FSA ESW. If it is 
not, a review with an ESW is needed to determine if an EA or EIS is 
warranted.



Sec.  799.34  Establishing and revising categorical exclusions.

    (a) As part of the process to establish a new categorical exclusion, 
FSA will consider all relevant information, including the following:
    (1) Completed FSA NEPA documents;
    (2) Other Federal agency NEPA documents on proposed actions that 
could be considered similar to the categorical exclusion being 
considered;
    (3) Results of impact demonstration or pilot projects;
    (4) Information from professional staff, expert opinions, and 
scientific analyses; and
    (5) The experiences of FSA, private, and public parties that have 
taken similar actions.
    (b) FSA will consult with CEQ and appropriate Federal agencies while 
developing or modifying a categorical exclusion.
    (c) Before establishing a new final categorical exclusion, FSA will 
follow the CEQ specified process for establishing Categorical 
Exclusions, including consultation with CEQ and an opportunity for 
public review and comment as required by 40 CFR 1507.3.

[[Page 449]]

    (d) FSA will maintain an administrative record that includes the 
supporting information and findings used in establishing a categorical 
exclusion.
    (e) FSA will periodically review its categorical exclusions to 
identify and revise exclusions that no longer effectively reflect 
environmental circumstances or current FSA program scope.
    (f) FSA will use the same process specified in this section and the 
results of its periodic reviews to revise a categorical exclusion or 
remove a categorical exclusion.



                   Subpart E_Environmental Assessments



Sec.  799.40  Purpose of an EA.

    (a) FSA prepares an EA to determine whether a proposed action would 
significantly affect the environment, and to consider the potential 
impacts of reasonable alternatives and the potential mitigation measures 
to the alternatives and proposed action.
    (b) FSA will prepare a PEA to determine if proposed actions that are 
broad in scope or similar in nature have cumulative significant 
environmental impacts, although the impacts of the proposed actions may 
be individually insignificant.
    (c) The result of the EA process will be either a FONSI or a 
determination that an EIS is required. FSA may also determine that a 
proposed action will significantly affect the environment without first 
preparing an EA; in that case, an EIS is required.



Sec.  799.41  When an EA is required.

    (a) Proposed actions that require the preparation of an EA include 
the following:
    (1) New Conservation Reserve Enhancement Program (CREP) agreements;
    (2) Development of farm ponds or lakes greater than or equal to 20 
acres;
    (3) Restoration of wetlands greater than or equal to 100 acres 
aggregate;
    (4) Installation or enlargement of irrigation facilities, including 
storage reservoirs, diversions, dams, wells, pumping plants, canals, 
pipelines, and sprinklers designed to irrigate greater than 320 acres 
aggregate;
    (5) Land clearing operations (for example, vegetation removal, 
including tree stumps; grading) involving greater than or equal to 40 
acres aggregate;
    (6) Clear cutting operations for timber involving greater than or 
equal to 100 acres aggregate;
    (7) Construction or major enlargement of a Concentrated Aquatic 
Animal Production Facility (CAAP), as defined by the U.S. Environmental 
Protection Agency in 40 CFR 122.24;
    (8) Construction of commercial facilities or structures for 
processing or handling of farm production or for public sales;
    (9) Construction or major expansion of a large CAFO, as defined by 
the U.S. Environmental Protection Agency in 40 CFR 122.23, regardless of 
the type of manure handling system or water system;
    (10) Refinancing of a newly constructed large CAFO, as defined by 
the U.S. Environmental Protection Agency in 40 CFR 122.23, or CAAPs as 
defined by the U.S. Environmental Protection Agency in 40 CFR 122.24 
through 122.25, that has been in operation for 24 months or less;
    (11) Issuance of substantively discretionary FSA regulations, 
Federal Register notices, or amendments to existing programs that 
authorize FSA or CCC funding for proposed actions that have the 
potential to significantly affect the human environment;
    (12) Newly authorized programs that involve substantively 
discretionary proposed actions and are specified in Sec.  799.32(d);
    (13) Any FSA proposed action that has been determined to trigger 
extraordinary circumstances specified in Sec.  799.33(c); and
    (14) Any proposed action that will involve the planting of a 
potentially invasive species, unless exempted by Federal law.
    (b) Proposed actions that do not reach the thresholds defined in 
paragraph (a) of this section, unless otherwise identified under Sec.  
799.31(b) or Sec.  799.32(c), require a review using the ESW to 
determine if an EA is warranted.

[[Page 450]]



Sec.  799.42  Contents of an EA.

    (a) The EA should include at least the following:
    (1) FSA cover sheet;
    (2) Executive summary;
    (3) Table of contents;
    (4) List of acronyms;
    (5) A discussion of the purpose of and need for the proposed action;
    (6) A discussion of alternatives, if the proposed action involves 
unresolved conflicts concerning the uses of available resources;
    (7) A discussion of the existing pre-project environment and the 
potential environmental impacts of the proposed action, with reference 
to the significance of the impact as specified in Sec.  799.8 and 40 CFR 
1508.27;
    (8) Likelihood of any significant impact and potential mitigation 
measures that FSA will require, if needed, to support a FONSI;
    (9) A list of preparers and contributors;
    (10) A list of agencies, tribes, groups, and persons solicited for 
feedback and the process used to solicit that feedback;
    (11) References; and
    (12) Appendixes, if appropriate.
    (b) FSA will prepare a Supplemental EA, and place the supplements in 
the administrative record of the original EA, if:
    (1) Substantial changes occur in the proposed action that are 
relevant to environmental concerns previously presented, or
    (2) Significant new circumstances or information arise that are 
relevant to environmental concerns and to the proposed action or its 
impacts.
    (c) FSA may request that a program participant prepare or provide 
information for FSA to use in the EA and may use the program 
participant's information in the EA or Supplemental EA, provided that 
FSA also:
    (1) Independently evaluates the environmental issues;
    (2) Takes responsibility for the scope and content of the EA and the 
process utilized, including any required public involvement; and
    (3) Prepares the FONSI or NOI to prepare an EIS.



Sec.  799.43  Tiering.

    (a) As specified in 40 CFR 1508.28, tiering is a process of covering 
general environmental review in a broad PEA, followed by subsequent 
narrower scope analysis to address specific proposed actions, action 
stages, or sites. FSA will use tiering when FSA prepares a broad PEA and 
subsequently prepares a site-specific ESW, EA, or PEA for a proposed 
action included within the program addressed in the original, broad PEA.
    (b) When FSA uses tiering in a broad PEA, the subsequent ESW, EA, or 
PEA will:
    (1) Summarize the issues discussed in the broader statement;
    (2) Incorporate by reference the discussions from the broader 
statement and the conclusions carried forward into the subsequent tiered 
analysis and documentation; and
    (3) State where the PEA document is available.



Sec.  799.44  Adoption of an EA prepared by another entity.

    (a) FSA may adopt an EA prepared by another Federal agency, State, 
or Tribal government if the EA meets the requirements of this subpart.
    (b) If FSA adopts another agency's EA and issues a FONSI, FSA will 
follow the procedures specified in Sec.  799.44.



Sec.  799.45  Finding of No Significant Impact (FONSI).

    (a) If after completing the EA, FSA determines that the proposed 
action will not have a significant effect on the quality of the human 
environment, FSA will issue a FONSI.
    (b) The FONSI will include the reasons FSA determined that the 
proposed action will have no significant environmental impacts.
    (c) If the decision to issue the FONSI is conditioned upon the 
implementation of measures (mitigation actions) to ensure that impacts 
will be held to a nonsignificant level, the FONSI must include an 
enforceable commitment to implement such measures on the part of FSA, 
and any applicant or other party responsible for implementing the 
measures will be responsible for the commitments outlined in the FONSI.

[[Page 451]]



                Subpart E_Environmental Impact Statements



Sec.  799.50  Purpose of an Environmental Impact Statement (EIS).

    (a) FSA will prepare an EIS for proposed actions that are expected 
to have a significant effect on the human environment. The purpose of 
the EIS is to ensure that all significant environmental impacts and 
reasonable alternatives are fully considered in connection with the 
proposed action.
    (b) FSA will prepare a PEIS for proposed actions that are broad in 
scope or similar in nature and may cumulatively have significant 
environmental impacts, although the impact of the individual proposed 
actions may be insignificant.



Sec.  799.51  When an EIS is required.

    (a) The following FSA proposed actions normally require preparation 
of an EIS:
    (1) Legislative proposals, not including appropriations requests, 
with the potential for significant environmental impact that are drafted 
and submitted to Congress by FSA;
    (2) Broad Federal assistance programs administered by FSA, involving 
significant financial assistance or payments to program participants, 
that may have significant cumulative impacts on the human environment; 
and
    (3) Ongoing programs that have been found through previous 
environmental analyses to have major environmental concerns.
    (b) [Reserved]



Sec.  799.52  Notice of intent to prepare an EIS.

    (a) FSA will publish a Notice of Intent to prepare an EIS in the 
Federal Register and, depending on the scope of the proposed action, may 
publish a notice in other media.
    (b) The notice will include the following:
    (1) A description of the proposed action and possible alternatives;
    (2) A description of FSA's proposed scoping process, including 
information about any public meetings; and
    (3) The name of an FSA point of contact who can receive input and 
answer questions about the proposed action and the preparation of the 
EIS.



Sec.  799.53  Contents of an EIS.

    (a) FSA will prepare the EIS as specified in 40 CFR part 1502 and in 
section 102 of NEPA (42 U.S.C. 4332).
    (b) The EIS should include at least the following:
    (1) An FSA cover sheet;
    (2) An executive summary explaining the major conclusions, areas of 
controversy, and the issues to be resolved;
    (3) A table of contents;
    (4) List of acronyms and abbreviations;
    (5) A brief statement explaining the purpose and need of the 
proposed action;
    (6) A detailed discussion of the environmental impacts of the 
proposed action and reasonable alternatives to the proposed action, a 
description and brief analysis of the alternatives considered but 
eliminated from further consideration, the no-action alternative, FSA's 
preferred alternative(s), and discussion of appropriate mitigation 
measures;
    (7) A discussion of the affected environment;
    (8) A detailed discussion of:
    (i) The direct and indirect environmental consequences, including 
any cumulative impacts, of the proposed action and of the alternatives;
    (ii) Unavoidable adverse environmental effects;
    (iii) The relationship between local short-term uses of the 
environment and long-term ecosystem productivity;
    (iv) Any irreversible and irretrievable commitments of resources;
    (vi) Possible conflicts with the objectives of Federal, regional, 
State, local, regional, and Tribal land use plans, policies, and 
controls for the area concerned;
    (vii) Energy and natural depletable resource requirements, 
including, but not limited to natural gas and oil, and conservation 
potential of the alternatives and mitigation measures; and
    (viii) Urban quality, historic, and cultural resources and the 
design of the built environment, including the reuse and conservation 
potential of the alternatives and mitigation measures;

[[Page 452]]

    (9) In the draft EIS, a list of all Federal permits, licenses, and 
other entitlements that must be obtained for implementation of the 
proposed action;
    (10) A list of preparers;
    (11) Persons and agencies contacted;
    (12) References, if appropriate;
    (13) Glossary, if appropriate;
    (14) Index;
    (15) Appendixes, if any;
    (16) A list of agencies, organizations, and persons to whom copies 
of the EIS are sent; and
    (17) In the final EIS, a response to substantive comments on 
environmental issues.
    (c) FSA may have a contractor prepare an EIS as specified in 40 CFR 
1506.5(c). If FSA has a contractor prepare an EIS, FSA will:
    (1) Require the contractor to sign a disclosure statement specifying 
it has no financial or other interest in the outcome of the proposed 
action, which will be included in the administrative record; and
    (2) Furnish guidance and participate in the preparation of the EIS, 
and independently evaluate the EIS before its approval.



Sec.  799.54  Draft EIS.

    (a) FSA will prepare the draft EIS addressing the information 
specified in Sec.  799.53.
    (b) FSA will circulate the draft EIS as specified in 40 CFR 1502.19.
    (c) In addition to the requirements of 40 CFR 1502.19, FSA will 
request comments on the draft EIS from:
    (1) Appropriate State and local agencies authorized to develop and 
enforce environmental standards relevant to the scope of the EIS;
    (2) Tribal governments that have interests that could be impacted; 
and
    (3) If the proposed action affects historic properties, the 
appropriate SHPO, THPO, and the Advisory Council on Historic 
Preservation.
    (d) FSA will file the draft EIS with the U.S. Environmental 
Protection Agency as specified in 40 CFR 1506.9 and in accordance with 
U.S. Environmental Protection Agency filing requirements (available at 
http://www.epa.gov/compliance/nepa/submiteis/index.html).
    (e) The draft EIS will include a cover sheet with the information 
specified in 40 CFR 1502.11.
    (f) FSA will provide for a minimum 45-day comment period calculated 
from the date the U.S. Environmental Protection Agency publishes the NOA 
of the draft EIS.



Sec.  799.55  Final EIS.

    (a) FSA will prepare the final EIS addressing the information 
specified in Sec.  799.53.
    (b) FSA will evaluate the comments received on the draft EIS and 
respond in the final EIS as specified in 40 CFR 1503.4. FSA will discuss 
in the final EIS any issues raised by commenters that were not discussed 
in the draft EIS and provide a response to those comments.
    (c) FSA will attach substantive comments, or summaries of lengthy 
comments, to the final EIS and will include all comments in the 
administrative record.
    (d) FSA will circulate the final EIS as specified in 40 CFR 1502.19.
    (e) FSA will file the final EIS with the U.S. Environmental 
Protection Agency as specified in 40 CFR 1506.9.
    (f) The final EIS will include a cover sheet with the information 
specified in 40 CFR 1502.11.



Sec.  799.56  Supplemental EIS.

    (a) FSA will prepare supplements to a draft or final EIS if:
    (1) Substantial changes occur in the proposed action that are 
relevant to environmental concerns; or
    (2) Significant new circumstances or information arise that are 
relevant to environmental concerns and bearing on the proposed action or 
its impacts.
    (b) The requirements of this subpart for completing the original EIS 
apply to the supplemental EIS, with the exception of the scoping 
process, which is optional.



Sec.  799.57  Tiering.

    (a) As specified in 40 CFR 1508.28, tiering is a process of covering 
general environmental review in a broad PEIS, followed by subsequent 
narrower scope analysis to address specific proposed actions, action 
stages, or sites. FSA will use tiering when FSA prepares a broad PEIS 
and subsequently prepares

[[Page 453]]

a site-specific ESW, EA, or PEA for a proposed action included within 
the program addressed in the original, broad PEIS.
    (b) When FSA uses tiering in a broad PEIS, the subsequent ESW, EA, 
or PEA will:
    (1) Summarize the issues discussed in the broader statement;
    (2) Incorporate by reference the discussions from the broader 
statement and the conclusions carried forward into the subsequent tiered 
analysis and documentation; and
    (3) State where the PEIS document is available.



Sec.  799.58  Adoption of an EIS prepared by another entity.

    (a) FSA may elect to adopt an EIS prepared by another Federal 
agency, State, or Tribal government if:
    (1) The NECM determines that the EIS and the analyses and procedures 
by which they were developed meet the requirements of this part; and
    (2) The agency responsible for preparing the EIS concurs.
    (b) For the adoption of another Federal agency EIS, FSA will follow 
the procedures specified in the CEQ regulations in 40 CFR 1506.3.
    (c) For the adoption of an EIS from a state or tribe that has an 
established state or tribal procedural equivalent to the NEPA process 
(generally referred to as ``mini-NEPA''), FSA will follow the procedures 
specified in the CEQ regulations in 40 CFR 1506.3.



Sec.  799.59  Record of Decision.

    (a) FSA will issue a Record of Decision (ROD) within the time 
periods specified in 40 CFR 1506.10(b) but no sooner than 30 days after 
the U.S. Environmental Protection Agency's publication of the NOA of the 
final EIS. The ROD will:
    (1) State the decision reached;
    (2) Identify all alternatives considered by FSA in reaching its 
decision, specifying the alternative or alternatives considered to be 
environmentally preferable;
    (3) Identify and discuss all factors, including any essential 
considerations of national policy, which were considered by FSA in 
making its decision, and state how those considerations entered into its 
decision; and
    (4) State whether all practicable means to avoid or minimize 
environmental harm from the alternative selected have been adopted and, 
if not, explain why these mitigation measures were not adopted. A 
monitoring and enforcement program will be adopted and summarized where 
applicable for any mitigation.
    (b) FSA will distribute the ROD to all parties who request it.
    (c) FSA will publish the ROD or a notice of availability of the ROD 
in the Federal Register.

[[Page 455]]



  CHAPTER VIII--GRAIN INSPECTION, PACKERS AND STOCKYARD ADMINISTRATION 
      (FEDERAL GRAIN INSPECTION SERVICE), DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
800             General regulations.........................         457
801             Official performance requirements for grain 
                    inspection equipment....................         537
802             Official performance and procedural 
                    requirements for grain weighing 
                    equipment and related grain handling 
                    systems.................................         542
810             Official United States standards for grain..         543
868             General regulations and standards for 
                    certain agricultural commodities........         567
869-899

[Reserved]

[[Page 457]]



PART 800_GENERAL REGULATIONS--Table of Contents



                               Definitions

Sec.
800.0 Meaning of terms.

                             Administration

800.1 Mission.
800.2 Administrator.
800.3 Nondiscrimination--policy and provisions.
800.4 Procedures for establishing regulations, official standards, and 
          official criteria.
800.5 Complaints and reports of alleged violations.
800.6 Provisions for hearings.
800.7 Information about the Service, Act, and regulations.
800.8 Public information.

    Official Inspection and Class X or Class Y Weighing Requirements

800.15 Services.
800.16 Certification requirements for export grain.
800.17 Special inspection and weighing requirements for sacked export 
          grain.
800.18 Waivers of the official inspection and Class X weighing 
          requirements.

                 Recordkeeping and Access to Facilities

800.25 Required elevator and merchandising records.
800.26 Access to records and facilities.

                              Registration

800.30 Foreign commerce grain business.
800.31 Who must register.
800.32 When to register.
800.33 How to register.
800.34 Registration fee.
800.35 Review of applications.
800.36 Certificates of registration.
800.37 Notice of change in information.
800.38 Termination and renewal of registration.
800.39 Suspension or revocation of registration for cause.

        Conditions for Obtaining or Withholding Official Services

800.45 Availability of official services.
800.46 Requirements for obtaining official services.
800.47 Withdrawal of request for official services.
800.48 Dismissal of request for official services.
800.49 Conditional withholding of official services.
800.50 Refusal of official services and civil penalties.
800.51 Expenses of agency, field office, or Board of Appeals and Review.
800.52 Official services not to be denied.

                              Descriptions

800.55 Descriptions by grade.
800.56 Requirements on descriptions.

                        Grain Handling Practices

800.60 Deceptive actions and practices.
800.61 Prohibited grain handling practices.

                                  Fees

800.70 Fees for official services performed by agencies.
800.71 Fees assessed by the Service.
800.72 Explanation of additional service fees for services performed in 
          the United States only.
800.73 Computation and payment of service fees; general fee information.

                       Kinds of Official Services

800.75 Kinds of official inspection and weighing services.
800.76 Prohibited services; restricted services.

                    Inspection Methods and Procedures

800.80 Methods and order of performing official inspection services.
800.81 Sample requirements; general.
800.82 Sampling provisions by level of service.
800.83 Sampling provisions by kind of movement.
800.84 Inspection of grain in land carriers, containers, and barges in 
          single lots.
800.85 Inspection of grain in combined lots.
800.86 Inspection of shiplot, unit train, and lash barge grain in single 
          lots.
800.87 New inspections.
800.88 Loss of identity.

                   Weighing Provisions and Procedures

800.95 Methods and order of performing weighing services.
800.96 Weighing procedures.
800.97 Weighing grain in containers, land carriers, barges, and 
          shiplots.
800.98 Weighing grain in combined lots.
800.99 Checkweighing sacked grain.

                            Original Services

800.115 Who may request original services.
800.116 How to request original services.
800.117 Who shall perform original services.
800.118 Certification.

     Official Reinspection Services and Review of Weighing Services

800.125 Who may request reinspection services or review of weighing 
          services.
800.126 How to request reinspection or review of weighing services.
800.127 Who shall perform reinspection or review of weighing services.

[[Page 458]]

800.128 Conflicts of interest..
800.129 Certificating reinspection and review of weighing results.

                       Appeal Inspection Services

800.135 Who may request appeal inspection services.
800.136 How to request appeal inspection services.
800.137 Who shall perform appeal inspection services.
800.138 Conflict of interest.
800.139 Certificating appeal inspections.

                  Official Records and Forms (General)

800.145 Maintenance and retention of records--general requirements.
800.146 Maintenance and retention of records issued by the Service under 
          the Act.
800.147 Maintenance and retention of records on delegations, 
          designations, contracts, and approval of scale testing 
          organizations.
800.148 Maintenance and retention of records on organization, staffing, 
          and budget.
800.149 Maintenance and retention of records on licenses and approvals.
800.150 Maintenance and retention of records on fee schedules.
800.151 Maintenance and retention of records on space and equipment.
800.152 Maintenance and retention of file samples.
800.153 Maintenance and retention of records on official inspection, 
          Class X or Class Y weighing, and equipment testing service.
800.154 Availability of official records.
800.155 Detailed work records--general requirements.
800.156 Official inspection records.
800.157 Official weighing records.
800.158 Equipment testing work records.
800.159 Related official records.

                          Official Certificates

800.160 Official certificates; issuance and distribution.
800.161 Official certificate requirements.
800.162 Certification of grade; special requirements.
800.163 Divided-lot certificates.
800.164 Duplicate certificates.
800.165 Corrected certificates.
800.166 Reproducing certificates.

           Licenses and Authorizations (For Individuals Only)

800.170 When a license or authorization or approval is required.
800.171 Who may be licensed or authorized.
800.172 Applications for licenses.
800.173 Examinations and reexaminations.
800.174 Issuance and possession of licenses and authorizations.
800.175 Termination of licenses.
800.176 Voluntary cancellation or suspension of licenses.
800.177 Automatic suspension of license by change in employment.
800.178 Summary revocation of licenses.
800.179 Refusal of renewal, suspension, or revocation of licenses for 
          cause.
800.180 Summary cancellation of licenses.

         Duties and Conduct of Licensed and Authorized Personnel

800.185 Duties of official personnel and warehouse samplers.
800.186 Standards of conduct.
800.187 Conflicts of interest.
800.188 Crop year, variety, and origin statements.
800.189 Corrective actions for violations.

   Delegations, Designations, Approvals, Contracts, and Conflicts of 
                                Interest

800.195 Delegations.
800.196 Designations.
800.197 Approval as a scale testing and certification organization.
800.198 Contracts.
800.199 Conflict-of-interest provisions.

             Supervision, Monitoring, and Equipment Testing

800.215 Activities that shall be supervised.
800.216 Activities that shall be monitored.
800.217 Equipment that shall be tested.
800.218 Review of rejection or disapproval of equipment.
800.219 Conditional approval on use of equipment.

    Authority: 7 U.S.C. 71-87k.

    Source: 45 FR 15810, Mar. 11, 1980, unless otherwise noted.

                               Definitions



Sec.  800.0  Meaning of terms.

    (a) Construction. Words used in the singular form shall be 
considered to imply the plural and vice versa, as appropriate. When a 
section; e.g., Sec.  800.2, is cited, it refers to the indicated section 
in these regulations.
    (b) Definitions. For the purpose of these regulations, unless the 
context requires otherwise, the following terms shall have the meanings 
given for them below. The terms defined in the Act have been 
incorporated herein for easy reference.
    Act. The United States Grain Standards Act, as amended (39 Stat. 
482-485, as amended 7 U.S.C. 71 et seq.).

[[Page 459]]

    Additives. Materials approved by the Food and Drug Administration or 
the Environmental Protection Agency and added to grain for purposes of 
insect and fungi control, dust suppression, or identification.
    Administrator. The Administrator of the Grain Inspection, Packers 
and Stockyards Administration or any person to whom authority has been 
delegated.
    Agency. A delegated State or an official agency designated by the 
Administrator, as appropriate.
    Appeal inspection service. An official review by a field office of 
the results of an original inspection service or a reinspection service.
    Applicant. An interested person who requests an official inspection 
or a Class X or Class Y weighing service.
    Approved scale testing organization. A State or local governmental 
agency, or person, approved by the Service to perform official equipment 
testing services with respect to weighing equipment.
    Approved weigher. A person employed by or at an approved weighing 
facility and approved by the Service to physically perform Class X or 
Class Y weighing services, and certify the results of Class Y weighing.
    Approved weighing equipment. Any weighing device or related 
equipment approved by the Service for the performance of Class X or 
Class Y weighing services.
    Approved weighing facility. An elevator that is approved by the 
Service to receive Class X or Class Y weighing services.
    Assigned area of responsibility. A geographical area assigned to an 
agency or to a field office for the performance of official inspection 
or Class X or Class Y weighing services.
    Average grade. Multiple carrier units or sublots that are graded 
individually then averaged to form a single lot inspection.
    Board appeal inspection service. An official review by the Board of 
Appeals and Review of the results on an appeal inspection service.
    Board of Appeals and Review. The Board of Appeals and Review of the 
Service.
    Business day. The established field office working hours, any Monday 
through Friday that is not a holiday, or the working hours and days 
established by an agency.
    Cargo shipment. Bulk or sacked grain that is loaded directly aboard 
waterborne carrier for shipment. Grain loaded aboard a land carrier for 
shipment aboard a waterborne carrier shall not be considered to be a 
cargo shipment.
    Carrier. A truck, trailer, truck/trailer(s) combination, railroad 
car, barge, ship, or other container used to transport bulk or sacked 
grain.
    Chapter. Chapter VIII of the Code of Federal Regulations (7 CFR 
chapter VIII).
    Circuit. A geographical area assigned to a field office.
    Class X or Class Y weighing equipment testing. Any operation or 
procedure performed by official personnel to determine the accuracy of 
the equipment used, or to be used, in the performance of Class X or 
Class Y weighing services.
    Combined lot. Grain loaded aboard, or being loaded aboard, or 
discharged from two or more carriers as one lot.
    Compliance. Conformance with all requirements and procedures 
established by statute, regulation, instruction, or directive so that 
managerial, administrative, and technical functions are accomplished 
effectively. Compliance functions include: evaluating alleged 
violations, initiating preliminary investigations; initiating 
implementation of all necessary corrective actions; conducting 
management and technical reviews; administering the designation of 
agencies and the delegation of State agencies to perform official 
functions; identifying and, where appropriate, waiving and monitoring 
conflicts of interest; licensing agency personnel; responding to audits 
of FGIS programs; and reviewing and, when appropriate, approving agency 
fee schedules.
    Composite grade. Multiple samples obtained from the same type of 
carriers (e.g., trucklots, containers) that are combined into one sample 
for grade to form a single lot inspection.
    Container. A carrier, or a bin, other storage space, bag, box, or 
other receptacle for grain.

[[Page 460]]

    Contract grade. The official grade, official factors, or official 
criteria specified in a contract for sale or confirmation of sale; or in 
the absence of a contract the official grade, official factors, or 
official criteria specified by the applicant for official service.
    Contract service. An inspection or weighing service performed under 
a contract between an applicant and the Service.
    Contractor. A person who enters into a contract with the Service for 
the performance of specified official inspection or official monitoring 
services.
    Date of official inspection service or Class X or Class Y weighing 
services. The day on which an official inspection, or a Class X or Class 
Y weighing service is completed. For certification purposes, a day shall 
be considered to end at midnight, local time.
    Deceptive loading, handling, weighing, or sampling. Any manner of 
loading, handling, weighing, or sampling that knowingly deceives or 
attempts to deceive official personnel.
    Delegated State. A State agency delegated authority under the Act to 
provide official inspection service, or Class X or Class Y weighing 
services, or both, at one or more export port locations in the State.
    Department of Agriculture and Department. The United States 
Department of Agriculture (USDA).
    Designated agency. A State or local governmental agency, or person, 
designated under the Act to provide either official inspection service, 
or Class X or Class Y weighing services, or both, at locations other 
than export port locations.
    Door-probe sample. A sample taken with a probe from a lot of bulk 
grain that is loaded so close to the top of the carrier that it is 
possible to insert the probe in the grain only in the vicinity of the 
tailgate of the truck or trailer, the door of the railroad boxcar, or in 
a similarly restricted opening or area in the carrier in which the grain 
is located or is loaded in hopper cars or barges in such a manner that a 
representative sample cannot be obtained.
    Elevator. Any warehouse, storage, or handling facility used 
primarily for receiving, storing, or shipping grain. In a facility that 
is used primarily for receiving, storing, and shipping grain, all parts 
of the main facility, as well as annexes, shall be considered to be part 
of the elevator. A warehouse, storage, and handling facility that is 
located adjacent to and is operated primarily as an adjunct of a grain 
processing facility shall not be considered to be an elevator.
    Elevator areas and facilities. All operational areas, including the 
automated data processing facilities that are an integral part of the 
inspection or weighing operations of an elevator; the loading and 
unloading docks; the headhouse and control rooms; all storage areas, 
including the bins, the interstices, the bin floor, and the basement; 
and all handling facilities, including the belts, other conveyors, 
distributor scales, spouting, mechanical samplers, and electronic 
controls.
    Emergency. A situation that is outside the control of the applicant 
that prevents official inspection or weighing services within 24 hours 
of the scheduled service time.
    Employed. An individual is employed if the individual is actually 
employed or the employment is being withheld pending issuance of a 
license under the Act.
    Exporter. Any person who ships or causes to be shipped any bulk or 
sacked grain in a final carrier or container in which the grain is 
transported from the United States to any place outside the United 
States.
    Export elevator. Any grain elevator, warehouse, or other storage or 
handling facility in the United States (i) from which bulk or sacked 
export grain is loaded (A) aboard a carrier in which the grain is 
shipped from the United States to any place outside thereof, or (B) into 
a container for shipment to an export port location where the grain and 
the container will be loaded aboard a carrier in which it will be 
shipped from the United States to any place outside thereof; and (ii) 
which has been approved by the Service as a facility where Class X or 
Class Y weighing of grain may be obtained.
    Export grain. Grain for shipment from the United States to any place 
outside thereof.
    Export port location. A commonly recognized port of export in the 
United

[[Page 461]]

States or Canada, as determined by the Administrator, from which grain 
produced in the United States is shipped to any place outside the United 
States. Such locations include any coastal or border location or site in 
the United States which contains one or more export elevators, and is 
identified by the Service as an export port location.
    False, incorrect, and misleading. Respectively false, incorrect, and 
misleading in any particular. \2\
---------------------------------------------------------------------------

    \1\ [Reserved]
    \2\ A definition taken from the U.S. Grain Standards Act, as 
amended, with certain modifications which do not change the meanings.
---------------------------------------------------------------------------

    Federal Register. An official U.S. Government publication issued 
under the Federal Register Act of July 26, 1935, as amended (44 U.S.C. 
301 et seq.).
    Field Office. An office of the Service designated to perform or 
supervise official inspection services and Class X and Class Y weighing 
services.
    Field Office administrative costs. The costs of management, support, 
and maintenance of a Field Office, including, but not limited to, the 
management and administrative support personnel, rent, and utilities. 
This does not include any costs directly related to providing original 
or review inspection or weighing services.
    Grain. Corn, wheat, rye, oats, barley, flaxseed, sorghum, soybeans, 
triticale, mixed grain, sunflower seed, canola, and any other food 
grains, feed grains, and oilseeds for which standards are established 
under section 4 of the Act.
    Handling. Loading, unloading, elevating, storing, binning, mixing, 
blending, drying, aerating, screening, cleaning, washing, treating, or 
fumigating grain.
    High quality specialty grain. Grain sold under contract terms that 
specify all factors exceed the grade limits for U.S. No. 1 grain, except 
for the factor test weight, or specify ``organic'' as defined by 7 CFR 
part 205.
    Holiday. The legal public holidays specified in paragraph (a) of 
section 6103, Title 5, of the United States Code (5 U.S.C. 6103(a)) and 
any other day declared to be a holiday by Federal statute or Executive 
Order. Under section 610 and Executive Order No. 10357, as amended, if 
the specified legal public holiday falls on a Saturday, the preceding 
Friday shall be considered to be the holiday, or if the specified legal 
public holiday falls on a Sunday, the following Monday shall be 
considered to be the holiday.
    ``IN'' movement. A movement of grain into an elevator, or into or 
through a city, town, port, or other location without a loss of 
identity.
    Instructions. The Notices, Instructions, Handbooks, and other 
directives issued by the Service.
    Interested person. Any person having a contract or other financial 
interest in grain as the owner, seller, purchaser, warehouseman, or 
carrier, or otherwise.
    Interstate or foreign commerce. Commerce from any State to or 
through any other State, or to or through any foreign country.
    Licensee. Any person licensed by the Service.
    Loading. Placing grain in or aboard any carrier or container.
    (``LOCAL'' movement. A bin run or other inhouse movement, or grain 
in bins, tanks, or similar containers which are not in transit or 
designed to transport grain
    Lot. A specific quantity of grain identified as such.
    Material error. An error in the results of an official inspection 
service that exceeds the official tolerance, or any error in the results 
of a Class X or Class Y weighing service
    Material portion. A subsample, component, or sublot which is 
determined to be inferior to the contract or declared grade. A subsample 
is a material portion when it has sour, musty, or commercially 
objectionable foreign odors, when it is heating; or when it is of 
distinctly low quality. A component is a material portion when it is 
infested or when it is determined to be inferior in quality by more than 
one numerical grade to the contract or declared grade. A sublot is a 
material portion when a factor result causes a breakpoint to be exceeded 
or when a factor result exceeds specific sublot contract requirements. A 
sublot designated a material portion shall include only one sublot.
    Merchandiser. Any person, other than a producer, who buys and sells 
grain

[[Page 462]]

and takes title to the grain. A person who operates as a broker or 
commission agent and does not take title to the grain shall not be 
considered to be a merchandiser.
    Monitoring. Observing or reviewing activities performed under or 
subject to the Act for adherence to the Act, the regulations, standards, 
and instructions and preparing reports thereon.
    National program administrative costs. The costs of national 
management and support of official grain inspection and/or weighing. 
This does not include the Field Office administrative costs and any 
costs directly related to providing service.
    Nonregular workday. Any Sunday or holiday.
    Official agency. Any State or local government agency, or any 
person, designated by the Administrator pursuant to subsection (f) of 
section 7 of the Act for the conduct of official inspection (other than 
appeal inspection), or subsection (c) of section 7A of the Act for the 
conduct of Class X or Class Y weighing (other than review of weighing).
    Official certificate. Those certificates which show the results of 
official services performed under the Act as provided in the 
instructions, and any other official certificates which may be approved 
by the Service in accordance with the instructions.
    Official criteria. A quantified physical or chemical property of 
grain that is approved by the Service to determine the quality or 
condition of grain or other facts relating to grain.
    Official factor. A quantified physical or chemical property of grain 
as identified in the Official U.S. Standards for Grain.
    Official forms. License, authorizations, and approvals; official 
certificates; official pan tickets; official inspection or weighing 
logs; weight sheets; shipping bin weight loading logs; official 
equipment testing reports; official certificates of registration; and 
any other forms which may be issued or approved by the Service that show 
the name of the Service or an agency and a form number.
    Official grade designation. A numerical or sample grade designation, 
specified in the standards relating to kind, class, quality, and 
condition of grain provided for in the Act.
    Official inspection. The determination (by original inspection, and 
when requested, reinspection and appeal inspection) and the 
certification, by official personnel, of the kind, class, quality, or 
condition of grain, under standards provided for in the Act; or the 
condition of vessels and other carriers or receptacles for the 
transportation of grain insofar as it may affect the quality of such 
grain; or other facts relating to grain under other criteria approved by 
the Administrator (the term ``officially inspected'' shall be construed 
accordingly).
    Official inspection equipment testing. Any operation or procedure by 
official personnel to determine the accuracy of equipment used, or to be 
used, in the performance of official inspection services.
    Official inspection technician. Any official personnel who perform 
or supervise the performance of specified official inspection services 
and certify the results thereof, other than certifying the grade of the 
grain.
    Official inspector. Any official personnel who perform or supervise 
the performance of official inspection services and certify the results 
thereof including the grade of the grain.
    Official marks. The symbols or terms ``official certificate,'' 
``official grade,'' ``officially sampled,'' ``officially inspected,'' 
``official inspection,'' ``U.S. inspected,'' ``loaded under continuous 
official inspection,'' ``official weighing,'' ``officially weighed,'' 
``official weight,'' ``official supervision of weighing,'' ``supervision 
of weighing,'' ``officially supervised weight,'' ``loaded under 
continiuous official weighing,'' ``loaded under continuous official 
inspection and weighing,'' ``officially tested,'' ``Class X weight,'' 
``official Class X weighing,'' ``Class X weighing,'' ``official Class Y 
weighing,'' ``Class Y weighing,'' and ``Class Y weight.''
    Official personnel. Persons licensed or otherwise authorized by the 
Administrator pursuant to Section 8 of the Act to perform all or 
specified functions involved in official inspection, Class X or Class Y 
weighing, or in the supervision of official inspection, or Class X or 
Class Y weighing.

[[Page 463]]

    Official sample. A sample obtained from a lot of grain by, and 
submitted for official inspection by, official personnel (the term 
``official sampling'' shall be construed accordingly).
    Official sampler. Any official personnel who perform or supervise 
the performance of official sampling services and certify the results 
thereof.
    Official stowage examination. Any examining operation or procedure 
performed by official personnel to determine the suitability of a 
carrier or container to receive or store grain.
    Official tolerance. A statistical allowance prescribed by the 
Service, on the basis of expected variation, for use in performing or 
supervising the performance of official inspection services, official 
equipment testing services, and, when determined under an established 
loading plan, reinspection services and appeal inspection services.
    Official U.S. Standards for Grain. The Official U.S. Standards for 
Grain established under the Act describe the physical and biological 
condition of grain at the time of inspection.
    Official weigher. Any official personnel who perform or supervise 
the performance of Class X or Class Y weighing services and certify the 
results thereof, including the weight of the grain.
    Official weighing. (Referred to as Class X weighing.) The 
determination and certification by official personnel of the quantity of 
a lot of grain under standards provided for in the Act, based on the 
actual performance of weighing or the physical supervision thereof, 
including the physical inspection and testing for accuracy of the 
weights and scales and the physical inspection of the premises at which 
weighing is performed and the monitoring of the discharge of grain into 
the elevator or conveyance. (The terms ``officially weigh'' and 
``officially weighed'' shall be construed accordingly.)
    Official weighing technician. Any personnel who perform or supervise 
specified weighing services and certify the results thereof other than 
certifying the weight of grain.
    Official weight sample. Sacks of grain obtained at random by, or 
under the complete supervision of, official personnel from a lot of 
sacked grain for the purpose of computing the weight of the grain in the 
lot.
    Operating expenses. The total costs to the Service to provide 
official grain inspection and/or weighing services.
    Operating reserve. The amount of funds the Service has available to 
provide official grain inspection and/or weighing services.
    Original inspection. An initial official inspection of grain.
    ``Out'' movement. A movement of grain out of an elevator or out of a 
city, town, port, or other location.
    Person. Any individual, partnership, corporation, association, or 
other business entity.
    Quantity. Pounds or kilograms, tons or metric tons, or bushels.
    Reasonably continuous operation. A loading or unloading operation in 
one specific location which does not include inactive intervals in 
excess of 88 consecutive hours.
    Regular workday. Any Monday, Tuesday, Wednesday, Thursday, Friday, 
or Saturday that is not a holiday.
    Regulations. The regulations in parts 800, 801, and 802 of this 
chapter.
    Reinspection service. An official review of the results of an 
original inspection service by the agency or field office that performed 
the original inspection service.
    Respondent. The party proceeded against.
    Review of weighing service. An official review of the results of a 
Class X or Class Y weighing service.
    Secretary. The Secretary of Agriculture of the United States or any 
person to whom authority has been delegated.
    Service. The Federal Grain Inspection Service of the Grain 
Inspection, Packers and Stockyards Administration of the United States 
Department of Agriculture.
    Service representative. An authorized salaried employee of the 
Service; or a person licensed by the Administrator under a contract with 
the Service.
    Shallow-probe sample. A sample taken with a probe from a lot of bulk 
grain that is loaded so close to the top of the carrier that it is 
possible to insert the probe in the grain at the prescribed locations, 
but only at an angle greater or

[[Page 464]]

more obtuse from the vertical than the angle prescribed in the 
instructions.
    Ship. The verb ``ship'' with respect to grain means transfer 
physical possession of the grain to another person for the purpose of 
transportation by any means of conveyance, or transport one's own grain 
by any means of conveyance.
    Shiplot grain. Grain loaded aboard, or being loaded aboard, or 
discharged from an ocean-going vessel including a barge, lake vessel, or 
other vessel of similar capacity.
    Shipper's Export Declaration. The Shipper's Export Declaration 
certificate filed with the U.S. Department of Commerce, Bureau of 
Census.
    Specified service point. A city, town, or other location specified 
by an agency for the performance of official inspection or Class X or 
Class Y weighing services and within which the agency or one or more of 
its inspectors or weighers is located.
    Standardization. The act, process, or result of standardizing 
methodology and measurement of quality and quantity. Standardization 
functions include: compiling and evaluating data to develop and to 
update grading and weighing standards, developing or evaluating new 
methodology for determining grain quality and quantity, providing 
reference standards for official grading methods, and reviewing official 
results through the use of a quality control and weight monitoring 
program.
    State. Any one of the States (including Puerto Rico) or territories 
or possessions of the United States (including the District of 
Columbia).
    Submitted sample. A sample submitted by or for an interested person 
for official inspection, other than an official sample.
    Supervision. The effective guidance of agencies, official personnel 
and others who perform activities under the Act, so as to reasonably 
assure the integrity and accuracy of the program activities. Supervision 
includes overseeing, directing, and coordinating the performance of 
activities under the Act, reviewing the performance of these activities; 
and effecting appropriate action. FGIS supervisory personnel supervise 
agencies, official personnel and others who perform activities under the 
Act. Agency supervisors are responsible for the direct supervision of 
their own official personnel and employees. FGIS provides oversight, 
guidance, and assistance to agencies as they carry out their 
responsibilities.
    Supervision of weighing (Referred to as Class Y weighing.) Such 
supervision by official personnel of the grain-weighing process as is 
determined by the Administrator to be adequate to reasonably assure the 
integrity and accuracy of the weighing and of certificates which set 
forth the weight of the grain and such physical inspection by such 
personnel of the premises at which the grain weighing is performed as 
will reasonably assure that all the grain intended to be weighed has 
been weighed and discharged into the elevator or conveyance.
    United States. The States (including Puerto Rico) and the 
territories and possessions of the United States (including the District 
of Columbia).
    Use of official inspection service. The use of the services provided 
under a delegation or designation or provided by the Service.
    Uniform in quality. A lot of grain in which there are no material 
portions.
    Warehouseman's sampler. An elevator employee licensed by the Service 
to obtain samples of grain for a warehouseman's sample-lot inspection 
service. Warehouseman's samplers are not considered official personnel, 
but they are licensed under authority of section 11 of the Act.

[45 FR 15810, Mar. 11, 1980, as amended at 49 FR 36068, Sept. 14, 1984; 
49 FR 37055, Sept. 21, 1984; 49 FR 49586, Dec. 21, 1984; 52 FR 6495, 
Mar. 4, 1987; 55 FR 24041, June 13, 1990; 57 FR 3273, Jan. 29, 1992; 60 
FR 5835, Jan. 31, 1995; 70 FR 21923, Apr. 28, 2005; 70 FR 73558, Dec. 
13, 2005; 75 FR 41695, July 19, 2010; 76 FR 45399, July 29, 2011; 78 FR 
43755, July 22, 2013; 81 FR 49859, July 29, 2016]

                             Administration



Sec.  800.1  Mission.

    The mission of the Federal Grain Inspection Service is to facilitate 
the marketing of grain, oilseeds, pulses, rice, and related commodities 
by:
    (a) Establishing descriptive standards and terms,

[[Page 465]]

    (b) Accurately and consistently certifying quality,
    (c) Providing for uniform official inspection and weighing,
    (d) Carrying out assigned regulatory and service responsibilities, 
and
    (e) Providing the framework for commodity quality improvement 
incentives to both domestic and foreign buyers.

[54 FR 9197, Mar. 6, 1989]



Sec.  800.2  Administrator.

    The Administrator is delegated, from the Secretary, responsibility 
for administration of the United States Grain Standards Act and 
responsibilities under the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621 et seq.). The Administrator is responsible for the establishment of 
policies, guidelines, and regulations by which the Service is to carry 
out the provisions of the Act and the Agricultural Marketing Act of 
1946. The regulations promulgated under the Agricultural Marketing Act 
of 1946 appear at part 68 of this title (7 CFR part 68). The 
Administrator is authorized by the Secretary to take any action required 
by law or considered to be necessary and proper to the discharge of the 
functions and services under the Act. The Administrator may delegate 
authority to the Deputy Administrator and other appropriate officers and 
employees. The Administrator may, in emergencies or other circumstances 
which would not impair the objectives of the Act, suspend for period 
determined by the Administrator any provision of the regulations or 
official grain standards. The Administrator may authorize research; 
experimentation; and testing of new procedures, equipment, and handling 
techniques to improve the inspection and weighing of grain. The 
Administrator may waive the official inspection and official weighing 
requirements pursuant to Section 5 of the Act.

[60 FR 5835, Jan. 31, 1995]



Sec.  800.3  Nondiscrimination--policy and provisions.

    In implementing, administering, and enforcing the Act and the 
regulations, standards, and instructions, it is the policy of the 
Service to promote adherence to the provisions of the Civil Rights Act 
of 1964 (42 U.S.C. 2000a et seq.), (Pub. L. 88-352).



Sec.  800.4  Procedures for establishing regulations, official standards,
and official criteria.

    Notice of proposals to prescribe, amend, or revoke regulations, 
official standards, and official criteria under the Act shall be 
published in accordance with applicable provisions of the Administrative 
Procedure Act (5 U.S.C. 551, et seq.). Proposals to establish, amend, or 
revoke grain standards will be made effective not less than 1 calendar 
year after promulgation unless, for good cause, the Service determines 
that the public health, interest, or safety require that they become 
effective sooner. Any interested person desiring to file a petition for 
the issuance, amendment, or revocation of regulations, Official U.S. 
Standards for Grain, or official criteria may do so in accordance with 
Sec.  1.28 of the regulations of the Office of the Secretary of 
Agriculture (7 CFR 1.28).



Sec.  800.5  Complaints and reports of alleged violations.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section, complaints and reports of violations involving the Act or the 
regulations, standards, and instructions issued under the Act should be 
filed with the Service in accordance with Sec.  1.133 of the regulations 
of the Office of the Secretary of Agriculture (7 CFR 1.133) and with the 
regulations and the instructions.
    (b) Reinspection, review of weighing, and appeal services. 
Complaints involving the results of official inspection or Class X or 
Class Y weighing services shall, to the extent practicable, be submitted 
as requests for a reinspection service, a review of weighing service, an 
appeal inspection service, or a Board appeal inspection service as set 
forth in these regulations.
    (c) Foreign buyer complaints. Inquiries or complaints from importers 
or other purchasers in foreign countries involving alleged discrepancies 
in the quality or weight of officially inspected or Class X weighed 
export grain shall, to the extent possible, be submitted by

[[Page 466]]

the importers or purchasers to the appropriate U.S. Agricultural Attache 
in accordance with Sec.  2.68(a)(14) of the regulations of the Office of 
the Secretary of Agriculture (7 CFR 2.68(a)(14)) and the instructions 
issued by the Foreign Agricultural Service of the Department.

[45 FR 15810, Mar. 11, 1980, as amended at 54 FR 5924, Feb. 7, 1989]



Sec.  800.6  Provisions for hearings.

    Opportunities will be provided for hearings prescribed or authorized 
by sections 7(g)(3), 7A(c)(2), 9, 10(d), and 17A(d) of the Act, and the 
hearings shall be conducted in accordance with the Rules of Practice 
Governing Formal Adjudicatory Administrative Proceedings Instituted by 
the Secretary under Various Statutes (7 CFR, part 1, subpart H).



Sec.  800.7  Information about the Service, Act, and regulations.

    Information about the Grain Inspection, Packers and Stockyards 
Administration, Service, Act, regulations, official standards, official 
criteria, rules of practice, instructions, and other matters related to 
the official inspection or Class X or Class Y weighing of grain may be 
obtained by telephoning or writing the U.S. Department of Agriculture, 
Grain Inspection, Packers and Stockyards Administration, P.O. Box 96454, 
Washington, D.C. 20090-6454, or any field office or agency of the 
Service.

[60 FR 5836, Jan. 31, 1995]



Sec.  800.8  Public information.

    (a) General. This section is issued in accordance with Sec. Sec.  
1.1 through 1.23 of the regulations of the Secretary of Agriculture in 
part 1, subpart A, of subtitle A of title 7 (7 CFR 1.1 through 1.23), 
and appendix A thereto, implementing the Freedom of Information Act (5 
U.S.C. 552). The Secretary's regulations, as implemented by this 
section, govern the availability of records of the Service to the 
public.
    (b) Public inspection and copying. Materials maintained by the 
Service, including those described in 7 CFR 1.5, will be made available, 
upon a request which has not been denied, for public inspection and 
copying at the U.S. Department of Agriculture, Grain Inspection, Packers 
and Stockyards Administration, at 14th Street and Independence Avenue, 
SW., Washington, D.C. 20250. The public may request access to these 
materials during regular working hours, 8:00 a.m. to 4:30 p.m., est, 
Monday through Friday except for holidays.
    (c) Indexes. FGIS shall maintain an index of all material required 
to be made available in 7 CFR 1.5. Copies of these indexes will be 
maintained at the location given in paragraph (b) of this section. 
Notice is hereby given that quarterly publication of these indexes is 
unnecessary and impracticable, because the material is voluminous and 
does not change often enough to justify the expense of quarterly 
publication. However, upon specific request, copies of any index will be 
provided at a cost not to exceed the direct cost of duplication.
    (d) Requests for records. Requests for records under 5 U.S.C. 
552(a)(3) shall be made in accordance with 7 CFR 1.6 and shall be 
addressed as follows: Office of the Administrator, Grain Inspection, 
Packers and Stockyards Administration; FOIA Request, U.S. Department of 
Agriculture, P.O. Box 96454, Washington, D.C. 20090-6454.
    (e) Appeals. Any person whose request under paragraph (d) of this 
section, is denied shall have the right to appeal such denial in 
accordance with 7 CFR 1.13. Appeals shall be addressed to the 
Administrator, Grain Inspection, Packers and Stockyards Administration, 
FOIA Appeal, P.O. Box 96454, Washington, D.C. 20090-6454.

(Secs. 5, 18, Pub. L. 94-582, 90 Stat. 2869, 2884; (7 U.S.C. 76, 87e))

[48 FR 57467, Dec. 30, 1983, as amended at 54 FR 5924, Feb. 7, 1989; 60 
FR 5836, Jan. 31, 1995]

    Official Inspection and Class X or Class Y Weighing Requirements



Sec.  800.15  Services.

    (a) General. These regulations implement requirements for a national 
inspection and weighing system. This system promotes the uniform and 
accurate application of the official grain standards and provides 
inspection and weighing services required by the Act

[[Page 467]]

and as requested by applicants for official services. The types and 
kinds of services available under the Act and regulations can be 
obtained at all specified service points in the United States and on 
U.S. grain in Canadian ports.
    (b) Responsibilities for complying with the official inspection, 
aflatoxin testing, and weighing requirements--(1) Export grain. 
Exporters are responsible for (i) complying with all inspection, Class X 
weighing, and other certification provisions and requirements of section 
5(a)(1) of the Act and the regulations applicable to export grain and 
(ii) having all corn, as defined in Sec.  810.401, exported from the 
United States tested for aflatoxin contamination unless the buyer and 
seller agree not to have the corn tested. The Service shall perform the 
aflatoxin testing service unless the buyer and seller agree to have the 
corn tested by an entity other than the Service.
    (2) Grain in marked containers. When grain is in a container that 
bears an official grade designation or mark, the person who places the 
designation or mark on the container or the person who places the grain 
in a container that bears the designation or mark shall be responsible 
for determining that the grain has been inspected or weighed by official 
personnel and qualifies for the official grade designation or mark.
    (3) Grain for which representations have been made. Any person who 
makes a representation that (i) grain has been officially inspected or 
weighed; or (ii) grain has been officially inspected or weighed and 
found to be of a particular kind, class, quality, condition, or weight; 
or (iii) particular facts have been established with respect to the 
grain by official inspection or weighing, shall be responsible for 
determining that the representation is true and is not in violation of 
the Act and regulations.

[50 FR 49668, Dec. 4, 1985, as amended at 57 FR 2439, Jan. 22, 1992; 81 
FR 49860, July 29, 2016]



Sec.  800.16  Certification requirements for export grain.

    (a) General. Official Export Grain Inspection and Weight 
Certificates, Official Export Grain Inspection Certificates, and 
Official Export Grain Weight Certificates for bulk or sacked grain shall 
be issued according to Sec.  800.162 for export grain loaded by an 
export elevator. Only these types of export certificates showing the 
official grade, official aflatoxin test results if required under the 
Act and the regulations, and/or the Class X weight of the grain shall be 
considered to be in compliance with inspection and weighing requirements 
under the Act for export grain.
    (b) Promptly furnished. Export certificates shall be considered 
promptly furnished if they are forwarded by the shipper or the shipper's 
agent to the consignee not later than 10 business days after issuance.

[50 FR 49668, Dec. 4, 1985, as amended at 57 FR 2439, Jan. 22, 1992]



Sec.  800.17  Special inspection and weighing requirements for sacked
export grain.

    (a) General. Subject to the provisions of Sec.  800.18, sacked 
export grain shall be (1) officially inspected on the basis of official 
samples obtained with an approved sampling device and operated in 
accordance with instructions, (2) Class X weighed or checkweighed, and 
(3) officially checkloaded by official personnel at the time the grain 
is loaded aboard the export carrier, in accordance with the provisions 
of paragraphs (b) and (c) of this section.
    (b) Services at time of loading. When official sampling, official 
inspection, Class X weighing or checkweighing, and checkloading of 
sacked export grain loaded aboard an export carrier is performed at one 
location and time, official export inspection and weight certificate(s) 
which identify the export carrier shall be issued.
    (c) Services prior to loading. When official sampling, official 
inspection, and Class X weighing or checkweighing of sacked export grain 
is performed prior to the date of loading aboard an export carrier, 
official ``OUT'' certificates shall be issued. An examination by 
official personnel for condition and checkloading of the grain shall be 
made as the grain is loaded aboard the export carrier. If the 
examination for condition and the checkloading shows that the identity 
or quantity of the

[[Page 468]]

grain has not changed or the condition of the grain has not changed 
beyond expected variations prescribed in the instruction, official 
export inspection and weight certificates shall be issued on the basis 
of the official ``OUT'' certificates and the checkloading. If the 
identity, quantity, or the condition has changed, official export 
inspection and weight certificates shall be issued on the basis of the 
most representative samples, including weight samples, obtained at the 
time the grain is loaded aboard the export carrier.

[50 FR 49668, Dec. 4, 1985]



Sec.  800.18  Waivers of the official inspection and Class X weighing
requirements.

    (a) General. Waivers from the official inspection and Class X 
weighing requirements for export grain under section 5 of the Act shall 
be provided in accordance with this section and the Act.
    (b) Waivers--(1) 15,000 metric-ton waiver. Official inspection and 
Class X weighing requirements apply only to exporters and individual 
elevator operators who (i) exported 15,000 metric tons or more of grain 
during the preceding calendar year, or (ii) have exported 15,000 metric 
tons or more of grain during the current calendar year. Exporters and 
elevator operators who are granted a waiver by reason of this paragraph 
shall, as a condition of the waiver, keep such accounts, records, and 
memorandum to fully and correctly disclose all transactions concerning 
lots of all export grain shipments. In addition, the exporters or 
elevator operators shall notify the Service in writing of the intention 
to export grain under this waiver. In the case of lots waived under this 
provision, if such lots are required by contract to be inspected or 
weighed, or if the lots are represented by official inspection or weight 
certificates, then such certificates shall meet the requirements of 
section 5 of the Act.
    (2) Grain exported for seeding purposes. Official inspection and 
Class X weighing requirements do not apply to grain exported for seeding 
purposes, provided that (i) the grain is (A) sold or consigned for sale 
and invoiced as seed; and (B) identified as seed for seeding purposes on 
the Shipper's Export Declaration; and (ii) records pertaining to these 
shipments are made available, upon request by the Service, for review or 
copying purposes.
    (3) Grain shipped in bond. Official inspection and weighing 
requirements do not apply to grain that is shipped from a foreign 
country to a foreign country through the United States in bond in 
accordance with applicable regulations of the United States Customs 
Service (19 CFR part 18).
    (4) Grain exported by rail or truck to Canada or Mexico. Inspection 
and weighing requirements do not apply to grain exported by rail or 
truck from the United States to Canada or Mexico.
    (5) Grain not sold by grade. Official inspection requirements may be 
waived by the Service on a shipment-by-shipment basis for export grain 
not sold, offered for sale, or consigned for sale by official grade if 
(i) the contract and any amendments clearly show that the buyer and 
seller mutually agree to ship the grain without official inspection and 
(ii) a copy of the contract and any amendments is furnished in advance 
of loading, along with a completed application on a form prescribed by 
the Service.
    (6) Service not available. Upon request, any required official 
inspection or Class X weighing of grain may be waived on a shipment-by-
shipment basis if (i) official personnel are not and will not be 
available within a 24-hour period to perform needed inspection or 
weighing services and (ii) both the buyer and seller of the grain are 
made aware that the grain has not been officially inspected or Class X 
weighed.
    (7) Emergency waiver. (i) Upon request, the requirements for 
official inspection or Class X weighing will be waived whenever the 
Service determines that an emergency exists that precludes official 
inspection or Class X weighing;
    (ii) To qualify for an emergency waiver, the exporter or elevator 
operator must submit a timely written request to the Service for the 
emergency waiver and also comply with all conditions that the Service 
may require.
    (8) High quality specialty grain shipped in containers. Official 
inspection and

[[Page 469]]

weighing requirements do not apply to high quality specialty grain 
exported in containers. Records generated during the normal course of 
business that pertain to these shipments must be made available to the 
Service upon request, for review or copying. These records must be 
maintained for a period of 3 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 49669, Dec. 4, 1985, as amended at 70 FR 21923, Apr. 28, 2005; 70 
FR 73559, Dec. 13, 2005; 75 FR 41695, July 19, 2010; 76 FR 45399, July 
29, 2011; 81 FR 49860, July 29, 2016]

                 Recordkeeping and Access to Facilities



Sec.  800.25  Required elevator and merchandising records.

    (a) Elevator and merchandiser recordkeeping. Every person and every 
State or political subdivision of a State that owns or operates an 
elevator and every merchandiser that has obtained or obtains official 
inspection or official weighing services other than (1) submitted sample 
inspection service, or (2) official sampling service, or (3) official 
stowage examination service shall keep such accounts, records, and 
memoranda that fully and correctly disclose all transactions concerning 
the lots of grain for which the elevator or merchandiser received 
official services, except as provided under Sec.  800.18.
    (b) Retention period. Records specified in this section may be 
disposed of after a period of 3 years from the date of the official 
service; provided, the 3-year period may be extended if the elevator 
owner or operator, or merchandiser is notified in writing by the 
Administrator that specific records should be retained for a longer 
period for effective administration and enforcement of the Act. This 
requirement does not restrict or modify the requirements of any other 
Federal, State, or local statute concerning recordkeeping.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[51 FR 1768, Jan. 15, 1986]



Sec.  800.26  Access to records and facilities.

    (a) Inspection of records and facilities. Prior to the examination 
of records or inspection of facilities by an authorized representative 
of the Secretary or the Administrator, the authorized representative 
shall contact or otherwise notify the elevator manager or manager's 
representative of their presence and furnish proof of identity and 
authority. While in the elevator, the authorized representative shall 
abide by the safety regulations in effect at the elevator. Every 
elevator owner and operator and every merchandiser shall permit 
authorized representatives of the Secretary or Administrator to enter 
its place of business during normal business hours and have access to 
the facilities and to inspect any books, documents, papers, and records 
that are maintained by such persons. Such access and inspection will be 
to effectuate the purpose, provisions, and objectives of the Act and to 
assure the integrity of official services under the Act or of any 
official transaction with which the Act is concerned. All copies of such 
records will be made at the Service's expense. Reasonable accommodations 
shall be made available to the duly authorized representative by 
elevator owners and operators, and merchandisers for such examination of 
records.
    (b) Disclosure of business information. FGIS employees or persons 
acting for FGIS under the Act shall not, without the consent of the 
elevator operator or merchandiser concerned, divulge or make known in 
any manner, any facts or information acquired pursuant to the Act and 
regulations except as authorized by the Administrator, by a court of 
competent jurisdiction, or otherwise by law.

[51 FR 1768, Jan. 15, 1986]

                              Registration



Sec.  800.30  Foreign commerce grain business.

    ``Foreign commerce grain business'' is defined as the business of 
buying grain for sale in foreign commerce or the business of handling, 
weighing, or transporting grain for sale in foreign

[[Page 470]]

commerce. This provision shall not include:
    (a) Any person who only incidentally or occasionally buys for sale, 
or handles, weighs, or transports grain for sale and is not engaged in 
the regular business of buying grain for sale, or handling, weighing, or 
transporting grain for sale;
    (b) Any producer of grain who only incidentally or occasionally 
sells or transports grain which the producer has purchased;
    (c) Any person who transports grain for hire and does not own a 
financial interest in such grain; or
    (d) Any person who buys grain for feeding or processing and not for 
the purpose of reselling and only incidentally or occasionally sells 
such grain as grain.

[48 FR 44455, Sept. 29, 1983]



Sec.  800.31  Who must register.

    Each person who has engaged in foreign commerce grain business 
totaling 15,000 or more metric tons during the preceding or current 
calendar year must register with the Service and shall be deemed to be 
regularly engaged in foreign commerce grain business. This includes 
foreign-based firms operating in the United States but does not include 
foreign governments or their agents. The Service will, upon request, 
register persons not required to register under this section if they 
comply with the requirements of Sec. Sec.  800.33 and 800.34.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44455, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec.  800.32  When to register.

    A person shall submit an application for registration to the Service 
at least 30 calendar days before regularly engaging in foreign commerce 
grain business according to Sec.  800.31. For good cause shown, the 
Service may waive this 30-day requirement.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44455, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec.  800.33  How to register.

    Any person who is required or desires to register must submit an 
application for registration to the Service. Application forms can be 
obtained from the Service. Each application shall: (a) Be typewritten or 
legibly written in English; (b) include all information required by the 
application form; and (c) be signed by the applicant. The information 
required by this paragraph may be submitted to the Service via 
telephone, subject to written confirmation. An applicant shall furnish 
any additional information requested by the Service for consideration of 
the application.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44456, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec.  800.34  Registration fee.

    An applicant shall submit the registration fee prescribed in Sec.  
800.71 with the completed application. If an application is dismissed, 
the fee shall be refunded by the Service. No fee or portion of a fee 
shall be refunded if a person is registered and the registration is 
subsequently suspended or revoked under Sec.  800.39.

[48 FR 44456, Sept. 29, 1983]



Sec.  800.35  Review of applications.

    (a) The Service shall review each application to determine if it 
complies with Sec. Sec.  800.32, 800.33, and 800.34. If the application 
complies and the fee has been paid, the applicant shall be registered.
    (b) If the application does not comply with Sec. Sec.  800.32, 
800.33, and 800.34 and the omitted information prevents a satisfactory 
review by the Service, the applicant shall be provided an opportunity to 
submit the needed information. If the needed information is not 
submitted within a reasonable time, the application may be dismissed. 
The Service shall promptly notify the applicant, in writing, of the 
reasons for the dismissal.

[48 FR 44456, Sept. 29, 1983]

[[Page 471]]



Sec.  800.36  Certificates of registration.

    The Service shall furnish the applicant with an original and three 
copies of the registration certificate. The registration shall be 
effective on the issue date shown on the certificate. Each certificate 
of registration is issued on the condition that the registrant will 
comply with all provisions of the Act, regulations, and instructions. 
The Service shall charge a fee, in accordance with Sec.  800.71, for 
each additional copy of a certificate of registration requested by a 
registrant.

[48 FR 44456, Sept. 29, 1983]



Sec.  800.37  Notice of change in information.

    Each registrant shall notify the Service within 30 days of any 
change in the information contained in the application for registration. 
If the notice is submitted orally, it shall be promptly confirmed in 
writing.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44456, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec.  800.38  Termination and renewal of registration.

    Each certificate of registration shall terminate on December 31 of 
the calendar year for which it is issued. The Service shall send a 
letter to each registrant notifying the registrant of the impending 
termination of the registration and providing instructions for 
requesting renewal. The registration may be renewed in accordance with 
Sec. Sec.  800.33 and 800.34. Failure to receive the letter shall not 
exempt registrants from the responsibility of renewing their 
registration if required by Sec.  800.31.

[48 FR 44456, Sept. 29, 1983]



Sec.  800.39  Suspension or revocation of registration for cause.

    (a) General. Registration is subject to suspension or revocation 
whenever the Administrator determines that the registrant has violated 
any provision of the Act or regulations, or has been convicted of any 
violation involving the handling, weighing, or inspection of grain under 
Title 18 of the United States Code.
    (b) Procedure. Before the Service suspends or revokes a 
registration, the registrant (hereinafter the ``respondent''): (1) Shall 
be notified of the proposed action and the reasons therefor and (2) 
shall be afforded opportunity for a hearing in accordance with the Rules 
of Practice Governing Formal Adjudicatory Proceedings Instituted by the 
Secretary under Various Statutes (7 CFR, 1.130 through 1.151). Prior to 
formal adjudicatory proceedings, the Service may allow the respondent to 
express views on the action proposed by the Service in an informal 
conference before the Administrator. If the Service and the respondent 
enter into a consent agreement, no formal adjudicatory proceedings shall 
be initiated.

[48 FR 44456, Sept. 29, 1983]

        Conditions For Obtaining Or Withholding Official Services



Sec.  800.45  Availability of official services.

    (a) Original inspection and weighing services. Original inspection 
and weighing services on grain are available according to this section 
and Sec. Sec.  800.115 through 800.118 when requested by an interested 
person.
    (b) Reinspection, review of weighing, and appeal inspection 
services. Reinspection, review of weighing, appeal inspection, and Board 
appeal inspection services are available when requested by an interested 
person, according to Sec. Sec.  800.125 through 800.129 and Sec. Sec.  
800.135 through 800.139.
    (c) Proof of authorization. If an application for official services 
is filed by a person representing the applicant, the agency or the field 
office receiving the application may require written proof of the 
authority to file the application.

(Approved by the Office of Management and Budget under control number 
0580-0012)

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30913, Aug. 2, 1984, as amended at 50 FR 45392, Oct. 31, 1985; 54 
FR 5924, Feb. 7, 1989]

[[Page 472]]



Sec.  800.46  Requirements for obtaining official services.

    (a) Consent and agreement by applicant. In submitting a request for 
official services, the applicant and the owner of the grain consent to 
the special and general requirements specified in paragraphs (b) and (c) 
of this section. These requirements are essential to carry out the 
purposes or provisions of the Act.
    (b) General requirements--(1) Access to grain. Grain on which 
official services are to be performed shall, except as provided in 
Sec. Sec.  800.85, 800.86, 800.98, and 800.99, be made accessible by the 
applicant for the performance of the requested official service and 
related monitoring and supervision activities. For the purposes of this 
section, grain is not ``accessible'' if it is offered for official 
services (i) in containers or carriers that are closed and cannot, with 
reasonable effort, be opened by or for official personnel; (ii) when any 
portion is located so as to prohibit the securing or a representative 
sample; or (iii) under conditions prescribed in the instructions as 
being hazardous to the health or safety of official personnel.
    (2) Working space. When official services are performed at an 
elevator, adequate and separate space must be provided by the applicant 
for the performance of the requested service and related monitoring and 
supervision activities. Space will be ``adequate'' if it meets the 
space, location, and safety requirements specified in the instructions.
    (3) Notice of changes. The operator of each facility at which 
official services are performed must notify the appropriate agency or 
field office promptly, in full detail, of changes in the grain handling 
and weighing facilities, equipment, or procedures at the elevator that 
could or would affect the proper performance of official services.
    (4) Loading and unloading conditions. As applicable, each applicant 
for official services must provide or arrange for suitable conditions in 
the (i) loading and unloading areas and the truck and railroad holding 
areas; (ii) gallery and other grain-conveying areas; (iii) elevator 
legs, distributor, and spout areas; (iv) pier or dock areas; (v) deck 
and stowage areas in the carrier; and (vi) equipment used in loading or 
unloading and handling the grain. Suitable conditions are those which 
will facilitate accurate inspection and weighing, maintain the quantity 
and the quality of the grain that is to be officially inspected or 
weighed, and not be hazardous to the health and safety of official 
personnel, as prescribed in the instructions.
    (5) Timely arrangements. Requests for official service shall be made 
in a timely manner; otherwise, official personnel may not be available 
to provide the requested service. For the purpose of this paragraph, 
``timely manner'' shall mean not later than 2 p.m., local time, of the 
preceding business day.
    (6) Observation of activities. Each applicant for official services 
must provide any interested person, or their agent, an opportunity to 
observe sampling, inspection, weighing, and loading or unloading of 
grain. Appropriate observation areas shall be mutually defined by the 
Service and facility operator. The areas shall be safe and shall afford 
a clear and unobstructed view of the performance of the activity, but 
shall not permit a close over-the-shoulder type of observation by the 
interested person.
    (7) Payment of bills. Each applicant, for services under the Act, 
must pay bills for the services according to Sec. Sec.  800.70 through 
800.73.
    (8) Written confirmations. When requested by the agency or field 
office, verbal requests for official services shall be confirmed in 
writing. Each written request shall be signed by the applicant, or the 
applicant's agent, and shall show or be accompanied by the following 
information:
    (i) The identification, quantity, and specific location of the 
grain;
    (ii) The name and mailing address of the applicant;
    (iii) The kind and scope of services desired; and
    (iv) Any other information requested by the agency or field office.
    (9) Names and addresses of interested persons. When requested, each 
applicant for official services shall show on the application form the 
name and address of each known interested person.

[[Page 473]]

    (10) Surrender of superseded certificates. When a request for 
official service results in a certificate being superseded, the 
superseded certificate must be promptly surrendered.
    (11) Recordkeeping and access. Each applicant for official services 
must comply with applicable recordkeeping and access-to-facility 
provisions in Sec. Sec.  800.25 and 800.26.
    (12) Monitoring equipment. Owners and operators of elevators shall, 
upon a finding of need by the Administrator, provide equipment necessary 
for the monitoring by official personnel of grain loading, unloading, 
handling, sampling, weighing, inspection, and related activities. The 
finding of need will be based primarily on a consideration of manpower 
and efficiency.
    (c) Special requirements for official Class X and Class Y weighing 
services--(1) General. Weighing services shall be provided only at 
weighing facilities which have met the conditions, duties, and 
responsibilities specified in section 7A(f) of the Act and this section 
of the regulations. Weighing services will be available only in 
accordance with the requirements of Sec.  800.115. Facilities desiring 
weighing services should contact the Service in advance to allow the 
Service time to determine if the facility complies with the provisions 
of the Act and regulations.
    (2) Conditions. The facility shall provide the following information 
annually to the Service:
    (i) The facility owner's name and address;
    (ii) The facility operator's name and address;
    (iii) The name of each individual employed by the facility as a 
weigher and a statement that each individual:
    (A) Has a technical ability to operate grain weighing equipment and
    (B) Has a reputation for honesty and integrity;
    (iv) A blueprint or similar drawing of the facility showing the 
location of:
    (A) The loading, unloading, and grain handling systems;
    (B) The scale systems used or to be used in weighing grain; and
    (C) The bins and other storage areas;
    (v) The identification of each scale in the facility that is to be 
used for weighing grain under the Act;
    (vi) The following information regarding automated data processing 
systems:
    (A) Overall system intent, design, and layout;
    (B) Make, model, and technical specifications of all hardware;
    (C) Description of software, language used, and flow charts of all 
programs, subprograms, routines, and subroutines; and
    (D) Complete operating instructions; and
    (vii) Any other information deemed necessary to carry out the 
provisions of the Act.

If a facility has, or plans to have, an automated data processing system 
which is used in conjunction with any portion of the scale system, grain 
handling system, or the preparing or printing of official weight 
certificates, the facility shall make available to the Service 
sufficient documentation to ensure that the system cannot be used 
deceptively or otherwise provide inaccurate information. The Service or 
approved scale testing and certification organization shall conduct an 
onsite review to evaluate the performance and accuracy of each scale 
that will be used for weighing grain under the Act, and the performance 
of the grain loading, unloading, and related grain handling equipment 
and systems.
    (3) Duties and responsibilities of weighing facilities requesting 
official services--(i) Providing official services. Upon request, each 
weighing facility shall permit official weighing services to be 
performed promptly.
    (ii) Supervision. Each weighing facility shall supervise its 
employees and shall take action necessary to assure that employees are 
performing their duties according to the Act, regulations, and 
instructions and are not performing prohibited functions or are not 
involved in any action prohibited by the Act, regulations, and 
instructions.
    (iii) Facilities and equipment--(A) General. Each weighing facility 
shall obtain and maintain facilities and equipment which the Service 
determines are needed for weighing services performed at the facility. 
Each facility shall operate and shall maintain each scale system and 
related grain handling system

[[Page 474]]

used in weighing according to instructions issued by the manufacturer 
and by the Service. A scale log book for each approved scale used for 
official weighing services shall be maintained according to instructions 
at each weighing facility.
    (B) Malfunction of scales. Scales or scale systems that are 
operating in other than a correct and approved manner shall not be used 
for weighing grain under the Act. Before the malfunctioning scale or 
scale system can be used again for weighing grain under the Act, it 
shall be repaired and determined to be operating properly by the Service 
or approved scale testing and certification organization.
    (iv) Oral directives. FGIS oral directives issued to elevator 
personnel shall be confirmed in writing upon request by elevator 
management. Whenever practicable, the Service shall issue oral 
directives through elevator management officials.

(Approved by the Office of Management and Budget under control number 
0580-0012)

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984, as amended at 49 FR 49587, Dec. 21, 1984; 50 
FR 45392, Oct. 31, 1985; 54 FR 5924, Feb. 7, 1989]



Sec.  800.47  Withdrawal of request for official services.

    An applicant may withdraw a request for official services any time 
before official personnel release results, either verbally or in 
writing. See Sec.  800.51 for reimbursement of expenses, if any.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec.  800.48  Dismissal of request for official services.

    (a) Conditions for dismissal--(1) General. An agency or the Service 
shall dismiss requests for official services when (i) Sec.  800.76 
prohibits the requested service; (ii) performing the requested service 
is not practicable; (iii) the agency or the Service lacks authority 
under the Act or regulations; or (iv) sufficient information is not 
available to make an accurate determination.
    (2) Original services. A request for original services shall be 
dismissed if a reinspection, review of weighing, appeal inspection, or 
Board appeal inspection has been performed on the same lot at the same 
specified service point within 5 business days.
    (3) Reinspection, appeal inspection, or Board appeal inspection 
services. A request for a reinspection, appeal inspection, or Board 
appeal inspection service shall be dismissed when:
    (i) The kind and scope are different from the kind and scope of the 
last inspection service;
    (ii) The condition of the grain has undergone a material change;
    (iii) The request specifies a representative file sample and a 
representative file sample is not available,
    (iv) The applicant requests that a new sample be obtained and a new 
sample cannot be obtained; or
    (v) The service cannot be performed within 5 business days of the 
date of the last inspection date.
    (4) Review of weighing services. A request for review of weighing 
services shall be dismissed when the request (i) is filed before the 
weighing results have been released, or (ii) is filed more than 90 
calendar days after the date of the original service.
    (b) Procedure for dismissal. When an agency or the Service proposes 
to dismiss a request for official services, the applicant shall be 
notified of the proposed action. The applicant will then be afforded 
reasonable time to take corrective action or to demonstrate there is no 
basis for the dismissal. If the agency or the Service determines that 
corrective action has not been adequate, the applicant will be notified 
again of the decision to dismiss the request for service, and any 
results of official services shall not be released.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 45392, Oct. 31, 1985]



Sec.  800.49  Conditional withholding of official services.

    (a) Conditional withholding. An agency or the Service shall 
conditionally withhold requests for official services

[[Page 475]]

when an applicant fails to meet any requirement prescribed in Sec.  
800.46.
    (b) Procedure and withholding. When an agency or the Service 
proposes to conditionally withhold official services, the applicant 
shall be notified of the reason for the proposed action. The applicant 
will then be afforded reasonable time to take corrective action or to 
show that there is no basis for withholding services. If the agency or 
the Service determines that corrective action has not been adequate, the 
applicant will be notified. Any results of official services shall not 
be released when a request for service is withheld.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec.  800.50  Refusal of official services and civil penalties.

    (a) Grounds for refusal. Any or all services available to an 
applicant under the Act may be refused, either temporarily or 
indefinitely, by the Service for causes prescribed in section 10(a) of 
the Act. Such refusal by the Service may be restricted to the particular 
facility or applicant (if not a facility) found in violation or to a 
particular type of service, as the facts may warrant. Such action may be 
in addition to, or in lieu of, criminal penalties or other remedial 
action authorized by the Act.
    (b) Provision and procedure for summary refusal. The Service may, 
without first affording the applicant (hereafter in this section 
``respondent'') a hearing, refuse to provide official inspection and 
Class X or Y weighing services pending final determination of the 
proceeding whenever the Service has reason to believe there is cause, as 
prescribed in section 10 of the Act, for refusing such official services 
and considers such action to be in the best interest of the official 
services system under the Act: Provided that within 7 days after refusal 
of such service, the Service shall afford the respondent an opportunity 
for a hearing as provided under paragraph (c)(2) of this section. 
Pending final determination, the Service may terminate the temporary 
refusal if alternative managerial, staffing, financial, or operational 
arrangements satisfactory to the Service can be and are made by the 
respondent.
    (c) Procedure for other than summary refusal. Except as provided in 
paragraph (b) of this section, before the Service refuses to provide 
official services the respondent shall be (1) notified of the services 
that are to be refused, the locations at which and the time period for 
which service will be refused, and the reasons for the refusal; and (2) 
afforded an opportunity for a hearing in accordance with the provisions 
of the Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary Under Various Statutes (7 CFR 1.130 et 
seq.). At the discretion of the Service, prior to initiation of formal 
adjudicatory proceedings, the respondent may be given an opportunity to 
express his or her views on the action proposed by the Service in an 
informal conference before the Administrator of the Service. If, as a 
result of such an informal conference, the Service and the respondent 
enter into a consent agreement, no formal adjudicatory proceedings shall 
be initiated.
    (d) Assessment of civil penalties. Any person who has knowingly 
committed any violation of section 13 of the Act or has been convicted 
of any violation of other Federal law with respect to the handling, 
weighing, or official inspection of grain may be assessed a civil 
penalty not to exceed the amount specified at Sec.  3.91(b)(6)(viii) of 
this title for each such violation as the Administrator determines is 
appropriate to effect compliance with the Act. Such action may be in 
addition to, or in lieu of, criminal penalties under section 14 of the 
Act, or in addition to, or in lieu of, the refusal of official services 
authorized by the Act.
    (e) Provisions for civil penalty hearings. Before a civil penalty is 
assessed against any person, such person shall be afforded an 
opportunity for a hearing as provided under paragraph (c)(2) of this 
section.
    (f) Collection of civil penalties. Upon failure to pay the civil 
penalty, the Service may request the Attorney General to file civil 
action to collect the

[[Page 476]]

penalty in a court of appropriate jurisdiction.

[45 FR 15810, Mar. 11, 1980, as amended at 51 FR 12830, Apr. 16, 1986, 
75 FR 17560, Apr. 7, 2010]]



Sec.  800.51  Expenses of agency, field office, or Board of Appeals
and Review.

    For any request that has been dismissed or withdrawn under Sec.  
800.47, Sec.  800.48, or Sec.  800.49, respectively, each applicant 
shall pay expenses incurred by the agency or the Service.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec.  800.52  Official services not to be denied.

    Subject to the provisions of Sec. Sec.  800.48, 800.49, and 800.50, 
no person entitled to official services under the Act shall be denied or 
deprived of the right thereto by reason of any rule, regulation, bylaw, 
or custom of any market, board of trade, chamber of commerce, exchange, 
inspection department, or similar organization; or by any contract, 
agreement, or other understanding.

                              Descriptions



Sec.  800.55  Descriptions by grade.

    (a) General. In any sale, offer for sale, or consignment for sale, 
which involves the shipment of grain in interstate or foreign commerce, 
the description of grain, as being of a grade in any advertising, price 
quotation, other negotiation of sale, contract of sale, invoice, bill of 
lading, other document, or description on bags or other containers of 
the grain, is prohibited if such description is other than by an 
official grade designation, with or without additional information as to 
specified factors. An official grade designation contains any of the 
following: The term ``U.S.,'' the numerals 1 through 5, the term 
``Sample grade,'' or the name of a subclass or a special grade of grain 
specified in the Official United States Standards for Grain.
    (b) Proprietary brand names or trademarks. A description of grain by 
a proprietary brand name or a trademark that does not resemble an 
official grade designation will not be considered to be a description by 
grade; but a description by a proprietary brand name or trademark that 
contains singly or in combination any of the terms referenced in 
paragraph (a) of this section shall be considered to resemble an 
official grade designation.
    (c) Use of one or more factor designations. In interstate commerce, 
a description of grain by the use of one or more grade factor 
designations which appear in the Official United States Standards for 
Grain or by other criteria will not be considered to be a description by 
grade.
    (d) False or misleading descriptions. In any sale, offer for sale, 
or consignment for sale of any grain which involves the shipment of 
grain from the United States to any place outside thereof, knowingly 
using a false or misleading description of grain by official grade 
designation, or other description is prohibited.

[50 FR 9982, Mar. 13, 1985]



Sec.  800.56  Requirements on descriptions.

    Section 13 of the Act contains certain prohibitions with respect to 
the use of official grade designations, official marks, and other 
representations with respect to grain.
    (a) The use of an official grade designation, with or without factor 
information, or of official criteria information, or of the term 
``official grain standards,'' shall not, without additional information, 
be considered to be a representation that the grain was officially 
inspected.
    (b) The use of any symbol or term listed as an official mark, at 
Sec.  800.0(b)(68), with respect to grain shall be considered to be a 
representation of official service under the Act: Provided however, that 
the use of the official marks ``official certificate;'' ``officially 
inspected;'' ``official inspection;'' ``officially weighed;'' ``official 
weight;'' and ``official weighing'' shall not be considered to be a 
representation of official service under the Act if it is clearly shown 
that the activity occurred under the U.S. Warehouse Act (7 U.S.C. 241 et 
seq.): Provided further,

[[Page 477]]

that the use of the official mark ``officially tested'' with respect to 
grain inspection and weighing equipment shall not be considered to be a 
representation of testing under the Act if it is clearly shown that the 
equipment was tested under a State statute.

[50 FR 9982, Mar. 13, 1985]

                        Grain Handling Practices



Sec.  800.60  Deceptive actions and practices.

    In the absence of prior adequate notice to appropriate official 
personnel, any action or practice, including the loading, weighing, 
handling, or sampling of grain that knowingly causes or is an attempt to 
cause the issuance by official personnel of a false or incorrect 
official certificate or other official form, is deemed to be deceptive 
and, as such, is a violation of section 13(a)(3) of the Act. For the 
purposes of this paragraph, adequate notice is written or oral notice 
given to an agency or the Service, as applicable, before official 
personnel begin to perform official inspection or weighing services. If 
oral notice is given, it must be confirmed in writing within 2 business 
days. To be adequate, the notice must explain the nature and extent of 
the action or practice in question and must identify the grain, stowage 
container, equipment, facility, and the official personnel actually or 
potentially involved.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[48 FR 17330, Apr. 22, 1983, as amended at 48 FR 44453, Sept. 29, 1983; 
54 FR 5924, Feb. 7, 1989]



Sec.  800.61  Prohibited grain handling practices.

    (a) Definitions. For the purpose of this section, dockage and 
foreign material in grain shall be:
    (1) Defined for export elevators at export port locations as set 
forth in 7 CFR part 810 and as dust removed from grain and collected in 
a bin/container and as dust settling on floors, equipment, and other 
areas, commonly referred to as dust sweepings; and
    (2) Defined for other than export elevators as set forth in 7 CFR 
part 810.
    (b) Prohibited practices. Except as permitted in paragraphs (c) and 
(d) of this section, no person shall:
    (1) Recombine or add dockage or foreign material to any grain, or
    (2) Blend different kinds of grain except when such blending will 
result in grain being designated as Mixed grain in accordance with 
subpart E of the Official United States Standards for Grain.
    (3) Add water to grain for purposes other than milling, malting, or 
similar processing operations.
    (c) Exemption. (1) The Administrator may grant exemptions from 
paragraph (b) of this section for grain shipments sent directly to a 
domestic end-user or processor. Requests for exemptions shall be 
submitted by grain handlers to the Service through the domestic end-
users or processors or their representatives.
    (2) Grain sold under an exemption shall be consumed or processed 
into a product(s) by the purchaser and not resold into the grain market.
    (3) Products or byproducts from grain sold under an exemption shall 
not be blended with or added to grain in commercial channels, except for 
vegetable oil which may be used as a dust suppressant in accordance with 
(d)(4) of this section.
    (d) Exceptions. Paragraph (b) shall not be construed as prohibiting 
the following grain handling practices. Compliance with paragraphs 
(d)(1) through (d)(6) of this section does not excuse compliance with 
applicable Federal, State, and local laws.
    (1) Blending. Grain of the same kind, as defined by the Official 
United States Standards for Grain, may be blended to adjust quality. 
Broken corn or broken kernels may be recombined or added to whole grain 
of the same kind provided that no foreign material or dockage has been 
added to the broken corn or broken kernels.
    (2) Insect and fungi control. Grain may be treated to control 
insects and fungi. Elevators, other grain handlers, and their agents are 
responsible for the proper use and applications of insecticides and 
fungicides. Sections 800.88 and 800.96 include additional requirements 
for grain that is officially inspected and weighed.

[[Page 478]]

    (3) Marketing dockage and foreign material. Dockage and foreign 
material may be marketed separately.
    (4) Dust suppressants. Grain may be treated with an additive, other 
than water, to suppress dust during handling. Elevators, other grain 
handlers, and their agents are responsible for the proper use and 
application of dust suppressants. Sections 800.88 and 800.96 include 
additional requirements for grain that is officially inspected and 
weighed.
    (5) Identification. Confetti or similar material may be added to 
grain for identification purposes. Elevators, other grain handlers, and 
their agents are responsible for the proper use and application of such 
materials. Sections 800.88 and 800.96 include additional requirements 
for grain that is officially inspected or weighed.
    (6) Export loading facilities. Between May 1, 1987, and December 31, 
1987, export elevators at export port locations may recombine dockage 
and foreign material, but not dust, with grain provided such 
recombination occurs during the loading of a vessel with the intended 
purpose of ensuring uniformity of dockage and foreign material in the 
cargo.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[52 FR 24437, June 30, 1987, as amended at 59 FR 52077, Oct. 14, 1994]

                                  Fees



Sec.  800.70  Fees for official services performed by agencies.

    (a) Assessment and use of fees. (1) Fees assessed by an agency for 
official inspection and Class X or Class Y weighing services or testing 
of inspection equipment shall be reasonable and nondiscriminatory.
    (2) In the case of a State or local governmental agency, fees shall 
not be used for any purpose other than to finance the cost of the 
official inspection and Class X or Class Y weighing service and 
inspection equipment testing service performed by the agency or the cost 
of other closely related programs administered by the agency.
    (b) Approval required--(1) Restriction. Only fees that meet the 
requirements stated in this section and are approved by the Service as 
reasonable and nondiscriminatory may be charged by an agency.
    (2) Exceptions. For good cause shown by an agency, the Administrator 
may grant case-by-case exceptions to the requirements in this section, 
provided that a determination is made that the agency fees would be 
reasonable and nondiscriminatory.
    (c) Reasonable fees. In determining if an agency's fees are 
reasonable, the Service will consider whether the fees:
    (1) Cover the estimated total cost to the agency of
    (i) Official inspection services,
    (ii) Class X or Class Y weighing services,
    (iii) Inspection equipment testing services, and
    (iv) Related supervision and monitoring activities performed by the 
agency;
    (2) Are reasonably consistent with fees assessed by adjacent 
agencies for similar services;
    (3) Are assessed on the basis of the average cost of performing the 
same or similar services at all locations served by the agency; and
    (4) Are supported by sufficient information which shows how the fees 
were developed.
    (d) Nondiscriminatory fees. In determining if fees are 
nondiscriminatory, the Service will consider whether the fees are 
collected from all applicants for official service in accordance with 
the approved fee schedule. Charges for time and travel incurred in 
providing service at a location away from a specified service point 
shall be assessed in accordance with the approved fee schedule.
    (e) Schedule of fees to be established. (1) Each agency shall 
establish a schedule of fees for official services which the agency is 
delegated or designated the authority to perform. The schedule shall be 
in a standard format in accordance with the instructions. Such schedules 
may include fees for nonofficial services provided by the agency, but 
they shall be clearly identified and will not be subject to approval by 
the Service.
    (2) The schedule shall be published and made available by the agency 
to all users of its services.

[[Page 479]]

    (f) Request for approval of fees--(1) Time requirement. A request 
for approval of a new or revised fee shall be submitted to the Service 
not less than 60 days in advance of the proposed effective date for the 
fee. Failure to submit a request within the prescribed time period may 
be considered grounds for postponment or denial of the request.
    (2) Contents of request. Each request shall show (i) the present 
fee, if any, and the proposed fee, together with data showing in detail 
how the fee was developed, and (ii) the proposed effective date.
    (g) Review of request--(1) Approval action. If upon review the 
Service finds that the request and supporting data justify the new or 
revised fee, the request will be marked ``approved'' and returned to the 
agency.
    (2) Denial action. If the Service finds that the request and 
supporting data do not justify the new or revised fee, approval of the 
request will be withheld pending receipt of any additional supporting 
data which the agency has to offer. If the data are not submitted within 
a reasonable period, the request shall be denied. In the case of a 
denial of a request, the agency shall be notified of the reason for 
denial.

(Approved by the Office of Management and Budget under control numbers 
0580-0003 and 0580-0012)

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
48 FR 44453, Sept. 29, 1983; 50 FR 30131, July 24, 1985]



Sec.  800.71  Fees assessed by the Service.

    (a) Official inspection and weighing services. The fees shown in 
Schedule A of paragraph (a)(1) of this section apply to official 
inspection and weighing services performed by FGIS in the U.S. and 
Canada. The fees shown in Schedule B of paragraph (a)(2) of this section 
apply to official domestic inspection and weighing services performed by 
delegated States and designated agencies, including land carrier 
shipments to Canada and Mexico. The fees charged to delegated States by 
the Service are set forth in the State's Delegation of Authority 
document. Failure of a delegated State or designated agency to pay the 
appropriate fees to the Service within 30 days after becoming due will 
result in an automatic termination of the delegation or designation. The 
delegation or designation may be reinstated by the Service if fees that 
are due, plus interest and any further expenses incurred by the Service 
because of the termination, are paid within 60 days of the termination.
    (1) Schedule A--Fees for official inspection and weighing services 
performed in the United States and Canada, effective October 1, 2015. 
Canada fees include the noncontract hourly rate, the Toledo Field Office 
tonnage fee, and the actual cost of travel.

    Table 1 of Schedule A--Fees for Official Services Performed at an Applicant's Facility in an Onsite FGIS
                                                 Laboratory \1\
----------------------------------------------------------------------------------------------------------------
                                                     Monday to       Monday to       Saturday,
                                                  Friday (6 a.m.  Friday (6 p.m.    Sunday, and      Holidays
                                                    to 6 p.m.)      to 6 a.m.)     overtime \2\
----------------------------------------------------------------------------------------------------------------
(i) Inspection and Weighing Services Hourly
 Rates (per service representative):
    1-year contract ($ per hour)................          $38.20          $40.00          $45.80          $67.80
 
    Noncontract ($ per hour)....................           67.80           67.80           67.80           67.80
                                                 ---------------------------------------------------------------
(ii) Additional Tests (cost per test, assessed in addition to the hourly rate): \3\
    (A) Aflatoxin (rapid test kit method).......................................................           10.80
    (B) Aflatoxin (rapid test kit method-applicant provides kit) \4\............................            8.90
    (C) All other Mycotoxins (rapid test kit method)............................................           19.80
    (D) All other Mycotoxins (rapid test kit method-applicant provides kit) \4\.................           17.90
    (E) NIR or NMR Analysis (protein, oil, starch, etc.)........................................            2.60
    (F) Waxy corn (per test)....................................................................            2.60
    (G) Fees for other tests not listed above will be based on the lowest noncontract hourly
     rate
    (H) Other services..........................................................................
        (1) Class Y Weighing (per carrier):
            (i) Truck/container.................................................................            0.70

[[Page 480]]

 
            (ii) Railcar........................................................................            1.60
            (iii) Barge.........................................................................            2.90
(iii) Tonnage Fee (assessed in addition to all other applicable fees, only one tonnage fee will
 be assessed when inspection and weighing services are performed on the same carrier):
    (A) All outbound carriers serviced by the specific Field Office (per-metric ton):
        (1) League City.........................................................................           0.182
        (2) New Orleans.........................................................................           0.100
        (3) Portland............................................................................           0.145
        (4) Toledo..............................................................................           0.291
        (5) Delegated States \5\................................................................           0.064
        (6) Designated Agencies \5\.............................................................           0.064
----------------------------------------------------------------------------------------------------------------
\1\ Fees apply to original inspection and weighing, re-inspection, and appeal inspection service and include,
  but are not limited to, sampling, grading, weighing, prior to loading stowage examinations, and certifying
  results performed within 25 miles of an employee's assigned duty station. Travel and related expenses will be
  charged for service outside 25 miles as found in Sec.   800.72(a).
\2\ Overtime rates will be assessed for all hours in excess of 8 consecutive hours that result from an applicant
  scheduling or requesting service beyond 8 hours, or if requests for additional shifts exceed existing
  staffing.
\3\ Appeal and re-inspection services will be assessed the same fee as the original inspection service.
\4\ Applicant must provide the test kit, instrument hardware, calibration control, and all supplies required by
  the test kit manufacturer.
\5\ Tonnage fee is assessed on export grain inspected and/or weighed, excluding land carrier shipments to Canada
  and Mexico.


 Table 2 of Schedule A--Services Performed at Other Than an Applicant's
                   Facility in an FGIS Laboratory 1 2
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(i) Original Inspection and Weighing (Class X) Services:
    (A) Sampling only (use hourly rates from Table 1 of
     this section):
    (B) Stationary lots (sampling, grade/factor, & check
     loading):
        (1) Truck/trailer/container (per carrier).......          $21.40
        (2) Railcar (per carrier).......................           31.60
        (3) Barge (per carrier).........................          198.60
        (4) Sacked grain (per hour per service                      0.08
         representative plus an administrative fee per
         hundredweight) (CWT)...........................
    (C) Lots sampled online during loading (sampling
     charge under (1)(i) of this table, plus):
        (1) Truck/trailer container (per carrier).......           12.80
        (2) Railcar (per carrier).......................           26.70
        (3) Barge (per carrier).........................          135.90
        (4) Sacked grain (per hour per service                      0.08
         representative plus an administrative fee per
         hundredweight) (CWT)...........................
    (D) Other services:
        (1) Submitted sample (per sample--grade and                12.80
         factor)........................................
        (2) Warehouseman inspection (per sample)........           22.40
        (3) Factor only (per factor--maximum 2 factors).            6.30
        (4) Check loading/condition examination (use                0.08
         hourly rates from Table 1 of this section, plus
         an administrative fee per hundredweight if not
         previously assessed) (CWT).....................
        (5) Re-inspection (grade and factor only.                  13.90
         Sampling service additional, item (1)(i) of
         this table)....................................
        (6) Class X Weighing (per hour per service                 67.80
         representative)................................
    (E) Additional tests (excludes sampling):
        (1) Aflatoxin (rapid test kit method)...........           31.90
        (2) Aflatoxin (rapid test kit method--applicant            30.00
         provides kit) \3\..............................
        (3) All other Mycotoxins (rapid test kit method)           41.00
        (4) All other Mycotoxins (rapid test kit method--          39.10
         applicant provides kit) \3\....................
        (5) NIR or NMR Analysis (protein, oil, starch,             10.80
         etc.)..........................................
        (6) Waxy corn (per test)........................           10.80
        (7) Canola (per test-00 dip test)...............           10.80
        (8) Pesticide Residue Testing: \4\
            (i) Routine Compounds (per sample)..........          228.90
            (ii) Special Compounds (Subject to                    122.00
             availability)..............................
        (9) Fees for other tests not listed above will
         be based on the lowest noncontract hourly rate
         from Table 1 of this section...................

[[Page 481]]

 
(ii) Appeal inspection and review of weighing
 service:\5\
    (A) Board Appeals and Appeals (grade and factor)....           86.90
        (1) Factor only (per factor--max 2 factors).....           45.80
        (2) Sampling service for Appeals additional
         (hourly rates from Table 1 of this section)....
    (B) Additional tests (assessed in addition to all
     other applicable tests):...........................
        (1) Aflatoxin (rapid test kit method)...........           31.90
        (2) Aflatoxin (rapid test kit method--applicant            29.80
         provides kit) \3\..............................
        (3) All other Mycotoxins (rapid test kit method)           50.00
        (4) All other Mycotoxins (rapid test kit method--          48.10
         applicant provides kit) \3\....................
        (5) NIR or NMR Analysis (protein, oil, starch,             18.80
         etc.)..........................................
        (6) Sunflower oil (per test)....................           18.80
        (7) Mycotoxin (per test-HPLC)...................          149.40
        (8) Pesticide Residue Testing: \4\..............
            (i) Routine Compounds (per sample)..........          228.90
            (ii) Special Compounds (Subject to                    122.00
             availability)..............................
        (9) Fees for other tests not listed above will
         be based on the lowest noncontract hourly rate
         from Table 1 of this section...................
    (C) Review of weighing (per hour per service                   87.70
     representative)....................................
(iii) Stowage examination (service-on-request): \4\
    (A) Ship (per stowage space) (minimum $271.00 per              54.20
     ship)..............................................
    (B) Subsequent ship examinations (same as original)            54.20
     (minimum $162.60 per ship).........................
    (C) Barge (per examination).........................           43.50
    (D) All other carriers (per examination)............           17.10
------------------------------------------------------------------------
\1\ Fees apply to original inspection and weighing, re-inspection, and
  appeal inspection service and include, but are not limited to,
  sampling, grading, weighing, prior to loading stowage examinations,
  and certifying results performed within 25 miles of an employee's
  assigned duty station. Travel and related expenses will be charged for
  service outside 25 miles as found in Sec.   800.72(a).
\2\ An additional charge will be assessed when the revenue from the
  services in Schedule A, Table 2, does not cover what would have been
  collected at the applicable hourly rate as provided in Sec.
  800.72(b).
\3\ Applicant must provide the test kit, instrument hardware,
  calibration control, and all supplies required by the test kit
  manufacturer.
\4\ If performed outside of normal business, 1[frac12] times the
  applicable unit fee will be charged.
\5\ If, at the request of the Service, a file sample is located and
  forwarded by the Agency, the Agency may, upon request, be reimbursed
  at the rate of $3.50 per sample by the Service.


            Table 3 of Schedule A--Miscellaneous Services \1\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(i) Grain grading seminars (per hour per service                 $67.80.
 representative) \2\....................................
(ii) Certification of diverter-type mechanical samplers           67.80.
 (per hour per service representative) \2\..............
(iii) Special weighing services (per hour per service
 representative): \2\
    (A) Scale testing and certification.................          88.30.
    (B) Scale testing and certification of railroad               88.30.
     track scales.......................................
    (C) Evaluation of weighing and material handling              88.30.
     systems............................................
    (D) NTEP Prototype evaluation (other than Railroad            88.30.
     Track Scales)......................................
    (E) NTEP Prototype evaluation of Railroad Track               88.30.
     Scale..............................................
    (F) Use of GIPSA railroad track scale test equipment         529.40.
     per facility for each requested service. (Track
     scales tested under the Association of American
     Railroads agreement are exempt.)...................
    (G) Mass standards calibration and re-verification..          88.30.
    (H) Special projects................................          88.30.
(iv) Foreign travel (hourly fee) \3\....................          88.30.
(v) Online customized data service:
    (A) One data file per week for 1 year...............         529.40.
    (B) One data file per month for 1 year..............         317.70.
(v) Samples provided to interested parties (per sample).           3.30.
(vi) Divided-lot certificates (per certificate).........           2.10.
(vii) Extra copies of certificates (per certificate)....           2.10.
(viii) Faxing (per page)................................           2.10.
(ix) Special mailing....................................     Actual Cost
(x) Preparing certificates onsite or during other than
 normal business hours (use hourly rates from Table 1)
------------------------------------------------------------------------
\1\Any requested service that is not listed will be performed at $67.80
  per hour.
\2\ Regular business hours--Monday through Friday--service provided at
  other than regular business hours will be charged at 11/2 times the
  applicable hourly rate. (See the definition of ``business day'' in
  Sec.   800.0(b))
\3\ Foreign travel charged hourly fee of $88.30 plus travel, per diem,
  and related expenditures.


[[Page 482]]

    (2) Schedule B--Fees for FGIS Supervision of Official Inspection and 
Weighing Services Performed by Delegated States and/or Designated 
Agencies in the United States. The supervision fee charged by the 
Service is $0.011 per metric ton of domestic U.S. grain shipments 
inspected and/or weighed, including land carrier shipments to Canada and 
Mexico.
    (b) Annual review of fees. For each calendar year, starting with 
2017, the Service will review the fees in Schedule A in paragraph (a)(1) 
of this section and publish fees effective January 1 of each year 
according to the following:
    (1) Tonnage fees. Tonnage fees will consist of the national tonnage 
fee and local tonnage fees and will be calculated and rounded to the 
nearest $0.001 per metric ton. All outbound grain officially inspected 
and/or weighed by the Field Offices in New Orleans, League City, 
Portland, and Toledo will be assessed the national tonnage fee plus the 
appropriate local tonnage fee. Export grain officially inspected and/or 
weighed by delegated States and official agencies, excluding land 
carrier shipments to Canada and Mexico, will be assessed the national 
tonnage fee only. The fees will be set according to the following:
    (i) National tonnage fee. The national tonnage fee is the national 
program administrative costs for the previous fiscal year divided by the 
average yearly tons of export grain officially inspected and/or weighed 
by delegated States and designated agencies, excluding land carrier 
shipments to Canada and Mexico, and outbound grain officially inspected 
and/or weighed by the Service during the previous 5 fiscal years.
    (ii) Local tonnage fee. The local tonnage fee is the Field Office 
administrative costs for the previous fiscal year divided by the average 
yearly tons of outbound grain officially inspected and/or weighed by the 
Field Office during the previous 5 fiscal years. The local tonnage fee 
is calculated individually for each Field Office.
    (2) Operating reserve. In order to maintain an operating reserve not 
less than 3 and not more than 6 months, the Service will review the 
value of the operating reserve at the end of each fiscal year and adjust 
fees according to the following:
    (i) Less than 4.5 months. If the operating reserve is less than 4.5 
times the monthly operating expenses, the Service will increase all fees 
in Schedule A in paragraph (a)(1) of this section by 2 percent for each 
$1,000,000, rounded down, that the operating reserve is less than 4.5 
times the monthly operating expense, with a maximum increase of 5 
percent annually. Except for fees based on tonnage or hundredweight, all 
fees will be rounded to the nearest $0.10.
    (ii) Greater than 4.5 months. If the operating reserve is greater 
than 4.5 times the monthly operating expenses, the Service will decrease 
all fees in Schedule A in paragraph (a)(1) of this section by 2 percent 
for each $1,000,000, rounded down, that the operating reserve is greater 
than 4.5 times the monthly operating expense, with a maximum decrease of 
5 percent annually. Except for fees based on tonnage or hundredweight, 
all fees will be rounded to the nearest $0.10.
    (c) Periodic review. The Service will periodically review and adjust 
all fees in Schedules A and B in paragraphs (a)(1) and (2) of this 
section, respectively, as necessary to ensure they reflect the true cost 
of providing and supervising official service. This process will 
incorporate any fee adjustments from paragraph (b) of this section.
    (d) Miscellaneous fees for other services--(1) Registration 
certificates and renewals. (i) The nature of your business will 
determine the fees that your business must pay for registration 
certificates and renewals:
    (A) If you operate a business that buys, handles, weighs, or 
transports grain for sale in foreign commerce, you must pay $135.00.
    (B) If you operate a business that buys, handles, weighs, or 
transports grain for sale in foreign commerce and you are also in a 
control relationship (see definition in section 17A(b)(2) of the Act) 
with respect to a business that buys, handles, weighs, or transports 
grain for sale in interstate commerce, you must pay $270.00.
    (ii) If you request extra copies of registration certificates, you 
must pay $2.20 for each copy.

[[Page 483]]

    (2) Designation amendments. If you submit an application to amend a 
designation, you must pay $75.00.
    (3) Scale testing organizations. If you submit an application to 
operate as a scale testing organization, you must pay $250.00.

[81 FR 49860, July 29, 2016, as amended at 81 FR 96340, Dec. 30, 2016]



Sec.  800.72  Explanation of additional service fees for services performed
in the United States only.

    (a) When transportation of the service representative to the service 
location (at other than a specified duty point) is more than 25 miles 
from an FGIS office, the actual transportation cost in addition to the 
applicable hourly rate for each service representative will be assessed 
from the FGIS office to the service point and return. When commercial 
modes of transportation (e.g., airplanes) are required, the actual 
expense incurred for the round-trip travel will be assessed. When 
services are provided to more than one applicant, the travel and other 
related charges will be prorated between applicants.
    (b) In addition to a 2-hour minimum charge for service on Saturdays, 
Sundays, and holidays, an additional charge will be assessed when the 
revenue from the services in Sec.  800.71(a)(1), schedule A, table 2, 
does not equal or exceed what would have been collected at the 
applicable hourly rate. The additional charge will be the difference 
between the actual unit fee revenue and the hourly fee revenue. Hours 
accrued for travel and standby time shall apply in determining the hours 
for the minimum fee.

[61 FR 43305, Aug. 22, 1996, as amended at 81 FR 49862, July 29, 2016]



Sec.  800.73  Computation and payment of service fees; general fee
information.

    (a) Computing hourly rates. The applicable hourly rate will be 
assessed in quarter hour increments for:
    (1) Travel from the FGIS field office or assigned duty station to 
the service point and return;
    (2) The performance of the requested service, less mealtime.
    (b) Application of fees when service is delayed or dismissed by the 
applicant. The applicable hourly rate will be assessed for the entire 
period of scheduled service when:
    (1) Service has been requested at a specified location;
    (2) A service representative is on duty and ready to provide service 
but is unable to do so because of a delay not caused by the Service; and
    (3 FGIS officials determine that the service representative cannot 
be utilized to provide service elsewhere without cost to the Service.
    (c) Application of fees when an application for service is withdrawn 
or dismissed. The applicable hourly rate will be assessed to the 
applicant for the entire period of scheduled service if the request is 
withdrawn or dismissed after the service representative departs for the 
service point, or if the service request is not canceled by 2 p.m., 
local time, the business day preceding the date of scheduled service. 
However, the applicable hourly rate will not be assessed to the 
applicant if FGIS officials determine that the service representative 
can be utilized elsewhere or released without cost to the Service.
    (d) To whom fees are assessed. Fees for inspection, weighing, and 
related services performed by service representatives, including 
additional fees as provided in Sec.  800.72, shall be assessed to and 
paid by the applicant for the service.
    (e) Advance payment. As necessary, the Administrator may require 
that fees shall be paid in advance of the performance of the requested 
service. Any fees paid in excess of the amount due shall be used to 
offset future billings, unless a request for a refund is made by the 
applicant.
    (f) Form of payment. Bills for fees assessed under the regulations 
in this part for official services performed by FGIS shall be paid by 
check, draft, or money order, payable to the U.S. Department of 
Agriculture, Grain Inspection, Packers and Stockyards Administration.

[61 FR 43305, Aug. 22, 1996, as amended at 69 FR 26490, May 13, 2004]

[[Page 484]]

                       Kinds of Official Services



Sec.  800.75  Kinds of official inspection and weighing services.

    (a) General. Paragraphs (b) through (m) of this section describe the 
kinds of official service available. Each kind of service has several 
levels. Sec. Sec.  800.115, 800.116, 800.117, and 800.118 explain 
Original Services, Sec. Sec.  800.125, 800.126, 800.127, 800.128, and 
800.129 explain Reinspection Services and Review of Weighing Services, 
and Sec. Sec.  800.135, 800.136, 800.137, 800.138, and 800.139 explain 
Appeal Inspection Services. The results of each official service listed 
in paragraphs (b) through (j) will be certificated according to Sec.  
800.160.
    (b) Official sample-lot inspection service. This service consists of 
official personnel (1) sampling an identified lot of grain and (2) 
analyzing the grain sample for grade, official factors, or official 
criteria, or any combination thereof, according to the regulations, 
Official U.S. Standards for Grain, instructions, and the request for 
inspection.
    (c) Warehouseman's sample-lot inspection service. This service 
consists of (1) a licensed warehouseman sampler (i) sampling an 
identified lot of grain using an approved diverter-type mechanical 
sampler and (ii) sending the sample to official personnel and (2) 
official personnel analyzing the grain sample for grade, official 
factors, official criteria, or any combination thereof, according to the 
regulations, Official U.S. Standards for Grain, instructions, and the 
request for inspection.
    (d) Submitted sample inspection service. This service consists of an 
applicant or an applicant's agent submitting a grain sample to official 
personnel, and official personnel analyzing the grain sample for grade, 
official factors, official criteria, or any combination thereof, 
according to the regulations, Official U.S. Standards for Grain, 
instructions, and the request for inspection.
    (e) Official sampling service. This service consists of official 
personnel (1) sampling an identified lot of grain and (2) forwarding a 
representative portion(s) of the sample along with a copy of the 
certificate, as requested by the applicant.
    (f) Official stowage examination service. (1) This service consists 
of official personnel visually determining if an identified carrier or 
container is clean; dry; free of infestation, rodents, toxic substances, 
and foreign odor; and is suitable to store or carry grain.
    (2) A stowage examination may be obtained as a separate service or 
with one or more other services. Approval of the stowage space is 
required for official sample-lot inspection services on all export lots 
of grain and all official sample-lot inspection services performed on 
outbound domestic lots of grain which are sampled and inspected at the 
time of loading. Also, approval of the stowage space is required for any 
weighing services performed on all outbound land carriers.
    (g) Class X weighing service. This service consists of official 
personnel (1) completely supervising the loading or unloading of an 
identified lot of grain and (2) physically weighing or completely 
supervising approved weighers weighing the grain.
    (h) Class Y weighing service. This service consists of (1) approved 
weighers physically weighing the grain and (2) official personnel 
partially or completely supervising the loading or unloading of an 
identified lot of grain.
    (i) Checkweighing service (sacked grain). This service consists of 
official personnel or approved weighers under the supervision of 
official personnel (1) physically weighing a selected number of sacks 
from a grain lot and (2) determining the estimated total gross, tare, 
and new weights, or the estimated average gross or net weight per filled 
sack according to the regulations, instructions, and request by the 
applicant.
    (j) Checkloading service. This service consists of official 
personnel (1) performing a stowage examination; (2) computing the number 
of filled grain containers loaded aboard a carrier; and (3) if 
practicable, sealing the carrier for security.
    (k) Test weight reverification service. This service consists of 
official personnel (1) comparing the weight of elevator test weights 
with known weights; (2) correcting the elevator test weights, when 
necessary; and (3) issuing a Report of Test.

[[Page 485]]

    (l) Railroad track scale testing service. This service consists of 
official personnel (1) testing railroad track scales with Service-
controlled test cars and (2) issuing a Report of Test.
    (m) Hopper and truck scale testing service. This service consists of 
official personnel (1) testing hopper and truck scales and (2) issuing a 
Report of Test.

(The information collection requirements contained in this section were 
approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45392, Oct. 31, 1985]



Sec.  800.76  Prohibited services; restricted services.

    (a) Prohibited services. No agency shall perform any inspection 
function or provide any inspection service on the basis of unofficial 
standards, procedures, factors, or criteria if the agency is designated 
or authorized to perform the service or provide the service on an 
official basis under the Act. No agency shall perform official and 
unofficial weighing on the same mode of conveyance at the same facility.
    (b) Restricted services--(1) Not standardized grain. When an 
inspection or weighing service is requested on a sample or a lot of 
grain which does not meet the requirements for grain as set forth in the 
Official U.S. Standards for Grain, a certificate showing the words ``Not 
Standardized Grain'' shall be issued according to the instructions.
    (2) Grain screening. The inspection or weighing of grain screenings 
may be obtained from an agency or field office according to the 
instructions.

[50 FR 45393, Oct. 31, 1985, as amended at 60 FR 65235, Dec. 19, 1995; 
63 FR 45677, Aug. 27, 1998]

                    Inspection Methods and Procedures



Sec.  800.80  Methods and order of performing official inspection services.

    (a) Methods--(1) General. All official inspection services shall be 
performed in accordance with methods and procedures prescribed in the 
regulations and the instructions.
    (2) Lot inspection services. A lot inspection service shall be based 
on a representative sampling and examination of the grain in the entire 
lot, except as provided in Sec.  800.85, and an accurate analysis of the 
grain in the sample.
    (3) Stowage examination service. A stowage examination service shall 
be based on a thorough and accurate examination of the carrier or 
container into which grain will be loaded.
    (4) Submitted sample inspection service. A submitted sample 
inspection service shall be based on a submitted sample of sufficient 
size to enable official personnel to perform a complete analysis for 
grade. If a complete analysis for grade cannot be performed because of 
an inadequate sample size or other conditions, the request for service 
shall be dismissed or a factor only inspection may be performed upon 
request.
    (5) Reinspection and appeal inspection service. A reinspection, 
appeal inspection, or Board appeal inspection service shall be based on 
an independent review of official grade information, official factor 
information, or other information consistent with the scope of the 
original inspection.
    (b) Order of service. Official inspection services shall be 
performed, to the extent practicable, in the order in which they are 
received. Priority shall be given to inspections required for export 
grain. Priority may be given to other kinds of inspection services under 
the Act with the specific approval of the Service.
    (c) Recording receipt of documents. Each document submitted by or on 
behalf of an applicant for inspection services shall be promptly stamped 
or similarly marked by official personnel to show the date of receipt.
    (d) Conflicts of interest. No official personnel shall perform or 
participate in performing an official inspection service on grain or on 
a carrier or container in which they have a direct or indirect financial 
interest.

[50 FR 49669, Dec. 4, 1985]



Sec.  800.81  Sample requirements; general.

    (a) Samples for official sample-lot inspection service--(1) Original 
official sample-lot inspection service. For original sample-lot 
inspection purposes, an official sample shall be obtained by official 
personnel; representative of the grain in the lot; and protected from 
manipulation, substitution, and improper or careless handling.

[[Page 486]]

    (2) Official sample-lot reinspection and appeal inspection service. 
For an official sample-lot reinspection service or an official appeal 
sample-lot inspection service, the sample(s) on which the reinspection 
or appeal is determined shall (i) be obtained by official personnel and 
(ii) otherwise meet the requirements of paragraph (a)(1) of this 
section. If the reinspection or appeal inspection is determined on the 
basis of official file sample(s), the samples shall meet the 
requirements of Sec.  800.82(d).
    (3) New sample. Upon request and if practicable, a new sample shall 
be obtained and examined as a part of a reinspection or appeal 
inspection. The provision for a new sample shall not apply if obtaining 
the new sample involves a change in method of sampling.
    (b) Representative sample. A sample shall not be considered 
representative unless it (1) has been obtained by official personnel, 
(2) is of the size prescribed in the instructions, and (3) has been 
obtained, handled, and submitted in accordance with the instructions. A 
sample which fails to meet the requirements of this paragraph may, upon 
request of the applicant, be inspected as a submitted sample.
    (c) Protecting samples. Official personnel shall protect official 
samples, warehouseman's samples, and submitted samples from 
manipulation, substitution, or improper and careless handling which may 
deprive the samples of their representativeness or which may change the 
physical or chemical properties of the grain, as appropriate, from the 
time of sampling or receipt until the inspection services are completed 
and the file samples have been discarded.
    (d) Restriction on sampling. Official personnel shall not perform an 
original inspection or a reinspection service on an official sample or a 
warehouseman's sample unless the grain from which the sample was 
obtained was located within the area of responsibility assigned to the 
agency or field office at the time of sampling, except as provided for 
in Sec.  800.117, or on a case-by-case basis as determined by the 
Administrator.
    (e) Disposition of samples--(1) Excess grain. Any grain in excess of 
the quantity specified in the instructions for the requested service, 
the file samples, and samples requested by interested persons shall be 
returned to the lot from which the grain was obtained or to the owner of 
the lot or the owner's order.
    (2) Inspection samples. Inspection samples, after they have served 
their intended purpose, shall be disposed of as follows:
    (i) Samples which contain toxic substances or materials shall be 
kept out of food and feed channels, and
    (ii) Official personnel shall dispose of samples obtained or 
submitted to them according to procedures established by the Service. 
Complete and accurate records of disposition shall be maintained.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[50 FR 49669, Dec. 4, 1985, as amended at 68 FR 19138, Apr. 18, 2003]



Sec.  800.82  Sampling provisions by level of service.

    (a) Original inspection service--(1) Official sample-lot inspection 
service. Each original inspection service shall be performed on the 
basis of one or more official samples obtained by official personnel 
from grain in the lot and forwarded to the appropriate agency or field 
office.
    (2) Warehouseman's sample-lot inspection. Each original 
warehouseman's sample-lot inspection service shall be performed on the 
basis of samples obtained by a licensed warehouseman and sent to the 
appropriate agency or field office in whose circuit the warehouse is 
located.
    (3) Submitted sample service. Each original submitted sample 
inspection service shall be performed on the basis of the sample as 
submitted.
    (b) Reinspection, and appeal inspection services--(1) Official 
sample-lot inspection service. Each of these inspection services shall 
be performed on the basis of official samples as available, including 
file samples, at the time the service is requested. In performing these 
services, a sample obtained with an approved diverter-type mechanical 
sampler or with a pelican sampler generally shall be used with respect 
to quality factors and official criteria, and a sample obtained with a 
probe at the time of the reinspection or appeal,

[[Page 487]]

generally, shall be used with respect to heating, musty, sour, insect 
infestation, and other condition and odor factors. In instances where 
original inspection results are based on samples obtained by probe, the 
decision as to whether file samples or new samples obtained by probe are 
to be used shall be made by the official personnel performing the 
service.
    (2) Warehouseman's sample-lot inspection service. Each reinspection 
service and appeal inspection service on a warehouseman's sample shall 
be performed on an analysis of the official file sample.
    (3) Submitted sample service. Each reinspection service and appeal 
inspection service on a submitted sample shall be performed on an 
analysis of the official file sample.
    (c) Board appeal inspection services. Board appeal inspection 
services shall be performed on an analysis of the official file sample.
    (d) Use of file samples--(1) Requirements for use. A file sample 
that is retained by official personnel in accordance with the procedures 
prescribed in the instructions may be considered representative for a 
reinspection service, appeal inspection service, and a Board appeal 
inspection service if (i) the file sample has remained at all times in 
the custody and control of the official personnel that performed the 
inspection service in question; and (ii) the official personnel who 
performed the original inspection service and those who are to perform 
the reinspection, the appeal inspection, or the Board appeal inspection 
service determine that the samples were representative at the time the 
original inspection service was performed and that the quality or 
condition of the grain in the samples has not changed.
    (2) Certificate statement. When the results of a reinspection, 
appeal inspection, or Board appeal inspection service are based on an 
official file sample, the certificate for the reinspection service, the 
appeal inspection service, and the Board appeal inspection service shall 
show a statement, as specified in the instructions, indicating that the 
results are based on the official file sample.

[50 FR 49670, Dec. 4, 1985]



Sec.  800.83  Sampling provisions by kind of movement.

    (a) Export cargo movements--(1) Bulk grain. Except as may be 
approved by the Administrator on a shipment-by-shipment basis in an 
emergency, each inspection for official grade, official factor, or 
official criteria on an export cargo shipment of bulk grain shall be 
performed on official samples obtained from the grain (i) as the grain 
is being loaded aboard the final carrier; (ii) after the final elevation 
of the grain prior to loading and as near to the final loading spout as 
is physically practicable (except as approved by the Administrator when 
representative samples can be obtained before the grain reaches the 
final loading spout); and (iii) by means of a diverter-type mechanical 
sampler approved by the Service and operated in accordance with 
instructions. If an approved diverter-type mechanical sampler is not 
properly installed at an elevator or facility as required, each 
certificate issued at that elevator or facility for an export cargo 
shipment of bulk grain shall show a statement indicating the type of 
approved sampling method used, as prescribed in the instructions.
    (2) Sacked grain. Each inspection for official grade, official 
factor, or official criteria on an export cargo shipment of sacked grain 
shall be performed on official samples obtained from the grain by any 
sampling method approved by the Service and operated in accordance with 
instructions.
    (b) Other movements. Each inspection for official grade, official 
factor, or official criteria on a domestic cargo movement (``In,'' 
``Out,'' or en route barge movement), a movement in a land carrier (any 
movement in a railcar, truck trailer, truck/trailer combination, or 
container), or a ``LOCAL'' movement of bulk or sacked grain shall be 
performed on official samples obtained from the grain by any sampling 
method approved by the Service and operated in accordance with the 
instructions.

[50 FR 49670, Dec. 4, 1985]

[[Page 488]]



Sec.  800.84  Inspection of grain in land carriers, containers, and 
barges in single lots.

    (a) General. The inspection of bulk or sacked grain loaded or 
unloaded from any carrier or container, except shiplot grain, must be 
conducted in accordance with the provision in this section and 
procedures prescribed in the instructions. Applicant must provide 
written instructions to official personnel, reflecting contract 
requirements for quality and quantity for the inspection of multiple 
carriers graded on a composite grade or average grade basis.
    (b) Single and multiple grade procedure--(1) Single grade. When 
grain in a carrier(s) is/are offered for inspection as one lot and the 
grain is found to be uniform in condition, the grain must be sampled, 
inspected, graded, and certified as one lot. For the purpose of this 
paragraph, condition only includes the factors heating and odor.
    (i) Composite grade. Grain loaded in multiple carriers offered for 
inspection may be combined into a single sample for grade analysis and 
certified as a single lot, provided that the grain in each individual 
carrier is inspected and found uniform in respect to odor, condition, 
and insect infestation, and sampling is performed at the individual 
loading location in a reasonably continuous operation. The maximum 
number of individual units that may be combined to form a composite 
grade analysis is 20 containers, 5 railcars, or 15 trucks. Composite 
analysis must be restricted to carriers inspected within the official 
service provider's area of responsibility.
    (ii) Average grade. Grain loaded in multiple carriers offered for 
inspection may be graded individually, then averaged for certification 
as a single lot, provided that: the grain in each individual carrier is 
inspected and graded as an individual unit; the grain is found to be 
uniform in respect to odor, condition, and insect infestation; and 
sampling is performed at the individual loading location in a reasonably 
continuous operation. The maximum number of individual units that may be 
combined to form an average grade analysis is 20 containers, 5 railcars, 
or 15 trucks. Average grade analysis is restricted to carriers inspected 
within the official service provider's area of responsibility.
    (2) Multiple grade. When grain in a carrier is offered for 
inspection as one lot and the grain is found to be not uniform in 
condition because portions of the grain are heating or have an odor, the 
grain in each portion will be sampled, inspected, and graded separately; 
but the results must be shown on one certificate. The certificate must 
show the approximate quantity or weight of each portion, the location of 
each portion in the carrier or container, and the grade of the grain in 
each portion. The requirements of this section are not applicable when 
an applicant requests that the grade of the entire carrier be based on a 
determination of heating or odor when only a portion of the carrier is 
found to be heating or have an odor.
    (3) Infested. If any portion of grain in a lot is found to be 
infested, according to applicable provisions of the Official U.S. 
Standards for Grain, the entire lot shall be considered infested. When 
grain in railcars or trucks with permanently enclosed tops is considered 
infested, the applicant for inspection shall be promptly notified and 
given the option of (i) receiving a grade certificate with a special 
grade designation indicating that the entire lot is infested or (ii) 
fumigating the grain in the lot in accordance with instructions and 
receiving a grade certificate without the special grade designation.
    (c) One certificate per carrier: exceptions. Except as provided in 
this paragraph, one official certificate must be issued for the 
inspection of the grain in each truck, trailer, truck/trailer(s) 
combination, container, railcar, barge, or similarly-sized carrier, or 
composite/average grade analysis on multiple carrier units. The 
requirements of this paragraph are not applicable:
    (1) When grain is inspected in a combined lot under Sec.  800.85;
    (2) When grain is inspected under paragraph (d) of this section; or
    (3) When certification is at the option of the applicant in 
accordance with instructions.
    (d) Bulkhead lots. If grain in a carrier is offered for official 
inspection as two or more lots and the lots are separated by bulkheads 
or other partitions, the

[[Page 489]]

grain in each lot shall be sampled, inspected, and graded separately in 
accordance with paragraphs (a) and (b) of this section. An official 
certificate shall be issued for each lot inspected. Each certificate 
shall show the term ``Bulkhead Lot,'' the approximate quantity or weight 
of the grain in the lot, the location of the lot in the carrier, and the 
grade of the grain in the lot.
    (e) Bottom not sampled. If bulk grain offered for official 
inspection is at rest in a carrier or container and is fully accessible 
for sampling in an approved manner, except that the bottom of the 
carrier or container cannot be reached with each probe, the grain shall 
be sampled as thoroughly as possible with an approved probe. The grain 
in the resulting samples shall be inspected, graded, and certificated, 
except that each certificate shall show a statement, as specified in the 
instructions, indicating the depth probed. Any inspection which is based 
on a sample that does not represent the entire carrier or container does 
not meet the mandatory inspection requirements of section 5(a)(1) of the 
Act.
    (f) Partial inspection--heavily loaded--(1) General. When an ``In'' 
movement of bulk grain is offered for inspection at rest in a carrier or 
container and is loaded in such a manner that it is possible to secure 
only door-probe or shallow-probe samples, the container shall be 
considered to be ``heavily loaded,'' and the request for inspection 
either shall be dismissed or a partial inspection shall be made. If the 
request is for the inspection of an ``Out'' movement of grain, the 
request shall be dismissed on the grounds that the grain is not 
accessible for a correct ``Out'' inspection.
    (2) Certification procedure. If a partial inspection is made, the 
grain will be sampled as thoroughly as possible with an approved probe 
and inspected, graded, and a ``partial inspection--heavily loaded'' 
certificate issued. The certificate shall show the words ``Partial 
inspection--heavily loaded'' in the space provided for remarks. The type 
of samples that were obtained shall be described in terms of ``door 
probe'' or ``shallow probe.''
    (3) Reinspection and appeal inspection procedure. A request for a 
reinspection or an appeal inspection service on grain in a carrier or 
container that is certificated as ``partial inspection--heavily loaded'' 
shall be dismissed in accordance with Sec.  800.48(a)(4).
    (4) Restriction. No ``partial inspection--heavily loaded'' 
certificate shall be issued for sacked grain or any inspection other 
than the inspections described in paragraphs (f)(1) through (4) of this 
section and Sec.  800.85(h)(2).
    (g) Part lots--(1) General. If a portion of the grain in a carrier 
or container is removed, the grain that is removed and the grain 
remaining shall be considered separate lots. When an official inspection 
service is requested on either portion, the grain shall be sampled, 
inspected, graded, and a ``part-lot'' inspection certificate issued.
    (2) Grain remaining in carrier or container. The certificate for 
grain remaining in a carrier or container shall show (i) the following 
completed statement: ``Partly unloaded; results based on portion 
remaining in (show carrier or container identification),'' (ii) the term 
``Part lot'' following the quantity information, (iii) the 
identification of the carrier or container, and (iv) the estimated 
amount and location of the part lot.
    (3) Grain unloaded from carrier or container. If grain is sampled by 
official personnel during unloading, the certificate for the grain that 
is unloaded shall show (i) the completed statement: ``Part lot; results 
based on portion removed from (show carrier identification)'' and (ii) 
the term ``Part lot'' following the quantity information. If the grain 
is not sampled by official personnel during unloading, the certificate 
may, upon request of the applicant, show a completed statement such as 
``Applicant states grain is ex-car '' or ``Applicant states grain is ex-
barge ,'' but the certificate shall not otherwise show a carrier or 
container identification or the term ``Part lot.''
    (h) Identification for compartmented cars. The identification for 
compartments in a compartmented railcar shall, in the absence of readily 
visible markings, be stated in terms of the location of the grain in a 
compartment, with the first compartment at the brake end of the car 
being identified as B-1, and the remaining compartments

[[Page 490]]

being numbered consecutively towards the other end of the car.

[50 FR 49671, Dec. 4, 1985, as amended at 57 FR 11428, Apr. 3, 1992; 78 
FR 43756, July 22, 2013]



Sec.  800.85  Inspection of grain in combined lots.

    (a) General. The official inspection for grade of bulk or sacked 
grain loaded aboard, or being loaded aboard, or discharged from two or 
more carriers or containers (including barges designed for loading 
aboard a ship) as a combined lot shall be performed according to the 
provisions of this section and procedures prescribed in the 
instructions.
    (b) Application procedure--(1) For inspection during loading, 
unloading, or at rest. Applications for official inspection of grain as 
a combined lot must:
    (i) Be filed in accordance with Sec.  800.116;
    (ii) Show the estimated quantity of grain that is to be certified as 
one lot;
    (iii) Show the contract grade, and if applicable; other inspection 
criteria required by the contract; and
    (iv) Identify each carrier into which grain is being loaded or from 
which grain is being unloaded.
    (2) Recertification. An application for recertification as a 
combined lot of grain that has been officially inspected and 
certificated as two or more single lots shall (i) be filed not later 
than 2 business days after the latest inspection date of the single lots 
and (ii) show information specified in paragraph (b)(1) of this section.
    (c) Inspection procedure; general--land carriers and barges--(1) 
Inspection during loading, or unloading, or at rest. Grain in two or 
more land carriers or barges that are to be officially inspected as a 
combined lot, must be sampled in a reasonably continuous operation. 
Representative samples must be obtained from the grain in each 
individual carrier and inspected in accordance with procedures as 
prescribed in the instructions.
    (2) Recertification. Grain that has been officially inspected and 
certified as two or more single, composite, or average quality lots may 
be recertified as a combined lot provided that:
    (i) The grain in each lot was sampled in a reasonably continuous 
operation;
    (ii) The original inspection certificates issued for the single, 
composite, or average quality lots have been surrendered to official 
personnel;
    (iii) Representative file samples of the single, composite, or 
average quality lots are available;
    (iv) The grain in the single, composite, or average quality lots is 
of the same grade or better grade and quality than as specified in the 
written instructions provided by the shipper;
    (v) Official personnel who performed the inspection service for the 
single, composite, or average quality lots and the official personnel 
who are to recertify the grain as a combined lot must determine that the 
samples used as a basis for the inspection of the grain in the single, 
composite, or average quality lots were representative at the time of 
sampling and have not changed in quality or condition; and
    (vi) The quality or condition of the grain meets uniformity 
requirements established by the Service for official inspection of grain 
in combined lots.
    (d) Weighted or mathematical average. Official factor and official 
criteria information shown on a certificate for grain in a combined lot 
shall, subject to the provisions of paragraphs (e) through (g) of this 
section, be based on the weighted or mathematical averages of the 
analysis of the sublots in the lot and shall be determined in accordance 
with the instructions.
    (e) Infested grain. If the grain in a combined lot is offered for 
official inspection as it is being loaded aboard a carrier and the 
grain, or a portion of the grain, in a lot is found to be infested, 
according to applicable provisions of the Official U.S. Standards for 
Grain, the applicant shall be notified and may exercise options 
specified in the instructions. When grain in railcars or trucks with 
permanently enclosed tops is considered infested, the applicant shall be 
given the option of (1) receiving a grade certificate with a special 
grade designation indicating that the entire lot is infested or (2) 
fumigating the grain in the lot in accordance with instructions and 
receiving a grade certificate without the special grade designation.

[[Page 491]]

    (f) Grain uniform in quality. Samples obtained from grain officially 
inspected as a combined lot shall be examined for uniformity of quality. 
If the grain in the samples is found to be uniform in quality and the 
grain is loaded aboard or is unloaded from the carriers in a reasonably 
continuous operation, the grain in the combined lot shall be officially 
inspected and certificated as one lot. The requirements of this 
paragraph (f) and paragraph (c) of this section with respect to 
reasonably continuous loading or unloading do not apply to grain which 
is at rest in carriers when the grain is offered for inspection.
    (g) Grain not uniform in quality. When grain officially inspected as 
a combined lot is found to be not uniform in quality or if the grain is 
not loaded or unloaded in a reasonably continuous operation, the grain 
in each portion, and any grain which is loaded or unloaded at different 
times, shall be officially sampled, inspected, graded, and certificated 
as single lots.
    (h) Special certification procedures--(1) Grain not uniform in 
quality. When grain in a combined lot is found to be not uniform in 
quality under paragraph (g) of this section, the official inspection 
certificate for each portion of different quality shall show (i) the 
grade, identification, and approximate quantity of the grain and (ii) 
other information required by the instructions.
    (2) Partial inspection. When an inbound movement of bulk grain is 
offered for official inspection at rest as a combined lot and all 
carriers are not fully accessible for sampling, the request for official 
inspection either shall be dismissed or a combined lot inspection shall 
be made on those carriers that are accessible. Those lots that are not 
accessible shall be handled in accordance with Sec.  800.84. If the 
request is for an official inspection service on an outbound movement of 
grain at rest in a combined lot, the request shall be dismissed on the 
ground that the grain is not accessible for a correct ``Out'' 
inspection.
    (3) Official mark. If grain in a combined lot is inspected for grade 
as it is being loaded aboard two or more carriers, upon request of the 
applicant, the following mark shall be shown on the inspection 
certificate: ``Loaded under continuous official inspection'' or ``Loaded 
under continuous official inspection and weighing.''
    (4) Combined-lot certification; general. Each official certificate 
for a combined-lot inspection service must show the identification for 
the ``combined lot'' or, at the request of the applicant, the 
identification of each carrier in the combined lot. If the 
identification of each carrier is not shown, the statement ``Carrier 
identification available on the official work record'' must be shown on 
the inspection certificate in the space provided for remarks. The 
identification and any seal information for the carriers may be shown in 
the Remarks section on the reverse side of the inspection certificate, 
provided that the statement ``See reverse side'' is shown on the face of 
the certificate in the space provided for remarks, or on an additional 
page.
    (5) Recertification. If a request for a combined-lot inspection 
service is filed after the grain has been officially inspected and 
certified as single, composite, or average quality lots, the combined-
lot inspection certificate must show, in addition to the requirements of 
paragraph (h)(4) of this section the following:
    (i) The date of inspection of the grain in the combined lot (if the 
single, composite, or average quality lots were inspected on different 
dates, the latest of the dates must be shown);
    (ii) A serial number other than the serial numbers of the official 
inspection certificates that are to be superseded;
    (iii) The location of the grain, if at rest, or the name(s) of the 
elevator(s) from which or into which the grain in the combined lot was 
loaded or unloaded;
    (iv) A statement showing the approximate quantity of grain in the 
combined lot;
    (v) A completed statement showing the identification of any 
superseded certificates; and
    (vi) If at the time of issuing the combined-lot inspection 
certificate the superseded certificates are not in the custody of the 
official personnel, a statement indicating that the superseded 
certificates have not been surrendered

[[Page 492]]

must be clearly shown in the space provided for remarks. If the 
superseded certificates are in the custody of official personnel, the 
superseded certificates must be clearly marked ``Void.''
    (i) Further combining. After a combined-lot inspection certificate 
has been issued, there shall be no further combining and no dividing of 
the certificate.
    (j) Limitation. No combined-lot inspection certificate shall be 
issued (1) for any official inspection service other than as described 
in this section or (2) which shows a quantity of grain in excess of the 
quantity in the single lots.

[50 FR 49672, Dec. 4, 1985, as amended at 78 FR 43756, July 22, 2013]



Sec.  800.86  Inspection of shiplot, unit train, and lash barge grain
in single lots.

    (a) General. Official inspection for grade of bulk or sacked grain 
aboard, or being loaded aboard, or being unloaded from a ship, unit 
train, or lash barges as a single lot shall be performed according to 
the provisions of this section and procedures prescribed in the 
instructions.
    (b) Application procedure. Applications for the official inspection 
of shiplot, unit train, and lash barges as a single lot shall:
    (1) Be filed in advance of loading or unloading;
    (2) Show the estimated quantity of grain to be certificated;
    (3) Show the contract grade and official criteria if applicable; and
    (4) Identify the carrier and stowage area into which the grain is 
being loaded, or from which the grain is being unloaded, or in which the 
grain is at rest.
    (c) Inspection procedures--(1) General information. Shiplot, unit 
train, and lash barge grain officially inspected as a single lot shall 
be sampled in a reasonably continuous operation. Representative samples 
shall be obtained from the grain offered for inspection and inspected 
and graded in accordance with a statistical acceptance sampling and 
inspection plan according to the provisions of this section and 
procedures prescribed in the instructions.
    (2) Tolerances. The probability of accepting or rejecting portions 
of the lot during loading or unloading is dependent on inspection 
results obtained from preceding portions and the applied breakpoints and 
procedures. Breakpoints shall be periodically reviewed and revised based 
on new estimates of inspection variability. Tables 1 through 24 list the 
breakpoints for all grains.

                     Table 1--Grade Limits (GL) and Breakpoints (BP) for Six-Rowed Malting Barley and Six-Rowed Blue Malting Barley
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Minimum limits of--                            Maximum limits of--
                                                           ---------------------------------------------------------------------------------------------
                                                                                                                                     Skinned
                           Grade                            Test weight    Suitable      Sound      Damaged    Foreign     Other       and        Thin
                                                             per bushel    malting       barley     kernels    material    grains     broken     barley
                                                              (pounds)      types      (percent)   (percent)  (percent)  (percent)   kernels   (percent)
                                                                          (percent)       \1\                                       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  GL BP        GL BP        GL BP      GL BP      GL BP      GL BP      GL BP      GL BP
U.S. No. 1................................................    47.0 -0.5    95.0 -1.3    97.0 -1.0    2.0 0.8    0.5 0.1    2.0 0.8    4.0 1.1    7.0 0.6
U.S. No. 2................................................    45.0 -0.5    95.0 -1.3    94.0 -1.4    3.0 0.9    1.0 0.4    3.0 0.9    6.0 1.4   10.0 0.9
U.S. No. 3................................................    43.0 -0.5    95.0 -1.3    90.0 -1.6    4.0 1.1    2.0 0.5    5.0 1.3    8.0 1.5   15.0 0.9
U.S. No. 4................................................    43.0 -0.5    95.0 -1.3    87.0 -1.9    5.0 1.3    3.0 0.6    5.0 1.3   10.0 1.6   15.0 0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.


                  Table 2--Grade Limits (GL) and Breakpoints (BP) for Two-Rowed Malting Barley
----------------------------------------------------------------------------------------------------------------
                                        Minimum limits of--                       Maximum limits of--
                              ----------------------------------------------------------------------------------
                                                                                             Skinned
            Grade              Test weight    Suitable      Sound                 Foreign      and        Thin
                                per bushel    malting     barley \1\  Wild oats   material    broken     barley
                                 (pounds)      types      (percent)   (percent)  (percent)   kernels   (percent)
                                             (percent)                                      (percent)
----------------------------------------------------------------------------------------------------------------
                                     GL BP        GL BP        GL BP      GL BP      GL BP      GL BP      GL BP
U.S. No. 1...................    50.0 -0.5    97.0 -1.0    98.0 -0.8    1.0 0.6    0.5 0.1    5.0 1.3    5.0 0.4
U.S. No. 2...................    48.0 -0.5    97.0 -1.0    98.0 -0.8    1.0 0.6    1.0 0.4    7.0 1.3    7.0 0.5
U.S. No. 3...................    48.0 -0.5    95.0 -1.3    96.0 -1.1    2.0 0.8    2.0 0.5   10.0 1.8   10.0 0.9

[[Page 493]]

 
U.S. No. 4...................    48.0 -0.5    95.0 -1.3    93.0 -1.1    3.0 0.9    3.0 0.6   10.0 1.8   10.0 0.9
----------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered
  against sound barley.
Note: Malting barley shall not be infested in accordance with Sec.   810.107(b) and shall not contain any
  special grades as defined in Sec.   810.206. Six- and two-rowed barley varieties not meeting the above
  requirements shall be graded in accordance with standards established for the class Barley.


                           Table 3--Grade Limits (GL) and Breakpoints (BP) for Barley
----------------------------------------------------------------------------------------------------------------
                                  Minimum limits of--                      Maximum limits of--
                              ----------------------------------------------------------------------------------
                                                                         Heat
            Grade              Test weight     Sound       Damaged     damaged    Foreign     Broken      Thin
                                per bushel     barley    kernels \1\   kernels    material   kernels     barley
                                 (pounds)    (percent)    (percent)   (percent)  (percent)  (percent)  (percent)
----------------------------------------------------------------------------------------------------------------
                                     GL BP        GL BP        GL BP      GL BP      GL BP      GL BP      GL BP
U.S. No. 1...................    47.0 -0.5    97.0 -1.1      2.0 0.8    0.2 0.1    1.0 0.4    4.0 1.0   10.0 0.9
U.S. No. 2...................    45.0 -0.5    94.0 -1.4      4.0 1.0    0.3 0.1    2.0 0.4    8.0 1.5   15.0 0.9
U.S. No. 3...................    43.0 -0.5    90.0 -1.6      6.0 1.4    0.5 0.2    3.0 0.5   12.0 1.8   25.0 1.3
U.S. No. 4...................    40.0 -0.5    85.0 -2.2      8.0 1.5    1.0 0.5    4.0 0.5   18.0 1.8   35.0 1.9
U.S. No. 5...................    36.0 -0.5    75.0 -2.2     10.0 1.8    3.0 0.6    5.0 0.6   28.0 2.4   75.0 2.3
----------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels. Injured-by-frost kernels and injured-by-mold kernels are not considered
  damaged kernels.


       Table 4--Breakpoints for Barley Special Grades and Factors
------------------------------------------------------------------------
     Special grade or factor        Grade or range limit     Breakpoint
------------------------------------------------------------------------
Dockage.........................  As specified by                   0.23
                                   contract or load order.
Two-rowed Barley................  Not more than 10.0% of            1.8
                                   Six-rowed in Two-rowed.
Six-rowed Barley................  Not more than 10.0% of            1.8
                                   Two-rowed in Six-rowed.
Malting (Blue Aleurone Layers)..  Not less than 90.0%....          -1.3
Malting (White Aleurone Layers).  Not less than 90.0%....          -1.3
Smutty..........................  More than 0.20%........           0.06
Garlicky........................  3 or more in 500 grams.      2\1/3\
Ergoty..........................  More than 0.10%........           0.13
Infested........................  Same as in Sec.                   0
                                   810.107.
Blighted........................  More than 4.0%.........           1.1
Injured-by-Frost Kernels........  Not more than 1.9%.....           0.1
Injured-by-Heat Kernels.........  Not more than 0.2%.....           0.04
Frost-damaged Kernels...........  Not more than 0.4%.....           0.05
Heat-damaged Kernels............  Not more than 0.1%.....           0.1
Other Grains....................  Not more than 25.0%....           2.4
Moisture........................  As specified by                   0.5
                                   contract or load order
                                   grade.
------------------------------------------------------------------------


                            Table 5--Grade Limits (GL) and Breakpoints (BP) for Corn
----------------------------------------------------------------------------------------------------------------
                                                                                Maximum limits of--
                                                                 -----------------------------------------------
                                                   Minimum test                   Damaged kernels
                                                    weight per   -----------------------------------------------
                      Grade                           bushel                                        Broken corn
                                                     (pounds)      Heat-damaged        Total        and foreign
                                                                      kernels        (percent)       material
                                                                     (percent)                       (percent)
----------------------------------------------------------------------------------------------------------------
                                                           GL BP           GL BP           GL BP           GL BP
U.S. No. 1......................................       56.0 -0.4         0.1 0.1         3.0 1.0         2.0 0.2
U.S. No. 2......................................       54.0 -0.4         0.2 0.2         5.0 1.3         3.0 0.3
U.S. No. 3......................................       52.0 -0.4         0.5 0.3         7.0 1.5         4.0 0.3
U.S. No. 4......................................       49.0 -0.4         1.0 0.5        10.0 1.8         5.0 0.4
U.S. No. 5......................................       46.0 -0.4         3.0 0.9        15.0 2.1         7.0 0.4
----------------------------------------------------------------------------------------------------------------


[[Page 494]]


                            Table 6--Breakpoints for Corn Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
         Special grade or factor                          Grade limit                         Breakpoint
----------------------------------------------------------------------------------------------------------------
Flint...................................  95 percent or more of flint corn..........  -1.0
Flint and Dent..........................  More than 5 percent, but less than 95       1.0 or -1.0
                                           percent of flint corn.
Infested................................  Same as in Sec.   810.107.................  0
Corn of other colors:
  White.................................  Not more than 2.0 percent.................  0.8
  Yellow................................  Not more than 5.0 percent.................  1.0
Waxy....................................  95 percent or more........................  -3.0
High BCFM...............................  As specified by contract or load order      10 percent of the load
                                           grade.                                      order grade
Moisture................................  As specified by contract or load order      0.4
                                           grade.
----------------------------------------------------------------------------------------------------------------


                          Table 7--Grade limits (GL) and Breakpoints (BP) for Flaxseed
----------------------------------------------------------------------------------------------------------------
                                                                                     Maximum limits of-damaged
                                                                   Minimum test               kernels
                                                                    weight per   -------------------------------
                              Grade                                   bushel       Heat-damaged
                                                                     (pounds)         kernels          Total
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                                                           GL BP           GL BP           GL BP
U.S. No. 1......................................................       49.0 -0.1         0.2 0.1        10.0 0.9
U.S. No. 2......................................................       47.0 -0.1         0.5 0.1        15.0 1.1
----------------------------------------------------------------------------------------------------------------


      Table 8--Breakpoints for Flaxseed Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Moisture.......................  As specified by load               0.4
                                  order or contract
                                  grade.
Dockage........................  0.99 percent or above..            0.32
------------------------------------------------------------------------


                         Table 9--Grade Limits (GL) and Breakpoints (BP) for Mixed Grain
----------------------------------------------------------------------------------------------------------------
                                                                                Maximum Limits of--
                                                                 -----------------------------------------------
                                                                                          Damaged kernels
                              Grade                                              -------------------------------
                                                                     Moisture                      Heat-damaged
                                                                     (percent)         Total          kernels
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                                                  ..............           GL BP           GL BP
U.S. Mixed Grain................................................            16.0        15.0 0.6         3.0 0.4
----------------------------------------------------------------------------------------------------------------
Note: There is no tolerance for U.S. Sample grade Mixed Grain.


    Table 10--Breakpoints for Mixed Grain Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Smutty.........................  15 or more in 250 grams            6
                                  (wheat, rye, or
                                  triticale
                                  predominates).
                                 More than 0.2% (all                0.05
                                  other mixtures).
Ergoty.........................  More than 0.30% (rye               0.13
                                  wheat predominates).
                                 More than 0.10% (all               0
                                  other mixtures).
Garlicky.......................  2 or more per 1,000                1
                                  grams (wheat, rye, or
                                  triticale
                                  predominates).
                                 4 or more per 500 grams            2
                                  (all other mixtures).
Infested.......................  Same as in Sec.                    0
                                  810.107.
Blighted.......................  More than 4.0% (barley             1.1
                                  predominates).
Treated........................  Same as in Sec.                    0
                                  810.805.
Moisture.......................  As specified by                    0.5
                                  contract or load order
                                  grade.
------------------------------------------------------------------------


                            Table 11--Grade Limits (GL) and Breakpoints (BP) for Oats
----------------------------------------------------------------------------------------------------------------
                                        Minimum limits of--                     Maximum limits of--
                                 -------------------------------------------------------------------------------
              Grade                 Test weight                    Heat-damaged       Foreign
                                    per bushel      Sound Oats        kernels        material        Wild Oats
                                     (pounds)        (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                           GL BP           GL BP           GL BP           GL BP           GL BP
U.S. No. 1......................       36.0 -0.5       97.0 -0.8         0.1 0.1         2.0 0.4         2.0 0.6

[[Page 495]]

 
U.S. No. 2......................       33.0 -0.5       94.0 -1.2         0.3 0.4         3.0 0.4         3.0 0.8
U.S. No. 3 \1\..................       30.0 -0.5       90.0 -1.4         1.0 0.5         4.0 0.5         5.0 1.1
U.S. No. 4 \2\..................       27.0 -0.5       80.0 -1.9         3.0 0.8         5.0 0.5        10.0 1.4
----------------------------------------------------------------------------------------------------------------
\1\ Oats that are Slightly Weathered shall be graded not higher than U.S. No. 3.
\2\ Oats that are Badly Stained or Materially Weathered shall be graded not higher than U.S. No. 4.


        Table 12--Breakpoints for Oats Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factors           Grade limit          Breakpoint
------------------------------------------------------------------------
Heavy..........................  38 pounds or more......           -0.5
Extra Heavy....................  40 pounds or more......           -0.5
Moisture.......................  As specified by                    0.5
                                  contract or load order
                                  grade.
Thin...........................  More than 20.0%........            0.5
Smutty.........................  More than 0.2%.........            0.05
Ergoty.........................  More than 0.10%........            0.10
Garlicky.......................  4 or more in 500 grams.       2\1/3\
Infested.......................  Same as in Sec.                    0
                                  810.107.
Bleached.......................  Same as in Sec.                    0
                                  810.1005.
------------------------------------------------------------------------


                                                Table 13--Grade Limits (GL) and Breakpoints (BP) for Rye
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Maximum limits of--
                                                                         -------------------------------------------------------------------------------
                                                                                 Foreign Material            Damaged kernels(percent)
                                                          Minimum test   ----------------------------------------------------------------
                         Grade                             weight per     Foreign matter                                                     Thin rye
                                                         bushel (pounds)    other than         Total       Heat-damaged        Total         (percent)
                                                                               wheat         (percent)       (percent)       (percent)
                                                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   GL BP           GL BP           GL BP           GL BP           GL BP           GL BP
U.S. No. 1............................................         56.0 -0.5         1.0 0.4         3.0 0.8         0.2 0.1         2.0 0.8        10.0 0.6
U.S. No. 2............................................         54.0 -0.5         2.0 0.5         6.0 1.1         0.2 0.1         4.0 1.1        15.0 0.8
U.S. No. 3............................................         52.0 -0.5         4.0 0.8        10.0 1.4         0.5 0.4         7.0 1.4        25.0 0.9
U.S. No. 4............................................         49.0 -0.5         6.0 0.8        10.0 1.4         3.0 0.8        15.0 2.0  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------


        Table 14--Breakpoints for Rye Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Moisture.......................  As specified by                    0.3
                                  contract or load order
                                  grade.
Light Garlicky.................  2 or more per 1,000           1\1/3\
                                  grams.
Garlicky.......................  More than 6 per 1,000         7\1/3\
                                  grams.
Ergoty.........................  More than 0.30%........            0.10
Plump..........................  Not more than 5.0%                 0.5
                                  through 0.064 x 3/8
                                  sieve.
Light Smutty...................  More than 14 per 250               6
                                  grams.
Smutty.........................  More than 30 per 250              10
                                  grams.
Infested.......................  Same as in Sec.                    0
                                  810.107.
Dockage........................  As specified by                    0.2
                                  contract or load order
                                  grade.
------------------------------------------------------------------------


                                              Table 15--Grade Limits (GL) and Breakpoints (BP) for Sorghum
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Maximum limits of--
                                                                                     -------------------------------------------------------------------
                                                                                               Damaged kernels             Broken kernels and foreign
                                                                       Minimum test  ----------------------------------             material
                               Grade                                    weight per                                     ---------------------------------
                                                                     bushel (pounds)    Heat-damaged                                         Foreign
                                                                                         (percent)     Total (percent)  Total (percent)      material
                                                                                                                                            (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              GL BP            GL BP            GL BP            GL BP            GL BP
U.S. No. 1.........................................................       57.0 -0.4          0.2 0.1          2.0 1.1          3.0 0.5          1.0 0.4
U.S. No. 2.........................................................       55.0 -0.4         0.5 -0.4          5.0 1.8          6.0 0.6          2.0 0.5
U.S. No. 3 \1\.....................................................       53.0 -0.4          1.0 0.5         10.0 2.3          8.0 0.7          3.0 0.6

[[Page 496]]

 
U.S. No. 4.........................................................       51.0 -0.4          3.0 0.8         15.0 2.8         10.0 0.8          4.0 0.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Sorghum that is distinctly discolored shall be graded not higher than U.S. No. 3.


                          Table 16--Breakpoints for Sorghum Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
        Special grade or factors                          Grade limit                         Breakpoint
----------------------------------------------------------------------------------------------------------------
Class Tannin............................  Not less than 90.0%.......................  -1.9
Sorghum.................................  Not less than 97.0%.......................  -1.0
White...................................  Not less than 98.0%.......................  -0.9
Smutty..................................  20 or more in 100 grams...................  8
Infested................................  Same as in Sec.   810.107.................  0
Dockage.................................  0.99% and above...........................  0.32
Moisture................................  As specified by contract or load order      0.5
                                           grade.
----------------------------------------------------------------------------------------------------------------


                                              Table 17--Grade Limits (GL) and Breakpoints (BP) for Soybeans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Maximum limits of--
                                                     ---------------------------------------------------------------------------------------------------
                                                                  Damaged kernels              Foreign material    Splits (percent)    Soybeans of other
                                                     ----------------------------------------      (percent)     --------------------  colors (percent)
                        Grade                            Heat-damaged       Total (percent)  --------------------                    -------------------
                                                           (percent)     --------------------
                                                     --------------------                        GL        BP        GL        BP        GL        BP
                                                         GL        BP        GL        BP
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1..........................................       0.2       0.2       2.0       0.8       1.0       0.2      10.0       1.6       1.0       0.7
U.S. No. 2..........................................       0.5       0.3       3.0       0.9       2.0       0.3      20.0       2.2       2.0       1.0
U.S. No. 3 \1\......................................       1.0       0.5       5.0       1.2       3.0       0.4      30.0       2.5       5.0       1.6
U.S. No. 4 \2\......................................       3.0       0.9       8.0       1.5       5.0       0.5      40.0       2.7      10.0       2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Soybeans that are purple mottled or stained which will not be graded higher than U.S. No. 3.
\2\ Soybeans that are materially weathered which will not be graded not higher than U.S. No. 4.


      Table 18--Breakpoints for Soybean Special Grades and Factors
------------------------------------------------------------------------
     Special grade or factor              Grade limit         Breakpoint
------------------------------------------------------------------------
Garlicky.........................  5 or more per 1,000                 2
                                    grams.
Infested.........................  Same as in Sec.                     0
                                    810.107.
Soybeans of other colors.........  Not more than 10.0%.....          2.3
Moisture.........................  As specified by contract          0.3
                                    or load order grade.
Test Weight......................  As specified by contract         -0.4
                                    or load order.
------------------------------------------------------------------------


                       Table 20--Breakpoints for Sunflower Seed Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
            Special grade or factor                                Grade limit                      Breakpoint
----------------------------------------------------------------------------------------------------------------
Moisture......................................  As specified by contract or load order grade....            0.5
Foreign Material..............................  1.25% and less..................................            0.27
                                                1.26% and above.................................            0.39
Admixture.....................................  As specified by contract or load order grade....            0.6
----------------------------------------------------------------------------------------------------------------


                                             Table 21--Grade Limits (GL) and Breakpoints (BP) for Triticale
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Maximum limits of--
                                                         -----------------------------------------------------------------------------------------------
                                           Minimum test           Damaged kernels                Foreign material
                  Grade                     weight per   ----------------------------------------------------------------  Shrunken and
                                              bushel                                      Material other                  broken kernels    Defects \3\
                                             (percent)     Heat-damaged      Total \1\     than wheat or     Total \2\       (percent)       (percent)
                                                             (percent)       (percent)     rye (percent)     (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   GL BP           GL BP           GL BP           GL BP           GL BP           GL BP           GL BP

[[Page 497]]

 
U.S. No. 1..............................       48.0 -0.5         0.2 0.1         2.0 0.8         1.0 0.4         2.0 0.6         5.0 0.8         5.0 1.3
U.S. No. 2..............................       45.0 -0.5         0.2 0.1         4.0 1.1         2.0 0.5         4.0 0.9         8.0 0.8         8.0 1.3
U.S. No. 3..............................       43.0 -0.5         0.5 0.4         8.0 1.5         3.0 0.6         7.0 1.2        12.0 1.6        12.0 2.3
U.S. No. 4..............................       41.0 -0.5         3.0 0.8        15.0 2.0         4.0 0.8        10.0 1.4        20.0 2.3        20.0 2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels.
\2\ Includes material other than wheat or rye.
\3\ Defects includes damaged kernels (total), foreign material (total), and shrunken and broken kernels. The sum of these three factors may not exceed
  the limit for defects for each numerical grade.


                         Table 22--Breakpoints for Triticale Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
            Special grade or factor                                Grade limit                      Breakpoint
----------------------------------------------------------------------------------------------------------------
Garlicky......................................  2 or more per 1,000 grams.......................       1\1/3\
Ergoty........................................  More than 0.10%.................................            0.1
Smutty........................................  More than 14 per 250 grams......................            6
Infested......................................  Same as in Sec.   810.107.......................            0
Dockage.......................................  0.99% or above..................................            0.32
Moisture......................................  As specified by contract or load order grade....            0.5
----------------------------------------------------------------------------------------------------------------


                                               Table 23--Grade Limits (GL) and Breakpoints (BP) for Wheat
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Minimum limits of--                                Maximum limits of--
                                                  ------------------------------------------------------------------------------------------------------
                                                   Test weight per bushel     Damaged kernels                                     Wheat of other classes
                                                  ----------------------------------------------                                            \4\
                                                    Hard red                                                 Shrunken            -----------------------
                      Grade                          spring     All other    Heat-                Foreign      and      Defects
                                                    wheat or     classes    damaged   Total \2\   material    broken      \3\     Contrasting
                                                   white club      and      kernels   (percent)  (percent)   kernels   (percent)    classes    Total \5\
                                                    wheat \1\  subclasses  (percent)                        (percent)              (percent)   (percent)
                                                    (pounds)    (pounds)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        GL BP       GL BP      GL BP      GL BP      GL BP      GL BP      GL BP       GL BP       GL BP
U.S. No. 1.......................................   58.0 -0.3   60.0 -0.3    0.2 0.2    2.0 1.0    0.4 0.2    3.0 0.3    3.0 0.7     1.0 0.7     3.0 1.6
U.S. No. 2.......................................   57.0 -0.3   58.0 -0.3    0.2 0.2    4.0 1.5    0.7 0.3    5.0 0.4    5.0 0.9     2.0 1.0     5.0 2.1
U.S. No. 3.......................................   55.0 -0.3   56.0 -0.3    0.5 0.3    7.0 1.9    1.3 0.4    8.0 0.5    8.0 1.2     3.0 1.3    10.0 2.9
U.S. No. 4.......................................   53.0 -0.3   54.0 -0.3    1.0 0.4   10.0 2.3    3.0 0.6   12.0 0.6   12.0 1.4    10.0 2.3    10.0 2.9
U.S. No. 5.......................................   50.0 -0.3   51.0 -0.3    3.0 0.7   15.0 2.7    5.0 0.7   20.0 0.7   20.0 1.5    10.0 2.3   10.0 2.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ These requirements also apply when Hard Red Spring or White Club wheat predominate in a sample of Mixed wheat.
\2\ Includes heat-damaged kernels.
\3\ Defects include damaged kernels (total), foreign material, and shrunken and broken kernels. The sum of these factors may not exceed the limit for
  defects for each numerical grade.
\4\ Unclassed wheat of any grade may contain not more than 10.0 percent of wheat of other classes.
\5\ Includes contrasting classes.


                           Table 24--Breakpoints for Wheat Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
          Special grade or factor                                  Grade limit                        Breakpoint
----------------------------------------------------------------------------------------------------------------
Moisture...................................  As specified by contract or load order grade...........        0.3
Garlicky...................................  More than 2 bulblets per 1,000 grams...................   1\1/3\
Light smutty...............................  More than 5 smut balls per 250 grams...................        3
Smutty.....................................  More than 30 smut balls per 250 grams..................       10
Infested...................................  Same as in Sec.   810.107..............................        0
Ergoty.....................................  More than 0.05%........................................        0.03
Treated....................................  Same as in Sec.   810.2204.............................        0
Dockage....................................  As specified by contract or load order grade...........        0.2

[[Page 498]]

 
Protein....................................  As specified by contract or load order grade...........        0.5
 
             Class and Subclass
Hard red spring:
  DNS......................................  75% or more DHV........................................       -5.0
  NS.......................................  25% or more DHV but less than 75% DHV..................       -5.0
Durum:
  HADU.....................................  75% or more HVAC.......................................       -5.0
  ADU......................................  60% or more HVAC but less than 75% of HVAC.............       -5.0
Soft white:
  SWH......................................  Not more than 10% white club wheat.....................        2.0
  WHCB.....................................  Not more than 10% of other soft white wheat............        2.0
  WWH......................................  More than 10% WHCB and more than 10% of other soft            -3.0
                                              white wheat.
----------------------------------------------------------------------------------------------------------------

    (3) Grain accepted by the inspection plan. Grain which is offered 
for inspection as part of a single lot and accepted by a statistical 
acceptance sampling and inspection plan according to the provisions of 
this section and procedures prescribed in the instructions shall be 
certificated as a single lot provided it was sampled in a reasonably 
continuous operation. Official factor and official criteria information 
shown on the certificate shall be based on the weighted or mathematical 
averages of the analysis of sublots.
    (4) Grain rejected by the inspection plan. When grain which is 
offered for inspection as part of a single lot is rejected by the plan 
or is not sampled in a reasonably continuous operation, the grain in 
each portion shall be certificated separately. If any portion of grain 
is not accepted by the plan and designated a material portion, the 
applicant shall be promptly notified and have the option of:
    (i) Removing the material portion from the carrier; or
    (ii) Requesting the material portion be separately certificated; or
    (iii) Requesting either a reinspection or an appeal inspection of 
the material portion; or
    (iv) Requesting a reinspection service and/or an appeal inspection 
service on the entire lot.
    (5) Reinspection service and appeal inspection service. A 
reinspection or an appeal inspection may be requested on a material 
portion. A Board appeal inspection may also be requested on a material 
portion after the reinspection or appeal inspection. A reinspection, an 
appeal inspection, and a Board appeal inspection may be requested on the 
total sublots in the lot.
    (i) Material portions. A material portion designated by the plan may 
be reinspected or appeal inspected once in the field, but not both, and 
once at the Board of Appeals and Review. The reinspection or appeal 
inspection result shall, unless a material error is found, be averaged 
with the original inspection determination. The Board appeal inspection 
result shall, unless a material error is found, be averaged with the 
previous inspection result. The inspection plan tolerances shall be 
reapplied to the material portion grain to determine acceptance or 
rejection. If a material error is found, the reinspection or appeal 
inspection result shall replace the original inspection result or the 
Board appeal result shall replace the previous inspection result. For 
purposes of this section, a material error is defined as results 
differing by more than two standard deviations. Acceptance or rejection 
of that portion of grain shall be based on the reinspection or appeal 
inspection and on the Board appeal inspection result alone when a 
material error is found.
    (ii) Entire lot. The applicant may request a reinspection service, 
an appeal inspection service, and a Board appeal inspection service on 
the entire lot. Inspection results for these services shall replace the 
previous inspection results. The tolerances shall be reapplied to all 
portions of the entire lot to determine acceptance or rejection.
    (d) Infested grain--(1) Available options. If gain or any portion of 
grain in a single shiplot, unit train, or lash

[[Page 499]]

barge lot is found to be infested, according to the provisions of the 
Official U.S. Standards for Grain, the applicant shall be promptly 
notified and have the option of:
    (i) Unloading the portion of infested grain from the lot and an 
additional amount of other grain in common stowage with the infested 
grain; or
    (ii) When applicable, completing the loading and treating all 
infested grain in the lot; or
    (iii) When applicable, treating the infested grain for the purpose 
of destroying the insects, subject to subsequent examination by official 
personnel; or
    (iv) Continue loading without treating the infested grain, in which 
case all of the infested grain in the lot and all grain in common 
stowage areas with the infested grain will be officially certificated as 
infested according to the provisions of the Official U.S. Standards for 
Grain.
    (2) Exception. If infested grain in loaded into common stowage with 
a lot, or a portion of a lot, which has not been officially certificated 
as being infested, the applicant loading the infested grain may not use 
the option in paragraph (d)(1)(i) of this section.
    (3) With treatment. If infested grain is treated with a fumigant in 
accordance with the instructions and the treatment is witnessed by 
official personnel, the official sampling, inspection, grading, and 
certification of the lot shall continue as though the infested condition 
did not exist.
    (e) Special certification procedures--(1) Rejected grain. When grain 
is rejected by the inspection plan under paragraph (c)(4) of this 
section, the official inspection certificate for each different portion 
of different quality shall show:
    (i) A statement that the grain has been loaded aboard with grain of 
other quality;
    (ii) The grade, location, or other identification and approximate 
quanity of grain in the portions; and
    (iii) Other information required by the regulations and the 
instructions.

The requirement of paragraph (e)(1)(i) of this section does not apply to 
grain that is inspected as it is unloaded from the carrier or to 
portions loaded in separate carriers or stowage space.
    (2) Common stowage. (i) Without separation. When bulk grain is 
offered for official inspection as it is loaded aboard a ship and is 
loaded without separation in a stowage area with other grain or another 
commodity, the official inspection certificate for the grain in each lot 
shall show the kind, the grade, if known, and the location of the other 
grain, or the kind and location of the other commodity in the adjacent 
lots.
    (ii) With separation. When separations are laid between lots, the 
official inspection certificates shall show the kind of material used in 
the separations and the locations of the separations in relation to each 
lot.
    (iii) Exception. The common stowage requirements of this paragraph 
are not applicable to the first lot in a stowage area unless a second 
lot is loaded, in whole or in part, in the stowage area prior to issuing 
the official inspection certificate for the first lot.
    (3) Protein. A special statement indicating the actual protein range 
of a lot shall be shown on the official inspection certificate if the 
difference between the lowest and highest protein determinations for the 
lot exceeds 1.0 percent when protein is officially determined and a 
specific range limit is not established by the contract grade.
    (4) Part lot. If part of a lot of grain in an inbound carrier is 
unloaded and part is left in the carrier, the unloaded grain shall be 
officially inspected and certificated in accordance with the provisions 
of Sec.  800.84(g).
    (5) Official mark. If the grain in a single lot is officially 
inspected for grade as it is being loaded, upon request, the following 
official mark shall be shown on the inspection certificate: ``Loaded 
under continuous official inspection.''

[55 FR 24042, June 13, 1990; 55 FR 46131, Nov. 1, 1990, as amended at 56 
FR 4675, Feb. 5, 1991; 57 FR 58965, 58970, Dec. 14, 1992; 61 FR 18490, 
Apr. 26, 1996; 63 FR 20056, Apr. 23, 1998; 64 FR 6783, Feb. 11, 1999; 71 
FR 52405, Sept. 6, 2006; 71 FR 77853, Dec. 27, 2006; 73 FR 39732, July 
20, 2007]



Sec.  800.87  New inspections.

    (a) Identity lost. An applicant may request official personnel to 
perform a new original inspection service on an

[[Page 500]]

identified lot of grain, or on an identified carrier or container, if 
the identity of the lot or the carrier or container has been lost.
    (b) Identity not lost. If the identity of the grain or the carrier 
or container is not lost, a new original inspection shall not be 
performed on the same identified lot of grain or carrier or container in 
the same assigned area of responsiblity within 5 business days after the 
last official inspection.

[50 FR 49674, Dec. 4, 1985]



Sec.  800.88  Loss of identity.

    (a) Lots. Except as noted in paragraph (d) of this section, the 
indentity of a lot of grain shall be considered lost if (1) a portion of 
the grain is unloaded, transferred, or otherwise removed from the 
carrier or container in which the grain was located at the time of the 
original inspection; or (2) a portion of grain or other material, 
including additives, is added to the lot after the orginal inspection 
was performed, unless the addition of the additive was performed in 
accordance with the regulations and the instructions. At the option of 
official personnel performing a reinspection, appeal inspection, or 
Board appeal inspection service, the identity of grain in a closed 
carrier or container shall be considered lost if the carrier or 
container is not sealed or if the seal record is incomplete.
    (b) Carriers and containers. The indentity of a carrier or container 
shall be considered lost when (1) the stowage area is cleaned, painted, 
treated, fumigated, or fitted after the original inspection was 
performed; or (2) the identification of the carrier or container has 
been changed since the original inspection was performed.
    (c) Submitted samples. The identity of a submitted sample of grain 
shall be considered lost when (1) the identifying number, mark, or 
symbol for the sample is lost or destroyed or (2) the samples have not 
been retained and protected by official personnel as prescribed in the 
instructions.
    (d) Additives. \1\ If additives are applied during loading to 
outbound, including export, grain after sampling or during unloading to 
inbound grain before sampling for the purpose of insect or fungi 
control, dust suppression, or identification, the inspection certificate 
shall show a statement showing the type and purpose of the additive 
application, except that no statement is required to be shown when the 
additive is a fumigant applied for the purpose of insect control.
---------------------------------------------------------------------------

    \1\ Elevators, other handlers of grain, and their agents are 
responsible for the additive's proper usage and application. Compliance 
with this section does not excuse compliance with applicable Federal, 
State, and local laws.

[52 FR 6495, Mar. 4, 1987, as amended at 58 FR 3212, Jan. 8, 1993; 59 FR 
52077, Oct. 14, 1994]

                   Weighing Provisions and Procedures



Sec.  800.95  Methods and order of performing weighing services.

    (a) Methods. All Class X or Class Y weighing, checkweighing, 
checkloading, stowage examination, and other weighing services shall be 
performed by official personnel or approved weighers using approved 
weighing equipment and according to procedures prescribed in the 
regulations and the instructions.
    (b) Order of service. Weighing services shall be performed, to the 
extent practicable, in the order in which requests are received. 
Official personnel must mark or stamp the date received on each written 
request for service. Precedence will be given to requests for weighing 
required by sections 5(a)(1) or 5(a)(2) of the Act.

[52 FR 6495, Mar. 4, 1987]



Sec.  800.96  Weighing procedures.

    (a) Inbound. Inbound grain that is to be weighed must be routed 
directly from the carrier and cannot be cleaned, dried, or otherwise 
processed to remove or add other grain or material en route. Except as 
noted in paragraph (c) of this section, the identity of an inbound lot 
shall be considered lost when a portion of the lot is transferred or 
otherwise removed prior to weighing or a portion of grain or other 
material is added to the lot prior to weighing. When loss of identity 
occurs, no amount shall be shown in the ``Net Weight'' portion of the 
weight certificate for the lot.

[[Page 501]]

    (b) Outbound. Outbound grain that has been weighed must be routed 
directly from the scale to the carrier and cannot be cleaned, dried, or 
otherwise processed to remove or add other grain or material en route. 
Except as noted in paragraph (c) of this section, the identity of an 
outbound lot will be considered lost if a portion of the lot is 
transferred or otherwise removed from the lot after weighing or a 
portion of grain or other material is added to the lot after weighing. 
When loss of identity occurs, no amount shall be shown in the ``Net 
Weight'' portion of the weight certificate for the lot.
    (c) Exceptions--(1) Spills. (i) Outbound. (A) Replaced. If a spill 
occurs in handling and loading of outbound grain and the spilled grain 
is retrieved, or is replaced in kind, and is loaded on board during the 
loading operations, the weight certificate shall show the weight of the 
grain that was physically loaded on board. Upon request of the 
applicant, an additional certificate may be issued by the agency or the 
field office to show the weight of the additional grain that was used to 
replace a spill.
    (B) Not replaced. If a spill occurs in the handling and loading of 
outbound grain and the spilled grain is not retrieved or is not replaced 
during the loading operation, the weight certificate shall show the 
weight of the grain that was actually weighed, minus the estimated 
amount of the grain that was spilled. Upon request of the applicant, an 
additional certificate may be issued showing the estimated amount of 
grain that was spilled. The applicant may, upon request, have the total 
amount that was weighed shown on the weight certificate with the 
estimated amount of the spilled grain noted.
    (ii) Inbound. If a spill occurs in the handling of inbound grain and 
the grain is not retrieved and weighed, the weight certificate shall 
show the weight of the grain that was actually unloaded from the carrier 
and a statement regarding the spill as prescribed in the instructions.
    (2) Additives. \1\ If additives are applied during loading to 
outbound, including export, grain after weighing or during unloading to 
inbound grain before weighing for the purpose of insect or fungi 
control, dust suppression, or identification, the weight certificate 
shall show the actual weight of the grain after the application of the 
additive for inbound grain or the actual weight of the grain prior to 
the application of the additive for outbound or export grain and a 
statement showing the type and purpose of the additive application, 
except that no statement is required to be shown when the additive is a 
fumigant applied for the purpose of insect control.
---------------------------------------------------------------------------

    \1\ Elevators, other handlers of grain, and their agents are 
responsible for the additive's proper usage and application. Compliance 
with this section does not excuse compliance with applicable Federal, 
State, and local laws.
---------------------------------------------------------------------------

    (3) Dust. If dust is removed during the handling of grain, the 
weight certificate shall not be adjusted to reflect the weight of the 
removed dust.
    (4) Commingled carriers. If grain from two or more identified 
carriers becomes mixed, (i) the combined weight of the grain shall be 
shown in the ``Net Weight'' block of one certificate with all carrier 
identification shown in the identification of carrier section of the 
certificate, or (ii) upon request of the applicant, a certificate shall 
be issued for each carrier with the ``Net Weight'' block crossed out, 
and with the total combined weight unloaded and the identification of 
the other carrier(s) shown in the ``Remarks'' section.
    (5) Unremoved grain. If, after unloading an inbound carrier, there 
is sound grain remaining in the carrier that could have been removed 
with reasonable effort, the weight certificate shall show the weight of 
the grain that was actually unloaded from the carrier and a statement 
regarding the grain remaining in the carrier.

[52 FR 6495, Mar. 4, 1987, as amended at 58 FR 3212, Jan. 8, 1993; 59 FR 
52077, Oct. 14, 1994]



Sec.  800.97  Weighing grain in containers, land carriers, barges, and
shiplots.

    (a) General. The weighing of grain loaded or unloaded from any 
carrier shall be conducted according to this section and the 
instructions.
    (b) Procedure--(1) General. If grain in a carrier is offered for 
inspection or

[[Page 502]]

weighing service as one lot, the grain must be weighed at the individual 
weighing location in a reasonably continuous operation and certified as 
one lot. The identification of the carrier(s) must be recorded on the 
scale tape or ticket and the weight certificate.
    (2) Sacked grain. If sacked grain is offered for weighing and the 
grain is not fully accessible, the request for weighing service shall be 
dismissed.
    (3) Part lots. If a portion of an inbound lot of grain is unloaded 
and a portion is left in the carrier because it is not uniform in 
quality or condition, or the lot is unloaded in other than a reasonably 
continuous operation, the portion that is removed and the portion 
remaining in the carrier shall be considered as part lots and shall be 
weighed and certificated as part lots.
    (c) Certification of trucklots, carlots, and bargelots--(1) Basic 
requirement. One official certificate must be issued for the weighing of 
the grain in each container, truck, trailer, truck/trailer(s) 
combination, railroad car, barge, or similarly sized carrier. This 
requirement is not applicable to multiple grain carriers weighed as a 
single lot or combined lot under Sec.  800.98.
    (2) Part-lot weight certificates. A part-lot weight certificate 
shall show (i) the weight of the portion that is unloaded and (ii) the 
following statement: ``Part-lot: The net weight stated herein reflects a 
partial unload.''
    (d) Certification of shiplot grain--(1) Basic requirement. The 
certificate shall show (i) if applicable, a statement that the grain has 
been loaded aboard with other grain, (ii) the official weight, (iii) the 
stowage or other identification of the grain, and (iv) other information 
required by the regulations and the instructions.
    (2) Common stowage--(i) Without separation. If bulk grain is offered 
for weighing as it is being loaded aboard a ship and is loaded without 
separation in a stowage area with other grain or another commodity, the 
weight certificate for the grain in each lot shall show that the lot was 
loaded aboard with other grain or another commodity without separation 
and the relative location of the grain.
    (ii) With separation. If separations are laid between adjacent lots, 
the weight certificates shall show the kind of material used in the 
separations and the location of the separations in relation to each lot.
    (iii) Exception. The common stowage requirements of this paragraph 
shall not be applicable to the first lot in a stowage area unless a 
second lot has been loaded, in whole or in part, in the stowage area 
before issuing the official weight certificate for the first lot.
    (3) Official mark. If the grain is officially weighed in a 
reasonably continuous operation, upon request by the applicant, the 
following statement may be shown on the weight certificate: ``Loaded 
under continuous official weighing.''

[52 FR 6496, Mar. 4, 1987, as amended at 78 FR 43757, July 22, 2013]



Sec.  800.98  Weighing grain in combined lots.

    (a) General. The weighing of bulk or sacked grain loaded aboard, or 
being loaded aboard, or unloaded from two or more carriers as a combined 
lot shall be conducted according to this section and the instructions.
    (b) Weighing procedure--(1) Single lot weighing. (i) Single lots of 
grain that are to be weighed as a combined lot may be weighed at 
multiple locations, provided that:
    (A) The lots are contained in the same type of carrier; and
    (B) Weighing is performed at each individual location in a 
reasonably continuous operation.
    (ii) The grain loaded into or unloaded from each carrier must be 
weighed in accordance with procedures prescribed in the instructions. In 
the case of sacked grain, a representative weight sample must be 
obtained from the grain in each carrier unless otherwise specified in 
the instructions.
    (2) Recertification. Grain that has been weighed and certified as 
two or more single lots may be recertified as a combined lot, provided 
that the original weight certificates issued for the single lots have 
been or will be surrendered to the appropriate agency or field office, 
and the official personnel who performed the weighing service for the 
single lots and the official personnel who are to recertify the grain as 
a combined lot determine that the

[[Page 503]]

weight of the grain in the lots has not since changed, and in the case 
of sacked grain, that the weight samples used as a basis for weighing 
the single lots were representative at the time of the weighing.
    (3) Grain uniform in quality. An applicant may request that grain be 
weighed and certificated as a combined lot whether or not the grain is 
uniform in quality for the purpose of inspection under the Act.
    (c) Certification procedures--(1) General. Each certificate for a 
combined-lot Class X or Class Y weighing service shall show the 
identification for the ``Combined lot'' or, at the request of the 
applicant, the identification of each carrier in the combined lot. The 
identification and any seal information for the carriers may be shown on 
the reverse side of the weight certificate, provided the statement ``See 
reverse side'' is shown on the face of the certificate in the space 
provided for remarks.
    (2) Recertification. If a request for a combined-lot Class X or 
Class Y weighing service is filed after the grain in the single lots has 
been weighed and certified, the combined-lot weighing certificate must 
show the following:
    (i) The date of weighing the grain in the combined lot (if the 
single lots were weighed on different dates, the latest dates must be 
shown);
    (ii) A serial number, other than the serial numbers of the weight 
certificates that are to be superseded;
    (iii) The name of the elevator(s) from which or into which the grain 
in the combined lot was loaded or unloaded;
    (iv) A statement showing the weight of the grain in the combined 
lot;
    (v) A completed statement showing the identification of any 
superseded certificate as follows: ``This combined-lot certificate 
supersedes certificate Nos. ___, dated ___; and
    (vi) If at any time of issuing the combined-lot weight certificate, 
the superseded certificates are not in the custody of the agency or 
field office, the statement ``The superseded certificates identified 
herein have not been surrendered'' must be shown clearly in the space 
provided for remarks beneath the statement identifying the superseded 
certificates. If the superseded certificates are in the custody of the 
agency or field office, the superseded certificates must be clearly 
marked ``Void.''
    (3) Part lot. If a part of a combined lot of grain in inbound 
carriers is unloaded and a part is left in the carriers, the grain that 
is unloaded shall be certificated in accordance with the provisions in 
Sec.  800.97(c)(2).
    (4) Official mark. When grain is weighed as a combined lot in one 
continuous operation, upon request by the applicant, the following 
statement shall be shown on the weight certificate: ``Loaded under 
continuous official weighing,'' or ``Loaded under continuous official 
inspection and weighing.''
    (5) Further combining. After a combined-lot weight certificate has 
been issued, there shall be no further combining and no dividing of the 
certificate.
    (6) Limitations. No combined-lot weight certificate shall be issued 
(i) for any weighing service other than as described in this section or 
(ii) which shows a weight of grain different from the total of the 
combined single lot.

[52 FR 6496, Mar. 4, 1987, as amended at 78 FR 43757, July 22, 2013]



Sec.  800.99  Checkweighing sacked grain.

    (a) General. Each checkweighing service performed on a lot of sacked 
grain to determine the weight of the grain shall be made on the basis of 
one or more official weight samples obtained from the grain by official 
personnel according to this section and procedures prescribed in the 
instructions.
    (b) Representative sample. No official weight sample shall be 
considered to be representative of a lot of sacked grain unless the 
sample is of the size prescribed in the instructions and has been 
obtained and weighed according to the procedures prescribed in the 
instructions.
    (c) Protecting samples and data. Official personnel and other 
employees of an agency or the Service shall protect official weight 
samples and data from manipulation, substitution, and improper and 
careless handling which might deprive the samples and sample data of 
their representativeness.

[[Page 504]]

    (d) Restriction on weighing. No agency shall weigh any lot of sacked 
grain unless at the time of obtaining the official weight sample the 
grain from which the sample was obtained was located within the area of 
responsibility assigned to the agency, except as otherwise provided for 
in Sec.  800.117, or on a case-by-case basis as determined by the 
Administrator.
    (e) Equipment and labor. Each applicant for weighing services shall 
provide necessary labor for obtaining official weight samples and place 
the samples in a position for weighing and shall supply suitable 
weighing equipment approved by the Service, pursuant to the regulations 
and the instructions.
    (f) Disposition of official weight samples. In weighing sacked grain 
in lots, the grain in the official weight samples shall be returned to 
the lots from which the samples were obtained.
    (g) Provisions by kinds of service--(1) ``IN'' movements. Each 
checkweighing on an ``IN'' movement of sacked grain shall be based on an 
official weight sample obtained while the grain is at rest in the 
carrier or during unloading, in accordance with procedures prescribed in 
the instructions.
    (2) ``OUT'' movements (export). Each checkweighing of sacked export 
grain shall be based on an official weight sample obtained as the grain 
is being loaded aboard the final carrier, as the grain is being sacked, 
or while the grain is at rest in a warehouse or holding facility, in 
accordance with procedures prescribed in the instructions.
    (3) ``OUT'' movements (other than export). Each checkweighing of an 
``OUT'' movement of nonexport sacked grain shall be based on an official 
weight sample obtained from the grain as the grain is being loaded in 
the carrier, or while the grain is at rest in the carrier, or while the 
grain is at rest in a warehouse or holding facility, or while the grain 
is being sacked, in accordance with procedures prescribed in the 
instructions.
    (4) ``LOCAL'' weighing. Each checkweighing of a ``LOCAL'' movement 
of sacked grain shall be based on an official weight sample obtained 
while the grain is at rest or while the grain is being transferred, in 
accordance with procedures prescribed in the instructions.

[52 FR 6497, Mar. 4, 1987, as amended at 68 FR 19138, Apr. 18, 2003]

                            Original Services



Sec.  800.115  Who may request original services.

    (a) General. Any interested person may request original inspection 
and weighing services. The kinds of inspection and weighing services are 
described in Sec.  800.75.
    (b) Class Y weighing services. A request for Class Y weighing 
services at an export elevator at an export port location shall cover 
all lots shipped or received in a specific type of carrier. At all other 
elevators, the request shall cover all lots shipped from or to a 
specific location in a specific type of carrier. Each request shall be 
for a contract period of at least 3 months, but a facility may, upon 
satisfactory notification, exempt specific unit trains from the request.
    (c) Contract services. Any interested person may enter into a 
contract with an agency or the Service whereby the agency or Service 
will provide original services for a specified period and the applicant 
will pay a specified fee.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45393, Oct. 31, 1985]



Sec.  800.116  How to request original services.

    (a) General. Except as otherwise provided for in Sec.  800.117, 
requests for original services shall be filed with an agency or field 
office authorized to operate in the area in which the original service 
is to be performed. All requests shall include the information specified 
in Sec.  800.46. Verbal requests shall be confirmed in writing when 
requested by official personnel, as specified in Sec.  800.46. Copies of 
request forms may be obtained from the agency or field office upon 
request. If the information specified by Sec.  800.46 is not available 
at the

[[Page 505]]

time the request is filed, official personnel may, at their discretion, 
withhold service pending receipt of the required information. An 
official certificate shall not be issued unless the information as 
required by Sec.  800.46 has been submitted, or official personnel 
determine that sufficient information has been made available so as to 
perform the requested service. A record that sufficient information was 
made available must be included in the record of the official service.
    (b) Request requirements. Except as provided for in Sec.  800.117, 
requests for original services, other than submitted sample inspections, 
must be made to the agency or field office responsible for the area in 
which the service will be provided. Requests for submitted sample 
inspections may be made with any agency, or any field office that 
provides original inspection service. Requests for inspection or Class X 
weighing of grain during loading, unloading, or handling must be 
received in advance of loading so official personnel can be present. All 
requests will be considered filed when official personnel receive the 
request. A record shall be maintained for all requests. All requests for 
service that is to be performed outside normal business hours must be 
received by 2 p.m. the preceding day.

(Approved by Office of Management and Budget under control number 0580-
0013)

[68 FR 19139, Apr. 18, 2003]



Sec.  800.117  Who shall perform original services.

    (a) General. Original services shall be performed by the agency or 
field office assigned the area in which the service will be provided, 
except as provided in paragraph (b) of this section.
    (b) Exceptions for official agencies to provide service--(1) Timely 
service. If the assigned official agency cannot provide service within 6 
hours of a request, the service may be provided by another official 
agency upon approval from the Service.
    (2) Barge probe service. Any official agency may provide probe 
sampling and inspection service for barge-lots of grain with no 
restrictions due to geographical locations.
    (3) Written agreement. If the assigned official agency agrees in 
writing with the adjacent official agency to waive the current 
geographic area restriction at the request of the applicant for service, 
the adjacent official agency may provide service at a particular 
location upon providing written notice to the Service, and the Service 
determines that the written agreement conforms to the provisions in the 
Act.
    (c) Interim service at other than export port locations. If the 
assigned official agency is not available on a regular basis to provide 
original services, and no official agency within a reasonable proximity 
is willing to provide such services on an interim basis, the services 
shall be provided by authorized employees of the Secretary, or other 
persons licensed by the Secretary, until the services can be provided on 
a regular basis by an official agency, as provided in Sec.  800.196.

[68 FR 19139, Apr. 18, 2003, as amended at 81 FR 49862, July 29, 2016]



Sec.  800.118  Certification.

    Official certificates shall be issued according to Sec.  800.160. 
Upon request, a combination inspection and Class X weighing certificate 
may be issued when both services are performed in a reasonably 
continuous operation at the same location by the same agency or field 
office. An official certificate shall not be issued unless the 
information as required by Sec.  800.46 has been submitted, or official 
personnel determine that sufficient information has been made available 
so as to perform the requested service. A record that sufficient 
information was made available must be included in the record of the 
official service.

(Approved by Office of Management and Budget under Control Number 0580-
0013)

[68 FR 19139, Apr. 18, 2003]

     Official Reinspection Services and Review of Weighing Services



Sec.  800.125  Who may request reinspection services or review of
weighing services.

    (a) General. Any interested person may request a reinspection or 
review of weighing service, except as provided

[[Page 506]]

for in Sec.  800.86(c)(5). Only one reinspection service or review of 
weighing service may be performed on any original service. When more 
than one interested person requests a reinspection or review of weighing 
service, the first person to file is the applicant of record.
    (b) Kind and scope of request. A reinspection or review of weighing 
service is limited to the kind and scope of the original service. If the 
request specifies a different kind or scope, the request shall be 
dismissed but may be resubmitted as a request for original services: 
Provided, however, that an applicant for service may request a 
reinspection of a specific factor(s), official grade and factors, or 
official criteria. In addition, reinspections for grade may include a 
review of any pertinent factor(s), as deemed necessary by official 
personnel. Official criteria are considered separately from official 
grade or official factors when determining the kind and scope. When 
requested, a reinspection for official grade or official factors and 
official criteria may be handled separately even though both sets of 
results are reported on the same certificate. Moreover, a reinspection 
or review of weighing may be requested on either the inspection or Class 
X weighing results when both results are reported on a combination 
inspection and Class X weight certificate.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[50 FR 45393, Oct. 31, 1985, as amended at 54 FR 5924, Feb. 7, 1989; 55 
FR 24048, June 13, 1990; 68 FR 61328, Oct. 28, 2003]



Sec.  800.126  How to request reinspection or review of weighing services.

    (a) General. Requests shall be made with the agency or field office 
that performed the original service. All requests shall include the 
information specified in Sec.  800.46. Verbal requests shall be 
confirmed in writing when requested by official personnel. Copies of 
request forms may be obtained from the agency or field office. If at the 
time the request is filed the documentation required by Sec.  800.46 is 
not available, official personnel may, at their discretion, withhold 
services pending the receipt of the required documentation. A 
reinspection certificate or the results of a review of weighing service 
shall not be issued unless (1) the documentation requested under Sec.  
800.46 has been submitted or (2) official personnel determine sufficient 
information has been made available so as to perform the requested 
service. A record that sufficient information was made available shall 
be included in the record of the official service.
    (b) Request requirements. Requests will be considered filed on the 
date they are received by official personnel. A record shall be 
maintained for all requests.
    (1) Reinspection services. Requests shall be received (i) before the 
grain has left the specified service point where the grain was located 
when the original inspection was performed; (ii) no later than the close 
of business on the second business day following the date of the 
original inspection; and (iii) before the identity of the grain has been 
lost. If a representative file sample, as prescribed in Sec.  800.82, is 
available, official personnel may waive the requirements pursuant to 
this subparagraph. The requirements of paragraph (b)(1)(i) of this 
section may be waived only upon written consent of the applicant and all 
interested persons. The requirements of paragraph (b)(1)(ii) and (iii) 
of this section may be waived at the request of the applicant or other 
interested persons. The requirement of paragraph (b)(1)(ii) of this 
section may also be waived upon satisfactory showing by an interested 
person of evidence of fraud or that because of distance or other good 
cause, the time allowed for filing was not sufficient. A record of each 
waiver shall be included in the record of the reinspection service.
    (2) Review of weighing services. Requests shall be received no later 
than 90 calendar days after the date of the original Class X or Class Y 
weighing service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45394, Oct. 31, 1985]



Sec.  800.127  Who shall perform reinspection or review of weighing
services.

    Reinspection or review of weighing services shall be performed by 
the agency or field office that performed the original service.

[50 FR 45394, Oct. 31, 1985]

[[Page 507]]



Sec.  800.128  Conflicts of interest..

    Official personnel cannot perform or participate in performing or 
issue an official certificate for a reinspection or a review of weighing 
service if they participated in the original service unless there is 
only one qualified person available at the time and place of the 
reinspection or review of weighing.

[50 FR 45394, Oct. 31, 1985]



Sec.  800.129  Certificating reinspection and review of weighing results.

    (a) General. Except as provided in paragraph (a)(1) of this 
paragraph, official certificates shall be issued according to Sec.  
800.160 and the instructions. Except as provided in paragraph (b)(2) of 
this section, only the result of the reinspection service shall be 
reported.
    (1) Results of material portion sublots. When results of a 
reinspection on a material portion do not detect a material error, they 
shall be averaged with the original inspection results. For purposes of 
this section, a material error is defined as results differing by more 
than two standard deviations. The averaged inspection results shall 
replace the original inspection results recorded on the official 
inspection log. Reinspection results shall replace the original 
inspection results recorded on the official inspection log if a material 
error is detected. No certificates will be issued unless requested by 
the applicant or deemed necessary by official personnel.
    (2) Reporting review of weighing results. When the review of 
weighing service results indicate that the original weighing results 
were correct, the applicant will be notified in writing. When the 
original weighing service results are incorrect, a corrected weight 
certificate or, if applicable, a corrected combination inspection and 
Class X weight certificate will be issued according to the provisions of 
Sec.  800.165.
    (b) Required statements on reinspection certificates. Each 
reinspection certificate shall show the statements required by this 
section, Sec.  800.161, and applicable instructions.
    (1) Each reinspection certificate must clearly show (i) the term 
``Reinspection'' and (ii) a statement identifying the superseded 
certificate. The superseded certificate will be considered null and void 
as of the date of the reinspection certificate.
    (2) When official grade or official factors, Class X weighing 
results, and official criteria are reported on the same certificate, the 
reinspection certificate shall show a statement indicating that the 
reinspection results are based on official grade, or official factors, 
or official criteria and that all other results are those of the 
original service.
    (3) If the superseded certificate is in the custody of the agency or 
field office, the superseded certificate shall be marked ``Void.'' If 
the superseded certificate is not in the custody of the agency or field 
office at the time the reinspection certificate is issued, a statement 
indicating that the superseded certificate has not been surrendered 
shall be shown on the reinspection certificate.
    (4) As of the date of issuance of the official certificate, the 
superseded certificate for the original service will be void and shall 
not be used to represent the grain.
    (5) When certificates are issued under paragraph (a)(1) of this 
section, the reinspection certificate shall show a statement indicating 
that the results replaced the original results and that the reinspection 
certificate is not valid for trading purposes.

[50 FR 45394, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990]

                       Appeal Inspection Services



Sec.  800.135  Who may request appeal inspection services.

    (a) General. Any interested person may request appeal inspection or 
Board appeal inspection services, except as provided for in Sec.  
800.86(c)(5). When more than one interested person requests an appeal 
inspection or Board appeal inspection service, the first person to file 
is the applicant of record. Only one appeal inspection may be obtained 
from any original inspection or reinspection service. Only one Board 
appeal inspection may be obtained from an appeal inspection. Board 
appeal inspections will be performed on the basis of the official file 
sample. Board appeal inspections are not available on stowage 
examination services.

[[Page 508]]

    (b) Kind and scope of request. An appeal inspection service is 
limited to the kind and scope of the original or reinspection service; 
or, in the case of a Board Appeal inspection service, the kind and scope 
of the appeal inspection service. If the request specifies a different 
kind or scope, the request shall be dismissed but may be resubmitted as 
a request for original services: Provided, however, that an applicant 
for service may request an appeal or Board Appeal inspection of a 
specific factor(s), official grade and factors, or official criteria. In 
addition, appeal and Board Appeal inspections for grade may include a 
review of any pertinent factor(s), as deemed necessary by official 
personnel. Official criteria are considered separately from official 
grade or official factors when determining kind and scope. When 
requested, an appeal inspection for grade, or official factors, and 
official criteria may be handled separately even though both results are 
reported on the same certificate. Moreover, an appeal inspection may be 
requested on the inspection results when both inspection and Class X 
weighing results are reported on a combination inspection and Class X 
weight certificate.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[50 FR 45395, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990; 
68 FR 61328, Oct. 28, 2003]



Sec.  800.136  How to request appeal inspection services.

    (a) General. Requests shall be filed with the field office 
responsible for the area in which the original service was performed. 
Requests for Board appeal inspections may be filed with the Board of 
Appeals and Review or the field office that performed the appeal 
inspection. All requests shall include the information specified in 
Sec.  800.46. Verbal requests shall be confirmed in writing when 
requested by official personnel as specified in Sec.  800.46. Copies of 
request forms may be obtained from the field office upon request. If at 
the time the request is filed the documentation required by Sec.  800.46 
is not available, official personnel may, at their discretion, withhold 
service pending the receipt of the required documentation. An appeal 
inspection certificate will not be issued unless (1) documentation 
requested under Sec.  800.46 has been submitted or (2) office personnel 
determine that sufficient information has been made available so as to 
perform the request. A record that sufficient information has been made 
available must be included in the record of the official service.
    (b) Filing requirements. Requests will be considered filed on the 
date they are received by official personnel. A record shall be 
maintained for all requests. Requests must be filed (1) before the grain 
has left the specified service point where the grain was located when 
the original inspection was performed, (2) no later than the close of 
business on the second business day following the date of the last 
inspection, and (3) before the identity of the grain has been lost. If a 
representative file sample as prescribed in Sec.  800.82 is available, 
official personnel may waive the requirements pursuant to this 
paragraph. The requirements of paragraph (b)(1) of this section may be 
waived only upon written consent of the applicant and all interested 
persons. The requirements of paragraphs (b)(2) and (b)(3) of this 
section may be waived at the request of the applicant or other 
interested persons. The requirement of paragraph (b)(2) of this section 
may also be waived upon satisfactory showing by an interested person of 
evidence of fraud or that because of distance or other good cause, the 
time allowed for filing was not sufficient. A record of each waiver 
shall be included in the record of the appeal inspection service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45395, Oct. 31, 1985, as amended at 54 FR 5924, Feb. 7, 1989]



Sec.  800.137  Who shall perform appeal inspection services.

    (a) Appeal. Appeal inspection services shall be performed by the 
field office responsible for the area in which the original inspection 
was performed.
    (b) Board appeal. Board appeal inspection services shall be 
performed only by the Board of Appeals and Review.

[[Page 509]]

The field office that performed the appeal inspection service will act 
as a liaison between the Board of Appeals and Review and the applicant.

[50 FR 45395, Oct. 31, 1985]



Sec.  800.138  Conflict of interest.

    Official personnel cannot perform or participate in performing or 
issue an official certificate for an appeal inspection if they 
participated in the original inspection, reinspection, or, in the case 
of a Board appeal inspection, the appeal inspection service unless there 
is only one qualified person available at the time and place of the 
appeal inspection.

[50 FR 45395, Oct. 31, 1985]



Sec.  800.139  Certificating appeal inspections.

    (a) General. Except as provided in paragraphs (b) of this section, 
official certificate shall be issued according to Sec.  800.160 and the 
instructions. Except as provided in paragraph (c)(2) of this section, 
only the results of the appeal inspection service shall be reported.
    (b) Results of material portion sublots. When results of an appeal 
inspection performed by a field office or the Board of Appeals and 
Review on a material portion do not detect a material error, they shall 
be averaged with the previous inspection results recorded on the 
official inspection log for the identified sample. For purposes of this 
section, a material error is defined as results differing by more than 
two standard deviations. The appeal or Board appeal inspection result 
shall replace the previous inspection results recorded on the official 
inspection log for the identified sample if a material error is 
detected. No certificate will be issued unless requested by the 
applicant or deemed necessary by inspection personnel.
    (c) Required statements. Each appeal certificate shall show the 
statements required by this section, Sec.  800.161, and applicable 
instructions.
    (1) Each appeal inspection certificate shall clearly show (i) the 
term ``Appeal'' or ``Board appeal'' and (ii) a statement identifying the 
superseded certificate. The superseded certificate will be considered 
null and void as of the date of the appeal inspection certificate.
    (2) When official grade or official factors, Class X weighing 
results, and official criteria are reported on the same certificate, the 
appeal inspection certificate shall show a statement indicating that 
appeal or Board appeal inspection results are based on official grade, 
official factors, or official criteria and that all other results are 
those of the original, reinspection, or, in the case of a Board appeal, 
the appeal inspection results.
    (3) Superseded certificates held by the Service shall be marked 
``Void.'' If the superseded certificate is not in the custody of the 
Service at the time the appeal certificate is issued, a statement 
indicating that the superseded certificate has not been surrendered 
shall be shown on the appeal certificate.
    (4) As of the date of issuance of the appeal or Board appeal 
certificate, the superseded certificate for the original, reinspection, 
or appeal inspection service will be void and shall not be used to 
represent the grain.
    (5) When certificates are issued under paragraph (b) of this 
section, the appeal inspection certificate shall show a statement 
indicating that the results replace the original inspection, 
reinspection, or, in the case of a Board appeal, the appeal inspection 
results and that the appeal inspection certificate is not valid for 
trading purposes.
    (d) Finality of Board appeal inspections. A Board appeal inspection 
will be the final appeal inspection service.

[50 FR 45395, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990]

                  Official Records and Forms (General)

    Source: Sections 800.145 through 800.159 appear at 50 FR 18986, May 
6, 1985, unless otherwise noted.



Sec.  800.145  Maintenance and retention of records--general requirements.

    (a) Preparing and maintaining records. The records specified in 
Sec. Sec.  800.146-800.159 shall be prepared and maintained in a manner 
that will facilitate (1) the daily use of records and (2) the

[[Page 510]]

review and audit of the records to determine compliance with the Act, 
the regulations, the standards, and the instructions.
    (b) Retaining records. Records shall be retained for a period not 
less than that specified in Sec. Sec.  800.146-800.159. In specific 
instances, the Administrator may require that records be retained for a 
period of not more than 3 years in addition to the specified retention 
period. In addition, records may be kept for a longer time than the 
specified retention period at the option of the agency, the contractor, 
the approved scale testing organization, or the individual maintaining 
the records.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.146  Maintenance and retention of records issued by the Service
under the Act.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records of the Act, regulations, the standards, 
any instructions issued by the Service, and all amendments and revisions 
thereto. These records shall be maintained until superseded or revoked.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.147  Maintenance and retention of records on delegations,
designations, contracts, and approval of scale testing organizations.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records of their delegation, designation, 
contract, or approval. These records consist of a copy of the delegation 
or designation documents, a copy of the current contract, or a copy of 
the notice of approval, respectively, and all amendments and revisions 
thereto. These records shall be maintained until superseded, terminated, 
revoked, or cancelled.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.148  Maintenance and retention of records on organization,
staffing, and budget.

    (a) Organization. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their organization. 
These records shall consist of the following documents: (1) If it is a 
business organization, the location of its principal office; (2) if it 
is a corporation, a copy of the articles of incorporation, the names and 
addresses of officers and directors, and the names and addresses of 
shareholders; (3) if it is a partnership or an unincorporated 
association, the names and addresses of officers and members, and a copy 
of the partnership agreement or charter; and (4) if it is an individual, 
the individual's place of residence. These records shall be maintained 
for 5 years.
    (b) Staffing. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their employees. These 
records consist of (1) the name of each current employee, (2) each 
employee's principal duty, (3) each employee's principal duty station, 
(4) information about the training that each employee has received, and 
(5) related information required by the Service. These records shall be 
maintained for 5 years.
    (c) Budget. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their budget. These 
records consist of actual income generated and actual expenses incurred 
during the current year. Complete accounts for receipts from (1) 
official inspection, weighing, equipment testing, and related services; 
(2) the sale of grain samples; and (3) disbursements from receipts shall 
be available for use in establishing or revising fees for services under 
the Act. Budget records shall also include detailed information on the 
disposition of grain samples obtained under the Act. These records shall 
be maintained for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.149  Maintenance and retention of records on licenses and
approvals.

    (a) Licenses. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of licenses. These records 
consist of current information showing (1) the name of each licensee, 
(2) the scope of each license, (3) the termination date

[[Page 511]]

of each license, and (4) related information required by the Service. 
These records shall be maintained for the tenure of the licensee.
    (b) Approvals. Agencies shall maintain complete records of approvals 
of weighers. These records consist of current information showing the 
name of each approved weigher employed by or at each approved weighing 
facility in the area of responsibility assigned to an agency or field 
office. These records shall be maintained for the tenure of the 
weigher's employment as an approved weigher.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.150  Maintenance and retention of records on fee schedules.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records on fee schedules. These records consist 
of (a) a copy of the current fee schedule; (b) in the case of an agency, 
data showing how the fees in the schedule were developed; (c) superseded 
fee schedules; and (d) related information required by the Service. 
These records shall be maintained for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.151  Maintenance and retention of records on space and
equipment.

    (a) Space. Agencies shall maintain complete records on space. These 
records consist of (1) a description of space that is occupied or used 
at each location, (2) the name and address of the owner of the space, 
(3) financial arrangements for the space, and (4) related information 
required by the Service. These records shall be maintained for 5 years.
    (b) Equipment. Agencies shall maintain complete records on 
equipment. These records consist of (1) the description of each piece of 
equipment used in performing official inspection or Class X or Class Y 
weighing services under the Act, (2) the location of the equipment, (3) 
the name and address of the owner of the equipment, (4) the schedules 
for equipment testing and the results of the testing, and (5) related 
information required by the Service. These records shall be maintained 
for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.152  Maintenance and retention of file samples.

    (a) General. The Service and agencies shall maintain complete file 
samples for their minimum retention period (calendar days) after the 
official function was completed or the results otherwise reported.
    (b) Minimum retention period. Upon request by an agency and with the 
approval of the Service, specified file samples or classes of file 
samples may be retained for shorter periods of time.

------------------------------------------------------------------------
           Carrier                In        Out       Export     Other
------------------------------------------------------------------------
(1) Trucks..................          3          5         30
(2) Railcars................          5         10         30
(3) Ships & Barges..........          5         25         90
(4) Ships and Barges (short           5         25         60
 voyage--5 days or less)....
(5) Containers..............          5         60         60
(6) Bins & Tanks............  .........  .........  .........          3
(7) Submitted Samples.......  .........  .........  .........          3
------------------------------------------------------------------------

    (c) Special retention periods. In specific instances, the 
Administrator may require that file samples be retained for a period of 
not more than 90 calendar days. File samples may be kept for a longer 
time than the regular retention period at the option of the Service, the 
agency, or the individual maintaining the records.

[50 FR 18986, May 6, 1985, as amended at 78 FR 43757, July 22, 2013]

(Approved by the Office of Management and Budget under control number 
0580-0011)

[[Page 512]]



Sec.  800.153  Maintenance and retention of records on official inspection,
Class X or Class Y weighing, and equipment testing service.

    Agencies and approved scale testing organizations shall maintain 
complete detailed official inspection work records, copies of official 
certificates, and equipment testing work records for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.154  Availability of official records.

    (a) Availability to officials. Each agency, contractor, and approved 
scale testing organization shall permit authorized representatives of 
the Comptroller General, the Secretary, or the Administrator to have 
access to and to copy, without charge, during customary business hours 
any records maintained under Sec. Sec.  800.146-800.159.
    (b) Availability to the public--(1) Agency, contractor, and approved 
scale testing organization records. The following official records will 
be available, upon request by any person, for public inspection during 
customary business hours:
    (i) Copies of the Act, the regulations, the standards, and the 
instructions;
    (ii) The delegation, designation, contract, or approval issued by 
the Service;
    (iii) Organization and staffing records;
    (iv) A list of licenses and approvals; and
    (v) The approved fee schedule of the agency, if applicable.
    (2) Service records--Records of the Service are available in 
accordance with the Freedom of Information Act (5 U.S.C. 552(a)(3)) and 
the regulations of the Secretary of Agriculture (7 CFR, part 1, subpart 
A).
    (c) Locations where records may be examined or copied--(1) Agency, 
contractor, and approved scale testing organization records. Records of 
agencies, contractors, and approved scale testing organizations 
available for public inspection shall be retained at the principal place 
of business of the agency, contractor, or approved scale testing and 
certification organization.
    (2) Service records. Records of the Service available for public 
inspection shall be retained at each field office and at the 
headquarters of the Service in Washington, DC.



Sec.  800.155  Detailed work records--general requirements.

    (a) Preparation. Detailed work records shall be prepared for each 
official inspection, Class X or Class Y weighing, and equipment testing 
service performed or provided under the Act. The records shall (1) be on 
standard forms prescribed in the instructions; (2) be typed or legibly 
written in English; (3) be concise, complete, and accurate; (4) show all 
information and data that are needed to prepare the corresponding 
official certificates or official report; (5) show the name or initials 
of the individual who made each determination; and (6) show other 
information required by the Service to monitor or supervise the service 
provided.
    (b) Use. Detailed work records shall be used as a basis for (1) 
issuing official certificates or official forms, (2) approving 
inspection and weighing equipment for the performance of official 
inspection or Class X or Class Y weighing services, (3) monitoring and 
supervising activities under the Act, (4) answering inquiries from 
interested persons, (5) processing complaints, and (6) billing and 
accounting. These records may be used to report results of official 
inspection or Class X or Class Y weighing services in advance of issuing 
an official certificate.
    (c) Standard forms. The following standard forms shall be furnished 
by the Service to an agency: Official Export Grain Inspection and Weight 
Certificates (singly or combined), official inspection logs, official 
weight loading logs, official scale testing reports, and official volume 
of work reports. Other forms used by an agency in the performance of 
official services, including certificates, shall be furnished by the 
agency.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.156  Official inspection records.

    (a) Pan tickets. The record for each kind of official inspection 
service identified in Sec.  800.76 shall, in addition to the official 
certificate, consist of one or more pan tickets as prescribed in the

[[Page 513]]

instructions. Activities that are performed as a series during the 
course of an inspection service may be recorded on one pan ticket or on 
separate pan tickets. The original copy of each pan ticket shall be 
retained by the agency or field office that performed the inspection.
    (b) Inspection logs. The record of an official inspection service 
for grain in a combined lot and shiplot shall include the official 
inspection log as prescribed in the instructions. The original copy of 
each inspection log shall be retained by the agency or field office that 
performed the inspection. If the inspection is performed by an agency, 
one copy of the inspection log shall be promptly sent to the appropriate 
field office.
    (c) Other forms. Any detailed test that cannot be completely 
recorded on a pan ticket or an inspection log shall be recorded on other 
forms prescribed in the instructions. If the space on a pan ticket or an 
inspection log does not permit showing the full name for an official 
factor or an official criteria, an approved abbreviation may be used.
    (d) File samples--(1) General. The record for an official inspection 
service based, in whole or in part, on an examination of a grain in a 
sample shall include one or more file samples as prescribed in the 
instructions.
    (2) Size. Each file sample shall consist of an unworked portion of 
the official sample or warehouseman's sample obtained from the lot of 
grain and shall be large enough to permit a reinspection, appeal 
inspection, or Board appeal inspection for the kind and scope of 
inspection for which the sample was obtained. In the case of a submitted 
sample inspection, if an undersized sample is received, the entire 
sample shall be retained.
    (3) Method. Each file sample shall be retained in a manner that will 
preserve the representativeness of the sample from the time it is 
obtained or received by the agency or field office until it is 
discarded. High moisture samples, infested samples, and other problem 
samples shall be retained according to the instructions.
    (4) Uniform system. To facilitate the use of file samples, agencies 
shall establish and maintain a uniform file sample system according to 
the instructions.
    (5) Forwarding samples. Upon request by the supervising field office 
or the Board of Appeals and Review, each agency shall furnish file 
samples (i) for field appeal or Board appeal inspection service, or (ii) 
for monitoring or supervision. If, at the request of the Service, an 
agency locates and forwards a file sample for an appeal inspection, the 
agency may, upon request, be reimbursed at the rate prescribed in Sec.  
800.71 by the Service.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.157  Official weighing records.

    (a) Scale ticket, scale tape, or other weight records. In addition 
to the official certificate, the record for each Class X or Class Y 
weighing service shall consist of a scale ticket, a scale tape, or any 
other weight record prescribed in the instructions.
    (b) Weighing logs. The record of a Class X or Class Y weighing 
service performed on bulk grain in a combined lot or bulk shiplot grain 
shall include the official weighing log as prescribed in the 
instructions. The original copy of each weighing log shall be retained 
by the field office or agency that performed the weighing.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.158  Equipment testing work records.

    The record for each official equipment testing service or activity 
consists of an official equipment testing report as prescribed in the 
instructions. Upon completion of each official equipment test, one or 
more copies of the completed testing report may, upon request, be issued 
to the owner or operator of the equipment. The testing report shall show 
the (a) date the test was performed, (b) name of the organization and 
personnel that performed the test, (c) names of the Service employees 
who monitored the testing, (d) identification of equipment that was 
tested, (e) results of the test, (f) names of any interested persons who 
were informed of the test results, (g) number or other identification of 
the approval

[[Page 514]]

tag or label affixed to the equipment, and (h) other information 
required by the instructions.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.159  Related official records.

    (a) Volume of work report. Field offices and agencies shall prepare 
periodic reports showing the kind and the volume of inspection and 
weighing services that they performed. The report shall be prepared and 
copies shall be submitted to the Service according to the instructions.
    (b) Record of withdrawals and dismissals. Field offices and agencies 
shall maintain a complete record of requests for official inspection or 
weighing services that are withdrawn by the applicant or that are 
conditionally withheld or dismissed. The record shall be prepared and 
maintained according to the instructions.
    (c) Licensee record. Licensees, including licensed warehouse 
samplers, shall (1) keep the license issued to them by the Service and 
(2) keep or have reasonable access to a complete record of the Act, the 
standards, the regulations, and the instructions.

(Approved by the Office of Management and Budget under control number 
0580-0011)

                          Official Certificates

    Source: Sections 800.160 through 800.166 appear at 50 FR 45396, Oct. 
31, 1985, unless otherwise noted.



Sec.  800.160  Official certificates; issuance and distribution.

    (a) Required issuance. An official certificate shall be issued for 
each inspection service and each weighing service except as provided 
Sec. Sec.  800.84, 800.129, and 800.139 and paragraph (b) of this 
section.
    (b) Distribution--(1) General--(i) Export. The original and at least 
three copies of each certificate will be distributed to the applicant or 
applicant's order. One copy of each certificate shall be retained by the 
agency, field office, or Board of Appeals and Review.
    (ii) Nonexport. The original and at least one copy of each 
certificate will be distributed to the applicant or to the applicant's 
order. In the case of inbound trucklot grain, one copy shall be 
delivered by the applicant to the person who owned the grain at the time 
of delivery. One copy of each certificate shall be retained by the 
agency, field office, or Board of Appeals and Review.
    (iii) Local movements of shiplot grain. When shiplot grain is 
offered for inspection as a single lot and a portion of the lot is 
returned to the elevator, certificates representing the inspection 
service shall not be issued unless (A) requested by the applicant or (B) 
deemed necessary by official personnel.
    (2) Reinspection and appeal inspection services. In addition to the 
distribution requirements of paragraph (b) of this section, one copy of 
each reinspection or appeal inspection certificate shall be distributed 
to each interested person of record or the interested person's order and 
to the agency or field office that issued the superseded certificate.
    (3) Additional copies. Additional copies of certificates will be 
furnished to the applicant or interested person upon request. Fees for 
extra copies may be assessed according to the fee schedules established 
by the agency or the Service.
    (c) Prompt issuance. The results of the inspection or weighing 
service shall be reported to the applicant on the date the inspection or 
weighing service is completed. Certificates shall be issued as soon as 
possible, but no later than the close of business on the next business 
day. Upon request of an agency or a field office, the requirements of 
this paragraph may be waived by the Service when results have been 
reported before issuing the certificate.
    (d) Who may issue certificates--(1) Authority. Certificates for 
inspection or Class X weighing services may be issued only be official 
personnel who are specifically licensed or authorized to perform and 
certify the results reported on the certificate. Certificates for Class 
Y weighing services may be issued only by individuals who are licensed 
or authorized or are approved to perform and certify the results.
    (2) Exception. The person in the best position to know whether the 
service was performed in an approved manner and that the determinations 
are accurate and true should issue the certificate. If the service is 
performed by one

[[Page 515]]

person, the certificate should be issued by that person. If the service 
is performed by two or more persons, the certificate should be issued by 
the person who made the majority of the determinations or the person who 
makes the final determination. Supervisory personnel may issue a 
certificate when the individual is licensed or authorized to perform the 
service being certificated.
    (e) Name requirement. On export certificates, the typewritten name 
and signature of the individual issuing the certificate shall appear on 
the original and all copies. On all other certificates, the name or 
signature of the individual issuing the certificate shall appear on the 
original and all copies. Upon request by the applicant, the name and 
signature may be shown on all other certificates.
    (f) Authorization to affix names--(1) Requirements. The name or 
signature of official personnel may be affixed to official certificates 
which are prepared from work records signed or initialed by the person 
whose name will be shown. An agent affixing the name and signature shall 
(i) be employed by the agency or Service; (ii) have been designated to 
affix names and signatures; and (iii) hold a power of attorney from the 
person whose name and signature will be affixed. The power of attorney 
shall be on file with the agency or Service.
    (2) Initialing. When a name or signature is affixed by an authorized 
agent, the initials of the agent shall appear directly below or 
following the signature of the person.
    (g) Advance information. Upon request, the contents of an official 
certificate may be furnished in advance to the applicant and any other 
interested party, or to their order, and any additional expense shall be 
borne by the requesting party.
    (h) Certification after dismissal. An official certificate cannot be 
issued for a service after the request has been withdrawn or dismissed.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45396, Oct. 31, 1985, as amended at 57 FR 11428, Apr. 3, 1992]



Sec.  800.161  Official certificate requirements.

    (a) General. Official certificates shall show the information and 
statements required by Sec.  800.161 through Sec.  800.165 and the 
instructions. The Administrator shall approve any other information and 
statements reported. Information shall be reported in a uniform, 
accurate, and concise manner, be in English, be typewritten or 
handwritten in ink, and be clearly legible.
    (b) Required format. Official certificates shall be uniform in size, 
shape, color, and format and conform to requirements prescribed in the 
instructions. Upon request and for good cause, the Service may approve 
special design certificates. All information and statements shall be 
shown on the front of the certificate, except that on domestic grain 
certificates, (1) approved abbreviations for official factors and 
official criteria, with their meanings, may be shown on the back and (2) 
the identification of carriers or containers in a combined-lot 
inspection may be shown on the back if ample space is not available on 
the front. When information is recorded on the back of the certificate, 
the statement ``See reverse side'' must be shown on the front.
    (c) Required information. Each official certificate shall show the 
following information in accordance with the instructions:
    (1) For an agency issuing export certificates or the Federal Grain 
Inspection Service, ``United States Department of Agriculture--Federal 
Grain Inspection Service;''
    (2) For a designated agency, the name of the agency, as applicable;
    (3) Captions identifying the kind of service;
    (4) A preprinted serial number and lettered prefix;
    (5) ``Original'' or ``copy,'' as applicable;
    (6) ``Divided lot,'' ``duplicate,'' or ``corrected,'' as applicable;
    (7) The identification of the carrier or container;
    (8) The date the service was performed;
    (9) The date and method of sampling;
    (10) The kind of movement and the level of service performed;

[[Page 516]]

    (11) The grade and kind or ``Not Standardized Grain,'' as 
applicable;
    (12) The results of the service performed;
    (13) The location of the issuing office;
    (14) The location of the grain when the service was performed;
    (15) A space for remarks;
    (16) Whether a reinspection or appeal inspection service was based 
in whole or in part on file samples when file samples are used;
    (17) A statement reflecting the results of a stowage examination, 
when applicable;
    (18) Seal records, when applicable; and
    (19) The name of the person issuing the certificate.
    (d) Required statements. Each official certificate shall include the 
following statements according to the instructions: (1) A statement that 
the certificate is issued under the authority of the United States Grain 
Standards Act; (2) a nonnegotiability statement; (3) a warning 
statement; and (4) a statement referencing the certificate number and 
date. Each official certificate for an official sample-lot inspection 
service shall include a caption ``U.S. Grain Standards Act'' and a USDA-
FGIS shield ghosted across the front. Each official certificate for a 
warehouseman's sample-lot inspection, a submitted sample inspection, or 
Class Y weighing service shall include a statement that the certificate 
does not meet the requirements of section 5 of the Act of warehouseman's 
sample-lot inspection, the word ``QUALIFIED;'' for submitted sample 
inspections, the words ``Not Officially Sampled;'' for Class Y weighing, 
the words ``Class Y Weighing'' screened across the front.
    (e) Permissive information and statements--(1) Certificates. 
Information and statements requested by the applicant but not required 
by the regulations or instructions may be shown on the certificate if 
the information or statements have been approved in the instructions or 
on a case-by-case basis by the Administrator.
    (2) Letterhead. Information and statements requested by the 
applicant but not required by the regulations or instructions may be 
shown on letterhead stationary of the Service or an agency when (i) 
ample space is not available for reporting the information or statements 
on the certificate, (ii) letterhead stationary is determined to be more 
suitable than the official certificate, and (iii) the certificate is 
referenced on the letterhead stationary and distributed according to 
Sec.  800.160. Letterhead stationary of the Service shall be used for 
all export grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.162  Certification of grade; special requirements.

    (a) General. Except as provided in paragraph (c) of this section, 
each official certificate for grade shall show:
    (1) The grade and factor information required by the Official U.S. 
Standards for Grain;
    (2) The test weight of the grain, if applicable;
    (3) The moisture content of the grain;
    (4) The results for each official factor for which a determination 
was made;
    (5) The results for each official factor that determined the grade 
when the grain is graded other that U.S. No. 1;
    (6) Any other factor information considered necessary to describe 
the grain; and
    (7) Any additional factor results requested by the applicant for 
official factors defined in the Official U.S. Standards for Grain.
    (b) Cargo shipments. Each official certificate for grade 
representing a cargo shipment shall show, in addition to the 
requirements of paragraph (a) of this section, the results of all 
official grade factors defined in the Official United States Standards 
for Grain for the type of grain being inspected.
    (c) Test weight for canola and soybeans. Official canola inspection 
certificates will show, in addition to the requirements of paragraphs 
(a) and (b) of this section, the official test weight per bushel only 
upon request by the applicant. Official soybean inspection certificates 
will show, in addition to the requirements of paragraphs (a) and (b) of 
this section, the official test weight per bushel unless the applicant 
requests that test weight not be determined. Upon request, soybean test 
weight results will not be determined

[[Page 517]]

and/or reported on the official certificate.
    (d) Aflatoxin test for corn. Official corn export certificates shall 
show, in addition to the requirements of paragraphs (a), (b), and (c) of 
this section, the official aflatoxin test results if required under 
Sec.  800.15(b).

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45396, Oct. 31, 1985, as amended at 52 FR 24437, June 30, 1987; 
57 FR 2439, Jan. 22, 1992; 57 FR 3273, Jan. 29, 1992; 57 FR 56439, Nov. 
30, 1992; 71 FR 52405, Sept. 6, 2006]



Sec.  800.163  Divided-lot certificates.

    (a) General. When shiplot grain is offered for inspection or Class X 
weighing as a single lot and is certificated as a single lot, the 
applicant may exchange the official certificate for two or more divided-
lot certificates. This applies to original inspection, reinspection, 
appeal inspection, Board appeal inspection, and Class X weighing 
services.
    (b) Application. Requests for divided-lot certificates shall be made 
(1) in writing; (2) by the applicant who filed the inital request; (3) 
to the office that issued the outstanding certificate; (4) within 5 
business days of the outstanding certificate date; and (5) before the 
identity of the grain has been lost.
    (c) Quantity restrictions. Divided-lot certificates shall not show 
an aggregate quantity different than the total quantity shown on the 
superseded certificate.
    (d) Surrender of certificate. The certificate that will be 
superseded shall (1) be in the custody of the agency or the Service; (2) 
be marked ``Void;'' and (3) show the identification of the divided-lot 
certificates.
    (e) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the superseded 
certificate shall be shown on each divided-lot certificate. Divided-lot 
certificates shall show (1) a statement indicating the grain was 
inspected or weighed as an undivided lot; (2) the terms ``Divided Lot-
Original,'' and the copies shall show ``Divided Lot-Copies;'' (3) the 
same serial number with numbered suffix (for example, 1764-1, 1764-2, 
1764-3, and the like); and (4) the quantity specified by the request.
    (f) Issuance and distribution. Divided-lot certificates shall be 
issued no later than the close of business on the next business day 
after the request and be distributed according to Sec.  800.160.
    (g) Limitations. No divided-lot certificate can be issued (1) for 
grain in any shipment other than shiplot grain inspected or weighed as a 
single lot or (2) for an export certificate which has been superseded by 
another export certificate. After divided-lot certificates have been 
issued, further dividing or combining is prohibited except with the 
approval of the Service.
    (h) Use of superseded certificate prohibited. As of the date of the 
divided-lot certificate, the superseded certificate will be void and 
shall not be used or represent the grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.164  Duplicate certificates.

    Upon request, a duplicate certificate may be issued for a lost or 
destroyed official certificate.
    (a) Application. Requests for duplicate certificates shall be filed: 
(1) in writing; (2) by the applicant who requested the service covered 
by the lost or destroyed certificate; and (3) with the office that 
issued the initial certificate.
    (b) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the lost or 
destroyed certificate shall be shown on the duplicate certificate. 
Duplicate certificates shall show (1) the terms ``Duplicate-Original'' 
and the copies shall show ``Duplicate-Copies'' and (2) a statement that 
the certificate was issued in lieu of a lost or destroyed certificate.
    (c) Issuance. Duplicate certificates shall be issued as promptly as 
possible and distributed according to Sec.  800.160.
    (d) Limitations. Duplicate certificates will not be issued for 
certificates that have been superseded.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.165  Corrected certificates.

    (a) General. The accuracy of the statements and information shown on

[[Page 518]]

official certificates shall be verified by the individual whose name or 
signature is shown on the certificate, or by the authorized agent who 
affixed the name or signature. Errors found during this process shall be 
corrected according to this section.
    (b) Who may correct. Only official personnel or their authorized 
agents may make corrections, erasures, additions, or other changes to 
official certificates.
    (c) Corrections prior to issuance--(1) Export certificates. No 
corrections, erasures, additions, or other changes can be made to an 
export certificate. If any error is found prior to issuance, a new 
certificate shall be prepared and issued and the incorrect certificate 
marked ``Void.''
    (2) Other than export certificates. No corrections, erasures, 
additions, or other changes shall be made to other than export 
certificates which involve identification, grade, gross, tare, or net 
weight. If errors are found, a new certificate shall be prepared and 
issued and the incorrect certificate marked ``Void.'' Otherwise, errors 
may be corrected provided that (i) the corrections are neat and legible, 
(ii) each correction is initialed by the individual who corrects the 
certificate, and (iii) the corrections and initials are shown on the 
original and all copies.
    (d) Corrections after issuance--(1) General. If errors are found on 
a certificate at any time up to a maximum of 1 year after issuance, the 
errors shall be corrected by obtaining the incorrect certificate and 
replacing it with a corrected certificate. When the incorrect 
certificate cannot be obtained, a corrected certificate can be issued 
superseding the incorrect one.
    (2) Certification requirements. The same statements and information, 
including permissive statements, that were shown on the incorrect 
certificate, along with the correct statement or information, shall be 
shown on the corrected certificate. According to this section and the 
instructions, corrected certificates shall show (i) the terms 
``Corrected-Original'' and ``Corrected-Copy;'' (ii) a statement 
identifying the superseded certificate and the corrections; (iii) a 
statement indicating the superseded certificate was not surrended if the 
incorrect certificate was not surrendered; and (iv) a new serial number. 
In addition, the incorrect certificate shall be marked ``Void'' when 
submitted.
    (e) Limitations. Corrected certificates cannot be issued for a 
certificate that has been superseded by another certificate or on the 
basis of a subsequent analysis for quality.
    (f) Use of superseded certificate prohibited. As of the date of 
issuance of the corrected certificate, the superseded certificate will 
be void and shall not be used to represent the grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  800.166  Reproducing certificates.

    Official certificates may be photo copied or similarly reproduced.

(Approved by the Office of Management and Budget under control number 
0580-0011)

           Licenses and Authorizations (For Individuals Only)



Sec.  800.170  When a license or authorization or approval is required.

    (a) Requirement. (1) Any individual who performs or represents that 
he or she is licensed or authorized to perform any or all inspection or 
Class X weighing services under the Act must be licensed or authorized 
by the Service to perform each service.
    (2) Any individual who performs or represents that he or she is 
licensed or authorized, or an approved weigher, to perform Class Y 
weighing services under the Act must be licensed or authorized, or 
approved, by the Service to perform this service.
    (b) Excepted activities. A license or authorization, or approval for 
weighing, under the Act and regulations is not required for (1) opening 
or closing a carrier or container of grain, or transporting or filing 
official samples, or similar laboring functions; (2) typing or filing 
official inspection and weighing certificates or other official forms or 
performing similar clerical functions; (3) performing official equipment 
testing functions with respect to official inspection equipment; (4) 
performing inspection, weighing, or scale testing functions that are not 
conducted for the purposes of the Act; or

[[Page 519]]

(5) performing scale testing functions by a State or municipal agency or 
by the employees of such agencies.
    (c) 30-day waiver. A prospective applicant for a license as a 
sampler, inspection technician, or weighing technician may, for a period 
of time not to exceed 30 calendar days, help perform those official 
sampling, inspection, or Class X or Class Y weighing services for which 
the applicant desires to be licensed, under the direct physical 
supervision of an individual who is licensed to perform the services. 
The supervising individual shall be fully responsible for each function 
performed by the prospective applicant and shall initial any work form 
prepared by the prospective applicant.
    (d) No fee by Service. No fee will be assessed by the Service for 
licensing an individual employed by an agency or contractor.
    (e) Fee by agency. At the request of the Service, an agency may help 
examine an applicant for a warehouse sampler's license for competency 
and may assess a fee in accordance with the provisions of Sec.  800.70. 
The fee shall be paid by the applicant or by the elevator that employs 
the applicant.

(Secs. 9, 18, Pub. L. 94-582, 90 Stat. 2875 and 2884 (7 U.S.C. 79a and 
87e))

[45 FR 15810, Mar. 11, 1980, as amended at 46 FR 30325, June 5, 1981]



Sec.  800.171  Who may be licensed or authorized.

    (a) Prohibitions. No person may be licensed or authorized who has a 
conflict of interest as defined in section 11 of the Act or specified in 
Sec.  800.187.
    (b) Exceptions to prohibitions--(1) Conflict by agency. An employee 
of an agency that has a conflict of interest that is waived by the 
Administrator under section 11(b)(5) of the Act may be licensed: 
Provided, That the employee has no conflict of interest other than the 
agency conflict of interest.
    (2) Warehouse samplers. A qualified employee of an elevator may be 
licensed to perform specified sampling services under the Act in 
accordance with the provisions of Sec.  800.174(a)(2).
    (c) General qualifications--(1) Inspection and weighing. To obtain a 
license to perform inspection or weighing services under the Act, an 
individual must be employed by an agency to perform the services and 
must otherwise be found competent in accordance with this section and 
Sec.  800.173.
    (2) Specified technical services. To obtain a license to perform 
specified sampling, inspection testing, weighing, and similar services 
under the Act, an individual must (i) be employed by an agency to 
perform the services, or (ii) enter into or be employed under a contract 
with the Service to perform the services, and (iii) otherwise be found 
competent in accordance with this section and Sec.  800.173.
    (3) Warehouse sampler. To obtain a warehouse sampler's license, an 
applicant must be employed by an elevator to perform sampling services 
and otherwise be found competent in accordance with this section and 
Sec.  800.173.
    (4) Requirements. To be considered competent, an individual must (i) 
meet the qualifications specified in Sec.  800.173; and (ii) have 
available the equipment and facilities necessary to perform the services 
for which the individual is to be licensed.
    (d) Competency determinations--(1) Agency samplers and technicians. 
The competency of an applicant for a license as a sampler, inspection 
technician, or weighing technician shall be determined by (i) the chief 
inspector or the chief weighmaster, as applicable, of the agency that 
employs the applicant or, in the case of a warehouse sampler, the agency 
that is assigned the area in which the elevator that employs the sampler 
is located, and (ii) the field office supervisor.
    (2) Inspectors, weighers, contract samplers, and technicians. The 
competency of an applicant for a license as an inspector or weigher or 
any license issued under the terms of a contract with the Service shall 
be determined by the Service.
    (3) Examinations. A determination of competency of an applicant for 
a license shall include an evaluation of the results of examinations or 
reexaminations under Sec.  800.173.

[45 FR 15810, Mar. 11, 1980, as amended at 49 FR 36072, Sept. 14, 1984]



Sec.  800.172  Applications for licenses.

    (a) General. An application for a license, the renewal of a license, 
or the

[[Page 520]]

return of a suspended license shall be made to the Service on forms 
furnished by the Service. Each application shall (1) be in English, (2) 
be typewritten or legibly written in ink, (3) show all information 
prescribed by the application form, and (4) be signed by the applicant.
    (b) Additional information. An applicant shall furnish any 
additional information considered necessary by the Service for 
consideration of an application.
    (c) Withdrawal. An application for a license may be withdrawn by an 
applicant at any time.
    (d) Review of applications--(1) General procedure. Each application 
shall be reviewed to determine whether the applicant and the application 
comply with the Act and the regulations.
    (2) Application and applicant in compliance. If it is determined 
that the applicant and the application comply with the Act and the 
regulations, the requested license shall be granted.
    (3) Application not in compliance. If an application does not comply 
with this section and the noncompliance prevents a satisfactory review 
by the Service, the applicant shall be provided an opportunity to submit 
any needed information. If the needed information is not submitted by 
the applicant within a reasonable time, the application may be 
dismissed.
    (4) Applicant not in compliance. If it is determined that an 
applicant does not comply with the provisions of the Act and Sec. Sec.  
800.171, 800.173, and 800.187 at the time the application is submitted, 
the applicant shall be provided an opportunity to comply. If the 
applicant cannot comply within a reasonable period of time, the 
application shall be dismissed.
    (e) Procedure for dismissal. If a dismissal involves an application 
for a renewal of a license or for the return of a suspended license, the 
dismissal shall be performed in accordance with the provisions of Sec.  
800.179. All other dismissals shall be performed by promptly notifying 
the applicant and the employer of the applicant of the reasons for the 
dismissal.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44453, Sept. 29, 1983; 
54 FR 5924, Feb. 7, 1989]



Sec.  800.173  Examinations and reexaminations.

    (a) General. Applicants for a license and individuals who are 
licensed to perform any or all official inspection or Class X or Class Y 
weighing services shall, at the discretion of the Service, submit to 
examinations or reexaminations to determine their competency to perform 
the official inspection or weighing functions for which they desire to 
be, or are, licensed.
    (b) Time and place of examinations and reexaminations. Examinations 
or reexaminations under this section shall be conducted by official 
personnel designated by the Service and shall be given at a reasonable 
time and place in accordance with the instructions.
    (c) Scope of examinations and reexaminations. Examinations or 
reexaminations may include oral or written tests on the applicable 
provisions of the Act, the regulations, the Official U.S. Standards for 
Grain, the procedures for the inspection and weighing of grain under the 
Act, the instructions, on-site performance evaluations, and vision or 
olfactory examinations.
    (d) Competency standards--(1) Inspection. An individual may be found 
to be incompetent to perform official inspection services if the 
individual (i) has a color-vision deficiency; (ii) cannot meet the 
physical requirements necessary to perform the functions; (iii) cannot 
readily distinguish between the different kinds and classes of grain, or 
the different conditions in grain, including heating, musty, sour, 
insect infestation, and smut; (iv) cannot demonstrate a technical 
ability to operate grain sampling, testing, and grading equipment; (v) 
does not have a working knowledge of applicable provisions of the Act, 
the regulations, the Official U.S. Standards for Grain, and the 
instructions; (vi) cannot determine work-related mathematical 
computations; or (vii) cannot prepare legible records in English.

[[Page 521]]

    (2) Weighing. An individual may be found to be incompetent to 
perform Class X or Class Y weighing services under the Act if the 
individual (i) does not meet the requirements of paragraphs (d)(1)(ii), 
(v), (vi), and (vii) of this section or (ii) cannot demonstrate a 
technical ability to operate grain weighing equipment.



Sec.  800.174  Issuance and possession of licenses and authorizations.

    (a) Scope of licenses and authorizations. Subject to the provisions 
of Sec.  800.171, eligible individuals may be licensed or authorized by 
the Service to perform one or more services specified in this paragraph.
    (1) Official samplers. Individuals employed by an agency or the 
Service or employed under the terms of a contract with the Service may 
be licensed or authorized, as applicable, to perform or supervise the 
performance of stowage examinations, grain sampling, and related 
technical services and to issue official certificates for the services 
performed by them.
    (2) Licensed warehouse samplers. Elevator or warehouse employees may 
be licensed to sample grain and perform stowage examinations. No 
elevator employee shall be licensed to (i) sample export grain for 
inspection under the Act, (ii) test or grade grain, or (iii) certify the 
results of any inspection service under the Act.
    (3) Official inspection technicians. Individuals employed by an 
agency or the Service or employed under the terms of a contract with the 
Service may be licensed or authorized to perform or supervise the 
performance of stowage examinations, grain sampling, or all or specified 
noninterpretive laboratory-testing services and to issue official 
certificates for the services performed by them.
    (4) Official inspectors. Individuals employed by an agency or the 
Service may be licensed or authorized to perform and supervise the 
performance of stowage examinations, sampling, laboratory-testing, 
grading, and related services and to issue official certificates for the 
services performed by them.
    (5) Official weighing technicians. Individuals who are employed by 
an agency or the Service to observe the loading, unloading, and handling 
of grain that has been or is to be weighed under the Act may be licensed 
or authorized to perform and supervise the performance of grain handling 
and stowage examination services and to issue official certificates for 
the services performed by them.
    (6) Official weighers. Individuals employed by an agency or the 
Service may be licensed or authorized to perform and supervise the 
performance of grain handling, stowage examination, official weighing 
(Class X), and supervision of weighing (Class Y), and related services 
and to issue official certificates for the services performed by them.
    (7) Authorized scale tester. Individuals employed by the Service may 
be authorized to test and supervise the testing of scales used for Class 
X and Class Y weighing services and to approve and certify scales based 
on the results of these tests.
    (b) Condition for issuance--(1) Compliance with the Act. Each 
license is issued on the condition that the licensee will, during the 
term of the license, comply with the Act, the regulations, and the 
instructions.
    (2) Possession of license. Each license shall be the property of the 
Service, but each licensee shall have the right to possess the license 
subject to the provisions of Sec. Sec.  800.173, 800.186, and 800.187.
    (c) Duplicate license. Upon satisfactory proof of the loss or 
destruction of a license, a duplicate will be issued by the Service.
    (d) Retention of licenses. Each license shall be retained by the 
holder of the license in a manner that the license can be examined upon 
request by service personnel.



Sec.  800.175  Termination of licenses.

    (a) Term of license. Each license shall terminate in accordance with 
the termination date shown on the license and as specified in paragraph 
(b) of this section. The termination date for a license shall be no less 
than 5 years or more than 6 years after the issuance date for the 
initial license; thereafter, every 5 years. Upon request of a licensee 
and for good cause shown, the termination

[[Page 522]]

date may be advanced or delayed by the Administrator for a period not to 
exceed 60 days.
    (b) Termination schedule for licenses. Subject to the provisions of 
paragraph (a) of this section, licenses shall terminate on the last day 
of the month shown in the following schedule:

------------------------------------------------------------------------
         Last names beginning with                Termination date
------------------------------------------------------------------------
A.........................................  January.
B.........................................  February.
C, D......................................  March.
E, F, G...................................  April.
H, I, J...................................  May.
K, L......................................  June.
M.........................................  July.
N, O, P, Q................................  August.
S.........................................  September.
R, T, U, V................................  October.
W.........................................  November.
X, Y, Z...................................  December.
------------------------------------------------------------------------

    (c) Termination notices. The Service shall issue notice of 
termination to licensees and to their employers at least 60 days before 
the termination date. The notice shall (1) provide detailed instructions 
for requesting renewal of licenses; (2) state whether a reexamination 
will be required; and (3) if a reexamination will be required, show the 
nature and scope of the reexamination. Failure to receive a notice from 
the Service shall not exempt a licensee from the responsibility of 
having the license renewed on or before the termination date.
    (d) Renewal of licenses. Licenses that are renewed shall show the 
permanent license number, the date of renewal, and the word ``Renewed.''
    (e) Termination of suspended licenses. Any suspension of a license, 
including voluntary suspension or suspension by change in employment, 
shall not affect the termination date of the license. If a licensee 
applies for renewal of the license prior to the termination date, the 
license will not terminate during the period of suspension.
    (f) Surrender of license. Each license that is terminated, 
suspended, or canceled under the provisions of Sec. Sec.  800.175 
through 800.178 or is suspended, revoked, or not renewed for cause under 
the provisions of Sec.  800.179 shall be promptly surrendered to the 
field office.
    (g) Marking terminated, canceled, or revoked licenses. Each 
terminated, canceled, or revoked license surrendered to the Service 
shall be marked ``Canceled.''

[45 FR 15810, Mar. 11, 1980, as amended at 81 FR 49863, July 29, 2016]



Sec.  800.176  Voluntary cancellation or suspension of licenses.

    Upon request by a licensee, the Service may cancel a license or 
suspend a license for a period of time not to exceed 1 year. A license 
that has been voluntarily suspended shall be returned by the Service 
upon request by the licensee within 1 year, subject to the provisions of 
Sec.  800.172; a license that has been cancelled shall be considered 
void and shall not be subject to return or renewal.



Sec.  800.177  Automatic suspension of license by change in employment.

    A license issued to an individual who is employed by an agency shall 
be automatically suspended when the individual ceases to be employed by 
the agency. If the individual is reemployed by the agency or employed by 
another agency within 1 year of the suspension date and the license has 
not terminated in the interim, upon request of the licensee, the license 
will be reinstated subject to the provisions of Sec. Sec.  800.172 and 
800.173.



Sec.  800.178  Summary revocation of licenses.

    Licenses may be summarily revoked upon a finding that the licensee 
has been convicted of any offense either prohibited by section 13 of the 
Act or prohibited by Title 18 of the United States Code, with respect to 
the performance of services under the Act.



Sec.  800.179  Refusal of renewal, suspension, or revocation of licenses 
for cause.

    (a) General. A license may be suspended or revoked or may be refused 
renewal or return (if suspended) for causes prescribed in section 9 of 
the Act.
    (b) Procedure for summary action. Under section 9 of the Act, any 
license may, without first affording the licensee (hereafter in this 
section the ``respondent'') an opportunity for a

[[Page 523]]

hearing, be summarily suspended pending final determination, whenever 
the action is considered to be in the best interest of the official 
inspection system. Such action shall be effective upon receipt of notice 
from the Service by the respondent. Within 30 calendar days after 
issuing a notice of summary action, the Service shall afford the 
respondent an opportunity for a hearing as provided under paragraph (c) 
of this section. Pending final determination, the Service may terminate 
the action if alternative employment arrangements satisfactory to the 
Service can be and are made for the respondent by the employer of the 
respondent.
    (c) Procedure for other than summary action. Except as provided for 
in paragraph (a) of this section, before the Service refuses to renew, 
or suspends or revokes a license, or refuses to return a suspended 
license, the respondent shall be (1) notified of the proposed action and 
the reasons therefor, and (2) afforded (i) an opportunity to express 
his/her views on the proposed action in an informal manner, or (ii) at 
the request of the respondent, a hearing in accordance with the 
provisions of the Rules of Practice Governing Formal Adjudicatory 
Proceedings Instituted by the Secretary under Various Statutes (7 CFR, 
part 1, subpart H).



Sec.  800.180  Summary cancellation of licenses.

    A license may be summarily canceled when (a) the license has been 
under voluntary or automatic suspension for a period of 1 year and there 
has been no request for return of the license or a request for return of 
the license has been dismissed in accordance with Sec.  800.172; or (b) 
the licensee has died or fails to surrender the license in accordance 
with Sec.  800.175(f).

         Duties and Conduct of Licensed and Authorized Personnel



Sec.  800.185  Duties of official personnel and warehouse samplers.

    (a) General. Official personnel and warehouse samplers shall, when 
performing official services or duties under the Act, comply with the 
Act, the regulations, and the instructions.
    (b) Inspection and weighing services. Official personnel shall 
perform requested official inspection and Class X and Class Y weighing 
services (1) without discrimination, (2) as soon as practicable, and (3) 
in accordance with methods and procedures prescribed in the 
instructions.
    (c) Sealing carriers or containers. Upon request, or in accordance 
with the instructions, official personnel shall (1) when feasible, affix 
security seals to doors, hatch covers, and similar openings on carriers 
or containers that contain grain that has been officially inspected or 
Class X or Class Y weighed under the Act and (2) show seal records on 
certificates and other official forms in accordance with the provisions 
of Sec.  800.161.
    (d) Scope of operations. Official personnel and warehouse samplers 
shall operate only within the scope of their license or authorization 
and except as otherwise provided in Sec.  800.117, operate only within 
the area of responsibility assigned to the official agency, field 
office, or contractor which employs them. Official personnel and 
warehouse samplers may perform official inspection or weighing services 
in a different area of responsibility with the specific consent of the 
Service.
    (e) Working materials. Official personnel and warehouse samplers 
shall be responsible for maintaining a working knowledge of the 
applicable provisions of the Act, the regulations, the Official U.S. 
Standards for Grain, the instructions, and all amendments and revisions 
thereto.
    (f) Observation of services. Official personnel and warehouse 
samplers shall permit any person (or the person's agent) who has a 
financial interest in grain that is being inspected or weighed under the 
Act, or in equipment that is being tested under the Act, to observe the 
performance of any or all official inspection, or Class X or Class Y 
weighing. Appropriate areas in the elevator may be specified by the 
Service in conjunction with the elevator management for observing each 
service. The areas shall be safe, shall afford a clear and unobstructed 
view of the performance of the services, but shall not permit a close 
over-the-shoulder

[[Page 524]]

type of observation by the interested person or the person's agent.
    (g) Reporting violations. Official personnel and warehouse samplers 
shall in accordance with the instructions promptly report (1) 
information which shows or tends to show a violation of any provision of 
the Act, the regulations, or the instructions, and (2) information on 
any instructions which have been issued to them by any official 
personnel or other persons which are contrary to the Act, the 
regulations, or the instructions.
    (h) Related duties. Official personnel and warehouse samplers shall, 
when practicable, assist in training other employees who desire to 
become licensed.
    (i) Instructions by Service. Official personnel and warehouse 
samplers shall carry out all written instructions or oral directives 
issued to them by the Service and, upon request, inform the Service 
regarding inspection, weighing, or equipment testing services performed 
by them. Oral directives from the Service not found in written 
instructions shall be confirmed in writing, upon request.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
48 FR 44453, 44454, Sept. 29, 1983; 54 FR 5924, Feb. 7, 1989; 68 FR 
19139, Apr. 18, 2003]



Sec.  800.186  Standards of conduct.

    (a) General. Official personnel and warehouse samplers must maintain 
high standards of honesty, integrity, and impartiality to assure proper 
performance of their duties and responsibilities and to maintain public 
confidence in the services provided by them.
    (b) Prohibited conduct; official personnel and warehouse samplers. 
No official personnel or warehouse sampler shall:
    (1) Perform any official inspection, Class X or Class Y weighing, or 
equipment testing service unless licensed or authorized to do so;
    (2) Engage in criminal, dishonest, or notoriously disgraceful 
conduct, or other conduct prejudicial to the Department or the Service;
    (3) Report for duty in an intoxicated or drugged condition, or 
consume intoxicating beverages or incapacitating drugs while on duty;
    (4) Smoke in prohibited areas in elevators or perform official 
services in an unsafe manner that could endanger official personnel 
working on or about the premises;
    (5) Make unwarranted criticisms or accusations against other 
official personnel, warehouse samplers, or employees of the Department; 
and
    (6) Refuse to testify or respond to questions in connection with 
official inquiries or investigations.
    (7) Coerce or attempt to coerce any person into providing any 
special or undue benefit to official personnel, approved weighers, or 
warehouse samplers.
    (c) Prohibited conduct; official personnel. In addition to the 
conduct prohibited by paragraph (b) of this section, no official 
personnel shall:
    (1) Solicit contributions from other official personnel or warehouse 
samplers for an employee of the Service, or make such a contribution. 
Nothing in this paragraph shall preclude the occasional voluntary giving 
or acceptance of gifts of a nominal value on special occasions;
    (2) Take any action that might (i) create the appearance of a loss 
of impartiality or (ii) adversely affect the confidence of the public in 
the integrity of the inspection, weighing, or equipment testing services 
performed under the Act;
    (3) Except as provided in Sec.  800.76(a), engage in any outside 
(unofficial) work or activity that:
    (i) May impair their efficiency in performing official functions; or
    (ii) Consists in whole or in part of unofficial acts of sampling, 
stowage examination, inspection testing, equipment testing, inspection, 
or weighing services similar to the official services for which the 
employing agency is designated; or
    (iii) May result in the acquisition of property interests that could 
create a conflict of interest as defined in section 11 of the Act; or
    (iv) May tend to bring criticism on or otherwise embarrass the 
Department or the Service;

[[Page 525]]

    (4) Issue to other official personnel, warehouse samplers, or 
approved weighers any instructions or directives inconsistent with the 
Act, the regulations, the Official U.S. Standards for Grain, or the 
instructions;
    (5) Organize or help establish a general or specialized farm 
organization, or act as an officer or business agency in, recruit 
members for, or accept office space or contributions from such an 
organization;
    (6) Advocate that any general or specialized farm organization 
better represents the interest of farmers than any other organization or 
individual, or recommend that the responsibilities of any government 
agency be carried out through a general or specialized farm 
organization. Nothing in paragraph (c)(5) of this section shall prevent 
official personnel from holding membership in a general or specialized 
farm organization or prohibit official personnel from participating in 
the operation of local groups or organizations that conduct government-
authorized programs.

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44454, Sept. 29, 1983; 
60 FR 65235, Dec. 19, 1995; 63 FR 45677, Aug. 27, 1998]



Sec.  800.187  Conflicts of interest

    (a) General. Warehouse samplers are exempt from the conflict-of-
interest provisions of this section.
    (b) What constitutes a gratuity. For the purposes of these 
regulations, the term ``gratuity'' shall include any favor, 
entertainment, gift, tip, loan, payment for unauthorized or fictitious 
work, unusual discount, or anything of monetary value. The term shall 
not include (1) the occasional exchange of a cup of coffee or similar 
social courtesies of nominal value in a business or work relationship if 
the exchange is wholly free of any embarrassing or improper 
implications; (2) the acceptance of unsolicited advertising material 
such as pencils, pens, and note pads of nominal value if the material is 
wholly free of any embarrassing or improper implications; and (3) the 
exchange of the usual courtesies in an obvious family or personal 
relationship (including those between official personnel and their 
parents, spouses, children, or close personal friends) when the 
circumstances make it clear that the exchange is the result of the 
family or personal relationship, rather than a business or work 
relationship.
    (c) Conflicts. In addition to the conflicts of interest prohibited 
by section 11 of the Act, the activities specified in this paragraph 
shall also be considered to be a conflict of interest. Accordingly, no 
official personnel shall, during the term of their license or 
authorization (including any period of suspension):
    (1) Accept any gratuity.
    (2) Accept any fee or charge or other thing of monetary value, in 
addition to the published fee or charge, for the performance of official 
inspection or weighing services under circumstances in which the 
acceptance could result, or create the appearance of resulting, in (i) 
the use of their office or position for undue private gain, (ii) an 
undertaking to give undue preferential treatment to any group or any 
person, or (iii) any other loss of independence or impartiality in the 
performance of official inspection or Class X or Class Y weighing 
services.
    (3) Knowingly perform, or participate in performing, an inspection 
or weighing service on grain in which they have a direct or indirect 
financial interest.
    (4) Engage in the business by buying, selling, transporting, 
cleaning, elevating, storing, binning, mixing, blending, drying, 
treating, fumigating, or other preparation of grain (other than a grower 
of grain, or in the disposition of inspection samples); or in the 
business of cleaning, treating, or fitting carriers or containers for 
transporting or storing grain; the merchandising for nonfarm use of 
equipment for cleaning, drying, treating, fumigating, or otherwise 
processing, handling, or storing grain; or the merchandising of grain 
inspection or weighing equipment (other than buying or selling by 
official personnel of the equipment for use in the performance of their 
official services).
    (5) Seek or hold any appointive or elective office in a grain 
industry organization or association. This provision does not apply to 
organizations of official inspectors or official weighers.
    (6) Participate in any transaction involving the purchase or sale of 
corporate stocks or bonds, grain or grain-

[[Page 526]]

related commodities, or other property for speculative or income 
purposes if the transaction could reasonably be construed to interfere 
with the proper and impartial performance of official inspection for 
Class X or Class Y weighing services. Official personnel are not 
prohibited from (i) producing grain as a grower and selling the grain; 
(ii) making bona fide investments in governmental obligations, banking 
institutions, savings and loan associations, and other tangibles and 
intangibles that are clearly not involved in the production, 
transportation, storage, marketing, or processing of grain; or (iii) 
borrowing money from banks or other financial institutions on customary 
terms.
    (d) Reports of interests. Official personnel shall report 
information regarding their employment or other business or financial 
interests which may be required by the Service.
    (e) Avoiding conflicts of interest. Official personnel shall not 
acquire any financial interest or engage in any activity that would 
result in a violation of this Sec.  800.187, or Sec.  800.186, or 
section 11 of the Act and shall not permit their spouses, minor 
children, or blood relatives who reside in their immediate households to 
acquire any such interest or engage in any such activity. For the 
purpose of this section, the interest of a spouse, minor child, or blood 
relative who is a resident of the immediate household of official 
personnel shall be considered to be an interest of the official 
personnel.
    (f) Disposing of a conflict of interest--(1) Remedial action. Upon 
being informed that a conflict of interest exists and that remedial 
action is required, an applicant for a license and official personnel 
shall take immediate action to end the conflict of interest and inform 
the Service of the action taken.
    (2) Hardship cases. Applicants and official personnel who believe 
that remedial action will cause undue personal hardship may request an 
exception by forwarding to the Service a written statement setting forth 
the facts, circumstances, and reasons for requesting an exception.
    (3) Failure to terminate. If a final determination is made by the 
Service that a conflict of interest does exist and should not be 
excepted, failure to terminate the conflict of interest shall subject: 
(i) An applicant for a license to a dismissal of the application; (ii) 
An employee of the Service to disciplinary action; and (iii) A licensee 
to license revocation.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44453 and 44454, Sept. 
29, 1983; 54 FR 5924, Feb. 7, 1989]



Sec.  800.188  Crop year, variety, and origin statements.

    No official personnel shall certify or otherwise state in writing 
(a) the year of production of grain, including use of terms such as 
``new crop'' or ``old crop''; (b) the place or geographical area where 
the grain was grown; or (c) the variety of the grain.



Sec.  800.189  Corrective actions for violations.

    (a) Criminal prosecution. Official personnel and warehouse samplers 
who commit an offense prohibited by section 13 of the Act are subject to 
criminal prosecution in accordance with section 14 of the Act.
    (b) Administrative action--(1) Other than Service employees. In 
addition to possible criminal prosecution, licensees and warehouse 
samplers are subject to administrative action in accordance with 
sections 9 and 14 of the Act.
    (2) Service employees. In addition to possible criminal prosecution, 
employees of the Service are subject to disciplinary action by the 
Service.

   Delegations, Designations, Approvals, Contracts, and Conflicts of 
                                Interest

    Authority: Sections 800.195 through 800.199 were issued under secs. 
8, 9, 10, 13, and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 2880, 
and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e.



Sec.  800.195  Delegations.

    (a) General. Eligible States may be delegated authority to perform 
official services (excluding appeal inspection) at export port locations 
within their respective States.

[[Page 527]]

    (b) Restrictions. Only the Service or the delegated State may 
perform official inspection, Class X, and Class Y weighing services at 
an export port location within the State. If official inspection 
services, at export port locations within the State, are performed by 
the Service, only the Service may perform Class X and Class Y weighing 
services at the locations. If official inspection services are performed 
by a delegated State, either the State or the Service may perform Class 
X and Class Y weighing services at the export port locations within the 
State.
    (c) Who can apply. States which: (1) Were performing official 
inspection at an export port location under the Act on July 1, 1976, or; 
(2)(i) performed official inspection at an export port location at any 
time prior to July 1, 1976; (ii) were designated under section 7(f) of 
the Act on December 22, 1981, to perform official inspections; and (iii) 
operate in a State from which total annual exports of grain do not 
exceed, as determined by the Administrator, 5 per centum of the total 
amount of grain exported from the United States annually may apply to 
the Service for a delegation.
    (d) When and how to apply. A request for authority to operate as a 
delegated State should be filed with the Service not less than 90 
calendar days before the State proposes to perform the official service. 
A request for authority to operate as a delegated State shall show: (1) 
The export port location(s) where the State proposes to perform official 
inspection, Class X, and Class Y weighing services; (2) the estimated 
annual volume of inspection and weighing services for each location; and 
(3) the schedule of fees the State proposes to assess. A request for a 
revision to a delegation shall (i) be filed with the Service not less 
than 90 calendar days before the desired effective date, and (ii) 
specify the change desired.
    (e) Review of eligibility and criteria for delegation. Each 
applicant for authority to operate as a delegated State shall be 
reviewed to determine whether the applicant meets the eligibility 
conditions contained in paragraph (c) of this section and the criteria 
contained in section 7(f)(1)(A) of the Act. The requested delegation may 
be granted if the Service determines that the applicant meets the 
eligibility conditions and criteria. If an application is dismissed, the 
Service shall notify the applicant promptly, in writing, of the 
reason(s) for the dismissal.
    (f) Responsibilities--(1) Providing official services. Each 
delegated State shall be responsible for providing each official service 
authorized by the delegation at all export elevators at export port 
locations in the State. The State shall perform each official service 
according to the Act, regulations, and instructions.
    (2) Staffing, licensing, and training. Delegated States shall employ 
official personnel on the basis of job qualifications rather than 
political affiliations. The State shall employ sufficient personnel to 
provide the services normally requested in an accurate and timely 
manner. The State shall only use personnel licensed by the Service for 
the performance of official services and shall train and assist its 
personnel in acquiring and maintaining the necessary skills. The State 
shall keep the Service informed of the employment status of each of its 
licensees and any substantial change in a licensee's duties.
    (3) Rotation of personnel. Where feasible, each delegated State 
shall rotate licensees among elevators and other facilities as is 
necessary to preserve the integrity of the official inspection and 
weighting systems.
    (4) Supervision. The State and its officials shall be responsible 
for the actions of the official personnel employed by the State, for 
direct supervision of the daily activities of such personnel, and for 
the conduct of official services and related activities in the State. 
The State shall supervise official activities according to the Act, 
regulations, and instructions and shall take action necessary to ensure 
that its employees are not performing prohibited functions and are not 
involved in any action prohibited by the Act, regulations, or 
instructions. Each State shall report to the Service information which 
shows or may show a violation of any provision of the Act, regulations, 
or instructions and information on any instructions which have been 
issued to State personnel by Service personnel or by

[[Page 528]]

any other person which are contrary to or inconsistent with the Act, 
regulations, or instructions.
    (5) Conflict of interest. (i) General. The delegated State and any 
commissioner, director, employee, or other related person or entity 
shall not have a conflict of interest, as defined in section 11 of the 
Act and Sec.  800.199 of the regulations. A conflict of interest may be 
waived pursuant to Sec.  800.199(d).
    (ii) Unofficial activities. The delegated State or personnel 
employed by the State shall not perform any unofficial service that is 
the same as any of the official services covered by the delegation.
    (6) Fees. The delegated State shall charge fees according to Sec.  
800.70.
    (7) Facilities and equipment. (i) General. The laboratory and office 
facilities of each delegated State shall be: Located; equipped; and 
large enough so that requested services are provided in an orderly and 
timely manner.
    (ii) Equipment testing. Each delegated State shall test the 
equipment that it uses for official services according to the 
instructions.
    (8) Security. Each delegated State shall provide sufficient security 
to assure that official samples, records, equipment, and forms are 
reasonably secure from theft, alteration, or misuse.
    (9) Certificate control system. Each delegated State shall establish 
a certificate control system for all official certificates it receives, 
issues, voids, or otherwise renders useless. The system shall provide 
for: (i) Recording the numbers of the official certificates printed or 
received; (ii) protecting unused certificates from fraudulent or 
unauthorized use; and (iii) maintaining a file copy of each certificate 
issued, voided, or otherwise rendered useless in a manner that would 
permit retrieval.
    (10) Records. Each delegated State shall maintain the records 
specified in Sec. Sec.  800.145 through 800.159.
    (11) Notification to Secretary. A delegated State shall notify the 
Secretary of its intention to temporarily discontinue official 
inspection and/or weighing services for any reason, except in the case 
of a major disaster. The delegated State must provide written 
notification to the Service no less than 72 hours in advance of the 
discontinuation date.
    (g) Termination--(1) Automatic termination. Failure to pay the user 
fees prescribed by the Service for supervisory costs related to official 
inspection and weighing services within 30 days after due shall result 
in the automatic termination of the delegation. The delegation shall be 
reinstated if fees currently due, plus interest and any further expenses 
incurred by the Service because of the termination, are paid within 60 
days after the termination.
    (2) Voluntary cancellation. A State may request that its delegation 
be canceled by giving 90 days written notice to the Service.
    (3) Revocation. (i) Without hearing. The Administrator may revoke 
the delegation of a State without first affording the State opportunity 
for a hearing. Unless otherwise provided, the revocation shall be 
effective when the State receives a notice from the Service regarding 
the revocation and the reason(s) therefor.
    (ii) Informal conference. At the discretion of the Administrator, 
before the delegation of a State is revoked under paragraph (g)(3)(i) of 
this section, the Service may (A) notify the State of the proposed 
action and the reason(s) therefor, and (B) afford the State an 
opportunity to express its views in an informal conference before the 
Administrator.
    (4) Review. At least once every 5 years, a delegated State shall 
submit to a review of its delegation by the Service in accordance with 
the criteria and procedures for delegation prescribed in section 7(e) of 
the Act, this section of the regulations, and the instructions. The 
Administrator may revoke the delegation of a State according to this 
subsection if the State fails to meet or comply with any of the criteria 
for delegation set forth in the Act, regulations, and instructions.
    (h) Provision of services following termination. If a State's 
delegation is terminated, official services at the export

[[Page 529]]

port locations in the State shall be provided by the Service.

(The information collection requirements contained in paragraph (d) were 
approved by the Office of Management and Budget under control number 
0580-0012; paragraphs (f)(2) and (f)(4) were approved under control 
number 0580-0011)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18988, May 6, 1985; 54 
FR 5924, Feb. 7, 1989; 60 FR 65236, Dec. 19, 1995; 81 FR 49863, July 29, 
2016]



Sec.  800.196  Designations.

    (a) General. Eligible persons or governmental agencies may be 
designated to perform official services (excluding appeal inspection) 
within a specified area (other than export port locations).
    (b) Restrictions--(1) General. If official inspection services are 
performed in an area by a designated agency, Class X and Class Y 
weighing services in that area may be performed only by the designated 
agency if the agency applies for designation to provide weighing 
services and is found qualified by the Service. If the agency designated 
to provide official inspection services is found not qualified or does 
not apply, the Class X and Class Y weighing services may be performed by 
another available agency that is found qualified and is designated by 
the Service, or the official services may be performed by the Service.
    (2) Interim authority. (i) By agency. A designated agency may 
perform official services outside its assigned area on an interim basis 
when authorized by the Service.
    (ii) By Service. Official inspection services and/or Class X and 
Class Y weighing services may be performed by the Service in an area 
(other than export port locations) on an interim basis in accordance 
with sections 7(h) and 7A(c) of the Act.
    (c) Who can apply. Any State or local governmental agency or any 
person may apply, subject to sections 7 and 7A of the Act, to the 
Service for designation as an official agency to perform official 
inspection services (excluding appeal inspection) and/or Class X and 
Class Y weighing services in a given area (other than export port 
locations) in the United States.
    (d) When and how to apply. An application for designation should be 
filed with the Service, according to the provisions of the Federal 
Register notice which requests applicants for designation to perform 
official services in existing or new geographic areas. The application 
for designation:
    (1) Shall be submitted on a form furnished by the Service;
    (2) Shall be typewritten or legibly written in English;
    (3) Shall show or be accompanied by documents which show all 
information requested on the form, or otherwise required by the Service; 
and
    (4) Shall be signed by the applicant or its chief operating officer.
    (e) Review of conditions and criteria for designation--(1) 
Application. Each application for a designation shall be reviewed to 
determine whether it complies with paragraph (d) of this section. If an 
application is not in compliance, the applicant shall be provided an 
opportunity to submit the needed information. If the needed information 
is not submitted within a reasonable time, as determined by the Service, 
the application may be dismissed. When an application is dismissed, the 
Service shall notify the applicant, in writing, of the reason(s) for the 
dismissal.
    (2) Applicant. Each applicant for authority to operate as as 
designated agency shall be reviewed to determine whether the applicant 
meets the conditions and criteria contained in sections 7(f)(1)(A) and 
(B) of the Act, Sec.  800.199 of the regulations, and paragraph (g) of 
this section. The requested designation may be granted if the Service 
determines that:
    (i) The requested action is consistent with the need for official 
services;
    (ii) The applicant meets the conditions and criteria specified in 
the Act and regulations;
    (iii) The applicant is better able than any other applicant to 
provide official services; and
    (iv) The applicant addresses concerns identified during 
consultations that the Service conducts with applicants for service to 
the satisfaction of the Service.
    (f) Area of responsibility--(1) General. Each agency shall be 
assigned an area of responsibility by the Service. Each

[[Page 530]]

area shall be identified by geographical boundaries and, in the case of 
a State or local government, shall not exceed the jurisdictional 
boundaries of the State or the local government, unless otherwise 
approved by the Service. The area of responsibility may not include any 
export elevators at export port locations or any portion of an area of 
responsibility assigned to another agency that is performing the same 
functions, except as otherwise provided in Sec.  800.117. A designated 
agency may perform official services at locations outside its assigned 
area of responsibility only after obtaining approval from the Service, 
or in accordance with provisions set forth in Sec.  800.117.
    (2) Amending. A request for an amendment to an assigned area of 
responsibility shall (i) be submitted to the Service in writing; (ii) 
specify the change desired; (iii) be signed by the applicant or its 
chief operating officer; and (iv) be accompanied by the fee prescribed 
by the Service. The assigned area may be amended if the Service 
determines that the amendment is consistent with the provisions and 
objectives of the Act, regulations, and instructions. Upon a finding of 
need, the Service may initiate action to change an assigned area of 
responsibility.
    (3) Specified service points. An agency may change its specified 
service points by notifying the Service in advance. Interested persons 
may obtain a list of specified service points within an agency's area of 
responsibility by contacting the agency. The list shall include all 
specified service points and shall identify each specified service point 
which operates on an intermittent or seasonal basis.
    (g) Responsibilities--(1) Providing official services. Insofar as 
practicable, each agency shall be responsible for providing at all 
locations in its assigned area each service authorized by the 
designation. An agency may, subject to Service approval, make 
arrangements with a neighboring agency to provide official services 
requested infrequently. The agency shall perform all official services 
according to the Act, regulations, and instructions in effect at the 
time of designation or which may be promulgated subsequently.
    (2) Fees. The agency shall charge fees according to Sec.  800.70.
    (3) Staffing, licensing, and training--(i) General. The agency shall 
employ sufficient personnel to provide the official services normally 
requested in an accurate and timely manner. Each agency shall only use 
personnel licensed by the Service for the performance of official 
services and shall train and assist its personnel in acquiring and 
maintaining the necessary skills. Each agency shall keep the Service 
informed of the employment status of each of its licensees and any 
substantial change in a licensee's duties.
    (ii) State agencies. State agencies shall employ official personnel 
on the basis of job qualifications rather than political affiliations.
    (4) Rotation of personnel. Where feasible, each agency shall rotate 
licensees among elevators and other facilities as is necessary to 
preserve the integrity of the official inspection and weighing systems.
    (5) Supervision. The agency and its officials shall be responsible 
for the actions of the official personnel employed by the agency, for 
direct supervision of the daily activities of such personnel, and for 
the conduct of official services and related activities at the agency. 
The agency shall supervise official activities, in accordance with the 
Act, regulations, and instructions, and shall take action necessary to 
ensure that its employees are not performing prohibited functions and 
are not involved in any action prohibited by the Act, regulations, or 
instructions. Each agency shall report to the responsible field office 
information which shows or may show a violation of any provision of the 
Act, regulations, or instructions and information on any instructions 
which have been issued to agency personnel by Service personnel or by 
any other person which are inconsistent with the Act, regulations, or 
instructions.
    (6) Conflict of interest--(i) General. Each agency and any officer, 
director, stockholder, employee, or other related entity shall not have 
a conflict of interest, as defined in Section 11 of the Act and Sec.  
800.199 of the regulations. A conflict of interest may be waived 
pursuant to Sec.  800.199(d). The agency shall

[[Page 531]]

advise the Service immediately of any proposed change in name, 
ownership, officers or directors, or control of the agency and, if a 
trust, any change affecting the trust agreement.
    (ii) Unofficial activities. Except as provided in Sec.  800.76(a), 
the agency or personnel employed by the agency shall not perform any 
unofficial service that is the same as the official services covered by 
the designation.
    (7) Facilities and equipment--(i) General. The laboratory and office 
facilities of each agency shall be: Located; equipped; and large enough 
so that requested services are provided in an orderly and timely manner.
    (ii) Equipment testing. Each agency shall test the equipment it uses 
for official services according to the instructions.
    (8) Security. Each agency shall provide sufficient security to 
ensure that official samples, records, equipment, and forms are 
reasonably secure from theft, alteration, or misuse.
    (9) Certificate control system. Each agency shall establish a 
certificate control system for all official certificates it receives, 
issues, voids, or otherwise renders useless. The system shall provide 
for (i) recording the numbers of the official certificates printed or 
received; (ii) protecting unused certificates from fraudulent or 
unauthorized use; and (iii) maintaining a file copy of each certificate 
issued, voided, or otherwise rendered useless in a manner that would 
permit retrieval.
    (10) Records. Each agency shall maintain the records specified in 
Sec. Sec.  800.145 through 800.159.
    (h) Termination and renewal--(1) Triennial--(i) Termination. A 
designation shall terminate at a time specified by the Administrator, 
but not later than 5 years after the effective date of the designation. 
A notice of termination shall be issued by the Service to a designated 
agency at least 120 calendar days in advance of the termination date. 
The notice shall provide instructions for requesting renewal of the 
designation. Failure to receive a notice from the Service shall not 
exempt a designated agency from the responsibility of having its 
designation renewed on or before the specified termination date.
    (ii) Renewal. Designations may be renewed, upon application, in 
accordance with criteria and procedures for designation prescribed in 
section 7(f) of the Act and this section of the regulations. The 
Administrator may decline to renew a designation if:
    (A) The requesting agency fails to meet or comply with any of the 
criteria for designation set forth in the Act, regulations, and 
instructions, of
    (B) The Administrator determines that another qualified applicant is 
better able to provide official services in the assigned area.
    (2) Automatic termination. Failure to pay the user fees prescribed 
by the Service for supervisory costs related to official inspection and 
weighing services within 30 days after due shall result in the automatic 
termination of the designation. The designation shall be reinstated if 
fees currently due, plus interest and any further expenses incurred by 
the Service because of the termination, are paid within 60 days after 
the termination.
    (3) Voluntary cancellation. An agency may request that its 
designation be canceled by giving 90 days written notice to the Service.
    (4) Suspension or revocation of designation. (i) General. A 
designation is subject to suspension or revocation, under section 
7(g)(3) of the Act, by the Service, whenever the Administrator 
determines that:
    (A) The agency has failed to meet one or more of the criteria 
specified in section 7(f) of the Act or the regulations for the 
performance of official functions, or otherwise has not complied with 
any provision of the Act, regulations, or instructions, or
    (B) Has been convicted of any violation of other Federal law 
involving the handling or official inspection of grain.
    (ii) Summary suspension. The Service may, without first affording 
the agency (hereafter referred to in this paragraph as the 
``respondent'') an opportunity for a hearing, suspend a designation or 
refuse to reinstate a designation when the suspension period has 
expired, pending final determination of the proceeding whenever the 
Service has reason to believe there is cause for revocation of the 
designation and considers such action to be in the best interest of

[[Page 532]]

the official inspection and weighing system. A suspension or refusal to 
reinstate a suspended designation shall be effective upon the 
respondent's receipt of a notice from the Service. Within 30 calendar 
days following the issuance of a notice of such action, the Service 
shall afford the respondent an opportunity for a hearing under paragraph 
(h)(4)(iii) of this section. The Service may terminate the action if it 
finds that alternative managerial, staffing, financial, or operational 
arrangements satisfactory to the Service can be and are made by the 
respondent.
    (iii) Other than summary suspension. Except as provided in paragraph 
(h)(4)(ii) of the section, before the Service revokes or suspends a 
designation, the respondent shall be: (A) Notified by the Service of the 
proposed action and the reason(s) therefor, and (B) afforded an 
opportunity for a hearing in accordance with the Rules of Practice 
Governing Formal Adjudicatory Proceedings Instituted by the Secretary 
Under Various Statutes (7 CFR part 1, subpart H). Before initiating 
formal adjudicatory proceedings, the Service may, at its discretion, 
afford the respondent an opportunity to present its views on the 
proposed action and the reason(s) therefor in an informal conference. 
If, as a result of the informal conference, a consent agreement is 
reached, no formal adjudicatory proceedings shall be initiated.
    (i) Provision of services following suspension or termination. If 
the designation of an agency is suspended, terminated, or the renewal of 
a designation is not granted, the Service shall attempt, upon a finding 
of need, to arrange for a replacement agency. If a qualified replacement 
agency cannot be designated on a timely basis, a qualified agency, if 
available, shall be designated on an interim basis. If a qualified 
agency is not available on an interim basis, the Service shall provide 
needed services on an interim basis.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18989, May 6, 1985; 54 
FR 5924, Feb. 7, 1989; 60 FR 65236, Dec. 19, 1995; 63 FR 45677, Aug. 27, 
1998; 68 FR 19139, Apr. 18, 2003; 81 FR 49863, July 29, 2016]



Sec.  800.197  Approval as a scale testing and certification organization.

    (a) Who may apply. Any State, local government, or person may 
request approval to perform scale testing and certification under the 
Act.
    (b) When and how to apply. A request for approval to perform scale 
testing and certification under the Act should be filed with the Service 
not less than 90 calendar days before the requested action's effective 
date. A request for approval to perform scale testing and certification 
shall:
    (1) Show or be accompanied by documents which show all information 
required by the Service;
    (2) Certify that each employee scheduled to perform official scale 
testing and certification services is competent to test weighing 
equipment and has a working knowledge of the regulations and 
instructions applicable to such services;
    (3) Be accompanied by the fee prescribed in Sec.  800.71; and
    (4) Be signed by the applicant or its chief operating officer.
    (c) Review of applicant. The review of an applicant for authority to 
perform scale testing and certification shall include an evaluation of 
the applicant's policies and procedures for testing and certifying 
scales for Class X and Class Y weighing.
    (d) Termination--(1) Voluntary. A scale testing and certification 
organization may request cancellation of its approval by notifying the 
Service.
    (2) Suspension or revocation of approval--(i) General. An approval 
is subject to suspension or revocation whenever the Administrator 
determines that the approved organization has violated any provision of 
the Act or regulations, or has been convicted of any violation involving 
the handling, weighing, or inspection of grain under Title 18 of the 
United States Code.
    (ii) Summary suspension. The Service may, without first affording 
the organization an opportunity for a hearing, suspend an approval or 
refuse to reinstate an approval when the suspension period has expired, 
pending final determination of the proceeding whenever the Service has 
reason to believe there is cause for revocation of the approval and 
considers such action to be in the

[[Page 533]]

best interest of the official weighing system. A suspension or refusal 
to reinstate a suspended approval shall be effective when the 
organization receives a notice from the Service. Within 30 calendar days 
following the issuance of a notice of such action, the Service shall 
give the organization an opportunity for a hearing under paragraph 
(d)(2)(iii) of this section. The Service may terminate its action if it 
finds that alternative managerial, staffing, or operational arrangements 
satisfactory to the Service can be and are made by the organization.
    (iii) Other than summary suspension. Except as provided in paragraph 
(d)(2)(ii) of this section, before the Service revokes or suspends an 
approval, the organization shall be notified by the Service of the 
proposed action and the reason(s) therefor and shall be given an 
opportunity for a hearing. Before the Service initiates a hearing, it 
may, at its discretion, give the organization an opportunity to present 
its views on the proposed action and the reason(s) therefor in an 
informal conference. If a consent agreement is reached during the 
informal conference, no formal adjudicatory proceedings shall be 
initiated.

(The information collection requirements contained in paragraph (b) were 
approved by the Office of Management and Budget under control number 
0580-0012)

[49 FR 30915, Aug. 2, 1984, as amended at 54 FR 5924, Feb. 7, 1989]



Sec.  800.198  Contracts.

    (a) Services contracted and who may apply. The Service may enter 
into a contract with any person, State, or governmental agency to 
perform on an occasional basis:
    (1) Specified official sampling, laboratory testing, or other 
similar objective technical activities involved in the testing of grain 
for official factors or official criteria, and
    (2) Monitoring activities in foreign ports with respect to export 
grain that has been inspected and weighed under the Act.
    (b) Restrictions--(1) Conflict of interest. A person, State or 
governmental agency with a conflict of interest prohibited by section 11 
of the Act or Sec.  800.199 shall not be eligible to enter into a 
contract with the Service.
    (2) Appeal service. An agency or employees of agencies shall not be 
eligible to enter into a contract with the Service to obtain samples 
for, or to perform other services involved in appeal inspection or Board 
appeal inspection services. However, agencies may forward file samples 
to the Service in accordance with Sec.  800.156(d).
    (3) Monitoring services. Agencies, employees of agencies, 
organizations, employees of organizations, and other persons that 
regularly provide official services to persons who export grain from the 
United States are eligible to enter into a contract with the Service to 
perform monitoring services on export grain in foreign ports only if 
they are under Service employees' direct supervision during monitoring 
activities.
    (c) When and how to apply. An application for a contractual 
arrangement shall: (1) Be typewritten or legibly written in English; (2) 
conform to the invitation to bid or other instructions issued by the 
Service or be filed on a form furnished by the Service; (3) show or be 
accompanied by documents which show any information requested by the 
Service; and (4) be signed by the applicant or its chief operating 
officer. All contracts shall be issued by the Department and shall 
follow Departmental procedures.
    (d) Termination and renewal. A contract with the Service shall 
terminate annually unless othewise provided in the contract. A contract 
may be renewed in accordance with Departmental procedures.
    (e) Cancellation. A contract may, upon request of the governmental 
agency or person that entered into the contract with the Service, be 
canceled by the Department in accordance with the terms of the contract 
or Departmental procedures and regulations.

(The information collection requirements contained in paragraph (c) were 
approved by the Office of Management and Budget under control number 
0580-0012)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18989, May 6, 1985; 54 
FR 5924, Feb. 7, 1989]

[[Page 534]]



Sec.  800.199  Conflict-of-interest provisions.

    (a) Meaning of terms. For the purpose of this section, the following 
terms shall have the meaning given for them below:
    (1) Grain business. The term ``grain business'' shall include (i) 
any entity that is engaged in the commercial transportation, storage, 
merchandising or other commercial handling of grain, which includes: The 
commercial buying, selling, transporting, cleaning, elevating, storing, 
binning, mixing, blending, drying, treating, fumigating, or other 
preparation of grain (other than as a grower of grain or the disposition 
of inspection samples); the cleaning, treating, or fitting of carriers 
or containers for transporting or storing of grain; the merchandising of 
equipment for cleaning, drying, treating, fumigating, or other 
processing, handling, or storing of grain; the merchandising of grain 
inspection and weighing equipment (other than the buying or selling by 
an agency or official personnel of the equipment for their exclusive use 
in the performance of their official inspection or Class X or Class Y 
weighing services); and the commercial use of official inspection and 
Class X or Class Y weighing services and (ii) any board of trade, 
chamber of commerce, grain exchange, or other trade group composed, in 
whole or in part, of one or more such entities.
    (2) Interest. The term ``interest'' when used with respect to an 
individual, shall include the interest of a spouse, minor child, or 
blood relative who resides in the immediate household of the individual.
    (3) Related. The term ``related'' when used in reference to a 
business or governmental entity means an entity that owns or controls 
another entity, or is owned or controlled by another entity, or both 
entities are owned or controlled by another entity.
    (4) Substantial stockholder. The term ``substantial stockholder'' 
means any person holding 2 per centum or more, or 100 shares or more of 
the voting stock of the corporation, whichever is the lesser interest.
    (b) Prohibited conflicts of interest. Unless waived on a case-by-
case basis by the Administrator under section 11(b)(5) or the Act, the 
following conflicts of interest for a business or association are 
prohibited:
    (1) Agency and contractor. No agency or contractor, or any member, 
director, officer, or employee thereof, and no business or governmental 
entity related to any such agency or contractor, shall be employed in or 
otherwise engaged in, or directly or indirectly have any stock or other 
financial interest in, any grain business or otherwise have any conflict 
of interest specified in Sec.  800.187(b).
    (2) Grain business. No grain business or governmental entity 
conducting any such business, or any member, director, officer, or 
employee thereof, and no other business or governmental entity related 
to any such entity, shall operate or be employed by, or directly or 
indirectly have any stock or other financial interest in, any agency or 
contractor.
    (3) Stockholder in any agency or contractor. No substantial 
stockholder in any agency or contractor shall be employed in or 
otherwise engaged in, or be a substantial stockholder in, any grain 
business, or directly or indirectly have any other kind of financial 
interest in any such business or otherwise have any conflict of interest 
specified in Sec.  800.187(b).
    (4) Stockholder of a grain business. No substantial stockholder in 
any grain business shall operate or be employed by or be a substantial 
stockholder in, or directly or indirectly have any other kind of 
financial interest in an incorporated agency or contractor.
    (5) Gratuity. No person described in paragraph (b)(1) of this 
section shall give to or accept from a person described in paragraph 
(b)(2) of this section any gratuity, and no person described in 
paragraph (b)(2) of this section shall give to or accept from a person 
described in paragraph (b)(1) of this section any gratuity. A 
``gratuity'' is defined in Sec.  800.187(a).
    (c) Exempt conflicts of interest--(1) Agency and contractor. An 
agency or contractor may use laboratory or office space or inspection, 
weighing, transportation, or office equipment that is owned or 
controlled, in whole or in

[[Page 535]]

part, by a grain business or related entity when the use of the space or 
equipment is approved by the Service for the performance of onsite 
official services under the Act.
    (2) Financial institution. A bona fide financial institution that 
has a financial relationship with one or more grain businesses or 
related entities may have a financial relationship with an agency, 
contractor, or related agency.
    (3) Grain business. A grain business or related entity may furnish 
laboratory or office space or inspection, weighing, transportation, or 
office equipment for use by an agency, contractor, or field office when 
use of the space or equipment is approved by the Service for the 
performance of onsite official inspection or weighing services.
    (d) Disposition of a conflict of interest. Upon being informed that 
a prohibited conflict of interest exists in the ownership, management, 
or operation of an agency and that remedial action is required, the 
agency shall take immediate action to resolve that conflict of interest 
and inform the Service of the action taken. An agency which believes 
that remedial action will cause undue economic hardship or other 
irreparable harm may request a waiver by forwarding to the Service a 
written statement setting forth the facts, the circumstances, and the 
reasons for requesting a waiver.

[49 FR 30915, Aug. 2, 1984]

             Supervision, Monitoring, and Equipment Testing



Sec.  800.215  Activities that shall be supervised.

    (a) General. Supervision of the activities described in this section 
shall be performed in accordance with the instructions.
    (b) Administrative activities. Administrative activities subject to 
supervision include but are not limited to (1) providing staffing, 
equipment, and facilities for performing authorized services; (2) 
dismissing requests for services and withholding requested services; (3) 
maintaining official records; (4) assessing and collecting fees; (5) 
rotating official personnel; (6) implementing instructions for (i) 
recruiting official personnel, (ii) training and supervising official 
and approved personnel, (iii) work performance and work production 
standards; and (7) supervising and monitoring.
    (c) Technical activities--(1) Equipment testing activities. 
Equipment testing activities subject to supervision include but are not 
limited to (i) implementing (A) the equipment performance requirements 
in parts 801 and 802 of this chapter and (B) the instructions for the 
operation of equipment used under the Act and for performing equipment-
testing activities and (ii) performing equipment-testing activities by 
official personnel or by approved scale testing organizations.
    (2) Inspection activities. Inspection activities subject to 
supervision include but are not limited to (i) implementing (A) the 
Official U.S. Standards for Grain, (B) official criteria, and (C) 
instructions for the performance of inspection activities and (ii) 
performing stowage examination, sampling, laboratory testing, grading, 
and certification activities by official personnel.
    (3) Weighing activities. Weighing activities subject to supervision 
include but are not limited to (i) implementing (A) uniform weighing 
procedures and (B) instructions for the performance of weighing 
activities and (ii) performing (A) stowage examination, sampling (sacked 
grain), weighing, and certification activities by official personnel and 
(B) by approved weighers of weighing activities.
    (4) Testing of prototype equipment activities. Prototype or proposed 
equipment is tested to determine whether the equipment will improve the 
performance of activities under the Act. Prototype equipment-testing 
activities subject to supervision include but are not limited to (i) 
implementing instructions for the testing of prototype equipment, (ii) 
testing prototype equipment by official personnel, and (iii) approving 
or denying the use of prototype equipment for use under the Act.



Sec.  800.216  Activities that shall be monitored.

    (a) General. Each of the administrative and technical activities 
identified

[[Page 536]]

in Sec.  800.215 and the elevator and merchandising activities 
identified in this section shall be monitored in accordance with the 
instructions.
    (b) Grain merchandising activities. Grain merchandising activities 
subject to monitoring for compliance with the Act include but are not 
limited to (1) failing to promptly forward an export certificate; (2) 
describing grain by other than official grades; (3) falsely describing 
export grain; (4) falsely making or using official certificates, forms, 
or marks; (5) making false quality or quantity representations about 
grain; and (6) selling export grain without a certificate of 
registration.
    (c) Grain handling activities. Grain handling activities subject to 
monitoring for compliance with the Act include, but are not limited to:
    (1) Shipping export grain without inspection or weighing;
    (2) Violating any Federal law with respect to the handling, 
weighing, or inspection of grain;
    (3) Deceptively loading, handling, weighing, or sampling grain; and
    (4) Exporting grain without a certificate of registration.
    (d) Recordkeeping activities. Elevator and merchandising 
recordkeeping activities subject to monitoring for compliance with the 
Act include those that are identified in section 12(d) of the Act and 
Sec.  800.25 of the regulations.
    (e) Other activities. Other activities subject to monitoring for 
compliance with the Act include but are not limited to (1) resolving 
conflicts of interest by official agencies or their employees; (2) 
providing access to elevator facilities and records; (3) improperly 
influencing or interfering with official personnel; (4) falsely 
representing that a person is official personnel; (5) using false means 
in filing an application for services under the Act; and (6) preventing 
interested persons from observing the loading, Class X or Class Y 
weighing, or official sampling of grain.

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
50 FR 2273, Jan. 16, 1985; 81 FR 49863, July 29, 2016]



Sec.  800.217  Equipment that shall be tested.

    (a) General. Testing of equipment and prototype equipment described 
in this section shall be performed in accordance with the instructions.
    (b) Inspection equipment. Each unit of equipment used in the 
official sampling, testing, or grading of grain, or in monitoring the 
official inspection of grain, shall be examined to determine whether the 
equipment is functioning in an approved manner. In addition, each unit 
of equipment for which official performance requirements have been 
established shall be tested for accuracy. For the purpose of this 
paragraph, diverter-type mechanical samplers used in obtaining 
warehouseman's samples shall be considered to be official inspection 
equipment used under the Act.
    (c) Weighing equipment. Each unit of equipment used in the Class X 
or Class Y weighing of grain or in monitoring the Class X or Class Y 
weighing of grain, each related grain handling system, and each related 
computer system shall be examined to determine whether it is functioning 
in an approved manner. In addition, each unit of equipment for which 
official performance requirements have been established shall be tested 
for accuracy.
    (d) Prototype equipment--(1) At request of interested party. Upon 
request of a financially interested party and with the concurrence of 
the Administrator, prototype grain inspection or weighing equipment may 
be tested by the Service for official use.
    (2) Determination by Service. Upon a determination of need, the 
Service may develop, contract for, or purchase and test prototype grain 
inspection or weighing equipment for official use.



Sec.  800.218  Review of rejection or disapproval of equipment.

    Any person desiring to complain of a rejection or disapproval of 
equipment by official personnel or of any alleged discrepancy in the 
testing of equipment under the Act by official personnel or by approved 
scale testing organizations may file a complaint with the Service.



Sec.  800.219  Conditional approval on use of equipment.

    (a) Approval. Equipment that is in use under the Act on the 
effective date

[[Page 537]]

of this section shall be considered conditionally to have been adopted 
and approved by the Service.
    (b) Limitation on approval. This conditional approval shall not bar 
a later rejection or disapproval of the equipment by the Service upon a 
determination that the equipment (1) should be rejected for official 
use, or (2) is not functioning in an approved manner, or (3) is not 
producing results that are accurate within prescribed tolerances, or (4) 
is producing results that are otherwise not consistent with the 
objectives of the Act.



PART 801_OFFICIAL PERFORMANCE REQUIREMENTS FOR GRAIN INSPECTION 
EQUIPMENT--Table of Contents



Sec.
801.1 Applicability.
801.2 Meaning of terms.
801.3 Tolerances for barley pearlers.
801.4 Tolerances for dockage testers.
801.5 Tolerances for diverter-type mechanical samplers.
801.6 Tolerances for moisture meters.
801.7 Reference methods and tolerances for near-infrared spectroscopy 
          (NIRS) analyzers.
801.8 Tolerances for sieves.
801.9 Tolerances for test weight apparatuses.
801.10 [Reserved]
801.11 Related design requirements.
801.12 Design requirements incorporated by reference.

    Authority: 7 U.S.C. 71-87k

    Source: 51 FR 7050, Feb. 28, 1986, unless otherwise noted.



Sec.  801.1  Applicability.

    The requirements set forth in this part 801 describe certain 
specifications, tolerances, and other technical requirements for 
official grain inspection equipment and related sample handling systems 
used in performing inspection services under the Act.



Sec.  801.2  Meaning of terms.

    (a) Construction. Words used in the singular form in this part shall 
be considered to imply the plural and vice versa, as appropriate.
    (b) Definitions. The definitions of terms listed in the part 800 
shall have the same meaning when the terms are used in this part 801. 
For the purposes of this part, the following terms shall have the 
meanings given for them below.
    (1) Avoirdupois weight. A unit of weight based on a pound of 16 
ounces.
    (2) Barley pearler. An approved laboratory device used to 
mechanically dehull kernels of barley or other grain.
    (3) Deviation from standard. In testing inspection equipment for 
accuracy, the variation between (i) the individual test result from the 
equipment that is being tested and (ii) the reference standard or the 
individual test result from the standard (or National standard) 
equipment, as applicable.
    (4) Direct comparison method. An equipment testing procedure wherein 
transfer standards are tested at the same time and place to compare the 
performance of two or more units of the same inpsection equipment. One 
unit of the equipment used in the test shall be standard inspection 
equipment. (See also sample exchange method).
    (5) Diverter-type mechanical sampler (primary). An approved device 
used to obtain representative portions from a flowing stream of grain.
    (6) Diverter-type mechanical sampler (secondary). An approved device 
used to subdivide the portions of grain obtained with a diverter-type 
mechanical sampler (primary).
    (7) Divider. An approved laboratory device used to mechanically 
divide a sample of grain into two or more representative portions.
    (8) Dockage tester. An approved laboratory device used to 
mechanically separate dockage and/or foreign material from grain.
    (9) Maintenance tolerance. An allowance established for use in 
determining whether inspection equipment should be approved for use in 
performing official inspection services.
    (10) Mean deviation from standard. In testing inspection equipment 
for accuracy, the variation between (i) the average for the test results 
from the equipment that is being tested and (ii) the reference standard 
or the average of the test results from the standard (or National 
standard) equipment, as applicable.
    (11) Metric weight. A unit of weight based on the kilogram of 1,000 
grams.

[[Page 538]]

    (12) Moisture meter. An approved laboratory device used to indicate 
directly or through conversion and/or correction tables the moisture 
content of grain including cereal grains and oil seeds.
    (13) National standard inspection equipment. A designated approved 
unit of inspection equipment used as the reference in determining the 
accuracy of standard inspection equipment.
    (14) Official inspection equipment. Equipment approved by the 
Service and used in performing official inspection services.
    (15) Sample exchange method. An equipment testing procedure wherein 
transfer standards are tested to compare the performance of two or more 
units of the same inspection equipment installed at different locations. 
One unit of the equipment used in the test shall be standard inspection 
equipment. (See also direct comparison method.)
    (16) Sieves. Approved laboratory devices with perforations for use 
in separating particles of various sizes.
    (17) Standard inspection equipment. An approved unit of inspection 
equipment that is designated by the Service for use in determining the 
accuracy of official inspection equipment.
    (18) Test weight. The avoirdupois weight of the grain or other 
material in a level-full Winchester bushel.
    (19) Test weight apparatus. An approved laboratory device used to 
measure the test weight (density) of a sample of grain.
    (20) Transfer standard. The medium (device or material) by which 
traceability is transferred from one inspection equipment standard unit 
to another unit.
    (21) Winchester bushel. A container that has a capacity of 2,150.42 
cubic inches (32 dry quarts).



Sec.  801.3  Tolerances for barley pearlers.

    The maintenance tolerances for barley pearlers used in performing 
official inspection services shall be:

------------------------------------------------------------------------
                 Item                               Tolerance
------------------------------------------------------------------------
Timer switch:
  0 to 60 seconds.....................  5 seconds,
                                         deviation from standard clock
  61 to 90 seconds....................  7 seconds,
                                         deviation from standard clock
  Over 90 seconds.....................  10
                                         seconds, deviation from
                                         standard clock
Pearled portion.......................  1.0 gram,
                                         mean deviation from standard
                                         barley pearler using barley
------------------------------------------------------------------------



Sec.  801.4  Tolerances for dockage testers.

    The maintenance tolerances for dockage testers used in performing 
official inspection services shall be:

------------------------------------------------------------------------
                 Item                               Tolerance
------------------------------------------------------------------------
Air separation........................  0.10
                                         percent, mean deviation from
                                         standard dockage tester using
                                         Hard Red Winter wheat
Riddle separation.....................  0.10
                                         percent, mean deviation from
                                         standard dockage tester using
                                         Hard Red Winter wheat
Sieve separation......................  0.10
                                         percent, mean deviation from
                                         standard dockage tester using
                                         Hard Red Winter wheat
Total dockage separation..............  0.15
                                         percent, mean deviation from
                                         standard dockage tester using
                                         Hard Red Winter wheat
------------------------------------------------------------------------



Sec.  801.5  Tolerance for diverter-type mechanical samplers.

    The maintenance tolerance for diverter-type mechanical samplers 
(primary, or primary and secondary in combination) used in performing 
official inspection services shall be 10 percent, 
mean deviation from standard sampling device using corn or the same type 
of grain that the system will be used to sample.



Sec.  801.6  Tolerances for moisture meters.

    (a) The maintenance tolerances for Motomco 919 moisture meters used 
in performing official inspection services shall be:
    (1) Headquarters standard meters:

----------------------------------------------------------------------------------------------------------------
                                                                   Tolerance
       Moisture range        -----------------------------------------------------------------------------------
                                          Direct comparison                          Sample exchange
----------------------------------------------------------------------------------------------------------------
Low.........................  0.05 percent
                               moisture, mean deviation from National
                               standard moisture meter using Hard Red
                               Winter wheat

[[Page 539]]

 
Mid.........................  0.05 percent
                               moisture, mean deviation from National
                               standard moisture meter using Hard Red
                               Winter wheat
High........................  0.05 percent
                               moisture, mean deviation from National
                               standard moisture meter using Hard Red
                               Winter wheat
----------------------------------------------------------------------------------------------------------------

    (2) All other than Headquarters standard meters:

----------------------------------------------------------------------------------------------------------------
                                                                   Tolerance
       Moisture range        -----------------------------------------------------------------------------------
                                          Direct comparison                          Sample exchange
----------------------------------------------------------------------------------------------------------------
Low.........................  0.15 percent        0.20 percent
                               moisture, mean deviation from standard    moisture, mean deviation from standard
                               moisture meter using Hard Red Winter      moisture meter using Hard Red Winter
                               wheat                                     wheat
Mid.........................  0.10 percent        0.15 percent
                               moisture, mean deviation from standard    moisture, mean deviation from standard
                               moisture meter using Hard Red Winter      moisture meter using Hard Red Winter
                               wheat                                     wheat
High........................  0.15 percent        0.20 percent
                               moisture, mean deviation from standard    moisture, mean deviation from standard
                               moisture meter using Hard Red Winter      moisture meter using Hard Red Winter
                               wheat                                     wheat
----------------------------------------------------------------------------------------------------------------

    (b) The maintenance tolerances for GAC 2100 moisture meters used in 
performing official inspection services shall be:
    (1) Headquarters standard meters. By direct comparison using mid-
range Hard Red Winter wheat, 0.05% mean deviation 
for the average of the Headquarters standard moisture meters.
    (2) All other than Headquarters standard meters. By sample exchange 
using mid-range Hard Red Winter wheat, 0.15% mean 
deviation from the standard meter.

[63 FR 34554, June 25, 1998]



Sec.  801.7  Reference methods and tolerances for near-infrared
spectroscopy (NIRS) analyzers.

    (a) Reference methods. (1) The chemical reference protein 
determinations used to reference and calibrate official NIRS instruments 
shall be performed in accordance with ``Comparison of Kjeldahl Method 
for Determination of Crude Protein in Cereal Grains and Oilseeds with 
Generic Combustion Method: Collaborative Study,'' July/August 1993, 
Ronald Bicsak, Journal of AOAC International Vol. 76, No. 4, 1993, and 
subsequently approved by the AOAC International as the Combustion 
method, AOAC International Method 992.23. This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be 
obtained from Director, Technical Services Division, Federal Grain 
Inspection Service, 10383 North Executive Hills Blvd., Kansas City, MO 
64153-1394. Copies may be inspected at the above address or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
    (2) The chemical reference starch determination used to reference 
and calibrate official NIRS instruments shall be performed in accordance 
with the Corn Refiners Association Method A-20, Analysis for Starch in 
Corn, Second revision, April 15, 1986, Standard Analytical Methods of 
the Member Companies of the Corn Refiners Association, Inc. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
may be obtained from Director, Technical Services Division, Federal 
Grain Inspection Service, 10383 North Executive Hills Blvd., Kansas 
City, MO 64153-

[[Page 540]]

1394. Copies may be inspected at the above address or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
    (b) Tolerances--(1) NIRS wheat protein analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of wheat protein content shall be 0.15 percent mean deviation from the national standard 
NIRS instruments, which are referenced and calibrated to the Combustion 
method, AOAC International Method 992.23.
    (2) NIRS soybean oil and protein analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of soybean oil shall be 0.20 percent mean deviation from the national standard 
NIRS instruments, which are referenced and calibrated to the FGIS 
solvent oil extraction method; and for determination of protein content 
shall be 0.20 percent mean deviation from the 
national standard NIRS instruments, which are referenced and calibrated 
to the Combustion method, AOAC International Method 992.23.
    (3) NIRS corn oil, protein, and starch analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of corn oil shall be 0.20 percent mean deviation from the national standard 
NIRS instruments, which are referenced and calibrated to the FGIS 
solvent oil extraction method; for determination of protein content 
shall be 0.30 percent mean deviation from the 
national standard NIRS instruments, which are referenced and calibrated 
to the Combustion method, AOAC International Method 992.23; and for 
determination of starch content shall be 0.35 
percent mean deviation from the national standard NIRS instruments, 
which are referenced and calibrated to the Starch method, Corn Refiners 
Association Method A-20.
    (4) NIRS barley protein analyzers. The maintenance tolerances for 
the NIRS analyzers used in performing official inspections for 
determination of barley protein content are 0.20 percent mean deviation 
from the national standard NIRS instruments, which are referenced and 
calibrated to the Combustion method, AOAC International Method 992.23.

[63 FR 35505, June 30, 1998, as amended at 69 FR 18803, Apr. 9, 2004; 71 
FR 65373, Nov. 8, 2006]



Sec.  801.8  Tolerances for sieves.

    The maintenance tolerances for sieves used in performing official 
inspection services shall be:
    (a) Thickness of metal: 0.0015 inch.
    (b) Accuracy of perforation: 0.001 inch from 
design specification.
    (c) Sieving accuracy:

------------------------------------------------------------------------
                                                  Tolerance
         Sieve description         -------------------------------------
                                    Direct comparison   Sample exchange
------------------------------------------------------------------------
.064 x \3/8\ inch oblong..........  0.2         thn-eq>0.3
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using wheat.       using wheat
\5/64\ x \3/4\ inch slotted.......  0.3         thn-eq>0.5
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
5\5/64\ x \3/4\ inch slotted......  0.5         thn-eq>0.7
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
\6/64\ x \3/4\ inch slotted.......  0.7         thn-eq>1.0
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
------------------------------------------------------------------------



Sec.  801.9  Tolerances for test weight apparatuses.

    The maintenance tolerances for test weight per bushel apparatuses 
used in performing official inspection services shall be:

------------------------------------------------------------------------
                  Item                              Tolerance
------------------------------------------------------------------------
Beam/scale accuracy....................  0.10
                                          pound per bushel deviation at
                                          any reading, using test
                                          weights
Overall accuracy.......................  0.15
                                          pound per bushel, mean
                                          deviation from standard test
                                          weight apparatus using wheat
------------------------------------------------------------------------


[[Page 541]]



Sec.  801.10  [Reserved]



Sec.  801.11  Related design requirements.

    (a) Suitability. The design, construction, and location of official 
sampling and inspection equipment and related sample handling systems 
shall be suitable for the official sampling and inspection activities 
for which the equipment is to be used.
    (b) Durability. The design, construction, and material used in 
official sampling and inspection equipment and related sample handling 
systems shall assure that, under normal operating conditions, operating 
parts will remain fully operable, adjustments will remain reasonably 
constant, and accuracy will be maintained between equipment test 
periods.
    (c) Marking and identification. Official sampling and inspection 
equipment for which tolerances have been established shall be 
permanently marked to show the manufacturer's name, initials, or 
trademark; the serial number of the equipment; and the model, the type, 
and the design or pattern of the equipment. Operational controls for 
mechanical samplers and related sample handling systems, including but 
not limited to pushbuttons and switches, shall be conspicuously 
identified as to the equipment or activity controlled by the pushbutton 
or switch.
    (d) Repeatability. Official inspection equipment when tested in 
accordance with Sec. Sec.  800.217 and 800.219 shall, within the 
tolerances prescribed in Sec. Sec.  801.3 through 801.10, be capable of 
repeating its results when the equipment is operated in its normal 
manner.
    (e) Security. Mechanical samplers and related sample handling 
systems shall provide a ready means of sealing to deter unauthorized 
adjustments, removal, or changing of component parts or timing sequence 
without removing or breaking the seals; and otherwise be designed, 
constructed, and installed in a manner to prevent deception by any 
person.
    (f) Installation requirements. Official sampling and inspection 
equipment and related sample handling systems shall be installed (1) at 
a site approved by the Service, (2) according to the manufacturer's 
instructions, and (3) in such a manner that neither the operation nor 
the performance of the equipment or system will be adversely affected by 
the foundation, supports, or any other characteristic of the 
installation.



Sec.  801.12  Design requirements incorporated by reference.

    (a) Moisture meters. All moisture meters approved for use in 
official grain moisture determination and certification shall meet 
applicable requirements contained in the FGIS Moisture Handbook and the 
General Code and Grain Moisture Meters Code of the 1991 edition of the 
National Institute of Standards and Technology's (NIST) Handbook 44, 
``Specifications, Tolerances, and Other Technical Requirements for 
Weighing and Measuring Devices.'' Pursuant to the provisions of 5 U.S.C. 
552(a), the materials in Handbook 44 are incorporated by reference as 
they exist on the date of approval and a notice of any change in these 
materials will be published in the Federal Register.
    The NIST Handbook is for sale by the Superintendent of Documents, 
U.S. Government Printing Office, Washington, DC 20403. It is also 
available for inspection at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal_register/code_of_federal_regulations/ibr_locations.html.
    The following Handbook 44 requirements are not incorporated by 
reference:

General Code (1.10.)
    G-S.5.5. Money Values, Mathematical Agreement
    G-T.1. Acceptance Tolerances
    G-UR.3.3. Position of Equipment
    G-UR.3.4. Responsibility, Money-Operated Devices
Grain Moisture Meters (5.56.)
    N.1.1. Transfer Standards
    N.1.2. Minimum Test
    N.1.3. Temperature Measuring Equipment
    T.2. Tolerance Values
    T.3. For Test Weight Per Bushel Indications or Recorded 
Representations
    UR.3.2. Other Devices not used for Commercial Measurement
    UR.3.7. Location
    UR.3.11. Posting of Meter Operating Range


[[Page 542]]


    (b) [Reserved]

[57 FR 2673, Jan. 23, 1992, as amended at 69 FR 18803, Apr. 9, 2004]



PART 802_OFFICIAL PERFORMANCE AND PROCEDURAL REQUIREMENTS FOR GRAIN 
WEIGHING EQUIPMENT AND RELATED GRAIN HANDLING SYSTEMS--Table of Contents



Sec.
802.0 Applicability.
802.1 Qualified laboratories.

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended (7 U.S.C. 71 et 
seq.).



Sec.  802.0  Applicability.

    (a) The requirements set forth in this part 802 describe certain 
specifications, tolerances, and other technical requirements for grain 
weighing equipment and related grain handling systems used in performing 
Class X and Class Y weighing services, official inspection services, and 
commercial services under the Act. All scales used for official grain 
weight and inspection certification services provided by FGIS must meet 
applicable requirements contained in the FGIS Weighing Handbook, the 
General Code, the Scales Code, the Automatic Bulk Weighing Systems Code, 
and the Weights Code of the 2008 edition of National Institute of 
Standards and Technology (NIST) Handbook 44, ``Specifications, 
Tolerances, and Other Technical Requirements for Weighing and Measuring 
Devices'' (Handbook 44); and NIST Handbook 105-1 (1990 Edition), 
``Specifications and Tolerances for Reference Standards and Field 
Standard Weights and Measures,'' (Handbook 105-1). These requirements 
are confirmed to be met by having National Type Evaluation Program type 
approval. Scales used for commercial purposes will be required to meet 
only the applicable requirements of the 2008 edition of the NIST 
Handbook-44. Pursuant to the provisions of 5 U.S.C. 552(a), with the 
exception of the Handbook 44 requirements listed in paragraph (b), the 
materials in Handbooks 44 and 105-1 are incorporated by reference as 
they exist on the date of approval and a notice of any change in these 
materials will be published in the Federal Register. This incorporation 
by reference was approved by the Director of the Federal Register on 
March 8, 2011, in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The 
NIST Handbooks are for sale by the National Conference of Weights and 
Measures (NCWM), 1135 M Street, Suite 110, Lincoln, Nebraska 68508. 
Information on these materials may be obtained from NCWM by calling 402-
434-4880, by E-mailing [email protected], or on the Internet at http://
www.nist.gov/owm.
    (b) The following Handbook 44 requirements are not incorporated by 
reference:

                              Scales (2.20)

S.1.8. Computing Scales
S.1.8.2. Money-Value Computation
S.1.8.3. Customer's Indications
S.1.8.4. Recorded Representations, Point of Sale
S.2.5.2. Jeweler's, Prescription, & Class I & II Scales
S.3.3. Scoop Counterbalance
N.1.3.2. Dairy-Product Test Scales
N.1.5. Discrimination Test (Not adopted for Grain Test Scales only)
N.1.8. Material Tests
N.3.1.2. Interim Approval
N.3.1.3. Enforcement Action For Inaccuracy
N.4. Coupled-in-Motion Railroad Weighing Systems
N.6. Nominal Capacity of Prescription Scales
T.1.2. Postal and Parcel Post Scales
T.2.3. Prescription Scales
T.2.4. Jewelers' Scales (all sections)
T.2.5. Dairy--Product--Test Scales (all sections)
T.N.3.9. Materials Test on Customer--Operated Bulk--Weighing Systems for 
Recycled Materials
UR.1.4. Grain Test Scales: Value of Scale Divisions
UR.3.1. Recommended Minimum Load
UR.3.1.1. Minimum Load, Grain Dockage

                 Automatic Bulk Weighing Systems (2.22)

N.1.3. Decreasing-Load Test

[75 FR 76255, Dec. 8, 2010]



Sec.  802.1  Qualified laboratories.

    (a) Metrology laboratories. (1) Any State metrology laboratory 
currently approved by the NBS ongoing certification program having 
auditing capability is automatically approved by the Service.
    (2) Any county or city weights and measures jurisdiction approved by 
NBS or by their respective NBS-Certified

[[Page 543]]

State laboratory as being equipped with appropriate traceable standards 
and trained staff to provide valid calibration is approved by the 
Service. The State approval may be documented by a certificate or 
letter. The jurisdiction must be equipped to provide suitable 
certification documentation.
    (3) Any commercial industrial laboratory primarily involved in the 
business of sealing and calibrating test weights (standards) will be 
approved by the Service provided:
    (i) It requests written authority to perform tolerance testing of 
weights used within the Service's program(s) through their approved 
State jurisdiction. Copies of its request and written reference 
regarding the State decision shall be provided to the Service. A 
positive decision by the State will be required as a prerequisite to the 
Service's granting approval to any commercial laboratory to tolerance 
test the weights used in testing scales under the jurisdiction of the 
Service;
    (ii) It has NBS traceable standards (through the State) and trained 
staff to perform calibrations in a manner prescribed by NBS and/or the 
State;
    (iii) It is equipped to provide suitable certification 
documentation;
    (iv) It permits the Service to make onsite visits to laboratory 
testing space.
    (4) Approval of the commercial industrial laboratory will be at the 
Service's discretion. Once it has obtained approval, the commercial 
industrial laboratory maintains its site in a manner prescribed by the 
State and the Service.
    (b) Type evaluation laboratories. Any State measurement laboratory 
currently certified by NBS in accordance with its program for the 
Certification of Capability of State Measurement Laboratories to conduct 
evaluations under the National Type Evaluation Program is approved by 
the Service.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[51 FR 7052, Feb. 28, 1986, as amended at 54 FR 5925, Feb. 7, 1989]



PART 810_OFFICIAL UNITED STATES STANDARDS FOR GRAIN--Table of Contents



                      Subpart A_General Provisions

                              Terms Defined

Sec.
810.101 Grains for which standards are established.
810.102 Definition of other terms.

            Principles Governing the Application of Standards

810.103 Basis of determination.
810.104 Percentages.

           Grades, Grade Requirements, and Grade Designations

810.105 Grades and grade requirements.
810.106 Grade designations.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

810.107 Special grades and special grade requirements.
810.108 Special grade designations.

              Subpart B_United States Standards for Barley

                              Terms Defined

810.201 Definition of barley.
810.202 Definition of other terms.

            Principles Governing the Application of Standards

810.203 Basis of determination.

                      Grades and Grade Requirements

810.204 Grades and grade requirements for Six-rowed Malting barley and 
          Six-rowed Blue Malting barley.
810.205 Grades and grade requirements for Two-rowed Malting barley.
810.206 Grades and grade requirements for barley.

              Special Grades and Special Grade Requirements

810.207 Special grades and special grade requirements.

       Subpart C_United States Standards for Canola_Terms Defined

810.301 Definition of canola.
810.302 Definitions of other terms.

            Principles Governing the Application of Standards

810.303 Basis of determination.

[[Page 544]]

                      Grades and Grade Requirements

810.304 Grades and grade requirements for canola.

              Special Grades and Special Grade Requirements

810.305 Special grades and special grade requirements.

                          Nongrade Requirements

810.306 Nongrade requirements.

               Subpart D_United States Standards for Corn

                              Terms Defined

810.401 Definition of corn.
810.402 Definition of other terms.

            Principles Governing the Application of Standards

810.403 Basis of determination.

                      Grades and Grade Requirements

810.404 Grades and grade requirements for corn.

              Special Grades and Special Grade Requirements

810.405 Special grades and special grade requirements.

             Subpart E_United States Standards for Flaxseed

                              Terms Defined

810.601 Definition of flaxseed.
810.602 Definition of other terms.

            Principles Governing the Application of Standards

810.603 Basis of determination.

                      Grades and Grade Requirements

810.604 Grades and grade requirements for flaxseed.

            Subpart F_United States Standards for Mixed Grain

                              Terms Defined

810.801 Definition of mixed grain.
810.802 Definition of other terms.

            Principles Governing the Application of Standards

810.803 Basis of determination.

                      Grades and Grade Requirements

810.804 Grades and grade requirements for mixed grain.

              Special Grades and Special Grade Requirements

810.805 Special grades and special grade requirements.

               Subpart G_United States Standards for Oats

                              Terms Defined

810.1001 Definition of oats.
810.1002 Definition of other terms.

            Principles Governing the Application of Standards

810.1003 Basis of determination.

                      Grades and Grade Requirements

810.1004 Grades and grade requirements for oats.

              Special Grades and Special Grade Requirements

810.1005 Special grades and special grade requirements.

                Subpart H_United States Standards for Rye

                              Terms Defined

810.1201 Definition of rye.
810.1202 Definition of other terms.

            Principles Governing the Application of Standards

810.1203 Basis of determination.

                      Grades and Grade Requirements

810.1204 Grades and grade requirements for rye.

              Special Grades and Special Grade Requirements

810.1205 Special grades and special grade requirements.

              Subpart I_United States Standards for Sorghum

                              Terms Defined

810.1401 Definition of sorghum.
810.1402 Definition of other terms.

            Principles Governing the Application of Standards

810.1403 Basis of determination.

                      Grades and Grade Requirements

810.1404 Grades and grade requirements for sorghum.

              Special Grades and Special Grade Requirements

810.1405 Special grades and special grade requirements.

[[Page 545]]

             Subpart J_United States Standards for Soybeans

                              Terms Defined

810.1601 Definition of soybeans.
810.1602 Definition of other terms.

            Principles Governing the Application of Standards

810.1603 Basis of determination.

                      Grades and Grade Requirements

810.1604 Grades and grade requirements for soybeans.

              Special Grades and Special Grade Requirements

810.1605 Special grades and special grade requirements.

          Subpart K_United States Standards for Sunflower Seed

                              Terms Defined

810.1801 Definition of sunflower seed.
810.1802 Definition of other terms.

            Principles Governing the Application of Standards

810.1803 Basis of determination.

                      Grades and Grade Requirements

810.1804 Grades and grade requirements for sunflower seed.

             Subpart L_United States Standards for Triticale

                              Terms Defined

810.2001 Definition of triticale.
810.2002 Definition of other terms.

            Principles Governing the Application of Standards

810.2003 Basis of determination.

                      Grades and Grade Requirements

810.2004 Grades and grade requirements for triticale.

              Special Grades and Special Grade Requirements

810.2005 Special grades and special grade requirements.

               Subpart M_United States Standards for Wheat

                              Terms Defined

810.2201 Definition of wheat.
810.2202 Definition of other terms.

            Principles Governing the Application of Standards

810.2203 Basis of determination.

                      Grades and Grade Requirements

810.2204 Grades and grade requirements for wheat.

              Special Grades and Special Grade Requirements

810.2205 Special grades and special grade requirements.

    Authority: 7 U.S.C. 71-87k.

    Source: 52 FR 24418, June 30, 1987, unless otherwise noted.



                      Subpart A_General Provisions

    Note: Compliance with the provisions of these standards does not 
excuse failure to comply with the provisions of the Federal Food, Drug, 
and Cosmetic Act, or other Federal laws.

                              Terms Defined



Sec.  810.101  Grains for which standards are established.

    Grain refers to barley, canola, corn, flaxseed, mixed grain, oats, 
rye, sorghum, soybeans, sunflower seed, triticale, and wheat. Standards 
for these food grains, feed grains, and oilseeds are established under 
the United States Grain Standards Act.

[57 FR 3274, Jan. 29, 1992]



Sec.  810.102  Definition of other terms.

    Unless otherwise stated, the definitions in this section apply to 
all grains. All other definitions unique to a particular grain are 
contained in the appropriate subpart for that grain.
    (a) Distinctly low quality. Grain that is obviously of inferior 
quality because it is in an unusual state or condition, and that cannot 
be graded properly by use of other grading factors provided in the 
standards. Distinctly low quality includes the presence of any objects 
too large to enter the sampling device; i.e., large stones, wreckage, or 
similar objects.
    (b) Moisture. Water content in grain as determined by an approved 
device according to procedures prescribed in FGIS instructions.
    (c) Stones. Concreted earthy or mineral matter and other substances 
of

[[Page 546]]

similar hardness that do not disintegrate in water.
    (d) Test Weight per bushel. The weight per Winchester bushel 
(2,150.42 cubic inches) as determined using an approved device according 
to procedures prescribed in FGIS instructions. Test weight per bushel in 
the standards for corn, mixed grain, oats, sorghum, and soybeans is 
determined on the original sample. Test weight per bushel in the 
standards for barley, flaxseed, rye, sunflower seed, triticale, and 
wheat is determined after mechanically cleaning the original sample. 
Test weight per bushel is recorded to the nearest tenth pound for corn, 
rye, sorghum, soybeans, triticale, and wheat. Test weight per bushel for 
all other grains, if applicable, is recorded in whole and half pounds 
with a fraction of a half pound disregarded. Test weight per bushel is 
not an official factor for canola.
    (e) Whole kernels. Grain with \1/4\ or less of the kernel removed.

[52 FR 24418, June 30, 1987, as amended at 60 FR 61196, Nov. 29, 1995; 
71 FR 52406, Sept. 6, 2006; 72 FR 39732, July 20, 2007]

            Principles Governing the Application of Standards



Sec.  810.103  Basis of determination.

    (a) Distinctly low quality. The determination of distinctly low 
quality is made on the basis of the lot as a whole at the time of 
sampling when a condition exists that may or may not appear in the 
representative sample and/or the sample as a whole.
    (b) Certain quality determinations. Each determination of rodent 
pellets, bird droppings, other animal filth, broken glass, castor beans, 
cockleburs, crotalaria seeds, dockage, garlic, live insect infestation, 
large stones, moisture, temperature, an unknown foreign substance(s), 
and a commonly recognized harmful or toxic substance(s) is made on the 
basis of the sample as a whole. When a condition exists that may not 
appear in the representative sample, the determination may be made on 
the basis of the lot as a whole at the time of sampling according to 
procedures prescribed in FGIS instructions.
    (c) All other determinations. The basis of determination for all 
other factors is contained in the individual standards.



Sec.  810.104  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure; e.g., report 8.34 as 8.3, and 1.22 as 1.2.
    (b) Recording. The percentage of dockage in flaxseed and sorghum is 
reported in whole percent with fractions of a percent being disregarded. 
Dockage in barley and triticale is reported in whole and half percent 
with a fraction less than one-half percent being disregarded. Dockage in 
wheat and rye is reported in whole and tenth percents to the nearest 
tenth percent. Foreign material in sunflower seed is reported to the 
nearest one-half percent. Ranges of sunflower seed foreign material are 
reported as follows: 0.0 to 0.24 is reported as 0.0 percent, 0.25 to 
0.74 as 0.5 percent, 0.75 to 1.24 as 1.0 percent, and the like. Foreign 
material and fines in mixed grain is reported in whole percent. The 
percentage of smut in barley, sclerotinia and stones in canola, and 
ergot in all grains is reported to the nearest hundredth percent. The 
percentage when determining the identity of all grains is reported to 
the nearest whole percent. Also reported to the nearest whole percent 
are the classes and subclasses in wheat; flint corn; flint and dent 
corn; waxy corn; classes in barley; and the percentage of each kind of 
grain in mixed grain. Plump barley shall be expressed in terms of the 
range in which it falls. Ranges shall be: Below 50 percent, 50 to 55 
percent, 56 to 60 percent, 61 to 65 percent, and the like. All other 
percentages are reported in tenths percent.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987, as amended at 
54 FR 24157, June 6, 1989; 57 FR 3274, Jan. 29, 1992; 59 FR 10573, Mar. 
7, 1994; 61 FR 18491, Apr. 26, 1996; 63 FR 20056, Apr. 23, 1998]

[[Page 547]]

           Grades, Grade Requirements, and Grade Designations



Sec.  810.105  Grades and grade requirements.

    The grades and grade requirements for each grain (except mixed 
grain) and shown in the grade table(s) of the respective standards. 
Mixed grain grade requirements are not presented in tabular form.



Sec.  810.106  Grade designations.

    (a) Grade designations for grain. The grade designations include in 
the following order:
    (1) The letters ``U.S.'';
    (2) The abbreviation ``No.'' and the number of the grade or the 
words ``Sample grade'';
    (3) When applicable, the subclass;
    (4) The class or kind of grain;
    (5) When applicable, the special grade(s) except in the case of 
bright, extra heavy, and heavy oats or plump rye, the special grades, 
``bright'', ``extra heavy'', ``heavy'' and ``plump'' will precede the 
word ``oats'' or ``rye'' as applicable; and
    (6) When applicable, the word ``dockage'' together with the 
percentage thereof.

When applicable, the remarks section of the certificate will include in 
the order of predominance; in the case of a mixed class, the name and 
approximate percentage of the classes; in the case of sunflower seed, 
the percentage of admixture; in the case of mixed grain, the grains 
present in excess of 10.0 percent of the mixture and when applicable, 
the words Other grains followed by a statement of the percentage of the 
combined quantity of those kinds of grains, each of which is present in 
a quantity less than 10.0 percent; in the case of barley, if requested, 
the word ``plump'' with the percentage range thereof; in the case of 
wheat, if requested, the percentage of protein content.
    (b) Optional grade designations. In addition to paragraph (a) of 
this Section, grain may be certificated under certain conditions as 
described in FGIS instructions when supported by official analysis, as 
``U.S. No. 2 or better (type of grain)'', ``U.S. No. 3 or better (type 
of grain)'', and the like.

[52 FR 24418, June 30, 1987, as amended at 53 FR 15017, Apr. 27, 1988]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec.  810.107  Special grades and special grade requirements.

    A special grade serves to draw attention to a special factor or 
condition present in the grain and, when applicable, is supplemental to 
the grade assigned under Sec.  810.106. Except for the special grade 
``infested,'' the special grades are identified and requirements are 
established in each respective grain standards.
    (a) Infested wheat, rye, and triticale. Tolerances for live insects 
responsible for infested wheat, rye, and triticale are defined according 
to sampling designations as follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. These 
grains will be considered infested if the representative sample (other 
than shiplots) contains two or more live weevils, or one live weevil and 
one or more other live insects injurious to stored grain, or two or more 
live insects injurious to stored grain.
    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and one or 
more other live insects injurious to stored grain, or two or more other 
live insects injurious to stored grain are found in, on, or about the 
lot (excluding submitted samples and shiplots).
    (3) Sample as a whole (continuous loading/unloading of shiplots and 
bargelots). The minimum sample size for bargelots and shiplots is 500 
grams per each 2,000 bushels of grain. The sample as a whole is 
considered infested when a component (as defined in FGIS instructions) 
contains two or more live weevils, or one live weevil and one or more 
other live insects injurious to stored grain, or two or more other live 
insects injurious to stored grain.
    (b) Infested barley, canola, corn, oats, sorghum, soybeans, 
sunflower seed, and

[[Page 548]]

mixed grain. Tolerances for live insects responsible for infested 
barley, canola, corn, oats, sorghum, soybeans, sunflower seed, and mixed 
grain are defined according to sampling designations as follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. These 
grains will be considered infested if the representative sample (other 
than shiplots) contains two or more live weevils, or one live weevil and 
five or more other live insects injurious to stored grain, or ten or 
more other live insects injurious to stored grain.
    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and five or 
more other live insects injurious to stored grain, or ten or more other 
live insects injurious to stored grain are found in, on, or about the 
lot (excluding submitted samples and shiplots).
    (3) Sample as a whole (continuous loading/unloading of shiplots and 
bargelots). The minimum sample for shiplots and bargelots is 500 grams 
per each 2,000 bushels of grain. The sample as a whole is considered 
infested when a component (as defined in FGIS instructions) contains two 
or more live weevils, or one live weevil and five or more other live 
insects injurious to stored grain, or ten or more other live insects 
injurious to stored grain.

[52 FR 24441, June 30, 1987, as amended at 57 FR 3274, Jan. 29, 1992]



Sec.  810.108  Special grade designations.

    Special grade designations are shown as prescribed in Sec.  810.106. 
Multiple special grade designations will be listed in alphabetical 
order. In the case of treated wheat, the official certificate shall show 
whether the wheat has been scoured, limed, washed, sulfured, or 
otherwise treated.



              Subpart B_United States Standards for Barley

                              Terms Defined



Sec.  810.201  Definition of barley.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of whole kernels of cultivated barley (Hordeum vulgare L.) and not 
more than 25 percent of other grains for which standards have been 
established under the United States Grain Standards Act. The term 
``barley'' as used in these standards does not include hull-less barley 
or black barley.



Sec.  810.202  Definition of other terms.

    (a) Black barley. Barley with black hulls.
    (b) Broken kernels. Barley with more than \1/4\ of the kernel 
removed.
    (c) Classes. There are two classes of barley: Malting barley and 
Barley.
    (1) Malting barley. Barley of a six-rowed or two-rowed malting type. 
The class Malting barley is divided into the following three subclasses:
    (i) Six-rowed Malting barley. Barley that has a minimum of 95.0 
percent of a six-rowed suitable malting type that has 90.0 percent or 
more of kernels with white aleurone layers that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, and 0.1 percent heat-damaged 
kernels. Six-rowed Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec.  810.107(b) and Sec.  
810.206.
    (ii) Six-rowed Blue Malting barley. Barley that has a minimum of 
95.0 percent of a six-rowed suitable malting type that has 90.0 percent 
or more of kernels with blue aleurone layers that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, and 0.1 percent heat-damaged 
kernels. Six-rowed Blue Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec.  810.107(b) and Sec.  
810.206.
    (iii) Two-rowed Malting barley. Barley that has a minimum of 95.0 
percent of a two-rowed suitable malting type that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, 0.1 percent heat-damaged kernels, 
1.9 percent injured-by-mold kernels, and 0.4 percent mold-damaged 
kernels. Two-rowed Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec.  810.107(b) and Sec.  
810.206.

[[Page 549]]

    (2) Barley. Any barley of a six-rowed or two-rowed type. The class 
Barley is divided into the following three subclasses:
    (i) Six-rowed barley. Any Six-rowed barley that contains not more 
than 10.0 percent of two-rowed varieties.
    (ii) Two-rowed barley. Any Two-rowed barley with white hulls that 
contains not more than 10.0 percent of six-rowed varieties.
    (iii) Barley. Any barley that does not meet the requirements for the 
subclasses Six-rowed barley or Two-rowed barley.
    (d) Damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are badly ground-damaged, badly weather-
damaged, diseased, frost-damaged, germ-damaged, heat-damaged, injured-
by-heat, insect-bored, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (e) Dockage. All matter other than barley that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of barley kernels removed in properly separating the 
material other than barley and that cannot be recovered by properly 
rescreening or recleaning.
    (f) Foreign material. All matter other than barley, other grains, 
and wild oats that remains in the sample after removal of dockage.
    (g) Frost-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are badly shrunken and distinctly discolored 
black or brown by frost.
    (h) Germ-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that have dead or discolored germ ends.
    (i) Heat-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are materially discolored and damaged by 
heat.
    (j) Injured-by-frost kernels. Kernels and pieces of barley kernels 
that are distinctly indented, immature or shrunken in appearance or that 
are light green in color as a result of frost before maturity.
    (k) Injured-by-heat kernels. Kernels, pieces of barley kernels, 
other grains, and wild oats that are slightly discolored as a result of 
heat.
    (l) Injured-by-mold kernels. Kernels, pieces of barley kernels 
containing slight evidence of mold.
    (m) Mold-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are weathered and contain considerable 
evidence of mold.
    (n) Other grains. Black barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, and wheat.
    (o) Plump barley. Barley that remains on top of a \6/64\ x \3/4\ 
slotted-hole sieve after sieving according to procedures prescribed in 
FGIS instructions.
    (p) Sieves. (1) \5/64\ x \3/4\ slotted-hole sieve. A metal sieve 
0.032 inch thick with slotted perforations 0.0781 (\5/64\) inch by 0.750 
(\3/4\) inch.
    (2) 5-\1/2\ \6/64\ x \3/4\ slotted-hole sieve. A metal sieve 0.032 
inch thick with slotted perforations 0.0895 (5-\1/2\/64) inch by 0.750 
(\3/4\) inch.
    (3) \6/64\ x \3/4\ slotted-hole sieve. A metal sieve 0.032 inch 
thick with slotted perforations 0.0937 (\6/64\) inch by 0.750 (\3/4\) 
inch.
    (q) Skinned and broken kernels. Barley kernels that have one-third 
or more of the hull removed, or that the hull is loose or missing over 
the germ, or broken kernels, or whole kernels that have a part or all of 
the germ missing.
    (r) Sound barley. Kernels and pieces of barley kernels that are not 
damaged, as defined under (d) of this section.
    (s) Suitable malting type. Varieties of malting barley that are 
recommended by the American Malting Barley Association and other malting 
type(s) used by the malting and brewing industry. The varieties are 
listed in GIPSAs instructions.
    (t) Thin barley. Thin barley shall be defined for the appropriate 
class as follows:
    (1) Malting barley. Six-rowed Malting barley that passes through a 
\5/64\ x \3/4\ slotted-hole sieve and Two-rowed Malting barley which 
passes through a \5.5/64\ x \3/4\ slotted-hole sieve in accordance with 
procedures prescribed in GIPSAs instructions.

[[Page 550]]

    (2) Barley. Six-rowed barley, Two-rowed barley, or Barley that 
passes through a \5/64\ x \3/4\ slotted-hole sieve in accordance with 
procedures prescribed in GIPSAs instructions.
    (u) Wild oats. Seeds of Avena fatua L. and A. sterilis L.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987, as amended at 
61 FR 18491, Apr. 26, 1996]

            Principles Governing the Application of Standards



Sec.  810.203  Basis of determination.

    All other determinations. Each determination of heat-damaged 
kernels, injured-by-heat kernels, and white or blue aleurone layers in 
Six-rowed barley is made on pearled, dockage-free barley. Other 
determinations not specifically provided for under the General 
Provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements



Sec.  810.204  Grades and grade requirements for Six-rowed Malting barley and Six-rowed Blue Malting barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Minimum limits of--                         Maximum limits of--
                                                                 ---------------------------------------------------------------------------------------
                                                                     Test                                                            Skinned
                              Grade                                 weight    Suitable    Sound     Damaged    Foreign     Other       and        Thin
                                                                     per      malting     barley    kernels    material    grains     broken     barley
                                                                    bushel     types       \1\        \1\     (percent)  (percent)   kernels   (percent)
                                                                   (pounds)  (percent)  (percent)  (percent)                        (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1......................................................       47.0       95.0       97.0        2.0        0.5        2.0        4.0        7.0
U.S. No. 2......................................................       45.0       95.0       94.0        3.0        1.0        3.0        6.0       10.0
U.S. No. 3......................................................       43.0       95.0       90.0        4.0        2.0        5.0        8.0       15.0
U.S. No. 4......................................................       43.0       95.0       87.0        5.0        3.0        5.0       10.0       15.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.
Notes: Malting barley shall not be infested in accordance with Sec.   810.107(b) and shall not contain any special grades as defined in Sec.   810.206.
  Six-rowed Malting barley and Six-rowed Blue Malting barley varieties not meeting the requirements of this section shall be graded in accordance with
  standards established for the class Barley.


[61 FR 18492, Apr. 26, 1996]



Sec.  810.205  Grades and grade requirements for Two-rowed Malting barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Minimum limits of--                           Maximum limits of--
                                                              ------------------------------------------------------------------------------------------
                                                                              Suitable                                          Skinned and
                            Grade                              Test weight    malting       Sound      Wild oats     Foreign       broken    Thin barley
                                                                per bushel     types      barley \1\   (percent)     material     kernels     (percent)
                                                                 (pounds)    (percent)    (percent)                 (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         50.0         97.0         98.0          1.0          0.5          5.0          5.0
U.S. No. 2...................................................         48.0         97.0         98.0          1.0          1.0          7.0          7.0
U.S. No. 3...................................................         48.0         95.0         96.0          2.0          2.0         10.0         10.0
U.S. No. 4...................................................         48.0         95.0         93.0          3.0          3.0         10.0         10.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.

    Notes: Malting barley shall not be infested in accordance with Sec.  
810.107(b) and shall not contain any special grades as defined in Sec.  
810.206. Two-rowed Malting barley varieties not meeting the requirements 
of this section shall be graded in accordance with standards established 
for the class Barley.

[61 FR 18492, Apr. 26, 1996]

[[Page 551]]



Sec.  810.206  Grades and grade requirements for barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Minimum limits of--                          Maximum Limits of--
                                                              ------------------------------------------------------------------------------------------
                                                                                                          Heat
                            Grade                              Test weight     Sound       Damaged      damaged      Foreign       Broken    Thin barley
                                                                per bushel     barley    kernels \1\    kernels      material     kernels     (percent)
                                                                 (pounds)    (percent)    (percent)    (percent)    (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         47.0         97.0          2.0          0.2          1.0          4.0         10.0
U.S. No. 2...................................................         45.0         94.0          4.0          0.3          2.0          8.0         15.0
U.S. No. 3...................................................         43.0         90.0          6.0          0.5          3.0         12.0         25.0
U.S. No. 4...................................................         40.0         85.0          8.0          1.0          4.0         18.0         35.0
U.S. No. 5...................................................         36.0         75.0         10.0          3.0          5.0         28.0         75.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. Sample Grade:
U.S. Sample grade shall be barley that:
(a) Does not meet the requirements for the grades 1, 2, 3, 4, or 5; or
(b) Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of
  glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more caster beans (Ricinus communis L.), 4 or more particles of unknown foreign substance(s)
  or commonly recognized harmful or toxic substance(s), 8 or more cocklebur (Xanthium spp.) or similar seeds singly or in combination, 10 or more rodent
  pellets, bird droppings, or equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\ quarts of barley; or
(c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
(d) Is heating or otherwise of distinctly low quality.
\1\ Includes heat-damaged kernels. Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels.


[61 FR 18492, Apr. 26, 1996]

              Special Grades and Special Grade Requirements



Sec.  810.207  Special grades and special grade requirements.

    (a) Blighted barley. Barley that contains more than 4.0 percent of 
fungus-damaged and/or mold-damaged kernels.
    (b) Ergoty barley. Barley that contains more than 0.10 percent 
ergot.
    (c) Garlicky barley. Barley that contains three or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets in 500 
grams of barley.
    (d) Smutty barley. Barley that has kernels covered with smut spores 
to give a smutty appearance in mass, or which contains more than 0.20 
percent smut balls.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



       Subpart C_United States Standards for Canola_Terms Defined

    Source: 57 FR 3274, Jan. 29, 1992, unless otherwise noted.



Sec.  810.301  Definition of canola.

    Seeds of the genus Brassica from which the oil shall contain less 
than 2 percent erucic acid in its fatty acid profile and the solid 
component shall contain less than 30.0 micromoles of any one or any 
mixture of 3-butenyl glucosinolate, 4-pentenyl glucosinolate, 2-hydroxy-
3-butenyl, or 2-hydroxy-4-pentenyl glucosinolate, per gram of air-dried, 
oil free solid. Before the removal of dockage, the seed shall contain 
not more than 10.0% of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec.  810.302  Definitions of other terms.

    (a) Conspicuous Admixture. All matter other than canola, including 
but not limited to ergot, sclerotinia, and stones, which is conspicuous 
and readily distinguishable from canola and which remains in the sample 
after the removal of machine separated dockage. Conspicuous admixture is 
added to machine separated dockage in the computation of total dockage.
    (b) Damaged kernels. Canola and pieces of canola that are heat-
damaged, sprout-damaged, mold-damaged, distinctly green damaged, frost 
damaged, rimed damaged, or otherwise materially damaged.
    (c) Distinctly green kernels. Canola and pieces of canola which, 
after being crushed, exhibit a distinctly green color.
    (d) Dockage. All matter other than canola that can be removed from 
the original sample by use of an approved

[[Page 552]]

device according to procedures prescribed in FGIS instructions. Also, 
underdeveloped, shriveled, and small pieces of canola kernels that 
cannot be recovered by properly rescreening or recleaning. Machine 
separated dockage is added to conspicuous admixture in the computation 
of total dockage.
    (e) Ergot. Sclerotia (sclerotium, sing.) of the fungus, Claviceps 
species, which are associated with some seeds other than canola where 
the fungal organism has replaced the seed.
    (f) Heat-damaged kernels. Canola and pieces of canola which, after 
being crushed, exhibit that they are discolored and damaged by heat.
    (g) Inconspicuous admixture. Any seed which is difficult to 
distinguish from canola. This includes, but is not limited to, common 
wild mustard (Brassica kaber and B. juncea), domestic brown mustard 
(Brassica juncea), yellow mustard (B. hirta), and seed other than the 
mustard group.
    (h) Sclerotia (Sclerotium, sing.). Dark colored or black resting 
bodies of the fungi Sclerotinia and Claviceps.
    (i) Sclerotinia. Genus name which includes the fungus Sclerotinia 
sclerotiorum which produces sclerotia. Canola is only infrequently 
infected, and the sclerotia, unlike sclerotia of ergot, are usually 
associated within the stem of the plants.

            Principles Governing the Application of Standards



Sec.  810.303  Basis of determination.

    Each determination of conspicuous admixture, ergot, sclerotinia, 
stones, damaged kernels, heat-damaged kernels, distinctly green kernels, 
and inconspicuous admixture is made on the basis of the sample when free 
from dockage. Other determinations not specifically provided for under 
the general provisions are made on the basis of the sample as a whole, 
except the determination of odor is made on either the basis of the 
sample as a whole or the sample when free from dockage. The content of 
glucosinolates and erucic acid is determined on the basis of the sample 
according to procedures prescribed in FGIS instructions.

                      Grades and Grade Requirements



Sec.  810.304  Grades and grade requirements for canola.

------------------------------------------------------------------------
                                                   Grades, U.S. Nos.
               Grading factors                --------------------------
                                                  1        2        3
------------------------------------------------------------------------
                                                 Maximum percent limits
                                                          of:
----------------------------------------------
Damaged kernels:
    Heat damaged.............................     0.1      0.5      2.0
    Distinctly green.........................     2.0      6.0     20.0
      Total..................................     3.0     10.0     20.0
Conspicuous admixture:
    Ergot....................................     0.05     0.05     0.05
    Sclerotinia..............................     0.05     0.10     0.15
    Stones...................................     0.05     0.05     0.05
      Total..................................     1.0      1.5      2.0
Inconspicuous admixture......................     5.0      5.0      5.0
------------------------------------------------------------------------
                                                Maximum count limits of:
----------------------------------------------
Other material:
    Animal filth.............................     3        3        3
    Glass....................................     0        0        0
    Unknown foreign substance................     1        1        1
------------------------------------------------------------------------
U.S. Sample grade Canola that:
    (a) Does not meet the requirements for
     U.S. Nos. 1, 2, 3; or
    (b) Has a musty, sour, or commercially
     objectionable foreign odor; or
    (c) Is heating or otherwise of distinctly
     low quality.
------------------------------------------------------------------------

              Special Grades and Special Grade Requirements



Sec.  810.305  Special grades and special grade requirements.

    Garlicky canola. Canola that contains more than two green garlic 
bulblets or an equivalent quantity of dry or partly dry bulblets in 
approximately a 500 gram portion.

                          Nongrade Requirements



Sec.  810.306  Nongrade requirements.

    Glucosinolates. Content of glucosinolates in canola is determined 
according to procedures prescribed in FGIS instructions.

[[Page 553]]



               Subpart D_United States Standards for Corn

                              Terms Defined



Sec.  810.401  Definition of corn.

    Grain that consists of 50 percent or more of whole kernels of 
shelled dent corn and/or shelled flint corn (Zea mays L.) and not more 
than 10.0 percent of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec.  810.402  Definition of other terms.

    (a) Broken corn. All matter that passes readily through a \12/64\ 
round-hole sieve and over a \6/64\ round-hole sieve sample according to 
procedures prescribed in FGIS instructions.
    (b) Broken corn and foreign material. All matter that passes readily 
through a \12/64\ round-hole sieve and all matter other than corn that 
remains in the sieved after sieving according to procedures prescribed 
in FGIS instructions.
    (c) Classes. There are three classes for corn: Yellow corn, White 
corn, and Mixed corn.
    (1) Yellow corn. Corn that is yellow-kerneled and contains not more 
than 5.0 percent of corn of other colors. Yellow kernels of corn with a 
slight tinge of red are considered yellow corn.
    (2) White corn. Corn that is white-kerneled and contains not more 
than 2.0 percent of corn of other colors. White kernels of corn with a 
slight tinge of light straw or pink color are considered white corn.
    (3) Mixed corn. Corn that does not meet the color requirements for 
either of the classes Yellow corn or White corn and includes white-
capped Yellow corn.
    (d) Damaged kernels. Kernels and pieces of corn kernels that are 
badly ground-damaged, badly weather-damaged, diseased, frost-damaged, 
germ-damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
or otherwise materially damaged.
    (e) Foreign material. All matter that passes readily through a \6/
64\ round-hole sieve and all matter other than corn that remains on top 
of the \12/64\ round-hole sieve according to procedures prescribed in 
FGIS instructions.
    (f) Heat-damaged kernels. Kernels and pieces of corn kernels that 
are materially discolored and damaged by heat.
    (g) Sieves--(1) 12/64 round-hole sieve. A metal sieve 0.032 inch 
thick with round perforations 0.1875 (12/64) inch in diameter which are 
\1/4\ inch from center to center. The perforations of each row shall be 
staggered in relation to the adjacent row.
    (2) 6/64 round-hole sieve. A metal sieve 0.032 inch thick with round 
perforations 0.0937 (6/64) inch in diameter which are \5/32\ inch from 
center to center. The perforations of each row shall be staggered in 
relation to the adjacent row.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24437, June 30, 1987; 
52 FR 28534, July 31, 1987]

            Principles Governing the Application of Standards



Sec.  810.403  Basis of determination.

    Each determination of class, damaged kernels, heat-damaged kernels, 
waxy corn, flint corn, and flint and dent corn is made on the basis of 
the grain after the removal of the broken corn and foreign material. 
Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole, except the 
determination of odor is made on either the basis of the grain as a 
whole or the grain when free from broken corn and foreign material.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

[[Page 554]]

                      Grades and Grade Requirements



Sec.  810.404  Grades and grade requirements for corn.

----------------------------------------------------------------------------------------------------------------
                                                                                     Maximum limits of
                                                                          --------------------------------------
                                                                Minimum         Damaged kernels
                                                              test weight -------------------------- Broken corn
                            Grade                              per bushel      Heat                  and foreign
                                                                (pounds)     damaged       Total       material
                                                                             kernels     (percent)    (percent)
                                                                            (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1..................................................         56.0          0.1          3.0          2.0
U.S. No. 2..................................................         54.0          0.2          5.0          3.0
U.S. No. 3..................................................         52.0          0.5          7.0          4.0
U.S. No. 4..................................................         49.0          1.0         10.0          5.0
U.S. No. 5..................................................         46.0          3.0         15.0          7.0
----------------------------------------------------------------------------------------------------------------
U.S. Sample Grade
 U.S. Sample grade is corn that:
 (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; or
 (b) Contains stones with an aggregate weight in excess of 0.1 percent of the sample weight, 2 or more pieces of
  glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more
  particles of an unknown foreign substance(s)or a commonly recognized harmful or toxic substance(s), 8 or more
  cockleburs (Xanthium spp.), or similar seeds singly or in combination, or animal filth in excess of 0.20
  percent in 1,000 grams; or
 (c) Has a musty, sour, or commercially objectionable foreign odor; or
 (d) Is heating or otherwise of distinctly low quality.


[60 FR 61196, Nov. 29, 1995]

              Special Grades and Special Grade Requirements



Sec.  810.405  Special grades and special grade requirements.

    (a) Flint corn. Corn that consists of 95 percent or more of flint 
corn.
    (b) Flint and dent corn. Corn that consists of a mixture of flint 
and dent corn containing more than 5.0 percent but less than 95 percent 
of flint corn.
    (c) Waxy corn. Corn that consists of 95 percent or more waxy corn, 
according to procedures prescribed in FGIS instructions.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987; 
52 FR 28534, July 31, 1987]



             Subpart E_United States Standards for Flaxseed

                              Terms Defined



Sec.  810.601  Definition of flaxseed.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of common flaxseed (Linum usitatissimum L.) and not more than 20 
percent of other grains for which standards have been established under 
the United States Grain Standards Act and which, after the removal of 
dockage, contains 50 percent or more of whole flaxseed.



Sec.  810.602  Definition of other terms.

    (a) Damaged kernels. Kernels and pieces of flaxseed kernels that are 
badly ground-damaged, badly weather-damaged, diseased, frost-damaged, 
germ-damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
or otherwise materially damaged.
    (b) Dockage. All matter other than flaxseed that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of flaxseed kernels removed in properly separating the 
material other than flaxseed and that cannot be recovered by properly 
rescreening or recleaning.
    (c) Heat-damaged kernels. Kernels and pieces of flaxseed kernels 
that are materially discolored and damaged by heat.
    (d) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, guar, hull-less barley, nongrain sorghum, oats, Polish wheat, 
popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, spelt, 
sunflower seed, sweet corn, triticale, wheat, and wild oats.

[[Page 555]]

            Principles Governing the Application of Standards



Sec.  810.603  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements



Sec.  810.604  Grades and grade requirements for flaxseed.

------------------------------------------------------------------------
                                                      Maximum limits of
                                           Minimum    damaged kernels--
                                            test   ---------------------
                  Grade                    weight      Heat
                                             per     damaged     Total
                                           bushel    kernels   (percent)
                                          (pounds)  (percent)
------------------------------------------------------------------------
U.S. No. 1..............................      49.0        0.2       10.0
U.S. No. 2..............................      47.0        0.5       15.0
U.S. Sample grade--
  U.S. Sample grade is flaxseed that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1 or 2;
     or
    (b) Contains 8 or more stones which have an aggregate weight in
     excess of 0.2 percent of the sample weight, 2 or more pieces of
     glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more
     castor beans (Ricinus communis L.), 4 or more particles of an
     unknown foreign substance(s) or a commonly recognized harmful or
     toxic substance(s), 10 or more rodent pellets, bird dropping, or
     equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\
     quarts of flaxseed; or
    (c) Has musty, sour, or commercially objectionable foreign odor
     (except smut or garlic odor), or
    (d) Is heating or otherwise of distinctly low quality.
------------------------------------------------------------------------



            Subpart F_United States Standards for Mixed Grain

                              Terms Defined



Sec.  810.801  Definition of mixed grain.

    Any mixture of grains for which standards have been established 
under the United States Grain Standards Act, provided that such mixture 
does not come within the requirements of any of the standards for such 
grains; and that such mixture consists of 50 percent or more of whole 
kernels of grain and/or whole or broken soybeans which will not pass 
through a \5/64\ triangular-hole sieve and/or whole flaxseed that passes 
through such a sieve after sieving according to procedures prescribed in 
FGIS instructions.



Sec.  810.802  Definition of other terms.

    (a) Damaged kernels. Kernels and pieces of grain kernels for which 
standards have been established under the Act, that are badly ground-
damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, 
heat-damaged, insect-bored, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (b) Foreign material and fines. All matter other than whole flaxseed 
that passes through a \5/64\ triangular-hole sieve, and all matter other 
than grains for which standards have been established under the Act, 
that remains in the sieved sample.
    (c) Grades. U.S. Mixed Grain, or U.S. Sample grade Mixed Grain, and 
special grades.
    (d) Heat-damaged kernels. Kernels and pieces of grain kernels for 
which standards have been established under the Act, that are materially 
discolored and damaged by heat.
    (e) Sieve--\5/64\ triangular-hole sieve. A metal sieve 0.032 inch 
thick with equilateral triangular perforations the inscribed circles of 
which are 0.0781 (\5/64\) inch in diameter.

            Principles Governing the Application of Standards



Sec.  810.803  Basis of determination.

    Each determination of damaged and heat-damaged kernels, and the 
percentage of each kind of grain in the mixture is made on the basis of 
the sample after removal of foreign material and fines. Other 
determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole, except the 
determination of odor is made on either the basis of the grain as a 
whole or the grain when free from foreign material and fines.

                      Grades and Grade Requirements



Sec.  810.804  Grades and grade requirements for mixed grain.

    (a) U.S. Mixed Grain (grade). Mixed grain with not more than 15.0 
percent of damaged kernels, and not more than 3.0 percent of heat-
damaged kernels, and that otherwise does not meet the

[[Page 556]]

requirements for the grade U.S. Sample grade Mixed Grain.
    (b) U.S. Sample grade Mixed Grain. Mixed grain that:
    (1) Does not meet the requirements for the grade U.S. Mixed Grain; 
or
    (2) Contains more than 16.0 percent moisture; or
    (3) Contains 8 or more stones that have an aggregate weight in 
excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 
or more Crotalaria seeds (Crotalaria spp.), 2 or more castor beans 
(Ricinus communis L.), 8 more cockleburs (Xanthium spp.) or similar 
seeds singly or in combination, 4 or more pieces of an unknown foreign 
substance(s) or a recognized harmful or toxic substance(s), 10 or more 
rodent pellets, bird droppings, or an equivalent quantity of other 
animal filth per 1,000 grams of mixed grain; or
    (4) Is musty, sour, or heating; or
    (5) Has any commercially objectionable foreign odor except smut or 
garlic; or
    (6) Is otherwise of distinctly low quality.

              Special Grades and Special Grade Requirements



Sec.  810.805  Special grades and special grade requirements.

    (a) Blighted mixed grain. Mixed grain in which barley predominates 
and that contains more than 4.0 percent of fungus-damaged and/or mold-
damaged barley kernels.
    (b) Ergoty mixed grain. (1) Mixed grain in which rye or wheat 
predominates and that contains more than 0.30 percent ergot, or
    (2) Any other mixed grain that contains more than 0.10 percent 
ergot.
    (c) Garlicky mixed grain. (1) Mixed grain in which wheat, rye, or 
triticale predominates, and that contains 2 or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets in 
1,000 grams of mixed grain; or
    (2) Any other mixed grain that contains 4 or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets, in 
500 grams of mixed grain.
    (d) Smutty mixed grain. (1) Mixed grain in which rye, triticale, or 
wheat predominates, and that contains 15 or more average size smut 
balls, or an equivalent quantity of smut spores in 250 grams of mixed 
grain, or
    (2) Any other mixed grain that has the kernels covered with smut 
spores to give a smutty appearance in mass, or that contains more than 
0.2 percent smut balls.
    (e) Treated mixed grain. Mixed grain that has been scoured, limed, 
washed, sulfured, or treated in such a manner that its true quality is 
not reflected by the grade designation U.S. Mixed Grain or U.S. Sample 
grade Mixed Grain.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



               Subpart G_United States Standards for Oats

                              Terms Defined



Sec.  810.1001  Definition of oats.

    Grain that consists of 50 percent or more of oats (Avena sativa L. 
and A. byzantina C. Koch) and may contain, singly or in combination, not 
more than 25 percent of wild oats and other grains for which standards 
have been established under the United States Grain Standards Act.



Sec.  810.1002  Definition of other terms.

    (a) Fine seeds. All matter that passes through a \5/64\ triangular-
hole sieve after sieving according to procedures prescribed in FGIS 
instructions.
    (b) Foreign material. All matter other than oats, wild oats, and 
other grains.
    (c) Heat-damaged kernels. Kernels and pieces of oat kernels, other 
grains, and wild oats that are materially discolored and damaged by 
heat.
    (d) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, Polish wheat, 
popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, spelt, 
sunflower seed, sweet corn, triticale, and wheat.
    (e) Sieves--(1) \5/64\ triangular-hole sieve. A metal sieve 0.032 
inch thick with equilateral triangular perforations the inscribed 
circles of which are 0.0781 (\5/64\) inch in diameter.
    (2) 0.064 x \3/8\ oblong-hole sieve. A metal sieve 0.032 inch thick 
with oblong perforations 0.064 inch by 0.375 (\3/8\) inch.

[[Page 557]]

    (f) Sound oats. Kernels and pieces of oat kernels (except wild oats) 
that are not badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (g) Wild oats. Seeds of Avena fatua L. and A. sterillis L.

            Principles Governing the Application of Standards



Sec.  810.1003  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole.

                      Grades and Grade Requirements



Sec.  810.1004  Grades and grade requirements for oats.

----------------------------------------------------------------------------------------------------------------
                                                     Minimum limits--                 Maximum limits--
                                                ----------------------------------------------------------------
                                                                              Heat-
                     Grade                       Test weight   Sound oats    damaged      Foreign     Wild oats
                                                  per bushel   (percent)     kernels      material    (percent)
                                                   (pounds)                 (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1.....................................         36.0         97.0          0.1          2.0          2.0
U.S. No. 2.....................................         33.0         94.0          0.3          3.0          3.0
U.S. No. 3 \1\.................................         30.0         90.0          1.0          4.0          5.0
U.S. No. 4 \2\.................................         27.0         80.0          3.0          5.0         10.0
U.S. Sample grade--
  U.S. Sample grade are oats which:
    (a) Do not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contain 8 or more stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2
     or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus
     communis L.), 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or
     toxic substance(s), 8 or more cocklebur (Xanthium spp.) or similar seeds singly or in combination, 10 or
     more rodent pellets, bird droppings, or equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\
     quarts of oats; or
    (c) Have a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Are heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ Oats that are slightly weathered shall be graded not higher than U.S. No. 3.
\2\ Oats that are badly stained or materially weathered shall be graded not higher than U.S. No. 4.

              Special Grades and Special Grade Requirements



Sec.  810.1005  Special grades and special grade requirements.

    (a) Bleached oats. Oats that in whole or in part, have been treated 
with sulfurous acid or any other bleaching agent.
    (b) Bright oats. Oats, except bleached oats, that are of good 
natural color.
    (c) Ergoty oats. Oats that contain more than 0.10 percent ergot.
    (d) Extra-heavy oats. Oats that have a test weight per bushel of 40 
pounds or more.
    (e) Garlicky oats. Oats that contain 4 or more green garlic bulblets 
or an equivalent quantity of dry or partly dry bulblets in 500 grams of 
oats.
    (f) Heavy oats. Oats that have a test weight per bushel of 38 pounds 
or more but less than 40 pounds.
    (g) Smutty oats. Oats that have kernels covered with smut spores to 
give a smutty appearance in mass, or that contain more than 0.2 percent 
of smut balls.
    (h) Thin oats. Oats that contain more than 20.0 percent of oats and 
other matter, except fine seeds, that pass through a 0.064 x \3/8\ 
oblong-hole sieve but remain on top of a \5/64\ triangular-hole sieve 
after sieving according to procedures prescribed in FGIS instructions.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



                Subpart H_United States Standards for Rye

                              Terms Defined



Sec.  810.1201  Definition of rye.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of common rye (Secale cereale L.) and not more than 10 percent of 
other

[[Page 558]]

grains for which standards have been established under the United States 
Grain Standards Act and that, after the removal of dockage, contains 50 
percent or more of whole rye.



Sec.  810.1202  Definition of other terms.

    (a) Damaged kernels. Kernels, pieces of rye kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (b) Dockage. All matter other than rye that can be removed from the 
original sample by use of an approved device in accordance with 
procedures prescribed in FGIS instructions. Also, underdeveloped, 
shriveled, and small pieces of rye kernels removed in properly 
separating the material other than rye and that cannot be recovered by 
properly rescreening and recleaning.
    (c) Foreign material. All matter other than rye that remains in the 
sample after the removal of dockage.
    (d) Heat-damaged kernels. Kernels, pieces of rye kernels, and other 
grains that are materially discolored and damaged by heat.
    (e) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, wheat, and wild oats.
    (f) Sieve--0.064 x \3/8\ oblong-hole sieve. A metal sieve 0.032 inch 
thick with oblong perforations 0.064 by 0.375 (\3/8\) inch.
    (g) Thin rye. Rye and other matter that passes through a 0.064 x \3/
8\ oblong-hole sieve after sieving according to procedures prescribed in 
FGIS instructions.

            Principles Governing the Application of Standards



Sec.  810.1203  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements



Sec.  810.1204  Grades and grade requirements for rye.

----------------------------------------------------------------------------------------------------------------
                                                                       Maximum limits of--
                                                ----------------------------------------------------------------
                                                     Foreign material           Damaged kernels
                                      Minimum   ----------------------------------------------------
               Grade                test weight    Foreign
                                     per bushel     matter                     Heat                    Thin Rye
                                      (pounds)    other than     Total       damaged       Total      (percent)
                                                    wheat      (percent)    (percent)    (percent)
                                                  (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1........................         56.0          1.0          3.0          0.2          2.0         10.0
U.S. No. 2........................         54.0          2.0          6.0          0.2          4.0         15.0
U.S. No. 3........................         52.0          4.0         10.0          0.5          7.0         25.0
U.S. No. 4........................         49.0          6.0         10.0          3.0         15.0
U.S. Sample grade--
  U.S. Sample grade is rye that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contains 8 or more stones or any numbers of stones which have an aggregate weight in excess of 0.2
     percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or
     more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign substance(s) or a
     commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent
     quantity of other animal filth per 1\1/8\ to 1\1/4\ quarts of rye; or
    (c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Is heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------


[[Page 559]]

              Special Grades and Special Grade Requirements



Sec.  810.1205  Special grades and special grade requirements.

    (a) Ergoty rye. Rye that contains more than 0.30 percent of ergot.
    (b) Garlicky rye. Rye that contains in a 1,000-gram portion more 
than six green garlic bulblets or an equivalent quantity of dry or 
partly dry bulblets.
    (c) Light garlicky rye. Rye that contains in a 1,000-gram portion 
two or more, but not more than six, green garlic bulblets or an 
equivalent quantity of dry or partly dry bulblets.
    (d) Light smutty rye. Rye that has an unmistakable odor of smut, or 
that contains in a 250-gram portion smut balls, portions of smut balls, 
or spores of smut in excess of a quantity equal to 14 smut balls but not 
in excess of a quantity equal to 30 smut balls of average size.
    (e) Plump rye. Rye that contains not more than 5.0 percent of rye 
and other matter that passes through a 0.064 x \3/8\ oblong-hole sieve.
    (f) Smutty rye. Rye that contains in a 250-gram portion smut balls, 
portions of smut balls, or spores of smut in excess of a quantity equal 
to 30 smut balls of average size.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



              Subpart I_United States Standards for Sorghum

                              Terms Defined



Sec.  810.1401  Definition of sorghum.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of whole kernels of sorghum (Sorghum bicolor (L.) Moench) excluding 
nongrain sorghum and not more than 10.0 percent of other grains for 
which standards have been established under the United States Grain 
Standards Act.



Sec.  810.1402  Definition of other terms.

    (a) Broken kernels. All matter which passes through a 5/64 
triangular-hole sieve and over a 2-1/2/64 round-hole sieve according to 
procedures prescribed in FGIS instructions.
    (b) Broken kernels and foreign material. The combination of broken 
kernels and foreign material as defined in paragraph (a) and (f) of this 
section.
    (c) Classes. There are four classes of sorghum: Sorghum, Tannin 
sorghum, White sorghum, and Mixed sorghum.
    (1) Sorghum. Sorghum which lacks a pigmented testa (subcoat) and 
contains less than 98.0 percent White sorghum and not more than 3.0 
percent Tannin sorghum. The pericarp color of this class may appear 
white, yellow, red, pink, orange or bronze.
    (2) Tannin sorghum. Sorghum which has a pigmented testa (subcoat) 
and contains not more than 10 percent of kernels without a pigmented 
testa.
    (3) White sorghum. Sorghum which lacks a pigmented testa (subcoat) 
and contains not less than 98.0 percent kernels with a white pericarp, 
and contains not more than 2.0 percent of sorghum of other classes. This 
class includes sorghum containing spots that, singly or in combination, 
cover 25.0 percent or less of the kernel.
    (4) Mixed sorghum. Sorghum which does not meet the requirements for 
any of the classes Sorghum, Tannin sorghum, or White sorghum.
    (d) Damaged kernels. Kernels, pieces of sorghum kernels and other 
grains that are badly ground damaged, badly weather damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (e) Dockage. All matter other than sorghum that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of sorghum kernels removed in properly separating the 
material other than sorghum.
    (f) Foreign material. All matter, except sorghum, which passes over 
the number 6 riddle and all matter other than sorghum that remains on 
top of the 5/64 triangular-hole sieve according to procedures prescribed 
in FGIS instructions.
    (g) Heat-damaged kernels. Kernels, pieces of sorghum kernels, and 
other grains that are materially discolored and damaged by heat.
    (h) Nongrain sorghum. Seeds of broomcorn, Johnson-grass, Sorghum 
almum Parodi, and sudangrass; and

[[Page 560]]

seeds of Sorghum bicolor (L.) Moench that appear atypical of grain 
sorghum.
    (i) Pericarp. The pericarp is the outer layers of the sorghum grain 
and is fused to the seedcoat.
    (j) Sieves--(1) 1.98 mm (5/64 (0.0781) inches) triangular-hole 
sieve. A metal sieve 0.81 mm (0.032 inches) thick with equilateral 
triangular perforations the inscribed circles of which are 1.98 mm 
(0.0781 inches) in diameter.
    (2) 0.99 mm (2 1/2 /64 (0.0391) inches) round-hole sieve. A metal 
sieve 0.81 mm (0.032 inch) thick with round holes 0.99 mm (0.0391 
inches) in diameter.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24437, June 30, 1987; 
52 FR 28534, July 31, 1987; 57 FR 58971, Dec. 14, 1992; 72 FR 39732, 
July 20, 2007]

            Principles Governing the Application of Standards



Sec.  810.1403  Basis of determination.

    Each determination of broken kernels and foreign material is made on 
the basis of the grain when free from dockage. Each determination of 
class, damaged kernels, heat-damaged kernels, and stones is made on the 
basis of the grain when free from dockage and that portion of the broken 
kernels, and foreign material that will pass through a 1.98 mm (5/64 
inches) triangular-hole sieve. Other determinations not specifically 
provided for in the general provisions are made on the basis of the 
grain as a whole except the determination of odor is made on either the 
basis of the grain as a whole or the grain when free from dockage, 
broken kernels, and foreign material removed by the 1.98 mm (5/64 
inches) triangular-hole sieve.

[57 FR 58971, Dec. 14, 1992]

                      Grades and Grade Requirements



Sec.  810.1404  Grades and grade requirements for sorghum.

------------------------------------------------------------------------
                                                 Grades U.S. Nos. \1\
               Grading factors               ---------------------------
                                                1      2      3      4
------------------------------------------------------------------------
                         Minimum pound limits of
------------------------------------------------------------------------
Test weight per bushel......................   57.0   55.0   53.0   51.0
------------------------------------------------------------------------
                        Maximum percent limits of
------------------------------------------------------------------------
Damaged kernels:
  Heat (part of total)......................    0.2    0.5    1.0    3.0
    Total...................................    2.0    5.0   10.0   15.0
Broken kernels and foreign material:
  Foreign material (part of total)..........    1.0    2.0    3.0    4.0
    Total...................................    3.0    6.0    8.0   10.0
------------------------------------------------------------------------
                         Maximum count limits of
------------------------------------------------------------------------
Other material:
  Animal filth..............................      9      9      9      9
    Castor beans............................      1      1      1      1
    Crotalaria seeds........................      2      2      2      2
    Glass...................................      1      1      1      1
    Stones \2\..............................      7      7      7      7
    Unknown foreign substance...............      3      3      3      3
    Cockleburs..............................      7      7      7      7
    Total \3\...............................     10     10     10     10
------------------------------------------------------------------------
U.S. Sample grade is sorghum that:
  (a) Does not meet the requirements for U.S. Nos. 1, 2, 3, or 4; or
  (b) Has a musty, sour, or commercially objectionable foreign odor
   (except smut odor); or
  (c) Is badly weathered, heating, or distinctly low quality.
------------------------------------------------------------------------
\1\ Sorghum which is distinctly discolored shall not grade higher than
  U.S. No. 3.
\2\ Aggregate weight of stones must also exceed 0.2 percent of the
  sample weight.
\3\ Includes any combination of animal filth, castor beans, crotalaria
  seeds, glass, stones, unknown foreign substance or cockleburs.


[72 FR 39733, July 20, 2007]

              Special Grades and Special Grade Requirements



Sec.  810.1405  Special grades and special grade requirements.

    Smutty sorghum. Sorghum that has kernels covered with smut spores to 
give a smutty appearance in mass, or that contains 20 or more smut balls 
in 100 grams of sorghum.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



             Subpart J_United States Standards for Soybeans

                              Terms Defined



Sec.  810.1601  Definition of soybeans.

    Grain that consists of 50 percent or more of whole or broken 
soybeans (Glycine max (L.) Merr.) that will not pass through an \8/64\ 
round-hole sieve and not more than 10.0 percent of other grains for 
which standards have been established under the United States Grain 
Standards Act.

[[Page 561]]



Sec.  810.1602  Definition of other terms.

    (a) Classes. There are two classes for soybeans: Yellow soybeans and 
Mixed soybeans.
    (1) Yellow soybeans. Soybeans that have yellow or green seed coats 
and which in cross section, are yellow or have a yellow tinge, and may 
include not more than 10.0 percent of soybeans of other colors.
    (2) Mixed soybeans. Soybeans that do not meet the requirements of 
the class Yellow soybeans.
    (b) Damaged kernels. Soybeans and pieces of soybeans that are badly 
ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-
damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
stinkbug-stung, or otherwise materially damaged. Stinkbug-stung kernels 
are considered damaged kernels at the rate of one-fourth of the actual 
percentage of the stung kernels.
    (c) Foreign material. All matter that passes through an \8/64\ 
round-hole sieve and all matter other than soybeans remaining in the 
sieved sample after sieving according to procedures prescribed in FGIS 
instructions.
    (d) Heat-damaged kernels. Soybeans and pieces of soybeans that are 
materially discolored and damaged by heat.
    (e) Purple mottled or stained. Soybeans that are discolored by the 
growth of a fungus; or by dirt; or by a dirt-like substance(s) including 
nontoxic inoculants; or by other nontoxic substances.
    (f) Sieve--\8/64\ round-hole sieve. A metal sieve 0.032 inch thick 
perforated with round holes 0.125 (\8/64\) inch in diameter.
    (g) Soybeans of other colors. Soybeans that have green, black, 
brown, or bicolored seed coats. Soybeans that have green seed coats will 
also be green in cross section. Bicolored soybeans will have seed coats 
of two colors, one of which is brown or black, and the brown or black 
color covers 50 percent of the seed coats. The hilum of a soybean is not 
considered a part of the seed coat for this determination.
    (h) Splits. Soybeans with more than \1/4\ of the bean removed and 
that are not damaged.

            Principles Governing the Application of Standards



Sec.  810.1603  Basis of determination.

    Each determination of class, heat-damaged kernels, damaged kernels, 
splits, and soybeans of other colors is made on the basis of the grain 
when free from foreign material. Other determinations not specifically 
provided for under the general provisions are made on the basis of the 
grain as a whole.

                      Grades and Grade Requirements



Sec.  810.1604  Grades and grade requirements for soybeans.

----------------------------------------------------------------------------------------------------------------
                                                                               Grades U.S. Nos.
                       Grading factors                       ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
                                                                          Maximum percent limits of:
                                                             ---------------------------------------------------
Damaged kernels:
    Heat (part of total)....................................          0.2          0.5          1.0          3.0
        Total...............................................          2.0          3.0          5.0          8.0
    Foreign material........................................          1.0          2.0          3.0          5.0
    Splits..................................................         10.0         20.0         30.0         40.0
    Soybeans of other colors: \1\...........................          1.0          2.0          5.0         10.0
                                                             ---------------------------------------------------
                                                                           Maximum count limits of:
                                                             ---------------------------------------------------
Other material:
    Animal filth............................................            9            9            9            9
    Caster beans............................................            1            1            1            1
    Crotalaria seeds........................................            2            2            2            2
    Glass...................................................            0            0            0            0
    Stones \2\..............................................            3            3            3            3
    Unknown foreign substance...............................            3            3            3            3
        Total \3\...........................................           10           10           10           10
                                                             ---------------------------------------------------

[[Page 562]]

 
U.S. Sample grade are Soybeans that:
(a) Do not meet the requirements for U.S. Nos. 1, 2, 3, or 4; or
(b) Have a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
(c) Are heating or of distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ Disregard for Mixed soybeans.
\2\ In addition to the maximum count limit, stones must exceed 0.1 percent of the sample weight.
\3\ Includes any combination of animal filth, castor beans, crotalaria seeds, glass, stones, and unknown
  substances. The weight of stones is not applicable for total other material.


[71 FR 52406, Sept. 6, 2006]

              Special Grades and Special Grade Requirements



Sec.  810.1605  Special grades and special grade requirements.

    (a) Garlicky soybeans. Soybeans that contain 5 or more green garlic 
bulblets or an equivalent quantity of dry or partly dry bulblets in a 
1,000 gram portion.
    (b) Purple mottled or stained soybeans. Soybeans with pink or purple 
seed coats as determined on a portion of approximately 400 grams with 
the use of an FGIS Interpretive Line Photograph.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987; 
59 FR 10573, Mar. 7, 1994]



          Subpart K_United States Standards for Sunflower Seed

                              Terms Defined



Sec.  810.1801  Definition of sunflower seed.

    Grain that, before the removal of foreign material, consists of 50.0 
percent or more of cultivated sunflower seed (Helianthus annuus L.) and 
not more than 10.0 percent of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec.  810.1802  Definition of other terms.

    (a) Cultivated sunflower seed. Sunflower seed grown for oil content. 
The term seed in this and other definitions related to sunflower seed 
refers to both the kernel and hull which is a fruit or achene.
    (b) Damaged sunflower seed. Seed and pieces of sunflower seed that 
are badly ground-damaged, badly weather-damaged, diseased, frost-
damaged, heat-damaged, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (c) Dehulled seed. Sunflower seed that has the hull completely 
removed from the sunflower kernel.
    (d) Foreign material. All matter other than whole sunflower seeds 
containing kernels that can be removed from the original sample by use 
of an approved device and by handpicking a portion of the sample 
according to procedures prescribed in FGIS instructions.
    (e) Heat-damaged sunflower seed. Seed and pieces of sunflower seed 
that are materially discolored and damaged by heat.
    (f) Hull (Husk). The ovary wall of the sunflower seed.
    (g) Kernel. The interior contents of the sunflower seed that are 
surrounded by the hull.

            Principles Governing the Application of Standards



Sec.  810.1803  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, test 
weight per bushel, and dehulled seed is made on the basis of the grain 
when free from foreign material. Other determinations not specifically 
provided for in the general provisions are made on the basis of the 
grain as a whole, except the determination of odor is made on either the 
basis of the grain as a whole or the grain when free from foreign 
material.

[[Page 563]]

                      Grades and Grade Requirements



Sec.  810.1804  Grades and grade requirements for sunflower seed.

----------------------------------------------------------------------------------------------------------------
                                                                                    Maximum limits of--
                                                                          --------------------------------------
                                                                Minimum     Damaged Sunflower Seed
                            Grade                             test weight --------------------------   Dehulled
                                                               per bushel      Heat                      seed
                                                                (pounds)     Damaged       Total      (percent)
                                                                            (percent)    (Percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1..................................................         25.0          0.5          5.0          5.0
U.S. No. 2..................................................         25.0          1.0         10.0          5.0
U.S. Sample grade--
  U.S. Sample grade is sunflower seed that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1 or 2; or
    (b) Contains 8 or more stones which have an aggregate weight in excess of 0.20 percent of the sample weight,
     2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus
     communis L.), 4 or more particles of an unknown foreign substance(s), or a commonly recognized harmful or
     toxic substance(s), 10 or more rodent pellets, bird droppings, or equivalent quantity of other animal filth
     per 600 grams of sunflower seed; or
    (c) Has a musty, sour, or commercially objectionable foreign odor; or
    (d) Is heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------



             Subpart L_United States Standards for Triticale

                              Terms Defined



Sec.  810.2001  Definition of triticale.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of triticale (X Triticosecale Wittmack) and not more than 10 
percent of other grains for which standards have been established under 
the United States Grain Standards Act and that, after the removal of 
dockage, contains 50 percent or more of whole triticale.



Sec.  810.2002  Definition of other terms.

    (a) Damaged kernels. Kernels, pieces of triticale kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (b) Defects. Damaged kernels, foreign material, and shrunken and 
broken kernels. The sum of these three factors may not exceed the limit 
for the factor defects for each numerical grade.
    (c) Dockage. All matter other than triticale that can be removed 
from the original sample by use of an approved device according to 
procedures prescribed in FGIS instructions. Also, underdeveloped, 
shriveled, and small pieces of triticale kernels removed in properly 
separating the material other than triticale and that cannot be 
recovered by properly rescreening or recleaning.
    (d) Foreign material. All matter other than triticale.
    (e) Heat-damaged kernels. Kernels, pieces of triticale kernels, and 
other grains that are materially discolored and damaged by heat.
    (f) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, wheat, and wild oats.
    (g) Shrunken and broken kernels. All matter that passes through a 
0.064 x 3/8 oblong-hole sieve after sieving according to procedures 
prescribed in FGIS instructions.
    (h) Sieve--0.064 x \3/8\ oblong-hole sieve. A metal sieve 0.032 inch 
thick with oblong perforations 0.064 inch by 0.375 (3/8) inch.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

            Principles Governing the Application of Standards



Sec.  810.2003  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, 
material other than wheat or rye, and foreign material (total) is made 
on the basis of the grain when free from dockage and shrunken and broken 
kernels. Other

[[Page 564]]

determinations not specifically provided for under the general 
provisions are made on the basis of the grain when free from dockage 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements



Sec.  810.2004  Grades and grade requirements for triticale.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Maximum limits of--
                                                                           -----------------------------------------------------------------------------
                                                                                 Damaged Kernels          Foreign material
                                                                 Minimum   ----------------------------------------------------
                            Grade                              test weight                              Material                  Shrunken
                                                                per bushel      Heat                   other than                and broken  Defects \3\
                                                                 (pounds)     damaged     Total \1\     wheat or    Total \2\     kernels     (percent)
                                                                             (percent)    (percent)       rye       (percent)    (percent)
                                                                                                       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         48.0          0.2          2.0          1.0          2.0          5.0          5.0
U.S. No. 2...................................................         45.0          0.2          4.0          2.0          4.0          8.0          8.0
U.S. No. 3...................................................         43.0          0.5          8.0          3.0          7.0         12.0         12.0
U.S. No. 4...................................................         41.0          3.0         15.0          4.0         10.0         20.0         20.0
U.S. Sample grade--
  U.S. Sample grade is triticale that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces
     of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign
     substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of other
     animal filth per 1\1/8\ to 1\1/4\ quarts of triticale; or
    (c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Is heating or otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels.
\2\ Includes material other than wheat or rye.
\3\ Defects include damaged kernels (total), foreign material (total) and shrunken and broken kernels. The sum of these three factors may not exceed the
  limit for defects for each numerical grade.


[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

              Special Grades and Special Grade Requirements



Sec.  810.2005  Special grades and special grade requirements.

    (a) Ergoty triticale. Triticale that contains more than 0.10 percent 
of ergot.
    (b) Garlicky triticale. Triticale that contains in a 1,000 gram 
portion more than six green garlic bulblets or an equivalent quantity of 
dry or partly dry bulblets.
    (c) Light garlicky triticale. Triticale that contains in a 1,000 
gram portion two or more, but not more than six, green garlic bulblets 
or an equivalent quantity of dry or partly dry bulblets.
    (d) Light smutty triticale. Triticale that has an unmistakable odor 
of smut, or that contains in a 250 gram portion smut balls, portions of 
smut balls, or spores of smut in excess of a quantity equal to 14 smut 
balls, but not in excess of a quantity equal to 30 smut balls of average 
size.
    (e) Smutty triticale. Triticale that contains in a 250 gram portion 
smut balls, portions of smut balls, or spores of smut in excess of a 
quantity equal to 30 smut balls of average size.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



               Subpart M_United States Standards for Wheat

                              Terms Defined



Sec.  810.2201  Definition of wheat.

    Grain that, before the removal of dockage, consists of 50 percent or 
more common wheat (Triticum aestivum L.), club wheat (T. compactum 
Host.), and durum wheat (T. durum Desf.) and not more than 10 percent of 
other grains for which standards have been established under the United 
States Grain

[[Page 565]]

Standards Act and that, after the removal of the dockage, contains 50 
percent or more of whole kernels of one or more of these wheats.



Sec.  810.2202  Definition of other terms.

    (a) Classes. There are eight classes for wheat: Durum wheat, Hard 
Red Spring wheat, Hard Red Winter wheat, Soft Red Winter wheat, Hard 
White wheat, Soft White wheat, Unclassed wheat, and Mixed wheat.
    (1) Durum wheat. All varieties of white (amber) durum wheat. This 
class is divided into the following three subclasses:
    (i) Hard Amber Durum wheat. Durum wheat with 75 percent or more of 
hard and vitreous kernels of amber color.
    (ii) Amber Durum wheat. Durum wheat with 60 percent or more but less 
than 75 percent of hard and vitreous kernels of amber color.
    (iii) Durum wheat. Durum wheat with less than 60 percent of hard 
vitreous kernels of amber color.
    (2) Hard Red Spring wheat. All varieties of Hard Red Spring wheat. 
This class shall be divided into the following three subclasses.
    (i) Dark Northern Spring wheat. Hard Red Spring wheat with 75 
percent or more of dark, hard, and vitreous kernels.
    (ii) Northern Spring wheat. Hard Red Spring wheat with 25 percent or 
more but less than 75 percent of dark, hard, and vitreous kernels.
    (iii) Red Spring wheat. Hard Red Spring wheat with less than 25 
percent of dark, hard, and vitreous kernels.
    (3) Hard Red Winter wheat. All varieties of Hard Red Winter wheat. 
There are no subclasses in this class.
    (4) Soft Red Winter wheat. All varieties of Soft Red Winter wheat. 
There are no subclasses in this class.
    (5) Hard White wheat. All hard endosperm white wheat varieties. 
There are no subclasses in this class.
    (6) Soft White wheat. All soft endosperm white wheat varieties. This 
class is divided into the following three subclasses:
    (i) Soft White wheat. Soft endosperm white wheat varieties which 
contain not more than 10 percent of white club wheat.
    (ii) White Club wheat. Soft endosperm white club wheat varieties 
containing not more than 10 percent of other soft white wheats.
    (iii) Western White wheat. Soft White wheat containing more than 10 
percent of white club wheat and more than 10 percent of other soft white 
wheats.
    (7) Unclassed wheat. Any variety of wheat that is not classifiable 
under other criteria provided in the wheat standards. There are no 
subclasses in this class. This class includes any wheat which is other 
than red or white in color.
    (8) Mixed wheat. Any mixture of wheat that consists of less than 90 
percent of one class and more than 10 percent of one other class, or a 
combination of classes that meet the definition of wheat.
    (b) Contrasting Classes. Contrasting classes are:
    (1) Durum wheat, Soft White wheat, and Unclassed wheat in the 
classes Hard Red Spring wheat and Hard Red Winter wheat.
    (2) Hard Red Spring wheat, Hard Red Winter wheat, Hard White wheat, 
Soft Red Winter wheat, Soft White wheat, and Unclassed wheat in the 
class Durum wheat.
    (3) Durum wheat and Unclassed wheat in the class Soft Red Winter 
wheat.
    (4) Durum wheat, Hard Red Spring wheat, Hard Red Winter wheat, Soft 
Red Winter wheat, and Unclassed wheat in the class Soft White wheat.
    (5) Durum wheat, Soft Red Winter wheat, and Unclassed wheat in the 
class Hard White wheat.
    (c) Damaged kernels. Kernels, pieces of wheat kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (d) Defects. Damaged kernels, foreign material, and shrunken and 
broken kernels. The sum of these three factors may not exceed the limit 
for the factor defects for each numerical grade.
    (e) Dockage. All matter other than wheat that can be removed from 
the original sample by use of an approved

[[Page 566]]

device according to procedures prescribed in FGIS instructions. Also, 
underdeveloped, shriveled, and small pieces of wheat kernels removed in 
properly separating the material other than wheat and that cannot be 
recovered by properly rescreening or recleaning.
    (f) Foreign material. All matter other than wheat that remains in 
the sample after the removal of dockage and shrunken and broken kernels.
    (g) Heat-damaged kernels. Kernels, pieces of wheat kernels, and 
other grains that are materially discolored and damaged by heat which 
remain in the sample after the removal of dockage and shrunken and 
broken kernels.
    (h) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, and wild oats.
    (i) Shrunken and broken kernels. All matter that passes through a 
0.064 x \3/8\ oblong-hole sieve after sieving according to procedures 
prescribed in the FGIS instructions.
    (j) Sieve--0.064 x \3/8\ oblong-hole sieve. A metal sieve 0.032 inch 
thick with oblong perforations 0.064 inch by 0.375 (\3/8\) inch.

[52 FR 24418, June 30, 1987, as amended at 54 FR 48736, Nov. 27, 1989; 
57 FR 58966, Dec. 14, 1992; 71 FR 8235, Feb. 18, 2006; 78 FR 27858, May 
13, 2013]

            Principles Governing the Application of Standards



Sec.  810.2203  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, foreign 
material, wheat of other classes, contrasting classes, and subclasses is 
made on the basis of the grain when free from dockage and shrunken and 
broken kernels. Other determinations not specifically provided for under 
the general provisions are made on the basis of the grain when free from 
dockage, except the determination of odor is made on either the basis of 
the grain as a whole or the grain when free from dockage.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

                      Grades and Grade Requirements



Sec.  810.2204  Grades and grade requirements for wheat.

    (a) Grades and grade requirements for all classes of wheat, except 
Mixed wheat.

                                          Grades and Grade Requirements
----------------------------------------------------------------------------------------------------------------
                                                                                   Grades U.S. Nos.
                          Grading factors                           --------------------------------------------
                                                                        1        2        3        4        5
----------------------------------------------------------------------------------------------------------------
                                            Minimum pound limits of:
----------------------------------------------------------------------------------------------------------------
Test weight per bushel:
    Hard Red Spring wheat or White Club wheat......................     58.0     57.0     55.0     53.0     50.0
    All other classes and subclasses...............................     60.0     58.0     56.0     54.0     51.0
----------------------------------------------------------------------------------------------------------------
                                           Maximum percent limits of:
----------------------------------------------------------------------------------------------------------------
Defects:
    Damaged kernels................................................
        Heat (part of total).......................................      0.2      0.2      0.5      1.0      3.0
                                                                    --------------------------------------------
        Total......................................................      2.0      4.0      7.0     10.0     15.0
                                                                    ============================================
    Foreign material...............................................      0.4      0.7      1.3      3.0      5.0
    Shrunken and broken kernels....................................      3.0      5.0      8.0     12.0     20.0
                                                                    --------------------------------------------
        Total \1\..................................................      3.0      5.0      8.0     12.0     20.0
                                                                    ============================================
    Wheat of other classes: \2\....................................
    Contrasting classes............................................      1.0      2.0      3.0     10.0     10.0
                                                                    --------------------------------------------

[[Page 567]]

 
        Total \3\..................................................      3.0      5.0     10.0     10.0     10.0
                                                                    ============================================
    Stones.........................................................      0.1      0.1      0.1      0.1      0.1
----------------------------------------------------------------------------------------------------------------
                                            Maximum count limits of:
----------------------------------------------------------------------------------------------------------------
Other material in one kilogram:
    Animal filth...................................................      1        1        1        1        1
    Castor beans...................................................      1        1        1        1        1
    Crotalaria seeds...............................................      2        2        2        2        2
    Glass..........................................................      0        0        0        0        0
    Stones.........................................................      3        3        3        3        3
    Unknown foreign substances.....................................      3        3        3        3        3
                                                                    --------------------------------------------
        Total \4\..................................................      4        4        4        4        4
                                                                    ============================================
Insect-damaged kernels in 100 grams................................     31       31       31       31       31
----------------------------------------------------------------------------------------------------------------
U.S. Sample grade is Wheat that:
    (a) Does not meet the requirements for U.S. Nos. 1, 2, 3, 4, or 5; or.......................................
    (b) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or..........
    (c) Is heating or of distinctly low quality.................................................................
----------------------------------------------------------------------------------------------------------------
\1\ Includes damaged kernels (total), foreign material, shrunken and broken kernels.
\2\ Unclassed wheat of any grade may contain not more than 10.0 percent of wheat of other classes.
\3\ Includes contrasting classes.
\4\ Includes any combination of animal filth, castor beans, crotalaria seeds, glass, stones, or unknown foreign
  substance.

    (b) Grades and grade requirements for Mixed wheat. Mixed wheat is 
graded according to the U.S. numerical and U.S. Sample grade 
requirements of the class of wheat that predominates in the mixture, 
except that the factor wheat of other classes is disregarded.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24442, June 30, 1987; 
57 FR 58966, Dec. 14, 1992; 71 FR 8235, Feb. 18, 2006]

              Special Grades and Special Grade Requirements



Sec.  810.2205  Special grades and special grade requirements.

    (a) Ergoty wheat. Wheat that contains more than 0.05 percent of 
ergot.
    (b) Garlicky wheat. Wheat that contains in a 1,000 gram portion more 
than two green garlic bulblets or an equivalent quantity of dry or 
partly dry bulblets.
    (c) Light smutty wheat. Wheat that has an unmistakable odor of smut, 
or which contains, in a 250-gram portion, smut balls, portions of smut 
balls, or spores of smut in excess of a quantity equal to 5 smut balls, 
but not in excess of a quantity equal to 30 smut balls of average size.
    (d) Smutty wheat. Wheat that contains, in a 250 gram portion, smut 
balls, portions of smut balls, or spores of smut in excess of a quantity 
equal to 30 smut balls of average size.
    (e) Treated wheat. Wheat that has been scoured, limed, washed, 
sulfured, or treated in such a manner that the true quality is not 
reflected by either the numerical grades or the U.S. Sample grade 
designation alone.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24442, June 30, 1987; 
57 FR 58967, Dec. 14, 1992]



PART 868_GENERAL REGULATIONS AND STANDARDS FOR CERTAIN AGRICULTURAL
COMMODITIES--Table of Contents



                          Subpart A_Regulations

                               Definitions

Sec.
868.1 Meaning of terms.

                             Administration

868.5 Administrator.
868.6 Nondiscrimination--policy and provisions.
868.7 Procedures for establishing regulations and standards.
868.8 Complaints and reports of alleged violations.

[[Page 568]]

868.9 Provisions for hearings.
868.10 Information about the Service, Act, and regulations.
868.11 Public information.
868.12 Identification.
868.13 Regulations not applicable for certain purposes.

             Conditions for Obtaining or Withholding Service

868.20 Availability of services.
868.21 Requirements for obtaining service.
868.22 Withdrawal of request for inspection service by applicant.
868.23 Dismissal of request for inspection service.
868.24 Conditional withholding of service.
868.25 Denial or withdrawal of service.
868.26 Expenses of the cooperator or the Service.

                    Inspection Methods and Procedures

868.30 Methods and order of performing inspection service.
868.31 Kinds of inspection services.
868.32 Who shall inspect commodities.
868.33 Sample requirements; general.
868.34 Partial inspection.
868.35 Sampling provisions by level of service.
868.36 Loss of identity.

                       Original Inspection Service

868.40 Who may request original inspection service.
868.41 Contract service.
868.42 How to request original inspection service.
868.44 New original inspection.

                        Retest Inspection Service

868.50 Who may request retest inspection service.
868.51 How to request retest inspection service.
868.52 Certificating retest inspection results.

                        Appeal Inspection Service

868.60 Who may request appeal inspection service.
868.61 How to request appeal inspection service.
868.62 Who shall perform appeal inspection service.
868.63 Certificating appeal inspection results.

                          Official Certificates

868.70 Official certificates; issuance and distribution.
868.71 Official certificate requirements.
868.72 Certification of results.
868.73 Corrected certificates.
868.74 Divided-lot certificates.
868.75 Duplicate certificates.

             Licensed Inspectors, Technicians, and Samplers

868.80 Who may be licensed.
868.81 Licensing procedures.
868.82 Voluntary cancellation or suspension of license.
868.83 Automatic suspension of license by change in employment.
868.84 Suspension or revocation of license.

                                  Fees

868.90 Fees for certain Federal inspection services.
868.91 Fees for certain Federal rice inspection services.
868.92 Explanation of service fees and additional fees.

                      Subpart B_Marketing Standards

868.101 General information.
868.102 Procedures for establishing and revising grade standards.
868.103 Public notification of grade standards action.

            Subpart C_United States Standards for Rough Rice

                              Terms Defined

868.201 Definition of rough rice.
868.202 Definition of other terms.

              Principles Governing Application of Standards

868.203 Basis of determination.
868.204 Interpretive line samples.
868.205 Milling requirements.
868.206 Milling yield determination.
868.207 Moisture.
868.208 Percentages.
868.209 Information.

           Grades, Grade Requirements, and Grade Designations

868.210 Grades and grade requirements for the classes of rough rice. 
          (See also Sec.  868.212.)
868.211 Grade designation and other certificate information.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.212 Special grades and requirements.
868.213 Special grade designation.

     Subpart D_United States Standards for Brown Rice for Processing

                              Terms Defined

868.251 Definition of brown rice for processing.
868.252 Definition of other terms.

[[Page 569]]

              Principles Governing Application of Standards

868.253 Basis of determination.
868.254 Broken kernels determination.
868.255 Interpretive line samples.
868.256 Milling requirements.
868.257 Milling yield determination.
868.258 Moisture.
868.259 Percentages.
868.260 Information.

           Grades, Grade Requirements, and Grade Designations

868.261 Grades and grade requirements for the classes of brown rice for 
          processing. (See also Sec.  868.263.)
868.262 Grade designation and other certificate information.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.263 Special grades and special grade requirements.
868.264 Special grade designation.

            Subpart E_United States Standards for Milled Rice

                              Terms Defined

868.301 Definition of milled rice.
868.302 Definition of other terms.

              Principles Governing Application of Standards

868.303 Basis of determination.
868.304 Broken kernels determination.
868.305 Interpretive line samples.
868.306 Milling requirements.
868.307 Moisture.
868.308 Percentages.
868.309 Information.

           Grades, Grade Requirements, and Grade Designations

868.310 Grades and grade requirements for the classes Long Grain Milled 
          Rice, Medium Grain Milled Rice, Short Grain Milled Rice, and 
          Mixed Milled Rice. (See also Sec.  868.315.)
868.311 Grades and grade requirements for the class Second Head Milled 
          Rice. (See also Sec.  868.315.)
868.312 Grades and grade requirements for the class Screenings Milled 
          Rice. (See also Sec.  868.315.)
868.313 Grades and grade requirements for the class Brewers Milled Rice. 
          (See also Sec.  868.315.)
868.314 Grade designation and other certificate information.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.315 Special grades and special grade requirements.
868.316 Special grade designation.

    Authority: 7 U.S.C. 1621-1627.



                          Subpart A_Regulations

    Source: 53 FR 3722, Feb. 9, 1988, unless otherwise noted. 
Redesignated at 60 FR 16364, Mar. 30, 1995.

                               Definitions



Sec.  868.1  Meaning of terms.

    (a) Construction. Words used in the singular form are considered to 
imply the plural and vice versa, as appropriate.
    (b) Definitions. For the purpose of these regulations, unless the 
context requires otherwise, the following terms have the meanings given 
for them in this paragraph.
    (1) Act. The Agricultural Marketing Act of 1946, as amended (secs. 
202-208, 60 Stat. 1087, as amended, 7 U.S.C. 1621 et seq.).
    (2) Administrator. The Administrator of the Grain Inspection, 
Packers and Stockyards Administration or any person to whom the 
Administrator's authority has been delegated.
    (3) Appeal inspection service. A review by the Service of the 
result(s) of an original inspection or retest inspection service.
    (4) Applicant. An interested person who requests any inspection 
service with respect to a commodity.
    (5) Authorized inspector. A Department employee authorized by the 
Administrator to inspect a commodity in accordance with the Act, 
regulations, standards, and instructions.
    (6) Board appeal inspection service. A review by the Board of 
Appeals and Review of the result(s) of an original inspection or appeal 
inspection service on graded commodities.
    (7) Board of Appeals and Review or Board. The Board of Appeals and 
Review of the Service that performs Board appeal inspection services.
    (8) Business day. The established field office working hours, any 
Monday through Friday that is not a holiday, or the working hours and 
days established by a cooperator.
    (9) Carrier. A truck, trailer, truck/trailer(s) combination, 
railroad car, barge, ship, or other container used to

[[Page 570]]

transport bulk, sacked, or packaged commodity.
    (10) Commodity. Agricultural commodities and products thereof that 
the Secretary has assigned to the Service for inspection under the Act, 
including but not limited to dry beans, grain, hops, lentils, oilseeds, 
dry peas, split peas, and rice.
    (11) Continuous inspection. The conduct of inspection services in an 
approved plant where one or more official inspection personnel are 
present during the processing of a commodity to make in-process 
examinations of the preparation, processing, packing, and warehousing of 
the commodity and to determine compliance with applicable sanitation 
requirements.
    (12) Contract service. Any service performed under a contract 
between an applicant and the Service.
    (13) Contractor. Any person who enters into a contract with the 
Service or with a cooperator to perform specified inspection services.
    (14) Cooperator. An agency or department of the Federal Government 
which has an interagency agreement or State agency which has a 
reimbursable agreement with the Service.
    (15) Cooperator inspection service. The inspection service provided 
by a cooperator under the regulations. Under this service, inspection 
certificates are issued by the cooperator and all fees and charges are 
collected by the cooperator, except as provided in the agreement.
    (16) Department. The United States Department of Agriculture.
    (17) Factor. A quantified physical or chemical property identified 
in official standards, specifications, abstracts, contracts, or other 
documents whose measurement describes a specific quality of a commodity.
    (18) Field office. An office of the Service designated to perform, 
monitor, or supervise inspection services.
    (19) Grade. A grade designating a level of quality as defined in the 
commodity standards promulgated pursuant to the Act.
    (20) Graded commodity. Commodities for which the Service has 
promulgated Standards under the Act and commodities which are tested by 
the Service at a field office or by a cooperator for specific physical 
factors using approved equipment and an inspector's interpretation of 
visual conditions.
    (21) Holiday. The legal public holidays specified in paragraph (a) 
of section 6103, title 5, of the United States Code (5 U.S.C. 6103(a)) 
and any other day declared to be a holiday by Federal Statute or 
Executive Order. Under section 6103 and Executive Order 10357, as 
amended, if the specified legal public holiday falls on a Saturday, the 
preceding Friday shall be considered to be the holiday, or if the 
specified legal public holiday falls on a Sunday, the following Monday 
shall be considered to be the holiday.
    (22) Inspection certificate. A written or printed official document 
which is approved by the Service and which shows the results of an 
inspection service performed under the Act.
    (23) Inspection service. (i) Applying such tests and making 
examinations of a commodity and records by official personnel as may be 
necessary to determine the kind, class, grade, other quality 
designation, the quantity, or condition of commodity; performing 
condition of container, carrier stowage examinations; and any other 
services as related to commodities, as necessary; and (ii) issuing an 
inspection certificate.
    (24) Instructions. The Notices, Instructions, Handbooks, and other 
directives issued by the Service.
    (25) Interagency agreement. An agreement between the Service and 
other agencies or departments of the Federal Government to conduct 
commodity inspection services as authorized in the Act.
    (26) Interested person. Any person having a contract or other 
financial interest in a commodity as the owner, seller, purchaser, 
warehouseman, carrier, or otherwise.
    (27) Licensee. Any person licensed by the Service.
    (28) Nongraded commodity. Nonprocessed commodities which are 
chemically tested for factors not included in the Standards under the 
Act or the U.S. Grain Standards Act (7 U.S.C. 71 et seq.) and processed 
commodities.
    (29) Nonregular workday. Any Sunday or holiday.

[[Page 571]]

    (30) Official inspector. Any official personnel who performs, 
monitors, or supervises the performance of inspection service and 
certifies the results of inspection of the commodity.
    (31) Official personnel. Any authorized Department employee or 
person licensed by the Administrator to perform all or specified 
functions under the Act.
    (32) Official sampler. Any official personnel who performs, 
monitors, or supervises the performance of sampling of a commodity.
    (33) Official technician. Any official personnel who performs, 
monitors, or supervises the performance of specified inspection services 
and certifies the results thereof, other than certifying the grade of a 
commodity.
    (34) Origin. The geographical area or place where the commodity is 
grown.
    (35) Original inspection service. An initial inspection of a 
community.
    (36) Person. Any individual, partnership, association, corporation, 
or other business entity.
    (37) Plant. The premises, buildings, structure, and equipment 
(including but not limited to machines, utensils, vehicles, and fixtures 
located in or about the premises) used or employed in the preparation, 
processing, handling, transporting, and storage of commodities.
    (38) Regular workday. Any Monday through Saturday that is not a 
holiday.
    (39) Regulations. The regulations in this part.
    (40) Reimbursable agreement. An agreement between the Service and 
State agencies to conduct commodity inspection services authorized 
pursuant to the Act.
    (41) Retest inspection service. To test, using the same laboratory 
procedures, a factor(s) of nongraded commodities previously tested.
    (42) Secretary. The Secretary of Agriculture of the United States or 
any person to whom the Secretary's authority has been delegated.
    (43) Service. The Federal Grain Inspection Service of the Grain 
Inspection, Packers and Stockyards Administration of the United States 
Department of Agriculture.
    (44) Service representative. An employee authorized by the Service 
or a person licensed by the Administrator.
    (45) Specification. A document which clearly and accurately 
describes the essential and technical requirements for items, materials, 
or services including requested inspection procedures.
    (46) Standards. The commodity standards in this part that describe 
the physical and biological condition of a commodity at the time of 
inspection.
    (47) Submitted sample. A sample submitted by or for an applicant for 
inspection.
    (48) Test. A procedure to measure a factor using specialized 
laboratory equipment involving the application of established scientific 
principles and laboratory procedures.

[53 FR 3722, Feb. 9, 1988, as amended at 60 FR 5835, Jan. 31, 1995. 
Redesignated at 60 FR 16364, Mar. 30, 1995, as amended at 63 FR 29531, 
June 1, 1998; 70 FR 69250, Nov. 15, 2005]

                             Administration



Sec.  868.5  Administrator.

    The Administrator, under the authority delegated by the Secretary, 
is charged with administering the programs and functions authorized 
under the Act and the regulations concerning those commodities assigned 
by the Secretary to the Service.



Sec.  868.6  Nondiscrimination--policy and provisions.

    In implementing, administering, and enforcing the Act and the 
regulations, standards, and instructions, it is the policy of the 
Service to promote adherence to the provisions of the Civil Rights Act 
of 1964 (42 U.S.C. 2000a et seq.).



Sec.  868.7  Procedures for establishing regulations and standards.

    Notice of proposals to prescribe, amend, or revoke regulations and 
standards shall be published in accordance with applicable provisions of 
the Administrative Procedures Act (5 U.S.C. 551 et seq.). Any interested 
person desiring to file a petition for the issuance, amendment, or 
revocation of regulations or standards may do so in

[[Page 572]]

accordance with 7 CFR 1.28 of the regulations of the Office of the 
Secretary of Agriculture.



Sec.  868.8  Complaints and reports of alleged violations.

    (a) General. Except as provided in paragraph (b) of this section, 
complaints and reports of violations involving the Act or the 
regulations, standards, and instructions issued under the Act should be 
filed with the Service in accordance with 7 CFR 1.133 of the regulations 
of the Office of the Secretary of Agriculture and these regulations and 
the instructions.
    (b) Retest inspection and appeal inspection service. Complaints 
involving the results of inspection services shall, to the extent 
practicable, be submitted as requests for retest inspection, appeal 
inspection, or Board appeal inspection services as set forth in these 
regulations.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec.  868.9  Provisions for hearings.

    Opportunities shall be provided for hearings either in accordance 
with the Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary under Various Statutes (7 CFR part 1, 
subpart H) or in accordance with FGIS procedures as appropriate.



Sec.  868.10  Information about the Service, Act, and regulations.

    Information about the Service, Act, regulations, standards, rules of 
practice, instructions, and other matters related to the inspection of 
commodities may be obtained by telephoning or writing the U.S. 
Department of Agriculture, Federal Grain Inspection Service, P.O. Box 
96454, Washington, DC 20090-6454, or any field office or cooperator.



Sec.  868.11  Public information.

    (a) General. This section is issued in accordance with Sec. Sec.  
1.1 through 1.23 of the regulations of the Secretary in part 1, subpart 
A, of subtitle A of title 7 (7 CFR 1.1 through 1.23), and appendix A 
thereto, implementing the Freedom of Information Act (5 U.S.C. 552). The 
Secretary's regulations, as implemented by this section, govern the 
availability of records of the Service to the public.
    (b) Public inspection and copying. Materials maintained by the 
Service, including those described in 7 CFR 1.5, will be made available, 
upon a request which has not been denied, for public inspection and 
copying at the U.S. Department of Agriculture, Federal Grain Inspection 
Service, 1400 Independence Avenue SW., Washington, DC 20250. The public 
may request access to these materials 8:00 a.m.-4:30 p.m. Monday through 
Friday except for holidays.
    (c) Indexes. The Service shall maintain an index of all material 
required to be made available in 7 CFR 1.5. Copies of these indexes will 
be maintained at the location given in paragraph (b) of this section. 
Notice is hereby given that quarterly publication of these indexes is 
unnecessary and impracticable because the material is voluminous and 
does not change often enough to justify the expense of quarterly 
publication. However, upon specific request, copies of any index will be 
provided at a cost not to exceed the direct cost of duplication.
    (d) Requests for records. Requests for records under 5 U.S.C. 
552(a)(3) shall be made in accordance with 7 CFR 1.6 and shall be 
addressed as follows: Office of the Administrator, Federal Grain 
Inspection Service, FOIA Request, U.S. Department of Agriculture, P.O. 
Box 96454, Washington, DC 20090-6454.
    (e) FOIA Appeals. Any person whose request, under paragraph (d) of 
this section, is denied shall have the right to appeal such denial in 
accordance with 7 CFR 1.13. Appeals shall be addressed to the 
Administrator, Federal Grain Inspection Service, FOIA Appeal, U.S. 
Department of Agriculture, P.O. Box 96454, Washington, DC 20090-6454.
    (f) Disclosure of information. FGIS employees or persons acting for 
FGIS under the Act shall not, without the consent of the applicant, 
divulge or make known in any manner any facts or information acquired 
pursuant to the Act, regulations, or instructions except as authorized 
by the Administrator, by a court of competent jurisdiction, or otherwise 
by law.

[53 FR 3722, Feb. 9, 1988, as amended 54 FR 5923, Feb. 7, 1989. 
Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 573]]



Sec.  868.12  Identification.

    All official personnel shall have in their possession and present 
upon request, while on duty, the means of identification furnished to 
them by the Department.



Sec.  868.13  Regulations not applicable for certain purposes.

    These regulations do not apply to the inspection of grain under the 
United States Grain Standards Act, as amended (7 U.S.C. 71 et seq.) or 
the inspection of commodities under the United States Warehouse Act, as 
amended (7 U.S.C. 241 et seq.).

             Conditions for Obtaining or Withholding Service



Sec.  868.20  Availability of services.

    (a) Original inspection service. Original inspection services are 
available according to this section and Sec. Sec.  868.40 through 
868.44.
    (b) Retest inspection and appeal inspection services. Retest 
inspection, appeal inspection, and Board appeal inspection services are 
available according to Sec. Sec.  868.50 through 868.52 and Sec. Sec.  
868.60 through 868.63.
    (c) Proof of authorization. A cooperator or the Service may request 
satisfactory proof that an applicant is an interested person or their 
authorized agent.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.21  Requirements for obtaining service.

    (a) Consent and agreement by applicant. In submitting a request for 
inspection service, the applicant and the owner of the commodity consent 
to the requirements specified in paragraphs (b) through (j) of this 
section.
    (b) Written confirmation. Verbal requests for inspection service 
shall be confirmed in writing upon request. Each written request shall 
be made in English and shall include:
    (1) The date filed;
    (2) The identification, quantity, and location of the commodity;
    (3) The type of service(s) requested;
    (4) The name and mailing address of the applicant and, if made by an 
authorized agent, the agent's name and mailing address; and
    (5) Any other relevant information that the official with whom the 
application is filed may request.

A written request or a written confirmation of a verbal request shall be 
signed by the applicant or a duly authorized agent.
    (c) Names and addresses of interested persons. When requested, each 
applicant for inspection service shall show on the application form the 
name and mailing address of each known interested person.
    (d) Surrender of superseded certificates. Superseded certificates 
must be promptly surrendered.
    (e) Accessibility--(1) Commodities. Each commodity lot inspected 
shall be arranged so the entire lot may be examined or, if necessary, a 
representative sample, as appropriate, can be obtained. If the entire 
lot is not accessible for examination or a representative sample cannot 
be obtained, the inspection shall be restricted to an examination or 
sampling of the accessible portion and the results certified as stated 
in Sec.  868.34.
    (2) Origin records. When an applicant requests origin inspection, 
the records indicating the origin of the commodity to be inspected shall 
be made accessible for examination and verification by official 
personnel.
    (f) Plant examination. Plant surveys shall be performed upon 
request. Survey results shall be reported in writing to a designated 
plant official. If the plant is approved as a result of the survey, 
inspection service may begin or continue at a time agreed upon by the 
plant management and the cooperator or Service. If the plant is not 
approved as a result of the survey, inspection service shall be 
conditionally withheld pursuant to the procedures in Sec.  868.24.
    (g) Working space. An applicant must provide adequate and separate 
space when inspection service is performed at a plant.
    (h) Loading and unloading conditions. Each applicant for inspection 
service shall provide or arrange for suitable conditions in the--
    (1) Loading and unloading areas and the truck and railroad holding 
areas;
    (2) Pier or dock areas;

[[Page 574]]

    (3) Deck and stowage areas of a carrier;
    (4) Other service areas; and
    (5) Equipment used in loading or unloading, processing, and handling 
the commodity.

Suitable conditions are those which will facilitate accurate inspection, 
maintain the quantity and the quality of the commodity that is to be 
inspected, and not be hazardous to the health and safety of official 
personnel as prescribed in the instructions.
    (i) Timely arrangements. Requests for inspection service shall be 
made in a timely manner; otherwise, official personnel may not be 
available to provide the requested service. ``Timely manner'' shall mean 
not later than 2 p.m., local time, of the preceding business day.
    (j) Payment of bills. Each applicant for inspection service shall 
pay bills for the service pursuant to Sec. Sec.  868.90-868.92.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.22  Withdrawal of request for inspection service by applicant.

    An applicant may withdraw a request for inspection service any time 
before official personnel release results, either verbally or in 
writing. Reimbursement of expenses, if any, shall be made pursuant to 
Sec.  868.26.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.23  Dismissal of request for inspection service.

    (a) Conditions for dismissal--(1) General. A cooperator or the 
Service shall dismiss requests for inspection service when:
    (i) Performing the requested service is not practicable or possible.
    (ii) The cooperator or the Service lacks authority under the Act or 
regulations to provide the inspection service requested or is unable to 
comply with the Act, regulations, standards, or instructions.
    (iii) Sufficient information is not available to make an accurate 
determination.
    (2) Original inspection service. A request for original inspection 
service shall be dismissed if an original inspection has already been 
performed and circumstances do not prevent a retest inspection, appeal 
inspection, or Board appeal inspection from being performed on the same 
lot.
    (3) Retest inspection service. A request for a retest inspection 
service shall be dismissed by official personnel when:
    (i) The factor requested was not tested during the original 
inspection;
    (ii) The condition of the commodity has undergone a material change;
    (iii) A representative file sample is not available;
    (iv) The applicant requests that a new sample be obtained;
    (v) The request is for a graded commodity; or
    (vi) The reasons for the retest inspection are frivolous.
    (4) Appeal inspection service. A request for an appeal inspection 
service shall be dismissed by official personnel when:
    (i) The scope is different from the scope of the original inspection 
service;
    (ii) The condition of the commodity has undergone a material change;
    (iii) The request specifies a file sample and a representative file 
sample is not available;
    (iv) The applicant requests that a new sample be obtained and a new 
sample cannot be obtained; or
    (v) The reasons for the appeal inspection are frivolous.
    (5) Board appeal inspection service. A request for a Board appeal 
inspection service shall be dismissed by official personnel when:
    (i) The scope is different from the scope of the original inspection 
service;
    (ii) The condition of the commodity has undergone a material change;
    (iii) A representative file sample is not available;
    (iv) The applicant requests that a new sample be obtained; or
    (v) The reasons for the Board appeal inspection are frivolous.
    (b) Procedure for dismissal. The cooperator or the Service shall 
notify the applicant of the proposed dismissal of service. If 
correctable, the applicant will be afforded reasonable time to

[[Page 575]]

take. corrective action or to demonstrate there is no basis for the 
dismissal. If corrective action has not been adequate, the applicant 
will be notified of the decision to dismiss the request for service, and 
any results of service shall not be released.



Sec.  868.24  Conditional withholding of service.

    (a) Conditional withholding. A cooperator or the Service shall 
conditionally withhold service when an applicant fails to meet any 
requirement prescribed in Sec.  868.21.
    (b) Procedure for withholding. The cooperator or the Service shall 
notify the applicant of the reason for the proposal to conditionally 
withhold service. The applicant will then be afforded reasonable time to 
take corrective action or to demonstrate that there is no basis for 
withholding service. If corrective action has not been adequate, the 
applicant will be notified of the decision to withhold service; and any 
results of service shall not be released.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.25  Denial or withdrawal of service.

    (a) General. Service may be denied or withdrawn because of (1) any 
willful violation of the Act, regulations, standards, or instructions or 
(2) any interference with or obstruction of any official personnel in 
the performance of their duties by intimidation, threat, assault, or any 
other improper means.
    (b) The Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary under Various Statutes (7 CFR part 1, 
subpart H) shall be followed in the denial or withdrawal of service.



Sec.  868.26  Expenses of the cooperator or the Service.

    For any request that has been withdrawn, dismissed, or withheld 
under Sec. Sec.  868.22, 868.23, or 868.24, respectively, each applicant 
shall pay expenses incurred by the cooperator or the Service.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                    Inspection Methods and Procedures



Sec.  868.30  Methods and order of performing inspection service.

    (a) Methods--(1) General. All sampling and inspection services 
performed by official personnel shall be made in accordance with the 
regulations, standards, and the instructions.
    (2) Lot inspection service. A lot inspection service shall be based 
on official personnel obtaining representative samples, examining the 
commodity in the entire lot, and making an accurate analysis of the 
commodity on the basis of the samples.
    (3) Submitted sample inspection service. A submitted sample 
inspection service shall be based on a submitted sample of sufficient 
size to enable official personnel to perform an accurate, complete 
analysis. The sample size will be prescribed in the instructions. If a 
complete analysis cannot be performed because of an inadequate sample 
size or other conditions, the request shall be dismissed or a factor 
only inspection may be performed upon request.
    (b) Order of service. Inspection services shall be performed, to the 
extent practicable, in the order in which requests for service are 
received.
    (c) Recording receipt of documents. Each document submitted by or on 
behalf of an applicant for inspection service shall be promptly stamped 
or similarly marked by official personnel to show the date of receipt.
    (d) Conflicts of interest. (1) Official personnel shall not perform 
or participate in performing an inspection service on a commodity or a 
carrier or container in which the official personnel have a direct or 
indirect financial interest.
    (2) Official personnel shall not perform, participate in performing, 
or issue a certificate if the official personnel participated in a 
previous inspection or certification of the lot unless there is only one 
authorized person available at the time and place of the requested 
inspection service.



Sec.  868.31  Kinds of inspection services.

    (a) General. The inspection of commodities shall be according to 
the--

[[Page 576]]

    (1) Standards of class, grade, other quality designation, quantity, 
or condition for such commodities promulgated by the Administrator; or
    (2) Specifications prescribed by Federal agencies; or
    (3) Specifications of trade associations or organizations; or
    (4) Other specifications as requested by applicant; or
    (5) The instructions.


The kinds of services provided and the basis for performing the services 
include those specified in paragraphs (b) through (m) of this section. 
Some or all of these services are provided when performing a complete 
inspection service.
    (b) Quality inspection service. This service consists of official 
personnel--
    (1) Obtaining representative sample(s) of an identified commodity 
lot;
    (2) Examining, grading, or testing the sample(s);
    (3) Examining relevant records for the lot; and
    (4) Certifying the results.
    (c) Submitted sample inspection service. This service consists of 
official personnel grading or testing a sample submitted by the 
applicant and certifying the results.
    (d) Examination service. This service consists of official personnel 
examining supplies without the use of special laboratory equipment or 
procedures to determine conformance to requirements requested by the 
applicant and certifying the results.
    (e) Checkweighing service (container). This service consists of 
official personnel--
    (1) Weighing a selected number of containers from a commodity lot;
    (2) Determining the estimated total gross, tare, and net weights or 
the estimated average gross or net weight per filled container; and
    (3) Certifying the results.
    (f) Bulk weighing service. This service consists of official 
personnel--
    (1) Completely supervising the loading or the unloading of an 
identified lot of bulk or containerized commodity,
    (2) Physically weighing or completely supervising the weighing of 
the commodity; and
    (3) Certifying the results.
    (g) Checkloading service. This service consists of official 
personnel--
    (1) Performing a stowage examination;
    (2) Computing the number of filled commodity containers loaded 
aboard the carrier;
    (3) Observing the condition of commodity containers loaded aboard 
the carrier;
    (4) If practicable, sealing the carrier; and
    (5) Certifying the results.
    (h) Checkcounting service. This service consists of official 
personnel determining the total number of filled outer containers in a 
lot to determine that the number of containers shown by the applicant is 
correct and certifying the results.
    (i) Condition inspection service. This service consists of official 
personnel determining the physical condition of the commodity by 
determining whether an identifiable commodity lot is water damaged, fire 
damaged, or has rodent or bird contamination, insect infestation, or any 
other deteriorating condition and certifying the results.
    (j) Condition of food containers service. This service consists of 
official personnel determining the degree of acceptability of the 
containers with respect to absence of defects which affect the 
serviceability, including appearance as well as usability, of the 
container for its intended purpose and certifying the results.
    (k) Observation of loading service. This service consists of 
official personnel determining that an identified lot has been moved 
from a warehouse or carrier and loaded into another warehouse or carrier 
and certifying the results.
    (l) Plant approval service. \1\ This service consists of official 
personnel performing a plant survey to determine if the plant premises, 
facilities, sanitary conditions, and operating methods are suitable to 
begin or continue inspection service.
---------------------------------------------------------------------------

    \1\ Compliance with the requirements in this paragraph does not 
excuse failure to comply with all applicable sanitation rules and 
regulations of city, county, State, Federal, or other agencies having 
jurisdiction over such plants and operations.
---------------------------------------------------------------------------

    (m) Stowage examination service. This service consists of official 
personnel visually determining if an identified carrier or container is 
clean; dry; free

[[Page 577]]

of infestation, rodents, toxic substances and foreign odor; and suitable 
to store or carry commodities and certifying the results.



Sec.  868.32  Who shall inspect commodities.

    Official commodity inspections shall be performed only by official 
personnel.



Sec.  868.33  Sample requirements; general.

    (a) Samples for lot inspection service--(1) Original lot inspection 
service. The sample(s) on which the original inspection is determined 
shall be--
    (i) Obtained by official personnel;
    (ii) Representative of the commodity in the lot;
    (iii) Protected by official personnel from manipulation, 
substitution, and improper or careless handling; and
    (iv) Obtained within the prescribed area of responsibility of the 
cooperator or field office performing the inspection service.
    (2) Retest lot inspection service. The sample(s) on which the retest 
is determined shall meet the requirements of paragraph (a)(1) of this 
section. The retest inspection shall be performed on the basis of a file 
sample(s), and the samples shall meet the requirements prescribed in 
Sec.  868.35(e).
    (3) Appeal lot inspection service. For an appeal lot inspection 
service, the sample(s) on which the appeal is determined shall meet the 
requirements of paragraph (a)(1) of this section. If the appeal 
inspection is performed on the basis of a file sample(s), the samples 
shall meet the requirements prescribed in Sec.  868.35(e). In accordance 
with Sec.  868.61(b), an applicant may request that a new sample be 
obtained and examined as part of the appeal inspection service.
    (4) Board appeal lot inspection service. A Board appeal lot 
inspection service shall be performed on the basis of file sample.
    (b) Sampler requirement. An official sampler shall sample 
commodities and forward the samples to the appropriate cooperator or 
field office or other location as specified. A sampling report signed by 
the sampler shall accompany each sample. The report shall include the 
identity, quantity, and location of the commodity sampled; the name and 
mailing address of the applicant; and all other information regarding 
the lot as may be required.
    (c) Representative sample. A sample shall not be considered 
representative of a commodity lot unless the sample--
    (1) Has been obtained by official personnel;
    (2) Is of the size prescribed in the instructions; and
    (3) Has been obtained, handled, and submitted in accordance with the 
instructions.
    (d) Protecting samples. Official personnel shall protect samples 
from manipulation, substitution, and improper and careless handling 
which would deprive the samples of their representativeness or which 
would change the physical and chemical properties of the commodity from 
the time of sampling until inspection services are completed and file 
samples have been discarded.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.34  Partial inspection.

    When the entire lot is not accessible for examination or a 
representative sample cannot be obtained from the entire lot, the 
certificate shall state the estimated quantity of the commodity in the 
accessible portion and the quantity of the entire lot. The inspection 
shall be limited to the accessible portion. In addition, the words 
``Partial Inspection'' shall be printed or stamped on the certificate.



Sec.  868.35  Sampling provisions by level of service.

    (a) Original inspection service--(1) Lot inspection service. Each 
original lot inspection service shall be made on the basis of one or 
more representative samples obtained by official personnel from the 
commodity in the lot and forwarded to the appropriate location.
    (2) Submitted sample service. Each original submitted sample 
inspection service shall be performed on the basis of the sample as 
submitted.
    (b) Retest inspection service. Each retest inspection service 
performed on a commodity lot or a submitted sample shall be based on an 
analysis of the file sample.

[[Page 578]]

    (c) Appeal inspection service--(1) Lot inspection service. Each 
appeal inspection service on a commodity lot shall be made on the basis 
of a file sample or, upon request, a new sample.
    (2) Submitted sample service. Each appeal inspection service on the 
commodity in a submitted sample shall be based on an analysis of the 
file sample.
    (d) Board appeal inspection service. Each Board appeal inspection 
service performed on a commodity lot or submitted sample shall be based 
on an analysis of the file sample.
    (e) Use of file samples--(1) Requirements for use. A file sample 
that is retained by official personnel in accordance with the procedures 
prescribed in the instructions shall be considered representative for 
retest inspection, appeal inspection, and Board appeal inspection 
service if: (i) The file samples have remained at all times in the 
custody and control of the official personnel that performed the 
inspection service and (ii) the official personnel who performed the 
inspection service in question and those who are to perform the retest 
inspection, the appeal inspection, or the Board appeal inspection 
service determines that the samples were representative of the commodity 
at the time the inspection service was performed and that the quality or 
condition of the commodity in the samples has not since changed.
    (2) Certificate statement. The certificate for a retest inspection, 
appeal inspection, or Board appeal inspection service which is based on 
a file sample shall show the statement ``Results based on file sample.''



Sec.  868.36  Loss of identity.

    (a) Lots. The identity of a packaged lot, bulk lot, or sublot of a 
commodity shall be considered lost if:
    (1) A portion of the commodity is unloaded, transferred, or 
otherwise removed from the carrier or location after the time of 
original inspection, unless the identity is preserved; or
    (2) More commodity or other material, including a fumigant or 
insecticide, is added to the lot after the original inspection was 
performed, unless the addition of the fumigant or insecticide was 
performed in accordance with the instructions; or
    (3) At the option of official personnel performing an appeal 
inspection or Board appeal inspection service, the identity of a 
commodity in a closed carrier or container may be considered lost if the 
carrier or container is not sealed or the seal record is incomplete.
    (b) Carriers and containers. The identity of a carrier or container 
shall be considered lost if (1) the stowage area is cleaned, treated, 
fumigated, or fitted after the original inspection was performed or (2) 
the identification has been changed since the original inspection.
    (c) Submitted sample. The identity of a submitted sample of a 
commodity shall be considered lost if:
    (1) The identifying number, mark, or symbol for the sample is lost 
or destroyed; or
    (2) The sample has not been retained and protected by official 
personnel as prescribed in the regulations and the instructions.

                       Original Inspection Service



Sec.  868.40  Who may request original inspection service.

    Any interested person may apply for inspection service.



Sec.  868.41  Contract service.

    Any interested person may enter into a contract with a cooperator or 
the Service whereby the cooperator or Service will provide original 
inspection services for a specified period, and the applicant will pay a 
specific fee.



Sec.  868.42  How to request original inspection service.

    (a) General. Requests may be made verbally or in writing. Verbal 
requests shall be confirmed in writing when requested by official 
personnel. All written requests shall include the information specified 
in Sec.  868.21. Copies of request forms may be requested from the 
cooperator or the Service. If all required documentation is not 
available when the request is made, it shall be provided as soon as it 
is available. At their discretion, official personnel may withhold 
inspection service pending receipt of the required documentation.
    (b) Request requirements. Requests for original inspection service, 
other than

[[Page 579]]

submitted sample inspections, must be made with the cooperator or the 
Service responsible for the area in which the service will be provided. 
Requests for submitted sample inspections may be made with any 
cooperator or any field office that provides original inspection 
service. Requests for inspection of commodities during loading, 
unloading, handling, or processing shall be received far enough in 
advance so official personnel can be present.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.44  New original inspection.

    When circumstances prevent a retest inspection, appeal inspection, 
or Board appeal inspection, an applicant may request a new original 
inspection on any previously inspected lot; except that a new original 
inspection may not be performed on an identifiable commodity lot which, 
as a result of a previous inspection, was found to be contaminated with 
filth, other than insect fragments in nongraded processed products, or 
to contain a deleterious substance. A new original inspection shall be 
based on a new sample and shall not be restricted to the scope of any 
previous inspection. A new original inspection certificate shall not 
supersede any previously issued certificate.

                        Retest Inspection Service



Sec.  868.50  Who may request retest inspection service.

    (a) General. Any interested person may request a retest inspection 
service on nongraded commodities. When more than one interested person 
requests a retest inspection service, the first interested person to 
file is the applicant of record. Only one retest inspection service may 
be performed on any original inspection service.
    (b) Scope of request. A retest inspection service may be requested 
for any or all quality factors tested but shall be limited to analysis 
of the file sample.

(Approved by the Office of Management and Budget under control number 
0580-0012)



Sec.  868.51  How to request retest inspection service.

    (a) General. Requests shall be made with the field office 
responsible for the area in which the original inspection service was 
performed. Verbal requests shall be confirmed in writing, upon request, 
as specified in Sec.  868.21. Copies of request forms may be obtained 
from the field office upon request. If at the time the request is filed 
and the documentation required by Sec.  868.21 is not available, 
official personnel may, at their discretion, withhold service pending 
the receipt of the required documentation.
    (b) Request requirements. Requests will be considered filed on the 
date they are received by official personnel.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.52  Certificating retest inspection results.

    (a) General. Retest inspection certificates shall be issued 
according to Sec.  868.70 and instructions. The certificate shall show 
the results of the factor(s) retested and the original results not 
included in the retest service.
    (b) Required statements on retest certificates. Each retest 
inspection certificate shall show the statements required by this 
section, Sec.  868.71, and the instructions.
    (1) Each retest inspection certificate shall clearly show the term 
``Retest'' and a statement identifying the superseded original 
certificate. The superseded certificate shall be considered null and 
void as of the date of the retest certificate. When applicable, the 
certificate shall also show a statement as to which factor(s) result is 
based on the retest inspection service and that all other results are 
those of the original inspection service.
    (2) If the superseded certificate is in the custody of the Service, 
the superseded certificate shall be marked ``Void.'' If the superseded 
certificate is not in the custody of the Service at the time the retest 
certificate is issued, a

[[Page 580]]

statement indicating that the superseded certificate has not been 
surrendered shall be shown on the retest certificate.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                        Appeal Inspection Service



Sec.  868.60  Who may request appeal inspection service.

    (a) General. Any interested person may request appeal inspection or 
Board appeal inspection service. When more than one interested person 
requests an appeal inspection or Board appeal inspection service, the 
first interested person to file is the applicant of record. Only one 
appeal inspection may be obtained from any original inspection or retest 
inspection service for nongraded commodities. Only one Board appeal 
inspection may be obtained from any original or appeal inspection 
service for graded commodities. Board appeal inspection shall be 
performed on the basis of the file sample.
    (b) Kind and scope of request. When the results for more than one 
kind of service are reported on a certificate, an appeal inspection or 
Board appeal inspection service, as applicable, may be requested on any 
or all kinds of services reported on the certificate. The scope of an 
appeal inspection service will be limited to the scope of the original 
inspection or, in the case of a Board appeal inspection service, the 
original or appeal inspection service. A request for appeal inspection 
of a retest inspection will be based upon the scope of the original 
inspection. If the request specifies a different scope, the request 
shall be dismissed. Provided, however, that an applicant for service may 
request an appeal or Board appeal inspection of specific factor(s) or 
official grade and factors. In addition, appeal and Board appeal 
inspection for grade may include a review of any pertinent factor(s), as 
deemed necessary by official personnel.

(Approved by the Office of Management and Budget under control number 
0580-0013)

[53 FR 3722, Feb. 9, 1988. Redesignated at 60 FR 16364, Mar. 30, 1995 
and amended at 70 FR 69250, Nov. 15, 2005]



Sec.  868.61  How to request appeal inspection service.

    (a) General. Requests shall be made with the field office 
responsible for the area in which the original service was performed. 
Requests for Board appeal inspections may be made with the Board of 
Appeals and Review or the field office that performed the appeal 
inspection. Verbal requests must be confirmed in writing, upon request, 
as specified in Sec.  868.21. Copies of request forms may be obtained 
from the field office upon request. If at the time the request is made 
the documentation required by Sec.  868.21 is not available, official 
personnel may, at their discretion, withhold service pending the receipt 
of the required documentation.
    (b) Request requirements. (1) This subparagraph is applicable to 
rice inspection only. Except as may be agreed upon by the interested 
persons, the application shall be made: (i) Before the rice has left the 
place where the inspection being appealed was performed and (ii) no 
later than the close of business on the second business day following 
the date of the inspection being appealed. However, the Administrator 
may extend the time requirement as deemed necessary.
    (2) Subject to the limitations of paragraph (b)(3) of this section, 
the applicant may request that an appeal inspection be based on: (i) The 
file sample or (ii) a new sample. However, an appeal inspection shall be 
based on a new sample only if the lot can positively be identified by 
official personnel as the one that was previously inspected and the 
entire lot is available and accessible for sampling and inspection. 
Board appeals shall be on the basis of the file sample.
    (3) An appeal inspection shall be limited to a review of the 
sampling procedure and an analysis of the file sample when, as a result 
of a previous inspection, the commodity was found to be contaminated 
with filth (other than insect fragments in nongraded processed products) 
or to contain a deleterious substance. If it is determined that the 
sampling procedures were improper, a new sample shall be obtained if the 
lot can be positively identified as the lot which was previously 
inspected and the

[[Page 581]]

entire lot is available and accessible for sampling and inspection.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.62  Who shall perform appeal inspection service.

    (a) Appeal. For graded commodities, the appeal inspection service 
shall be performed by the field office responsible for the area in which 
the original inspection was performed. For nongraded commodities, the 
appeal inspection service shall be performed by the Service's Commodity 
Testing Laboratory.
    (b) Board appeal. Board appeal inspection service shall be performed 
only by the Board of Appeals and Review. The field office will act as a 
liaison between the Board of Appeals and Review and the applicant.



Sec.  868.63  Certificating appeal inspection results.

    (a) General. An appeal inspection certificate shall be issued 
according to Sec.  868.70 and instructions. Except as provided in 
paragraph (b)(2) of this section, only the results of the appeal 
inspection or Board appeal inspection service shall be shown on the 
appeal inspection certificate.
    (b) Required statements. Each appeal inspection certificate shall 
show the statements required by this section, Sec.  868.71, and 
instructions.
    (1) Each appeal inspection certificate shall clearly show: (i) The 
term ``Appeal'' or ``Board Appeal'' and (ii) a statement identifying the 
superseded certificate. The superseded certificate shall be considered 
null and void as of the date of the appeal inspection or Board appeal 
inspection certificate.
    (2) When the results for more than one kind of service are reported 
on a certificate, the appeal or Board appeal inspection certificate 
shall show a statement of which kind of service(s) results are based on 
the appeal or Board appeal inspection service and that all other results 
are those of the original inspection, retest inspection, or appeal 
inspection service.
    (3) If the superseded certificate is in the custody of the Service, 
the superseded certificate shall be marked ``Void.'' If the superseded 
original inspection, retest inspection, or appeal inspection certificate 
is not in the custody of the Service at the time the appeal certificate 
is issued, a statement indicating that the superseded certificate has 
not been surrendered shall be shown on the appeal certificate.
    (c) Finality of Board appeal inspection. A Board appeal inspection 
shall be the final appeal inspection service except that for nongraded 
commodities an appeal shall be the final appeal inspection.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                          Official Certificates



Sec.  868.70  Official certificates; issuance and distribution.

    (a) Required issuance. An inspection certificate shall be issued to 
show the results of each kind and each level of inspection service.
    (b) Distribution--(1) Original. The original and one copy of each 
inspection certificate shall be distributed to the applicant or the 
applicant's order. In addition, one copy of each inspection certificate 
shall be filed with the office providing the inspection; and, if the 
inspection is performed by a cooperator, one copy shall be forwarded to 
the appropriate field office. If requested by the applicant prior to 
issuance of the inspection certificate, additional copies not to exceed 
a total of three copies will be furnished at no extra charge.
    (2) Retest and appeal inspection service. In addition to the 
distribution requirements in paragraph (b)(1) of this section, one copy 
of each retest or appeal inspection certificate will be distributed to 
each interested person of record or the interested person's order and to 
the cooperator or field office that issued the superseded certificate.
    (3) Additional copies. Additional copies of certificates will be 
furnished to the applicant or interested person upon request. Fees for 
extra copies in excess of three may be assessed according to the fee 
schedules established by the cooperator or the Service.
    (c) Prompt issuance. An inspection certificate shall be issued 
before the

[[Page 582]]

close of business on the business day following the date the inspection 
is completed.
    (d) Who may issue a certificate--(1) Authority. Certificates for 
inspection services may be issued only by official personnel who are 
specifically authorized or licensed to perform and certify the results 
reported on the certificate.
    (2) Exception. The person in the best position to know whether the 
service was performed in an approved manner and that the determinations 
are accurate and true should issue the certificate. If the inspection is 
performed by one person, the certificate should be issued by that 
person. If an inspection is performed by two or more persons, the 
certificate should be issued by the person who makes the majority of the 
determinations or the person who makes the final determination. 
Supervisory personnel may issue a certificate when the individual is 
licensed or authorized to perform the inspection being certificated.
    (e) Name requirement. The name or the signature, or both, of the 
person who issued the inspection certificate shall be shown on the 
original and all copies of the certificate.
    (f) Authorization to affix names--(1) Requirements. The names or the 
signatures, or both, of official personnel may be affixed to official 
certificates which are prepared from work records signed or initialed by 
the person whose name will be shown. The agent affixing the name or 
signature, or both, shall: (i) Be employed by a cooperating agency or 
the Service, (ii) have been designated to affix names or signatures, or 
both, and (iii) hold a power of attorney from the person whose name or 
signature, or both, will be affixed. The power of attorney shall be on 
file with the employing cooperating agency or the Service as 
appropriate.
    (2) Initialing. When a name or signature, or both, is affixed by an 
authorized agent, the initials of the agent shall appear directly below 
or following the name or signature of the person.
    (g) Advance information. Upon request, the contents of an official 
certificate may be furnished in advance to the applicant and any other 
interested person, or to their order, and any additional expense shall 
be borne by the requesting party.
    (h) Certification; when prohibited. An official certificate shall 
not be issued for service after the request for an inspection service 
has been withdrawn or dismissed.



Sec.  868.71  Official certificate requirements.

    Official certificates shall--
    (a) Be on standard printed forms prescribed in the instructions;
    (b) Be in English;
    (c) Be typewritten or handwritten in ink and be clearly legible;
    (d) Show the results of inspection services in a uniform, accurate, 
and concise manner;
    (e) Show the information required by Sec. Sec.  868.70-868.75; and
    (f) Show only such other information and statements of fact as are 
provided in the instructions authorized by the Administrator.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.72  Certification of results.

    (a) General. Each official certificate shall show the results of the 
inspection service.
    (b) Graded commodities. Each official certificate for graded 
commodities shall show--
    (1) The class, grade, or any other quality designation according to 
the official grade standards;
    (2) All factor information requested by the applicant; and
    (3) All grade determining factors for commodities graded below the 
highest quality grade.



Sec.  868.73  Corrected certificates.

    (a) General. The accuracy of the statements and information shown on 
official certificates must be verified by the individual whose name or 
signature, or both, is shown on the official certificate or by the 
authorized agent who affixed the name or signature, or both. Errors 
found during this process shall be corrected according to this section.
    (b) Who may correct. Only official personnel or their authorized 
agents may make corrections, erasures, additions,

[[Page 583]]

or other changes to official certificates.
    (c) Corrections prior to issuance. No corrections, erasures, 
additions, or other changes shall be made which involve identification, 
quality, or quantity. If such errors are found, a new official 
certificate shall be prepared and issued and the incorrect certificate 
marked ``Void.'' Otherwise, errors may be corrected provided that--
    (1) The corrections are neat and legible;
    (2) Each correction is initialed by the individual who corrects the 
certificate; and
    (3) The corrections and initials are shown on the original and all 
copies.
    (d) Corrections after issuance--(1) General. If errors are found on 
an official certificate at any time up to a maximum of 1 year after 
issuance, the errors shall be corrected by obtaining the incorrect 
certificate and replacing it with a corrected certificate. When the 
incorrect certificate cannot be obtained, a corrected certificate can be 
issued superseding the incorrect one.
    (2) Certification requirements. The same statements and information, 
including permissive statements, that were shown on the incorrect 
certificate, along with the correct statement or information, shall be 
shown on the corrected certificate. According to this section and the 
instructions, corrected certificates shall show--
    (i) The terms ``Corrected Original'' and ``Corrected Copy,''
    (ii) A statement identifying the superseded certificate and the 
corrections,
    (iii) A statement indicating the superseded certificate was not 
surrendered when the incorrect certificate was not submitted; and
    (iv) A new serial number.

In addition, the incorrect certificate shall be marked ``Void'' when 
submitted.
    (e) Limitations. Corrected certificates cannot be issued for a 
certificate that has been superseded by another certificate or on the 
basis of a subsequent analysis for quality.



Sec.  868.74  Divided-lot certificates.

    (a) General. When commodities are offered for inspection and are 
certificated as a single lot, the applicant may exchange the inspection 
certificate for two or more divided-lot certificates.
    (b) Application. Requests for divided-lot certificates shall be 
made--
    (1) In writing;
    (2) By the applicant who made the initial request;
    (3) To the office that issued the outstanding certificate;
    (4) Within 5 business days of the outstanding certificate date; and
    (5) Before the identity of the commodity has been lost.
    (c) Quantity restrictions. Divided-lot certificates shall not show 
an aggregate quantity different than the total quantity shown on the 
superseded certificate.
    (d) Surrender of certificate. The certificate that will be 
superseded shall--
    (1) Be in the custody of the cooperator or the Service;
    (2) Be marked ``Void,'' and
    (3) Show the identification of the divided-lot certificates.
    (e) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the superseded 
certificate shall be shown on each divided-lot certificate. Divided-lot 
certificates shall show--
    (1) A statement indicating the commodity was inspected as an 
undivided lot;
    (2) The terms ``Divided-Lot Original,'' and the copies shall show 
``Divided-Lot Copy;''
    (3) The same serial number with numbered suffix (for example, 1764-
1, 1764-2, 1764-3, and so forth); and
    (4) The quantity specified by the request.
    (f) Issuance and distribution. Divided-lot certificates shall be 
issued no later than the close of business on the next business day 
after the request and be distributed according to Sec.  868.70(b).
    (g) Limitations. After divided-lot certificates have been issued, 
further dividing or combining is prohibited except with the approval of 
the Service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

[[Page 584]]



Sec.  868.75  Duplicate certificates.

    Upon request, a duplicate certificate may be issued for a lost or 
destroyed official certificate.
    (a) Application. Requests for duplicate certificates shall be 
filed--
    (1) In writing;
    (2) By the applicant who requested the service covered by the lost 
or destroyed certificate; and
    (3) With the office that issued the initial certificate.
    (b) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the lost or 
destroyed certificate shall be shown on the duplicate certificate. 
Duplicate certificates shall show: (1) The terms ``Duplicate Original,'' 
and the copies shall show ``Duplicate Copy'' and (2) a statement that 
the certificate was issued in lieu of a lost or destroyed certificate.
    (c) Issuance. Duplicate certificates shall be issued as promptly as 
possible and distributed according to Sec.  868.70(b).
    (d) Limitations. Duplicate certificates shall not be issued for 
certificates that have been superseded.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

             Licensed Inspectors, Technicians, and Samplers



Sec.  868.80  Who may be licensed.

    (a) Inspectors. The Administrator may license any person to inspect 
commodities and to perform related services if the individual--
    (1) Is employed by a cooperator, is a contractor, or is employed by 
a contractor;
    (2) Possesses the qualifications prescribed in the instructions; and
    (3) Has no interest, financial or otherwise, direct or indirect in 
merchandising, handling, storing, or processing the kind of commodities 
or related products to be inspected.

The Administrator may require applicants to be examined for competency 
at a specific time and place and in a prescribed manner.
    (b) Technicians or samplers. The Administrator may license any 
person as a technician to perform official specified laboratory 
functions, including sampling duties and related services, or as a 
sampler to draw samples of commodities and perform related services if 
the individual: (1) Possesses proper qualifications as prescribed in the 
instructions and (2) has no interest, financial or otherwise direct or 
indirect in merchandising, handling, storing, or processing the kind of 
commodities or related products to be chemically analyzed, mechanically 
tested, sampled, and so forth. The Administrator may require applicants 
to be examined for competency at a specific time and place and in a 
prescribed manner.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995; 63 FR 29531, June 1, 1998]



Sec.  868.81  Licensing procedures.

    (a) Application. An application for a license, the renewal of a 
license, or the return of a suspended license shall be submitted to the 
Service on forms furnished by the Service. Each application shall be in 
English, be typewritten or legibly written in ink, show all information 
prescribed by the application form, and be signed by the applicant.
    (b) Examinations and reexaminations. Applicants for a license and 
individuals who are licensed to perform any or all inspection services 
shall, at the discretion of the Service, submit to examinations or 
reexaminations to determine their competency to perform the inspection 
functions for which they desire to be or are licensed.
    (c) Termination--(1) Procedure. Each license shall terminate 
according to the termination date shown on the license and as specified 
by the schedule in this paragraph. The termination date for a license 
shall be no less than 3 years or more than 4 years after the issuance 
date for the initial license; thereafter, every 3 years. Upon request of 
a licensee and for good cause shown, the termination date may be 
advanced or delayed by the Administrator for a period not to exceed 60 
days.

[[Page 585]]



                          Termination Schedule
------------------------------------------------------------------------
         Last name beginning with                 Termination date
------------------------------------------------------------------------
A........................................  January.
B........................................  February.
C, D.....................................  March.
E, F, G..................................  April.
H, I, J..................................  May.
K, L.....................................  June.
M........................................  July.
N, O, P, Q...............................  August.
R........................................  September.
S, T, U, V...............................  October.
W........................................  November.
X, Y, Z..................................  December.
------------------------------------------------------------------------


The Service shall issue a termination notice 60 days before the 
termination date. The notice shall give detailed instructions for 
requesting renewal of license, state whether a reexamination is 
required, and, if a reexamination is required, give the scope of the 
examination. Failure to receive a notice from the Service shall not 
exempt a licensee from the responsibility of having the license renewed 
by the termination date.
    (2) Exception. The license of an individual under contract with the 
Service shall terminate upon termination of the contract.
    (d) Surrender of license. Each license that is terminated or which 
is suspended or revoked under Sec.  868.84 shall be promptly surrendered 
to the Administrator or other official of the Service designated by the 
Administrator.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.82  Voluntary cancellation or suspension of license.

    Upon request by a licensee, the Service may cancel a license or 
suspend a license for a period of time not to exceed 1 year. A license 
that has been voluntarily suspended shall be returned by the Service 
upon request by the licensee within 1 year, subject to the provisions of 
Sec.  868.81(a) and (b); a license that has been cancelled shall be 
considered void and shall not be subject to return or renewal.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec.  868.83  Automatic suspension of license by change in employment.

    A license issued to an individual shall be automatically suspended 
when the individual ceases to be employed by the cooperator. If the 
individual is reemployed by the cooperator or employed by another 
cooperator within 1 year of the suspension date and the license has not 
terminated in the interim, upon request of the licensee, the license 
will be reinstated subject to the provisions of Sec.  868.81(a) and (b).

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec.  868.84  Suspension or revocation of license.

    (a) General. (1) An inspector's, technician's, or sampler's license 
may be suspended or revoked if the licensee:
    (i) Willfully, carelessly, or through incompetence fails to perform 
the duties specified in the Act, regulations, standards, or the 
instructions or
    (ii) Becomes incapable of performing required duties.
    (2) A license may not be suspended or revoked until the individual:
    (i) Has been served notice, in person or by registered mail, that 
suspension or revocation of the license is under consideration for 
reasons set out in the notice and
    (ii) Has been given an opportunity for a hearing.
    (b) Procedure for summary action. In cases where the public health, 
interest, or safety require, the Administrator may summarily suspend an 
inspector's, technician's, or sampler's license without prior hearing. 
In such cases, the licensee shall be advised of the factors which appear 
to warrant suspension or revocation of the license. The licensee shall 
be accorded an opportunity for a hearing before the license is finally 
suspended or revoked.
    (c) Procedures for other than summary action. Except in cases of 
willfulness or those described in paragraph (b) of this section, the 
Administrator, before instituting proceedings for the suspension or 
revocation of a license, shall provide the licensee an opportunity to 
demonstrate or achieve compliance with the Act, regulations, standards, 
and instructions. If the licensee does

[[Page 586]]

not demonstrate or achieve compliance, the Administrator may institute 
proceedings to suspend or revoke the license.

(The information collection requirements contained in paragraph (c) have 
been approved by the Office of Management and Budget under control 
number 0580-0012)

                                  Fees



Sec.  868.90  Fees for certain Federal inspection services.

    (a) The fees shown in Table 1 apply to Federal Commodity Inspection 
Services specified below.

                       Table 1--Hourly Rates \1 3\
          [Fees for inspection of commodities other than rice]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Hourly Rates (per service representative):
    Monday to Friday....................................          $34.20
    Saturday, Sunday, and Holidays......................           44.40
Miscellaneous Processed Commodities: \2\
    (1) Additional Tests (cost per test, assessed in
     addition to the hourly rate):
        (i) Aflatoxin Test (Thin Layer Chromatography)..           51.40
        (ii) Falling Number.............................           12.50
        (iii) Aflatoxin Test Kit........................            7.50
Graded Commodities (Beans, Peas, Lentils, Hops, and
 Pulses):
    (1) Additional Tests--Unit Rates (Beans, Peas,
     Lentils):
        (i) Field run (per lot or sample)...............           23.00
        (ii) Other than field run (per lot or sample)...           13.75
        (iii) Factor analysis (per factor)..............            5.65
    (2) Additional Tests--Unit Rates (Hops): (i) Lot or            29.30
     sample (per lot or sample).........................
    (3) Additional Tests--Unit Rates (Nongraded                     5.65
     Nonprocessed Commodities): (i) Factor analysis (per
     factor)............................................
    (4) Stowage Examination (service-on-request) \4\ (i)           50.50
     Ship (per stowage space) (minimum $252.50 per ship)
        (ii) Subsequent ship examinations (same as
         original) (minimum $151.50 per ship)
        (iii) Barge (per examination)...................           40.50
        (iv) All other carriers (per examination).......          15.50
------------------------------------------------------------------------
\1\ Fees for original commodity inspection and appeal inspection
  services include, but are not limited to, sampling, grading, weighing,
  stowage examinations, pre-inspection conferences, sanitation
  inspections, and other services requested by the applicant and that
  are performed within 25 miles of the field office. Travel and related
  expenses (commercial transportation costs, mileage, and per diem) will
  be assessed in addition to the hourly rate for service beyond the 25-
  mile limit. Refer to Sec.   868.92. Explanation of service fees and
  additional fees, for all other service fees except travel and per
  diem.
\2\ When performed at a location other than the Commodity Testing
  Laboratory.
\3\ Faxed and extra copies of certificates will be charged at $1.50 per
  copy.
\4\ If performed outside of normal business hours, 1\1/2\ times the
  applicable unit fee will be charged.

    (b) In addition to the fees, if any, for sampling or other requested 
service, a fee will be assessed for each laboratory test (original, 
retest, or appeal) listed in table 2 of this section.
    (c) If a requested test is to be reported on a specified moisture 
basis, a fee for a moisture test will also be assessed.
    (d) Laboratory tests referenced in table 2 of this section will be 
charged at the applicable laboratory fee.

             Table 2--Fees for Laboratory Test Services \1\
------------------------------------------------------------------------
                      Laboratory tests                           Fees
------------------------------------------------------------------------
(1) Aflatoxin (Quantitative--HPLC).........................      $182.00
(2) Aflatoxin (Quantitative--Test Kit).....................        87.00
(3) Aflatoxin (Qualitative--Test Kit)......................        47.00
(4) Appearance and odor....................................         7.00
(5) Ash....................................................        17.00
(6) Brix...................................................        16.00
(7) Calcium................................................        27.00
(8) Carotenoid Color.......................................        27.00
(9) Cold test (oil)........................................        20.00
(10) Color test (syrups)...................................        13.00
(11) Cooking tests (pasta).................................        13.00

[[Page 587]]

 
(12) Crude fat.............................................        20.00
(13) Crude fiber...........................................        27.00
(14) Falling number........................................        24.00
(15) Free fatty acid.......................................        24.00
(16) Insoluble impurities (oils and shortenings)...........         9.00
(17) Iron enrichment.......................................        30.00
(18) Lovibond color........................................        20.00
(19) Moisture..............................................        13.00
(20) Moisture and volatile matter..........................        17.00
(21) Oxidative stability index (OSI).......................        54.00
(22) Peroxide Value........................................        27.00
(23) Popping ratio.........................................        38.00
(24) Protein...............................................        16.00
(25) Sanitation (light filth)..............................        47.00
(26) Sieve test............................................        11.00
(27) Smoke Point...........................................        43.00
(28) Solid fat index.......................................       168.00
(29) Visual exam...........................................        22.00
(30) Vomitoxin (Qualitative--Test Kit).....................        61.00
(31) Vomitoxin (Quantitative--Test Kit)....................        81.00
(32) Other laboratory analytical services (per hour per           67.00
 service representative)...................................
------------------------------------------------------------------------
\1\ When laboratory tests/services are provided for GIPSA by a private
  laboratory, the applicant will be assessed a fee, which, as nearly as
  practicable, covers the costs to GIPSA for the service provided.


[61 FR 66535, Dec. 18, 1996, as amended 66 FR 17777, Apr. 4, 2001; 69 FR 
1894, Jan. 13, 2004]



Sec.  868.91  Fees for certain Federal rice inspection services.

    The fees shown in Tables 1 and 2 apply to Federal rice inspection 
services. Fees for other services not referenced in Table 2 will be 
based on the non-contract hourly rate listed in Sec.  868.91, Table 1.

                 Table 1--Hourly Rates/Unit Rate per CWT
------------------------------------------------------------------------
                                 Regular workday     Nonregular workday
         Service \1\            (Monday-Saturday)     (Sunday-Holiday)
------------------------------------------------------------------------
                       Effective February 16, 2007
------------------------------------------------------------------------
Contract (per hour per                      $54.80                $76.00
 Service representative)....
Noncontract (per hour per                    66.80                 92.10
 Service representative)....
Export Port Services (per                    0.066                 0.066
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2007
------------------------------------------------------------------------
Contract (per hour per                      $56.40                $78.30
 Service representative)....
Noncontract (per hour per                    68.80                 94.80
 Service representative)....
Export Port Services (per                    0.068                 0.068
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2008
------------------------------------------------------------------------
Contract (per hour per                      $58.10                $80.70
 Service representative)....
Noncontract (per hour per                    70.90                 97.70
 Service representative)....
Export Port Services (per                    0.070                 0.070
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2009
------------------------------------------------------------------------
Contract (per hour per                      $59.90                $83.10
 Service representative)....
Noncontract (per hour per                    73.00                100.60
 Service representative)....
Export Port Services (per                    0.072                 0.072
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2010
------------------------------------------------------------------------
Contract (per hour per                      $61.70                $85.60
 Service representative)....
Noncontract (per hour per                    75.20                103.60
 Service representative)....
Export Port Services (per                    0.074                0.074
 hundredweight) \2\.........
------------------------------------------------------------------------
\1\ Original and appeal inspection services include: Sampling, grading,
  weighing, and other services requested by the applicant when performed
  at the applicant's facility.
\2\ Services performed at export port locations on lots at rest.


[[Page 588]]


                     Table 2--Unit Rates Service \1\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                       Effective February 16, 2007
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $41.90
  (b) Brown rice for processing............................        36.00
  (c) Milled rice..........................................        26.00
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        32.50
  (b) All other factors (per factor) (all rice)............        15.60
Total oil and free fatty acid..............................        50.80
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       111.00
  (b) Parboiled light (per sample).........................        27.20
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2007
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $43.20
  (b) Brown rice for processing............................        37.10
  (c) Milled rice..........................................        26.80
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        33.50
  (b) All other factors (per factor) (all rice)............        16.10
Total oil and free fatty acid..............................        52.30
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       114.30
  (b) Parboiled light (per sample).........................        28.00
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2008
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $44.50
  (b) Brown rice for processing............................        38.20
  (c) Milled rice..........................................        27.60
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        34.50
  (b) All other factors (per factor) (all rice)............        16.60
Total oil and free fatty acid..............................        53.90
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       117.70
  (b) Parboiled light (per sample).........................        28.80
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2009
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $45.80
  (b) Brown rice for processing............................        39.40

[[Page 589]]

 
  (c) Milled rice..........................................        28.40
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        35.50
  (b) All other factors (per factor) (all rice)............        17.10
Total oil and free fatty acid..............................        55.50
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       121.30
  (b) Parboiled light (per sample).........................        29.70
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2010
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $47.20
  (b) Brown rice for processing............................        40.60
  (c) Milled rice..........................................        29.30
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        36.60
  (b) All other factors (per factor) (all rice)............        17.60
Total oil and free fatty acid..............................        57.20
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       124.90
  (b) Parboiled light (per sample).........................        30.60
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................       15.50
------------------------------------------------------------------------
\1\ Fees apply to determinations (original or appeals) for kind, class,
  grade, factor analysis, equal to type, milling yield, or any other
  quality designation as defined in the U.S. Standards for Rice or
  applicable instructions, whether performed singly or in combination at
  other than at the applicant's facility.
\2\ Interpretive line samples may be purchased from the U.S. Department
  of Agriculture, GIPSA, FGIS, Technical Services Division, 10383 North
  Ambassador Drive, Kansas City, Missouri 64153-1394. Interpretive line
  samples also are available for examination at selected FGIS field
  offices. A list of field offices may be obtained from the Director,
  Field Management Division, USDA, GIPSA, FGIS, 1400 Independence
  Avenue, SW., STOP 3630, Washington, DC 20250-3630 or from the GIPSA
  Web site (http://www.gipsa.usda.gov). The interpretive line samples
  illustrate the lower limit for milling degrees only and the color
  limit for the factor ``Parboiled Light'' rice.
\3\ If performed outside of normal business hours, 1\1/2\ times the
  applicable unit fee will be charged.


[72 FR 1915, Jan. 17, 2007]



Sec.  868.92  Explanation of service fees and additional fees.

    (a) Costs included in the fees. Fees for official services in 
Sec. Sec.  868.90 and 868.91 include--
    (1) The cost of performing the service and related supervision and 
administrative costs;
    (2) The cost of per diem, subsistence, mileage, or commercial 
transportation to perform the service for rice inspection only in Sec.  
868.91, table 1. See Sec.  868.90, table 1, footnote 1, for fees for 
inspection of commodities other than rice.
    (3) The cost of first-class mail service;
    (4) The cost of overtime and premium pay; and
    (5) The cost of certification except as provided in Sec.  868.92(c).
    (b) Computing hourly rates. Hourly fees will be assessed in quarter 
hour increments for--
    (1) Travel from the FGIS field office or assigned duty location to 
the service point and return; and
    (2) The performance of the requested service, less mealtime.
    (c) Additional fees. Fees in addition to the applicable hourly or 
unit fee will be assessed when--

[[Page 590]]

    (1) An applicant requests more than the original and three copies of 
a certificate;
    (2) An applicant requests onsite typing of certificates or typing of 
certificates at the FGIS field office during other than normal working 
hours; and
    (3) An applicant requests the use of express-type mail or courier 
service.
    (d) Application of fees when service is delayed by the applicant. 
Hourly fees will be assessed when--
    (1) Service has been requested at a specified location;
    (2) A Service representative is on duty and ready to provide service 
but is unable to do so because of a delay not caused by the Service; and
    (3) FGIS officials determine that the Service representative(s) 
cannot be utilized elsewhere or cannot be released without cost to the 
Service.
    (e) Application of fees when an application for service is withdrawn 
or dismissed. Hourly fees will be assessed to the applicant for the 
scheduled service if the request is withdrawn or dismissed after the 
Service representative departs for the service point or if the request 
for service is not withdrawn or dismissed by 2 p.m. of the business day 
preceding the date of scheduled service. However, hourly fees will not 
be assessed to the applicant if FGIS officials determine that the 
Service representative can be utilized elsewhere or if the Service 
representative can be released without cost to the Service.
    (f) To whom fees are assessed. Fees for official services including 
additional fees as provided in Sec.  868.92(c) shall be assessed to and 
paid by the applicant for the Service.
    (g) Advance payment. As necessary, the Administrator may require 
that fees shall be paid in advance of the performance of the requested 
service. Any fees paid in excess of the amount due shall be used to 
offset future billings, unless a request for a refund is made by the 
applicant.
    (h) Time and form of payment--(1) Fees for Federal inspection 
service. Bills for fees assessed under the regulations for official 
services performed by FGIS shall be paid by check, draft, or money 
order, payable to U.S. Department of Agriculture, Federal Grain 
Inspection Service.
    (2) Fees for cooperator inspection service. Fees for inspection 
services provided by a cooperator shall be paid by the applicant to the 
cooperator in accordance with the cooperator's fee schedule.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995; 61 FR 66536, Dec. 18, 1996]



                      Subpart B_Marketing Standards

    Source: 62 FR 6706, Feb. 13, 1997, unless otherwise noted.



Sec.  868.101  General information.

    The Grain Inspection, Packers and Stockyards Administration (GIPSA) 
of the U.S. Department of Agriculture (USDA) facilitates the fair and 
efficient marketing of agricultural products by maintaining voluntary 
grade standards for Beans, Whole Dry Peas, Split Peas, and Lentils, 
which provide a uniform language for describing the quality of these 
commodities in the marketplace. These standards may cover (but are not 
limited to) terms, classes, quality levels, performance criteria, and 
inspection requirements. Procedures contained in this part set forth the 
process which GIPSA will follow in developing, issuing, revising, 
suspending, or terminating the U.S. standards for Beans, Whole Dry Peas, 
Split Peas, and Lentils. Communications about GIPSA standards in general 
should be addressed to the Administrator, GIPSA, USDA, 1400 Independence 
Avenue, SW., Washington, DC 20250-3601.



Sec.  868.102  Procedures for establishing and revising grade standards.

    (a) GIPSA will develop, revise, suspend, or terminate grade 
standards if it determines that such action is in the public interest. 
GIPSA encourages interested parties to participate in the review, 
development, and revision of grade standards. Interested parties include 
growers, producers, processors, shippers, distributors, consumers, trade 
associations, companies, and State or Federal agencies. Such persons may 
at any time recommend that GIPSA develop, revise, suspend, or terminate 
a grade standard. Requests for action should be in writing, and should

[[Page 591]]

be accompanied by a draft of the suggested change, as appropriate.
    (b) GIPSA will:
    (1) Determine the need for new or revised standards;
    (2) Collect technical, marketing, or other appropriate data;
    (3) Conduct research regarding new or revised standards, as 
appropriate; and
    (4) Draft the proposed standards.
    (c) If GIPSA determines that new standards are needed, existing 
standards need to be revised, or the suspension or termination of 
existing standards is justified, GIPSA will undertake the action with 
input from interested parties.



Sec.  868.103  Public notification of grade standards action.

    (a) After developing a standardization proposal, GIPSA will publish 
a notice in the Federal Register proposing new or revised standards or 
suspending or terminating existing standards. The notice will provide a 
sufficient comment period for interested parties to submit comments.
    (b) GIPSA will simultaneously issue a news release about these 
actions, notifying the affected industry and general public. GIPSA will 
also distribute copies of proposals to anyone requesting a copy or to 
anyone it believes may be interested, including other Federal, State, or 
local government agencies.
    (c) All comments received within the comment period will be made 
part of the public record maintained by GIPSA, will be available to the 
public for review, and will be considered by GIPSA before final action 
is taken on the proposal.
    (d) Based on the comments received, GIPSA's knowledge of standards, 
grading, marketing, and other technical factors, and any other relevant 
information, GIPSA will decide whether the proposed actions should be 
implemented.
    (e) If GIPSA concludes that the changes as proposed or with 
appropriate modifications should be adopted, GIPSA will publish the 
final changes in the Federal Register as a final notice. GIPSA will make 
the grade standards and related information available in printed form 
and electronic media.
    (f) If GIPSA determines that proposed changes are not warranted, or 
otherwise are not in the public interest, GIPSA will either publish in 
the Federal Register a notice withdrawing the proposal, or will revise 
the proposal and again seek public input.



            Subpart C_United States Standards for Rough Rice

    Note to the subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted.

                              Terms Defined



Sec.  868.201  Definition of rough rice.

    Rice (Oryza sativa L.) which consists of 50 percent or more of paddy 
kernels (see Sec.  868.202(i)) of rice.

[34 FR 7863, May 17, 1969. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec.  868.202  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Chalky kernels. Whole or large broken kernels of rice which are 
one-half or more chalky.
    (c) Classes. The following four classes:

Long Grain Rough Rice
Medium Grain Rough Rice
Short Grain Rough Rice
Mixed Rough Rice


Classes shall be based on the percentage of whole kernels, large broken 
kernels, and types of rice.
    (1) ``Long grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
broken kernels of medium or short grain rice.
    (2) ``Medium grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
large broken

[[Page 592]]

kernels of long grain rice or whole kernels of short grain rice.
    (3) ``Short grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which, after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
large broken kernels of long grain rice or whole kernels of medium grain 
rice.
    (4) ``Mixed rough rice'' shall consist of rough rice which contains 
more than 25 percent of whole kernels and which, after milling to a 
well-milled degree, contains more than 10 percent of ``other types'' as 
defined in paragraph (h) of this section.
    (d) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means, and whole or large broken kernels of parboiled rice in non-
parboiled rice. ``Heat-damaged kernels'' (see paragraph (e) of this 
section) shall not function as damaged kernels.
    (e) Heat-damaged kernels. Whole or large broken kernels of rice 
which are materially discolored and damaged as a result of heating, and 
whole or large broken kernels of parboiled rice in nonparboiled rice 
which are as dark as, or darker in color than, the interpretive line for 
heat-damaged kernels.
    (f) Milling yield. An estimate of the quantity of whole kernels and 
total milled rice (whole and broken kernels combined) that are produced 
in the milling of rough rice to a well-milled degree.
    (g) Objectionable seeds. Seeds other than rice, except seeds of 
Echinochloa crusgalli (commonly known as barnyard grass, watergrass, and 
Japanese millet).
    (h) Other types. (1) Whole kernels of:
    (i) Long grain rice in medium or short grain rice,
    (ii) Medium grain rice in long or short grain rice,
    (iii) Short grain rice in long or medium grain rice, and
    (2) Large broken kernels of long grain rice in medium or short grain 
rice and large broken kernels of medium or short grain rice in long 
grain rice.

    Note: Broken kernels of medium grain rice in short grain rice and 
large broken kernels of short grain rice in medium grain rice shall not 
be considered other types.

    (i) Paddy kernels. Whole or broken unhulled kernels of rice.
    (j) Red rice. Whole or large broken kernels of rice on which there 
is an appreciable amount of red bran.
    (k) Seeds. Whole or broken seeds of any plant other than rice.
    (l) Smutty kernels. Whole or broken kernels of rice which are 
distinctly infected by smut.
    (m) Types of rice. The following three types:

Long grain
Medium grain
Short grain


Types shall be based on the length-width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels of rice that 
are broken as prescribed in FGIS instructions.
    (n) Ungelatinized kernels. Whole or large broken kernels of 
parboiled rice with distinct white or chalky areas due to incomplete 
gelatinization of the starch.
    (o) Whole and large broken kernels. Rice (including seeds) that (1) 
passes over a 6 plate (for southern production), or (2) remains on top 
of a 6 sieve (for western production).
    (p) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (q) 6 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0938 (\6/64\) inch in diameter.
    (r) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, and a bottom lamina 0.091-inch thick, without 
perforations.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989; 54 FR 51344, Dec. 
14, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec.  868.203  Basis of determination.

    The determination of seeds, objectionable seeds, heat-damaged 
kernels, red rice and damaged kernels, chalky

[[Page 593]]

kernels, other types, color, and the special grade Parboiled rough rice 
shall be on the basis of the whole and large broken kernels of milled 
rice that are produced in the milling of rough rice to a well-milled 
degree. When determining class, the percentage of (a) whole kernels of 
rough rice shall be determined on the basis of the original sample, and 
(b) types of rice shall be determined on the basis of the whole and 
large broken kernels of milled rice that are produced in the milling of 
rough rice to a well-milled degree. Smutty kernels shall be determined 
on the basis of the rough rice after it has been cleaned and shelled as 
prescribed in FGIS instructions, or by any method that is approved by 
the Administrator as giving equivalent results. All other determinations 
shall be on the basis of the original sample. Mechanical sizing of 
kernels shall be adjusted by handpicking as prescribed in FGIS 
instructions, or by any method that is approved by the Administrator as 
giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
60 FR 16364, Mar. 30, 1995]



Sec.  868.204  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual examinations shall be maintained 
by the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21403, May 18, 1989, 
and 60 FR 16364, Mar. 30, 1995]



Sec.  868.205  Milling requirements.

    In determining milling yield (see Sec.  868.202(f)) in rough rice, 
the degree of milling shall be equal to, or better than, that of the 
interpretive line sample for ``well-milled'' rice.

[42 FR 40869, Aug. 12, 1977. Redesignated at 54 FR 21413, May 18, 1989, 
and further redesignated and amended at 60 FR 16364, 16365, Mar. 30, 
1995]



Sec.  868.206  Milling yield determination.

    Milling yield shall be determined by the use of an approved device 
in accordance with procedures prescribed in FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the McGill 
Miller No. 3 and any other equipment that is approved by the 
Administrator as giving equivalent results.
    Note: Milling yield shall not be determined when the moisture 
content of the rough rice exceeds 18.0 percent.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; Redesignated and amended at 54 FR 21403, May 
18, 1989, and further redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.207  Moisture.

    Water content in rough rice as determined by an approved device in 
accordance with procedures prescribed in the FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the Motomco 
Moisture Meter and any other equipment that is approved by the 
Administrator as giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21403, May 18, 1989, 
as amended at 54 FR 51344, Dec. 14, 1989. Redesignated at 60 FR 16364, 
Mar. 30, 1995]



Sec.  868.208  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure; e.g., report 8.34 as 8.3 and 1.22 as 1.2.
    (b) Recording. All percentages, except for milling yield, are stated 
in whole and tenth percent to the nearest tenth percent. Milling yield 
is stated to the nearest whole percent.

[54 FR 21403, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 594]]



Sec.  868.209  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21404, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

           Grades, Grade Requirements, and Grade Designations



Sec.  868.210  Grades and grade requirements for the classes of Rough Rice. (See also Sec.  868.212.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Maximum limits of--
                                            --------------------------------------------------------------------------------
                                               Seeds and heat-damaged kernels               Chalky kernels \1 2\
                                            ------------------------------------  Red rice ----------------------
                                               Total     Heat-damaged               and
                   Grade                      (singly    kernels and     Heat-    damaged              In medium    Other       Color requirements \1\
                                                 or     objectionable   damaged   kernels    In long    or short  types \3\           (minimum)
                                             combined)  seeds (singly   kernels   (singly     grain      grain    (Percent)
                                              (Number    or combined)   (Number      or        rice       rice
                                               in 500     (Number in    in 500   combined)  (Percent)  (Percent)
                                               grams)     500 grams)    grams)   (Percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1.................................          4            3           1        0.5        1.0        2.0        1.0  Shall be white or creamy.
U.S. No. 2.................................          7            5           2        1.5        2.0        4.0        2.0  May be slightly gray.
U.S. No. 3.................................         10            8           5        2.5        4.0        6.0        3.0  May be light gray.
U.S. No. 4.................................         27           22          15        4.0        6.0        8.0        5.0  May be gray or slight rosy.
U.S. No. 5.................................         37           32          25        6.0       10.0       10.0       10.0  May be dark gray or rosy.
U.S. No. 6.................................         75           75          75   \4\ 15.0       15.0       15.0       10.0  May be dark gray or rosy.
U.S. Sample grade
    U.S. Sample grade shall be rough rice which: (a) does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 6, inclusive; (b)
     contains more than 14.0 percent of moisture; (c) is musty, or sour, or heating; (d) has any commercially objectionable foreign odor; or (e) is
     otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled rough rice, see Sec.   868.212(b).
\2\ For the special grade Glutinous rough rice, see Sec.   868.212(d).
\3\ These limits do not apply to the class Mixed Rough Rice.
\4\ Rice in grade U.S. No. 6 shall contain not more than 6.0 percent of damaged kernels.


[56 FR 55978, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



Sec.  868.211  Grade designation and other certificate information.

    (a) Rough rice. The grade designation for all classes of Rough rice 
shall be included on the certificate grade-line in the following order:
    (1) The letters ``U.S.;''
    (2) The number of the grade or the words ``Sample grade,'' as 
warranted;
    (3) The words ``or better,'' when applicable and requested by the 
applicant prior to inspection;

(Approved by the Office of Management and Budget under control number 
0580-0013)

    (4) The class;
    (5) Each applicable special grade (see Sec.  868.213); and
    (6) A statement of the milling yield.

[[Page 595]]

    (b) Mixed rough rice information. For the class Mixed Rough rice, 
the following information shall be included in the Results section of 
the certificate in the following order:
    (1) The percentage of whole kernels of each type in the order of 
predominance;
    (2) The percentage of large broken kernels of each type in the order 
of predominance;
    (3) The percentage of material removed by the No. 6 sieve or the No. 
6 sizing plate; and
    (4) The percentage of seeds, when applicable.
    (c) Large broken kernels. Large broken kernels, other than long 
grain, in Mixed Rough rice shall be certified as ``medium or short 
grain.''

[74 FR 55442, Oct. 28, 2009]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec.  868.212  Special grades and requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec.  868.210. Such special grades for rough rice are 
established and determined as follows:
    (a) Infested rough rice. Tolerances for live insects for infested 
rough rice are defined according to sampling designations as follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. The 
rough rice (except when examined according to paragraph (a)(3) of this 
section will be considered infested if the representative sample 
contains two or more live weevils, or one live weevil and one or more 
other live insects injurious to stored rice or five or more other live 
insects injurious to stored rice.
    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and one or 
more other live insects injurious to stored rice, or five or more other 
live insects injurious to stored rice, or 15 or more live Angoumois 
moths or other live moths injurious to stored rice are found in, on, or 
about the lot.
    (3) Sample as a whole during continuous loading/unloading. The 
minimum sample size for rice being sampled during continuous loading/
unloading is 500 grams per each 100,000 pounds of rice. The sample as a 
whole is considered infested when a component (as defined in FGIS 
instructions) contains two or more live weevils, or one live weevil and 
one or more other live insects injurious to stored rice, or five or more 
other live insects injurious to stored rice.
    (b) Parboiled rough rice. Parboiled rough rice shall be rough rice 
in which the starch has been gelatinized by soaking, steaming, and 
drying. Grades U.S. No. 1 to U.S. No. 6 inclusive, shall contain not 
more than 10.0 percent of ungelatinized kernels. Grades U.S. No. 1 and 
U.S. No. 2 shall contain not more than 0.1 percent, grades U.S. No. 3 
and U.S. No. 4 not more than 0.2 percent, and grades U.S. No. 5 and U.S. 
No. 6 not more than 0.5 percent of nonparboiled rice. If the rice is: 
(1) Not distinctly colored by the parboiling process, it shall be 
considered ``Parboiled Light''; (2) distinctly but not materially 
colored by the parboiling process, it shall be considered ``Parboiled''; 
(3) materially colored by the parboiling process, it shall be considered 
``Parboiled Dark.'' The color levels for ``Parboiled Light,'' 
``Parboiled,'' and ``Parboiled Dark'' rice shall be in accordance with 
the interpretive line samples for parboiled rice.
    Note: The maximum limits for ``Chalky kernels,'' ``Heat-damaged 
kernels,'' ``Kernels damaged by heat,'' and the ``Color requirements'' 
shown in Sec.  868.210 are not applicable to the special grade 
``Parboiled rough rice.''
    (c) Smutty rough rice. Smutty rough rice shall be rough rice which 
contains more than 3.0 percent of smutty kernels.
    (d) Glutinous rough rice. Glutinous rough rice shall be special 
varieties of rice (Oryza sativa L. glutinosa) which contain more than 50 
percent chalky kernels. Grade U.S. No. 1 shall contain not more than 1.0 
percent of nonchalky kernels, grade U.S. No. 2 not more than 2.0 percent 
of nonchalky kernels, grade U.S. No. 3 not more than 4.0 percent of 
nonchalky kernels, grade U.S. No. 4 not more than 6.0 percent of 
nonchalky kernels, grade U.S. No. 5 not more than 10.0 percent of 
nonchalky kernels, and

[[Page 596]]

grade U.S. No. 6 not more than 15.0 percent of nonchalky kernels.

    Note: The maximum limits for ``Chalky kernels'' in Sec.  868.210 are 
not applicable to the special grade ``Glutinous rough rice.''

    (e) Aromatic rough rice. Aromatic rough rice shall be special 
varieties of rice (Oryza sativa L. scented) that have a distinctive and 
characteristic aroma; e.g., basmati and jasmine rice.

[42 FR 40869, Aug. 12, 1977, as amended at 54 FR 21406, May 18, 1989; 56 
FR 55978, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec.  868.213  Special grade designation.

    The grade designation for infested, parboiled, smutty, glutinous, or 
aromatic rough rice shall include, following the class, the word(s) 
``Infested,'' ``Parboiled Light,'' ``Parboiled,'' ``Parboiled Dark,'' 
``Smutty,'' ``Glutinous,'' or ``Aromatic,'' as warranted, and all other 
information prescribed in Sec.  868.211.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



     Subpart D_United States Standards for Brown Rice for Processing

    Note to the subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted. Redesignated at 60 FR 16364, Mar. 30, 1995.

                              Terms Defined



Sec.  868.251  Definition of brown rice for processing.

    Rice (Oryza sativa L.) which consists of more than 50.0 percent of 
kernels of brown rice, and which is intended for processing to milled 
rice.



Sec.  868.252  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Brown rice. Whole or broken kernels of rice from which the hulls 
have been removed.
    (c) Chalky kernels. Whole or broken kernels of rice which are one-
half or more chalky.
    (d) Classes. There are four classes of brown rice for processing.

Long Grain Brown Rice for Processing.
Medium Grain Brown Rice for Processing.
Short Grain Brown Rice for Processing.
Mixed Brown Rice for Processing.


Classes shall be based on the percentage of whole kernels, broken 
kernels, and types of rice.
    (1) ``Long-grain brown rice for processing'' shall consist of brown 
rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of medium- or short-grain rice.
    (2) ``Medium-grain brown rice for processing'' shall consist of 
brown rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of long-grain rice or whole kernels of short-grain rice.
    (3) ``Short-grain brown rice for processing'' shall consist of brown 
rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of long-grain rice or whole kernels of medium-grain rice.
    (4) ``Mixed brown rice for processing'' shall be brown rice for 
processing which contains more than 25.0 percent of whole kernels of 
brown rice and more than 10.0 percent of ``other types'' as defined in 
paragraph (i) of this section.
    (e) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means (including parboiled kernels in nonparboiled rice and smutty 
kernels). ``Heat-damaged kernels'' (see paragraph (f) of this section) 
shall not function as damaged kernels.
    (f) Heat-damaged kernels. Whole or broken kernels of rice which are 
materially discolored and damaged as a result of heating and parboiled 
kernels in nonparboiled rice which are as dark as,

[[Page 597]]

or darker in color than, the interpretive line for heat-damaged kernels.
    (g) Milling yield. An estimate of the quantity of whole kernels and 
total milled rice (whole and broken kernels combined) that is produced 
in the milling of brown rice for processing to a well-milled degree.
    (h) Objectionable seeds. Whole or broken seeds other than rice, 
except seeds of Echinochloa crusgalli (commonly known as barnyard grass, 
watergrass, and Japanese millet).
    (i) Other types. (1) Whole kernels of:
    (i) Long grain rice in medium or short grain rice and medium or 
short grain rice in long grain rice,
    (ii) Medium grain rice in long or short grain rice,
    (iii) Short grain rice in long or medium grain rice,
    (2) Broken kernels of long grain rice in medium or short grain rice 
and broken kernels of medium or short grain rice in long grain rice.

    Note: Broken kernels of medium grain rice in short grain rice and 
broken kernels of short grain rice in medium grain rice shall not be 
considered other types.

    (j) Paddy kernels. Whole or broken unhulled kernels and whole or 
broken kernels of rise having a portion or portions of the hull 
remaining which cover one-half (\1/2\) or more of the whole or broken 
kernel.
    (k) Red rice. Whole or broken kernels of rice on which the bran is 
distinctly red in color.
    (l) Related material. All by-products of a paddy kernel, such as the 
outer glumes, lemma, palea, awn, embryo, and bran layers.
    (m) Seeds. Whole or broken seeds of any plant other than rice.
    (n) Smutty kernels. Whole or broken kernels of rice which are 
distinctly infected by smut.
    (o) Types of rice. There are three types of brown rice for 
processing:

Long grain
Medium grain
Short grain


Types shall be based on the length/width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels of rice that 
are broken as prescribed in FGIS instructions.
    (p) Ungelantinized kernels. Whole or broken kernels of parboiled 
rice with distinct white or chalky areas due to incomplete gelatization 
of the starch.
    (q) Unrelated material. All matter other than rice, related 
material, and seeds.
    (r) Well-milled kernels. Whole or broken kernels of rice from which 
the hulls and practically all of the embryos and the bran layers have 
been removed.
    (s) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (t) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, and a bottom lamina 0.091-inch thick, without 
perforations.
    (u) 6\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.1016 (6\1/2\/64) inch in diameter.

[13 FR 9479, Dec. 31, 1948, as amended at 44 FR 73008, Dec. 17, 1979; 47 
FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989; 54 FR 51344, 
Dec. 14, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec.  868.253  Basis of determination.

    The determination of kernels damaged by heat, heat-damaged kernels, 
parboiled kernels in nonparboiled rice, and the special grade Parboiled 
brown rice for processing shall be on the basis of the brown rice for 
processing after it has been milled to a well-milled degree. All other 
determinations shall be on the basis of the original sample. Mechanical 
sizing of kernels shall be adjusted by handpicking as prescribed in FGIS 
instructions, or by any method which gives equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989, and 
further redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.254  Broken kernels determination.

    Broken kernels shall be determined by the use of equipment and 
procedures prescribed in FGIS instructions, or by

[[Page 598]]

any method which gives equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989, and further redesignated at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.255  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual observation shall be maintained by 
the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989, and further redesignated at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.256  Milling requirements.

    In determining milling yield (see Sec.  868.252(g)) in brown rice 
for processing, the degree of milling shall be equal to, or better than, 
that of the interpretive line sample for ``well-milled'' rice.

[42 FR 40869, Aug. 12, 1977. Redesignated at 21406, May 18, 1989, and 
further redesignated and amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec.  868.257  Milling yield determination.

    Milling yield shall be determined by the use of an approved device 
in accordance with procedures prescribed in FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the McGill 
Miller No. 3 and any other equipment that is approved by the 
Administrator as giving equivalent results.

    Note: Milling yield shall not be determined when the moisture 
content of the brown rice for processing exceeds 18.0 percent.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989, and further redesignated at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.258  Moisture.

    Water content in brown rice for processing as determined by an 
approved device in accordance with procedures prescribed in FGIS 
instructions. For the purpose of this paragraph, ``approved device'' 
shall include the Motomco Moisture Meter and any other equipment that is 
approved by the Administrator as giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989, and further redesignated at 60 FR 16364, Mar. 
30, 1995]



Sec.  868.259  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
    (b) Recording. All percentages, except for milling yield, are stated 
in whole and tenth percent to the nearest whole percent. Milling yield 
is stated to the nearest whole percent.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.260  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 599]]

           Grades, Grade Requirements, and Grade Designations



Sec.  868.261  Grade and grade requirements for the classes of brown rice for processing. (See also Sec.  868.263.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Maximum limits of--
                                          --------------------------------------------------------------------------------------------------------------
                                              Paddy kernels      Seeds and heat-damaged kernels
                                          --------------------------------------------------------  Red rice               Broken
                                                                 Total                                and                 kernels
                  Grade                                         (singly     Heat-                   damaged     Chalky    removed     Other   Wellmilled
                                                      Number       or      damaged  Objectionable   kernels    kernels     by a 6     types     kernels
                                            Percent   in 500   combined)   kernels  seeds (number   (singly     \1 2\     plate or     \4\     (percent)
                                                       grams    (number    (number  in 500 grams)      or     (percent)   a 6\1/2\
                                                                 in 500    in 500                  combined)             sieve \3\
                                                                 grams)    grams)                  (percent)             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...............................        --        20         10         1            2          1.0        2.0        1.0       1.0        1.0
U.S. No. 2...............................       2.0        --         40         2           10          2.0        4.0        2.0       2.0        3.0
U.S. No. 3...............................       2.0        --         70         4           20          4.0        6.0        3.0       5.0       10.0
U.S. No. 4...............................       2.0        --        100         8           35          8.0        8.0        4.0      10.0       10.0
U.S. No. 5...............................       2.0        --        150        15           50         15.0       15.0        6.0      10.0       10.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
U.S. Sample grade...........  U.S. Sample grade shall be brown rice for
                               processing which (a) does not meet the
                               requirements for any of the grades from
                               U.S. No. 1 to U.S. No. 5, inclusive; (b)
                               contains more than 14.5 percent of
                               moisture; (c) is musty, or sour, or
                               heating; (d) has any commercially
                               objectionable foreign odor; (e) contains
                               more than 0.2 percent of related material
                               or more than 0.1 percent of unrelated
                               material; (f) contains two or more live
                               weevils or other live insects; or (g) is
                               otherwise of distinctly low quality.
------------------------------------------------------------------------
\1\ For the special grade Parboiled brown rice for processing, see Sec.
   868.263(a).
\2\ For the special grade Glutinous brown rice for processing, see Sec.
   868.263(c).
\3\ Plates should be used for southern production rice and sieves should
  be used for western production rice, but any device or method which
  gives equivalent results may be used.
\4\ These limits do not apply to the class Mixed Brown Rice for
  Processing.


[56 FR 55979, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



Sec.  868.262  Grade designation and other certificate information.

    (a) Brown rice for processing. The grade designation for all classes 
of Brown rice for processing shall be included on the certificate grade-
line in the following order:
    (1) The letters ``U.S.;''
    (2) The number of the grade or the words ``Sample grade,'' as 
warranted;
    (3) The words ``or better,'' when applicable and requested by the 
applicant prior to inspection;

(Approved by the Office of Management and Budget under control number 
0580-0013)

    (4) The class; and
    (5) Each applicable special grade (see Sec.  868.264).
    (b) Mixed Brown rice for Processing information. For the class Mixed 
Brown rice for processing, the following information shall be included 
in the Results section of the certificate in the following order:
    (1) The percentage of whole kernels of each type in the order of 
predominance;
    (2) The percentage of broken kernels of each type in the order of 
predominance, when applicable; and
    (3) The percentage of seeds, related material, and unrelated 
material.
    (c) Broken kernels. Broken kernels, other than long grain in Mixed 
Brown rice for processing shall be certified as ``medium or short 
grain.''

[74 FR 55442, Oct. 28, 2009]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec.  868.263  Special grades and special grade requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec.  868.262. Such special grades for brown rice for 
processing are established and determined as follows:
    (a) Parboiled brown rice for processing. Parboiled brown rice for 
processing shall be rice in which the starch has been gelatinized by 
soaking, steaming, and drying. Grades U.S. Nos. 1 to 5, inclusive, shall 
contain not more than 10.0 percent of ungelatinized kernels.

[[Page 600]]

Grades U.S. No. 1 and U.S. No. 2 shall contain not more than 0.1 
percent, grades U.S. No. 3 and U.S. No. 4 not more than 0.2 percent, and 
grade U.S. No. 5 not more than 0.5 percent of nonparboiled rice.
    Note: The maximum limits for ``chalky kernels,'' ``Heat-damaged 
kernels,'' and ``Kernels damaged by heat'' shown in Sec.  868.261 are 
not applicable to the special grade ``Parboiled brown rice for 
processing.''
    (b) Smutty brown rice for processing. Smutty brown rice for 
processing shall be rice which contains more than 3.0 percent of smutty 
kernels.
    (c) Glutinous brown rice for processing. Glutinous brown rice for 
processing shall be special varieties of rice (Oryza sativa L. 
glutinosa) which contain more than 50 percent chalky kernels. Grade U.S. 
No. 1 shall contain not more than 1.0 percent of nonchalky kernels, 
grade U.S. No. 2 not more than 2.0 percent of nonchalky kernels, grade 
U.S. No. 3 not more than 4.0 percent of nonchalky kernels, grade U.S. 
No. 4 not more than 6.0 percent of nonchalky kernels, and grade U.S. No. 
5 not more than 10.0 percent of nonchalky kernels.
    Note: The maximum limits for ``Chalky kernels'' in Sec.  868.261 are 
not applicable to the special grade ``Glutinous brown rice for 
processing.''
    (d) Aromatic brown rice for processing. Aromatic brown rice for 
processing shall be special varieties of rice (Oryza sativa L. scented) 
that have a distinctive and characteristic aroma; e.g., basmati and 
jasmine rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
56 FR 55979, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec.  868.264  Special grade designation.

    The grade designation for parboiled, smutty, glutinous, or aromatic 
brown rice for processing shall include, following the class, the 
word(s) ``Parboiled,'' ``Smutty,'' ``Glutinous,'' or ``Aromatic,'' as 
warranted, and all other information prescribed in Sec.  868.262.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



            Subpart E_United States Standards for Milled Rice

    Note to the subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted. Redesignated at 60 FR 16364, Mar. 30, 1995.

                              Terms Defined



Sec.  868.301  Definition of milled rice.

    Whole or broken kernels of rice (Oryza sativa L.) from which the 
hulls and at least the outer bran layers have been removed and which 
contain not more than 10.0 percent of seeds, paddy kernels, or foreign 
material, either singly or combined.

[48 FR 24859, June 3, 1983. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.302  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Brown rice. Whole or broken kernels of rice from which the hulls 
have been removed.
    (c) Chalky kernels. Whole or broken kernels of rice which are one-
half or more chalky.
    (d) Classes. There are seven classes of milled rice. The following 
four classes shall be based on the percentage of whole kernels, and 
types of rice:
Long Grain Milled Rice.
Medium Grain Milled Rice.
Short Grain Milled Rice.
Mixed Milled Rice.

The following three classes shall be based on the percentage of whole 
kernels and of broken kernels of different size:
Second Head Milled Rice.
Screenings Milled Rice.
Brewers Milled Rice.
    (1) ``Long grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of medium or short grain rice. U.S. No. 5 and U.S. No.

[[Page 601]]

6 long grain milled rice shall contain not more than 10.0 percent of 
whole kernels of medium or short grain milled rice (broken kernels do 
not apply).
    (2) ``Medium grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of long grain rice or whole kernels of short grain rice. U.S. 
No. 5 and U.S. No. 6 medium grain milled rice shall contain not more 
than 10.0 percent of whole kernels of long or short grain milled rice 
(broken kernels do not apply).
    (3) ``Short grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of long grain rice or whole kernels of medium grain rice. U.S. 
No. 5 and U.S. No. 6 short grain milled rice shall contain not more than 
10.0 percent of whole kernels of long or medium grain milled rice 
(broken kernels do not apply).
    (4) ``Mixed milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and more 
than 10.0 percent of ``other types'' as defined in paragraph (i) of this 
section. U.S. No. 5 and U.S. No. 6 mixed milled rice shall contain more 
than 10.0 percent of whole kernels of ``other types'' (broken kernels do 
not apply).
    (5) ``Second head milled rice'' shall consist of milled rice which, 
when determined in accordance with Sec.  868.303, contains:
    (i) Not more than (a) 25.0 percent of whole kernels, (b) 7.0 percent 
of broken kernels removed by a 6 plate, (c) 0.4 percent of broken 
kernels removed by a 5 plate, and (d) 0.05 percent of broken kernels 
passing through a 4 sieve (southern production); or
    (ii) Not more than (a) 25.0 percent of whole kernels, (b) 50.0 
percent of broken kernels passing through a 6\1/2\ sieve, and (c) 10.0 
percent of broken kernels passing through a 6 sieve (western 
production).
    (6) ``Screenings milled rice'' shall consist of milled rice which, 
when determined in accordance with Sec.  868.303, contains:
    (i) Not more than (a) 25.0 percent of whole kernels, (b) 10.0 
percent of broken kernels removed by a 5 plate, and (c) 0.2 percent of 
broken kernels passing through a 4 sieve (southern production); or
    (ii) Not more than (a) 25.0 percent of whole kernels and (b) 15.0 
percent of broken kernels passing through a 5\1/2\ sieve; and more than 
(c) 50.0 percent of broken kernels passing through a 6\1/2\ sieve and 
(d) 10.0 percent of broken kernels passing through a 6 sieve (western 
production).
    (7) ``Brewers milled rice'' shall consist of milled rice which, when 
determined in accordance with Sec.  868.303, contains not more than 25.0 
percent of whole kernels and which does not meet the kernel-size 
requirements for the class Second Head Milled Rice or Screenings Milled 
Rice.
    (e) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means, and parboiled kernels in nonparboiled rice. ``Heat-damaged 
kernels'' (see paragraph (g) of this section) shall not function as 
damaged kernels.
    (f) Foreign material. All matter other than rice and seeds. Hulls, 
germs, and bran which have separated from the kernels of rice shall be 
considered foreign material.
    (g) Heat-damaged kernels. Whole or broken kernels of rice which are 
materially discolored and damaged as a result of heating and parboiled 
kernels in nonparboiled rice which are as dark as, or darker in color 
than, the interpretive line for heat-damaged kernels.
    (h) Objectionable seeds. Seeds other than rice, except seeds of 
Echinochloa crusgalli (commonly known as barnyard grass, watergrass, and 
Japanese millet).
    (i) Other types. (1) Whole kernels of: (i) Long grain rice in medium 
or short grain rice, (ii) medium grain rice in long or short grain rice, 
(iii) Short grain rice in long or medium grain rice, and (2) broken 
kernels of long grain rice in medium or short grain rice and broken 
kernels of medium or short grain rice in long grain rice, except in U.S. 
No. 5 and U.S. No. 6 milled rice. In

[[Page 602]]

U.S. No. 5 and U.S. No. 6 milled rice, only whole kernels will apply.
    Note: Broken kernels of medium grain rice in short grain rice and 
broken kernels of short grain rice in medium grain rice shall not be 
considered other types.
    (j) Paddy Kernels. Whole or broken unhulled kernels of rice; whole 
or broken kernels of brown rice, and whole or broken kernels of milled 
rice having a portion or portions of the hull remaining which cover one-
eighth (\1/8\) or more of the whole or broken kernel.
    (k) Red rice. Whole or broken kernels of rice on which there is an 
appreciable amount of red bran.
    (l) Seeds. Whole or broken seeds of any plant other than rice.
    (m) Types of rice. There are three types of milled rice as follows:
Long grain.
Medium grain.
Short grain.

Types shall be based on the length-width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels that are 
broken, prescribed in FGIS instructions.
    (n) Ungelatinized kernels. Whole or broken kernels of parboiled rice 
with distinct white or chalky areas due to incomplete gelatinization of 
the starch.
    (o) Well-milled kernels. Whole or broken kernels of rice from which 
the hulls and practically all of the germs and the bran layers have been 
removed.
    Note: This factor is determined on an individual kernel basis and 
applies to the special grade Undermilled milled rice only.
    (p) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (q) 5 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina, 0.051-inch thick, perforated with rows of round holes 0.0781 
(\5/64\) inch in diameter, \5/32\ inch from center to center, with each 
row staggered in relation to the adjacent rows, and a bottom lamina 
0.091-inch thick, without perforations.
    (r) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, \5/32\ inch from center to center, with each row 
staggered in relation to the adjacent rows, and a bottom lamina 0.091-
inch thick, without perforations.
    (s) 2\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.0391 (2\1/2\/64) inch in diameter, 0.075-inch from 
center to center, with each row staggered in relation to the adjacent 
rows.
    (t) 4 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0625 (\4/64\) inch in diameter, \1/8\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (u) 5 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0781 (\5/64\) inch in diameter, \5/32\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (v) 5\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.0859 (5\1/2\/64) inch in diameter, \9/64\ inch 
from center to center, with each row staggered in relation to the 
adjacent rows.
    (w) 6 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0938 (\6/64\) inch in diameter, \5/32\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (x) 6\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.1016 (6\1/2\/64) inch in diameter, \5/32\ inch 
from center to center, with each row staggered in relation to the 
adjacent rows.
    (y) 30 sieve. A woven wire cloth sieve having 0.0234-inch openings, 
with a wire diameter of 0.0153 inch, and meeting the specifications of 
American Society for Testing and Materials Designation E-11-61, 
prescribed in FGIS instructions.

[13 FR 9479, Dec. 31, 1948, as amended at 44 FR 73008, Dec. 17, 1979; 47 
FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989; 54 FR 51345, 
Dec. 14, 1989. Redesignated and amended at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec.  868.303  Basis of determination.

    All determinations shall be on the basis of the original sample. 
Mechanical sizing of kernels shall be adjusted by handpicking, as 
prescribed in FGIS

[[Page 603]]

instructions, or by any method which gives equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989. 
Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.304  Broken kernels determination.

    Broken kernels shall be determined by the use of equipment and 
procedures prescribed in FGIS instructions or by any method which gives 
equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989 and 60 FR 16364, Mar. 30, 1995]



Sec.  868.305  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual observation shall be maintained by 
the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21406, May 18, 1989 
and 60 FR 16364, Mar. 30, 1995]



Sec.  868.306  Milling requirements.

    The degree of milling for milled rice; i.e., ``hard milled,'' 
``well-milled,'' and ``reasonably well-milled,'' shall be equal to, or 
better than, that of the interpretive line samples for such rice.

[67 FR 61250, Sept. 30, 2002]



Sec.  868.307  Moisture.

    Water content in milled rice as determined by an FGIS approved 
device in accordance with procedures prescribed in FGIS instructions.

[67 FR 61250, Sept. 30, 2002]



Sec.  868.308  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
    (b) Recording. The percentage of broken kernels removed by a 5 plate 
in U.S. Nos. 1 and 2 Milled Rice and the percentage of objectionable 
seeds in U.S. No. 1 Brewers Milled Rice is reported to the nearest 
hundredth percent. The percentages of all other factors are recorded to 
the nearest tenth of a percent.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec.  868.309  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21407, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 604]]



Sec.  868.310  Grades and grade requirements for the classes Long Grain Milled Rice, Medium Grain Milled Rice, Short Grain Milled Rice, and Mixed Milled Rice. 
          (See also Sec.  868.315.)

                                                                       Grades, Grade Requirements, and Grade Designations
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Maximum limits of--
                                 ----------------------------------------------------------------------------------------------------------------------------
                                    Seeds, heat damaged,              Chalky kernels \1 2\                Broken kernels                   Other types \4\
                                     and paddy kernels      Red rice ----------------------------------------------------------------------------------------
                                    (singly or combined)      and
              Grade              -------------------------  damaged              In medium                                                                          Color        Minimum milling
                                             Heat damaged   kernels    In long    or short              Removed    Removed   Through a    Whole    Whole and  requirements \1\  requirements \5\
                                    Total    kernels and    (singly     grain      grain      Total      by a 5     by a 6    6 sieve    kernels     broken
                                   (number  objectionable      or        rice       rice    (percent)  plate \3\  plate \3\     \3\     (percent)   kernels
                                   in 500   seeds (number  combined)  (percent)  (percent)             (percent)  (percent)  (percent)             (percent)
                                   grams)   in 500 grams)  (percent)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1......................         2           1           0.5        1.0        2.0       4.0        0.04        0.1        0.1  .........        1.0  White or creamy.  Well Milled.
U.S. No. 2......................         4           2           1.5        2.0        4.0       7.0        0.06        0.2        0.2  .........        2.0  Slightly gray...  Well Milled.
U.S. No. 3......................         7           5           2.5        4.0        6.0      15.0         0.1        0.8        0.5  .........        3.0  Light gray......  Reasonably well
                                                                                                                                                                                 milled.
U.S. No. 4......................        20          15           4.0        6.0        8.0      25.0         0.4        1.0        0.7  .........        5.0  Gray or slightly  Reasonably well
                                                                                                                                                               rosy.             milled.
U.S. No. 5......................        30          25       \5\ 6.0       10.0       10.0      35.0         0.7        3.0        1.0       10.0  .........  Dark gray or      Reasonably well
                                                                                                                                                               rosy.             milled.
U.S. No. 6......................        75          75      \6\ 15.0       15.0       15.0      50.0         1.0        4.0        2.0       10.0  .........  Dark gray or      Reasonably well
                                                                                                                                                               rosy.             milled.
U.S. Sample grade:

[[Page 605]]

 
    U.S. Sample grade shall be milled rice of any of these classes which: (a) Does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 6, inclusive; (b) contains more
     than 15.0 percent of moisture; (c) is musty or sour, or heating; (d) has any commercially objectionable foreign odor; (e) contains more than 0.1 percent of foreign material; (f) Contains
     two or more live or dead weevils or other insects, insect webbing, or insect refuse; (g) is otherwise of distinctly low quality.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.   868.315(c).
\2\ For the special grade Glutinous milled rice, see Sec.   868.315(e).
\3\ Plates should be used for southern production rice; and sieves should be used for western production rice, but any device or method which gives equivalent results may be used.
\4\ These limits do not apply to the class Mixed Milled Rice.
\5\ For the special grade Undermilled milled rice, see Sec.   868.315(d).
\6\ Grade U.S. No. 6 shall contain not more than 6.0 percent of damaged kernels.


[67 FR 61250, Sept. 30, 2002, as amended at 70 FR 37255, June 29, 2005]

[[Page 606]]



Sec.  868.311  Grades and grade requirements for the class Second Head Milled Rice. (See also Sec.  868.315.)

                                                   Grades, Grade Requirements, and Grade Designations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Maximum limits of--
                                          --------------------------------------------------------------------------------------------------------------
                                            Seeds, heat-damaged, and
                                            paddy kernels (singly or   Red rice
                                                   combined)              and
                  Grade                   ---------------------------   damaged     Chalky
                                                        Heat-damaged    kernels   kernels \1     Color requirements \1\     Minimum milling requirements
                                              Total     kernels and   (singly or      3\                                                 \2\
                                           (number in  objectionable   combined)   (percent)
                                           500 grams)  seeds (number   (percent)
                                                       in 500 grams)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...............................          15             5          1.0         4.0  White or Creamy.............  Well milled.
U.S. No. 2...............................          20            10          2.0         6.0  Slightly gray...............  Well milled.
U.S. No. 3...............................          35            15          3.0        10.0  Light gray..................  Reasonably well milled.
U.S. No. 4...............................          50            25          5.0        15.0  Gray or slightly gray.......  Reasonably well milled.
U.S. No. 5...............................          75            40         10.0        20.0  Dark gray or rosy...........  Reasonably well milled.
U.S. Sample grade:
    U.S. Sample grade shall be milled rice of this class which: (a) Does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 5,
     inclusive; (b) contains more than 15.0 percent of moisture; (c) is musty or sour, or heating; (d) has any commercially objectionable foreign odor;
     (e) contains more than 0.1 percent of foreign material; (f) contains two or more live or dead weevils or other insects, insect webbing, or insect
     refuse; or (g) is otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.   868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.   868.315(d).
\3\ For the special grade Glutinous milled rice, see Sec.   868.315(e).


[67 FR 61251, Sept. 30, 2002]



Sec.  868.312  Grade and grade requirements for the class Screenings Milled Rice. (See also Sec.  868.315.)

                                                   Grades, Grade Requirements, and Grade Designations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Maximum limits of--
                                          --------------------------------------------------------------------------------------------------------------
                                             Paddy kernels and seeds
                  Grade                   -----------------------------   Chalky
                                              Total      Objectionable   kernels         Color requirements \1\         Minimum milling requirements \2\
                                            (number in   seeds (number    \1 3\
                                            500 grams)   in 500 grams)  (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1 \4 5\.........................           30              20        5.0  White or Creamy...................  Well milled.
U.S. No. 2 \4 5\.........................           75              50        8.0  Slightly gray.....................  Well milled.
U.S. No. 3 \4 5\.........................          125              90       12.0  Light gray or slightly rosy.......  Reasonably well milled.
U.S. No. 4 \4 5\.........................          175             140       20.0  Gray or rosy......................  Reasonably well milled.
U.S. No. 5...............................          250             200       30.0  Dark gray or very rosy............  Reasonably well milled.
U.S. Sample grade:
    U.S. Sample grade shall be milled rice of this class which: (a) Does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 5,
     inclusive; (b) contains more than 15.0 percent of moisture; (c) is musty or sour, or heating; (d) has any commercially objectionable foreign odor;
     (e) has a badly damaged or extremely red appearance (f) contains more than 0.1 percent of foreign material; (g) contains two or more live or dead
     weevils or other insects, insect webbing, or insect refuse; or (h) is otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.   868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.   868.315(d).
\3\ For the special grade Glutinous milled rice, see Sec.   868.315(e).
\4\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 3.0 percent of heat-damaged kernels, kernels damaged by heat and/or
  parboiled kernels in nonparboiled rice.
\5\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 1.0 percent of material passing through a 30 sieve.


[67 FR 61251, Sept. 30, 2002]

[[Page 607]]



Sec.  868.313  Grades and grade requirements for the class Brewers Milled Rice. (See also Sec.  868.315.)

                               Grades, Grade Requirements, and Grade Designations
----------------------------------------------------------------------------------------------------------------
                                  Maximum limits of-- paddy
                                      kernels and seeds
                               -------------------------------                               Minimum milling
             Grade               Total (singly  Objectionable   Color requirements \1\       requirements \2\
                                 or combined)       seeds
                                   (percent)      (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1 \3 4\..............             0.5          0.05   White or Creamy.........  Well milled.
U.S. No. 2 \3 4\..............             1.0           0.1   Slightly gray...........  Well milled.
U.S. No. 3 \3 4\..............             1.5           0.2   Light gray or slightly    Reasonably well milled.
                                                                rosy.
U.S. No. 4 \3 4\..............             3.0           0.4   Gray or rosy............  Reasonably well milled.
U.S. No. 5....................             5.0           1.5   Dark gray or very rosy..  Reasonably well milled.
U.S. Sample grade:
    U.S. Sample grade shall be milled rice of this class which: (a) Does not meet the requirements for any of
     the grades from U.S. No. 1 to U.S. No. 5, inclusive; (b) contains more than 15.0 percent of moisture; (c)
     is musty or sour, or heating; (d) has any commercially objectionable foreign odor; (e) has a badly damaged
     or extremely red appearance; (f) contains more than 0.1 percent of foreign material; (g) contains more than
     15.0 percent of broken kernels that will pass through a 2\1/2\ sieve; (h) contains two or more live or dead
     weevils or other insects, insect webbing, or insect refuse; or (h) is otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.   868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.   868.315(d).
\3\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 3.0 percent of heat-damaged kernels,
  kernels damaged by heat and/or parboiled kernels in nonparboiled rice.
\4\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 1.0 percent of material passing
  through a 30 sieve. This limit does not apply to the special grade Granulated brewers milled rice.


[67 FR 61252, Sept. 30, 2002]



Sec.  868.314  Grade designation and other certificate information.

    (a) Milled rice. The grade designation for all classes of Milled 
rice shall be included on the certificate grade-line in the following 
order:
    (1) The letters ``U.S.;''
    (2) The number of the grade or the words ``Sample grade,'' as 
warranted;
    (3) The words ``or better,'' when applicable and requested by the 
applicant prior to inspection;

(Approved by the Office of Management and Budget under control number 
0580-0013)

    (4) The class; and
    (5) Each applicable special grade (see Sec.  868.316).
    (b) Mixed Milled rice information. For the class Mixed Milled rice, 
the following information shall be included in the Results section of 
the certificate in the following order:
    (1) The percentage of whole kernels of each type in the order of 
predominance;
    (2) The percentage of broken kernels of each type in the order of 
predominance, when applicable; and
    (3) The percentage of seeds and foreign material.
    (c) Broken kernels. Broken kernels, other than long grain in Mixed 
Milled rice shall be certified as ``medium or short grain.''

[74 FR 55442, Oct. 28, 2009]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec.  868.315  Special grades and special grade requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec.  868.314. Such special grades for milled rice are 
established and determined as follows:
    (a) Coated milled rice. Coated milled rice shall be rice which is 
coated, in whole or in part, with substances that are safe and suitable 
as defined in the regulation issued pursuant to the Federal Food, Drug, 
and Cosmetic Act at 21 CFR 130.3(d).
    (b) Granulated brewers milled rice. Granulated brewers milled rice 
shall be milled rice which has been crushed or granulated so that 95.0 
percent or more will pass through a 5 sieve, 70.0 percent or more will 
pass through a 4 sieve, and not more than 15.0 percent will pass through 
a 2\1/2\ sieve.

[[Page 608]]

    (c) Parboiled milled rice. Parboiled milled rice shall be milled 
rice in which the starch has been gelatinized by soaking, steaming, and 
drying. Grades U.S. No. 1 to U.S. No. 6, inclusive, shall contain not 
more than 10.0 percent of ungelatinized kernels. Grades U.S. No. 1 and 
U.S. No. 2 shall contain not more than 0.1 percent, grades U.S. No. 3 
and U.S. No. 4 not more than 0.2 percent, and grades U.S. No. 5 and U.S. 
No. 6 not more than 0.5 percent of nonparboiled rice. If the rice is: 
(1) Not distinctly colored by the parboiling process, it shall be 
considered ``Parboiled Light''; (2) distinctly but not materially 
colored by the parboiling process, it shall be considered ``Parboiled''; 
(3) materially colored by the parboiling process, it shall be considered 
``Parboiled Dark.'' The color levels for ``Parboiled Light,'' 
``Parboiled,'' and ``Parboiled Dark'' shall be in accordance with the 
interpretive line samples for parboiled rice.

    Note: The maximum limits for ``Chalky kernels,'' ``Heat-damaged 
kernels,'' ``Kernels damaged by heat,'' and the ``Color requirements'' 
in Sec. Sec.  868.310, 868.311, 868.312, and 868.313 are not applicable 
to the special grade ``Parboiled milled rice.''

    (d) Undermilled milled rice. Undermilled milled rice shall be milled 
rice which is not equal to the milling requirements for ``hard milled,'' 
``well milled,'' and ``reasonably well milled'' rice (see Sec.  
868.306). Grades U.S. No. 1 and U.S. No. 2 shall contain not more than 
2.0 percent, grades U.S. No. 3 and U.S. No. 4 not more than 5.0 percent, 
grade U.S. No. 5 not more than 10.0 percent, and grade U.S. No. 6 not 
more than 15.0 percent of well-milled kernels. Grade U.S. No. 5 shall 
contain not more than 10.0 percent of red rice and damaged kernels 
(singly or combined) and in no case more than 6.0 percent of damaged 
kernels.
    (e) Glutinous milled rice. Glutinous milled rice shall be special 
varieties of rice (Oryza sativa L. glutinosa) which contain more than 50 
percent chalky kernels. For long grain, medium grain, and short grain 
milled rice, grade U.S. No. 1 shall contain not more than 1.0 percent of 
nonchalky kernels, grade U.S. No. 2 not more than 2.0 percent of 
nonchalky kernels, grade U.S. No. 3 not more than 4.0 percent of 
nonchalky kernels, grade U.S. No. 4 not more than 6.0 percent of 
nonchalky kernels, grade U.S. No. 5 not more than 10.0 percent of 
nonchalky kernels, and grade U.S. No. 6 not more than 15.0 percent of 
nonchalky kernels. For second head milled rice, grade U.S. No. 1 shall 
contain not more than 4.0 percent of nonchalky kernels, grade U.S. No. 2 
not more than 6.0 percent of nonchalky kernels, grade U.S. No. 3 not 
more than 10.0 percent of nonchalky kernels, grade U.S. No. 4 not more 
than 15.0 percent of nonchalky kernels, and grade U.S. No. 5 not more 
than 20.0 percent of nonchalky kernels. For screenings milled rice, 
there are no grade limits for percent of nonchalky kernels. For brewers 
milled rice, the special grade ``Glutinous milled rice'' is not 
applicable.

    Note: The maximum limits for ``Chalky kernels,'' shown in Sec. Sec.  
868.310, 868.311, and 868.312 are not applicable to the special grade 
``Glutinous milled rice.''

    (f) Aromatic milled rice. Aromatic milled rice shall be special 
varieties of rice (Oryza sativa L. scented) that have a distinctive and 
characteristic aroma; e.g., basmati and jasmine rice.

(Secs. 203, 205, 60 Stat. 1087, 1090 as amended; 7 U.S.C. 1622, 1624)

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
48 FR 24859, June 3, 1983; 54 FR 21403, 21407, May 18, 1989; 56 FR 
55981, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995; 67 FR 61252, Sept. 30, 
2002]



Sec.  868.316  Special grade designation.

    The grade designation for coated, granulated brewers, parboiled, 
undermilled, glutinous, or aromatic milled rice shall include, following 
the class, the word(s) ``Coated,'' ``Granulated,'' ``Parboiled Light,'' 
``Parboiled,'' ``Parboiled Dark,'' ``Undermilled,'' ``Glutinous,'' or 
``Aromatic,'' as warranted, and all other information prescribed in 
Sec.  868.314.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]

                        PARTS 869	899 [RESERVED]

[[Page 609]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 611]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2017)

                      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)
         X  Department of the Treasury (Parts 1000--1099)
        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)

[[Page 612]]

    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       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)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         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)
       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)

[[Page 613]]

      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    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)

[[Page 614]]

     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)
    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)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Partys 10000--10049)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         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)

[[Page 615]]

        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       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)

[[Page 616]]

         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      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)

[[Page 617]]

        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)

               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)

[[Page 618]]

       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  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)

[[Page 619]]

         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)

                       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)

[[Page 620]]

       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--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) [Reserved]
        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) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 621]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (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)

[[Page 622]]

        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  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)

[[Page 623]]

      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)
         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)

[[Page 624]]

        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        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  [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          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)

[[Page 625]]

                       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)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          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)

[[Page 626]]

       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)
         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)

[[Page 627]]

        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         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  Administration for Children and Families, Department 
                of Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       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)

[[Page 628]]

         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)
        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)

[[Page 629]]

        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)
         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 (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 631]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2017)

                                                  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     5, 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
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 632]]

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
Career, Technical and Adult Education, Office of  34, IV
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, XIII
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
Defense Contract Audit Agency                     32, I

[[Page 633]]

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
Denali Commission                                 45, IX
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
  Career, Technical and Adult Education, Office   34, IV
       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
  Career, Technical, and Adult Education, Office  34, IV
       of
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
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 634]]

  National Drug Control Policy, Office of         2, XXXVI; 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 635]]

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
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
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, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  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; 5, XXXVI; 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
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI

[[Page 636]]

Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
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
  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
  Safety and Enforcement Bureau, Bureau of        30, II
  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
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
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI

[[Page 637]]

  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  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, VII
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
Military Compensation and Retirement              5, XCIX
     Modernization Commission
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                    5, C; 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           2, XXXVI; 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 Geospatial-Intelligence Agency           32, I
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 of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      5, IV; 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 638]]

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
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; 5, IV; 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
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV

[[Page 639]]

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
  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                               2, X;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
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
   Commission
[[Page 640]]

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
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 641]]



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, 2012 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.

                                  2012

7 CFR
                                                                   77 FR
                                                                    Page
Chapter VII
759 Added..........................................................41254
761.2 Regulation at 75 FR 54012 confirmed; (b) amended.............15938
761.8 Regulation at 75 FR 54012 confirmed..........................15938
761.103 Regulation at 75 FR 54012 confirmed........................15938
761.105 Regulation at 75 FR 54013 confirmed........................15938
761.201 Regulation at 75 FR 54013 confirmed........................15938
761.202 Regulation at 75 FR 54013 confirmed........................15938
761.204 Regulation at 75 FR 54013 confirmed........................15938
761.205 Regulation at 75 FR 54013 confirmed........................15938
761.206 Regulation at 75 FR 54013 confirmed........................15938
761.208 Regulation at 75 FR 54013 confirmed........................15938
761.210 Regulation at 75 FR 54013 confirmed........................15938
761.211 Regulation at 75 FR 54013 confirmed........................15938
762.101 Regulation at 75 FR 54013 confirmed........................15938
762.106 Regulation at 75 FR 54013 confirmed........................15938
    (b)(2) and (c)(4) amended......................................41256
762.110 Regulation at 75 FR 54013 confirmed; (a)(1)(vii) and 
        (c)(3) revised.............................................15938
762.120 Regulation at 75 FR 54013 confirmed........................15938
762.121 Regulation at 75 FR 54014 confirmed; (c) introductory text 
        revised....................................................15938
762.122 Regulation at 75 FR 54014 confirmed........................15938
762.124 Regulation at 75 FR 54014 confirmed; (d) revised...........15938
762.125 Regulation at 75 FR 54014 confirmed........................15938
762.128 Regulation at 75 FR 54014 confirmed........................15938
762.129 Regulation at 75 FR 54014 confirmed........................15938
762.130 Regulation at 75 FR 54014 confirmed........................15938
762.145 Regulation at 75 FR 54014 confirmed; (b)(10) revised; 
        (c)(1)(iii) amended........................................15938
762.147 Regulation at 75 FR 54014 confirmed........................15938
762.148 Regulation at 75 FR 54014 confirmed........................15938
764.1 Regulation at 75 FR 54015 confirmed..........................15938
764.51 Regulation at 75 FR 54015 confirmed; (b)(15) revised........15938
764.53 Regulation at 75 FR 54015 confirmed.........................15938

[[Page 642]]

764.101 Regulation at 75 FR 54015 confirmed........................15938
764.102 Regulation at 75 FR 54015 confirmed........................15938
764.103 Regulation at 75 FR 54015 confirmed........................15938
764.231--764.250 (Subpart F) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.231 (a) introductory text revised..............................15938
764.235 Revised....................................................15938
764.251--764.300 (Subpart F) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.251--764.300 (Subpart G) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.301--764.350 (Subpart G) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.301--764.350 (Subpart H) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.351--764.400 (Subpart H) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.351--764.400 (Subpart I) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.401--764.450 (Subpart I) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.401--764.450 (Subpart J) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.402 (d)(1)(ii) revised.........................................15939
764.451--764.459 (Subpart J) Regulation at 75 FR 54015 confirmed 
                                                                   15938
764.451--764.459 (Subpart K) Regulation at 75 FR 54015 confirmed 
                                                                   15938
765.101 Regulation at 75 FR 54016 confirmed........................15938
765.152 Regulation at 75 FR 54016 confirmed........................15938
765.205 Regulation at 75 FR 54016 confirmed........................15938
765.206 Regulation at 75 FR 54016 confirmed........................15938
765.207 Regulation at 75 FR 54016 confirmed........................15938
765.253 Regulation at 75 FR 54016 confirmed........................15938
765.351 Regulation at 75 FR 54016 confirmed........................15938
766.107 Regulation at 75 FR 54016 confirmed........................15938
766.108 Regulation at 75 FR 54016 confirmed........................15938
782 Suspended indefinitely.........................................51459

                                  2013

7 CFR
                                                                   78 FR
                                                                    Page
Chapter VII
761.2 (a) and (b) amended...........................................3834
    (a) and (b) amended; interim...................................14005
    (b) amended....................................................65529
761.7 (b)(1) revised; (b)(3) and (e) added.........................65529
761.103 (b) introductory text revised; (c), (d) and (e) 
        redesignated as (d), (e) and (f); new (c) added.............3835
    (b)(8) removed; (b)(9), (10) and (11) redesignated as new 
(b)(8), (9) and (10)...............................................65529
761.104 (e) and (f) redesignated as (f) and (g); new (e) added; 
        new (f) amended.............................................3835
762.120 (a)(2) introductory text, (k)(3), (l)(2) and (m) amended 
                                                                   65529
762.121 (a)(1)(v) amended..........................................65529
762.124 (a)(2) and (3) revised; (a)(4) and (5) redesingated as 
        (a)(5) and (6); new (a)(4) added; interim..................14005
762.127 Revised....................................................65529
762.145 Amended....................................................65530
762.146 (b)(1), (6) and (e)(1) amended.............................65530
762.149 (b)(1)(iii) introductory text amended......................65530
762.150 (g) revised; interim.......................................14005
    (b)(5) and (d)(2) amended......................................65530
764.1 (b)(2) amended................................................3835
764.51 (c) revised..................................................3835
764.101 (i)(3) amended; (i)(4) added................................3835
764.103 (c) and (e) amended.........................................3835
764.251 (a) introductory text amended; (b) removed..................3835
764.255 (b) introductory text revised; (c) added....................3835
765.205 (b), (c) introductory text and (1) revised.................65530

[[Page 643]]

765.252 (a) heading, introductory text, (1), (2), (4), (b)(1) and 
        (2) revised; (a)(5) and (b)(4) added.......................65531
765.253 (d) removed; (e) redesignated as new (d)...................65531
765.301 (a) revised................................................65531
765.302 (b) and (h) removed; (c) through (g) redesignated as new 
        (b) through (f); (a) and new (b) through (3) revised.......65531
765.305 (c) added..................................................65531
765.351 (a)(3) and (b)(1)(ii) revised; (a)(4) and (b)(1)(iii) 
        removed; (a)(5) through (10) redesignated as new (a)(4) 
        through (9); (f) added.....................................65531
766.110 (a)(6), (b)(2)(vi), (c) introductory text, (3) and (e) 
        revised; (c)(4) through (7), (m) and (n) added; (f) 
        amended....................................................65532
766.115 (a)(1) and (b) revised.....................................65532
766.101--766.150 (Subpart C) Appendix A revised....................65533
772.5 (c)(1) and (3) amended.......................................65541
772.8 (b) revised..................................................65541
Chapter VIII
800.0 (b)(1) through (107) designations removed; (b) amended.......43755
800.71 Revised.....................................................22155
800.84 (a), (b)(1), (2) and (c) introductory text revised..........43756
800.85 (b)(1), (c)(1), (2). (h)(4) and (5) revised.................43756
800.97 (b)(1) and (c)(1) revised...................................43757
800.98 (b)(1), (2) and (c)(2) revised..............................43757
800.152 (b) revised................................................43757
810.2202 (b) revised; eff. 5-1-14..................................27858

                                  2014

7 CFR
                                                                   79 FR
                                                                    Page
Chapter VII
718 Authority citation revised..............................57713, 74570
718.2 Amended......................................................57713
    Amended; interim...............................................74571
718.8 Revised......................................................57713
718.102 (b)(3), (4) and (6) amended; interim.......................74571
718.204 Revised....................................................57714
761.2 (b) amended; interim.........................................60743
    (b) amended....................................................78693
761.5 Amended; interim.............................................75996
761.7 (b)(3) removed...............................................78693
762.120 (j)(1), (2)(i), (ii), (iii), (k)(4) and (l)(3) revised; 
        (j)(3) and (4) added; interim..............................60743
762.122 (b) removed; (c), (d) and (e) redesignated as new (b), (c) 
        and (d)....................................................78693
762.129 (a), (b) and (c) revised...................................78693
762.130 (e)(4) revised; interim....................................60744
    (a)(2)(ii) amended.............................................78693
763.5 (b)(2) introductory text, (ii), (iii) and (3) revised; 
        (b)(2)(iv)(A) and (v)(A) amended; (b)(2)(vi) and (vii) 
        added; interim.............................................60744
763.7 (b)(3)(ii) amended; interim..................................60744
764.51 (b)(2)(ii) and (c)(1)(ii) amended; interim..................60744
764.101 (l) revised; interim.......................................60744
764.152 (c) introductory text, (2) and (3) revised; (c)(4), 
        (d)(1), (2) and (3) added; (d) amended.....................60744
764.154 (a)(3) revised.............................................78693
764.203 (b)(3) revised.............................................78693
764.252 Revised....................................................78693
764.254 (a)(4) added...............................................78694
764.302 (d) removed; (e) and (f) redesignated as (d) and (e).......78694
764.402 (a)(2) revised; interim....................................60745
765.252 (b)(1) revised.............................................78694
765.401 (a)(2) amended; interim....................................60745
765.402 (e)(1), (2) and (3)(ii) amended; (e)(3) introductory text 
        and (i) revised; interim...................................60745
785.4 (c)(1) and (2)(iii) amended; interim.........................75996
785.8 (b) revised; interim.........................................75996
785.9 Introductory text revised; interim...........................75996
785.11 (b) amended; interim........................................75996

                                  2015

7 CFR
                                                                   80 FR
                                                                    Page
Chapter VII
718 Authority citation revised.....................................41994
718.1 (a) revised; interim.........................................41994
718.2 Amended; interim.............................................41994
718.3 (a)(2), (3) and (b) amended; (a)(4), (5) and (6) removed; 
        interim....................................................41994
718.7 Revised; interim.............................................41994
718.8 (e)(1) and (2) amended; (f) and (g) redesignated as (e)(3) 
        and (f)......................................................119
    (e) amended; interim...........................................41995

[[Page 644]]

718.9 (a) introductory text and (b) introductory text revised; (f) 
        added; interim.............................................41995
718.101 (a)(1) amended; interim....................................41995
718.102 (a), (b)(1) and (6) amended; (b)(7) and (c) revised; (d) 
        added; interim.............................................41995
718.103 (b) and (c) revised; (d), (e) and (h) removed; (f), (g) 
        and (i) through (n) redesignated as new (d), (e) and (h) 
        through (m); new (e), (i) and (m)(2) amended; new (f) and 
        (g) added; interim.........................................41995
718.104 (a) introductory text, (1), (2) and (b) amended; interim 
                                                                   41996
718.105 (c)(2) amended; interim....................................41996
718.106 Revised; interim...........................................41996
718.111 Revised; interim...........................................41996
718.112 (a) revised; (b) introductory text amended; interim........41996
718.201--718.207 (Subpart C) Heading revised; interim..............41996
718.201 (a), (c) introductory text and (1) revised; interim........41996
718.206 Revised; interim...........................................41997
718.207 Revised; interim...........................................41998
718.301 (a) amended; (b) removed; (c) redesignated as (b); new (c) 
        added; interim.............................................41998
718.302 Amended; interim...........................................41998
718.303 Revised; interim...........................................41998
718.304 Revised; interim...........................................41998
718.306 (a) introductory text, (2), (4) and (b) revised; (c) 
        added; interim.............................................41998
718.307 (a) introductory text, (2), (3), (4) and (e) amended; (d) 
        revised; interim...........................................41998
761.2 Introductory text and (b) amended............................74970
769 Added..........................................................74970
789 Added..........................................................63898

                                  2016

7 CFR
                                                                   81 FR
                                                                    Page
Chapter VII
761.2 (b) amended...................................................3292
    (a) and (b) amended............................................72690
761.5 Regulation at 79 FR 75996 confirmed..........................72690
761.7 (e)(2) amended................................................7696
761.10 (c)(3) amended..............................................51284
762.101 (c)(2) and (3) amended; (c)(4) added.......................72690
762.105 (d)(2) amended.............................................72690
762.107 Added......................................................72690
762.110 (a) through (h) redesignated as (c) through (j); new (a) 
        and (b) added; new (c), new (d) introductory text and new 
        (f) revised; new (e) introductory text, new (g)(1) and (4) 
        amended; new (e)(3) and (4) removed; new (e)(5) 
        redesignated as (e)(3).....................................72691
762.125 (a) introductory text and (b) introductory text revised; 
        (d) added..................................................72691
762.128 (a) and (c)(3) amended.....................................51284
    (a) amended....................................................72692
762.140 (b)(5) introductory text revised; (b)(5)(v) added..........72691
763.7 (b)(12) amended..............................................51284
763.16 (a) amended.................................................51284
764.1 (b)(1) amended................................................3292
764.51 (c) introductory text amended; (d), (e) and (f) 
        redesignated as (e), (f) and (g); new (d) added.............3292
    (b)(7) amended.................................................51284
764.101 (i)(3) amended; (i)(4) revised..............................3293
    (i)(4)(i) and (ii) correctly added.............................10063
764.106 (b) amended................................................51284
764.107 (a) revised.................................................3293
764.152 (e) redesignated as (f); new (e) added......................3293
764.154 (b) amended; (b)(1) added...................................3293
764.155 (b)(1) added................................................3293
764.203 (c) redesignated as (d); new (c) added......................3293
764.251 (a) introductory text amended...............................3293
764.255 (c) introductory text amended...............................3293
765.205 (a)(3) and (b)(3)(xiii) amended............................51284
765.252 (b)(3)(ii) amended.........................................51284
765.351 (a)(6) amended.............................................51284
766 Authority citation revised.....................................51284
766.102 (b)(3)(ii) amended.........................................51285
766.112 (a)(6) amended.............................................51285
767.201 Introductory text amended..................................51285
770 Authority citation revised.....................................51285
770.5 (a) amended..................................................51285

[[Page 645]]

772 Authority citation revised.....................................51285
772.4 Amended......................................................51285
772.6 (a)(6) amended...............................................51285
773.9 Removed......................................................51285
773.18 (a)(3) amended..............................................51285
774.9 Removed......................................................51285
774.17 (d) amended.................................................51285
785.4 Regulation at 79 FR 75996 confirmed...........................7696
785.8 Regulation at 79 FR 75996 confirmed...........................7696
785.9 Regulation at 79 FR 75996 confirmed...........................7696
785.11 Regulation at 79 FR 75996 confirmed..........................7696
799 Revised........................................................51285
Chapter VIII
800 Policy statement...............................................41790
800.0 (b) amended..................................................49859
800.15 (b)(2) removed; (b)(3) and (4) redesignated as new (b)(2) 
        and (3)....................................................49860
800.18 (b)(7) revised..............................................49860
800.71 Revised.....................................................49860
    (a)(1) Schedule A Tables 1, 2 and 3 revised....................96340
800.72 (b) amended.................................................49862
800.117 (b)(2) removed; (b)(3) redesignated as new (b)(2); new 
        (b)(3) added...............................................49862
800.175 (a) revised................................................49863
800.195 (f)(11) and (g)(4) added...................................49863
800.196 (e)(2)(ii), (iii) and (h)(1)(i) revised; (e)(2)(iv) added 
                                                                   49863
800.216 (c) revised................................................49863


                                  [all]